Time Value of Money

Blockchain and Consensus systems

Blockchain technology has been quite the conflicting discussion as we enter the early twenty first century due to the increase of technology and how interactions on these platforms. This was undoubtedly a nascent concept upon its introduction to the markets although at its very nature it was there to solve a fundamental problem that we faced as humans for as long as we have transacted, that of trust. ‘Trust is the foundation beneath our feet’. This was during a time when traditional finances were run over cloud servers through centralised systems that required administration through a central authority. These would include the bankers involved in facilitating the transactions we needed to conduct as well as governments within which we were able to make our transactions. These centralised systems were considered mutable, in the sense that they provided a level of discretion to those within such institutions to be able to take decisions in their best interest. This could sometimes include providing economic benefits to those involved in making decisions and other cases the censorship of others. While this system was in place for the first couple of decades of this century, this was also at a time when the concept of ‘digital money’ was being introduced for the first time through various scholar papers in the 1980s, although the primary catalyst would have to be the bitcoin white paper released some time in the 2000s by Satoshi Nakamoto, a pseudonymous identity that we still are yet to confirm the identity of. Bitcoin is a cryptocurrency that runs on blockchain technology to support its primary intentioned function of ‘append’ only transactions that are immutable and can not be deleted after the fact. Blockchain technology was supported by a node of individual computers all across the world that worked in sync to support this network by validating transactions of others on the network. ‘Miners’ would seek to solve complex mathematic algorithms in order to figure out a ‘hash key’ or encryption for coins that would in turn reward them for their work through these coins. Developers would also play an integral role in these technologies as they would contribute to the ‘protocol’ or the set of rules that were programmed to act as governance in achieving consensus in decisions regarding the community.
This consensus mechanism, called “proof of work”, would be the primary difference between the previous versions of ‘digital currencies’ in that it would run on these virtual spreadsheets called ‘ledgers’ that got added to a block of chains once verified by the whole community. This was the first step towards transacting in a trust-less, permission-less manner as parties placed more of an emphasis on the decentralised manner of the blockchain instead of the counterpart they were transacting with. This would also attempt to solve the issue of potential inflation that could be caused by improper governance of monetary and fiscal policy that would ultimately lead to hyperinflation, as seen in the cases of Zimbabwe and Venezuela, where cash was eventually declined by workers in exchange for commodities such as loaves of bread and cartons of eggs at the end of a work day due to how rapidly the cash was diluted daily. While this could be ruled as an extreme version of an example, those that believed in this technology did so due to its supposed nature to fend off inflation within fiat currencies during times of economic downturns. It was also programmed in a specific set of deflationary mechanics, allowing it to earn the title of ‘digital gold’ due to its limited nature. Bitcoin protocol stated that it there could only be a set number of these coins available to be mined in its finite life, and the rewards for mining would half in a fixed period, mimicking the functionality of a fixed income securities such as bonds. Since the supply of these coins was limited, they would benefit from appreciation due to their rarity since they could no longer be mined past a fixed limit of 21,000,000 coins. Furthermore, there was also the mechanism where rewards for miners would diminish by half every four years until the year 2140 which added further to the aspect of rarity amongst the myriad of cryptocurrencies that followed suit since its inception.
Though this attempted to solve one issue, it gave rise to another issue of scalability of the system as its security features would impose a limit on the throughput of transactions the system could facilitate. It facilitated around 7 TPS (transactions per second) while its centralised counterpart such as Alipay was able to facilitate nearly 200,000 TPS, making it a fundamentally different product. This bottleneck was addressed by alternative consensus mechanisms that came into fruition later in the 2010s such as the Proof-of-stake (POS), the Delegated Proof-of-stake (dPOS) and the Proof-of-authority (POA) concepts. The POS mechanism would aim to address the issue of scalability and would end up doubling the TPS right away through variance in how transactions would be validated. This methodology would enable transactions to be validated by ‘stakers’ who would provide their coins and leave them within the blockchain to help verify the authenticity of transactions in exchange for transaction or ‘gas’ fees. This system would significantly lower the barrier to entry towards mining these cryptocurrencies as mining for bitcoin (and other POW coins) got quite intensive on computing power due to the innovations in computers, specifically graphics cards that could be combined to achieve scale. Proof of stake also introduced the ability to add layers unto the base layer of the blockchain which would add another element of functionality that we could achieve with these technologies apart from merely acting as digital money, by allowing the ability to run any smart protocol upon the blockchain, like how cloud computing would enable creation of softwares as a service to be run online. The most popular of these apps are decentralised exchanges (DEXs), that run 24/7 based on predetermined protocol that allow it transactions to occur without the requirement of appointed decision makers, but rather place the consensus in the responsibility within those that had a stake involved in the validity protocol. This effectively also provides a yield on invested capital for those that opt to stake their coins for liquidity, much like the traditional fixed income space would, except with an element of price appreciation that make them a practical solution for products that would otherwise lack a whole lot of flexibility. This would also give rise to another variant of the consensus mechanism through the delegated piece-of-stake (dPOS) by enabling stakeholders to ‘delegate’ a party of their choice to seek liquidity by dedicating their coins to achieve rewards through computers in the cloud computers, which could not only be rented in smaller increments but could also be scaled in capacity should users wish to step up their vested stake. The most significant POS cryptocurrency was Ethereum, which initially begun as a POW coin however saw a transition which is expected to be completed some time within the year 2021.
This would also see the inception of the proof-of-authority consensus mechanism, which would add another element of flexibility to the system by adding the ability for users to leverage their authority in the staking pool and be delegated to validate transactions on behalf of the pool. This further reduced the financial barrier towards getting involved in cryptocurrency as it reduced the need for supercomputers and a large up-front investment that was required in the POW & POS mechanisms. Though this did add to the overall efficiency of the process, it is also believed to be a rather centralised consensus mechanism as it does add the element of appointed delegates. However it is also a much more efficient form of centralised consensus mechanisms as it still follows the ‘add only’ protocol of blockchain which still promotes transparency through open transfer of information that anyone can verify. This trend of consensus systems represents a new era of decision making as we truly do have the ability to ‘vote with our dollars’ to ensure we have the most stakeholders in mind within our transactions. This comes at a time when there is mistrust within our existing centralised systems where there is mistrust amongst voters on alarming levels due to a variety of reasons. That being said, cryptocurrencies are far from being deployed in our decision making processes, although they do represent a compass with which we can navigate changes to future systems as we move into the 21st century and make more decisions online. The reason why this is of relevance is because decisions regarding the allocation and flow of large capital significantly affect the cost of capital available to those that need it in order to facilitate progress.

Traditional functions they help

After establishing an overview how Blockchain technology seeks to function, we will now try to discuss the inefficiencies it seeks to address. Automation is playing an increasingly larger role within our society today as we shift towards more and more functions of our daily life online. This could be emphasised by the increased use of data to improve the repetitive tasks that may be considered labor intensive in our modern workplaces. Automation not only comes within the manufacturing sector through the use of Computer Aided Design systems that facilitate efficient designs but also through assembly systems that assist workers in the activities leading to strain and injuries over extended periods. We are also able to leverage this innovation to further build on the financial system which allows for greater room to add value within the services provided to all stakeholders, including customers and employees.
Within the financial industry, inflation is a key indicator of how affordable or expensive daily commodities that we rely on can be. Inflation could be summed up quite well through the measure of CPI, or a Consumer Price Index, which is an aggregation of average prices for the most sought out commodities that we would exchange our cash for during our day to day activities. Inflation could also be considered as the time decay or the rate at which the value of money depreciates due to dilution for whatsoever reason. This dilution could occur for a variety of reasons within different contexts. Traditional finance systems would incorporate a mix of asset classes that would aim to provide a return on investment in the context of inflation rates, with the safest of investments such as short-term treasuries and notes providing close to 1% while slightly longer term bonds and debentures would provide a higher return with the trade-off that these funds would be unavailable to you for a slightly longer period. The traditional system also consisted of equity securities, or stocks, which represented a form of ownership within a company in exchange for dividends or a share of the earnings in the event of profitability as well as capital gains through a price appreciation of the underlying security. While these represented tools with which one could if not build wealth, at least keep up with the cost of living by staying ahead of inflation, this would also come at a significant upfront cost as they usually had a higher minimum price for these investments. Towards the end of the previous decade, we would see this barrier reduced as we saw the introduction of trading platforms that had lower fees and the inception of financial products such as Exchange Traded Funds, or ETFs which were crucial towards those who wished to ‘buy and hold’ their savings in an efficient manner. The concept of cash had always been a temporary solution to our everyday transactions. This was also when we saw the increase in cross-border transactions as we began to trade across borders in a multitude of currencies. Remittance and clearing was a process that usually involved multiple individuals to facilitate this transfer and achieve a transaction time of 2 days under the system of “T+2” through SWIFT inter-bank transfers.
This was why cryptocurrency offered a promising outlook for those that exchanged goods and services due to their decentralised nature as they would increase the speed of transfers from 2 days to within minutes. This would also have an impact on the slippages associated with transaction fees as these would add up to a significant loss of value as well as substantial tax burdens. The reason why this is noteworthy was because a significant portion of inflows of funds towards developing countries comes from remittances from a relative toward parents or family back in their home country. Such remittances would be subject to a lot of scrutiny, often when the recipient relied on these funds as their primary source of income. These improvements would mean that funds could be sent across borders in shorter times, more frequent transactions in smaller quantities due to the nature of tokenisation, allowing for more options to send help to our loved ones. This would also provide us the option to be able to save costs on otherwise hefty accommodation costs that would usually be associated with bringing one’s parents to live with the overseas earner, which provided for its own set of challenges toward saving and investment targets to achieve that. This solution also provided the added benefit of privacy in countries where taxes were a substantial source of revenue for the government in charge, often placing the unnecessary onus on the underserved community to pick up the tab for simply existing in the geography they were born into.
Blockchain also represented the concept of true ownership and transfer of assets through digitisation and smart protocols as it would be a validator for the ownership, in contrast to the governing authority that would traditionally bear this role. Leases for land, long term investments and other assets that could be transferred either through estate planning or the implementation of trust funds would generally be subject to regulatory oversight, as any land ‘owned’ traditionally would still be a lease for 999 years with the government for that nation. Crypto assets meant that should an asset still have liquidity after 1,000 years and it was passed down amongst the generations, the ownership could be traced back in a convenient manner to determine origins of the asset. Apart from such long term benefits of this nascent asset class, it would offer further flexibility in estate planning and trust funds through the concept of tokenisation and smart contracts. These would enable an estate, that would generally consist of securities in the form of real estate, bonds and equities, to be able to be divided in a far more efficient manner as the title deeds would be able to define the percentages of ownership in terms of proportions split and dedicated towards beneficiaries.
Another integral component of blockchain was the reshaping of the formalised credit system, by merely reducing the regulatory barrier that has otherwise deemed a substantial population in the world ineligible. Sub-Saharan Africa itself represents nearly half of the global population that lives below the poverty line, with median annual incomes often averaging at $1,000. This continues to leave unserved markets without the basic service of access to capital, at a time when significant progress comes from the technological devices that cost a premium. Access to credit would enable a traditionally unbankable citizen to be able to borrow to finance the tools needed to begin to save for a nest egg and plan for generational wealth through micropayments that traditional financial systems do not facilitate very easily.

t+0 and Smart Contracts
Blockchain runs off a series of protocols called smart contracts which allow for a predetermined set of rules to be able to execute themselves without the requirement for an intermediary to administer the transaction. The rules of the contract generally specify the obligations for parties involved and mechanics for the set of exchanges to be implemented. This has a practical benefit as it removes the need for trust between two counter-parties when taking part in a transaction as the performance requirements of the contract are written into the code of such a contract. This allows for a multitude of applications off the concept of these smart contracts. These contracts are why cryptocurrency is able to follow such a remarkable pace of growth during a time when there is such a high requirement for efficiency as we head off into our increasingly interconnected world.
Smart contracts are what have enabled the fundamentals of bitcoin and ethereum to sustain itself, through its immutability and transparency. These have a very practical use in today’s day and age and are likely the leading reasons for cryptocurrency adoption around the world. As we shift towards an age of digital communications and online communities, transparency becomes an increasingly important attribute as more and more people connecting online see greater incentives to act otherwise. This is not a pessimistic view but rather one from a statisticians perspective as the chances truly are that we are a species designed to be competitive and achieve some form of a reward when faced with any form of a risk, we like to win, we are only human. This does not have to come at a zero-sum cost as we now have the privilege of technology to enable our decision making and empower us to act in a manner that truly incorporates a multitude of stakeholders in our decisions, away from the traditional shareholder maximisation model, which entails absolute benefits for one party at the cost of detriment to another.
Another practical benefit of such a contract is that they are deterministic in nature, in the sense that they execute in its entirety, with regards to the conditions set by contract. They are atomic in nature, in the sense that all the protocols set within the contract need to be met in order for the entire contract to go through. Failure of meeting any of these obligations would result in forfeiture of the contract, speaking to the very nature of blockchain technology and why it is considered immutable. This takes the power out of individual decision making and instead provides parties with a more relevant playing field when dealing with transactions in todays day and age. These smart contracts have been an integral component towards achieving the “t+0” milestone from the “t+2” benchmark previously set by traditional inter-bank transfers. These have facilitated not only for the blockchain that enables transfers to occur at such high speeds but also towards the secondary layers of chains upon which decentralised exchanges are built. This would also enable the ability for blockchains to add capacity through adding additional consensus mechanisms which further allow us to build extra capacity and functionality through drag-and-drop application programming interfaces, or APIs.
Such contracts have undoubtedly brought significant efficiencies to certain industries that have seen their primary adoption through sheer practical benefits provided in terms of streamlining traditional processes. A key example for this would be within the legal industry that would usually require a room full of associates to comb through the ongoings in order to reach consensus on a way forward, which has since been improved to a predetermined ‘if this, then that’ protocols. Highly standardised transactions conducted by associates part of an accounting firm or investment bank have also seen immense value in these contracts due to the savings in legal fees associated with these newly realised efficiencies. These are merely upper level examples and the benefits truly have the potential to trickle down into a variety of other businesses.
Another practical example of an industry ripe for change through these contracts is that of the real estate industry. This industry sees an enormous backlog of transactions that could be improved to provide significant ease to all those involved. Particularly in the rental space, there would be benefits to be realised on both the tenant’s as well as viewing managers ends. A smart contract paired with a time-locked digital key would be an optimal solution for viewings. The potential tenant would have the ability to select an available time slot and view the property, at their convenience. This would reduce the hinderance caused to an already busy building manager, saving the interaction and exchange of final information to the date of moving in. This would also enable a digital signing process, freeing up more time on the interaction for the addressing of questions that a new tenant may have. From rental agreements to ownership through title deeds, smart contracts leave us with endless possibilities for innovations.

Hospitals and supply chains

Blockchain technology relies on the constant relay of transactions validated by a peer-to-peer network of nodes, which execute the rules of smart contract protocols designed to improve the functionality of the narrative they intend to improve. ‘A failed narrative is just that, while a successful one is recorded as history’. Another narrative that could see significant improvements thanks to blockchain would be that of hospitals. Hospitals currently face an enormous backlog in the transmission of information that is sensitive, which is what contributes to a further build up as an increasing number of patients are introduced to healthcare. This information consists of patient names, addresses and treatment information which needs to be reviewed by a multitude of care givers, which could consist of various doctors and specialists. This information could be encrypted into a simple hash key scanned onto a patient card for the patient’s end while enabling access for specific doctors to be able to view these prior to the appointment, allowing for better quality of care during the interaction with the patient. Doctors are said to have spent a quarter of time during a patient visit asking preliminary questions that could be facilitated through such a file transfer system. Blockchain technology could also assist with the storage and dispatch of medicine from pharmacies in one department of a hospital structure to another or towards deliveries at the patients’ homes through a similar method by only making parts of the specific info available to those working on the packing and shipping of medicine through the use of encryption. This would not only eliminate paperwork at a few steps of the way but also have further value within the supply chain to establish the prescribed dosage as well as how long the medicine could be kept in storage.
As the internet becomes increasingly accessible, we have begun to shift away from a volume based model of care towards an outcome based volume of care, which shifts the focus away from the number of patients visits towards an emphasis on the quality of care the patient receives. In order to support this trend, hospitals grow increasingly reliant on a mix of generalists as well as specialists, from caregivers such as doctors and nurses. This puts an increasing emphasis on the adoption of blockchain as it would entail the addition of software to not only coordinate routines based on patients visiting on but also on the basis of care givers around on the day. This also places greater emphasis on the usage of data generated and stored to better tend to patients either online or over the phone, with an emphasis on the growing trend of Telehealth to further achieve efficiency through proper planning, scheduling and setting the schedules of care givers that work in person as well as remotely. Though tele-health is not a new concept, this has been further emphasised by the significant advancements that better internet and devices brings us. With the adoption of zoom meetings and improvements in affordable hardware to self monitor health, the cost of treatment administration and follow up consultations to check progress could see cost improvements while adding value to the overall care experience the patient receives.
This also adds significant possibilities to the field of supply chain as the technology would be quite enabling in the sourcing of items to their origin source through blockchain technology. Not only does this enable us to track deliveries in transit to ensure timely delivery but also to provide real time data that could be use to make accurate predictions on stock schedules as well as help us manage inventories. We already have access to data analysis tools that let us predict consumption patterns to assist our procurement department which handles the refilling of stock. Blockchain technology however could help pave the way to automate parts of the process to reduce waste and slippage. This would also empower decision makers at the floor level to reduce time spent on tasks that could be automated or delegated to sub-managers.

Oil and Gas

The oil and gas sector is one that is crucial to the discussion of blockchain technology as speaks to the motivations behind which blockchain energy was developed. Since discovering the ‘Glen Pool’ in Tulsa, Oklahoma, back in the 1910s, this small town of a population of around 10,000 at the beginning of the decade experienced significant growth toward a whopping 100,000 by roughly the end of the decade. This was driven by the discovery of substantial reserves within these oil fields, dubbing it the title of ‘the world’s richest tiny oil field’. This undoubtedly drove a substantial drive of investment towards this area with companies coming in to participate in this ‘black gold’ rush in their efforts to be a part of the creation of this sector that is still powering most of our energy till date. This would consist of oil refineries, those manufacturing machinery for use in refineries, as well as manufacturers of pipelines. The oil and gas sector ended up growing to an astronomical industry of 400 companies by the end of the decade, all concentrated within this industry.
While this would fuel the growth of a new energy industry at the time, this was not the only progress seen in the region. Tulsa became home to a vibrant community of Americans that came in from all over the country that moved to this blooming new to be a part of the unprecedented change in the prospect of a better life, coming in by rail, on roads by cars and horses, as well as on foot. This would go on to drive the build up of a flourishing community of businesses from hotels to restaurants to retailers of clothing, furniture and more. This also led to the downtown region being ultra modernised through a network of streetcars as well as beautiful marble churches and an auditorium for 3500. This growth also led to the increase in significant development of residential apartment buildings as well as the workingman’s castles that featured the latest technology such as internal plumbing, electric lighting and beautiful front porches. This led to the development of a ‘skyline’ as well as a sprawl into the suburbs of the neighbourhood.
While this was the driver for change was quite significant, this would also lead to the beginning of our reliance on this carbon fuel. Fossil fuels represented an unprecedented era of growth due to the building of railroad networks all over the country that were driven by the steel revolution, thanks to Carnegie and the Bessemer process. This would also fuel the ability for people to send materials to be processed elsewhere, final products to be sold elsewhere as well as people to do business on behalf of them elsewhere. This led to the development of an unsustainable reliance of an energy source that was not only finite, but also exponentially more addictive as we got further into the century, in hindsight.
The reason for such a stance is due to the sheer effort being put into the development of carbon policies to reverse the effect of not using clean energy that drove a good proportion of the growth till date. Studies have now gone on to show that this source of energy was not the cleanest, especially due to its pollutive nature leading to the world’s average climate dropping on a yearly basis. It is harder to regulate such a resource once profits have been derived from it as now newer players want to continue to keep the game going while more and more subsidies are built around ways to outlaw it. Oil could be processed in a multitude of ways, with petrochemicals having significant utility when used inside of hospitals and other manufacturing plants however the majority of its uses were largely towards a transportation industry that became largely unregulated due to increases in purchasing power of businesses and customers. There were airlines and gasoline vehicles which would innovate to add more ‘horsepower’ to continue to feed our insatiable need for more speed and faster transport of goods, although this undoubtedly came at a cost to the environment in ways we are still trying to fully measure. Oil was further refined into transportation cylinders on specialised boats to form, liquified natural gas, or LNG, to be transported at volumes that were almost 60x more storage efficient, allowing us to export substantially larger quantities of gas through far cheaper means. This would also lead into the development of storage methods inside of our homes for this gas to be used for cooking on gas stoves to power our instantaneous requirement for heat on-demand.
The key issue with oil and gas consumption was that it was extremely difficult to even find the players responsible for putting out all of this carbon, let alone hold them accountable. This would lead from a multitude of players such as refineries and pipeline companies on the supply side as well as the factories which repurposed this oil into various other ways of consumption for further consumption downstream by the transport sector. This made it very difficult to try to reduce the reliance on this relatively cheap to extract source that had gone on to power all of this carbon pollution that we are faced with today. The price of our habits and actions will undoubtedly be paid for by our upcoming generations, unless we shift our consumption habits today and adopt cleaner energy technologies.
This issue relates directly to the issue of trust and accountability that blockchain aims to address. Blockchain aims to address the way in which we interact with our environment to promote a decentralised approach toward taking action as government policy and carbon taxes can not take us all the way. We too must contribute our part in ensuring we do not wait for permission to begin to adopt greener energy solutions to improve not only our energy efficiency. Carbon taxes work disproportionately in the extent to which they hold those responsible for their carbon output into the atmosphere. This would unfortunately leave the cost being passed onto the every day consumer that does not consume said carbon in proportion to the taxes imposed on them. These taxes are charged directly as well as indirectly through the ‘creeping charge’ of inflation that is not easily visible. This inflation could lead to hyperinflation very quickly due to certain governments improperly acting in their own interests, rather than in the interests of their constituents, leaving the vulnerable further off in a worse position than they begun with.

Hydroelectric Power

The build up of the sheer convenience that was brought forth by the oil and gas industry was undoubtedly coupled with the rise of our increasing demand for transport, particularly the transportation of our supply chains of electronic consumer goods and automobiles. Automobiles would then spread on the unfortunate byproduct of this trend back into the atmosphere as cars became more and more accessible as we began to realise economies of scale through the very factories that were contributors of carbon output further up the supply chain. This came at a time whereby we grew increasingly reliant on our communication tools to conduct more and more aspects of our day today life through electronic mail and eventually instant messaging applications that made more of us want to travel further because we had heard of someone who drove a car or had travelled to tropical destinations.
Fortunately, this was also at a time when clean energy was being taken observation of as surely this practice of digging out carbon from below the ground to release into our breathable atmosphere for future generations to pay the price. This was when we began to realise our need for clean power and renewable energy technologies. Though hydropower plants had been implemented in various parts of the world, this was contributing to grid consumption only as we had no means to store the clean energy it put out and run our vehicles on it. This was why it initially did not gain popularity as it did not provide the convenience brought forth by gasoline alternatives and the transport sector.
Hydroelectric power would also be faced with a constraint in that it would require significant water sources and capital investment of large quantities to build infrastructure to convert thee water through turbines into clean renewable energy. This clean energy would then require further infrastructure developments in its storage to prevent spillage and waste through overproduction. Further commitment would be required by the producer to invest into grid integration as this energy would need to reach households in an effective manner. These infrastructure challenges presented a unique barrier for widespread adoption of clean hydroelectric power.
Unfortunately the most preventative barrier to this was the innovation that was observed by the transport industry that was seeing remarkable progress in technologies that made vehicles and planes more luxurious as production continued to ramp up. This trend was further driven by the electrification of the interior of our vehicles with newer and better audio systems, with some luxury automakers such as Mercedes Benz incorporating carphones and video screens for passengers. These innovations led to so much innovation on the product geared at providing utmost luxury to the end users that ensured a bottomless pit for these firms’ R&D departments and lobbyists would work to keep the demand high enough to justify production figures of these luxurious methods of merely getting from point A to B. One did not need to purchase a new vehicle every 5 years, especially if their car worked just fine, however this demand was further kept up through affordable pricing schemes and further through policy support such as comprehensive lease agreements and tax incentives.
Storage of clean renewable energy still stood as a key barrier to scaling out of these technologies as we were still yet to increase battery capacity due to lack of support in R&D. Another key barrier was the use of biomass sources of energy which relied on converting waste collections through the process of sifting and sorting, as well as combustion under ground to power steam turbines to in turn create energy to be shipped off into existing coal grids. This would also be further propped up by higher levels of disposable plastic and paper products that some firms had also achieved scale in. This fed into the prevention of meaningful discussions over how power was produced, distributed and consumed in various communities over the world.

solar & geothermal

The increased adoption of clean energies were beginning to grow in demand as we continued to research alternative means of producing the energy we consumed. This was also coupled with an increasing availability of affordable electric household appliances such as air-conditioners, television sets and microwaves. This was also at a time when sourcing practices began to show significant improvement in the raw materials required for solar photovoltaic, or solar PV, technology as we increasingly began to realise the sustainability of solar as a clean energy alternative to the dominance that oil and gas alternatives had gone to grow over the century. While solar power had begun showing promise in utility, it still had to improve supply chains for raw materials to ramp up production of finished goods. This however was quickly achievable due to the existing production methods set in place by the transport sector and the efficiencies of scale it had realised.
Early in this century, production of solar PV panels began to ramp up as further economies of scale were realised by solar players as this mode of power generation began to show prospect. This was roughly also when supply chains around lithium began to show promise. Lithium mining has also seen an increased demand in consumption as we begin to use lithium in an increasing amount of our electronics. Though lithium is primarily known for watch batteries, AAAs and even smartphones now, this is the same technology that helps facilitate scaled access to storage solutions for infrastructure grade clean energy. The solution for scaling solar seemed to lie in the ability to scale the storage solutions that would be needed to package and distribute the excess power generated.
This rate of growth for solar was inversely matched by the decline in policy support and lobbying around big oil and its extended era of dominance in power generation. This was also supported by a rise in demand for electric vehicles as they achieved the same functionality as gasoline vehicles but through cleaner more renewable sources of energy. The increased battery capacity was a key indicator of which way consumers would have swayed, especially as we got higher and higher range outputs to support the average consumers’ concerns about range in contrast to their gasoline counterparts. Range concerns were quickly overcome by EVs’ abilities to self-drive through advancements in the software space.
As we progressed into the century, solar also began to grow in demand due to its increasing attractiveness due to achieving scale through lower prices for solar PV cells. These made them affordable for lower income countries looking to achieve electrification. There were however constraints to this as the amount of panels you were able to purchase would determine the efficiency of your solution. Solar plants became to look an increasingly attractive solution on a more commercial level as further policy support was deployed, through contracts such as Power Purchase Agreements, or PPAs, that was a license to generate solar power for consumption by the public through integration into power grids. This was how mini-grid and off-grid solutions came into popularity as it was they were transitionary methods for remote communities to gain alternative sources of power through semi-private forms of ownership.
The availability of affordable solar cells would undoubtedly contribute to the increased adoption of solar power in developing nations that were already underserved due to remote location and economic disparity. They would continue to increase their dominance in the energy markets as the demand for renewables continued to grow. This does present a significant threat to demand for oil and gas sources due to their affordable nature thanks to the increase in battery storage capacity that has also continued to grow.

5G & IOT
The last decade showed plenty improvements in solar and heat energy sources as they began to gain momentum on a global stage as Oil started to see a decline in carbon consumption sources. This would also be matched by the availability of raw materials needed for batteries. While a good portion of our energy came from a grid, this still meant that we could partially add aspects of a solar solution by incorporating an aspect of solar into our consumption, be it through rooftop solar panels or through participation in community solar programs. While this couldn’t power our Heating, Ventilation & Air Conditioning systems in its entirety, they would add some contribution that would reduce our reliance on the grid, offering savings in parts of consumption that could be powered by this, often receiving support from battery storage systems and smart metering hardware.
This was also at a time when our world became increasingly interconnected through significant advancements in our cell phones, with the availability of silicone semiconductors. Not only did these enable smaller devices but also facilitated a higher available output towards a multitude of applications. These smartphones would now be able to take photographs, record videos and allow us to share this media with one another in our increasingly globalised world through social media and video chat apps. This would require a higher bandwidth of internet as the files sent over the web got larger, videos longer and movies easier to access thanks to advancements in satellite technology. These improvements took us from GSMA to EDGE to 3G,4G and now on 5G connectivity. This represents a significant increase in internet speeds as we went from downloading music files that took over 15 minute to nearly instantaneously due to speeds increasing towards now up to 150–200 Mbps. This high rate of data transfer is what enables us to access our files faster, reach our friends over better quality audio and video, and get access to the latest entertainment without lag.
This was also when we began to adopt more technologies within our home such as smart, virtual assistants as well as digital doorbells, CCTV cameras and so forth. This allows us to keep an eye on our loved ones while were at out at work and away from home. This also lets us program our garage doors to open when we reach closer to home, turn on our lights automatically to a dim light setting we enjoy, put on our favourite music on the speaker as well as turn on the oven for preheating. ‘If this then that’ automation helps remove the repetitiveness of tasks that could be streamlined so we can focus on the things we most enjoy, such as cooking and spending time with loved ones, when we do return from home.
This shift towards an Internet of Things has also aimed to facilitate further automation as we enter the era of smart grids in contrast to traditional electricity grids. These smart grids entail our house to be powered partly by grid electricity, while reducing reliance on it through solar and wind alternatives through hardware installed on our roofs and in our back yards. This switching back and forth is powered by smart metering systems which automatically program our consumption of higher power consuming items such as washing machines at low consumption times, while switching over to our battery storage during peak consumption hours.

Pandemic

As I sat in a macroeconomics class last march, our professor who was an economics PHD continued to conduct his ‘news review’ sessions before the beginning of class. Right after mid term exams, his first headline asked us if we had heard of this ‘coronavirus’ that had begun to spread. To which we responded “damn, that’s crazy”. This sentiment changed quite fast as the pandemic began to cause borders to shut down and as social distancing measures began to kick in. Working as a courier delivering packages on behalf of pharmacies, this was also when I began to notice lesser and lesser people on the road due to lockdowns, and more masks everywhere I went, soon becoming a mandatory requirement.
Being new to the country and the job, I continued about my work assuming it would blow over soon, not paying much attention to a news story shared by a friend that said the Wuhan Province in China had gone ahead and locked down travel within the country, but had allowed the outbound international flights. “There is probably more to it” we concluded as the news story lost its traction. This was also a little before we began to read about stories of the displacement of China’s Uighur population into ‘re-education camps’ which did not sound very pleasant. This was especially considering Canada’s history with Indigenous boarding schools was taught to us as part of our curriculum as forms of ‘ethnic cleansing’ and ‘grooming to be integrated into society’.
This was however dismissed as newspapers had determined that the pandemic outbreak occurred from a wet-market due to someone having ‘eaten a bat’ which for some reason was considered passable. I’d never travelled to the region, neither did I have friends from there. Then we began to hear of a virology lab in the same province through conspiracy theory social media pages, that claimed the outbreak occurred through a lab outbreak. This was also shortly dismissed due to the events that the remainder of the year unfolded.
The pandemic was a difficult time as we saw the shutter of small businesses while big box stores continued to remain open as ‘essential’. We also began to see introduction of social distancing measures in the sense that we would have to stay at home under lockdown orders for safety purposes. This did lead to decreased movement outdoors and meeting up with one another, though we were fortunate to be increasingly interacting with one another through the mediums of Zoom, Instagram and other social media apps. This was also a year when the murder of George Floyd caused the African American community to stand up and take a stance against police brutality through “I Can’t Breathe” protests, in order to raise awareness for how George was killed, by asphyxiation through the police officer’s knee. This movement garnered nationwide support, and eventually support from the international community as the rest of the world pulled together to show support for racial injustice. This was admirable especially considering this was in the midst of a pandemic.
Later on in the year, the United States had a federal election which was highly contentious through out the election period, eventually won by the Democratic Biden-Harris ticket. Though results were declared, we also read about a multitude of lawsuits from the republican party challenging the results to the election, calling them ‘fake’ and insisting for recounting of ballots. This eventually led to an insurrection at the White House Capitol Building by republicans, that led to members of senate being barraged into a room under military guard, as insurgents roamed the White House freely, standing on desks and posing for pictures inside offices of senate members.
Thankfully, we were able to see a timely rollout of vaccinations as the pandemic really began to take a toll. Though we had not seen a pandemic of this kind, through respiratory diseases in over a century, the scientific community was able to band together to research and come up with a cure for the vaccine, with Pfizer and Moderna leading the way in early roll outs, securing those most in need. Though we had heard of some blood-clots from the Astro-Zeneca version, they were quick to make amendments accordingly.

Decentralised inclusion
The pandemic also led to higher number of job displacements due to a multitude of small businesses being shut down. This was at a time when consumers had increasing access to credit facility not only for personal shopping but to expand their small businesses through capital expenditure loans. The small businesses that took out loans right before the pandemic were the worst hit as they’d just injected capital into their businesses and eagerly awaited a return on investment as they were required to shut down.
Thankfully governments were also able to roll out pandemic relief programs in the form of recovery benefits and stimulus checks for immediate support. This was shortly followed by further support such as small business loans to encourage employment and rent moratoriums which allowed those who couldn’t afford to earn a wage, to postpone their rent towards the end of the pandemic and pushing off evictions in a bid to support those who needed the help.
Though these support programs came in during a timely manner, this also raised concerns about inflation, as the government had passed bills to give out a lot of disaster relief funding, with over 20% of all US dollars in circulation being printed in the year of 2020. This was further emphasised by unemployment figures which had been low going into the pandemic due to the shift away from contract work towards independent subcontractor work, with lesser benefits and job safety guarantees. Another concerning factor was that rent moratoriums were set to expire in around September of 2021, during which a lot of other pandemic relief programs were set to run out.
This is what caused concern in the financial markets as investors were uncertain about the kinds of assets they required to invest in to fend their assets from inflation in the event of a downturn. This would also be a time when the financial markets would see a shift towards inclusivity through lower minimum fees and easy to use trading platform such as Robinhood, which would enable users to participate in the financial markets for a chance to access some capital gains. Unfortunately the source of this influx of liquidity was unclear as a lot of these investors would openly claim to spend their ‘stimmy’ on the stock market, with brick and mortar video-games retailer GameStop stock seeing an unprecedented rally during a pandemic when all of their branches were shut and online shopping had long taken over as the primary source of games shopping. This also saw the rise of AMC theatres stock, seeing a similar rally in the midst of a pandemic when the likes of Amazon Prime and Netflix clearly boasting a superior collection of movies within their low subscription fee model.
Due to such uncertainty in the market, Investors found blockchain and cryptocurrency to be a viable option for their savings as equities and fixed income markets seemed to experience never before levels of uncertainty. Though this indicated levels of financial inclusion, this would also be matched by liquidity generated by stimulus and rent relief programs, which caused investors to be unsure of what all of these individual factors entailed.
This is the reason bitcoin was gaining in momentum as it presented for a truly decentralised asset class that was dubbed ‘digital gold’. Due to loss of faith in the US dollar, the idea of guarding one’s nest egg against inflation deemed bitcoin a viable alternative, especially since its rally to newer all time highs, nearing upwards of $60,000 per USD, far higher compared to the heaviest priced equities of AMZN (<$3,200) and GOOG (<$2,300).

Sustainable production and new methods of education (clean cooking methods for households)
This past year also raised significant around what truly constitutes work as ‘essential’. Some workers in higher income countries were faced with poverty, while some workers in lower income countries never saw a shutdown but just experienced loss of economic ability to earn a living. The pandemic caused the severe economic disparity to grow further apart as the world experienced different waves of the virus throughout the year. Some governments were quick to support their residents with pandemic relief right away, others did not have the option to lock down.
As a student of Finance, the primary question that we are taught to answer in a theory perspective is that of the ‘time value of money’ which helps determines rates of investment. This pandemic clearly highlighted a few prospects with regards to changes that were set to benefit workers. We saw a shift away from urban cities towards rural areas, as discouraged workers that may have lost employment, or could not keep up with higher costs of living would move towards rural areas. This also emphasised the concept of ‘work from home’ which started off in reaction to the pandemic, yet stayed through the endorsement from big tech firms such as Google and Facebook to not require workers to return to offices indefinitely, a trend which may inspire others to follow suit.
This also placed a greater emphasis on online learning, and an even greater emphasis on how underserved markets were far from being included as part of the Internet and clean energy. The concept of online learning was also introduced to emphasise the ability of students to be able to conduct learning in a virtual environment, while the healthcare space also saw a rise of Telehealth start-ups which saw the ability to provide healthcare through technology. The year also highlighted a significant gap in inclusivity between those who had access to technology and those who did not. Those who did not had varying levels of inclusion, with the majority of the most severely affected (above 48%) being from Sub Saharan African countries. These regions not only did not have access to internet, but did not have access to electricity which is a significant barrier. This would also emphasise how one side of the world has unpriced access to clean energy while the other lacks the basic necessities to provide for their daily consumption.
This leads me back to the question that I’d asked myself as a Finance student looking to understand the meaning of this profit seeking world that I’m seeking a degree to eventually try find employment in. While my friends in India would describe Oxygen cylinders and hospital beds being sold for a premium due to extortion business practices, another side of the world would wonder and doubt the existence of this virus due to seeing newspaper articles of hospitals being at low capacity, often asking ‘do you personally know anyone who’s in the hospital from the virus’. This truly made me question myself. What is the time value of money.