“People who buy Bitcoin are stupid”

18

October

2017

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Jamie Dimon, CEO of JPMorgan, has been in the news a lot lately expressing his critique on the Bitcoin cryptocurrency. In an interview he said Bitcoin is “a fraud” that will eventually blow up. He continued by saying it’s not a real thing and that eventually will be “closed”. (English, 2017) By closed he believes governments will crush the coin down one day. Besides that, he said: “if you are stupid enough to buy it, you’ll pay the price for it one day… The only value Bitcoin has is what the other guy will pay for it” Cheng and Tausche, 2017). He finished off by saying he would not hesitate to fire any JPMorgan trader who is caught trading in Bitcoin. (Son, Levitt and Louis, 2017)

How much truth is there in the statements of Jamie Dimon? While I do agree there is a lot of hype behind cryptocurrencies lately, I do not agree with his comment that Bitcoin will eventually be shut down. I believe the only possible threat for Bitcoin would be an attack on the Bitcoin network, which is still highly unlikely to stop the currency. Bitcoin is a network run on thousands of nodes geographically dispersed all over the world and thus different country’s legal jurisdictions apply to the currency. For governments to stop this would require all the governments to come together and agree to shut it down, which is something that has not happened often if you take a brief look at history. If people lose interest in the currency or the currency fails to achieve mass scale adoption, the price would of course drastically reduce. This will not stop the currency from existing however.

On a more positive note, he did however state that blockchain, the underlying technology of Bitcoin and other cryptocurrencies, is actually a good technology. In his words: “God bless the blockchain”. JPMorgan actually created its own cryptocurrency product called Qourom and was a founding member of another cryptocurrency initiative called the Enterprise Ethereum Alliance.

What do you make out of Jamie Dimon’s comments about Bitcoin? Do you think he has a valid point or does this show his knowledge of Bitcoin is limited?

English, C. (2017). Jamie Dimon is back to trashing bitcoin. [online] New York Post. Available at: http://nypost.com/2017/10/13/jamie-dimon-is-back-to-trashing-bitcoin/ [Accessed 18 Oct. 2017].

Cheng, E. and Tausche, K. (2017). Jamie Dimon says if you’re ‘stupid’ enough to buy bitcoin, you’ll pay the price one day. [online] CNBC. Available at: https://www.cnbc.com/2017/10/13/jamie-dimon-says-people-who-buy-bitcoin-are-stupid.html [Accessed 18 Oct. 2017].

Son, M., Levitt, M. and Louis, M. (2017). Jamie Dimon Slams Bitcoin as a ‘Fraud’. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin [Accessed 18 Oct. 2017].

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How blockchain will make the world a fairer place

11

October

2017

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The potential of blockchain technology has been a hot topic in IT news over the past years. For a lot of people, blockchain is probably most known for being the technology under Bitcoin. The potential of this technology reaches far beyond Bitcoin however. According to some people, blockchain has the power to  the most disruptive invention since the internet itself (Hiesboeck, 2017). Even though blockchain may have numerous potential benefits in various industries, in this post I want to focus on how blockchain can re-establish trust between the government, business and the public.

To start off, what is blockchain technology actually? Blockchain is essentially a distributed database to which data can only be added, meaning historic data cannot be lost nor corrupted (Montali, 2017). From this definition, three important properties emerge. The first one is transparency. The data on a blockchain is publicly embedded within the whole network, meaning it’s transparent by all parties. Secondly, the network cannot be corrupted. Altering or deleting historic information is virtually impossible. Thirdly, since the ledger is maintained and owned by users, transaction costs are reduced since there is no need for a third party. (Blockgeeks, 2017) So in what industries could blockchain re-establish the trust between the government, the public and businesses?

Charity
It is estimated that around 700 million people around the world are living in extreme poverty. The Brookings institute estimates that around $80 billion is needed to lift all of them out of extreme poverty. Around twice of this amount is spent on global aid every year, however since a lot of the major non-profit organization and NGO’s are inefficient and bureaucratic, only a small portion of this amount reaches the people in need. It is estimated that about 15-20% of donations actually reaches the recipients. (Kastelein, 2017) Blockchain technology could make it possible to significantly increase this percentage by reducing inefficiencies and reducing fraud or excess fees by making organizations more accountable.

Election voting
The US election in 2016 was not the first election where people accused one party of manipulating votes. The Turkish presidential election in 2014 and the Russian election in 2012 are two other recent controversial cases. Currently, most of the voting is done by in-person voting using paper ballots. Even if there would be no instance of fraud, any manual human process is prone to errors. Blockchain technology could be used here for transparent and secure vote counting, voter registration and identity verification. (Fisk, 2017). Creating an immutable ledger of votes could make elections more fair and democratic.

Even though these two industries could be two of the most important industries where blockchain could re-establish trust between entities, there are many more industries blockchain could disrupt. Examples are using blockchain to increase the transparency of government systems, distribute unemployment benefits in a better way, trustworthy ticket selling and ensuring compensation for artists who create value.

There are a lot of challenges blockchain has to overcome before it will reach this stage. However once it’s there I believe the technology has the potential be able to disrupt virtually any industry that deals with data or transactions of any kind.

What do you think? Do you think blockchain technology has the potential disrupt industries or do you think it is just an overblown hype?

 

 

 Hiesboeck, M. (2017). Blockchain is the most disruptive invention since the Internet itself – not just in finance. [online] Digital Doughtnut. Available at: https://www.digitaldoughnut.com/articles/2016/april/blockchain-is-the-most-disruptive-invention-since

Montali, D. (2017). Blockchain Will Disrupt Expedia and Airbnb, TUI CEO Says. [online] Skift. Available at: https://skift.com/2017/07/11/blockchain-will-disrupt-expedia-and-airbnb-tui-ceo-says/

Blockgeeks. (2017). What is Blockchain Technology? A Step-by-Step Guide For Beginners. [online] Available at: https://blockgeeks.com/guides/what-is-blockchain-technology/

Kastelein, R. (2017). Dutch Foundation Wants to Disrupt Charities Using Blockchain Technology. [online] Blockchain News. Available at: http://www.the-blockchain.com/2017/08/03/dutch-foundation-wants-disrupt-charities-using-blockchain-technology/

Fisk, P. (2017). Blockchain beyond banking … 19 industries which the new technology is likely to disrupt. [online] Thegeniusworks.com. Available at: http://www.thegeniusworks.com/2017/06/blockchain-beyond-banking-19-industries-new-technology-likely-disrupt/

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Technology of the Week – How the Sharing Economy changed the Hospitality Industry

22

September

2017

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Remember how you went to a travel agency to book your holiday? Nowadays you just open your laptop and arrange your entire trip within minutes. Information technology and Web 2.0 made a lot of change possible and encouraged new ways of booking hotels and buying flight tickets online. New players are forcing established companies to change their business plans or even forcing them out of the market. One of these new and disruptive players is Airbnb.

How did Airbnb shake up the tourism accommodation landscape?

In order to find out how Airbnb and peer-to-peer accommodation disrupted the travel industry, we first need to define what a disruptive technology is. Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses (Christensen, Raynor, McDonald, 2015).

There are three criteria for a technology to be disruptive:
1. Initially low popularity, but later goes mainstream
2. Lacks important qualities of prevailing product, but is often cheaper and has other advantages. It later catches up with mainstream standards while preserving advantages that drove early success
3. Disruptive technologies have very different business models than incumbents

How do these criteria apply to a ‘sharing economy’ business model such as Airbnb?

Initially Airbnb had limited popularity as it was aimed at a small market segment which was not exploited by incumbents. In the summer of 2015, the amount of guests increased to 17 million which suggests that Airbnb expanded rapidly and gained incredible popularity. (McAlone, 2017)
Airbnb meets the second criterion as the company had a lack of important qualities of the traditional travel model used by established travel agency companies. Initially, Airbnb was not able to compete with its competitors in terms of brand reputation of hosts, staff friendliness and customer service skills. However, the online platform excelled in other fields such as being cheaper and easier to use than the traditional way of booking accommodations.
Finally, Airbnb has challenged companies using the traditional travel agency model by providing an online marketplace permitting ‘peer-to-peer accommodation’. One of the main challenges associated with a peer-to-peer platform is security. Airbnb has overcome this challenge by providing a secure booking platform where interaction is encouraged and trust can be established between hosts and guests.

Will Airbnb remain an established player in the travel industry?

We believe there is one relatively new technology that has the potential to be the next industry disruptor: Blockchain.
Blockchain is the underlying technology behind the bitcoin currency. It is essentially a distributed database to which data can only be added, meaning historic data cannot be lost nor corrupted. Peer-to-peer applications can also be created by using a Blockchain based network, meaning the organization will be decentralized. This will help to democratize the sharing economy by making it cheaper to create, operate and use the platform. It could coordinate the transaction process (which Airbnb is currently doing) with self-executing smart contracts. This will result in a home rental application only involving the homeowner and the renter, cutting out the middleman, in this case AirBnB.

Christensen, Raynor, McDonald (2015). What Is Disruptive Innovation?. [online] Available at: https://hbr.org/2015/12/what-is-disruptive-innovation [Accessed 20 Sep. 2017].

McAlone, N. (2017). This chart shows exactly how insane Airbnb’s growth has been over the past 5 years. [online] Business Insider. Available at: http://www.businessinsider.com/airbnbs-summer-reach-has-grown-by-353-times-in-5-years-2015-9?international=true&r=US&IR=T [Accessed 22 Sep. 2017].

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