How Blockchain Is Changing Finance

 How Blockchain Is Changing Finance


Global Financial System

Our global financial system moves trillions of dollars a day and serves billions of people. But the system is rife with problems, adding cost through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. To wit, 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively. It’s no small wonder that regulatory costs continue to climb and remain a top concern for bankers. This all adds cost, with consumers ultimately bearing the burden.

It begs the question: Why is our financial system so inefficient? First, because it’s antiquated, a kludge of industrial technologies and paper-based processes dressed up in a digital wrapper. Second, because it’s centralized, which makes it resistant to change and vulnerable to systems failures and attacks. Third, it’s exclusionary, denying billions of people access to basic financial tools. Bankers have largely dodged the sort of creative destruction that, while messy, is critical to economic vitality and progress. But the solution to this innovation logjam has emerged: blockchain.

How Blockchain Works
Here are the basic principles underlying the technology.

Distributed Database
Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.

Peer-to-Peer Transmission
Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.

Transparency with Pseudonymity
Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.

Irreversibility of Records
Once a transaction is enteredin the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.

Computational Logic
The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.

Blockchain was originally developed as the technology behind cryptocurrencies like Bitcoin. A vast, globally distributed ledger running on millions of devices, it is capable of recording anything of value. Money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer to peer, because trust is established not by powerful intermediaries like banks and governments, but by network consensus, cryptography, collaboration, and clever code. For the first time in human history, two or more parties, be they businesses or individuals who may not even know each other, can forge agreements, make transactions, and build value without relying on intermediaries (such as banks, rating agencies, and government bodies such as the U.S. Department of State) to verify their identities, establish trust, or perform the critical business logic — contracting, clearing, settling, and record-keeping tasks that are foundational to all forms of commerce.

Given the promise and peril of such a disruptive technology, many firms in the financial industry, from banks and insurers to audit and professional service firms, are investing in blockchain solutions. What is driving this deluge of money and interest? Most firms cite opportunities to reduce friction and costs.  After all, most financial intermediaries themselves rely on a dizzying, complex, and costly array of intermediaries to run their own operations. Santander, a European bank, put the potential savings at $20 billion a year. Capgemini, a consultancy, estimates that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications.

To be sure, blockchain may enable incumbents such as JPMorgan Chase, Citigroup, and Credit Suisse, all of which are currently investing in the technology, to do more with less, streamline their businesses, and reduce risk in the process. But while an opportunistic viewpoint is advantageous and often necessary, it is rarely sufficient. After all, how do you cut cost from a business or market whose structure has fundamentally changed? Here, blockchain is a real game changer. By reducing transaction costs among all participants in the economy, blockchain supports models of peer-to-peer mass collaboration that could make many of our existing organizational forms redundant.

For example, consider how new business ventures access growth capital. Traditionally, companies target angel investors in the early stages of a new business and later look to venture capitalists, eventually culminating in an initial public offering (IPO) on a stock exchange. This industry supports a number of intermediaries, such as investment bankers, exchange operators, auditors, lawyers, and crowd-funding platforms (such as Kickstarter and Indiegogo). Blockchain changes the equation by enabling companies of any size to raise money in a peer-to-peer way, through global distributed share offerings. This new funding mechanism is already transforming the blockchain industry. In 2016 blockchain companies raised $400 million from traditional venture investors and nearly $200 million through what we call initial coin offerings (ICO rather than IPO).

These ICOs aren’t just new cryptocurrencies masquerading as companies. They represent content and digital rights management platforms (such as SingularDTV), distributed venture funds (such as the DAO, for a decentralized autonomous organization), and even new platforms to make investing in ICOs and managing digital assets easy (such as ICONOMI). There is already a deep pipeline of ICOs this year, such as Cosmos, a unifying technology that will connect every blockchain in the world, which is why it’s been dubbed the “internet of blockchains.” Others are sure to follow suit. In 2017 we expect that blockchain startups will raise more funds through ICO than any other means — a historic inflection point.

Incumbents are taking notice. The New York–based venture capital firm Union Square Ventures (USV) broadened its investment strategy so that it could buy ICOs directly. Menlo Park venture capital firm Andreessen Horowitz joined USV in investing in Polychain Capital, a hedge fund that only buys tokens. Blockchain Capital, one of the industry’s largest investors, recently announced that it would be raising money for its new fund by issuing tokens by ICO, a first for the industry. And, of course, companies such as Goldman Sachs, NASDAQ, Inc., and Intercontinental Exchange, the American holding company that owns the New York Stock Exchange, which dominate the IPO and listing business, have been among the largest investors in blockchain ventures.

As with any radically new business model, ICOs have risks. There is little to no regulatory oversight. Due diligence and disclosures can be scant, and some companies that have issued ICOs have gone bust. Caveat emptor is the watchword, and many of the early backers are more punters than funders. But the genie has been unleashed from the bottle. Done right, ICOs can not only improve the efficiency of raising money, lowering the cost of capital for entrepreneurs and investors, but also democratize participation in global capital markets. If the world of venture capital can change radically in one year, what else can we transform? Blockchain could upend a number of complex intermediate functions in the industry: identity and reputation, moving value (payments and remittances), storing value (savings), lending and borrowing (credit), trading value (marketplaces like stock exchanges), insurance and risk management, and audit and tax functions.

Is this the end of banking as we know it? That depends on how incumbents react. The Blockchain is not an existential threat to those who embrace the new technology paradigm and disrupt from within. The question is, who in the financial services industry will lead the revolution? Throughout history, leaders of old paradigms have struggled to embrace the new. Why didn’t AT&T launch Skype, or Visa create Paypal? CNN could have built Twitter since it is all about the sound bite. GM or Hertz could have launched Uber; Marriott could have invented Airbnb. The unstoppable force of blockchain technology is barreling down on the infrastructure of modern finance. As with prior paradigm shifts, blockchain will create winners and losers. Personally, we would like the inevitable collision to transform the old money machine into a prosperity platform for all.

Chuck Reynolds

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A Brief History of Blockchain

A Brief History of Blockchain


   Blockchain Innovation

Many of the technologies we now take for granted were quiet revolutions in their time. Just think about how much smartphones have changed the way we live and work. It used to be that when people were out of the office, they were gone because a telephone was tied to a place, not to a person. Now we have global nomads building new businesses straight from their phones. And to think: Smartphones have been around for merely a decade. We’re now in the midst of another quiet revolution: blockchain, a distributed database that maintains a continuously growing list of ordered records, called “blocks.” Consider what’s happened in just the past 10 years:

  • The first major blockchain innovation was bitcoin, a digital currency experiment. The market cap of bitcoin now hovers between $10–$20 billion dollars and is used by millions of people for payments, including a large and growing remittances market.
  • The second innovation was called blockchain, which was essentially the realization that the underlying technology that operated bitcoin could be separated from the currency and used for all kinds of other interorganizational cooperation. Almost every major financial institution in the world is doing blockchain research at the moment, and 15% of banks are expected to be using blockchain in 2017.
  • The third innovation was called the “smart contract,” embodied in a second-generation blockchain system called ethereum, which built little computer programs directly into blockchain that allowed financial instruments, like loans or bonds, to be represented, rather than only the cash-like tokens of the bitcoin. The ethereum smart contract platform now has a market cap of around a billion dollars, with hundreds of projects headed toward the market.
  • The fourth major innovation, the current cutting edge of blockchain thinking, is called “proof of stake.” Current generation blockchains are secured by “proof of work,” in which the group with the largest total computing power makes the decisions. These groups are called “miners” and operate vast data centers to provide this security, in exchange for cryptocurrency payments. The new systems do away with these data centers, replacing them with complex financial instruments, for a similar or even higher degree of security. Proof-of-work systems are expected to go live later this year.
  • The fifth major innovation on the horizon is called blockchain scaling. Right now, in the blockchain world, every computer in the network processes every transaction. This is slow. A scaled blockchain accelerates the process, without sacrificing security, by figuring out how many computers are necessary to validate each transaction and dividing up the work efficiently. To manage this without compromising the legendary security and robustness of blockchain is a difficult problem, but not an intractable one. A scaled blockchain is expected to be fast enough to power the internet of things and go head-to-head with the major payment middlemen (VISA and SWIFT) of the banking world.

This innovation landscape represents just 10 years of work by an elite group of computer scientists, cryptographers, and mathematicians. As the full potential of these breakthroughs hits society, things are sure to get a little weird. Self-driving cars and drones will use blockchains to pay for services like charging stations and landing pads. International currency transfers will go from taking days to an hour, and then to a few minutes, with a higher degree of reliability than the current system has been able to manage.

These changes and others represent a pervasive lowering of transaction costs. When transaction costs drop past invisible thresholds, there will be sudden, dramatic, hard-to-predict aggregations and disaggregations of existing business models. For example, auctions used to be narrow and local, rather than universal and global, as they are now on sites like eBay. As the costs of reaching people dropped, there was a sudden change in the system. Blockchain is reasonably expected to trigger as many of these cascades as e-commerce has done since it was invented, in the late 1990s.

How is technology transforming transactions?

Predicting what direction it will all take is hard. Did anybody see social media coming? Who would have predicted that clicking on our friends’ faces would replace time spent in front of the TV? Predictors usually overestimate how fast things will happen and underestimate the long-term impacts. But the sense of scale inside the blockchain industry is that the changes coming will be “as large as the original invention of the internet,” and this may not be overstated. What we can predict is that as blockchain matures and more people catch on to this new mode of collaboration, it will extend into everything from supply chains to provably fair internet dating (eliminating the possibility of fake profiles and other underhanded techniques). And given how far blockchain come in 10 years, perhaps the future could indeed arrive sooner than any of us think.

Until the late 1990s, it was impossible to process a credit card securely on the internet — e-commerce simply did not exist. How fast could blockchain bring about another revolutionary change? Consider that Dubai’s blockchain strategy (disclosure: I designed it) is to issue all government documents on blockchain by 2020, with substantial initial projects just announced to go live this year. The Internet of Agreements concept presented at the World Government Summit builds on this strategy to envision a substantial transformation of global trade, using blockchains to smooth out some of the bumps caused by Brexit and the recent U.S. withdrawal from the Trans-Pacific Partnership. These ambitious agendas will have to be proven in practice, but the expectation in Dubai is that cost savings and innovation benefits will more than justify the cost of experimentation. As Mariana Mazzucato teaches in The Entrepreneurial State, the cutting edge of innovation, particularly in infrastructure, is often in the hands of the state, and that seems destined to be true in the blockchain space.

Chuck Reynolds

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Kiwi Fruit, Chat Bots, and Marriage

Kiwi Fruit, Chat Bots, and Marriage


Who in their right mind would marry a Kiwi Fruit or a Minion?

Who in their right mind would want to have a conversation with a Minion… or a Kiwi Fruit?

Nobody would, right?

So why would anyone want to talk to a Chat-bot?

Can somebody explain why and how, in what is supposed to be the 21st Century, this article cites research which says that the large majority of millennials either enjoy chatting with chat-bots or would like to do so?

How stupid!

Am I 'Old School' or obsolete because I prefer to talk to real people?

This reminds me of those articles I've read about people who fall in love with doll companions or robots. To some degree it also reminds my of the idea of marketing with automated webinars (although that might have its proper purpose in certain situations).

My point is that I see something similar happening in "modern" MLM today.

It's gotten so hi-tech that it's being drained of humanity. There isn't enough human-to-human contact…. especially ON the internet side of it. 

People (and companies) have discovered they can get recruiting and selling leverage with technology and they've ramped it up soooo much that there is almost no humanity left it the process.

They think they can substitute technology completely for human contact. They reason that if it takes them X amount of time to personally recruit and mentor 2 people, maybe they could recruit and mentor 4 people in the same amount of time if they automated all or part of the process.

Then they go on and think that if they can use technology to recruit and train 4 people, why not try to find better technology that will allow them to recruit and sell even more by doing completely away with personal relationships transparency, or accountability of any kind. 

That's the way the world is going and MLM is following right along in parrallel. And yet people wonder why there's an employment problem. It's a version of, "Where's The Beef!?" Now it's, "Where's The People!?"

Another factor in the equation is, of course, the fact that many people today, especially Millenials, don't communicate very well verbally, i.e. without all the trendy filler-jargon like, "like"…"totally!"…"awesome"…"cool"…"yeah man", etc.

I wonder what the Gettysburg Address would have been like if the only tools and skills Abraham Lincoln had was a Blackberry and Twitter. 

I actually think an MLM which stipulated that leaders could not recruit a few people 'wide' until they had enabled (with proper mentorship) a certain number of their recruits to go deep…I think it would ultimately result in much stronger teams and steadier growth.

Putting real communication back into MLM, and especially internet marketing, should be a higher priority for leaders.

In my opinion, two of the reasons there are so many 'crash and burn' situations in MLM and internet marketing today is because (a) people don't know how to properly vet a product or opportunity, and (b) so many products and opportunities are mostly (if not entirely hype).

The virtual reality of the internet has become our new 'Matrix' but there is little real substance and/or accountability. Much of what we see, and even our relationships, on the internet, is based on hype, facade, and 'act as if' bullshit. "New" is interpretted to mean, "good" or "effective". Unverified testimonials are interpreted as guaranteed future results.

That's why I want to communicate with or develop a relationship with somebody on the internet, the very first question I usually type is, "Can you talk on Skype?"

Anyway… that's my rant. I couldn't believe it when I read that article above. I just find it incredible that human beings are getting so enamored with robots! Maybe someday you'll be able to go into a Walmart, buy a robotic 'companion' of your dreams, get legally certified as married at the check-out counter (which will be robotic too, of course), and walk out of the store happily married. 

Leonardo DaVinci, James Watt, Issac Newton, and Henry Ford would be so amazed at how far we've come.


Art Williams
Freelance Copywriter
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The Difference In A Nutshell – Social Media Marketing vs. Content Marketing

The Difference In A Nutshell – Social Media Marketing vs. Content Marketing

Yeah, I know. You're busy. I am too. We all want everything 'in a nutshell'. So here it is…what's the difference between social media marketing and content marketing?

Those are both terms you hear tossed around all the time. On his great site called Public Relations and Social Media Insight, Jeff Domansky shared an article called, "The Difference Between Content Marketing and Social Marketing | Simply Measured.

The only problem was…the link takes you to a 404 error code. Something must have happened to the original article between then and now.

But….Jeff knows his stuff and his comment in the article intro gives us the information we need:

Jeff Domansky's interpretation:

What's the difference between content marketing and social marketing? Is it that content marketing focuses on content production and creative thought, while social media marketing handles distribution? Depends!

I think that's it. Do you agree?

But there's even more to be gleaned from looking at Jeff's page.

Look at all the other interesting articles there. There's tons of stuff! For example, if you scroll through it, you'll find a video PLR resource that will knock your socks off… especially if you use the video background option on the TCP Custom Capture Page Creator like I do.

All of Jeff's sites on are top-notch and, as I've always said, I have always liked I just wish it was a bit less expensive.

That's it! Promised I'd be brief, right?

Thanks Jeff!



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