The Electronic B@zaar: Part 1 - the evolution of e-trade

** From the Silk Road to the e-Road **

The world is experiencing a complete transformation, from bricks-and-mortar to electrons. My hypothesis is simple:

We have been living in an economy that is driven by paper-based information founded on paper money. We are moving to one where the market, money and all its supporting information systems are completely electronic.

The Silk Road was the international trade route for the civilizations of Eurasia for 18 centuries. It ran over the roof of the world, from China through Central Asia to Asia Minor, starting at Yumen near to the Jade Gate at the northwest end of the Great Wall of China. From there, it passed through the southern reaches of the Gobi desert to the Tarim oases, then through Tashkent, Samarkand, and Bokhara, turning south of the Caspian Sea into Iran and on to Damascus.

It was once the world's main trading route, opened by China under the Han dynasty in the third century bc to enable trade with Athens and Rome. As trade flourished, each nation or settlement along the Silk Road took care of its maintenance, garrisoning the highway, protecting caravans and collecting tolls. From China came silk, tea, porcelain, and spices, and in return went wool, gold, silver, and gemstones, carried over dusty roads on the backs of camels. At points on the road there were well-known bazaars where European, Arab, Persian, and Indian traders exchanged goods with the nomad merchants who then traveled back to China to pass merchandise to their Chinese clients. A web of minor trade routes evolved at both ends of the Silk Road, with goods eventually passing through the whole of Arabia and into Europe.

In 1490, a Portuguese adventurer called Pero da Corvilha reported, on his return from a mission to the East, that pepper and ginger were grown in India and that cloves and cinnamon were brought to Arabia from islands further east. More significantly, he also circulated important navigational information gleaned from the crews of Arab trading ships. Exciting possibilities were discussed in the courts of Portugal and Spain. European galleons could carry large cargoes and move quickly. If another route could be found to the East, the multitude of middlemen on the Silk Road and throughout Arabia would be disintermediated. It might no longer be just spices and silk that came to Europe from mysterious India and distant China. Suddenly, the hunt was on for a sea route to the Indies.

Once Magellan had rounded the Horn, the days of the Silk Road were numbered. The merchant states of Europe quickly established a global highway across the seven seas and policed it with their navies, dividing up the world among themselves. Just as the Silk Road spawned a web of subsidiary trade routes, so did the global trade routes over which the European nations originally presided. A lucrative trade grew in coffee, cocoa, sugar, and other commodity crops and, following the Industrial Revolution, an international trade developed in copper, tin, petroleum, and other raw industrial commodities. The eighteenth, nineteenth, and twentieth centuries brought successive revolutions in transportation roads, bridges, canals, railways, steamships, airplanes. People could move further and faster and so could goods. The network effects of the Industrial Revolution were evident as trade exploded both nationally and internationally, enabled by a whole spectrum of trading routes.

Then, toward the end of the twentieth century, something quite surprising happened-surprising because nobody had expected it or predicted it. A new and very powerful trading route suddenly emerged out of the West Coast of the United States, growing at an alarming speed and connecting directly to the developed economies of Europe and the Far East. Some of the more perceptive businesspeople of the day recognized it immediately for what it was. They saw at once that it would disintermediate many of the large established businesses in the major economies of the world and they quickly invested in it. But many took longer to recognize this fact, and remained confused and bewildered by it.

This was and is an electronic trading highway, an e-road, a pervasive electronic web with strands spreading out to every corner of the planet. It has already become the road to the future. It has not yet pulled the economies of the world under its control. But it is rapidly doing this and it will not be stopped. It is destined to connect every commercial enterprise from San Francisco to Vladivostok, from the smallest trading post in Tierra Del Fuego to the souks of Istanbul and all points in between. It has existed so far for less than a decade and yet it is already clear that it is destined to become the primary trading route for the whole population of the planet, usurping the current trading mechanisms or at least altering them beyond recognition.

** Extracted from 'The Electronic B@zaar: From the Silk Road to the e-Road' by Robin Bloor published by Nicholas Brealey Publishing, £19.99.