By Victoria Silchenko for The Fintech Times.
Professor Michio Kaku has long been my personal hero, so listening to his presentation at the World Government Summit in Dubai (a ‘Davos Forum’ in Middle East attracting over 4,000 leaders from 140 countries) and then interviewing him in person was an enormous joy for a truth seeker and hopeless optimist like myself.
One of the most influential physicists and futurists of our time, tackling such sexy topics as space travel, Mars’ colonies, AI, and, of course immortality, Michio has managed to interpret science for the most wide-ranging audience in a series of books such as “The Future of the Mind” and new release “The Future of Humanity.”
But after listening to him speak at the WGS – an extraordinary event uniting the brightest minds of the world – I realised that his expertise goes well beyond physics. Here’s how he sees the world, from an economics point of view.
The age of Perfect Capitalism
We are building up to something that I call “Perfect Capitalism”, stated Professor Kaku. “Capitalism is a private ownership where prices are set by supply and demand. Period. End of story. That’s called capitalism. But capitalism is imperfect. Supply and demand are imperfect. You don’t know who is cheating you. You don’t know what a profit margin is. You don’t know who is gauging you. You don’t know what other people think about a product. That’s imperfect. Plus, you have all these middle men – who don’t do anything except transferring goods from point A to point B.”
But perfection is coming, he believes, thanks to the consumer getting to know so much information about a product, including supply and demand, at the touch of a few mobile phone buttons. The result is; more competition, and better markets.
Professor Kaku continued: “Perfect capitalism is where we are going today. Eliminating a middle man. Eliminating all the friction of capitalism.
There are of course, winners and losers. The winners are – society. Society benefits, things are cheaper, more diverse, better quality. But who are the losers? Every revolution has losers. The biggest losers are – the middle men. Like brokers.
Now, today stockbrokers no longer sell stock. But that sounds stupid. Of course, stockbrokers sell stock, what else they are going to sell? No, stockbrokers no longer sell stock. Because stockbroking is a middle man job. You can buy stock on your wrist-watch. Now stockbrokers sell something that robots cannot provide. It is called intellectual capital. We are talking about experience, know-how, savvy, intuition, analysis – we are talking about something that robots do not have. That’s where jobs are going be for middle-men”.
How to become a billionaire
But what if you are hyper-ambitious, want to disrupt an industry, and want to become a billionaire? What if, inspired by Jeff Bezos, you want to create the next Amazon? Or the next Uber? Airbnb?
Dr. Kaku has a genius but simple formula:
- Take any industry
- Find its middle men
- Find its point of friction
- List all the aggravation and waste
- Digitalise it
This is where I remembered one of my favorite quotes by Leonardo da Vinci “Simplicity is the ultimate sophistication”.
After his speech, when I got to interview Dr. Kaku in person, I was eager to ask him a question that had been bothering me for quite some time. If you think about it, without governmental money there would be no Silicon Valley, no Internet and even no Elon Musk who has been no stranger to governmental funding. And the fact is – just about every innovative poster-child company here in the U.S., including Intel, Compaq and Apple were advancing public funds such as SBIC or SBIR. These are companies that wouldn’t even exist without government funding and support. How is it all going to play out in the near future? Will, for example, blockchain technology change the relationships between governments and innovative ventures in need of a “patient” capital?
Dr. Kaku, who grew up in Silicon Valley, shared with me his own view on that. Certain industries require a jump-start – for example the nuclear industry or space programs – however other industries have done it largely independently. He stressed that government should certainly play a key role here– especially in education. In his speech he had said, “We have to make sure that we sponsor great universities, that we have great prizes, that we reward people for taking initiatives in creating something where nothing existed in the past.”
As for blockchain – well, “blockchain is just a way to keep track of a sequence of things – that’s why it is important for bitcoin, but when it goes to the government projects we know where the money is, we know where accountability goes – blockchain is less important.”
What about bitcoin?
As Dr. Kaku mentioned bitcoin, I realised that if I were to produce a feature film about bitcoin, I would give the role of Satoshi Nakamoto to Dr. Kaku – a charismatic and hyper-intelligent man who looks powerful and intriguing by default. Wait – are you thinking what I am thinking? Is there a …slight chance it was him? Well, if you are in the pro-bitcoin camp, get ready for some disappointment…
As Michio told me: “My personal point of view – you cannot stop virtual currency. As far as what are things worth – things are worth whatever you are willing to pay for. A glass of water could cost a billion dollars if a billionaire is willing to pay a billion dollars for a glass of water. And I can create a virtual currency and have it worth whatever you want as long as someone is willing to pay for it. So, it is gambling, it is speculation.
My personal attitude – it is not productive. My criteria for what is either good or what is: what is productive, what it produces, what good purpose does it serve humanity. Bitcoin is not a productive industry. At the present time it is gambling, it is speculation – you cannot stop it because humans love to gamble – there is a gene for gambling in our genome. So, we always have things like bitcoin, we always have things like slot machines, and we have things like gambling as it is part of who we are but for me it is not productive.”
While I was reflecting on Michio’s observations, I remembered the fact that bitcoin users expect 94% of all bitcoins to be released by 2024. Naturally, while approaching a $21m ceiling, the profits of miners will be fading. What’s next then? As Central Banks continue to pile up the financial system with massive and unsecured monetary printing, are we going to experience some kind of “crypto-singularity” event? Remember the fact that the average life expectancy for a fiat currency is 27 years – while gold has relished a monetary status (which means it is a medium of exchange, a unit of account, and a store of value) for over nearly 2,600 years and has been accepted since globally! And if anything – it is FAITH that will determine the future of the so called “digital gold” and gives it intrinsic value – first and foremost.
The day after my talk with Michio I found out that Regal RA DMCC, a gold investment and trading firm in Dubai, was the first company in the Middle East to receive a license to trade cryptocurrencies. The company will be able to store Bitcoin, Ethereum and other cryptocurrencies in a vault located in DMCC headquarters in Almas Tower in Dubai.