Capture More Leads with Inbound Marketing Software

The Best Inbound Marketing Tool

Marketing has changed. Today’s consumer take their time to get informed about a product before buying it. Thanks to Google, Yelp, Wikipedia, and a wide variety of websites, your customers can easily gather enough information to be well-informed on any topic in minutes, and that information dictates which companies they choose to work with. People have adapted their habits when it comes to browsing the internet, but there’s a way to take advantage of those new browsing habits. Just think about the last time you made a purchase decision — did you “Google It” before making up your mind?

What is inbound marketing?

Inbound marketing is where your customers find you!… Instead of you chasing them down. Inbound marketing is a method of creating SEO friendly (i.e. people can find you on Google), customer-centric content that your audience is looking for, rather than trying to reach out to someone who may or may not be interested in what you have to offer. Outbound marketing has been the standard way of doing things for a while now. You buy ads, set up a newsletter, send out cold emails, make cold calls, and generally shout into the darkness about your site in hopes that someone will hear you and respond. And to be completely fair about it, if you shout loud enough, you will attract some visitors to your site, but they might not be the visitors you were hoping for.

Inbound marketing works differently. Instead of doing everything in your power to reach outward in hopes of finding your audience, you create high-quality content like blog posts, videos, podcasts, and interactive demos. By doing so, you’re ensuring that your audience will want to find you. Outbound marketing yields a mixture of visitors who are interested in what you have to offer and visitors who had the wrong idea about your business. Some of those leads are warm, and some aren’t; it’s a mixed bag. With inbound marketing, every visitor is a warm lead. They’re coming to your site because they’re interested in what you offer, not because you were the loudest voice on the internet.

Why should you use inbound marketing?

Let’s start with the cold hard facts. According to Hubspot, inbound marketing costs 61% less to implement than outbound marketing, and it has been proven to generate 54% more leads. If your marketing budget looks a little like the piggy bank above, those two facts alone should be reason enough to give it a try, but there are plenty of benefits beyond the severely decreased cost per lead. For starters, each lead you get will be warm. With inbound marketing, your audience finds you naturally; in other words, they’re already interested in what you have to offer before they ever hear your sales pitch. Even better, if you start with great content, your visitors will come back to your site, again and again, giving you more chances to take advantage of a warm lead!

You have good content! Now how do you make that content work for you?

If you start with good content, every visitor to your site will be a warm lead. All you have to do from there is capture the leads, and that’s where Digioh comes in. Our lightbox is a robust and powerful tool that helps you put the right call to action in front of the right visitor. Once you’ve used inbound marketing to bring warm leads to your site, the Digioh Lightbox can help you to capture your visitors’ interest by presenting a compelling offer to them. By offering a free guide, a one on one consultation, or a discount on their next purchase, you can get your visitors to subscribe to your mailing list, or provide their contact info. Once you have that contact info, you can help them understand why they should buy your product.

The Digioh Lightbox is designed to put the power in the marketer’s hands. Once it’s installed on your site, you won’t need to deal with the IT department to make changes. Just log into Digioh, and use our user-friendly editor to change your call to action, or alter the appearance of the lightbox, and then just hit the publish button to push those changes to your site. Our lightbox also offers a suite of powerful rules you can use to set who sees it and when you can create a lightbox that will only show to users who came to your site from a specific referrer, you can target your lightbox based on the visitor’s geographic location, and you can target it based on the page your visitors are viewing. These customization options make it easy to put the right call to action in front of the right visitor.

All of those customization options make easy to create an engaging form to present to your visitors. If you know where they came in from, and what page on your site they’re reading, it’s easy to craft a message that’s going to appeal directly to their needs. You know what they’re looking for, and now you can craft an opt-in form that shows them you can give them what they need! With all of these powerful tools at your disposal, it’s easy to turn visitors into leads, and leads into conversions!  Don’t let all that time and effort you put into making great content go to waste; use the Digioh lightbox to engage your visitors, and you’ll be able to take full advantage of the audience your content has brought to your site!

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

  Effective Business Development Strategies to get started

Over the past few years, organizations worldwide are beginning to understand the importance of business developers and the value they bring to the organization, although not all companies quit comprehend what business development managers do exactly.

Let us say you have just moved into a business development position from a sales or a marketing background, normally, big enterprises provide their employees with training and orientation, small and medium size companies on the other hand usually lack such processes, if you want to find out where to start, then keep on reading…

In this article we will discuss business development activities that successful business development managers adopt to ensure success in their work, these main strategies are divided to three main parts:

1. Business Development Activities
2. Enhancing Public image
3. Increasing market exposure

 Business Development Activities

Market Research

Performing market research is highly important in order to understand your company current position and determine where it is headed, for that, you will need to do the following: Perform research about the industry you are in, the geographical area you cover and the market segment you are targeting. There are many ready made reports about the industry, market, country over the Internet sphere that you can find useful, they inform you about market trends and value, you can then calculate your market share out of the total market value.

Research for contracts, bids and opportunities of cooperation with other companies that your company can take to increase its channels of revenues. Subscribe to industry related databases, forums and blogs; these can be of great value to you, if you were in the construction or building industry for example, such databases will provide detailed information regarding all projects within your area from concept to execution, this would save you plenty of time consumed normally in collecting information and vastly reduce your market intelligence efforts, use them wisely as leverage over your competition.

Competitive analysis

Once you learn everything you can about the products/ services your company offers, you have to learn about your competition in order to understand where you stand compared to others, it will also help you determine your desired market positioning, for that you will need to do the following:

1. Determine your company top competitors (4-6 competitors)
2. Set up a criteria or mechanism of comparison, choose different variables of which you will do the comparison with, this could be in the form of strengths/ weaknesses or in other form such as price, product quality, exposure, brand reputation, etc.
3. Try to find out what are the projects your competitors are targeting within your market segment, assess if you can develop an offering that can win those business from them.
4. Since you are a new employee, competitors do not know you yet, use that to visit your competitors showrooms (if they have any), therefore you can visit them anonymously like any regular customer and collect valuable input to use in your research.

Current Client Relations  

1. Conduct warm calls to your existing clients, in order to assess the company current situation, what are you doing right/ wrong? In order to assess your strengths, Weaknesses, Opportunities & Threats (SWOT Analysis) and ensure your clients are not being tempted by other competitors.
2. Build close relationship with your clients, through the use of emails, phone calls, face to face meetings and product technical presentations in order to assess your client requirements and needs, do not forget to provide them with the latest copy of your marketing material.
3. Follow up, Follow up, Follow up, do not push hard, but also do not give up easily, 80% of B2B sales are conducted after the 5th encounter.
4. Identify your main target audience sectors, then categorize the main companies you want to approach within these sectors.
5. Conduct cold calls with the desired company and arrange meetings in order to identify their current supplier or service provider, find out why they are currently working with that supplier/ service provider and if they were happy about their current provider, tailor your sales pitch based on the given feedback to win the business.
6. Email your marketing materials to existing clients & potential clients within your target audience in order to raise awareness about the latest products you added or new services you provide.
7. Follow up, Follow up, and Follow up! Don’t push too hard but also do not give up. There are several email tracking tools that you can use, these can be useful as you will find out when a certain person have checked your email recently therefore you know that something must have come up and perhaps you should give your client a call.

Reach out to new clients

1. Identify your main target audience sectors, then categorize the main companies you want to approach within these sectors.
2. Conduct cold calls with the desired company and arrange meetings in order to identify their current supplier or service provider, find out why they are currently working with that supplier/ service provider and if they were happy about their current provider, tailor your sales pitch based on the given feedback to win the business.
3. Email your marketing materials to existing clients & potential clients within your target audience in order to raise awareness about the latest products you added or new services you provide.
4. Follow up, Follow up, and Follow up! Don’t push too hard but also do not give up. There are several email tracking tools that you can use, these can be useful as you will find out when a certain person have checked your email recently therefore you know that something must have come up and perhaps you should give your client a call.

Networking Events

As a BDM, spending your whole day inside the office will not be the best use of your time, you need to spend time out there, meeting people related to your market. Attending networking events can be of great value to you, you get to meet new people and learn new things about your market.

Attend industry related networking events, exhibitions, seminars, conferences and trade shows to be in contact with new; potential clients, having a booth in the exhibition is an advantage, however make sure it presents a good image and reflects the company brand identity, otherwise, you may be perceived to be unprofessional or cheap. Attend as many industry related events as you can, make sure you follow up with a thank you email to everyone you meet the second day.

Enhancing the Public image

This strategy addresses the company’s image and how it is perceived by the different stakeholders, the company is a brand, and like any brand, you cannot control the way perceive it, however you can only try to influence your audience perception, this can be achieved through:

Website 

1. You can work with the marketing division or marketing specialists on enhancing the company website, making it more user friendly, with a clear call for action message to converge views into actions, a poorly designed website can repulse people from your business and can cause you to lose customers before you even have them.
2. Make sure your website is ‘responsive’, what responsive means is that your website should be able to adapt to whatever browser used for view and it should also be able to fit multiple screens sizes depending on the gadget used to view your website (PC, Tablet, Laptop, Mobile, etc.)
3.  Proof your website content and ensure there are no punctuation or grammatical mistakes within, your font must be clear enough to read without problems, these small mistakes can go unnoticeable most of the time, however for clients with an eye for details, your company will be perceived as unprofessional or of low quality.
4. Use only high quality images on your website, low quality images may reflect bad image or poor quality, consider hiring a professional photographer to take some shots of staff in office or engineers working on site, these photos can be used on the website and for other marketing materials so don’t forget to archive these photos and label them for ease of use in future.
5. Consider adding the organizational chart of your company to the website, at least for upper management, this could ease the life of the website viewers as it would be clear who does what inside the organization, and whom they need to contact.

 Branding 

There should be only one integrated communication theme that governs all aspects of your brand, whether online or offline your brand must reflect consistency. Creating and implementing the below in compliance with your brand guidelines will ensure your company is presented with one unified, cohesive and professional image, addressing your customers in English is important, you need to consider your target audience, therefore adding the native language of your target audience is as important, your marketing material should include:

• Company Profile
• Generic Company Brochure
• Product Catalogs
• Branded Folder
• Branded CD’s
• Customer testimonials
• Press Releases
• A unified presentation template, also be sure all employees use it.
• Short 1-3 minutes promotional videos that promote the company and its products to be used on multiple platforms (YouTube, Exhibitions, Reception area, etc.).
• A unified company signature for emails and make sure all employees use it.

Office

Ensure your company offices reflect the company brand image, this includes:

• Reception Area should be equipped with marketing materials and business cards displayed in an attractive manner, available as takeaways for visitors.
• Company videos are displayed on loop in the waiting area, it gives your visitors an opportunity to know more about your business while waiting.
• Proper Signage displayed in all the company common areas, clearly displaying the company name and logo.
• Common areas and staff offices must be clean, tidy, uncluttered and inviting, bathrooms must remain clean at all times.
• Make sure that snacks and hot beverages are available at all times for visitors, served in an attractive dish wear.
• Your conference room should always be ready to accommodate guests, training, seminars and meetings, therefore it should be equipped with a screen or projector, a laser pointer, teleconferencing equipment and a white board.

Increasing market exposure

Optimize your online presence 

1. Conduct and online reputation management research, this would ensure that all articles, posts, videos and comments out there present your brand in a positive manner.
2. Develop your company presence over different social media platforms, ensure you choose your platforms according to your target audience (Facebook, LinkedIn, Twitter, etc.)
3. Develop content to post on your different social media platforms, such as (Press releases, Success stories, case studies, promotional videos, ongoing training activities, testimonials, etc.)
4. Increase your online exposure by applying search engine optimization techniques to enhance your online visibility.

By applying the above strategies, you can get ahead of your colleagues and reflect a professional image in front of your superiors, make sure you get upper management support for your actions, present them with a plan of what you want to do, they need to believe that what you are doing is in the best interest of the company, you will find that without upper management support, accomplishing the above strategies will be difficult if not impossible.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

The online cryptocurrency Bitcoin is rapidly becoming 2017’s go-to currency. The Bitcoin demand is on the rise, and one Bitcoin is worth around $1010 and rising. Currently, there is a threat of a “hard fork” on the cryptocurrency network, causing many users to concern over their cryptocurrency accounts. Bitcoin is a form of digital currency, which is not controlled by any organisation originally developed by a software developer called Satoshi Nakamoto. The idea was to create a decentralised form of currency, which would be used for economic transactions with low transaction fees, according to CoinDesk.

Bitcoin price surpassed the $1,115 mark during the early hours of March 22, 2017.

Where does a Bitcoin come from?

Bitcoins are not printed physically because they are created digitally by a community of people that can be joined by anyone in the world. The currency creates “mining” bitcoins, which means that transactions for online coins are tracked by computers, in order to confirm that they have a monetary value.

The copy for every blockchain is available for anyone participating in the cryptocurrency business, but miners have to confirm that the blocks -seeing as they’re not being regulated by anyone- are in fact a legitimate transaction. To do this, they run a mathematical formula to the block, turning it into a “hash,” that allows miners to know if a block has been tampered with, meaning that the block is fake.

Bitcoins are not physically printed, but instead, they are digitally verified.

“The bitcoin network deals with this by collecting all of the transactions made during set period into a list, called a block. It’s the miners’ job to confirm those transactions, and write them into a general ledger,” explains CoinDesk. “This general ledger is a long list of blocks, known as the ‘blockchain’. It can be used to explore any transaction made between any bitcoin addresses, at any point of the network”.

Miners use hashes to seal off a block, and they use software written to mine the blocks. When a miner creates a successful hash, they earn 25 bitcoins, and the information is added to the blockchain. However, creating hashes from data available isn’t too hard -although more specifications to filter the number of successful hashes have been added- and the cryptocurrency network is growing larger every day.

Upcoming hard fork could be worse than ‘Ethereum’s hard fork’

Cryptocurrency is growing so fast as a currency option, that a hard fork is predicted for Bitcoins. Circle Internet Financial, a technology company that offers user online wallets for cryptocurrencies, sent out an email to users on Monday suggesting that they should sell all of their bitcoins, to avoid the potential consequences of the upcoming hard fork.

The tech company used to trade bitcoins while users were able to sell and buy bitcoins on the page, but it stopped offering the service in December, only keeping the online wallets. The company explained in the email, that if a hard fork were to happen, their bitcoin services would be disrupted for an extended period of time.

Analysts are predicting a possible hard fork regarding Bitcoins.

“As it relates to blockchain technology, a hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid block/transactions valid (or vice-versa), and as such requires all nods or users to upgrade to the latest version of the protocol software,” according to Investopedia. “This essentially creates a fork in the blockchain, one path which follows the new upgraded blockchain, and one path which continues along the old path.”

The hard fork is not unheard of in the cryptocurrency network. Last year, the “Ethereum hard fork” took place in October, when a software development team, named Ethereum, designed a hard fork to increase the gas cost of transactions. However, the hard fork increased the number of service attacks, known as DoS attacks. This has lead to Bitcoin users raising their concern about the called “replay” attacks that the server may suffer after the hard fork. The Merkle describes the bitcoin replay attack as an issue that would allow attackers to steal other user’s coins. The coins stolen may or may not go to the attacker’s wallet, but either way, the vulnerability could empty users’ wallets.

The rise in cryptocurrency exchange

The rise of cryptocurrency is fueled by economic measures around the world, as the bitcoin is calculated taken the world’s economy into account. Estimates predict that with President Trump’s economic policies, the currency could rise to $2,000 dollars in 2017. The rise has been real, as in early December the Bitcoin was traded at $754. Boby Lee, CEO of BTCC talked to CoinDesk about the rise in the cryptocurrency.

“I think 2017 could be a continuation of 2016, in terms of it being a growth year for bitcoin’s price,” said Lee. “We are clearly in a bull market for bitcoin now, and my experience tells me that bitcoin bull markets don’t end until the previous high ($1,150 in December 2013) is exceeded, and that the new price is several multiples higher than the previous high.”

Experts and cryptocurrency-trading companies say that there is a plan to protect users’ Bitcoins in the event of a hard fork. However, if a hard fork takes place, two copies of the blockchain, two networks and two versions of the software would be created, leaving users to gamble on which one to use. Experts also said that if the hard fork takes place, all exchanges are likely to freeze for a period of time before and after it occurs.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Top Cryptocurrencies With High Block Rewards

With so many alternative cryptocurrencies in existence, it becomes difficult for developers to make their coin stand out. Some developers prefer to offer large block rewards, even though that will only add to coin inflation as time progresses. Below are some of the alternative cryptocurrencies with the largest block rewards in history. Not all of these projects are still operational today, though.

While the list is ranked based on the raw amount of coins that a cryptocurrency’s network rewards, we also measured each crypto’s reward as a function of its total supply. You will be surprised to find out that while a cryptocurrency may reward users with 10,000 coins per block when factoring in its total supply some of the coins’ rewards are very close to that of Bitcoin. This is a reminder to always keep data in perspective.

Bonus

Perhaps the only altcoin with a somewhat intriguing name is Bonus, listed as BNS on various cryptocurrency exchanges. Although this altcoin doesn’t offer much in terms of innovation, the block reward of at least 2,300 BNS is plenty of reason for some miners to jump in. The block reward rate of 2,300 is the minimum as a random bonus will be assigned on top of the original reward.

If we were to compare Bonus’ reward to that of Bitcoin, since there are 2.5 billion BNS in circulation, a 2300 block reward would equate to a 23 BTC reward if the network was Bitcoin. Remember that Bitcoin would have 21 million total coins in existence which is roughly 1/1000 that of BNS. It is important to keep these values in perspective when comparing block rewards.

Mazacoin

MazaCoin is one of those altcoins which has seemingly been around for quite some time. Despite gaining some initial momentum, there are very few use cases for this particular currency. That said, the coin made it onto Poloniex, which is considered to be the leading altcoin exchange to date. Mazacoin had an initial block reward of 5,000, which halves every 12 months. Due to its low trading volume on exchanges, and the 50 million pre mine MazaCoin never amounted to much. With a total supply of around 2.4 billion and a block reward of 5,000, if MazaCoin was a Bitcoin network, the reward would be roughly 50 BTC.

EarthCoin

At one point in time, many people thought Earthcoin could become the next Dogecoin. Rather than positioning itself as a meme, EarthCoin intended to change the world and protect out natural ecosystem  Things did not work out all that well. With a variable block reward – usually, around 10,000 — the coin is plagued by significant inflation. With no clear use cases and no one interested in using Earthcoin, that inflationary supply is doing more harm than good. With a supply of 13.5 billion and a block reward of 10,000, Earthcoin has roughly 500 times the supply than that of Bitcoin. If it were a Bitcoin network, the reward would be around 20 BTC.

Dogecoin

Once called the joke-coin of the internet, Dogecoin turned into something much more powerful than that. Dogecoin gained a lot of mainstream media recognition by sponsored various sports teams and even a NASCAR driver. Even though there is no limit as to how many Dogecoins can be generated in the end, many people still like this concept. The current block reward still sits around 250,000 DOGE, which is way too high. Dogecoin still generates a fair bit of trading volume across exchanges, though. With its current supply of 108.619 billion coins, there are a lot of DOGE in the world. In fact, the number of coins is 5,172 times higher than bitcoin. If this were a bitcoin network, the block reward would be 48.34 BTC.

ReddCoin

When it comes to finding an altcoin with a very large supply, look no further than Reddcoin. There will be 109 billion coins at the end, which will be achieved due to the currency’s high block reward. After initially starting at 300,000 RDD per block, the reward dropped to the 100,000 mark. However, the currency eventually dropped proof-of-work altogether.  It is not a surprise the value of RDD has tanked significantly as more time elapsed. Reddcoin has a total supply of 28.279 billion, resulting in there being 1,346 as many coins as bitcoin. If this were a bitcoin network, the block reward would be 74.29 BTC.

                                                                       MoonCoin

When MoonCoin was first introduced, a lot of people were very sceptical about this process. The developer deliberately introduced significant block rewards, which started at two million MOON. As more time progressed, the reward dropped to 1 million, although mining was halted shortly afterwards. With so many coins in circulation and no way to spend them other than selling MOON in favour of bitcoin, this project ground to a halt pretty quickly. It is still the altcoin with the highest block reward during the time it was actively mined. The current MoonCoin supply sits at 221.64 billion MOON, making it 10,554 times as common as bitcoin. If this were a bitcoin network, the block reward would be 94.75 BTC.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Strategies and Tips for Trading Cryptocurrency

Trading is not Cut in Dry

One fact of trading that’s best to make peace with is that you’re never going to perfectly time your buys and sells. What are the chances you’re going to purchase at the exact bottom and sell at the exact top, coupled with putting enough capital into the trade to make a dent in your wealth, Trading is not cut in dry in the sense that there is only one set path to take. Every person has different goals in investing and trading, and cryptocurrency trading is similar in that regard.

We know firsthand what it’s like to kick yourself over trades that haven’t worked or worked spectacularly yet not have the desired position size. All you can do is live in the now, the past is over. After all, hindsight is 20-20. It would’ve been nice to go all in when Bitcoin was $600 a year ago and cash out on a high return, but that’s not how it works. Imagine if you bought in 2013 when Bitcoin was 1,000, panicked when it dropped to 200 then sold? Imagine that sting. Hindsight is 20-20, we can’t predict the future. Learn from past successes and failures and apply it moving forward. Here are some tips, in our experience, for new cryptocurrency investors.

Understand the Power of Cryptocurrency

We liked our approach to stock investing. Bitcoin and cryptocurrencies are commodities; they are not stocks. They have prices, but they are fundamentally different. The exchange may be the only similarity between the two. We know that the underlying technology powering Bitcoin has potential to be adopted for institutional and retail capital alike. Cryptocurrency’s decentralised nature means that it cannot be shut down or manipulated easily. Many people ask why own Bitcoin, it’s that simple. We believe in the future and so should you. So we’re going along with Bitcoin anticipating capital will continue to flow as it’s potential is realised.

Determining a Strategy

How often will you buy or sell? Some people want to be day traders, but we’ve shown that holding could be the best bet. The general rule of thumb is that the longer of a time horizon you plan on holding for the less risk you incur. This rule carries over into the realm of cryptocurrency from stock investing. However, here may be times to simply cut and run. Declines due to unforeseen structural issues are an indicator to cut losses and sell out.

Initial Investments

Dollar cost averaging one’s purchases of Bitcoin reduces risk in sudden changes. This reduces the sting of or sudden pricing changes, reducing reliance on a single point of entry. By increasing your Bitcoin investment over time, you reduce the desire to buy or sell often. If there’s anything we’ve learned from the long run is that Bitcoin is here to stay (knock on wood). Stick to your gut, but don’t ignore others.

Hedge Your Bets

Various exchanges allow short orders. This allows one to place bets on either side of Bitcoin’s price movements. For example, a simple strategy would be to have 90% long and 10% short. This strategy assumes you are more confident in a long position. So this strategy may cater any level of risk.

Altcoin Trading

It is important not to neglect the power of altcoins, or non-bitcoin cryptocurrencies. Altcoins are less prone to public speculation. Their smaller market caps are more prone to larger swings in pricing. Each altcoin has a purpose and an intent, catering to different niches. There are larger risks associated with investing in altcoins, but also larger rewards. Our personal favourites are DASH, ZCash and Monero. An example would be allocating percentages based on your risk tolerance. It’s something like managing a fund. Some altcoins are more stable like Ethereum, while some are more prone to fluctuation. In one instance a trader might allocate 50% in Bitcoin, 25% in Ethereum, 20% in DASH, and 5% in ZCash.

Get into It

As Bitcoin heads toward a new all-time high, many are eager to reap profits. The ETF disapproval is a sign of changing attitudes for Bitcoin. It was unlikely the SEC was going to approve the ETF. This reinforces how important it is to stay up to date. Get involved; chat on boards, comment on blogs, and follow news on social media. A viable strategy for one person may not work for another. It’s all for naught if you don’t appreciate the power that cryptocurrencies mean.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Coinbase has added margin trading
to its bitcoin exchange

GDAX, the cryptocurrency exchange run by Coinbase, has added margin trading to the platform.

Eligible traders can now trade up to 3X leveraged orders on Bitcoin, Ethereum and Litecoin order books. If you’re unfamiliar with trading and exchanges, margin trading is when you borrow money from your broker to buy or sell more stock than you can afford. It’s essentially a short-term loan. By buying or selling on margin, traders can increase their leverage and buying power, potentially generating profits beyond what their own cash balance would have supported. This feature is mainly geared toward institutional investors. That’s because Coinbase has launched the feature attempting to fit within the boundaries of the Commodity Exchange Act.

This means that traders have to certify that they meet one of the qualifications to be allowed to trade on margin. While the full list is here, the requirements include things like being a corporation with a net worth exceeding $1,000,000 and trading on margin in order to hedge risks associated with your business. Individuals need to have a minimum of $5,000,000 invested on a discretionary basis in order to be allowed to trade on margin. By deciding to build their product within the guidelines of the Commodity Exchange Act, Coinbase has at least initially excluded a large segment of their user base. Other exchanges, like cex.io, offers margin trading to all users — but probably wouldn’t stand up to U.S. regulators.

For Coinbase, moving slowly and maintaining a favorable relationship with regulators is necessary if the company wants to stick around. The company explained: “we’re committed to working with regulators as the blockchain space continues to develop, rather than take on unnecessary risk just to get features out more quickly. Some other digital currency exchanges have decided not to do this. For us, the best approach was to carefully design our margin trading feature and engage with the CFTC to make sure that GDAX remains compliant.”

Additionally, the exchange isn’t currently charging interest or fees to access Margin Trading because they “believe that consumer lending laws require specific licenses to do this.” This move should also please Wall Street investors who were waiting on the recently denied Bitcoin ETF application. With the combination of margin support plus the strict regulatory focus, Coinbase and GDAX could be an ETF alternative for investors wanting to safely purchase bitcoin now.

Fears of a network split have shaken bitcoin while boosting ethereum, dash and monero

Call it the schadenfreude trade.

Bitcoin’s price is taking a beating, having shed about one-fifth of its value over the weekend. At the same time, its biggest rivals in the cryptocurrency space are ascendent: The price of a single ethereum token, the second-largest cryptocurrency by market capitalization, touched an all-time high above $50 over the weekend just as bitcoin’s losses were beginning to accelerate.

Bitcoiners have widely attributed the drop to fears that the bitcoin network might split in two, which is ironic: Ethereum suffered that exact fate over the summer when a contingent of its users refused to accept a mandatory software update that would’ve, among other things, amended the ethereum blockchain to return some of the $50 million worth of tokens stolen during the DAO hack. Bitcoin US-BTCUSD  traded as low as $947 a coin on Saturday, down from around $1,260 a coin on Thursday. That was its highest level since March 10, when the Securities and Exchange Commission rejected a proposed rule change that would’ve allowed for the creation of the first bitcoin exchange-traded fund, sparking a brief selloff.

The two moves are likely interrelated: Data provided by CryptoCompare, a company that supplies data and analytics about the cryptocurrency market, suggest that ethereum has largely benefited from bitcoin’s decline: The bulk of trading in ethereum has been conducted in bitcoin, trading volumes show, suggesting that worried investors are swapping their bitcoins for ethereum. Ethereum isn’t the only cryptocurrency benefiting from bitcoin’s selloff: Dash, the third-largest cryptocurrency by market cap, broke to an all-time high above $100 a coin on Monday. Monero, the fourth-largest digital currency, touched an all-time high above $20.

The bitcoin selloff started around the time that AntPool, the largest collective of bitcoin miners, on Friday adopted a controversial software update known as bitcoin unlimited. The proposed update is what's known as a “hard fork,” meaning that, once it receives a certain baseline of support, everyone running the bitcoin software will either need to accept bitcoin unlimited, or risk being shut out of the bitcoin network. As of Monday, bitcoin unlimited has the highest level of support among any of the proposed solutions to what’s known as the scalability problem: The fact that the bitcoin network is extremely limited in terms of the transaction volume that it can handle. Critics of bitcoin unlimited feel it would strengthen the control that a small group of miners have over the network.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Is This Massive Power Struggle
about To Blow Up Bitcoin?

Bitcoin's price plunged 25% over the weekend on rumors conspiracy theory to take over the network. Long-simmering tensions between two factions hardened, with each side threatening the other with everything ranging from lawsuits to software changes that would completely cut off the opposing group.  Twitter, Reddit and Bitcoin forums were aflame with insults and tough talk as each stakeholder vied to ensure that their piece of the cryptocurrency, whose market cap fell from $20 billion to $15.5 billion, remained secure. 

“We’re dangerously close to what could be the death of bitcoin,” said bitcoin developer Andrew DeSantis over the weekend after he posted a tweet storm Friday that set off alarm bells for many in the community. What triggered the widespread panic was the possibility that the network would be controlled by an oligopoly rather than held in an equilibrium of competing interests. From Thursday to Saturday, the value of bitcoin dropped 25%, though it has recovered somewhat to 15% below. That day, Vinny Lingham, an entrepreneur in the space known for his price targets, said, “The smart money left three days ago.”

The alleged bad actors maintained innocence.

“I think it’s conspiracy theorist stuff,” said Roger Ver, one of the most vocal advocates of a new version of the bitcoin software called Bitcoin Unlimited that, if it gains sufficient control of the computing power in the network, could become the main version of bitcoin and be incompatible with previous versions. (Ver is nicknamed Bitcoin Jesus because of his history evangelising bitcoin.) His fellow Bitcoin Unlimited supporter, Jihan Wu, the co-founder of bitcoin chip manufacturer Bitmain, said by phone from Beijing, “Definitely, I don't have such kind of plan.” Whether or not the conspiracy theories are true, over the weekend, what has so far been a two-year-long he said-she said stalemate turned into an incredibly expensive game of chicken.

What They’re Fighting About

The crisis has its roots in a two-year-old debate over how to scale the network, which currently accommodates, on average, about a handful of transactions a second, based on a data cap of 1MB roughly every 10 minutes. On the surface, the argument is that some participants in the ecosystem want to raise that limit, called the block size, to what, under Bitcoin Unlimited, would be a flexible cap, while the developers who have been designing and maintaining the software for the last several years, a team called Bitcoin Core, want to keep the 1MB limit but make the system more efficient so it processes more transactions per block.

The argument stems from philosophical differences. “At the highest level, there are two camps that see bitcoin becoming two different things: digital gold or electronic cash,” says Adam White, head of GDAX, the professional trading platform of one of the most well-known startups in the space, Coinbase. “Neither is right or wrong. They’re just different perspectives on what the network can become.” The developers’ approach is one more of digital gold — not necessarily putting every coffee payment onto the bitcoin network itself, but having them processed by other, faster networks that would later connect to bitcoin’s to provide finality to the transaction. Bitcoin Unlimited’s vision, supported by a number of miners at this point, is of bitcoin as e-cash — a network that has room for every morning coffee to be processed on bitcoin’s network, which would, incidentally, give them more transaction fees.

However, what might, in the abstract, be called a philosophical disagreement has become, on the ground, an all-out power struggle.

To understand the fight, it helps to know the game theoretic aspects of bitcoin. Bitcoin miners are people and companies with computers that process transactions for the network by adding them to the blockchain, or the ledger of every bitcoin transaction since the network launched in January 2009. Miners are motivated by a payout that the bitcoin software makes as it mints new bitcoin with every block of transactions processed. (This so-called block reward is currently 12.5 bitcoins, or about $13,750 at press time.) In addition to newly minted bitcoins, miners also receive small transaction fees paid by every user sending bitcoin. Wu is involved in mining in two ways: He not only manufactures bitcoin mining chips through Bitmain but also runs the biggest bitcoin mining operation called Antpool.

Designing the game, and the incentives in it, are the developers. Their motivations can range from ideological to technical. Many developers simply want to see a decentralised financial system not controlled by one or a few entities, whether it’s a government or a few big miners. But they need the miners. Without miners, the network wouldn’t exist, and without enough of them, it’s not secure. However, if too few of them dominate, then the delicate balance of no one party fully controlling the system falls apart since mining would be run by an oligopoly. Conversely, if the developers don’t do enough for the miners, the miners can retaliate against the developers.

Because of the developers and the miners both needing each other and have opposing incentives, they don’t fully trust each other. “Bitcoin is one of those things where nobody wants to be seen as controlling it,” says DeSantis. The magic of bitcoin has been the ability for various players with opposing interests to engage in a system that has so far led to an optimal outcome for all of them.

There’s one last group important to the game theory of bitcoin, but before we get to them: The detente between the two sides has lasted for a few years because the people who support bigger blocks (now in the form of Bitcoin Unlimited) had too little computing power on the network to take control of it. Also, certain technical upgrades, including a block size increase, require what’s called a hard fork, which runs the risk of creating two versions of bitcoin if not done with the full support of the community. Many consider this type of hostile hard fork a potential nuclear option in bitcoin — one that could destroy, or at least damage, the industry that, until last Thursday, had a $20 billion market cap.

From Impasse To Panic

On Friday, several exchanges announced that, in the event of a fork, Bitcoin Unlimited would not have the ticker symbol BTC. They were effectively preemptively awarding Bitcoin Core the reputation of being “the true bitcoin.” Many people in the community thought that that would deter Bitcoin Unlimited from forcing a hard fork.

But alarm spread when, later that day, DeSantis posted a 28-point tweet thread pointing out that Wu would soon be launching new facilities that would bring a lot more computing power to the network. (One deal was for U.S.-based facilities with John McAfee’s company MGT set to launch in the second quarter of 2017 and called MacPool.) While that wouldn’t necessarily give Wu or his companies more than 50% of the computing power, the worried developers hypothesized that since Wu’s company Bitmain manufactures the mining equipment that many miners use, purchasers of his mining equipment might feel pressure to support Bitcoin Unlimited so as not to have their supply of mining equipment cut off in the future. That could then tip Bitcoin Unlimited over the threshold that could allow them to, essentially, create a new version of bitcoin that cut off control from the current group of developers, which would then put the Bitcoin Unlimited developers in control and, at the very least, sow confusion in the market about which was the “true” bitcoin, if not make their version of it the dominant one.

The clincher? Bitmain owns BTC.com, and Ver controls Bitcoin.com. DeSantis asserts that, through search-engine strategies, Wu, Ver and their affiliates could lead many newcomers to believe that Bitcoin Unlimited is the “true” bitcoin. (The MacPool website, currently under construction, sports a ticker provided by Bitcoin.com; Ver is an advisor to MGT.)

As DeSantis puts it, “Most of the hardcore Bitcoiners are not good at talking to the press. They’d probably try to tell you about how the code is not the same and they’d go into some mathematical stuff and it would be a nightmare. You’d have a bunch of guys walking around, talking about math, and then other guys” — Wu, Ver, Bitcoin Unlimited — “saying, ‘We’re Bitcoin.com. Use Bitcoin.’” (DeSantis also notes that McAfee has been accused of murder and Ver is a convicted felon.)

In response, the Core team, DeSantis and other bitcoin developers are contemplating their version of the nuclear option: that they change the Bitcoin software so that it no longer works on the hardware currently running it. It would be as if Microsoft decided to change Office so that it no longer ran on PCs, rendering an entire industry useless. (Such a move would hit Wu, as both a manufacturer of the equipment and a mining pool operator, doubly hard.) But Eric Lombrozo, a Bitcoin Core developer, says, “I’d rather that not happen. I think it’d be dangerous for the network to go down that route. It’s basically a warpath…. But all the players have to consider that these things might actually happen.”

The Defense

Both Ver and Wu deny that they plotted to bring online new mining facilities that would force a fork to Bitcoin Unlimited and then push that as the “true” version of bitcoin. Their criticisms of Core are somewhat similar: Both are unhappy that the team has ignored what they believe is a need for bigger blocks, and both have personal gripes about the developers.

Ver says that Core is ignoring very real problems that currently exist on the network that not only slow transaction times but therefore make transactions less safe altogether. He also says that they treated “horribly” several developers who had been deeply involved in developing the protocol when they advocated for increasing the block size.

Wu thinks that Bitcoin Core’s current proposal to make the network more efficient (for technical reasons, called SegWit) is good technology that solves a number of problems. However, he is angry that about a year ago, a number of Core developers and miners came to an agreement in Hong Kong to adopt both SegWit and a small block size increase. Since then, the developers have proceeded with what they wanted — SegWit — but not the bigger blocks the miners desired.

(Calling the Hong Kong agreement “a diplomatic failure” and “botched,” Lombrozo wrote in an email, “The agreement was not signed by the Core team as a whole…it was signed by a few individual contributors and many of us felt that not only was it impossible to deliver what was expected but that it was contrary to the philosophical underpinnings of Bitcoin. … Ultimately, protocol changes cannot be negotiated behind closed doors by small numbers of people.”)

As for theories that purchasers of his mining equipment would feel pressure to support Bitcoin Unlimited, Wu says, “We have to look at the facts — whether I have ever done this to my customers before. No, I have never. Because the customers give us money to buy equipment. Maybe I can talk to them, maybe I can convince them about what is the best interest of bitcoin miners, but I never force them to do anything because that is anti-bitcoin.”

He also notes that some of the computing power in the new mining facilities will mostly be rented out to other miners (10% of the Chinese facility will be controlled by Bitmain) and so those miners, and not Bitmain, will choose whether to run Bitcoin Unlimited or Bitcoin Core on their individual machines. However, despite a March 1 press release announcing MacPool would go online in Q2, he could not give a launch date for either facility and said both were delayed.

When asked about the possibility of the Core team changing the software so it no longer works on his mining equipment (which involves changing something called the proof-of-work, or POW, algorithm), Wu, who first learned about bitcoin in 2011 and launched his company in 2013, said he remembers the first time he heard this threat in a chat forum in early 2016: “I was astonished. Switching the POW algorithm of bitcoin was never the kind of idea you can think of. If someone disagrees with you, you decide to what? I decided this was very political and was about interests, it’s not only about engineering. If it was only an engineering debate, it would not escalate to this level.” His conclusion: “Since they are doing such threatening, I think it’s OK that we run another kind of software, Bitcoin Unlimited.”

Wu says if Bitcoin Unlimited gets enough network power, the fork will occur. This could create two coins — one with less value than the other, as happened last summer when the Ethereum network split into two, creating Ethereum and Ethereum Classic, the latter of which is worth a fraction of Ethereum even though it is technically the original chain. When asked why he would be willing to risk losing what could potentially not only be a huge sum of money but his entire business, Wu says, “I will reject your assumption” — meaning, he refused to even entertain the possibility that Bitcoin Unlimited would become the chain of lesser value.

Hypothetically, the final touches on the Bitcoin Unlimited nuclear option would be if, after the fork, Bitcoin Unlimited allocated some of its computer power to attacking the other chain so that it was unable to function properly. It would be possible technically since, in order to fork, it would need to gain 80% of the computing power, which means the other side would have a fraction right after the split. (Unlimited has ramped up steeply, rising from about 20% to 37% share over the last month, while Core fell from 80% to 62%. Another miner today announced support for Unlimited.) When asked if Wu would undermine Core, he wouldn’t rule it out: “It may not be necessary to attack it. But to attack it is always an option.” Another way of harming Bitcoin Core would be if supporters of Bitcoin Unlimited dumped all their Bitcoin Core bitcoins, driving down the price for Bitcoin Core coins.

Meanwhile, the Bitcoin Core developers and DeSantis say they are working on a compromise to prevent the various nuclear options. Wu declined to comment on whether he is currently negotiating with anyone. However, just in case, Core is working on new versions of the software that wouldn’t run on current mining equipment.

The Way Forward

Back to our game theory analysis: The last group with an interest in bitcoin are the users, whose motivation is to make bitcoin transactions. (Note: exchanges have a role too, but they will ultimately follow the market, hence, for this discussion, we’ll lump them in with the users.) The way in which the network accommodates more transactions may be immaterial to many of them, making them neutral on the e-cash vs. digital gold question. However, their power over the system is economic: If, say, two versions of bitcoin came out — one that reflected the miners’ preferences and one that reflected the developers’ — the one that would prevail (or at least dominate, if both continued to exist) won’t necessarily be the one that the majority of miners support even though that network might be more robust. Nor would it necessarily be the one that the majority of developers support, even though that network might be perceived as being more technically sound or more decentralised. It would be whichever one the greatest number of investors put their faith in.

Wu suggests a futures contract to determine what the market response would be before any nuclear options are pursued. One currently on offer on cryptocurrency exchange Bitfinex shows Bitcoin Unlimited having a fraction of the value of Bitcoin Core. But Wu says the contract is not structured correctly and instead suggests one with three possible outcomes: Bitcoin Unlimited after a fork; Bitcoin Core after a fork; and Bitcoin Core as it is now, no forks. (The current contract could be lumping together the latter two possibilities into one.)

Whether this death match ends in disaster or a truce remains to be seen. After all, Bitcoin's "death" has been pronounced many times. However, while Bitcoin’s price has been seesawing, the value of Ethereum has more than doubled in the past two weeks and quadrupled since January, giving it a market capitalization of almost $4 billion. Bitcoin’s has now risen to $18 billion by press time, though it was as low as $15.5 billion on Saturday. Still, many cryptocurrency traders talk of what they foresee as “the flipping” — the moment when Ethereum’s market capitalization surpasses that of bitcoin’s. Some industry players surmise that if bitcoin underwent some fiasco around the same time Ethereum gained more validation, the two market caps could cross and never reverse. (Bitcoin's block size debate may have also gotten at least one Ethereum developer contemplating reducing the reward to their miners.)

Lingham no longer even cares about DeSantis’s theory that Wu, Ver, McAfee and company planned to use their new mining facilities to force a fork to Bitcoin Unlimited. “I don’t want to delve into the details of whether this is true or not,” he says. “It’s irrelevant. The point is … this should not be possible in bitcoin.”

Despite the bitter grudges held on both sides, multiple sources said that they thought the most likely outcome was that no hard fork would occur. “My suspicion is these people aren’t dumb enough to try to actually, in such a public way, get control of bitcoin because they know it would lead to a big price drop in general, no matter how good the outcome was,” says Peter Todd, a bitcoin protocol researcher who is aligned with DeSantis and Core. “I think the most likely scenario is that nothing will happen. I really mean nothing.”

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Ways To Tell If Bitcoin Is In A Bubble

No one wants to be on the wrong side of a bubble. If you invested in dot.com stocks the end of 1999 or bought a house with an adjustable-rate mortgage in 2008, you know exactly what I mean.When it comes to the cryptocurrency Bitcoin, there's every reason to be cautious. It's not regulated. There's no Federal Reserve behind it. There's no real guarantee for its value, which is determined by software. Forget about deposit insurance like the FDIC.Despite numerous red flags about Bitcoin, it's still all the rage for those championing its role as an alternative currency. I just hope those who love Bitcoin aren't also subscribing to "alternative facts."
 

 

The Basic rules of Behavioural Economics

Even though there's a high degree of machine-oriented determination behind Bitcoin, it's not immune from the laws of human nature. People still get crazy when they start to speculate that the value of something "can only go up." Even though the SEC recently decided not to greenlight an exchange-traded fund based on Bitcoin, let's pause a moment and review some of the basic rules of behavioural economics. Oh, and the same rules that apply to Bitcoin apply to any market, particularly stocks (ahem).

The language of bubbles shouldn't be forgotten. 

Whenever boosters of a speculative investment want to defend it, they always couch it in phrases like "this time is different" or "it's not like real estate or tech stocks." But these phrases only give us emotional insulation. The reality is that anything subject to speculation has a cliff-like downside. They are never like Treasury bonds.

One of the world's experts in bubbles — Prof. Robert Shiller, a Yale economist — said Bitcoin "was an amazing example of a bubble" back in 2014. Prof. Shiller authored the classic Irrational Exuberance, the go-to book on the dot.com and housing crashes. He also won a Nobel Prize in Economics. Prof. Shiller also recently said the U.S. stock market is overpriced.

Animal Spirits Outrun Logic.

When something is the object of speculation, there are more people betting on it than investing in it. If you're investing in a stock like Warren Buffett does, for example, you hold onto it for years to reap the benefits of appreciation and dividends. Speculation is largely based on emotion, or what Keynes called "Animal Spirits." A herd mentality cares almost nothing about relative values, that is if the vehicle is overpriced.

Traditional Valuation Models Don't Apply.

Here's an interesting test. Two ways of judging stock prices is to look at their price to earnings (P/E) or price to book (P/B) ratios. They will tell you, at a glance, if a company is a bargain or highly priced. What's the P/E for Bitcoin? How do we know if it's over- or under-valued? There have been four large run-up/crashes in Bitcoin valuations in recent years. One decline was as much as 93%. Can you imagine losing that much in a mutual fund, bond or single stock? Any real investment strategy involves knowing the potential downside of an investment. If it's all seen as upside, then it's pure speculation.

There's no transparency because there's a casino mentality.

Hey, everyone likes to roll the dice or buy lottery tickets every now and then. It's part of our nature. But unless you are gifted with clairvoyance and an uncanny ability to do statistics and probability in your head, you probably won't be able to "beat the house." You simply don't know what the next roll is going to be or what cards they hold. You can only guess.

So I find it a little troubling that there's already an "official Bitcoin casino" and CNBC "is hoping for $3,000" in a Bitcoin price prediction. "Hoping?" What's that based on? It's certainly not based on underlying earnings or dividends. Okay, I'll concede that Bitcoin shouldn't be directly compared with the traditional measures for stocks. We are talking apples and oranges. But you can't escape the fact that Bitcoin is immersed in the language of speculation and is still an opaque instrument for most of us. Those are two undeniable danger signals for me.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Blockchain the perfect data protection tool for banks using mainframes

Once exclusive to Bitcoin security, blockchain can now protect real-world coins for major fiscal players

Technophobic thrillers in popular media are always trying to convince us hackers are just a few malicious keystrokes away from crashing the world economy. And while doing such a thing is more complicated than just “deleting all the money,” one could certainly do a great deal of damage by changing what a computer thinks is true.

Wouldn’t it be great if there were software that could guarantee which data was and was not correct, backed up by the most powerful computer processors available? I give you blockchain, which more and more fiscal institutions are using to protect their data, backed up by the undeniable power of mainframes.

Blockchain first entered the public’s (OK, the techie public’s) awareness in the orbit of Bitcoin, as a means of securing that controversial digital currency’s code against someone who decided to break into the right server and add a couple zeroes to their account. But Bitcoin haters need not close this tab in disgust just yet, as blockchain has come into its own as a reliable security measure for more than just black market storefronts.

This powerful software has emerged from its point of origin to be the toast of the online security community, with giants such as HSBC and Bank of America looking to leverage blockchain to keep their data safe. Fortune predicts 15 percent of banks will use blockchain by the end of 2017, growing to 66 percent in four years.

What blockchain does is link every step of a transaction together into a discrete, secure “block,” with each step visible to each stakeholder. Each stakeholder must receive permission from every other stakeholder involved in each step to change anything about that step in the “chain” (see what they did there?) that forms the total process. Any attempt to make a change without all relevant permissions is flagged and negated. That’s not to say it’s impossible for a malcontent to forget every one of those permissions—any security expert will tell you no system is foolproof—but cracking a system with lots of steps and complexity is sure to discourage all but the most determined invaders.

Blockchain useful, safe for banks

A Blockchain is especially useful and safe for financial institutions because it creates a single ledger of all transactions and interactions rather than relying on cumbersome reconciliations between widespread systems to stay up to date. These reconciliations are a bank fraudster’s best friend, as criminals rely on the time between a fraudulent transaction going through and the system reconciling the discrepancy to get away scot free. This also makes precise, real-time visibility possible for data analytics, which is the driving force of market research in pretty much every field, finance perhaps most of all.

This is where big iron comes in. Not only are mainframes powerful enough to house a blockchain process, but they’re also fast enough to perform all the necessary checks to maintain blockchain’s level of security and perform all the stakeholders’ required analytics. Multiply that power by a whole bank of mainframes, like what most fiscal institutions use, and you’re putting up a big iron wall to stymie any online attackers. Blockchain sets in place which online information is true and mainframes make sure the truth is written in stone.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Could blockchain be the operating system of the cities of the future?

 

Many trends on the horizon offer opportunities that could transform our cities. From self-driving vehicles and the sharing economy through to cloud computing and blockchain technologies, each of these trends is quite significant on its own. But the convergence of their disruptive forces is what will create real value and drive innovations.

Take blockchain and the sharing economy as an example. Bringing these two forces together can potentially disrupt established companies like Uber and Airbnb. The success of these companies is largely due to their ability to make use of existing assets people owned, that had been paid for, but from which new value could be derived.

Effectively, these companies set up digital platforms that harnessed “excess capacity” and relied on other people to deliver the services. The same applies to other so-called “sharing economy” companies that merely act as service aggregators and collect a cut off the top. In the process, they gather valuable data for further commercial gain.

But can this business model be challenged and enhanced for the benefit of those who are delivering the service and creating the real value? Can technology be used to bypass the third party and allow direct peer-to-peer collaboration within a distributed governance structure? What could a “peer-owned” and “peer-run” marketplace look like? Blockchain technology could just be the answer.

What is different about blockchain?

You can think of blockchain as the second generation of the internet — a transformation from an internet of information to an internet of value. Blockchain allows suppliers and consumers — even competitors — to share a decentralised digital ledger across a network of computers without the need for a central authority.

The assets that can be described on the blockchain can be financial, legal, physical or electronic. No single party has the power to tamper with the records — sophisticated algorithms keep everyone honest by ensuring data integrity and authentication of transactions.

But the impacts of blockchain go well beyond financial services and transactions. Its real value is in establishing trust-based interactions and accelerating the transfer of governance from centralised institutions to distributed networks of peer-to-peer collaboration. The impact can be profound: a centralised institution acting as intermediatory in a transaction of value is now at risk of being disrupted because the same service can be provided on the blockchain through peer-to-peer interaction.

Blockchain gives service providers a means to collaborate and derive a greater share of the value for themselves. Smart agents on a blockchain could do just about everything provided by a service aggregator. The technology’s trust protocol allows autonomous associations to be formed and controlled by the same people who are creating the value. All revenues for services, minus overheads, would go to members, who also control the platform and make decisions. Trust is not established by third parties, but rather through an encrypted consensus enabled by smart coding.

The transformation has already begun

We already have examples of this technology in action. Arcade City, a global community of peer-to-peer services, is planning to offer a ride-sharing service on the blockchain. To catch a ride, the user buys digital currency (known as tokens), creates an offer and commits funds for the ride. A driver claims the offer, matches the funds to signal their commitment to provide the service, and picks up the passenger. The blockchain releases the funds as soon as the user acknowledges completing the ride. Arcade City has a city council, which will overlook the system for three years until it is fully decentralised and up and running.

The same concept of using distributed public record technology can be applied to a wide range of urban applications. For example, an energy startup in Perth is looking to trial a peer-to-peer technology solution that would allow consumers to offer excess energy, available through their solar panels, on the blockchain. A clever code matches the suppliers with consumers without the need to go through the energy provider.

Still more questions than answers

The blockchain technology and ecosystem around it are evolving rapidly, and are probably raising more questions than answers. How do we establish a system of transparent governance to ensure the longevity of the blockchain? What about security, speed, cost and, more importantly, regulations? As with other disruptive technologies, there will be winners and losers. If the technology is successfully managed for scalable growth, it could very well disrupt established norms and transform our societies. Large layers of data generated by consumers today, which are controlled by hubs, can become public. In a world driven by blockchain, consumers can monetize their own data to derive greater value.

By knowing when and how to take advantage of this technology, we have an opportunity to transform the digital platforms for tomorrow’s cities. The blockchain becomes the city’s operating system, invisible yet ubiquitous, improving citizens’ access to services, goods and economic opportunities. Today, the technology is yet to mature. It remains to be seen if the expectations can live up to reality. But, in many ways, this is quite reminiscent of the internet in the mid-1990s. Not many people would have predicted its significance back then. Had we understood the impacts of the internet 20 years ago, what could we have done differently to create more value?

That is where we stand today with blockchain. The power of this transformation will become more compelling as the hype settles down and we begin to unleash the possibilities.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member