Tag Archives: blockchain

Bitcoin Price Will Triple Gold in 2018, Silver Achieves Parity With Gold

Bitcoin Price Will Triple Gold in 2018, Silver Achieves Parity With Gold

 

Banks are going to get into big trouble later this year which is going to expose a gigantic derivative bust, silver has a good future ahead and Bitcoin price would triple the price of an ounce of gold – which is expected to reach $4,800 – by March next year, according to the latest data sets from Clif High. Based on this estimate, one Bitcoin could be worth more than $13,000 by then, he says in the interview he recently had with Greg Hunter.

Banks’ troubles

Clif High, who has gradually become a known name for the projection from his Web bots, says his data shows that the derivative that some banks would soon experience would be regional troubles rather than a global bust. He says: “It would be a large failure, say, in a northern Italian bank then the derivative associated with that bank ripples over to Deutsche Bank and maybe they are able to contain it a little bit and so everybody breathes a sigh of relief. Then it breaks out in Texas and a bunch of regional banks in Texas shuts down and there is pressure on some fracking whales and they get it contained with a little bit of credit infusion from somewhere else. Then it spreads to California and up to Asia and the next thing you know it is back in Europe. So we’ll be fighting this basically derivative disease as it pops up here and there. That’s going to be the modus operandi for the banks for the rest of this year.”

“He hints that a lot of people are going to get caught up in the situation when some of these banks go down because they won’t have access to their cash. Also, some of these banks are not likely to recover from the “nasty situation.”

Silver’s going to the moon

He didn’t say if there would be a correlation between the failure of banks and the projected rise in the price of silver. However, he notes that for a number of years, silver is going to be an increasingly key component of the increasing complex hyper-technologies. This will be as a result of the escalation in the actual growth rate of emotional attachment to silver between this year – when the metal is expected to break out and create a shift in its price manipulation – and 2022.

They will try to suppress it to contain it in the first instance, he adds, but they won’t be able to contain the next breakout coming towards the end of the year (October) because of what would be coming out as relative to technology by the time.

“The situation will encourage rampant hoarding in silver in 2018 and 2019 in many western countries and its price will escalate rapidly towards achieving parity with gold and become too expensive to be used as money. For gold, he says the next number according to his data sets is $4800 per ounce with a projected timeline of March 2018.”

Bitcoin won’t explode until 2019

If what Clif High, who is considered quite accurate with his predictions about Bitcoin, says about the digital currency is anything to go by, then we should see a $13,000+ Bitcoin by March 2018. Speaking of the price of gold in the interview with Hunter, High says an ounce of gold would reach $4800 net by March to drop down by about $300. He adds:

The data shows that when it’s dropped to that point, just curiously, it happens to match for a brief period of time exactly one-third of the price of Bitcoin when gold does that deepen and it’s back up again.”

That gives us about a price range of between $13,000 and $14,000. “Bitcoin is simply escalating. It doesn’t explode until 2019,” he adds with a submission that at some point, there will be one Bitcoin available for every thousand ounces of gold.

 Bitcoin Price Breaks $1228 All-Time High Again With ETF Nearing

  Bitcoin Price Breaks $1228 All-Time High Again With ETF Nearing

Bitcoin price surpassed $1,228 earlier today on major Bitcoin exchanges including Bitfinex, Bitstamp, Kraken and bitFlyer due to the industry’s optimism towards the Winklevoss twin’s Bitcoin ETF approval on March 11.

Digital currency exchanges in Asian markets including Japan and South Korea, which control over 52 percent of the global Bitcoin exchange market, have been facilitating Bitcoin trades in the range of $1,260 to $1,270, with a $50 premium in contrast to the global market. Traders on bitFlyer in particular, the world’s largest Bitcoin exchange that processes 60 percent of trades of the Japanese Bitcoin exchange market amounting to 94,520 Bitcoins per day, is still trading Bitcoin at $1,262, a value nearly $39 higher than Bitfinex and Bitstamp.

 

Speculation on Bitcoin ETF Approval

The strong performance of Bitcoin price is a result of the speculation of the Bitcoin industry towards the approval of the Winklevoss twin’s Bitcoin ETF COIN, which is awaiting its final decision by the Securities Exchange Commission (SEC) to be made public on March 11. Prior to the release of a memorandum on Feb. 22 by SEC Attorney and Adviser Neel Maitra, many analysts including Needham & Co Vice President of Equity Research Spencer Bogart noted the low probability of the COIN ETF being approved by the SEC.

The reason behind the prediction of Bogart was that if a Bitcoin ETF is approved by the SEC and it does well in the public market, SEC officials or whoever that made the final decision to make the ETF public will not receive any form of incentive out of the deal. However, if the ETF fails and controversy emerges as a result, SEC officials will be responsible for their actions.

“We have pegged the odds at less than 25 percent. That is because the very first thing the SEC lists in its own mission statement is protecting the investing public. When you think about the game theory aspect of this, if I work at the SEC and I approve this ETF. and it goes well, nobody is probably going to come around and pat me on the back and give me a promotion. But if I approve it and a lot of money flows into it, and something goes wrong, I am likely to lose my job,” said Bogart.

In other words, Bogart explained that it is a go-to decision for SEC officials to turn down any risky funds like the COIN ETF as they don’t benefit from the strong performance of the ETF but are still wholly responsible for the outcome of the ETF. Speculations began to change in favor of the Winklevoss twins and the Bitcoin industry when the Feb. 14 SEC-Winklevoss twins roundtable discussion memorandum was released. In the memo, the SEC revealed that its Division of Trading and Markets, Division of Corporate Finance, State Street representatives, KCG Holdings, Susquehanna International, ConvergEx and BATs participated in the meeting to discuss the future of the ETF and its performance when approved.

The SEC brought in outside advisors in KCG Holdings and Susquehanna International to offer unbiased insights into how the Winklevoss twin’s Bitcoin ETF could perform in the near future. Based on the current Bitcoin price trend, it could go both ways. The Bitcoin ETF approval process on March 11 could either allow Bitcoin to achieve new highs again or lead to a short-term decline.

Bitcoin Price Pushed by OKCoin Getting Ready for Relaunch, China Money Supply Increase

 

OKCoin, one of the two Chinese Bitcoin exchanges, is demonstrating progress in sorting out user fund withdrawals. On Feb. 9, it was requested by the People’s Bank of China (PBoC) to halt Bitcoin and Litecoin withdrawals. On March 1, OKCoin told their users that the exchange is approving the transfer of user funds stored on the global OKCoin trading platform to their Chinese site because the companys .CN platform is nearly ready for approval by the PBoC and relaunch.

Earlier in January, the PBoC asked OKCoin and Huobi, two of the largest Bitcoin exchanges in China, to suspend trading until their Know Your Customer (KYC) and Anti-Money Laundering (AML) systems are overhauled. The abrupt termination of OKCoin Bitcoin withdrawals stemmed from the PBoC’s initial warning sent out to Huobi and OKCoin on Jan. 18.

At the time, OKCoin operators announced a time frame of one month for the completion of their KYC and AML system update, which meant that users would not be able to withdraw their funds in Bitcoin or Litecoin for 31 days. However, OKCoin emphasized that the one month period could be either shortened or delayed depending on the development of their new industry-compliant AML and KYC systems. Since an AML and KYC update essentially led to the renovation of the entire platform, OKCoin and Huobi weren’t capable of providing a fixed date of withdrawal approval.

OKCoin seeing progress

On March 1, OKCoin representatives told their users on WeChat, a popular Chinese messaging platform with over 700 mln users, that the exchange is approving the transfer of Bitcoin and Litecoin from their .com to .cn site. Basically, OKCoin is approving users transferring their user funds stored on the global OKCoin trading platform to their Chinese site because of the companys .CN platform is nearly ready for approval by the PBoC and relaunch.

An OKCoin representative stated:

“Transferring Bitcoin from our domestic site to international site is not supported. But, transferring Bitcoin from international to domestic site is allowed.”

At the time of writing, it is difficult to conclude whether this means that OKCoin users will soon be able to withdraw their funds in Bitcoin and Litecoin. It is likely that these updates are being released within the Chinese community as the one-month deadline is approaching. According to their original roadmap, users should be able to withdraw funds on both Huobi and OKCoin in less than eight days.

Increasing demand

Optimistic announcements from OKCoin and Huobi have coincided with the Chinese government’s decision to initiate quantitative easing or printing cash to inject into their economy. Financial analysts including Reuters have reported that the PBoC is eying a 12 percent increase in money supply in 2017, which means that the government intends to increase its money supply by trillions of yuan throughout this year.

"It's not necessary to maintain last year's high money supply growth. A money supply rise of 11 percent should be enough for supporting growth, but we probably need to have some extra space, considering risks in the process of deleveraging,” a government insider told Reuters. The demand for Bitcoin will most likely rise if the Chinese yuan continues to devalue as a result of inflation. If the Chinese government opts to match its 12 percent cash injection plan as reported by Reuters and local financial companies, the value of yuan is expected to decrease and the demand for safe haven assets or decentralized currencies like gold and Bitcoin will most likely increase.

China also recently lowered its projected economic growth, decreasing its forecasted growth rate from 7 to 6.5 percent.

Chuck Reynolds
Contributor

Markethive

Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?

Blockchain:
A Better Way to Track Pork Chops, Bonds,
Bad Peanut Butter?

 

Cargo containers are loaded on a Maersk ship at the Port of Mombasa in Kenya. IBM has heated competition in the race to monitor transactions. Credit Andrew Renneisen for The New York Times. rank Yiannas has spent years looking in vain for a better way to track lettuce, steaks and snack cakes from farm and factory to the shelves of Walmart, where he is the vice president for food safety. When the company dealt with salmonella outbreaks, it often took weeks to trace where the bad ingredients came from.

Then, last year, IBM executives flew to Walmart’s headquarters in Arkansas to propose a solution: the blockchain. As Mr. Yiannas studied their pitch, he said, “I became increasingly convinced that maybe we were onto the holy grail.” The blockchain — the buzzy, bewildering technology behind cryptocurrencies like Bitcoin — is starting to be applied to real-world problems like tracking pork chops, shipping containers and footwear with a speed and security not currently possible. The IBM-Walmart partnership is one of the biggest practical tests to date.

At its heart, blockchain simply refers to a bookkeeping method that “chains” together entries so that they are very difficult to modify later. It provides a way for large groups of unrelated companies to jointly keep a secure and reliable record of their transactions.IBM is trying to position itself at the forefront of the heated competition for practical uses of this arcane idea. Walmart is just one of 400 IBM clients testing it out, and IBM now has around 650 employees dedicated to the technology.

The most immediate business opportunities are in the financial world as a tool to track and trade stocks, bonds, and other assets. But in the next week, Maersk, the global shipping giant, is expected to announce it is using IBM’s version of the blockchain to track the avocados, flowers and machine parts it carries on its enormous cargo ships. Last month, the government of Dubai said it was working with IBM to trace the goods flowing through its ports.

Yet success is far from assured.

Rival Microsoft said this past week that it was working with JPMorgan Chase and several other corporate giants on a system that competes against IBM’s, based on the virtual currency network known as Ethereum. Many banks are concerned that IBM could push them into a version of the blockchain that would lock them into IBM’s software. “We believe with 100 percent certainty that it’s going to matter,” Mark Russinovich, the head of Microsoft’s blockchain efforts, said of the technology. “It’s a question of where’s its going to matter and how it’s going to matter.”

Trust in Transactions

It was Bitcoin that first caught the attention of IBM researchers, and everyone else. Bitcoin, born in 2009, represented a novel idea in the financial world. Unlike, say, dollars or yen, Bitcoins are virtual tokens, unaffiliated with any nation. Anyone can open a wallet and receive Bitcoins — without providing any identifying information — and transactions are recorded on a universal ledger that is visible to everyone.

Drug dealers have embraced its relative anonymity. And people who live in countries that strictly control their financial systems, like China and Venezuela, have used Bitcoin to store their money beyond the watchful eye of the government. Containers are loaded onto a Maersk ship at the Port of Mombasa. A single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities. Credit Andrew Renneisen for The New York Times

But while the public focused on stories like these, geeks became fascinated with Bitcoin’s underlying structure and the communal way in which it was updated. That database was referred to as the blockchain because all the transactions were sorted into “blocks,” and each block was chained, using sophisticated math, to the ones before it, all the way back to the very first transaction — a structure that makes it tough for anyone to change the records after the fact.

In 2014, a handful of IBM employees began building their own version of Bitcoin, known as Blue Coin, which could be used to track financial transactions, totally independent of Bitcoin. But it was a small, exploratory project with no real support inside IBM. “I was prepared to tell them to shut it down, that cybercurrency is not our role to play,” said Arvind Krishna, director of research at IBM. But a team kept working on the technology, changing the name to Bluechain and then to Openchain. And Mr. Krishna eventually invited his team to a meeting at IBM’s central lab in Yorktown Heights, N.Y., for one last chance to defend the technology.

They explained that this was about more than just a currency — it was a new way of tracking shipments and transactions in supply chains of all kinds, from food to prescription drugs to diamonds. Because all the participants would be keeping their own live version of all the data, without a central authority, they could immediately see everything that was going on and trust that no one else had tampered with it. “That was the ‘aha’ for me,” Mr. Krishna said. “This was not really about digital payments, but establishing trust in transactions in general.” He called it “a technology that can change the world.”

There are still many in the industry who are skeptical of the long-term significance of the blockchain concept. Doubters have said that it is, at best, a slightly more reliable way to track data, and at worst, a much less efficient method of keeping data than current ones that rely on central gatekeepers. But blockchain champions like to compare it to the significance of the internet, which provided a universal computing language for communicating seamlessly among networks. The blockchain, they say, could provide that universal language for valuable data and information.

A few months after Mr. Krishna’s aha moment, his team presented the idea at an annual gathering where IBM’s top executives consider new technologies that could be major opportunities — or threats — to IBM’s business. Blockchain was the first subject of discussion, and the first that Virginia Rometty, IBM’s chief executive, gave the green light to.

She turned to Mr. Krishna, the research chief, and said, “You run with this,” he recalled. She asked for a working version within two months. Her hurry-up response was a reflection, in part, of IBM’s eagerness to find new businesses to make up for the erosion of its traditional hardware, software and services offerings. The company has made progress with new products like data-analysis software and its Watson artificial intelligence software.

Blockchain is being used to track and monitor all kinds of shipments and transactions, including Walmart pork shipments in China. Credit Walmart But growth in new businesses has not yet offset declines in traditional businesses. In January, IBM reported its 19th consecutive quarterly drop in revenue, though some of that sales retreat was because of profit-draining operations the company sold off, like semiconductor manufacturing and industry-standard server computers.

IBM has already suffered from being late to one of the biggest trends in technology today, cloud computing, where it moved slowly at first and watched the early market leadership go to Amazon and Microsoft. Today, Mr. Krishna said, “The first-mover advantage is even more important than it used to be.”

After getting Ms. Rometty’s push on the blockchain, the IBM team’s first move was to make its software “open source,” meaning that it would be free and available for anyone to review and tinker with. IBM’s bet was that this would establish its technology as a de facto standard, and that it could make money by selling software and services that would sit on top of the technology.It was the chairman of IBM Europe, Erich Clementi, who personally pitched the concept to the top technology executive at Maersk. Like Walmart, Maersk had already been looking for years for a better way to trace the goods it ships around the globe.

For Maersk, the problem was not tracking the familiar rectangular shipping containers that sail the world aboard its cargo ships — instead, it was the mountains of paperwork that go with each container. Maersk had found that a single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities.

While the containers themselves can be loaded on a ship in a matter of minutes, a container can be held up in port for days because a piece of paper goes missing, while the goods inside spoil. The cost of moving and keeping track of all this paperwork often equals the cost of physically moving the container around the world. What’s more, the system is rife with fraud. The valuable bill of lading is often tampered with or copied to let criminals siphon off goods or circulate counterfeit products, leading to billions of dollars in maritime fraud each year.

Maersk and IBM began working on a version of its software that would be open to everyone involved with every container. When customs authorities signed off on a document, they could immediately upload a copy of it, with a digital signature, so that everyone else involved — including Maersk and government authorities — could see that it was complete. If there were disputes later, everyone could go back to the record and be confident that no one had altered it in the meantime. The cryptography involved would make it hard for the virtual signatures to be forged.

The first test of the system happened last summer and tracked all of the paperwork related to a container of flowers moving from the Port of Mombasa in Kenya to Rotterdam in the Netherlands. It went well enough that Maersk and IBM followed up by tracking containers with pineapples from Colombia, and mandarin oranges from California.

The difficulty of making this work in the real world is that everyone at every step along the way needs to be involved, otherwise it’s unlikely to induce any more confidence than the old system. “You need to have something in it for all stakeholders, in order to get the whole chain going,” said Jakob Stausholm, the chief financial and technology officer at Maersk, who is leading the project. “That’s the difficult part.”

Maersk stores shelves and shelves of paper records dating back to 2014 in a storage room at its office in Mombasa. Credit Andrew Renneisen for The New York Times. IBM and Maersk have recently been seeking cooperation from customs authorities, freight forwarders and the producers that fill the containers. Just last month, Maersk and IBM began running their first trials with these partners involved, on shipping routes between Rotterdam and Newark.

A Question of Control

Not everyone has been so willing to buy into the IBM approach. Many technologists who got excited about Bitcoin have said that the newer, corporate-designed blockchains — like the one being built by IBM — are missing one of the main elements of Bitcoin’s success, namely the extremely decentralized structure. Anyone in the world can join Bitcoin and, in effect, study its ledgers. But only a limited set of participants can gain access to ones like IBM’s.

That could make them more vulnerable to attack from, say, a hacker who targets a few of the participants. Even though the IBM technology for tracking shipments is more decentralized than previous methods, “it still concentrates power in a handful of entities,” said Emin Gun Sirer, a professor at Cornell who studies distributed systems.

The companies working with IBM have been less worried about these security issues. Almost all of them demanded that the system not be open like Bitcoin. While they are giving up some security benefits, the private blockchains can move faster than Bitcoin, which has been plagued by delays. IBM has faced questions from companies worried that the tech giant has too much control over the system it is building and could make them dependent on IBM software for years to come.

IBM tried to fend off this line of attack when it made it's software open source in 2015. The foundation that is now in charge of the computer code, the Hyperledger Foundation, has attracted many other companies that are now working on the project alongside IBM. Just in the past week, the Bank of England, Kaiser Permanente and nine other new members joined. But the director of the Hyperledger Foundation, Brian Behlendorf, acknowledged that IBM is still the single largest contributor to the project. As a result, it has been an uphill battle to convince others that it is not simply an IBM project.

“They have such a head start that it can leave the impression that Hyperledger is an IBM product,” Mr. Behlendorf said. “We are trying to tell a story about the other companies building on top of Hyperledger. That is emerging. It will take some time.” Microsoft has fended off this sort of problem by focusing most of its efforts on a blockchain that it had nothing to do with building, the blockchain behind the virtual currency known as Ethereum. This has already helped Microsoft move in on some clients that IBM is also pursuing. Bank of America, for instance, is building a system with Microsoft that will track the flows of money around trade deals.

But IBM has taken an early lead. Its list of collaborators includes the likes of the London Stock Exchange and the Bank of Tokyo and lots of companies outside the financial world like Maersk and Walmart. “This is the most well-thought-out project in the space,” said Mr. Sirer, the Cornell professor. Now all IBM has to do is get the systems out into the real world and show that they work.

At Maersk, Mr. Stausholm said it could take five or even 10 years for that to happen, given all the partners — manufacturers, customs officials, and farmers — that need to come together. “I really do believe in it,” he said, “but I don’t know how fast it will be able to take off.” At Walmart, Mr. Yiannas is more optimistic. His company has already completed two pilots with IBM — moving pork from Chinese farms to Chinese stores, and produce from Latin America to the United States — and he is confident a finished version can be put together within a few years. “I think this is our one best hope for getting it right,” he said.

Chuck Reynolds
Contributor

Markethive

IBM And Maersk Apply Blockchain To Container Shipping

IBM And Maersk Apply Blockchain To Container Shipping

IBM and Maersk are using a blockchain built on the Hyperledger Fabric to manage the supply chain for container shipping.Maersk, the Danish shipping company which is the largest container carrier in the world with 18 % to 20% of the market, did a proof of concept (POC) with IBM in September, tracking a container of flowers from Mombasa, on the coast of Kenya, to Rotterdam in the Netherlands.

Ramesh Gopinath, IBM’s vice president of blockchain research, said all the documents for shipping containers can be fully digitized and the containers can be tracked. In the September POC, the shipping cost $2,000 and the paperwork could be about $300, or 15 percent of the cargo’s value.Traditionally, a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different interactions and communications among them, said the IBM announcement.

Using digital records and a blockchain can sharply reduce costs, although the actual savings won’t be known for a year or two until the blockchain is more widely used. “Global trade $20 trillion, a big chunk of global GDP, and container shipping is a huge part of it,’ said Gopinath. “Fifty percent travels on containers. When I walk into any store to buy something, it likely came on a ship.” That includes not only the obvious — toys from China — but the ingredients for a dessert like a tiramisu with imported chocolate, spices, and flavors, he added.

Both shipping and the financial process supporting it — trade finance — rely on piles of paper. “The entire process is extremely inefficient,” said Gopinath of the container shipping business. IBM started working with Maersk in December 2015 to see how the paper records could be digitized. It completed a pilot in last month. The pilot started with an empty container at Schneider Electric in Lyons, France. It was filled with goods from the plant there and trucked to Rotterdam, loaded onto a Maersk Line ship and transported to the Port of Newark and then to a Schneider Electric facility in the U.S.

The complexity of international shipping is clear from the number of agencies which participated in this pilot. They included Customs Administration of the Netherlands working under an EU research project, the U.S. Department of Homeland Security Science and Technology Directorate, and U.S. Customs and Border Protection. Damco, Maersk’s supply chain solutions company, supported origin management activities of the shipment while utilizing the solution.

The number of agencies and companies involved in the movement of the single container points to one of the issues that digitalization of trade will face said Gopinath, not all countries are ready. “Computerization varies by country. The reason we picked [Rotterdam and Newark] with  guidance from Maersk is that they chose the trade lanes and brought in customs to make all this happen.” He sees the benefits reaching all the way through the supply chain, including to the retail warehouses, which will know when a shipment is coming so they can staff to receive it, and even to individual stores.

A permission led blockchain is immutably, highly secure and trusted shared network which provides each participant end-to-end visibility based on their level of permission. IBM’s announcement said that the costs associated with trade documentation processing and administration are estimated to be equal to the actual physical transportation costs, It also offers a big benefit for ports because they get information of when the ship arrives and what is on it so they can plan how to handle the containers more efficiently.

The supply chain blockchain IBM is using with Maersk is a world away from anonymous bitcoin transactions. This is a closed group, a permission led blockchain where all the participants are known and have permission to participate. “It’s early days for blockchain,” said Gopinath. “I think we at IBM have done more with blockchain than anyone on the planet. The solution developed by Maersk and IBM is based on the Linux Foundation's open source Hyperledger Fabric.

IBM’s announcement said that the solution is designed to help reduce or eliminate fraud and errors, minimize the time products spend in the transit and shipping process, improve inventory management and ultimately reduce waste and cost.

Ibrahim Gokcen, chief digital officer at Maersk, said: “The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry. We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries.”

Blockchain, which has potential for letters of credit to accompany containers, is getting mixed reviews from banking organizations, according to Enrico Camerinelli, senior research analyst at Aité Group. He notes that R3, a financial technology consortium and SWIFT have said blockchain is unneeded or not ready for wholesale banking, although it was a hot topic at SWIFT's annual Sibos conference in Geneva last October.

Blockchain was a hot topic at Sibos in Geneva last October.However, notes Camerinelli, individual banks including China’s central bank, Mizuho Bank, and JPMorgan are testing blockchains in controlled circles — permission led blockchains.

“Banks are also engaged in blockchain proof of concepts to transact digitized documents, particularly letters of credit, bills of lading, and invoices,” he wrote in a recent report. “ING and Société Générale have run a paperless oil trade on a blockchain platform… Rabobank, Deutsche Bank, HSBC, KBC, Natixis, Société Générale, and UniCredit are developing a shared cross-border trade finance platform for small and midsize enterprises… Although blockchain technology is still in its infancy, problems are not insurmountable and should be the key focus area of bank consortia.”

Chuck Reynolds
Contributor

Markethive

Some Reasons to Introduce an Inbound Marketing Strategy

 

 

You’ve likely heard about inbound marketing quite a lot in recent years, but many marketers are still unclear about how this approach differs from more traditional, outbound marketing and why it’s so valuable. Today, we’re going to change that.

Inbound Marketing 101

Before we get into the value that an inbound marketing strategy can provide, let’s first review the basics to make sure we’re all on the same page. Everyone used to be a captive audience — we had no choice but to watch commercials on TV, phone calls from telemarketers were a near nightly occurrence and even our ability to filter mail was nothing special. Today, that’s no longer the case, as we have plenty of technology at our disposal that can help us tune out these traditional, outbound approaches (so named because these were messages pushed on us).

As a result, marketers have had to adapt, and that’s where inbound marketing was born. Attracting customers with “pull” tactics (e.g. interesting blog posts and educational webinars) rather than shouting at them with “push” tactics (e.g. advertisements and cold calls) is the cornerstone of inbound marketing. The idea is that by attracting people to your message, you can ultimately convert those prospect leads and customer leads.

How Inbound Marketing Adds Value

This type of inbound marketing strategy is extremely common among leading marketing organizations today, and with good reason, as it not only improves upon the traditional, outbound approach but can also add significant business value in new ways. While the benefits of an inbound marketing strategy are numerous, here are three of the top reasons to consider taking this approach:

  1. Strengthen Brand Awareness: It’s common to spend a lot of time online today, and most people are likely to peruse social feeds for topics of interest, sign up for relevant newsletters and/or conduct Google searches to find answers to their questions. If your inbound marketing efforts continue to pop up across these activities (and it is very likely to make that happen, no matter the size of your business), you can significantly strengthen brand awareness among your target audience. Even if this brand awareness doesn’t result in any immediate conversions, it is likely to pay off long term, as familiarity can go a long way toward building credibility.
  2. Improve Your Position as a Thought Leader: People want to learn from and, even more so, partner with and buy from brands that they trust, and building that trust requires proving your expertise. Engaging in common inbound marketing activities like blogging, hosting webinars and connecting on social media can help bolster your status as a thought leader in your space. And once you’ve established yourself as a thought leader, you’ve also established a lot of credibilities (not to mention awareness as described above) as well.
  3. Increase Lead and Opportunity Generation: Last but not least, inbound marketing can significantly increase lead and opportunity generation. The stats say it all here — Social Media B2B reports that companies who blog generate 67% more leads per month. Meanwhile, other data finds that companies who use marketing automation to nurture prospects realize a 451% increase in qualified leads. In general, inbound marketing activities should create relevant content for your target audience to consume, and that model should help you foster relationships that will ultimately help you convert that audience. Combine these activities with clear calls to action designed to push people through your funnel, and you’ll be well on your way toward identifying more (and higher quality) leads and opportunities.

You Can’t Ignore the Power of Inbound Marketing

At the end of the day, inbound marketing creates new, powerful opportunities to build stronger relationships with your target audience and ultimately turn those relationships into sales. The results might not always be immediate, but the effort will most certainly pay off.

Chuck Reynolds
Contributor

Markethive

Bitcoin value overtakes price of gold as cryptocurrency hits all-time high

Bitcoin value overtakes price of gold as cryptocurrency hits all-time high

   The price of Bitcoin has hit the roof, but experts warn against getting too excited..

The cost of a single Bitcoin has overtaken the value of an ounce of gold for the first time after its price skyrocketed this week to an all-time high. At the time of writing (Friday 3 March) the exchange price for one of Bitcoin hit a high of $1,290.49 (£1,054.83, €1,221.75), according to the Coindesk price index. In comparison, one troy ounce of gold was priced at $1227.07, as reported by Bloomberg Market statistics.

Bitcoin has had a volatile 12 months. In early January, the digital currency lost more than $3bn in overall value in less than an hour following fluctuations in the trading on Chinese Bitcoin exchanges. Since then, however, its value has continued to rise and rise. As usual in the area of online-based finance, the reasons for the pricing changes is multi-faceted. Gold has had a somewhat troubled trading week, falling more than 2% in the past week. Meanwhile, the price of a single Bitcoin has spiked by more than 7%, CNBC reported.

Commentators point to rising speculation that US Securities and Exchange Commission (SEC) is discussing the approval of the first bitcoin-based ETF (exchange traded fund). Bloomberg reported that officials from the regulatory body met with Tyler and Cameron Winklevoss, best known for taking legal action against Mark Zuckerberg over the founding of social media platform Facebook, in mid-February. A decision on this is reportedly due .by 11 March.

Yet experts are quick to denounce the Bitcoin price jump as anything revelatory. "Ultimately there is no significance behind bitcoin being priced higher than an ounce of gold – all it does is make good headlines," Charles Hayter, founder of CryptoCompare told IBTimes UK via email.

"Bitcoin has been linked to gold as a store of value and a flight to safety – the truth is that bitcoin is its own asset class in its own right and does fare well in times of uncertainty," he continued. "It is also subject to its own internal forces too such as its governance or lack of to be more accurate. "So it can correlate to gold in certain periods as a form of digital gold but does have periods where its fundamentals mean it has low correlations to gold."

Referencing the Winklevoss ETF, Hayter said his speculation had affected the cost. He said there are also a couple of other exchange traded funds in the application stage that would offer "ordinary investors broader access to bitcoin investing". He noted: "It's a question of buying the rumor – but if approved this would certainly give a dramatic condoning of Bitcoin by the authorities and powers that be, which would open the door to a wealth of new investors into the asset class."

"Perhaps key would be the institutional money which would eventually flow into bitcoin. This would bring a certain amount of stability in the long run." Chinese mining giant BTCC boss Bobby Lee has some insight into what is happening with transaction fees and regulations in the region. He made a bullish claim that Bitcoin will be valued between $5000 and $11,00 by 2020 after the block reward halving.

Chuck Reynolds
Contributor

Markethive

Deletable blockchain might make cryptocurrency more user-friendly

Deletable blockchain might make cryptocurrency more user-friendly

 

Thanks to the amount of technical savviness, one needs to possess to use them, many cryptocurrencies are rather inaccessible for average users. PascalCoin – a new cryptocurrency – is ready to change this with delectable blockchains. The project has made considerable headway since releasing its first beta version in July last year. According to The Merkle, there is a lot of trading activity and buzz around the new altcoin but as of yet, there are no merchants or platforms accepting it as a payment option.

PascalCoin is therefore not going to oust bitcoin anytime soon, but it does employ interesting new strategies to create a cryptocurrency. Instead of relying on transaction history in blockchains, like most other cryptocurrencies, PascalCoin uses ‘safebox with a safe box hash’. The safebox feature makes it unnecessary for the end user to download a blockchain of historical operations, making PascalCoin the first cryptocurrency to do that. The balance is included in each block of the blockchain so the chain can be deleted without affecting the ability to make transactions.

By saving the balance of the account on each block, the new altcoin hopes to simplify cryptocurrencies and become more appealing to the general public. Instead of long hacker-esque series of random numbers and letters, PascalCoin features up to 10-digit account numbers that include the balance and make the experience more similar to regular bank accounts. The safe box is also meant to avoid the issues that have been detected with bitcoin. One of those issues being double spending, when people attempt to do two transactions with the same funds, which is a known problem with bitcoins.

 

When discussing cryptocurrency, the issue of traceability often arises. Many worry that cryptocurrency can aid criminals in their illegal dealing, although that might be changing. Pascal Coin will not be any more untraceable than bitcoin, even though it allows you to delete the blockchain. Deleting the blockchain can make the transaction history more obscure but anybody that possesses the full block chain will be able to see it.

It’s way too early to tell whether PascalCoin’s take on cryptocurrency will change anything about the future of cryptocurrency. However, new additions to the world of digital currencies are always interesting, especially if they bring it closer the public.

Chuck Reynolds
Contributor

Markethive

Winklevoss Twins Await Imminent SEC Decision on Bitcoin ETF

Winklevoss Twins Await Imminent SEC Decision on Bitcoin ETF

They’re one of three groups vying to gain regulatory approval. A bitcoin ETF could attract $300 million in assets in a week OC Set to Issue Digital Currency. Tyler and Cameron Winklevoss will know within days whether they’ve won approval to begin offering their bitcoin-based exchange traded fund, with the digital currency’s record rally hanging in the balance.

Officials from the U.S. Securities and Exchange Commission met with the twins on Feb. 14 to discuss their proposal for an ETF based on the digital currency, according to a short notice of the meeting published on Feb. 22. A decision is due by March 11. The 35-year-old twins want to trade the security on the Bats BZX Exchange Inc.

 

An approved ETF would make bitcoin investing simple for small traders and institutions, while potentially boosting the digital currency just as it’s hitting new highs almost daily. Some $300 million could pour into a bitcoin ETF in its first week, Spencer Bogart, head of research at venture-capital investor Blockchain Capital, said in an interview. “I’d be very surprised if it did anything but a double from whatever levels it is at beforehand,”

Bitcoin rose as high as $1,255.53 on Thursday, an intraday record, passing the price of an ounce of gold. It has gained 28 percent this year, as investors worried about global uncertainties and speculated on a more relaxed regulatory environment for the currency under President Trump. Hopes for the ETF have been a factor as well. The Winklevoss Bitcoin Trust is one of three such vehicles seeking regulatory approval — and the advantages that come with being first. The others are Bitcoin Investment Trust, a creation of Barry Silbert, who had previously built a market for selling shares in private companies, and SolidX Bitcoin Trust.

Digital Asset Services, the sponsor of the Winklevoss ETF, declined to comment. Silbert and Ivan Brightly, chief operating officer of SolidX, also wouldn’t comment. The Winklevoss twins may be best known for accusing Facebook founder Mark Zuckerberg of stealing their idea for a social-media network, a case they ultimately settled.

Long-Term Edge?

SEC approval could give enormous power and riches to the winner for years to come. Just look at gold: SPDR Gold Shares ETF started in 2004, has more than four times higher the market value of iShares Gold Trust ETF, started in 2005.Trading bitcoin now is no easy thing. Investors have to open bitcoin wallet accounts, then purchase bitcoins via online exchanges. Or they can invest in Bitcoin Investment Trust, which trades over the counter, often at a hefty premium to the cryptocurrency. The last possibility is Ark, which operates an ETF with 5 percent exposure to blockchain — the database technology underlying bitcoin — and peer-to-peer computing.

With a publicly traded ETF, small investors could just call their brokers or buy shares online. Approval is by no means certain. On BitMEX, a contract betting on approval of the Winklevoss Bitcoin Trust spiked to an all-time high of 70 percent on Feb. 28, before crashing to 53 percent on March 1. Neena Mishra, director of ETF Research at Zacks Investment Research, pegs the chances at 40 percent.

Regulatory Question

The biggest unknown is whether the regulators will conclude that bitcoin, a digital currency created on and managed by computers, lends itself to being a part of an ETF at all. Whether it’s secure enough, for example. Exchange Mt. Gox had many of its bitcoins stolen several years ago. Last summer, a project running on a blockchain technology similar to bitcoin’s got hacked and lost millions of dollars of investors’ funds. Bitcoin has similarities to currencies, as well as commodities like gold — since there’s a limited number, it could be considered a scarce resource. What ultimately matters is how the SEC sees it.

“Bitcoin is not a stock, it’s not a bond, it’s not a hard asset like precious metal, it’s not a commodity future,” Ben Johnson, director of global ETF and passive strategies research at Morningstar Inc., said in an interview. “It’s a technology that’s very much in its infancy, and it’s not something that in my mind lends itself to being packaged as an ETF.” A SEC rejection of the Winklevoss proposal could help one of the other bitcoin ETFs seeking regulatory approval to get the nod this year by making the agency’s concerns public and allowing them to adjust their proposals accordingly.

Bitcoin Investment Trust, which filed in January to list on the NYSE Arca, already trades over the counter. Bank of New York Mellon is the trust’s transfer agent. And SolidX has a big differentiator: It promises to ensure its bitcoins from loss — something that could boost its chances of approval, Zacks’ Mishra said.

The Winklevoss’s ETF, which first filed with the SEC in July of 2013, has amended its S-1 filing multiple times over the years to address regulators’ concerns. It’s represented by attorney Kathleen Moriarty, who is known for helping bring ground-breaking new ETFs to market. The twins have also secured State Street Bank & Trust Co. as the administrator of the trust. They already operate the Gemini cryptocurrency exchange, catering to institutional and retail investors.

“All that adds up,” Eric Balchunas, an ETF analyst at Bloomberg Intelligence, said in an interview. “If they are going approve one, it’s going to be Winklevoss first. And they kind of deserve it.”

Chuck Reynolds
Contributor

Markethive

Bitcoin’s “creator” races to patent technology with gambling tycoon

Bitcoin’s “creator” races to patent technology with gambling tycoon

The man who last year made global headlines by claiming to be Satoshi Nakamoto, the creator of bitcoin, is working with a fugitive online gambling entrepreneur to file scores of patents relating to the digital currency and its underlying technology, blockchain.Craig Wright, the Australian computer scientist who made the Satoshi claim, has the backing of Calvin Ayre, a wealthy Canadian entrepreneur, according to people close to Wright and documents reviewed by Reuters. Ayre has been indicted in the United States on charges of running online gambling operations that are illegal in many U.S. states – an accusation he rejects.

Wright’s expertise combined with Ayre’s support make a potentially formidable force in shaping the future of bitcoin and blockchain, the ledger technology that underlies digital currencies. Wright and his associates have lodged more than 70 patent applications in Britain and have plans to file many more, according to documents and emails reviewed by Reuters and sources with knowledge of Wright’s business. The patents range from the storage of medical documents to WiFi security and reflect Wright's deep knowledge of how bitcoin and blockchain work.

“The bitcoin blockchain can be scaled up to replace all existing payment system networks to become the world's single global economic infrastructure.”

Craig Wright, computer scientist

Their total compares with 63 blockchain-related patents filed globally last year and 27 so far this year by multinationals from credit card companies to chipmakers, according to Thomson Innovation. Neither Wright nor Ayre would comment for this story on their business relationship, details of which are revealed here for the first time, or their goals. But their interest in bitcoin and blockchain highlights two key trends.

First, an increasing number of entrepreneurs believe blockchain, which can circumvent the need for big financial intermediaries, will challenge traditional payment systems. Various banks are investing large sums of money exploring how blockchain could revolutionize payment systems and cut costs. Bitcoin involves sending payments directly, securely and potentially anonymously between two people's digital wallets, whereas all mainstream transactions, including those using intermediaries like Paypal and credit card lenders, run through banks and usually require named accounts and verification.

Second, blockchain has the potential to defy authorities trying to enforce borders and national regulations – and it already does so in areas such as online gambling. In internet chatrooms, some online gamblers say that using bitcoin enables them to disguise their identity and transactions. The confidentiality conveyed by the currency is one source of its popularity. Bitcoin hit a record high this week, partly because of speculation that the first bitcoin exchange-traded fund is set to receive U.S. regulatory approval. After a sharp rise this year, the cryptocurrency reached more than $1,200 per bitcoin.

Ayre said last year that he saw a “growing convergence” of bitcoin and online gambling, according to the website CalvinAyre.com. Documents reviewed by Reuters show Wright’s links to online gambling go back decades and that bitcoin grew out of code originally developed with gambling in mind. Early bitcoin code, seen by Reuters and analysed by a computer coding consultant with no ties to Wright or any blockchain-related project, contains unimplemented functions related to poker.

 

Vision for Bitcoin

Wright’s vision for bitcoin, though, goes much further than gambling, according to his research papers and interview transcripts. It remains unclear whether he is Satoshi Nakamoto or not, and even whether Satoshi is one person or a group of people. But some of the documents, including two folders of computer code for early versions of bitcoin, support Wright’s claims that he was closely involved in the development of the cryptocurrency before it became public in 2009.

Whatever Wright's original role, he has suggested bitcoin could have widespread applications. In a paper from November 2015, also reviewed by Reuters, he wrote: “The bitcoin blockchain can be scaled up to replace all existing payment system networks to become the world's single global economic infrastructure.” The paper is unpublished, but it gives an insight into the global scope of his plans for the technology. While it's far from clear the two will be successful in their patent applications, bitcoin and patent experts say Wright's project represents the single largest filing of bitcoin-related intellectual property they've seen. "It's certainly bullish," said Justin Hill, a patents expert with law firm Olswang. "With the ambition comes the risk."

THE ANTIGUA CONNECTION

Reuters has previously reported that Wright was filing patents through a company called EITC Holdings, which is based in Antigua. Ayre lives in Antigua, and EITC Holdings is headed by associates of Ayre, according to one source close to Wright and one with direct knowledge of his business, as well as corporate documents reviewed by Reuters. Australian Stefan Matthews, who began working for Ayre in 2011, was a director of EITC Holdings until at least late 2016. It isn't clear if he's still associated with the company. Canadian Robert MacGregor, another long-term Ayre associate, was a director of EITC Holdings until mid-April 2016. The documents do not disclose the shareholders of the company.

Matthews and MacGregor appear with Wright in a June 2015 photograph seen by Reuters. Neither man responded to requests for comment. Sources familiar with the company said they had gone to some lengths to avoid their roles in EITC being discovered.

“I see a growing convergence of Bitcoin, online gaming, virtual reality and gamification technologies.”

In September, Ayre posted on his Facebook page that Wright was his “crazy/smart friend.” Photos on Ayre's Facebook page show him and Wright boating and swimming together in what Ayre identifies as Indian Arm, a fjord near Vancouver, the previous month. A spokesman for Ayre, Ed Pownall, said Ayre was living in Antigua while trying to clear his name and was not doing “any interviews at the moment, on legal advice.” Pownall added that Ayre “wanted you to know the information about him is incorrect.” He declined to specify what information he was referring to.

The range of patent applications lodged by Wright and colleagues is wide. Five, registered on Dec. 14, were made by EITC Holdings with the bland description “computer-implemented method and system,” public filings show. One, registered on Dec. 28, was described as “Determining a common secret for two blockchain nodes for the secure exchange of information” – apparently a way to use the blockchain to exchange encrypted data. Other applications by Wright and his associates relate to sports betting and a blockchain-based operating system for simple electronic devices.

Emails from Wright to Ayre’s associate Matthews, reviewed by Reuters, set out plans to file 150 patents. A person with direct knowledge of Wright’s businesses said he and associates ultimately aim to file closer to 400. None has been approved so far and it’s not clear whether the patents would be enforceable if granted, but Wright’s associates have been quoted as saying the patents could be sold “for upwards of a billion dollars.”

They face stiff competition from other players who are spending significant sums to explore blockchain’s potential. About 70 banks (and Thomson Reuters) have joined a company called R3, which is examining whether blockchain could cut costs in the way financial markets execute transactions. A spokesperson for R3 did not respond to requests for comment.

PwC, a consultancy, said more than $1.5 billion was invested in blockchain companies in 2016. Whoever wins this intellectual property race, the rush to patent applications poses a threat to the original conception of bitcoin as a technology available to all. “What was started by Satoshi as an open source project is going to be far from an open project by the time all the commercial projects weigh in,” said Nigel Swycher, CEO of London-based Aistemos, an IP analytics company. “People will try to use patents as one of many ways to protect their interests.”

THE CODER

Details about Wright’s links to the online gambling industry have emerged from previously unpublished information from the Australian Tax Office (ATO), which is investigating Wright over his claims for tax credits relating to bitcoin ventures. In 2014 Wright told the ATO that he had been producing software for online casinos and other gambling businesses when he was writing computer code that later helped to develop bitcoin.

A 2015 video, reviewed by Reuters, shows Wright being interviewed by three ATO officials. Wright is clad in a waistcoat and tie, fielding questions about his complex businesses and claims for tax breaks. At one point he is quizzed about his work for Bodog, the online gambling network set up by Ayre. Wright clams up and says he cannot disclose any details because of “contractual obligations.”

The ATO declined to comment on Wright, saying that its investigation into him was continuing. A person close to Wright told Reuters that Wright began working for Bodog in 2010. Ayre had set up Bodog in the 1990s. It expanded into entertainment and proved so lucrative that Ayre featured in the 2006 “billionaires” issue of Forbes magazine.

Ayre chose to base his gambling business in Costa Rica. But much of its revenue came from players in the United States, where online gambling was and is illegal in many states. In February 2012, the U.S. Attorney’s Office in Maryland indicted Bodog, Ayre and four other people (Wright not among them) for allegedly conducting an illegal gambling business between 2005 and 2012. They were also indicted for moving funds from overseas to pay winnings to gamblers in the United States.

MOVE TO BRITAIN

Wright’s involvement with bitcoin was initially lucrative. He worked on computer code with an American cybersecurity consultant named David Kleiman, and by 2011 the pair had amassed 1.1 million bitcoins, worth more than $1 billion at today's prices. Their activities were described by Wright in his interviews with the ATO, of which Reuters has reviewed the transcripts. Kleiman died in 2013.

Wright lost money when an online currency exchange ran into difficulties, according to documents reviewed by Reuters. Wright left Australia and relocated his business ventures to Britain. In 2015, associates of Ayre began setting up companies which are now involved with Wright and bitcoin and blockchain. In September 2015, EITC Holdings, the Antiguan company that has filed scores of patents, was incorporated, originally under the name NCrypt Holdings.

That month, two companies – The Workshop Technologies and The Workshop Ventures – were incorporated in Britain with Ayre’s associate MacGregor as their sole director. According to the person with direct knowledge of the patent filings, Wright now works for The Workshop Technologies and MacGregor is his boss. The Workshop Technologies did not respond to requests for comment.

In May 2016, MacGregor presented Wright to the world as the creator of bitcoin through a coordinated media campaign with the BBC, the Economist and GQ magazine. However, when the cameras rolled, Wright failed to convince experts he really was Satoshi – and the bitcoin world dismissed him as a crank.

The publicity misfire led people with knowledge of Wright to speculate at the time that he would stop making bitcoin and blockchain patent applications. Wright did drop from public view. But he continued to produce papers, handwritten notes, and voice recordings about patent applications, many of which have been reviewed by Reuters, for colleagues at The Workshop Technologies to convert into patents, according to the person with direct knowledge of Wright’s businesses.

In September last year, a relaxed-looking Wright resumed making visits to the company’s premises in central London, according to the source, who saw him there several times.

In Antigua, meanwhile, Ayre began construction in October of a $25 million call centre, saying it was part of his vision for bitcoin and online gaming. Speech notes provided by Ayre’s spokesman, Pownall, show that Ayre said at a launch event: “I see a growing convergence of Bitcoin, online gaming, virtual reality and gamification technologies, and progressive countries like Antigua are poised to take advantage of this convergence by developing a truly global services industry.”

According to an overview document and presentation slides reviewed by Reuters, in 2015 Wright planned to propose to the Antigua government that the island adopt bitcoin as its official currency. It is unclear which government department Wright approached, or indeed whether he made the proposal as planned. Requests for comment from three ministries in the Antiguan government produced no response.

“Bitcoin is not just a currency,” Wright wrote in his proposal for Antigua to adopt bitcoin. “It's a new backbone and commercial foundation for the internet.”

Chuck Reynolds
Contributor

Markethive

How Blockchain Is Changing Finance

 How Blockchain Is Changing Finance

  

Global Financial System

Our global financial system moves trillions of dollars a day and serves billions of people. But the system is rife with problems, adding cost through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. To wit, 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively. It’s no small wonder that regulatory costs continue to climb and remain a top concern for bankers. This all adds cost, with consumers ultimately bearing the burden.

It begs the question: Why is our financial system so inefficient? First, because it’s antiquated, a kludge of industrial technologies and paper-based processes dressed up in a digital wrapper. Second, because it’s centralized, which makes it resistant to change and vulnerable to systems failures and attacks. Third, it’s exclusionary, denying billions of people access to basic financial tools. Bankers have largely dodged the sort of creative destruction that, while messy, is critical to economic vitality and progress. But the solution to this innovation logjam has emerged: blockchain.

How Blockchain Works
Here are the basic principles underlying the technology.

Distributed Database
Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.

Peer-to-Peer Transmission
Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.

Transparency with Pseudonymity
Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.

Irreversibility of Records
Once a transaction is enteredin the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.

Computational Logic
The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.

Blockchain was originally developed as the technology behind cryptocurrencies like Bitcoin. A vast, globally distributed ledger running on millions of devices, it is capable of recording anything of value. Money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer to peer, because trust is established not by powerful intermediaries like banks and governments, but by network consensus, cryptography, collaboration, and clever code. For the first time in human history, two or more parties, be they businesses or individuals who may not even know each other, can forge agreements, make transactions, and build value without relying on intermediaries (such as banks, rating agencies, and government bodies such as the U.S. Department of State) to verify their identities, establish trust, or perform the critical business logic — contracting, clearing, settling, and record-keeping tasks that are foundational to all forms of commerce.

Given the promise and peril of such a disruptive technology, many firms in the financial industry, from banks and insurers to audit and professional service firms, are investing in blockchain solutions. What is driving this deluge of money and interest? Most firms cite opportunities to reduce friction and costs.  After all, most financial intermediaries themselves rely on a dizzying, complex, and costly array of intermediaries to run their own operations. Santander, a European bank, put the potential savings at $20 billion a year. Capgemini, a consultancy, estimates that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications.

To be sure, blockchain may enable incumbents such as JPMorgan Chase, Citigroup, and Credit Suisse, all of which are currently investing in the technology, to do more with less, streamline their businesses, and reduce risk in the process. But while an opportunistic viewpoint is advantageous and often necessary, it is rarely sufficient. After all, how do you cut cost from a business or market whose structure has fundamentally changed? Here, blockchain is a real game changer. By reducing transaction costs among all participants in the economy, blockchain supports models of peer-to-peer mass collaboration that could make many of our existing organizational forms redundant.

For example, consider how new business ventures access growth capital. Traditionally, companies target angel investors in the early stages of a new business and later look to venture capitalists, eventually culminating in an initial public offering (IPO) on a stock exchange. This industry supports a number of intermediaries, such as investment bankers, exchange operators, auditors, lawyers, and crowd-funding platforms (such as Kickstarter and Indiegogo). Blockchain changes the equation by enabling companies of any size to raise money in a peer-to-peer way, through global distributed share offerings. This new funding mechanism is already transforming the blockchain industry. In 2016 blockchain companies raised $400 million from traditional venture investors and nearly $200 million through what we call initial coin offerings (ICO rather than IPO).

These ICOs aren’t just new cryptocurrencies masquerading as companies. They represent content and digital rights management platforms (such as SingularDTV), distributed venture funds (such as the DAO, for a decentralized autonomous organization), and even new platforms to make investing in ICOs and managing digital assets easy (such as ICONOMI). There is already a deep pipeline of ICOs this year, such as Cosmos, a unifying technology that will connect every blockchain in the world, which is why it’s been dubbed the “internet of blockchains.” Others are sure to follow suit. In 2017 we expect that blockchain startups will raise more funds through ICO than any other means — a historic inflection point.

Incumbents are taking notice. The New York–based venture capital firm Union Square Ventures (USV) broadened its investment strategy so that it could buy ICOs directly. Menlo Park venture capital firm Andreessen Horowitz joined USV in investing in Polychain Capital, a hedge fund that only buys tokens. Blockchain Capital, one of the industry’s largest investors, recently announced that it would be raising money for its new fund by issuing tokens by ICO, a first for the industry. And, of course, companies such as Goldman Sachs, NASDAQ, Inc., and Intercontinental Exchange, the American holding company that owns the New York Stock Exchange, which dominate the IPO and listing business, have been among the largest investors in blockchain ventures.

As with any radically new business model, ICOs have risks. There is little to no regulatory oversight. Due diligence and disclosures can be scant, and some companies that have issued ICOs have gone bust. Caveat emptor is the watchword, and many of the early backers are more punters than funders. But the genie has been unleashed from the bottle. Done right, ICOs can not only improve the efficiency of raising money, lowering the cost of capital for entrepreneurs and investors, but also democratize participation in global capital markets. If the world of venture capital can change radically in one year, what else can we transform? Blockchain could upend a number of complex intermediate functions in the industry: identity and reputation, moving value (payments and remittances), storing value (savings), lending and borrowing (credit), trading value (marketplaces like stock exchanges), insurance and risk management, and audit and tax functions.

Is this the end of banking as we know it? That depends on how incumbents react. The Blockchain is not an existential threat to those who embrace the new technology paradigm and disrupt from within. The question is, who in the financial services industry will lead the revolution? Throughout history, leaders of old paradigms have struggled to embrace the new. Why didn’t AT&T launch Skype, or Visa create Paypal? CNN could have built Twitter since it is all about the sound bite. GM or Hertz could have launched Uber; Marriott could have invented Airbnb. The unstoppable force of blockchain technology is barreling down on the infrastructure of modern finance. As with prior paradigm shifts, blockchain will create winners and losers. Personally, we would like the inevitable collision to transform the old money machine into a prosperity platform for all.

Chuck Reynolds
Contributor

Markethive

A Brief History of Blockchain

A Brief History of Blockchain

  

   Blockchain Innovation

Many of the technologies we now take for granted were quiet revolutions in their time. Just think about how much smartphones have changed the way we live and work. It used to be that when people were out of the office, they were gone because a telephone was tied to a place, not to a person. Now we have global nomads building new businesses straight from their phones. And to think: Smartphones have been around for merely a decade. We’re now in the midst of another quiet revolution: blockchain, a distributed database that maintains a continuously growing list of ordered records, called “blocks.” Consider what’s happened in just the past 10 years:

  • The first major blockchain innovation was bitcoin, a digital currency experiment. The market cap of bitcoin now hovers between $10–$20 billion dollars and is used by millions of people for payments, including a large and growing remittances market.
  • The second innovation was called blockchain, which was essentially the realization that the underlying technology that operated bitcoin could be separated from the currency and used for all kinds of other interorganizational cooperation. Almost every major financial institution in the world is doing blockchain research at the moment, and 15% of banks are expected to be using blockchain in 2017.
  • The third innovation was called the “smart contract,” embodied in a second-generation blockchain system called ethereum, which built little computer programs directly into blockchain that allowed financial instruments, like loans or bonds, to be represented, rather than only the cash-like tokens of the bitcoin. The ethereum smart contract platform now has a market cap of around a billion dollars, with hundreds of projects headed toward the market.
  • The fourth major innovation, the current cutting edge of blockchain thinking, is called “proof of stake.” Current generation blockchains are secured by “proof of work,” in which the group with the largest total computing power makes the decisions. These groups are called “miners” and operate vast data centers to provide this security, in exchange for cryptocurrency payments. The new systems do away with these data centers, replacing them with complex financial instruments, for a similar or even higher degree of security. Proof-of-work systems are expected to go live later this year.
  • The fifth major innovation on the horizon is called blockchain scaling. Right now, in the blockchain world, every computer in the network processes every transaction. This is slow. A scaled blockchain accelerates the process, without sacrificing security, by figuring out how many computers are necessary to validate each transaction and dividing up the work efficiently. To manage this without compromising the legendary security and robustness of blockchain is a difficult problem, but not an intractable one. A scaled blockchain is expected to be fast enough to power the internet of things and go head-to-head with the major payment middlemen (VISA and SWIFT) of the banking world.

This innovation landscape represents just 10 years of work by an elite group of computer scientists, cryptographers, and mathematicians. As the full potential of these breakthroughs hits society, things are sure to get a little weird. Self-driving cars and drones will use blockchains to pay for services like charging stations and landing pads. International currency transfers will go from taking days to an hour, and then to a few minutes, with a higher degree of reliability than the current system has been able to manage.

These changes and others represent a pervasive lowering of transaction costs. When transaction costs drop past invisible thresholds, there will be sudden, dramatic, hard-to-predict aggregations and disaggregations of existing business models. For example, auctions used to be narrow and local, rather than universal and global, as they are now on sites like eBay. As the costs of reaching people dropped, there was a sudden change in the system. Blockchain is reasonably expected to trigger as many of these cascades as e-commerce has done since it was invented, in the late 1990s.

How is technology transforming transactions?

Predicting what direction it will all take is hard. Did anybody see social media coming? Who would have predicted that clicking on our friends’ faces would replace time spent in front of the TV? Predictors usually overestimate how fast things will happen and underestimate the long-term impacts. But the sense of scale inside the blockchain industry is that the changes coming will be “as large as the original invention of the internet,” and this may not be overstated. What we can predict is that as blockchain matures and more people catch on to this new mode of collaboration, it will extend into everything from supply chains to provably fair internet dating (eliminating the possibility of fake profiles and other underhanded techniques). And given how far blockchain come in 10 years, perhaps the future could indeed arrive sooner than any of us think.

Until the late 1990s, it was impossible to process a credit card securely on the internet — e-commerce simply did not exist. How fast could blockchain bring about another revolutionary change? Consider that Dubai’s blockchain strategy (disclosure: I designed it) is to issue all government documents on blockchain by 2020, with substantial initial projects just announced to go live this year. The Internet of Agreements concept presented at the World Government Summit builds on this strategy to envision a substantial transformation of global trade, using blockchains to smooth out some of the bumps caused by Brexit and the recent U.S. withdrawal from the Trans-Pacific Partnership. These ambitious agendas will have to be proven in practice, but the expectation in Dubai is that cost savings and innovation benefits will more than justify the cost of experimentation. As Mariana Mazzucato teaches in The Entrepreneurial State, the cutting edge of innovation, particularly in infrastructure, is often in the hands of the state, and that seems destined to be true in the blockchain space.

Chuck Reynolds
Contributor

Markethive