It was just your normal bipolar week in the virtual currency world, as comically corrupt DEA agents and sketchy CEOs vied for the headlines against yet more positive signals from Wall Street.
1. Banks and the Blockchain
The week opened with the WSJ discussing the announcement of former NYSE CEO Duncan Niederauer joining Tera Exchange as an advisor, adding to the recent run of Wall Street veterans aligning themselves with virtual currencies. Banks continue to be excited and/or worried about the threat of the move to digital banking, with Barclays CEO Anthony Jenkins noting the potential disruptive force of banking services being offered from non-banks. His quote on the strategy behind the free Pingit service hit the three biggest potential benefits we are exploring with various distributed ledger applications:
We are looking for the 'triple win' - removing costs, improving control and enhancing the customer and client experience.
The week ended with UBS announcing the opening of a technology lab dedicated to the exploration of blockchain based protocols in processing financial transactions. Once again, their stated goal is identifying gains in efficiency and cost. Which makes sense when reading this post from JDX Consulting, claiming that Dodd Frank compliance costs the eight largest banks $34 billion annually, along with 60.7 paperwork burden hours (incidentally, "paperwork burden hours" is on a short list for one of the most soul-crushing phrases I have ever heard).
2. DEA Cray Cray
My favorite roundup of the bumbling shenanigans of DEA agent Carl Mark Force IV (incredible name) and Secret Service agent Shawn Bridges was Fusion's story 5 other insane things a corrupt DEA agent did while allegedly stealing Bitcoin from Silk Road:
The complaint is an astonishing, and frankly amusing, tale of two bumbling agents who seemed to think that virtual currencies were confounding enough to the government that it would never figure out what they were up to. Force allegedly messed up in many ways, including signing his real name, “Carl,” to an unencrypted email from one of his monikers, “French Maid.” According to the government, Force blackmailed a suspect he was investigating, stole nearly a million dollars worth of bitcoin, and sold information about the investigation to Silk Road operator Dread Pirate Roberts for his own personal gain. That’s all pretty bad.
3. R3 Advisor Corner: Richard Gendal Brown Bitcoin As Smart Contract Platform
[In my talk] I observed that these two worlds also differ in one other respect: the Bitcoin-like systems could be disruptive to existing institutions if they gained widespread adoption, whereas Ripple-like systems seem, to me, to be far more closely aligned to how things work today and are, perhaps, a source of incremental innovation.
If this observation is correct, then firms looking at this space probably need to assess the technologies through different lenses. The question for banks for Ripple-like systems is: “how could we use this to reduce cost or improve our operations” whereas the question for Bitcoin-like systems is: “how would we respond if this technology gained widespread adoption?”
And to answer the last question, one must be sure to really understand what the system under analysis really is!
For me, it is a mistake to think about Bitcoin solely as a currency. Because the Bitcoin currency system is a masterclass in mirage: underneath the hood, it’s a fascinating smart contract platform.
[Disclosure: this is a shameless plug, as I am an investor in Align]
Congrats to Marwan and team for this milestone. And I continue to like their approach in keeping the blockchain where it should be: behind the scenes:
“The key is that there are significant advantages for the businesses using the blockchain in terms of savings in time and money,” Forzley explained. “In addition, there is no change of behavior required. The blockchain is used behind the scene as a rail that moves fiat to fiat between two parties.”
5. IBM all in on IoT
Interesting overview of IBM's Internet of Things strategy from Fortune, with the headline that they plan to invest $3 billion over the next four years in building out the IBM business unit. Too bad we have already ruined the Internet of Things...