Whilst most of the world’s various financial markets have evolved at a considerable pace over the course of the last 20 years, the commodities space has remained largely unchanged.
This has changed of late, however, with the emergence of data as a viable commodity that’s arguably the single most valuable and in-demand anywhere in the world. Since 2006, there has been talk of data replacing oil as the world’s most valuable resource, with The Economist having confirmed this in a number of different articles.
But why exactly is data so valuable in the modern world, and does it have the potential to impact on the infrastructure of the commodities market?
Why is Data so Valuable?
The facts surrounding data are compelling, with 97% of businesses using it to power their commercial growth and a further 76% of companies using it as an integral part of their core strategy.
In the commercial world, data is essentially customer information, and this is increasingly informing everything from a company’s marketing strategy to the way in which it communicates with its loyal patrons.
This is incredibly valuable in the modern age, which is why Google and Facebook are now able to share targeted adverts with you depending on your browsing behaviour and individual buying habits.
Marketers are also increasingly inclined to increase their budget for marketing intelligence to achieve better insight, with 79% looking to ramp up their spend and invest more in data in order to optimise their marketing ROI.
With these points in mind, the value and strategic importance of data cannot be denied, whilst commodities such as oil are losing their market share in an age of renewable energy.
How will Data Change Commodities Trading?
Before data becomes the king of the commodities market, however, it’s important to consider how trading this type of asset could impact on the sector’s existing infrastructure.
After all, when you currently login to an online trading platform such as Oanda, you can use futures’ contracts to exchange assets using relatively standardised agreements.
However, it’s hard to imagine using a similar model when trading data, as this type of asset cannot be traded directly between parties and subsequently broken down or analysed. The main reason for this is that most data sets are coupled, tied to the context in which they were collected in the first place.
Now, whilst uncoupled datasets are mutually interchangeable and could fit the existing model, this does not apply to the vast majority of valuable information coveted by businesses and traders alike.
In this respect, it would be wrong to describe data as the new oil, as it whilst it may be the single most valuable asset of its type in the world it cannot be traded easily within the current commodities infrastructure.
This means that the market will need to adapt if data is to realise its full potential as an asset class, but this is liable to take a considerable amount of time.