Blockchain: More than Bitcoin – Part 2.ico

bitcoin
Image Courtesy: Thomas Trutschel/Getty

 

This is a short detour from the normal flow of our blockchain discussions. This used to be part of Part 2 of the series, but I thought we should address Bitcoin separately without spending too much time on its workings.

What is Bitcoin?

One major factor for the buzz and excitement around blockchain is Bitcoin, a digital currency built on blockchain technology as its underlying platform.

Bitcoins actually are digital “units” which get transferred from one person to another, very similar to cash. The amount of bitcoin that each person has (balance) and any transfer of bitcoins from one person to another (transaction) is encrypted and stored on the bitcoin blockchain, a digital copy of which is maintained at every member of this blockchain, in an application file called a bitcoin wallet.

How do you print a digital currency?

Bitcoins are generated by computers continuously and collectively solving complex calculations. These computers are usually owned and operated by the members of the bitcoin network. Very simply, an application on your computer continuously solves mathematical problems and you are given bitcoins in return. This is called bitcoin mining.

As the bitcoin network has grown, the mathematical calculations have become more complex and need longer times to solve, as a way to control the number of bitcoins in circulation.

What is its value?

Now because Bitcoin is a digital currency (or cryptocurrency, a term used to emphasize the encryption used in the system), it is naturally compared to existing currencies like the US Dollar, GB Pound, Euro etc. And this has exposed bitcoin to speculation and trading, much like stocks or commodities.

Another aspect of bitcoin is that it does not have an inherent value by itself. It is not pegged to the value of a commodity like gold, so it also does not have a relative value. The only thing that would set its relative value is its demand.

The demand for bitcoin

The smart part about the bitcoin blockchain is that, while everyone has a complete copy of the bitcoin ledger, one can only read the transactions in which one is involved. If you need to see the transactions of another, they have to permit you to see them. This permission is unbreakable and immutable, hence law enforcement authorities, governments, banks etc. Cannot override this permission. This makes the bitcoin blockchain a really confidential and secure storage of financial value.

While this confidentiality is great for a financial instrument, this level of secrecy is now making bitcoin really lucrative for people who want to hide their money and financial transactions. Some of these are:

  • People with unaccounted money (black money)
  • People who want to avoid paying tax
  • People engaged in illegal or antisocial activities
  • People engaged in terrorist activities

All of the people on the list above have huge sums of physical money that they need to hide or transfer secretly. One well-publicized example was the WannaCry Ransomware attack, which demanded its ransom in bitcoin.

As a result, they end up buying large amounts of bitcoin, creating a demand for bitcoin which cannot be matched by the rate at which bitcoin is mined. This drives up the relative value of bitcoin (the value of bitcoin in terms of other currencies). As a result, the trading of bitcoin like any other commodity like gold or crude oil has taken precedence over using bitcoin as a means of exchange.

The future for bitcoin

As stated earlier, there are two schools of thought about bitcoin. On the one hand, there is a lot of excitement about the cryptocurrency and its potential to be independent of any controlling authority.

In a perfect world, a bitcoin will become the standard means of exchange and will determine the true price of everything.

So a loaf of bread in New York would cost 1 bitcoin and in Delhi and in Tokyo and in Capetown. This will be the end of inflation as we know (and hate) it. And because every transaction is recorded by default, no one will be able to hoard or steal bitcoin because what is yours will be yours, verified by everybody else’s ledger.

However, this is not liked by the traditional controllers of currency, viz. Governments, central banks and financial institutions. The fact that they lose control over the supply of currency and the complete inability to impose transaction fees and taxes turns out to be a massive loss for these entities. As a result, all these agencies will not favour bitcoin and other cryptocurrencies without having a measure of control over it. And that fundamentally goes against the very nature of a cryptocurrency.

Moreover, the volatility in bitcoin trading (buying and selling bitcoin like a commodity) and the huge spurt in its relative price is also troubling for many smaller and developing economies, which are worried about their own value will be severely eroded with a new global currency taking over. At the time of this writing, the price of one bitcoin had moved from $1808 in May 2017 to hit its record high of $19213 in December 2017 only to fall to $6100 in Jan 2018. Given this kind of volatility, the bitcoin has become a very expensive speculative commodity.

So it is my personal opinion that cryptocurrency, in its current form, will be strongly opposed by the governments and central banks, with greed and ignorance driving their opposition. Cryptocurrency across the world will be subjected to heavy regulation, varying from mandatory declarations of bitcoin holdings at the least, to absolute bans at its worst. Add to that, the reduction of bitcoin to a mere commodity will result in its real value as an economic equalizer being completely overlooked.

As of today, bitcoin is probably a very risky investment as its future is very uncertain. Unless there is some consensus about the validity and acceptability of bitcoin across the world, this uncertainty will continue to play out.

#bitcoin #cryptocurrency #blockchain

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The Consultant’s Role – Why we are??

The gospel according to Alan Weiss, probably the most profound statement of what we do (or rather should do) as consultants:

The role of a consultant is to improve the client’s condition.

When we walk away from a client, the client’s condition should be better than it was before we arrived, or we’ve failed.

Failing Innovation

Desperate times call for desperate measures. And while the recent recessionary economy might not have been the right time to launch new projects, the need to incorporate innovation to build cheaper, faster and more efficient products and services is one of the major ways that experts agree how the recession is to be tackled.

A friend brought up this subject during a coffee break. Apparently a number of organizations have started off innovation projects in a number of areas, Product Development, Green Eco initiatives, Cost optimization etc.

The argument was that most organizations drive innovation projects like delivery projects. In the sense, that sooner or later they must give results. Now I agree with the fact that all undertakings must give results to be viable, but to assume that any innovation project should be successful is maybe being too optimistic.

So, the question is, is it ok for innovation projects to fail??

After all, it is in the realm of experimentation. Some ideas will succeed, a lot of them won’t. What is important is to recognize the futility of the project early on and kill it. Most projects either get treated as babies or as burdens, both to be let go of at the very end.

Forcing innovation this way will never bring about a Google, but it’ll always produce Bings!!!

Working for something you believe in

 

A curious thought came to me while I was shaving this morning. Now I’ve been a “loyal” [if that term makes sense] user of Gilette products. So the thought was this:

I apparently believe in Gilette products to keep using them for so long. So if I did work for Gilette, would I essentially be more motivated or more effective at work??

Maybe consumer care is a lousy example, but inkeeping with my expertise, would it be better if I worked for an organization whose products I use on a regular basis? Would it be easier to believe in the organization and in turn, believe in my work?

Do let me know your views on this.

Killing Entrepreneurship

The question I’m asking is:

Do large companies kill smaller companies??

Obviously, duh?? Of course larger behemoths devour smaller fry. Its the law of the world. Remember Darwin?? Survival of the fittest?? Rings a bell???

Ah well, of course I’ve done my basic Biology course. The biggies do gobble up the little ones.

However the feast I’m talking about happens without bloodshed… no restructuring, no layoffs and definitely no takeovers. The way it happens, I’d say it’s competition elimination without spending anything…. Now isn’t that a dream run???

Picture the situation.

Joe Engineer passes out of his engineering college with real hopes of changing the world. Though he never went to an MIT, he’s had enough talk been given to him of the divinity of the engineering profession. Typically he joins up a top IT firm and begins his climb up the corporate hierarchy. At this stage, he’s really happy to sit in front of a computer and wallow in megabytes of code, all with the intention of "putting a smile on the customer’s face".

A year into the job, Joe suddenly realises that he’s not exactly changing the world, but rather following code-correction orders from the Project Manager. Joe realises that to improve the situation, he ought to be giving those orders. So by hook or crook (more crook than hook usually), Joe Engineer becomes Joe Project Leader.

Suddenly Joe is now faced with a new monster. Project Finance and budgeting. Compared to these, building a supercomputer is a cakewalk. Joe also realises that his orders are now coming from top management, who now talk business rather than technology. Moreover, he also gets acquainted with Mr. Welch, Mr. Murthy and Mr. Gates and finally realises the path to true nirvana. And that path has a single milestone called MBA.

So Joe enrolls himself to be an MBA. Now it all starts to make sense. Organizational Behavior, Integrated Marketing, Financial Management, Project Management, all coupled with Peter Drucker, Tom Peters and Philip Kotler. He tops the Entrepreneurship course. Changing the world is now easier than ever.

Back in the job, Joe finds himself on a new pedestal. His old technology team doesn’t know what to do with this ‘outsider’. "After all, he’s all past gone beyond understanding the beauty of a recursive algorithm", they say. So Joe goes to top management.

"Ah yes, the newbie", they say. "Promising young fellow", they say. "Let him learn the ropes", they say. And Joe is put in charge of his old team with the sage prophesy,"Someday, you will be CEO". Joe Project Leader is finally transformed into Joe Manager.

So poor Joe is back to doing what he was before he got his MBA. He’ll never be back into technology, because he’s an MBA. And he’ll retire with the eternal hope that someday he’ll be CEO, because he’s an MBA!!

And that’s how the new firms are killed. In the minds and morales of brilliant executives who want to break out, but don’t know how and where. A sort of corporate abortion, prevalent in most top firms globally. And finally Joe disappears, a statistic, a face in the crowd. Without changing the world.

So much for Intrapreneurship and all that gas. Intrapreneurship forces one to think in terms of the existing or emerging markets, not radically as innovation is meant to be. For example, would an IT Giant stake into gourmet foods, even if the market for gourmet foods was booming?? Unlikely, with all that jazz about corporate focus, isn’t it??

And Can Joe quit?? Possible, but very unlikely. Not if he wants to constantly hear, "You quit XYZ?? What are you, an idiot??" or if he wants to suddenly wants his social circle to disappear. Its easy if you’re in a mid tier company to chuck it all and go the lone road, but when you’re in one of the top ten firms, it seems like a long long long way down.

So is there a solution?? Maybe. I’m still searching… and something tells me its in the force of collective efforts… A team … to walk the lone road together…
I’ll post my findings in a future post, so until that time, Au revoir!!

Two minutes to stop procrastination

 

My friend, Patrick from the Prevoyance Group told me about the two minute rule. It goes:

Anything that takes less than two minutes to do must be done immediately.

This, to me is a gem in prioritization. Its simple, an most of the time, is what we do without thinking. What really needs work is the ability to analyse quickly how much time each task that comes your way would take.

And also the humility to accept that some task is gonna take more time than 2 minutes….