The concept of algorithm economy is based on the algorithms that lead to sophisticated application designs. Algorithms have utility in machine learning, artificial intelligence, and such other processes in which software advances beyond its original programming with the help of smart algorithm design. In this model, companies can buy, sell or trade individual algorithms or pieces of an application, which makes market more precise than the market for full applications. Therefore, it gives birth to decentralisation of services. Thus, algorithm economy connotes evolution of microservices and the functionality of algorithms.
The term ‘algorithm economy’ was conceived by Gartner, a company involved in keeping an eye on latest evolving trends in the realm of technology to refer to the next wave of innovation, which would enable developers to produce, distribute, and commercialise their code.
So, the concept relates to functional algorithms that could be integrated easily so that developers can create smarter apps, which are more efficient and cost-effective than the previous ones.