Reality isn’t a Simulation, but the Simulations are Coming

By TradeSmith Research Team

Is reality actually real? What if it’s all just a simulation?

For technology enthusiasts and science fiction fans, the question is fun to debate just for kicks.

At the 2016 Isaac Asimov Memorial Debate — an event hosted by the American Museum of Natural History — “Is the Universe a Simulation?” was the grand debate topic, with physicists, astrophysicists, and philosophers all weighing in.

Astrophysicist Dr. Neil DeGrasse Tyson argues it is “very likely” the universe is a simulation, mainly due to sheer probability. With an infinite timeline of advanced civilizations running complex simulations, the odds are higher we’re inside one than not.

Another astrophysicist, Dr. Michio Kaku, argues the opposite case. He thinks the universe is almost certainly not a simulation — because the universe is so complex, there would be no point trying to simulate it in the first place.

Weather patterns alone are enough to choke any supercomputer; trying to model quantum interactions would be infinitely more challenging. Kaku thinks a realistic universe simulation would have a one-to-one difficulty correspondence with creating an actual universe — which wouldn’t have a point, so reality is real after all. (For the record, we agree with Kaku.)

No matter what, digital simulations are about to enter the real world (no pun intended) in a very big way.

In the 2020s we will start to see complex digital simulations of real-world places and things. It won’t be like that room in Star Trek where you can walk into any time period, but that’s the basic direction. On a micro-scale, and with increasing speed and sophistication, simulations will start getting real.

This will happen partly because the world is awash in data.

For example: A terabyte of data can hold roughly 200,000 five-minute songs, 310,000 smartphone pictures, or 500 hours worth of movies. According to the CEO of Microsoft, the global retail industry is producing 40 terabytes of data per hour (and the rate is picking up).

If you put together one trillion terabytes worth of data, you get a zettabyte. In 2018, the world had about 33 zettabytes of data; by 2025, the total is expected to rise 500 percent.

Also by 2025, the average netizen is anticipated to have 5,000 digital interactions per day (about one every 17 seconds). Then, too, between 2020 and 2030, the amount of electricity devoted to data storage alone could quadruple, from 2% to 8%.

With connections exploding — and the likelihood of 42 billion connected devices by 2025 — some argue we are entering a world of “hyperdata.” Put together the implications of a hyperdata environment coupled with a waterfall decline in the cost of computing power, and you get a natural rise of digital simulations.

The most obvious use of digital simulation technology is entertainment. Making virtual reality games and holographic experiences more life-like, or even indistinguishable from life in some ways, could be a trillion-dollar industry.

But digital solutions will have practical uses too, possibly on a far bigger scale than entertainment alone.

For instance Satya Nadella, Microsoft’s CEO, says that “bits will help atoms be more efficient by bridging online and offline.” The idea here is that, the more realistically an environment can be simulated, the easier it becomes to test different configurations in the real world.

The managers of a factory, for example, could use an advanced simulation to play around with different machine configurations and output mixes.

They could run hundreds of risky experiments with no actual risk at all — because the risks are taken inside the simulation, not with real-world equipmentation.

Simulations could also transform the management of large construction projects (which are notoriously wasteful) and metro area transport networks, which are fiendishly complex (like the New York City subway system), while rendering wild new architecture configurations using 21st century materials (get ready for building designs and neighborhood layouts like nothing you’ve ever seen before). 

Simulations could also transform medicine and healthcare: Doctors could experiment with novel treatments and drug combinations on the simulated version of a patient’s vital systems, going through countless combinations in the cloud before prescribing the optimal treatment in real life.

The increasingly popular term to describe this phenomenon is “digital twins,” as in, using the waves of data that now wash over the planet to create “digital twins” of reality.

As with so many aspects of transformative technology, the rise of simulations could wreak havoc on well established industries and sectors in the market.

Because breakthrough technologies have a “winner take all” paradigm by nature, with the wielders of breakthrough tech reshaping and dominating entire industries, we are likely to see more companies with 10X-100X type growth potential, more left-behinds heading for decline or bankruptcy, and far less room for middle-of-the-road performance.

We are still in very early days for these and other innovations. It is not just the pace of change, but the rate of change itself that is accelerating — in the 2020s “new” will be coming at us faster and faster.

For investors, identifying the strongest trends — and the high potential winners within a given industry group — will be critically important. For the sake of preserving capital, avoiding disrupted “value traps” and industries in terminal decline could become even more important.

Our focus will remain on helping you do this, with a combination of brainpower and great software.

TradeSmith Research Team