Amateur investors from WallStreetBets subreddit recently disrupted the hedge fund game by bulk buying GME (GameStop) stocks creating value where there was none before. The Redditors found that some hedge funds had a short position against the gaming company and started the market craze that got coverage nationwide.
Until very recently, the creation of value was heavily dependent on the physical world. The value itself was transferred through tangible goods, like gasoline, beans, rocks, goods extracted from the earth. However, the world has physical limitations. A finite amount of resources and the law of physics dictate the theoretical global maximum.
The digital realm has no such restraints.
The digital transformation predicted almost a decade ago has already revealed its secrets. Uber has an immense evaluation as the carless ride-hailing provider. Airbnb is a hospitality company that doesn't own real estate. All are valued higher than the sum of their physical, earth-bound parts.
I believe the market is witnessing the beginning of digital value outstripping the worth of the physical world. Bitcoin and Etherum might seem like far away existential threats, but the "dumb market" tripling GME in a few days is an immediate existential threat to the "way business is done." It certainly won't be the last, and I'm excited to see what happens in the future.
Mar 1, 2021
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