Hedge Fund CIO: Our New Reality Will Depend On The Fierce Clash Between Centralized And Decentralized Power

By Eric Peters, CIO of One River Asset Management

“Your devices won’t be the focal point of your attention anymore,” said Mark Zuckerberg in his keynote, shuffling through a computer-generated landscape, renaming his firm Meta. “We’re starting to see a lot of these technologies coming together in the next five or 10 years,” he explained, server farms proliferating across the globe, humming, processor speeds advancing inexorably along parabolic curves.

“A lot of this is going to be mainstream and a lot of us will be creating and inhabiting worlds that are just as detailed and convincing as this one, on a daily basis,” said the founder/architect, extending the epic journey of a firm first built to rank undergrad women’s appearance to one that now intends to construct humanity’s new reality: the Metaverse.

Zuckerberg’s detractors went wild. “Meta as in ‘we are a cancer to democracy metastasizing into a global surveillance and propaganda machine for boosting authoritarian regimes and destroying civil society… for profit!,’” tweeted AOC. Others were less kind. But Meta carried on, making massive capital investments to win an intensifying war for its very existence.

You see, Facebook, like every other organization based upon centralized control – which is to say virtually every institution – is threatened with extinction by a growing army of revolutionary entrepreneurs, developing decentralized alternatives. Incumbents across the most vulnerable industries are sending lobbyists to fortify regulatory moats from an assault by these innovators.

Zuckerberg can hope for no such DC support. A wildly successful decentralized Metaverse would utterly destroy Facebook. So, before he loses his entire empire, he must build a wall around his existing network, and pray his users do not flee Meta’s centralized Metaverse. Meta’s longer-term odds of success are not high.

And for those of us looking for frameworks to understand this emerging reality, the fierce battle between centralized and decentralized power is a focal point. The conflict will affect every industry, institution. And of course, understanding what is likely to become valuable in this new world that few can yet imagine, let alone understand, presents an enormous opportunity.

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Anecdote

“Web 1.0 was flat, static,” said the visionary, unseating the slow-moving incumbents. “Web 2.0 arrived and was dynamic, interactive — it is what we mostly experience today,” added the founder/CEO, lifting his phone from the table, looking at the screen, placing it gently down. “Web 3.0 will be immersive. And we will spend an increasing amount of our lives within the new worlds that it will open.”

I’d zipped into the city for our meeting, on autopilot, handsfree, crazy stop-and-go traffic along the Hudson, software navigating the chaos at 60mph. “In these new worlds, our experiences will be virtual, the currencies we use will naturally be native to those worlds, the assets will be digital.” And he paused, thoughtful, entirely at ease.

“When I started this company, I saw a future where early digital currencies would become increasingly popular, more valuable. And I expected these technologies would eventually prove useful and solve real world problems,” he said. “Even I am surprised by how quickly the latter has come.”

Venture capital is cascading into blockchain companies that are racing to replace the things incumbent institutions presently do; only faster, cheaper, more securely. Some protocols are built to do things we previously considered impossible. Still others do things not previously imagined. These revolutionary pioneers see a world very different from what has been. They have a broadening view of what is possible.

“As this future manifests, all assets will be tokenized — the virtual assets we already see today, the financial assets we have always traded, and many real assets we never even considered tokenizing, exchanging, trading.”

While we will split our time between the virtual and the real, all our possessions will gravitate to the blockchain, tokenized, fractionalized. “And we will supply the most trusted custodial wallets to secure digital assets for everyone in that future.”