Decentralisation and digitalisation of everything – Big Tech Wants In!
You ain’t seen nothing yet!
On the eve of the release of the white paper for Facebook’s secretive Libra project, the world has woken up to crypto currencies. This once derided subject is no longer only the talk of anarchists and cypherpunks but is now a mainstream conversation that is about to go ballistic.
Crypto currencies / blockchain / DLT, call it what you will, may be the most revolutionary technology we will witness in our lifetimes. Every once in a while something comes along and changes things so fundamentally that we wonder how we survived without it. It was the internet over 25 years ago but, blockchain could have a similar or even bigger impact on our lives.
Initially this is a technology that is disrupting the financial industry, which is antiquated and close to falling over. But you need to think bigger. This is far more revolutionary than that.
Blockchain and its genesis, Bitcoin, will radically change economics, social contracts, and our financial system. Not to mention many professions. Nothing will be spared.
The changing of the seasons
We have the perfect storm brewing from which Bitcoin, blockchain and its many iterations will arise.
Throughout modern history (think the last 500 years) we have had repetitive and predictable cycles which can be most clearly seen as seasons. Spring, summer, autumn and winter are ushered in with the ebb and flow of generational cycles.
Throughout our lives we have different needs and desires and so the political and social environment comes to reflect those changing needs. Mostly with a lag which leads to periods of stress and dislocation.
Currently we are moving in to a secular winter which comes about as the old institutions and political environment no longer functions optimally for the majority of the people. The populace starts to demand change and, via upheaval, we eventually get that change and find a new model that better suits our needs.
Blockchain or more specifically Bitcoin, is symptomatic of this change. As is Donald Trump. The world is trying to find a new framework, one with less oversight from Government and overbearing institutions that no longer represent the people whom they are supposed to. As technology advances at unprecedented rates people are more comfortable being governed by computers (maths) than the whims of Governments and the people within them.
We are witnessing the start of a backlash against loss of individual privacy and Government overreach. Just ask millennials and Generation Z’s. They are the ones who have been alienated by the old system and demand more from the new. They are tech savvy, more risk adverse and open to new alternatives.
The force is strong!
The younger generations are embracing the idea of the digitalisation and decentralisation of everything, which speaks far more to their values as citizens of the 21st century.
Crypto winter is thawing
Late 2017 the hype cycle peaked as speculators poured billions in to coins named after animals and worse much worse.
But as we saw with the tech boom in the late 90’s, the bursting of the dotcom bubble was just the first phase and a cleansing of the system led to far more solid foundations from which some of the biggest tech companies were built.
“Tech that changes industries and markets doesn’t get built overnight. There are fits, starts, and failures. And value doesn’t always flow to the places we believe it will.”
The crypto space is no different and while the speculators went away (they are well and truly back now), for over a year the building went on quietly and out of the view of most.
Big tech wants in
We are at and interesting crossroads. We are on the eve of Facebook releasing the white paper for secretive Libra project which will see the tech behemoth role out a stablecoin know as GlobalCoin in 2020.
Facebook’s mission is to bank the unbanked. Highly commendable…
…until you remember just how much hot water Facebook has been in over privacy breaches and questionable practices with user data. They want in but at what price to the user.
Can a leopard change its spots?
Facebook has had a rough ride of late over clear breaches of privacy that has seen Facebook Founder Mark Zuckerberg pulled in front of the Senate to testify over privacy breaches from the Cambridge Analytica fallout.
Do we really need a tech company that has a stranglehold on global social media, one that boasts over 2 billion users, to now corner the payments market? And what about their partners Visa, Mastercard, Paypal. Isn’t this just more of the same, the boys club want a share of the spoils.
The price tag to enter the boys club? A mere U$10m gets a seat at the table and perhaps access to all of our data.
Source: The Block – Facebook’s partners in Libra
Facebook’s head start
Facebook have a huge advantage over almost any other company, an unrivalled reach. Over 2 billion people, many of whom won’t have a bank account. And they have the platforms to execute on, Facebook and Whatsapp.
It is hard to dismiss Facebook’s GlobalCoin. It will instantly be known and available to a huge audience who will be naturally curious. That network effect is impossible to replicate and so even if the technology is inferior to other protocols that are being developed it is highly likely it will get traction.
However, no single protocol is going to be able to satisfy all user needs such as privacy, store of value, micro payments, non-financial transactions.
A force for good – education & regulation
GlobalCoin may be a white knight for Bitcoin and other crypto currencies. 2.3 billion people will need to be educated about crypto currencies to begin using them. Not only that but infrastructure will need to be built to reduce the friction of moving fiat money to crypto, not just GlobalCoin but other crypto currencies with different uses cases. Once you are set up to transact in GlobalCoin it is likely you will be able to transact in other crypto currencies.
Regulation will need to be expedited to deal with the on-boarding of 2.3 billion people. Another positive for crypto currencies in general as far more people become exposed to it.
GlobalCoin a Bitcoin killer….not so fast
A reminder that Bitcoin was born out of mistrust and mismanagement of monetary and economic policy following the Great Financial Crisis. Politicians and bankers simply can’t be trusted. We have more debt and more wealth inequality than ever before. The middle class has shrunk while the ultra-wealthy have only got richer. Wealth has never been more concentrated thanks the economic and monetary response to deal with the last financial crisis.
Bitcoin is a decentralised, trustless and immutable system that gives the individual financial sovereignty. GlobalCoin doesn’t even come close.
While GlobalCoin is stealing all the headlines there are some very cool development humming along outside of mainstream.
This really is one of the most exciting spaces to be in. The pace of development and innovation is mind boggling.
Strap in for the ride.
Keep an eye on two of my favourites.
Enigma – ‘secret’ contracts
Enigma is a protocol that is tackling privacy of non-financial transactions. Think medical records, land title deeds, IoT, etc. Rather than making transactions private, Enigma can encrypt any data via computational anonymity. Imagine if all the medical records in the US were on a decentralised blockchain, the cost savings and efficiencies would be enormous.
Celo – banking the truly unbanked
Celo’s mission is to build a monetary system that creates the conditions for prosperity for all. The first application launching is a social payments and cash transfer app, aimed at frontier markets and Celo is partnering with key industry players such as the World Food Program to help those that need it most.