Thread by @jmikolay

In 2017, ARK Invest began publishing a Big Ideas report to enlighten investors on the impact of breakthrough technologies.

Yesterday ARK released Big Ideas 2022, highlighting ARK's most provocative research conclusions for the coming year.

Here’s a distillation of what it says:

ARK is led by @CathieDWood

@ARKInvest is focused solely on disruptive innovation: opportunities likely to scale as technologies converge, transforming entire industries.

Big Ideas 2022 offers a cross-sector understanding of tech and the future

For info purposes only
Not investment advice
Not a recommendation to buy, sell or hold any particular security
Read ARK’s risk and disclosure statement

Okay – let’s dive in!

Five innovation platforms are evolving and converging at the same time, and will generate significant equity market returns over the long term:

-Artificial Intelligence
-Robotics
-Energy Storage
-DNA Sequencing
-Blockchain Technology

14 transformative technologies are approaching tipping points as costs drop, unleashing demand across sectors and geographies and spawning more innovation

Big Ideas 2022 focuses on these 14 technologies:

1. AI
2. Digital Consumers
3. Digital Wallets
4. Public Blockchains
5. Bitcoin
6. Ethereum & DeFi
7. Web3
8. Gene Editing
9. Multi-Omics
10. Electric Vehicles
11. Autonomous Ride-Hail
12. Autonomous Logistics
13. 3D Printing & Robotics
14. Orbital Aerospace

1. AI

AI training costs appear to be declining at more than twice the rate of Moore’s Law as performance is increasing significantly.

By automating the tasks of knowledge workers, AI should boost productivity and lower unit labor costs significantly.

The market cap of AI hardware and software companies could scale at roughly 50% annualized rate, increasing from $2.5 trillion in 2021 to $87 trillion by 2030.

2. DIGITAL CONSUMERS

The new digitally native consumer is spending an increasing amount of time socializing, playing, and purchasing online.

Digital is taking share of our lives and social platforms are scaling like never before

Online entertainment spend, advertising spend, and platform e-commerce fees are likely to grow at an 18% compound annual rate during the next five years, from $1.8 trillion today to $4.1 trillion in 2026.

On average in 2021, internet users spent 38% of their free time online and 62% offline. By 2030, we expect these averages to flip, with users spending 52% of their free time online and 48% offline.

Today, six platforms have more than 1 billion monthly active users, and 29 platforms have at least 100 million monthly active users.

The global digital advertising market will grow at a 11% compound annual rate over the next 8 years, surpassing $1 trillion in expenditures by the end of 2029.

Social commerce GMV will grow at a compound annual rate of 41% over the next 5 years to $3.7 trillion, more than doubling it from <10% of total e-commerce today to 22% in 2026.

Video game content and services will grow at a 15% compound annual growth rate from roughly $200 billion in 2021 to more than $400 billion by 2026 with the rise of “virtual worlds.”

Revenue associated with discretionary online time will increase from $1.8T today to $4.1T in 2026

3. DIGITAL WALLETS

Digital wallets like Venmo, Cash App, and others around the globe are penetrating traditional financial services, including brokerage and lending, thanks to what we believe are superior user experiences and much lower costs of acquisition.

Digital wallets could scale at an annual rate of 69% in the US, from more than $400 billion in market capitalization to $5.7 trillion, and 78% globally, from $1.1 to $20 trillion, during the next five years.

Dominating e-commerce payments since 2017, digital wallets surpassed cash last year in point-of-sales payments, likely in response to the COVID-19 pandemic.

Square’s Cash App and PayPal’s Venmo have amassed 74 million and 82 million annual active users in the past 8 and 11 years.

J.P. Morgan hit 60 million deposit account holders after five acquisitions in more than 30 years.

Traditional banks in the US spend roughly $750 in paid marketing and roughly $2500 in total, including the occupancy expenses for branch networks, to acquire a new customer.

Based on network effects, viral marketing, and arguably superior value propositions, digital wallet providers spend as little as $1 to acquire new customers, giving them room to invest and move up-market.

Each digital wallet user in the U.S. could be worth $22,500 at maturity.

If digital wallets were to become consumer financial dashboards, the net present value of their financial service revenues would be roughly $10,000 per average US user.

Digital wallets also could serve as on-ramps to Web3 assets, such as NFTs. Such Web3 monetization could add $1,700 to their net present value per user.

4. PUBLIC BLOCKCHAINS

Public blockchains could transform every traditional asset class.

Public blockchains are powering novel forms of coordination across money, finance, and the internet.

Bitcoin is the most profound application of public blockchains, the foundation of “self-sovereign” digital money.

The Bitcoin protocol has enabled two other revolutions: The Financial (DeFi) and Internet (Web3) Revolutions.

The first profound application was self-sovereign, digital money (bitcoin).

While centralized institutions must coordinate the functions of a financial system, Bitcoin operates as a single, decentralized institution.

The decentralized, open, and permissionless characteristics of public blockchains lower the cost of coordination, among other advantages.

Investors once thought the internet was a new channel among others. Now, the internet is facilitating all channels.

Similarly, cryptoassets issued on public blockchains are likely to impact all asset classes.

Just as the internet turned information into packets online, public blockchains are likely to turn all assets into transactions on-chain.

In addition to the Money Revolution, public blockchains also have catalyzed Financial and Internet Revolutions.

The Money Revolution: coordination of value transfer and property rights outside the purview of centralized authorities, govts, and top-down control

The Financial Revolution: coordination of financial services and contracts outside the purview of traditional institutions

The Internet Revolution: coordination of identity, reputation, and data outside the purview of traditional media conglomerates and big tech

The Money Revolution requires predictable monetary assurances, maximum decentralization, and conservatism.

5. BITCOIN

Now a fraction of global asset values, bitcoin has significant appreciation potential.

Bitcoin’s market capitalization could scale more than 25-fold in the next decade, with each exceeding $1 million in value.

The price of 1 Bitcoin could exceed $1 Million by 2030.

Bitcoin’s market participants are maturing and focused on the long-term.

Despite increased exuberance as bitcoin scaled to a record high price, on-chain data suggests that bitcoin holders are focused on long-term fundamentals.

Bitcoin’s institutional holder base appears to be broadening after the launch of more regulated products and adoption by corporations and nation-states.

Bitcoin offers a system of property rights without reliance on nation-states, protecting the purchasing power of people in countries with strict capital controls, highly inflationary currencies, or capricious governments.

A Digital-Monetary Energy Network

Bitcoin incentivizes the discovery of cost-efficient energy sources, independent of location and consumer demand.

Bitcoin mining will encourage and generate more electricity from renewable carbon-free sources.

Intermittent energy sources like wind and solar could meet a larger percentage of grid demand if Bitcoin mining impacts the utility grid.

6. ETHEREUM & DEFI

DeFi promises more interoperability, transparency, and financial services while minimizing intermediary fees and counterparty risk.

Ethereum emerged in 2021 as the predominant smart contracting platform for decentralized finance and NFTs.

Ether (ETH) is both the preferred collateral in DeFi and the unit of account in NFT marketplaces, suggesting that it is likely to capture a portion of the $123 trillion global money supply.

Built on Ethereum, DeFi, stablecoins, and NFTs pushed ether to an all time high in late 2021.

Since the speculative ICO washout in 2018, Ethereum’s activity has evolved considerably.

Increased network activity has pushed Ethereum’s transaction fees higher than those for Bitcoin.

Higher fees have created demand for ”Layer 2” scaling solutions to lower Ethereum’s transaction fees while maintaining security.

Revenue per employee illustrates DeFi’s efficiency relative to that of traditional finance.

DAOs are replacing centralized, hierarchical corporate structures with decentralized communities.

Stablecoins—cryptoassets pegged to fiat currency, often the USD—serve as fixed-value assets for crypto trading, lending, and payments in both centralized and decentralized markets.

They increased nearly 5x in 2021.

On international crypto exchanges with limited access to US Bank accounts, like Binance, stablecoin-denominated trading pairs account for more than 70% of total trading volume on centralized crypto exchanges, well above USD-denominated trading at only 15%.

Sharding and layer 2 scaling solutions will expand Ethereum’s throughput from 15 to 100,000 transactions per second.

Layer 2 scaling solutions took off more slowly than expected, hindered by long withdrawal times and limited layer 2 liquidity.

Proof of Stake consensus will increase both decentralization and the cost of attacking the network.

Putting control in the hands of the wealthiest token holders and limited physical barriers to entry, increase the risk of centralization.

Existing Proof of Stake chains have not been shown to be more decentralized than Proof of Work.

Proof of Stake consensus is a “greener” alternative to Proof of Work.

Proof of Work mining could accelerate the world’s transition to renewable energy.

Ether’s Market Cap could exceed $20 Trillion in the next 10 years.

Ethereum could displace many traditional financial services, and its native token, ether, could compete as global money.

As financial services move on-chain, decentralized networks are likely to take share from existing financial intermediaries.

The beneficiaries of this shift include Ethereum, the base protocol, and DeFi, the decentralized applications built on top of Ethereum.

As the preferred collateral in DeFi and the unit of account in NFT marketplaces, ether (ETH) has the potential to capture a portion of the $123 trillion in global M2.

7. WEB3

Now that consumers are spending more time and resources online, the importance of digital assets is likely to increase considerably as consumer spending shifts to virtual worlds.

A global framework like NFTs provides a stable way of taking the ownership and control of digital assets away from corporations, to the benefit of individuals.

By 2030, we expect Web3 to depress annual offline consumption by $7.3 trillion, boosting direct online expenditures at an annual rate of 28%, from $1.4 trillion today to $12.5 trillion per year.

Web3 virtual ecosystems will thrive if online human participants can own—as opposed to use or rent— digital assets.

In traditional Web 2.0 business models, end users typically face restrictions on products or services.

Web 2.0 end users cannot port in-game assets from one game to another and they risk censorship on the social media platforms that profit from their content.

In contrast, public and decentralized blockchains allow users to store and trade their assets in a legitimate secondary market.

In 2021, NFTs generated $21 billion in sales as the number of monthly unique buyers soared nearly eight-fold to more than 700,000.

Ethereum is the dominant smart contract platform and the blockchain of choice for NFT issuance and transactions.

As fees continue to rise on Ethereum, however, the competition from other layer-1 blockchains and layer-2 scaling technologies is likely to increase.

Based on the evolution of the video gaming market, NFT demand for blockchain-based games and virtual worlds could exceed that for digital collectibles and art, especially as collectibles and art begin to exhibit more utility in various games during the next five to ten years.

The increasing interoperability of NFTs could enable the convergence of collecting, gaming, socializing, and investing.

NFTs will blur the line between consumption and investment.

NFTs offer a liquid marketplace in which consumers can invest in different digital assets and engage in peer-to-peer transactions.

Blockchain-based gaming can enable entertainment and monetization simultaneously.

Pay-to-Play models require end-users to purchase games at a fixed cost.

Free-to-Play models are replacing Pay-to-Play and unlocking a larger customer base. Virtual goods and gaming-as-a-service are increasing the revenue upside for game developers.

Because NFTs recognize the ownership of in-game assets, they are enabling Play-and-Earn models. Games can raise capital and reward users through NFT sales and in-game rewards.

If Web3 Proliferates, The Monetization Rate Of Online Spending Should Approach That Of Offline Spending By 2030.

Without Web3 , annual online expenditures is likely to grow at an annual rate of 16%, from $1.4 trillion in 2021 to $5.2 trillion in 2030.

With Web3, annual online expenditures are likely to grow at an annual rate of 28% to $12.5 trillion.

8. GENE EDITING

Curing disease, not masking symptoms

The convergence of next generation DNA sequencing, CRISPR gene-editing, and artificial intelligence (AI) has the potential to transform health care.

These advances could accelerate the pace of scientific discovery, personalizing medicine to cure disease instead of masking symptoms.

The equity market capitalization of gene editing and gene therapy companies could grow 54% at a compound annual rate of return, scaling from roughly $130 billion today to $1.1 trillion by 2026.

Gene editing breakthroughs are creating more effective therapies at a faster rate than historically has been the case.

Gene Editing And Gene Therapy Companies Could Reach Roughly $1.1 Trillion In Market Capitalization By 2026.

By 2026, the share of total R&D spending devoted to gene editing and therapy companies could grow from 3% to 17%.

Gene editing and therapy market capitalization could scale 54% at a compound annual growth rate from roughly $130 billion to $1.1 trillion by 2026.

Gene Editing and Gene Therapy Market Cap (Forecast) Could Track R&D Spend as a Precent of Pharma/Biotech.

9. MULTI-OMICS

Multi-omics—including life science tools, basic and translational research, population health efforts, and molecular diagnostics—could impact oncology, organ health, and population health, scaling at a 22% annual rate from $110 billion to roughly $300 billion during the next 5yrs

As costs decline, molecular diagnostic tests that combine DNA, RNA, and proteins should detect disease more accurately and comprehensively than existing tests.

New analytics and software tools, especially those focused on high-throughput proteomics, should allow scientists to unlock the codes to life, disease, and health.

Created using next-generation sequencing, the 2003 human genome draft sequence was incomplete.

Using. long-read sequencing methods, the Telomere-to-Telomere Consortium finally published a complete human genome–discovering 200 million more base pairs of DNA and 1,500 new genes.

This monumental achievement is a harbinger of novel life science tools and methods that will surface previously hidden biology.

The Central Dogma states that DNA is transcribed into RNA, which ultimately is translated into protein.

Understanding the interactions between & among the pillars of the Central Dogma, we will improve our ability to make predictions, diagnoses, and leaps of biological insight.

Mass Spectrometry is undergoing a renaissance.

MS is a technique to analyze proteomic samples one at a time, taking advantage of different masses and charges of proteins.

MS has been hard to scale; it requires manual analysis that often fails to detect protein levels in plasma.

Novel sample prep and analysis that bookend MS are beginning to address its shortcomings.

Because MS is ubiquitous, the market is likely to adopt these advancements in short order.

Scientists Are Creating Methods To Detect Previously Hidden Proteins

NGS massively parallelized the analysis of DNA and RNA data, enabling a significant increase in research experiments.1 Several new detection technologies could parallelize the detection and analysis of proteins

Scientists will be able to quantify more than half the human plasma proteome in a single experiment by the end of 2022.

Each Layer Of The Central Dogma Adds To Its Complexity

While the ~20,000 genes in our genomes create ~20,000 canonical proteins, our transcriptomes and proteomes can harbor hundreds of thousands of unique molecules.

Biological processes like alternative splicing and post-translational modification, for example, add diversity and complexity, as shown below.

Semiconductor and nanopore-based sequencing technologies are best suited to analyze full-length RNA isoforms, protein sequence variants, and other processes like alternative splicing and PTMs.

The scalability and maturity of semiconductor and nanopore-based sequencing technologies may help translate novel research findings into clinical practice.

10. ELECTRIC VEHICLES

As their range increases, the prices of EVs are declining, overcoming the most significant barriers to customer adoption.

Based on Wright’s Law, EV sales will increase roughly eightfold, or a 53% annual rate, from 4.8M in 2021 to 40M units in 2026.

Wright’s Law Has Modeled The Decline In Battery Costs Accurately

The largest cost component of an EV is its battery, the declining cost of which will be critical to reaching sticker-price parity with gas-powered vehicles.

For every cumulative doubling of units produced, battery cell costs will fall by 28%.

Lithium iron phosphate (LFP) cells, which are less expensive and at a lower production base than nickel cells, could hasten the cost and price declines.

Electric Vehicle Costs Could Rival Gas-Powered Options In 2023

The total cost of ownership for a like-for-like EV dropped below that of a Toyota Camry in 2019.

EV production costs and sticker prices are likely to drop below those of gas-powered vehicles in the next one to two years and undercut them by 25-35% in 2025.

Wright’s Law Also Models Improvements in EV Charging Rates

The ability to charge an EV fast is impacted by the vehicle & the charging infrastructure.

Once EV charging rates reach an acceptable level, the industry will optimize for autonomous driving, safety, and entertainment.

The median performance of EVs in 2021 is approaching Tesla’s performance in 2018.

Both should continue to improve.

Electric Vehicles Are Breaking Traditional S-Curve Dynamics
In a typical s-curve adoption cycle, the growth of a new technology decelerates as penetration increases.

In contrast, growth in global EV unit sales accelerated from 60% in 2013 to an estimated 100%+ in 2021.

If Traditional Automakers Navigate The Shift From Gas-Powered Vehicles Successfully, EV Sales Could Scale 8-Fold From 4.8 Million to
40 Million During The Next Five Years.

Sales of smaller, cheaper “neighborhood electric vehicles” will take off by 2026.

11. AUTONOMOUS RIDE-HAILING

Autonomous ride-hailing will reduce the cost of mobility to one-eighth the average cost of ride-hail today, spurring widespread adoption and unleashing unprecedented economic productivity.

Autonomous ride-hailing platforms will add roughly $26 trillion to global GDP and $2 trillion in profits per year by 2030. For perspective, global GDP approached $89 trillion in 2021.

Adjusted for inflation, the cost of owning and operating a personal car has not changed since the Model T rolled off the first assembly line.

At scale, autonomous taxis could cost consumers as little as $0.25 per mile, spurring widespread adoption.

Consumers value the time they spent driving in the $0.60 - $1.10 per mile range.

On average, they value time in work-related travel more highly than non-work travel.

Today, consumers pay $2 per mile on average for ride-hail, significantly more than the marginal cost of driving a personal car and the perceived value of their time.

The value consumers place on their time and on convenience will support prices for autonomous ride-hail higher than our estimated price floor of 25 cents per mile. We expect tiers of service to emerge at different price levels.

Ride-Hail Demand Is Likely To Create An $11 Trillion Addressable Market. At $0.25 cents per mile, autonomous ride-hail could attract a wider population than ride-hail serves today.

Priced at $0.25 per mile, autonomous ride-hail is likely to expand the customer base and increase traffic congestion significantly.

Autonomous air taxis will offer faster travel options at price points roughly the same as ground taxis today.

By 2026, The Enterprise Value Of Autonomous Ride-Hail Platforms Could Be Much Higher Than That Of Automakers Today

Companies that own the autonomous technology stack could dominate enterprise values in the future auto ecosystem.

Autonomous Ride-Hail Could Have More Economic Impact Than Any Innovation In History, Adding Roughly $26 Trillion To Global GDP By 2030

12. AUTONOMOUS LOGISTICS

Autonomous logistics, including trucks, drones, and rolling robots, could lower costs and offer faster and more convenient delivery of goods.

ARK believes that autonomous logistics revenues could scale from nil today to $900 billion in 2030.

Autonomous logistics will reshape the global supply chain completely, giving consumers faster and more convenient ways to receive goods. Shopping habits and homes could be reshaped in ways that will save consumers time and money.

Autonomous Vehicles That Roll And Fly Could Lower Costs Across The Supply Chain

Autonomous vehicles will operate at higher utilization rates than human-in-the-loop systems, creating more cost-effective delivery systems, particularly for small volumes in the last mile.

Autonomous electric trucks should benefit from higher utilization and lower maintenance and labor costs than human-driven diesel trucks.
Rolling grocery robots should enable inexpensive and convenient delivery, reshaping consumer shopping habits.

Autonomous drones are likely to deliver a substantial share of e-commerce parcels and online food sales.

Robot Grocery Delivery Could Lower Costs By 6X And Convert Unpaid Labor Into Paid Services

Robot grocery delivery could convert roughly $40 billion of unpaid labor into paid services and erase $6 billion in gasoline demand.

Drone delivery should be more efficient & cost-effective in transporting goods and meals, especially for suburban and rural residents, increasing food delivery as a % of total spending on food.

Autonomous Logistics Revenues Could Scale From Nil Today To More Than $900B in 2030.

13. 3D PRINTING & ROBOTICS

3D printing and adaptable robots shorten supply chain footprints, allow for digital inventory, and reduce materials waste while cutting costs and time-to-production.

Supply chain shocks and labor shortages should accelerate the use of 3D printing and robotics. ARK estimates that 3D printing and robotics could scale at a 56% annual rate, from nearly $70 billion in public enterprise value in 2020 to over $6 trillion in 2030.

The adoption of industrial robots accelerated after the 2002 dot-com bust and again after the 2008-2009 crisis.

In response to the China/US trade conflict in 2019 and supply chain bottlenecks during 2020 & 2021, the penetration of industrial robots will gain more momentum.

Manufacturers can produce 3D-printed parts on demand, eliminating the need to hold physical inventory of spare and low volume parts.

A “digital inventory” of part designs and printing instructions can combine with physical inventory, shrinking the footprint of warehouses.

Manufacturers can place 3D printers near the destinations of final products, reducing supply chain footprints and shipping costs.
3D Printing allows manufacturers to vertically integrate, reducing reliance on outside suppliers while saving time and cost.

Amazon deployed its first 200k robots over seven years & another 150k in just two years.

During those 9 years, Amazon's workforce grew nearly fifteen-fold.

Automation will enable new products & services that otherwise would not exist, on balance increasing demand for labor.

3D printing allows for rapid prototyping, the elimination of tooling, a reduction in the number of parts, and faster time-to-market.

The Enterprise Value For 3D Printing And Robotics To Scale From $70 Billion Today To Over $6 Trillion By 2030.

14. ORBITAL AEROSPACE

Aerospace costs are declining thanks to advancements in deep learning, mobile connectivity, sensors, 3D printing, and robotics.

Satellite broadband revenues could approach $10 billion per year in the US and $40 billion globally during the next 5-10 years

Rocket Reusability Should Lower Launch Costs By An Order Of Magnitude

SpaceX Is Refurbishing Rockets In Record Time

Lower Satellite Launch Costs Could Enable Continuous Global Coverage With Low Latency

The number of active satellites orbiting earth nearly doubled during in the past two years.

Companies are planning an order of magnitude increase in satellite launches during the next ten years.

The 75,000 of launches planned by 2030 has tripled since last year.

Since 2004, the cost of satellite bandwidth has dropped 7,500-fold, from $300,000,000/Gigabits per second (Gbps) to $40,000/Gbps.

It could fall another 40-fold during the next five years to ~$1,000/Gbps, thanks to Starship, SpaceX’s next-gen rocket and its next-gen satellites.

Satellite internet is likely to target two markets: a high number of low paying customers and a low number of high paying customers.

Satellite Broadband Revenues Could Approach $10 Billion Per Year In The US And $40 Billion Globally During The Next 5-10 Years

Demand For Hypersonic Flight Will Skyrocket

Passengers on short-haul private flights are willing to pay roughly $15k for every two hours saved.

Passengers and businesses will be willing to pay $100k to save 13 hours on a 2–3 hour private hypersonic flight from NYC to Japan.

SUMMARY:

The convergence of robotics, battery technologies, and artificial intelligence is likely to collapse the cost structure of transportation, impacting the economics of auto, rail, and airline activities.

The convergence of next generation DNA sequencing, artificial intelligence, and gene therapies should boost returns on investment significantly, potentially creating a golden age of health care likely to rival that of the eighties and nineties.

The convergence of APIs, social platforms, and blockchain technology could integrate business and consumer marketplaces, disintermediating the middlemen dominating financial ecosystems.

AI innovation could increase nearly 10-fold to more than $100 trillion in equity market capitalization by 2030

Battery Technology Could Enable Autonomous Mobility, Generating More Than $30 Trillion In Market Capitalization By 2030

Robotics Advances Could Generate More Than $10 Trillion In Equity Capitalization By 2030

Genomic Technologies Could Drive More Than $3 Trillion In Equity Market Capitalization By 2030