Look longterm for crypto investments

There’s a possibility that some big winners come out of the crypto projects. Sure, most are junk but like the tech boom, a few big winners may emerge. There’s a lot debate about how to value crypto assets. Most of that pertains to assets that are being used as intended now.

With many projects either not yet active, or still in the very early stages, any valuation based on data or metrics seems unlikely to be accurate. Investments need to be longterm, as Jeremy Epstein writes in How do you value crypto-assets? at Never Stop Marketing

if you are serious about profiting from this long term trend towards blockchain-based ownership of assets that will have value within decentralized networks, then the smart move is to ignore the short-term crypto mania and use this time to go as deep as you can on the fundamentals.

Do what you can to understand HOW a crypto-network is put together and how it will work. If you are about to make an investment, find someone who has really done his or her homework.

As an example of someone that’s done their homework, he cites the Store of Value blog.

Using crypto to pay viewers & other new business models

Jeremy Epstein looks at how Amazon is integrating advertising into their streaming video service, and how it could be applied to crypto-enabled business models of the future:

Let’s leave aside the legitimate fear that now Amazon has even MORE information about you, locked away in proprietary databases, and can manipulate you at will since who cares about that anyway, right?

What Amazon is now doing, better than anyone in the history of TV has ever done, is tie content viewing directly to revenue.

For every show you watch, intro you skip over, episode you quit halfway through…every single click, you are going to earn some sort of crypto-token for it.

That’s right, you will get paid to watch TV. (That’s all we need, right? At least my kids can become revenue generators now.)

Vendors will run AI algorithms on all of the data that you (and others) generate and serve even more relevant ads based on your viewing habits.

You’ll get your content for free and you will get paid to watch it.  Then, you’ll use those crypto-tokens to buy the products that advertisers put in front of you (which is paid for in the same crypto-tokens), all part of the circular economy.

It likely won’t be Amazon that will find a way to pay you, as they’ve shown they are happy to keep your data in exchange for finding ways to sell more, but there are new business models, made possible by crypto and blockchain.

via Amazon Shows How You Will Get Paid in Cryptocurrency to Watch TV at Never Stop Marketing…

Crypto: Will there be real developments in 2018?

It is not easy to keep an eye on the “long game” during periods of mania like the one we are experiencing. The attention of the world is on the currencies, but people like CNBC are missing the point. The bulk of the iceberg lies below the water. The same is true with crypto. That is where you should keep your eyes as well.

via 2018: The Year the Crypto Sh*t Starts Getting Real at Never Stop Marketing…

You can’t “blockchain” everything

Matt Levine on the “blockchain” projects attempting to adopt to real world, which doesn’t function as neatly as needed. Blockchain opens up a a lot of new possibilities, but you can’t simply port physical businesses to a blockchain. New models are needed in some cases, and in most, blockchain isn’t the answer.

Levine, of course, references “tech” company Juicero:

You might call this the Juicero Problem: You can build a computer ecosystem and associate it with bags of fruit, and encourage people to use the computer ecosystem to squeeze the bags of fruit, but not everything that happens to the bags of fruit in the real world can be completely controlled by your computer ecosystem. You can’t prevent people from squeezing the bags with their hands. The world exists, and it is messier than your protocols want it to be.

via The Blockchain Is Not the World at Bloomberg

Using blockchain technology to more accurately measure value

in any transaction, you want to maximize across a few vectors: value for your customers value for your partners (and employees) value for society value for the planet today value for the planet tomorrow …and probably more

via How Blockchain Technology Can Help Measure Value at Never Stop Marketing…

Blockchain Based AI is Coming

As Deepak Dutt, CEO of AI-based identity proofing company Zighra says, “When data is commoditized, AI algorithms become the most valuable part of the ecosystem.” In other words, we’ll see a power shift from those who own big sets of data to those who build smart, useful algorithms. That’s great, but if we’re moving data to blockchains, some big, thorny questions still exist. For example: Where does the data go? How is it discovered and utilized? Why would people put their data in there? And don’t the “big guys” still have a huge advantage in terms of building powerful AI? Welcome to the world of Blockchain+AI

via Why you want blockchain-based AI (even if you don’t know it yet) at Never Stop Marketing…

Examples of implementing blockchain technologies

Jeremy Epstein lays out how blockchain technologies can be utilized in two great, simple examples. In the first example, he shows how a smart contracts could be used for a SEO marketer:

In a smart contract, we set up the rule that says, “if the result for search term ‘blockchain marketing,’ goes to Never Stop Marketing on May 21, then pay Sandy 2 Bitcoin. If not, only pay .5 BTC”

We might agree that we will use the .json feed from Google (called an “oracle”) to serve as the arbiter and then, we would both sign it with our unique cryptographic signatures.

I would put the 2 BTC into an escrow account for payment.

Then, we let it run.

On the prescribed date, the contract queries Google, sees the result and the appropriate amount is released immediately (or not, if it fails). Either way, the contract is recorded in a blockchain and open to verification (here’s one I ran).

Done, basically no friction or time delay. The provider of the service, in this case, SmartContract gets a transaction fee of .0001 BTC.

And in his second example, he shows how a decentralized rideshare app could help users capture the value created by usage:

Riders need Zoozs in order to pay for rides. Drivers accept Zoozs in return for rides.

As there is a finite number of Zoozs-or a predictable inflation to it based on the protocol rules- (though they are digital so they can be cost-effectively sliced into multiple decimals), the value of each Zooz increases as the demand for them increases.

Let’s think of it this way and keep it very simple.

There are 100 Zoozs out there.

Each one is worth $1.

There are 100 network participants. 50 drivers and 50 riders.

Each ride costs 1 Zooz.

As word gets around that La’Zooz is cheaper than Uber, more people want Zoozs. So they trade their dollars or Bitcoins for Zoozs which increases the price of a Zooz to $2. So now, everyone who has a Zooz has $2 worth of value instead of $1.

The purchasing power has doubled, so you can afford 2 rides for 1 Zooz instead of 1. So you sell half a Zooz to someone who needs one, keeps the Zooz you want for buying rides and get the profit from the other one.

The drivers who were charging 1 Zooz now see the value of the ride they gave in the past go from $1 to $2 (retroactively) and are more inclined to accept Zoozs because they expect more people to join the network. In effect, by taking these tokens, you are getting value today AND getting value in the future.

Instead of Uber capturing the value that accrues, the owners of the network (the token holders) capture the value. Whoa!

 

Amazon’s growing competitor list may be a problem

From Michael Coren at Quartz on the history of competing with so many companies, as Amazon does:

Perhaps no other company in history has sold so many different products (354 million) while competing against so many other companies (hundreds). In the past, that power hasn’t lasted. Amazon is betting it will be different.

On how it’s worked in the past:

General Electric (GE) fell into this trap after World War II. As GE brought hundreds of industries under its roof, the company’s stock began to track US booms and busts. Today, analysts compare GE’s portfolio of business from jet engines to oil-field safety valves to an actively managed mutual fund—and one that doesn’t beat the market. Since the mid-1940s, the $181 billion conglomerate has barely outperformed the S&P 500. Almost all of its standout performance came during the 20-year tenure of CEO Jack Welch in the 1980s and 1990s–a management feat that hasn’t been repeated.

Amazon has a nearly unprecedented advantage and that may be damaging in the long-term:

Modern antitrust theory, rooted in the ideas of “consumer harm” from monopolists’ high prices, misses the threat posed by Amazon, Khan argues. The structural advantages Amazon wields over competitors gives its the ability to price products below cost and restrict access to customers. Over time, Amazon’s stranglehold on the market may degrade product quality, variety, and innovation, and enable exploitive pricing after competitors are eliminated.

While they don’t fit the classic definition of a monopoly, Amazon is aware trouble may lie ahead and is prepared:

The company’s lobbying budget ballooned to $11.4 million in 2016, a six-fold increase over 2011, reports the Washington Business Journal. Amazon now retains at least 77 lobbyists, two of them former heads of the Department of Justice Antitrust Division during the Obama and George W. Bush Administrations, brought on to help ensure the Whole Foods acquisition.

Maybe it’s different this time, or perhaps Amazon will someday be unseated by the likes of OpenBazaar or another blockchain enabled marketplace.

 

Cowen & Levine on Where Tech Will Take Finance

Two of my favorite writers discussed where fintech is headed.

From Matt Levine:

The point of most innovations in consumer finance has been precisely to reduce its presence in our lives: Instead of talking to a bank teller to get money, you use an ATM. Instead of physically walking into a broker’s office to talk about which stocks to buy, you buy index funds through a web page. Or, now, you click to enroll in an app and it does all of your asset-allocating and stock-picking and tax-harvesting and so forth for you. I think that a lot of financial technology is heading in the direction of perfecting that vanishing act, so that in 20 years you’ll just think about financial things less than you do now.

Really ambitious proponents of blockchain technology, though, envision a world in which a lot of identity information — your citizenship and marital status and college degrees and employment and certifications and whatnot, maybe your fingerprints and retinas and DNA, as well as of course your credit information — are encoded on a blockchain and used in every aspect of your life.

And from Cowen:

Perhaps I expect bigger changes than you do, so let me follow up on a few possible future scenarios. Here’s one to start with: Big data and algorithms will become so good that only the good credit risks will be able to borrow. Of course this will help many creditworthy people, but the social-insurance function of credit might disappear with large numbers of risky borrowers locked out of the loan market and perhaps some insurance markets too.

 

Levine is, as usual, quite level-headed about new developments and seemingly prepared to be underwhelmed. Cowen sees bigger potential problems, which he’s also wont to do.

The next phase of blockchain adoption

From Jeremy Epstein’s post The 2 Phases of Adoption: Marketing in a Blockchain World at Never Stop Marketing:

I expect the first phase of adoption within the marketing world to be focused on the question of “how do we use blockchain tech to do what we already do more efficiently?”

Phase 2 is going to require the most forward-thinking CMOs to ask themselves “ok, what new business opportunities and threats are going to emerge because of the arrival of blockchain technologies that we can take advantage of and need to defend ourselves against?”

Clearly, we’ve seen an onslaught of ICOs recently with teams looking to launch projects quickly while the money is flowing in. As may be expected, this hasn’t resulted in the best quality projects. A lot is going to change in the 2nd phase, It’s likely years away either, as cycles are sped up immensely in the crypto world.