A recent piece in the Harvard Business Review entitled The Promise of Blockchain Is a World Without Middlemen lays out the case for decentralized networks in evangelical language. As the author writes, “Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men.”
But is it a given that such a world is what customers really want?
The Job of the Middleman
Middlemen make for an easy target for disgruntled customers and observers of the economy. At times it can be unclear how they are adding value to a transaction. Sometimes it looks like middlemen are simply inserting themselves into a transaction to increase costs and take a cut.
The tech behemoths’ role in nation-states is evolving
The biggest US tech companies now have powers which challenge the primacy of governments in many domains. In many cases they also have capabilities not available to nation states. We touched on these issues, and the notion of “corporate foreign policy” in one of the previous issues of my weekly newsletter Exponential View.
Now in the Pennsylvania Law Review, Kristen Eichensehr looks at the issue of Digital Switzerlands in greater depth, 66 pages of it to be precise. We’ve summarized parts of it here. One key distinction between large corporations and nation states is that they lack territory, control of state-violence, and have very different governance mechanisms to nation-states. But that is as true for many supranational bodies as well.
Blockchain may play a key role in the next 10 years of electricity
“With the broadcast system, you have one person in one station deciding what gets put out over the airwaves. When you have a distributed network, like the internet, everybody can be a server. There’s no distinction between the broadcaster and the receiver: every computer does both. You can take your home laptop and run a server off of it in the same way that the biggest computers at Google can. There’s no fundamental difference between the computers they have in their server rooms and what you have on your desk.” — Aaron Swartz, cofounder of Reddit
Decentralization eventually comes to every industry.
How blockchain, backlash, and breaches may challenge conventional wisdom and reshape your industry
The Official Future Hits Some Speed Bumps
Ask anyone in any major sector of the economy about the future of their industry and the majority will say something like the following:
Our industry will be transformed by platforms
These platforms will extract the most value from our industry and determine the winners and losers
The most likely platform overlords will be the native digital tech giants: Google, Amazon, Facebook, Apple (or Alibaba and Tencent depending on where you live)
Essentially, what people are saying is that the notion of digital platform dominance is inevitable. In an Accenture survey in 2016, 81 percent of executives said platform based business will be core to their growth strategy within three years. As such, to understand where platforms are going is to understand the future of your industry itself. Either you will be that player (hard for most) or need to find a place to play and win within their ecosystem.
In July of 2017, I wrote a post on Medium titled What It’s Like to Be a Woman at a Tech Conference. The article has since been viewed ~64k times, and has become the piece of writing I am most recognized for. Usually if someone says “hey you look familiar” at a conference, I do the pose (😐👍pictured below) mimicking me in a wine cave full of dudes, and they figure it out.
When Bill Gates says you’re tempting fate, best to listen
Bill Gates was the Mark Zuckerberg of the 1980s and 90s. Microsoft in the late 1990s owned the tech world. It was an unmitigated monopoly in computer operating systems, poised to do the same in the Internet and web browsing markets. But then it tangled with the US government. A bruising legal battle with the Dept. of Justice culminated in a humbling settlement in 2002. As it licked its wounds and considered how to operate in a post-settlement world, Microsoft missed the search revolution, ceding it to Google, missed the mobile revolution, ceding it to Apple, and missed the social revolution as well. Given all those misses, it’s that much more remarkable how healthy Microsoft’s business is today — it remains a major force in tech, particularly in enterprise, an area where its FANG rivals have mostly whiffed.
So when Gates uses his most potent current platform — the release of his annual Gates Foundation letter — as an opportunity to warn his industry of its blinkered arrogance, well, the man knows of what he speaks. He’s lived through through the government ringer, he’s been the blinkered tech icon who thought he was smarter than the rest of the room, and he’s lived long enough to realize the error of his ways. Given the moment in which our industry finds itself, Gates’ admonition is both poignant and timely.
A survey of the early stages of a financial revolution
Beyond the hype around Bitcoin, there is a quieter revolution taking place as various governments and industries explore the potential uses of digital currencies and their underlying blockchain technologies. Governments as diverse as Russia, Japan, China and Dubai are developing state cryptocurrencies to supplement (and maybe even eventually replace?) their more tangible fiat currencies. Meanwhile, a whole range of industries from banking and finance to insurance and big tech are looking to streamline systems, lower costs, and explore new revenue streams by leveraging tokenized systems and public and private blockchain platforms.
As with any emerging and disruptive technologies, there are those industries and companies which sense new opportunities and want to get ahead of the game through early exploration and adoption, while others wait to see how things will shake out.
I host a podcast which takes deep dives into science, tech, and sociological topics. I do this via interviews with world-class experts who have the patience to engage in truly unhurried discussions of their fields. My episodes are untethered from the headlines, as they’re meant to resonate with future as well as present-day listeners, ideally over a span of years.
Occasionally, though, things happen to line up with current events. And was that ever the case this week — as today’s episode is about cryptocurrencies, which have been repeatedly dashing price records, even as Bitcoin debuted on the futures markets this past Sunday.
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Bitcoin prices are on a tear, and so is blockchain and ICO hype. Are you as confused as I am? Let’s figure out why.
“This is the Internet in 1993!”
I heard this statement several times at an industry conference I attended earlier this month, and it had been ringing in my ears for any number of reasons well before then. It all feels so familiar, and yet this time, it also feels utterly foreign.