In this post and infographic, we want to explain one of the biggest financial breakthroughs in a century to you, built on top of Bitcoin. This innovation will eventually enable new, consumption-based business models, microtransactions and even the livestreaming of money. The implications of this are hard to overstate.
Why haven’t you heard about this before?
You’ve probably heard some things about the cryptocurrency Bitcoin, the global network that allows people to directly transfer value without middlemen.
The media has been talking a lot about the explosive price action over the past year, but they’re not doing a great job at educating people how all of it works and what amazing innovations are being created. Admittedly, explaining Bitcoin isn’t an easy job. Even the inventor struggled with it!
Writing a description for this thing for general audiences is bloody hard. There’s nothing to relate it to.
– Satoshi Nakamoto, 05/07/2010
Bitcoin is complex to understand, because it combines so many different fields. It’s like trying to understand how the Internet technically works. Most people don’t, but they still trust it with their sensitive information.
When it comes to money, we’re much more reluctant with our trust. Even though most people don’t have a clue how the existing financial system works either, we still want to understand this new thing. So let us explain!
The simple idea behind Bitcoin
In essence, Bitcoin allows you to be the absolute owner of your money, instead of trusting someone else to take care of it at a cost. Not everyone is interested in that or happy about it, which is fine. It can help a lot of people that don’t have access to financial services today.
Bitcoin was not invented to replace your bank, but to provide an alternative financial system that allows you to transfer value anytime, anywhere in the world. It consists of several components that make this possible.
One of them is the widely praised Blockchain technology. This is a database that permanently records ownership of the money and value on the network throughout time. Contrary to popular belief, it is an unattractive tool for criminals, because they don’t want to leave permanent evidence of their crimes.
Bitcoin’s popularity problem
Over the past years, this system has become more popular than the technology can handle. There are huge amounts of people that want to send near instant and near free transactions anywhere in the world, because they can’t do this with their banks.
To process so many transactions, you would eventually need a centralised system with a small amount of powerful computers, with the best Internet speeds in the world. Unfortunately, most of the world does not have that luxury, but we also don’t want a small amount of people to be in control of Bitcoin.
As a result, only a few hundred thousand transactions can be processed per day, and when there is a lot of demand, it can become slower or more expensive to do so.
So a bunch of developers have been spending a lot of time to create promising solutions for this scalability problem.
We created an infographic to explain their innovation to you in simple terms.
You can find it at the bottom of the post.
The Lightning Network
Lightning is a system that works on top of the Bitcoin blockchain, so it uses actual bitcoins. It is like a checking account to your savings account, which allows you to instantly transfer money at almost no cost.
On the blockchain, everyone who helps to secure the network needs to store all of the transactions, but on the Lightning Network this is not needed. This way bitcoin can be used cheaply, by far more people around the world.
The Lightning Network is already live today, but is still in its very early stages. On this site you can see all the connections people have already set up (About 1000 at the time of writing this).
This is what the early Internet looked like as well, hopefully the Lightning Network will become a global success as well.
How can you get started with the Lightning Network?
Later this year, more and more applications will allow you to use the Lightning Network yourself, keep an eye out for this! For now it is being tested by experts.
If you want to learn more about the Lightning Network, we highly recommend you to check out this megathread on Reddit.
If you’re interested in more simple explanations about Bitcoin, Cryptocurrencies and Blockchains, you can follow @SDWouters and @CnuddeLouis on Twitter, or hire them as speakers for your event or organisation. We can bring you an accessible story, tailored to the interests of the audience.
We also give workshops to work out the possibilities for your organisation to use blockchains and/or cryptocurrencies, and to set up new types of business models and revenue streams using innovations such as the Lightning Network. Contact us for more information.
A few months ago our blockchain consultant Sam Wouters wrote a post on LinkedIn about “How blockchains can be used in Insurance”. One of the few thousand readers was John Davison, CIO at First Central Group. This is the parent company behind several insurance and reinsurance businesses, such as UK-based motor insurer 1st Central.
Blockchain use case in insurance
John had 2 use cases in mind and invited us to come help his architects and developers to figure them out. So Sam and Ward flew over to Guernsey for 2 days of workshops with 2 objectives.
1. Create a thorough understanding of blockchains.
2. Determine whether it makes sense to use a blockchain for the 2 presented use cases.
For the first objective we gave an introduction to open and private blockchains, a deep-dive into where we stand in the Financial and Insurance industries and a presentation on smart contracts.
It was most impressive to us how quickly the team picked up on the blockchain knowledge. These are definitely some of the smartest people we’ve worked with so far.
We solved the first case pretty quickly. It was about ensuring data integrity across different steps in the Insurance value chain, to save large amounts of time and money on the auditing process. While that sounds like a heavy operation, we decided on an elegant, lightweight solution. It can be implemented using either open or permissioned blockchains and FCG will start working on it later this year.
The second case was about managing insurance capacity, a process that helps insurers and reinsurers assess their risks. Today this is a slow process which makes running an Insurance business a lot more risky and complex.
We can’t tell you anything more about our solution right now. FCG will create an MVP to see whether it works as well in practice as it did on the whiteboard. It’ll be more challenging but potentially highly disruptive for the Insurance industry.
We have a lot of faith in the team’s capabilities to execute the plans and we look forward to further helping them do so.
“At FCG we’re constantly evaluating technology advancement across all industries, looking for disruptive opportunities in our current businesses. Sam and Ward from Duval Union Consulting are well-known and well regarded experts in blockchain and associated technologies and it was an easy decision to ask them to collaborate with our in-house technologists here in Guernsey.
We set out to deliberately challenge the current insurance paradigm, testing whether and how the technology underpinning bitcoin could be utilised within our vertical.
As CIO of FCG it was really encouraging to see how the two day whiteboard session unfolded, with valuable input from all attendees. The output of these sessions is intriguing, promising a revolutionary approach to traditional retail insurance – I eagerly await a proof of concept later this year.
Many thanks again to Sam and Ward for their input, their constructive challenge and their contribution to FCG’s forward thinking. I look forward to working with them over the coming months”
If you’re looking into how blockchains can be used for your business, contact us for a presentation, workshop or bootcamp!
Guernsey itself was a lovely place to visit by the way!
Amazon recently dropped 2 bombshells: Its $13.7B acquisition of Whole Foods and the $9B offer for Slack. They came at a welcome time for us, because we were in the middle of creating this Amazon case.
In all of our research and Trendwatching, Amazon is one of the most fascinating organisations we have ever seen. It employs unique strategies according to highly regarded philosophies, which has lead it to unprecedented success.
We believe that every organisation, large or small, has much to learn from Amazon. If you’re in any kind of commerce or logistics, you absolutely must pay attention to Amazon. In The Amazon Case we’ll explain you why they are winning and how they are doing it.
With Digital Transformation in full progress across nearly all sectors, the interest in Artificial Intelligence for business is growing exponentially. Industry leaders are investing billions in its potential. AI is not just “the next big thing”, it’s the thing we always knew would happen and it is going to transform all of our organisations. (including Duval Union Consulting!)
Many questions arise around this topic: What is Artificial Intelligence and what isn’t? What is possible today? How can my organisation use AI? Will this replace my job? What can we expect in the future?
We will answer these and more in our presentation. We help you understand the impact of digital on your business and give you concrete steps to start taking action.
If your organisation wants to take the first steps in this valuable field, let’s talk ASAP! Contact us
Today it’s still difficult to understand blockchains
The business people that picked up on the hype sometimes spread misinformation, while the technical people that do understand how blockchains work, aren’t always the best at explaining it in simple terms (or shouldn’t be spending their time doing that).
A 3 minute video or blogpost isn’t enough to understand a blockchain, but you also don’t want to read for hours and still wonder how exactly this all works. At the end of the day, you want to know if you can use a blockchain for your business and how to do that.
We’ve spent the past few years learning about blockchains, to answer those questions as simple as possible. We will help you understand why blockchains are so revolutionary and how they work, regardless of your personal background.
In our 13-page e-book, we explain why Blockchains exist, how they work and what you can do with them.
Sign up and we’ll mail you our E-book
Last month, Airbnb CEO Brian Chesky took to Twitter to ask people what Airbnb should launch in 2017.
One of the top suggestions was for Airbnb to start accepting payments in bitcoin.
— Stephen Cole (@sthenc) 26 December 2016
Thanks for the 2,000 submissions. Most popular: Bitcoin, Guest Loyalty, upgraded homes & services, group travel, things to do, and Mars https://t.co/DbrBSTDlCl
— Brian Chesky (@bchesky) 30 December 2016
I think it’s a great fit. People that are likely to choose one “digital” solution are also more likely to use another. The big question is of course: Will we see it happen this year?
How else could a blockchain be used?
Unsurprisingly, among the discussions about this news, there were some people that suggested we should take things a step further and decentralize Airbnb on a blockchain.
— Matt Liston (@malloc8) 26 December 2016
This once again emphasized the problem I have with Ethereum. As a speaker on Bitcoin and Blockchains, people sometimes ask me why I don’t talk about Ethereum more, which is the second biggest blockchain by market cap. It’s because I remain unconvinced of the problems Ethereum solves for the foreseeable future. (Please prove me wrong though)
Ethereum aims to be “the world computer”, by providing a platform for decentralized applications and smart contracts. Putting apps on decentralized networks would be great…IF the cloud hosting industry was an overly expensive oligopoly, with a lot of downtime and censorship for those using it. Instead, it is a highly competitive market that is getting cheaper and more reliable year after year.
Decentralizing control of Airbnb, Uber… by using smart contracts, also does not solve a problem in my eyes. It would probably create them, considering the complexity involved.
Yes, this would cut out the 6-12% cut Airbnb takes on bookings, but customers are already saving a lot of money by using Airbnb. We also love that we can fall back on a company when we are travelling abroad and things go sour.
Don’t decentralize for the sake of it
The main investment firm in the cryptocurrency & blockchain space, Digital Currency Group, seems to think the same way about decentralization for the sake of it. (and reminded me that I still wanted to write this article!)
“Our view is decentralizing a company or an idea for the fact of decentralization does not necessarily solve a real problem,” said Silbert. “Although, we haven’t seen everything, so maybe there is a decentralized project out there with merit.
“We’ve essentially looked at every Ethereum company looking to raise capital in a traditional way, and we’ve passed on all of them,” added Silbert.
In my eyes the real killer solution that cryptography could bring to Airbnb and the whole “sharing economy”, is transferrable reputation. I initially hoped this was the reason Airbnb acquired the ChangeTip team, considering their experience in cryptography and integration with various platforms.
With transferrable reputation, I mean the ability to transfer the trustworthy reputation that you built up on one service, to others, so you can get started there quicker.
If you’re a new host on Airbnb without any reviews, it can be hard to get your first booking even though you’re verified. However, if you can prove that you’ve been buying and selling on eBay for years and have dozens of reviews, if you can prove that you’ve been helping your neighborhood out through TaskRabbit or that you’ve been providing services through Fiverr, to name a few, then this could give you a reputation boost to get started.
Creating an ecosystem of businesses
There is a major win for all sharing economy businesses to get on board with a model like this, as they are all up against the incumbents in their own industries. Like I said in the beginning of the post, people that are likely to choose one digital solution, are also more likely to use another.
If users carry the effort they’ve put into a platform with them through one shared identity, then they have even more of a reason to stay on-board of this ecosystem.
Ideally, this identity would be fully controlled by the user and not by a centralized, vulnerable intermediary. After all, we’re doing things in radical new ways here. To do this, we would need to use a blockchain.
Like everything in crypto-land, there is a trade-off though. Digital-first businesses are all about our data and users being in control could challenge that if they become less willing to give up their information. I personally believe that if these businesses continue to be as transparent as they have been, it’ll all be fine, but perhaps that’s naïve.
A universal, user-controlled digital identity is a long shot, but worth it for all of us. I’m interested to see how this will play out!
Want to learn more about blockchains and Bitcoin? Get in touch!
De Persgroep was one of our first Digital Transformation clients, as media was one of the first sectors to feel the power of digital disruption.
We helped De Persgroep with their transformation strategy and sat down with CEO Koen Verwee to talk about the changing media landscape, their transformation journey and most importantly, their realisations.
Check out the full interview below:
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Around November 2015, we worked together with CapitalAtWork, an Asset Manager, to help them with their future vision and Digital Transformation. Directly after our collaboration, Claude Eyschen was appointed as CDO to take ownership of the digital agenda.
Ever since we’ve done various in-house presentations for CapitalAtWork about the changing world of finance and the blockchain, to help them keep track of how the financial sector is evolving so they can take the right actions.
We sat down with Claude and General Manager Maarten Rooijakkers, to talk about the transformation of CapitalAtWork so far.
Check out the full interview below:
Want to start your transformation too? Contact us email@example.com
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- (Food) Retailers, wouldn’t it be convenient if you could get rid of the whole checkout part of your store?
- Brands, wouldn’t you love it if you could see how your customers react when they pick up your products in store?
- Point-of-Sale software providers, wouldn’t you just hate it if your product became completely obsolete?
How Amazon Go might change the game
If you haven’t already seen the latest from Amazon, check out their Amazon Go launch video:
Wow! No lines, no checkout…and no privacy. Amazon conveniently didn’t mention in the video that they will be using cameras to automatically track what you pick up. It is once again a case of customers trading off privacy for convenience, as we’ve seen many times over the past years.
An automated system like this would make Point-of-Sale software providers completely obsolete in the long run… unless they create a better system like this themselves. The disruptors are getting disrupted!
Supermarkets and other retailers would love it as the checkout process is THE bottleneck and it is challenging to manage their workforce to keep an optimal flow. If initial tests by Amazon prove successful, chances are they’ll start selling their solution to others in both food- and non-food retail.
That’s not all though, if we’ve learnt one thing about Amazon over the past years, it’s that they like playing the long game.
Amazon Go’s long game
You may think that Amazon is launching this just to bring convenience to their customers. You may think they will try to overtake the physical channel with these smart supermarkets that can be super-optimized based on all the data. Amazon realises the cost and timeframe of that is huge though, and in the mean time there are a lot of short-term business opportunities.
Amazon will likely begin registering customers’ facial expressions when they pick up products. They will then sell this data to the brands that make the products. Up until now it’s been impossible for brands to get indications of what consumers think of their products’ branding in their “natural habitat”. A tracking system like Amazon Go would enable a whole new level of analysis and accurate A/B testing for them.
This is a gamechanger. We’re not saying this technology will take over the world within a year, but it will definitely have major implications if the trials are well received.
How will you deal with this future? What’s your organization’s vision on the future and do you have a strategy to play a strong role in it? We can help you create a future vision, strategy and a concrete roadmap of steps you need to take to become future-proof.