Let’s try something a little out of left field.
It may sound a tad incongruous but bear with me. It could have a greater impact on your future finances than you might imagine possible. Because today we’re going to look at Moore’s law and its possible impact on your job, and your kids’ jobs.
Moore’s law states that the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years. What that means is processing speed (in computing devices of all kinds) and memory capacity are doubling every two years. The law has held true for fifty years now and is showing no signs of slowing down.
If you double anything, every two years, you’ll find yourself on a steep gradient of accelerating change, otherwise known as an exponential curve. The key concept to grasp is that the rate of change is always increasing. In this case, computers are getting faster, faster.
As hardware accelerates, the software that rides atop it becomes commensurately more powerful, along with its effects on society – and that’s where we arrive at the subject of personal finances.
You all know the drill. Technology makes some industries redundant while others spring into being. For example, telegraph operators found themselves out of work when the telephone came along. Fancy shares in a typewriter company?
Sure, you might say, the new has always replaced the old. So what’s different now?
Remember when video stores seemed the best local business in town? A license to print money? If you’re not already streaming movies online, you will soon. Remember when you used to go to a travel agent and sit in a red chair while someone booked a flight for you? How quaint. Remember when bookstores were the only places to buy books? When books were made of paper?
All of these changes have happened in the last decade. And that’s just a fraction of it. Real estate agents are finding it tough as people go online to buy and sell houses directly. Publishers are struggling as authors begin selling straight to readers through sites like Amazon. Retailers are hurting all over the shop. Want an Apple or Dell computer? Buy it from Apple or Dell.
What’s going on here, of course, is disintermediation. The removal of the middleman.
So ask yourself: Am I a middleman? Could I be disintermediated? Don’t settle for an easy answer. Really stretch yourself to imagine ways technology could shut you out. If you can imagine it, chances are it’ll happen. Maybe sooner rather than later.
A final case in point. Remember Yahoo!? The internet company thriving on the reality of Moore’s law? One of the big players in the new, high-tech world? Now it’s a minnow. And why? Yahoo! was essentially a portal that provided services between you and the internet.
It could happen to many of us, because two years from now technology will be improving twice as quickly as it is today. If you think the last ten years were crazy, wait for the next ten. And the ten after that. Hold onto your hats, folks.