Blockchain technology is the engine that powers Bitcoin, Ethereum, Litecoin, Ripple, the every increasing number of wannabee alt currencies, as well as the plethora of “utility token” applications. For the universe of those focused on Initial Coin Offerings and Initial Token Offerings and the purported billions of dollars that start-up companies claim their respective tokens or coins will be worth when (and IF) large pacts of users utilize them, keep in mind: Its about the Blockchain, Blockhead! Not Bitcoin!
This view is remarkably well-explained below by IBM SVP Global Markets, Martin Schroeter, an IT industry ‘grey beard’; someone who is not a crypto cool kid, but a technology industry thought-leader who ‘got the joke’ about blockchain technology well before the alt currency concept was sketched out on a white board someplace in the dark web.
Let’s remember, on-line adult entertainment became a multi-billion dollar industry not because porn was suddenly a new craze; the seismic growth (no pun intended) of that industry was powered by the underlying technology known as the Internet. The gambling industry was once confined to brick and mortar venues and ‘scale-ability’ was dependent on government legislative initiatives that would allow for more casinos in more places. With the Internet, online betting broke the hold that traditional casino operators had on bettors, just like tens of dozens of “other use applications” have been levered across every industry verticals. Donald Trump’s casino empire didn’t go bankrupt simply because he was “not informed” about how to operate a casino; he along with other operators whose casinos blew up were simply boxed out by consumers who migrated to a less expensive, more efficient and more instant gratification way to whet their wagering appetites: by betting on-line.
This isn’t to insist that alt currencies won’t have usefulness in the crypto generations ahead. Fiat currencies backed by a crowd of fans, as opposed to a sovereign government are not a new concept. Gold is a perfect example. While gold does have a utility value as an ingredient in certain products, one could argue that Uranium has a greater value–after all, its a crucial ingredient in a range of nuclear energy products and of course, WMDs. Aside from industrial demand and supply metrics, gold prices are correlated mostly to the behavior of speculators seeking a hedge against government-backed currencies and an array of other investment instruments and financial assets. News Flash For Those Not In-the-Know, there is already a blockchain-based technique that can comprehensively track global gold inventories, warehouse receipts, real-time supply and demand data, vault records, commodities market transactions on listed exchanges and OTC transactions, shipping manifests, and every other ‘data point’ or transaction-based event imaginable.
“..Blockchain technology is positioned to streamline the $2 trillion global trade market, making its numerous logistical undertakings faster, easier and more comprehensible..”
Immutable. Instantaneous. Transparent. Friction-less. Encrypted. Indisputable. Scaleable. These are the hallmarks of blockchain and distributed ledger applications. Cryptocurrencies are merely a by-product of blockchain and like every ‘by-product’, bitcoin and the other altt currencies are lacking discrete elements of the core foundation: among other things, these new-age ‘currencies’ are not secure. While hoped-for regulatory schemes will add a greater degree of trust and accountability. Without those two latter components, we’re resigned to live in a world in which Bernie Madoff is a likely next POTUS.
Its about the Blockchain, Blockhead! Not Bitcoin! : Rinse, Repeat. Prospectus.com LLC senior director Evan Fisher says, “Having a concept in mind for using blockchain technology is great, but a truly great idea needs to be ‘flushed out’ and defensible. Whether positioned as adtech, blocktech, fintech, medtech, martech, or any other arena, the need to perform a blockchain feasibility study is crucial to have in hand when approaching investors with a private placement memorandum who will fund your idea.”
Blockchain, a digital record-keeping method that exploded in popularity in conjunction with the cryptocurrency craze, will change the way the world makes transactions, IBM’s Martin Schroeter told CNBC.
Not Only Far and Wide Fintech Applications: “If you bought IBM stock today, you would have to wait three days for that transaction to clear through a traditional daisy chain process involving brokerage firm back offices, financial industry trade clearing and settlement utilities and custodian centers,” Schroeter, IBM’s senior vice president of global markets, told “Mad Money” host Jim Cramer. “Using blockchain technology, and in the blockchain itself, … you can see every transaction instantly, so your trade could clear and go from their account to your account instantly.”
Having recently partnered with shipping colossus Maersk on a joint venture to apply blockchain software, IBM hopes to establish an efficient “global trade network” of manufacturers, shippers, freight forwarders and others, Schroeter said. The idea is to streamline the $2 trillion global trade market, making its numerous logistical undertakings faster, easier and more comprehensible, he told Cramer.
“There’s no more paperwork and you know that it’s going to be cleared at a specific time,” Schroeter said, using shipments as an example. “Everyone has perfect visibility to where everything is. You’ve just shortened that cycle dramatically. That creates a lot of value, a lot of value for manufacturers and retailers.”
When it comes to enterprises — IBM’s main customer base — Schroeter said they look for three key applications of blockchain.
“One, they have to know that it’s a permissioned network,” Schroeter said. “So, permissioned network means I know who else is in with me. Bitcoin is not permissioned. Anybody could have a bitcoin. But if I’m Maersk, … I need to know who the manufacturers [are] and I need to trust and only let people in that I want in my network.”
No. 2 on the list is scalability. Shippers often carry tens of thousands of containers across thousands of ships, so the network that serves those enterprises must be able to scale.”We’re operating in the thousands and thousands of transactions per second. That suits an enterprise world. Bitcoin can’t do that, as an example,” Schroeter said. Blockchain technology can.
The third thing companies look for when implementing blockchain is immutability, or the inability to erase or reverse a transaction, the former CFO told Cramer.
“When you buy a share, the reason it takes three days [to process] is because somebody has a physical share. But the blockchain, it makes it so our blockchains are immutable. Nobody can go back and say that didn’t really happen,” Schroeter said. Let’s roll the video…
Jay Berkman is a seasoned veteran of the financial markets, a former public company CEO and serial entrepreneur. He is Entrepreneur-in-Residence at The JLC Group and COO of Prospectus.com LLC, a global consultancy and professional service provider for entrepreneurs seeking best-in-class business plan preparation and investor offering documentation services. The firm is a burgeoning thought-leader within the realm of blocktech initiatives and best practices for capital formation. To follow thoughts and observations, the firm’s Twitter is @Prospectus_com and the firm’s blog can be accessed via this link