We live in an age where technology is ever more embedded in our lives, to the extent that we can now earn a salary, have it deposited directly in the bank, and draw on it to buy products without ever actually dealing with hard currency. From the start of the chain to the end, it’s all digital. All 1s and 0s.

This is really a phenomenal shift. Depending how far back you choose to go, we’ve been ascribing value to items for barter or trade as a form of currency for some 11,000 years (oldest indications reach as far back as 9000BC). And through most of all this time value has been attached to physical objects to drive commerce.

But not anymore. It’s a tether we no longer need, and in more ways than one.

Even before the concept of intellectual property helped us codify value for things like inventions, trademarks, designs, and literary or artistic works, we recognised and learned to assign value to less tangible things: our stories, thoughts and ideas.

We’re quite used to the concept that not everything that has value has to be tangible, and while in business this frequently comes under intellectual property, it doesn’t cover everything that contributes to a firm’s assets or revenue generating capability. These ‘intangibles’ can include software code, data, trade secrets, branding, domain names, and even the skills and knowledge of the workforce.

Typically, for accounting purposes, these are often grouped under ‘good will’, but this vastly downplays their value. For example, you need only look to the smartphone in your pocket: two of the top most valuable listed companies in the world today are Alphabet (Google’s parent) and Facebook, both of which built their fortunes from and with data.

Indeed, data is perhaps the exemplary example of an intangible asset that almost every company has — as even the smallest business will have customer records in order to conduct business.

A 2015 TechCrunch piece by Tom Goodwin became hugely popular for observing that “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

Semantics aside, the point is salient: not every business asset has to be tangible. Entire business models can be created from and operate through intangibles. Any modern business today will already have a potentially large asset base in intangibles, and you could argue that unless a business can identify, value, and leverage them it will become increasingly harder to remain competitive in the future, especially on the global stage.

In 1973, three economists — Fischer Black, Myron Scholes and Robert Merton — developed a new options pricing model to value and price derivatives. Thanks to them, today we have a derivatives market that has grown to be worth between $US544 trillion and $US1.2 quadrillion (The Money Project, October 2017).

At the time of writing IP Australia is helping explore a Centre of Excellence aimed at creating IP and intangible asset-based valuation standards and methodologies bringing together key people from industry, academia and government to develop new financing products to stimulate economic growth.

One key driver for this is the potential for new growth opportunities, especially for innovation-led SMEs, which for Australia account for a large component of our economic activity, to unlock the value of their intangible assets and in turn access capital to finance and galvanise growth. This is even more important for those companies operating in digital domains with their asset base largely in intangibles.

To borrow from the adage — it’s true that all that glitters is not gold, but sometimes it can be more valuable too.