Technological Disruption

The Internet of Things

The Internet of Things is the foundational intelligent infrastructure of the new economy — integrating a Communications Internet, Energy Internet and Logistics Internet into a single IoT operating system. Hundreds of billions of consumer products will eventually be connected to the internet and to one another, feeding real-time data to an integrated global neural network. Corporations around the world are already beginning to develop and distribute “smart” appliances and products that are capable of being connected to the internet and controlled by consumers via Wi-Fi. One of the most powerful effects of this global network of things will be the comprehensive energy efficiency and productivity gains across society, largely afforded by big data analysis. According to Jeremy Rifkin:

“The Internet of Things will connect everything with everyone in an integrated global network. People, machines, natural resources, production lines, logistics networks, consumption habits, recycling flows, and virtually every other aspect of economic and social life will be linked via sensors and software to the IoT platform, continually feeding Big Data to every node — business, homes, vehicles — moment to moment, in real time. Big Data, in turn, will be processed with advanced analytics, transformed into predictive algorithms, and programmed into automated systems to improve thermodynamic efficiencies, dramatically increase productivity, and reduce the marginal cost of producing and delivering a full range of goods and services to near zero across the entire economy.”[3]

The IoT is inherently designed to be open, distributed, and collaborative, giving anyone the freedom to utilize this collective data, create applications, and contribute to increasing economic efficiencies. However, the IoT is not just about data analysis. One of its defining features is making possible the transition from carbon-based fuels to renewable energy sources through a distributed Energy Internet. Taken as the sum of its parts, the Internet of Things will enable humanity to use less of the Earth’s resources dramatically more efficiently and, ultimately, aid in re-integrating our species with the biosphere of the planet.

Aggregate energy efficiency is the “ratio of useful to potential physical work that can be extracted from materials.”[4]

“During the period from 1900 to 1980 in the United States, aggregate energy efficiency…steadily rose along with the development of the nation’s infrastructure, from 2.48 percent to 12.3 percent…leveling off in the late 1990s at around 13 percent with the completion of the Second Industrial Revolution infrastructure. Despite a significant increase in efficiency, which gave the United States extraordinary productivity and growth, nearly 87 percent of the energy used in the Second Industrial Revolution was wasted during transmission.”[5]

Further efficiency gains under the current fossil fuel-based infrastructure are limited, since the technologies designed for this system, such as the internal-combustion engine and the centralized electricity grid, have few productivity gains left to exploit. However, studies indicate that, through a transition to an IoT infrastructure, “it is conceivable to increase aggregate energy efficiency to 40 percent or more in the next 40 years, amounting to a dramatic increase in productivity beyond what the economy experienced in the twentieth century.”[6]

Distributed Renewable Energy

An Internet of Things infrastructure will incorporate an Energy Internet, in which prosumers (consumers who have become their own producers) are empowered to share excess energy across an open and distributed IoT enabled smart-grid.

Initially, smart appliances may increase energy efficiency in the home by simply communicating with one another to reduce energy use. For example, this could be accomplished by not operating at peak times on the grid, or not all turning on at once, or charging an electric vehicle (EV) during the cheapest and most efficient hours of the night. However, as technologies for renewable and free energy harvesting (e.g., solar, wind, etc.) become exponentially more efficient and accessible to the average consumer it becomes possible for every household to harvest their own free and renewable energy, and share any excess (which may initially be done by selling it back to the utility company for a reduction in costs) across a decentralized smart-grid, or Energy Internet. It is even possible to utilize EVs as an energy storage device and to distribute this stored energy back into the grid during peak times.

Numerous sources of clean and renewable energy are already available, including: solar, wind, wave and tidal action, ocean currents, temperature differentials, falling water, geothermal, electrostatic, hydrogen, natural gas, algae, biomass, bacteria, phase transformation, fresnel lenses, and thermionics, amongst others. Geothermal energy alone can supply more than five hundred times the energy contained in all of the world’s known fossil fuel resources.[7] Additionally, every hour the sun radiates more energy onto the earth than the entire human population uses in one year.[8] Harnessing just one-tenth of 1 percent of the sun’s energy that hits the Earth would give us six times the energy that the global economy now consumes.[9]

Just as Moore’s Law applies to computing technology, solar and wind harvesting technologies are now experiencing exponential growth curves of their own, with geothermal, biomass and hydro expected to follow. For solar photovoltaic cells, the same “doubling” phenomenon as seen with computer chips has been observed, and price has tended to drop 20 percent for every doubling of industry capacity.[10] The price of crystalline silicon photovoltaic cells has fallen from $60 per watt in 1976 to $0.66 per watt in 2013, while efficiency of triple junction solar cells has reached 41 percent in the lab.[11] According to industry analysts, “the harvesting technology for solar and small wind power will be as cheap as cell phones and laptops within 15 years.”[12]

Within 10 years, it is projected that every building in America and Europe will be equipped with digital smart-meters that will be capable of optimizing the efficiency of devices and appliances within the home,[13] as well as continuously feeding and receiving real-time data from the IoT network. In the coming years, prosumers will be empowered to harvest and freely share their own clean and renewable energy across a distributed Energy Internet on an IoT infrastructure.

3D Printing and the Decentralization of Manufacturing

3D printing is the technology behind the manufacturing model that will accompany an IoT infrastructure. As with wind and solar harvesting technology, the development of 3D printers is on an exponential growth curve where the first “low-cost” Stratasys printer entered the market at $30,000 in 2002, while today’s entry-level 3D printers start at just $300. Already, 3D printers are producing a wide range of products, from jewelry and artwork, to car and airplane parts, human prostheses and bionic implants, bioprinted cells and tissue (with the first 3D printed transplant-ready organ scheduled to be printed in 2015[14]), functioning mechanical devices (including weapons), to furniture, to full-scale buildings and parts of infrastructure; even food is now being 3D printed, along with replacement parts for the International Space Station that are currently being printed out in zero gravity orbit.

To increase printing efficiencies, companies are currently exploring the use of abundant and locally available feedstock to create the printer filament. Mcor recently introduced a 3D printer that uses cheap paper as its feedstock, and prints out 3D products in full color with the consistency of wood at 5 percent of the cost. Other such projects include a 3D printer that uses sand to create glass objects, and the Filabot printer which grinds up and recycles plastic objects to produce its own filament. Sand, rock, and virtually any type of discarded waste material have the potential to be used for 3D construction and in 3D printed buildings. The European Space Agency has even designed a printer with the potential to use lunar soil as its feedstock to construct buildings on the moon.[15]

Though 3D printing may still be a niche area of manufacturing, its future disruptive potential is vast. Of most significance, the designs or schematics for 3D printed products are downloadable digital files that are able to be instantaneously shared online to any point on the planet, just as any type of digital media file. As with other online networks, 3D printing communities, such as Thingiverse or Youmagine, are doing away with intellectual property protection and are instead opting for open-source sharing, making their products freely available for anyone to use and modify. In this way, printed products can be made instantly available worldwide at a fraction of the cost and eliminate the need for long-range shipping. Additionally, 3D printers use just one-tenth of the material of traditional manufacturing,[16] can print their own spare parts, require very little human labor, and can create single customized products or large batches designed to order at virtually the same unit cost and without the need to retrofit an entire manufacturing facility, giving 3D printing immense advantages in efficiency and productivity.

3D printing will drive the decentralization of manufacturing as it scales. Embedded in an Internet of Things infrastructure, anyone on the planet is enabled to become a prosumer and create products for use or sharing over global networks. By allowing anyone and everyone access to a highly efficient means of production, 3D printing will reduce marginal costs to near zero for the majority of consumer products while circumventing and undermining traditional markets of exchange.

Cryptocurrency, Peer-to-Peer Finance and Blockchain 2.0

Though cryptocurrency and its underlying Blockchain may be several of the newest disruptive technologies (the Bitcoin whitepaper having been released in 2008, with the currency coming online the following year), their underlying applications are easily the most widespread (many of which are only now beginning to be explored), and their ultimate potential for disruption is likely yet to be realized.

Cryptocurrency, such as Bitcoin, is the mode of financial exchange that has been painfully absent from an increasingly interconnected world of instant digital communications. The digital currency is built upon an open-source protocol (its code is available for anyone to view), is secured by cryptography, and enables peer-to-peer transactions to take place over a decentralized global network without the need for any sort of intermediary third party (e.g., bank, government, etc). Essentially, it is a global decentralized digital currency, outside the realm of control of any centralized governing authority or entity.

Cryptocurrency transactions can be instantaneously sent anywhere in the world, in any denomination, with next to no transaction fee. This characteristic alone gives cryptocurrency the ability to reinvigorate and revolutionize the world of micro-payments, micro-lending, and remittance payments. With digital cryptocurrencies, foreign workers around the world are able to transfer remittance payments back to their families without having to pay exorbitant fees, often upwards of $30 USD per transaction, charged by companies such as Western Union. The micro-lending model, used to fund startup businesses and humanitarian projects around the world, has similarly been hindered by high global transfer fees on small sums and can now be reinvigorated through free-flowing cryptocurrency transactions.

Furthermore, cryptocurrency presents an opportunity to circumvent the ad-based revenue model for online digital content creation. Currently, user created content posted to YouTube, for example, takes in revenue through short advertisements that viewers are forced to watch, while the third party host (in this case Google) assumes a percentage of revenue from each creator. With the ability to send direct peer-to-peer micro-payments, it is possible to support content creators directly, without the need for any sort of third party intermediary. In the same way, small denominations of cryptocurrency could be attached to social media “likes,” empowering users to directly support one another for content creation and sharing— further incentivizing the creation of quality content and online initiatives. Even if just five or ten cents worth of cryptocurrency is attached to a “like,” if a video has one-hundred thousand views and half of those people send a five cent “like,” the content creator will directly receive $2,500 for their content, without the need for any corporate advertisement or third party fees.

The underlying technology that enables these secure peer-to-peer transactions to take place over a decentralized network is called the Blockchain. Cryptocurrency protocols, like Bitcoin, were simply the first widespread application of this technology. Numerous Blockchain 2.0 applications are now in development, many of which could be used to help manage an IoT infrastructure.

Smart contracts are computer programs that can automatically execute the terms of a contract once the agreed upon conditions are fulfilled. These could include simple transactions such as an online shopping purchase, or executing the terms of a will. Moreover, as smart devices and products continue to proliferate across an Internet of Things infrastructure they will increasingly integrate and register with the Blockchain and be able to be bought, sold and operated in line with the terms of smart contracts. For example, a car could be programmed to only operate for its rightful owner, or a house could be rented out whose doors will unlock via the tenant’s phone for a pre-determined length of time.[17]

The applications of the Blockchain are far-reaching, and largely beyond the scope of this article. The final application that will be mentioned here, that may be useful in a Collaborative Commons, is the potential to decentralize governance. Over the Blockchain, it is possible to conduct cryptographically secure and anonymous digital voting across the globe, where a unique crypto-token could be issued to the pool of voters that could then be used to cast a digital vote. Given the simplicity of conducting a crypto-vote, it is possible that democracies could become more secure, liquid, and less centralized, such that individuals would be able to vote directly on major issues themselves, rather than having to rely on elected representatives who are often under the influence of partisan politics, corporate lobbyists and politically motivated short-sightedness.

Though cryptocurrency and the Blockchain are relatively recent technologies, it is likely that both will be integral to the IoT infrastructure and play a significant role in facilitating and managing the new economy.

Automation and the End of Wage Labor

By now it is no secret that robotics, artificial intelligence (AI), big data, advanced analytics and algorithms are increasingly replacing human labor. Between 1997 and 2005, “manufacturing output increased by 60 percent in the United States while 3.9 million manufacturing jobs were eliminated during roughly the same period.”[18] Labor that was once outsourced to cheaper work forces overseas is now being repatriated with advanced robotics that are cheaper and more efficient than their foreign counterparts. Beyond manufacturing, logistics is becoming increasingly automated, from autonomous robots and storage systems in warehouses to driverless vehicles that are already beginning to be seen on public roadways, increasing efficiency and decreasing marginal cost at every step of the logistics value chain. Similarly, many white-collar and service industry positions are being transferred to machines just as quickly, eliminating the need for secretaries, phone operators, travel agents, bank tellers, cashiers, etc. The online retail sector is growing by 15 percent per year and is expected to double by 2020.[19] With much higher costs and payrolls, it is likely that many brick-and-mortar retailers will ultimately succumb to their virtual equivalents.

Professionals and knowledge workers are equally expendable, as advanced algorithms and AI are increasingly utilizing big data to recognize patterns, advance hypotheses and implement solutions. Many formulaic news and sports articles are now being written by AI, which have been capable of passing the Turing test online for some time, and can be published within minutes of an event.[20] Professionals from lawyers, to accountants, to middle managers and marketers — all are facing replacement by innovative big data algorithms.

The complete automation of the workforce has the ability to free humanity from wage labor and for the first time in history allow individuals to pursue their true passions, free of any sort of debt or servitude. There is no task that could not ultimately be carried out by machines or managed by sophisticated artificial intelligence. Computers will eventually be able to design their own programs, improve and repair their own circuitry, and update information about the social needs of humanity. Autonomous machines and self-erecting structures could excavate canals, dig tunnels, construct bridges and dams, and efficiently build advanced infrastructure on a global scale. Human participation would consist of selecting the desired ends.

Over the coming decades, wage labor and the means of production will be increasingly handed off to intelligent technologies. Simultaneously, however, the build-out of an IoT infrastructure (which will also contribute to one final surge of wage labor) will usher in a new organizational model, characterized by distinct values that can already be seen emerging.