Digital Economy Dispatch #111 -- 2022: The Digital Year in Review

Digital Economy Dispatch #111 -- 2022: The Digital Year in Review25th December 2022

All good things must come to an end. Fortunately, so must all bad things. And for many people, the end of the year cannot come quickly enough. Driven by the on-going impact of the global pandemic, 2022 has stubbornly refused to deliver on the fast-paced recovery many had been expecting. Instead, no matter how you look at it, the past 12 months will be remembered as a difficult time for just about everyone. Certainly for everyone wanting significant action to avoid an environmental catastrophe, believing in peace and harmony across nations, or expecting more leadership from our politicians. But it has also been a personal calamity if you were hoping to see gains in your cryptocurrency investments, trying to make money in any of the world’s major stock markets, or simply struggling to pay for your weekly groceries and heat your home.

For the digital economy too, it has been a challenging year. In the world of digital finance, the growing interest and hype around cryptocurrency trading and Non-Fungible Tokens (NFTs) took something of a beating. Their troubles were perhaps best illustrated by the example of the NFT based on Jack Dorsey’s first tweet which initially sold for $3M and when subsequently auctioned received a highest bid of just $14,000. A loss of over 99% in value. By the end of the year, the world of NFTs has just about died.

Similarly, the mood around cryptocurrencies has quickly gone from euphoric to despair. The year is finishing with the arrest of one of the most vaunted gurus of the crypto world, Sam Bankman-Fried, and the collapse of FTX, the crypto currency exchange he led. By some accounts, his personal fortune of $17B has now been erased. All part of broad loss of confidence in the past few months which some experts estimate have led to cryptocurrency and NFT losses of over $25 Trillion over that period. More worryingly, the knock-on effects have brought many more aspects of the cryptocurrency wave into question with implications for everyone who believes in the digital transformation of banking and finance.

But 2022 has not been without hope for our digital future.

AI Moves Ever Onward

Throughout the year we have seen a stream of stories describing important steps forward for AI. Many of these have focused on technical breakthroughs and engineering achievements that increase our abilities to deploy it in a wider set of scenarios.

It seems that 2022 will be seen as the time when research and AI development led to fundamental advances in generative AI that brought many new use cases to the fore. Although in the labs for some time, excitement about these AI approaches saw a rapid growth in investment sparking a new “Silicon Valley goldrush”. By the end of the year, David Strong at Stanford University has listed well over 150 generative AI startups across a range of application areas.

However, this adoption of AI has not just been the domain of Silicon Valley startups. Large established organizations have also been accelerating their use of the technology. IBM’s global AI adoption index for 2022 surveyed over 7,500 companies to find that AI is already in use by over a third of companies and that 44% of organizations are currently working to embed AI into their applications and processes.

Perhaps in this regard, 2022 may well be seen as a broader watershed for AI. Cassie Kozyrkov at Google sees this as a breakthrough year when we switched from a focus on the science to predominantly talking about the use of AI to drive productivity. She has described it as the year for showing off the ways that AI can now create, automate, and excite. What has emerged, in her words, are a number of “proofs of concept in a productivity revolution”.

And the biggest showoff of them all has been ChatGPT. Late in 2022, the announcement by OpenAI of their latest technology experiment has fired up many people’s imaginations about just how far AI has travelled in recent times. The ease of use, broad applicability, and human-like responses of ChatGPT has been something of a revelation to many. Commentaries about its many potential use abound.

However, just as important has been the realization that ChatGPT and similar systems are taking us into tricky waters. We are being asked to face the implications of widely deployed AI tools delivered by agencies and companies with many different motives. The AI solutions themselves have no concept of right or wrong. Ask it a question and it responds with an answer that is plausible and believable. However, it may also be incomplete, misleading, or simply false. Early users of ChatGPT report that its responses are “dangerously creative”. That is, its creativity knows no bounds, its reasoning and algorithms for providing an answer are too complex for most people to understand, and it certainly has no limits on whether its answers are true or false.

These experiences have been a shock to many who are now considering the implications of AI for the first time. if such AI capabilities become embedded in almost everything we do, how do we govern and control their actions and responses? In this respect, 2022 may well be a very significant turning point and be known as the year that the world began to wake up to the ethical, legal, and moral challenges we now face with AI.

Facing Today’s Digital Reality

For many, 2022 has been a year when digital transformation activities have had to face the reality of a world in turmoil and to adapt to the uncertainties and volatility driven by global events. As much as digital technologies have been essential to deal with these challenges, they have also amplified the concerns for our future. Advances in AI illustrate this dilemma. Excitement for the progress being made is dampened by the ethical, legal, and moral issues it raises. Perhaps 2022 will best be remembered as the year we finally began to face our digital demons.