What is the data economy?
The data economy is a digital ecosystem for collecting, storing, and selling data. In our digital age, a countless amount of data is created each day. Every second, over 2 million emails are sent, more than 75,000 Youtube videos are viewed, and over 70,000 Google searches are made.
Search engines, social media sites, online vendors, payment gateways, software as a service (SaaS), and connected devices on the Internet of Things (IoT) all collect data as part of the service or product they provide. Many of these platforms, like social media or search engines, don’t cost money to use, but users pay for these platforms with their own data.
As data science, AI, and machine learning continue to advance, the amount of data collected continues to grow at a rapid pace and becomes increasingly valuable. Google, for example, processes 6.2 billion searches per day and 2.3 trillion searches per year.
How big is the data economy?
In the last decade, the value and significance of data in our economy has grown significantly. In 2016, 25 of the largest technology firms had a combined value of nearly $6 trillion, according to an article published by the United Nations. In 2018, the five largest firms in the world (Apple, Amazon, Facebook, Google, and Microsoft) all participated in the data economy and had a combined market value of $8 trillion. Compare that with 2008, where only one of the largest firms was a data firm.
The European Union projects that the EU data economy will see a 530% increase of global data volume and grow to €829 billion by 2025.
Rethinking the current data economy
“People, businesses and organizations should be empowered to make better decisions based on insights from non-personal data, which should be available to all,” the European data strategy of the European Commission states.
In the current data economy, users are not necessarily informed a transaction has taken place when they exchange their data for a product like when a person signs up for Facebook, does a Google search, or uses Alexa. Data is misrepresented in GDP or company valuations because the value of data is not factored into the larger economy. Our current model does not have policies in place to prevent data monopolies. Users experience a lack of trust and transparency about how much user data is worth, how it’s being used, and how long it’s being used.
In response to the limitations of the existing data economy, a number of DAOs, protocols, and organizations have cropped up, inaugurating a new data economy. The new data economy acknowledges that data is an essential part of the current economy that should be understood, accounted for, and regulated. It recognizes data as an asset that is growing at a rapid pace and rethinks the way data is collected, stored, and sold.
The new data economy makes data as transparent as money and the use, collection, and selling of data are regulated. Data and barter are acknowledged as part of the economy in addition to money transactions through new technological frameworks. People are aware of the data they’re giving up and the terms. Economic activity and company valuation include data and barter, which can be more accurate than today’s money-based measures. Monopolies can be regulated based on factors other than price. Lastly, the ethical concerns of data collection and usage are addressed and the privacy of user data is protected.
What is the Data Economy Index ($DATA)?
The Data Economy Index ($DATA) is a basket of 7 tokens developed by the Index Coop that gives investors passive exposure to some of the most significant innovators in the data economy. The index includes Filecoin(renFIL), the Graph(GRT), Basic Attention Token(BAT), livepeer(LPT), OCEAN, Numeraire(NMR) and Chainlink(LINK). Filecoin, for example, is a decentralized storage network that allows users to store their data on the cloud using Polygon (formerly Mainnet). By hosting a storage system on the blockchain, it removes the owner like DropBox or Google storing, collecting, and profiting from user data. Learn more about the Data Economy Index here.