A new and exciting era is upon us, and we are experiencing it as it unfolds. A range of emerging technologies – Web3, metaverse, AI, IoT, blockchain technology, robotics and much more – have been evolving exponentially and are soon to shape the global economy, and our society, and will have an immense impact on our lives. We are not spectators of this evolution; we are the creators of this journey and we have the opportunity to dictate its course of action and its ultimate influence on our lives.
These technologies will be utilized in any industry, sector, product, or service, and will enable new and innovative business models to evolve, which could not exist in current traditional systems. We should understand, though, that technology itself is the means and not the end goal.
Since technology is merely a tool, one type of technology cannot solve all our problems, and in many cases, a solution will involve the integration of several technologies while each technology addresses a different issue of the problem and the combination of them all result in the desired solution.
As Abraham Maslow once said, “if all you have is a hammer, everything looks like a nail.”
Every problem is different, and we should be diligent and vigilant to acknowledge and address it appropriately. After all, in your toolbox, you will find a hammer, screwdriver, saw, spanners, measuring tape, pliers, and more. Each tool has a different purpose and utility function.
If, for example, you plan to build a house, a lot of components are taken into account in terms of design and material will be used, and so will the tools needed. You would need wood, tiles, and other materials, but also hammers, screwdrivers, saws, measuring tape, and much more. With the assistance of all these tools, a house to your design and liking is built.
By that same token, when you are confronting a business or economic problem, you should approach its solution holistically. It is vital that you consider the following, but not limited to:
- Which technologies could (or are needed) to solve the problem?
- Are the technologies, in their given state, capable of fully resolving the problem? If not, assess the drawbacks, risks and vulnerabilities associated and consider ways to mitigate them as much as possible
- How can various emerging technologies identified benefit the project? What is the implementation approach?
- Design, structure, and architect the business model and objectives, while considering the drawbacks, risks, and vulnerabilities that have been recognized, and incorporate methods to mitigate them in your system design and architecture
Emerging technologies have the potential to create new experiences and resolve social and economic shortcomings. These solutions will most likely integrate and merge several technologies.
An example can be found in education. Education is the ultimate social equalizer, which can level the playing field for economic growth and opportunities, but it is also very costly, especially for those who need to acquire skills the most. A possible solution could be providing education in the metaverse, which can bring an engaging and accessible learning experience to everyone – no matter where they are located or whether they have any kind of disability or what their culture, gender or race is. The goal would be to build an accessible, decentralized, borderless and equitable platform, and providing education to the communities who need it the most.
But such an experience would not exist without the utilization of Web3, blockchain technology, AI, or IoT. Web3 is needed for seamless accessibility and decentralization. Blockchain technology is needed for security and efficiency of information sharing, enabling transactions in the virtual world as well as transactions and information sharing between the virtual space and the physical space, and the authentication of avatars and any assets in the metaverse via non-fungible tokens (NFTs.) AI would allow for monitoring and analyzing information and activities in the metaverse as well as increasing the effectiveness of engagement and learning. IoT would facilitate the gathering of information, and real-time interactions with resources outside a metaverse space and within other metaverse spaces.
This solution would require a holistic approach to achieve the desired result, while understanding the technology challenges as well as addressing user concerns such as user rights, privacy protection and the security of their information.
The dual purpose of technology
Technology is a tool. Like any tool it can be used for good or for evil. Consider a knife. You can use it to cut vegetables for your salad or you can use it as a weapon against another person.
The statements of U.S. Treasury secretary Janet Yellen about cryptocurrency and bitcoin are an example of the duality of the use of technology. In 2018, Yellen said she was “not a fan” of Bitcoin, highlighting the illicit transactions and crime associated with cryptocurrency. Then at a February 2021 U.S. Financial Sector Innovation Policy Roundtable, she said: “I see the promise of these new technologies, but I also see the reality,” pointing to myriad problems ranging from terror financing and drug trafficking to money laundering.
In January 2021, Yellen said: “Cryptocurrencies are a particular concern. I think many are used – at least in a transaction sense – mainly for illicit financing…and I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels.”
Yellen’s comments echoed those of ECB President Christine Lagarde, who said in January 2021 that Bitcoin had been used for some “totally reprehensible money-laundering activity.”
Additionally, major investors have expressed similar worries. Warren Buffett said in 2020 that “Bitcoin has been used to move around a fair amount of money illegally.” He joked that investors should “go short suitcases,” as criminals would no longer need them to carry cash.
Yellen’s negative sentiment towards cryptocurrency has changed to a degree and it seems that in 2022 she could also see the benefits of blockchain technology – the technology that underlines cryptocurrency.
In a March 2022 interview with CNBC, she said: “I have a little bit of skepticism because I think there are valid concerns about it. Some have to do with financial stability, consumer/investor protection, use for illicit transactions and other things. On the other hand, there are benefits from crypto, and we recognize that innovation in the payment system can be a healthy thing.”
“Crypto has obviously grown by leaps and bounds,” she said, pointing out that it was no longer just a short-term craze. “And it’s now playing a significant role – not really so much in transactions, but in investment decisions of lots of Americans.”
In early March, with relation to Biden’s Executive Order on digital assets, Yellen said, “The Treasury will work to promote a fairer, more inclusive, and more efficient financial system, while building on our ongoing work to counter illicit finance and prevent risks to financial stability and national security.”
It’s important to note that while cryptocurrency has been used for nefarious activities, there is an overall misconception about the industry, because the majority of cryptocurrency is not used for criminal activity. According to an excerpt from Chainalysis’ 2021 report in 2019, criminal activity represented 2.1% of all cryptocurrency transaction volume (roughly $21.4 billion worth of transfers). In 2020, the criminal share of all cryptocurrency activity fell to just 0.34% ($10.0 billion in transaction volume).
According to the UN, it is estimated that between 2% and 5% of global GDP ($1.6 to $4 trillion) annually relates to money laundering and illicit activity. This means that criminal activity using cryptocurrency transactions is much smaller than fiat currency and its use is going down year by year.
In addition, with sophisticated analytics methods, it is possible to capture criminals and terrorists who use cryptocurrency instead of cash. The FBI in February 2022 arrested one couple who tried to lauder $4.5 billion in stolen cryptocurrency. Bear in mind that blockchain transactions are trackable, traceable and immutable, and due to these features, the FBI was able to capture those who were responsible for Bitfinex hack in 2016. Cash transactions, on the other hand, are much more difficult to trace and track.
Technology risks and vulnerabilities
Technology, like any tool, may be used to benefit our lives, but also carries some risks and vulnerabilities. It is imperative that we are mindful of these vulnerabilities and understand how, at the very least, we can mitigate them.
Emerging technologies, such as AI, Web3 and blockchain technology are software, running algorithms created by developers, meaning it can have bugs or loopholes in the code, which even if they are not intentional, could be exploited. Many botched Decentralized Finance (DeFi) projects have been launched with unaudited code, resulting in losses like the YAM code bug disaster. Therefore, any code should be audited before being launched and continuously monitored and updated.
In addition, an algorithm may be biased. After all, humans write these algorithms, and humans have inherent biases, which consciously or unconsciously may get into the code. Thus, curating greater diversity in tech is critical to avoiding closed and self-reinforcing approaches to data and digital innovation, and preventing unintentional bias in algorithms. Creating a more diverse workforce should be seen as more than meeting a quota or ticking a box but a business imperative.
Emerging technologies have a vast potential to benefit our lives and resolve economic and social shortcomings. But we should remember that technology is a means to an end, a tool, and we should understand how to implement it for our benefit while mitigating its risks and vulnerabilities if inappropriately used.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
