A Great Issues Lecture by Bill Winters, Coordinator of Computing Services
Rose State College
The Birth of a New Nation - A View from Cyberspace (January 28, 1998)
A new nation is forming. A few years ago it did not exist. It has already doubled in size over the last couple of years. 10,000 new citizens set up residence each and every day. At this rate, it will soon boast the largest population on earth.
Four years ago, most people had never even heard of the Internet. Right now more than 30 million are signed on to the Internet. This is a larger population than any city on earth. There are 300,000 more who sign on every month. There are 159 different countries online.
In 1957, the Allentown, Pennsylvania semiconductor plant had approximately 4,000 workers. It took each worker all day to make only five transistors. This amounted to 20,000 transistors for the whole plant. Each one cost $2.50 to make and AT&T used all of them. By 1983, the plant still had 4,000 workers. But by then the transistors were integrated on microchips. Each worker could make 5.3 million in a day --- 6.4 trillion in all. They sold for a few one-thousandths of a cent a piece. That was 1983. Now in 1998, they're much more powerful --- but sell for less than 500 millionths of a cent. Yet computer chip makers like Intel have been among the most profitable companies over the last decade.
This means the ground work is already being laid. Consider this: Computers are found in only 25% of the homes in the United States. Meanwhile, televisions are in 98% of U. S. homes. Telephones are probably in 99%. But you can already install a card in the back of your computer that turns it into a television. And you can already set up your home computer to make calls.
Everything else for this cybernation is already falling into place. Especially phone lines. Old copper phone wires could only carry 48 conversations. Now each fiber-optic cable can carry over 8000 --- literally at the speed of light. And there are over 16 million miles of fiber-optic cable already in use. Moreover, with improvements in fiber-optic technology, it may be possible to transmit over 10 million conversations each by the year 2000.
It is predictable that the place where all these channels converge will be a computer generated city, a cyberstate with no real physical center, no government regulations. No borders of language barriers (software is already available that will translate any length of written text from one language to another almost instantly). A completely free market. No restrictions on speech or expression. And possibly no taxes or other drains on income.
The technology elite of tomorrow will be able to get on a plane and take his livelihood anywhere he likes without losing a single business day. He'll effectively be able to conduct his affairs from anywhere in the world. But working from rural enclaves and romantic cities is just the beginning. As you're about to see, the birth of the cyberstate will cripple big government. It will cause pandemonium in the cities. And it will create two new, radically different social classes.
It will also create the world's first true free market. It will change the way you think about business and wealth (you'll have more of it). You pay less taxes or no taxes at all. Wars will be unlikely. (Except for maybe economic wars with hackers launching "logic bombs".) Rush-hour traffic and big industries will disappear, leaving us with a relatively smog-free environment.
It is predictable that networked virtual reality [which would make it possible for you to see and feel other objects and people projected into a cybercity] will make computerized experiences practically indistinguishable from the real thing.
It is estimated that 10% of the population of the United States has access to either the Internet or one of the commercial online services. The top 1% of the population pays one-quarter of all income taxes, the top 5% pays half, and these economically powerful people are the most likely to be online before the year 2000. With this cyberstate, the oversized tax base will erode. People may effectively trade in their current citizenships for cybercitizen status. People may give up their tax responsibilities.
This wasn't possible when transactions still had to be conducted in government-issued currencies. Especially for U. S. citizens, whose government reserves the right to tax them on incomes made anywhere in the world. But that does not have to be the case. Financial transactions are now going online along with people. Wealth can be encrypted into untraceable, electronic bits.
By necessity government spending habits will be cut off. Governments and welfare recipients will be bypassed. The back lash in relatively abandoned cities may be ugly. But even as the outdated welfare state falls apart, you'll see others fortunes taking off, including your own, if you've invested in the right companies.
Find fortunes or flip burgers
Three years ago, virtually no major business had interactive or online advertising. Today, every major ad agency has an interactive advertising group. And this year spending for interactive advertising went over $100 million. By the year 2000, that number will balloon to over $4 billion.
What does this tell you? First, that the greatest investment opportunities will be in the companies best prepared for the shift from nation-state to cyberstate. Second, you need to prepare yourself. Already, 37% of the largest U.S. companies have made plans to market their products on the Internet. Another 9% are already there.
Buy your next car without ever visiting the dealership
Because 47 different kinds of cars --- from Ford, Chrysler, and GM, as well as Toyota, Honda, Saab, and Subaru --- are now advertised online.
The cyberstate is still in its early stages. Watch closely for the growth of the Internet and the world communication network. Also note critical developments in networked and tactile reality, cybercash, the smart-card and the computerization and Westernization of the emerging markets. It is possible that all of these factors will converge to create a fully functional, fully developed cyberstate by 2015.
THE INSIDE TRACK ON CYBER DOLLARS
You should have seen it coming. After setting you back a cool quarter million in tuition fees, your child has returned to college. Sure, he graduated with honors. But what practical value does a degree in philosophy with minors in anthropology and English literature carry in today's job market?
Unfortunately, college has trained your offspring to be a deep, probing thinker with no marketable skills? Worst of all, junior has moved back in with you. And instead of pounding the pavement, hunting for a job --- any job! --- he spends most of his time and money on that infernal computer he just bought. There he is now, grinning from ear to ear, waving a letter in his hand. Yet another unpaid bill?
Before you can start the tirade about responsibilities and values and independence, your son informs you that he just received his first income as an entrepreneur on the Internet. Doing what? you manage to ask. Writing poetry and giving advice about computer games. A somewhat sly smile dances around the corners of his mouth as your son invites you out for a beer. His treat.
The means to achieve new levels of individual and financial independence already exist. I believe they are the answer to the often-asked question But what does one do with a degree like that? The response, quite simply, is combine what one has learned with the technological capabilities and amazing possibilities of the Internet to revolutionize publishing as we know it.
The possibilities for online entrepreneurship are limitless. You can offer subscriptions to digital magazines or newsletters, set yourself up as an online advisory or research service, even build up your own library of pay-per-view files. In a few years, you may be able to open a warehouse of data files for a range of autofabricated products. You never have to worry about postal rate hikes, print deadlines, or paper quality. It' a business that involves virtually no cost.
HOW TO GET STARTED
The only way to become familiar with the Internet is to use it. All you really need is a personal computer with the capacity to adequately access the Internet. Having a fast modem is also critical in taking advantage of the full range of Internet services.
Accessing the Internet is easy and will become even easier in the near future. There are hundreds of local, national, and international service providers who are falling all over each other to sign you up.
Browser's - Navigation Tools
Netscape's Navigator or Microsoft's Explorer. They are user-friendly and provide shortcuts in exploring the Internet.
The Internet has no central location, but is a collection of attached sites and networks. Due to this somewhat amorphous nature, there are no standard modes of accessing the different types of information and resources. Graphical interfaces ease the confusion of traversing all the different types of services by giving you a visual picture of what is going on inside your computer.
How does one FIND CLIENTS?
The Internet is filled with thousands of newsgroups ( http://www.dejanews.com ). People subscribe to these and leave messages about ongoing discussions on a specific subject. Scan through these and read the ones that might be related to services you want to offer.
Through electronic mail you can send letters to your subscribers' electronic mailboxes. Maintaining a list of active clients is easy --- simply add and remove names from your address book function as members order and cancel subscriptions. With a few keystrokes, an electronic magazine could instantly be sent to 100 people or more. Your only costs are online access fees, which are a pittance compared to postage fees.
Great fortunes could be realized by entrepreneurs with the stamina and sagacity to venture into this widely uncharted territory. The Internet provides opportunity for individuals and businesses that is on par with the investment potential of industrializing China. The only difference is that you can take advantage of it without tying up lots of capital.
SECURING YOUR ELECTRONIC PRIVACY WHILE YOU STILL CAN
When it comes to the security of your private communications, you owe it to yourself and your family to protect your sensitive information as carefully as you would protect your home.
Law-abiding Internet or e-mail users might wonder why electronic privacy should concern them. After all, an honest citizen has nothing to fear if a government computer automatically scans his communications for certain key words.
It doesn't really matter if it's a government employee scanning your mail to determine if you plan to owe taxes, or if it's a criminal attempting to steal the credit card information you dispatched into cyberspace. There is simply no reason not to take appropriate precautions --- particularly if you consider how quickly electronic technologies and software become outdated and vulnerable.
There are several ways for you to protect yourself from electronic looters. One approach to electronic data encryption is incorporated in a device called the Clipper chip. The only problem with the Clipper chip: While one key would be given to the intended recipient of the information, the other would be held by the U. S. government, who could thereby access any transmissions suspected of being illegal.
There is a certain irony that government's attempts to create a back door to monitor encrypted communications have coincided with the most celebrated case of hacking in computer history. Government interest in this technology is not restricted to the United States, either: While the U.S. has legislated an online decency standard, police in Hong Kong have shut down Internet access to the whole city.
Pretty Good Privacy (or PGP) is a computer encryption program that might change the world by bringing top level encryption to the common man. In fact, PGP is better than pretty good. The U.S. government felt so threatened by its unbreakability that it banned export of the software for national security reasons. PGP's inventor, Philip Zimmerman, was placed under criminal investigation.
What is good against the KGB must be intrinsically good for individual privacy and safety all over the world. The Electronic Frontier Foundation (EFF) is an organization that shares this view. Because of this philosophy, the EFF provides legal support to Zimmerman and PGP. The Electronic Frontier Foundation (EFF) is involved in many different areas of cyber and privacy laws, and is an excellent resource in finding out your rights in these matters.
The Golden Age of Opportunity
Imagine running a sales-based business that doesn't require inventories and involves no aspect of the physical transportation of goods. Marketing, production, shipment, delivery and payment can all be taken care of efficiently and quickly from your home office. Even better, there are 15 million potential customers at your fingertips.
From an advertising standpoint, the Internet poses problems not dealt with before. It is impossible for advertising to be conducted by conventional means; the very nature of the Internet makes this unrealistic. Users of the Internet have the ultimate veto power when deciding what will appear on their screens. By programming and individual selection, they can avoid advertisements altogether.
Marketing on the Internet is still in its infancy. One problem advertisers are still grappling with is that interest generated by electronically accessible information does not necessarily translate into sales. The typical Internet surfer scans bulletin boards and online libraries for interesting subjects, downloads information spontaneously, then files it on the hard drive and---in many cases---never returns to it again. If you can't convert a brief attention span into an immediate client, you've lost your opportunity.
Using this new electronic medium for mass marketing not only means adapting advertising to uncharted and somewhat hostile online territory---all-too-blatant advertisers regularly get flamed or bombarded with negative feedback by e-mail. The biggest challenge is converting a shrewd sales pitch into a sale. If you advertise an information service, for example, your potential client has to switch mediums: print out the subscription form he or she downloaded, write a check and put it in the mail---snail mail as the efforts of the postal service are derogatorily called.
Of course, you could ask your client to send a credit card number via e-mail. But, as you know, sending credit card numbers and expiration dates to merchants can still be risky business.
The morally deficient can also take advantage of the Internet by posing as someone else. It is very difficult to verify someone's online identity. Sophisticated computer pirates are rampant on the Internet, accessing bank systems, company computers, even the highly protected databases of the world's secret service. It is na´ve to think these cyber thugs have any inhibitions about preying on individuals attempting to do business online.
The Internet could become a place where fortunes are won or lost, the determining factor being an individual's grasp of the latest information and understanding of the market.
Open Market offers you a place to set up shop online. You could call it a cybermall: a complete electronic infrastructure for establishing and managing a business. The company offers software that allows you to design your own electronic storefront and create your own products while providing a secure payment system. All these features are available to both small and large businesses. Customers are enticed to shop at the Open Market site by a brand new software utility that allows them to browse and buy more effectively than with any other online shopping service.
The heart of Open Market is the Storebuilder software. This do-it-yourself computer application allows you to set up business on the World Wide Web, the multimedia aspect of the Internet. The application is so easy to use, anyone who is merely computer literate can set up a storefront within hours. The software guides the merchant through pricing, inventory and product information, and supplies a seamless interface with Open Market's billing system.
Getting around quickly and effectively is very important on the Internet. The network is simply too large to use an inaccurate or unsupported navigator. Netscape Communications Corp. was developed by the same team that made the original Mosaic browser in 1993. Mosaic has greatly simplified travel on the Internet. And as mentioned above, it allows the home computer user to take advantage of the multimedia capabilities of the World Wide Web. The World Wide Web has quickly become the largest growing aspect of the Internet and the area most likely to be utilized in commercial applications and by entrepreneurs.
Netscape's newest browser is a secure navigator that can be used for commerce and will be compatible with a secure credit card payment system under development by Netscape and First Data.
Like Enhanced Mosaic, Netscape is a secure link to the merchant. Complicated encryption software will not allow cyber thugs to intercept your financial data, and it lets the merchant know who is trying to buy something. Netscape also sells licenses for its own client-server software that will run networks connected to the Internet. This allows businesses to set up their own Internet sites that will be compatible with the secure transaction capability of the First Data-Netscape system.
Because of the high security of this system (which uses encryption to protect credit card numbers), banks have begun to announce their willingness to join the network to facilitate transactions.
Following the philosophy that Internet commerce should be secure and accessible, a group of longtime Internet experts founded First Virtual. First Virtual's system is going to information providers to charge for access to their valued products, and to spend the gains in a completely private manner. The system allows sellers to charge for information, and protects buyers by letting them shop and compare before agreeing to pay. To open a First Virtual account, you send a simple e-mail message to them. This is the most secure system possible.
The first step to setting up an ecash account is to download instructions at the company's site on the World Wide Web. Then download the ecash software and install it on your system. The first time you activate the software, your virtual bank will ask you how much money you want to take off your credit card and deposit into the account.
The Cybercash system will allow two different types of transactions: purchases from authorized Cybercash vendors, and peer-to-peer money transfers from credit cards, debit cards and direct bank accounts. Much like ecash, you will be able to spend money at retailers who use the Cybercash system and even send money to your friends or colleagues who have no retail storefront set-up.
Cybercash transactions are secure and private in three different ways. First, the transactions are completely automated once the software has been properly installed in your system. You do not have to enter in your vital information every time you want to buy something or transfer money. All transmissions from a Cybercash user to authorized vendors is completely encrypted, so there is little risk of interception and misuse of your information.
Gambling and the Internet appear to be natural partners. The potential market for online gaming is projected to exceed US$10 billion a year for North America alone. The worldwide market for these kinds of services could be as high as US $1 trillion annually. Here is how it's going to work: if you are interested only in the true money-making potential of this technology, this means that you don't try to beat the bank. You want to be the bank.
Mega Trend 1: "The Empowerment of the individual"(Tremendous power has been given to the individual with both the Personal Computer and the Internet.)
Mega Trend 2: "A major movement away from the emphasis on government as the focus of power to the INDIVIDUAL as the focus of power" (This means that the individual has capabilities never before available to him.)
Mega Trend 3: "A movement toward adding value to attract customers" (Marketing now means adding value in such a way that it is obvious to the customer that he(she) is getting a great deal. This is now what motives the customer to make a purchase.)
Mega Trend 4: "An Explosion of the World Wide Web" (This is the basis of the new CyberNation that is forming.)
Mega Trend 5: "A trend toward a nation without boundaries, without taxes, no government bureaucracy and golden age of unlimited opportunity"
Mega Trend 6: "A large disparity between the haves and have-nots"
This is what we have to look forward to in our future.
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