08 March 2018

EDITORIAL - Cryptocurrencies, Bitcoin Mining and Blockchain

What is it all about? Will it change anything? When?

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We hear cryptocurrency, bitcoin mining and blockchain in many conversations these days. The views seem to range from those who think it is hype, to those who are skeptical of the impact they face, to the very few who are convinced the world has changed forever.

At the bottom of this article is a funny video that summarizes three main flavours of sentiment toward cryptocurrency.

In this article I hope to stimulate the thinking of colleagues who may be in government, in senior management, on the advisory boards of nonprofits, directors of profit driven enterprises and those who invest. Some 2,600 are connected by LinkedIn and the rest (458K) read this blog.

Recently, the feed from CNBC ran the headline 'Secretive Chinese bitcoin mining company may have made as much money as Nvidia last year'.  The article went on to say:
  • "Based on conservative estimates of gross margin of 75 percent and operating margin of 65 percent, Bernstein analysts calculate that Beijing-based Bitmain made $3 billion to $4 billion in operating profits in 2017". 
  • "By contrast, Nvidia's operating profit was $3 billion during the same period, according to Bernstein's U.S. semiconductor team estimates".
So how can this be?  
Mostly because changes are occurring so rapidly. Of course even the casual observer will understand the implications of Nvidia Corporation profits after 24 years of capital intensive development being overshadowed by a bitcoin mining operation in its infancy. Bitmain was founded five years ago (2013) and is likely a less capital intensive operation. An interesting sidelight to this story is that Nvidia may, in fact, hold an important key to higher computing densities and lower power consumption in bitcoin mining with the SoCs and parallel processing capabilities it owns.

Okay, so what? 
Here's what. The lack of stability and massive speculation evident in cryptocurrency have blinded those who should be paying close attention to blockchain technology in the rest of the economy. 

Defining the blockchain in detail is beyond the scope of this article, however, several articles have appeared in InfoStream (Use the search feature). A recent InfoStream article featured Ginni Rometty CEO of IBM, was simple and explained blockchain to the US National Governors Association.

What is it all about? Will it change anything? When?
The main blockchain takeaways for your consideration are these:
  1. Blockchain will convert every existing value chain into an ecosystem of collaborators working to deliver products and services to the customer with full transparency, financial security, lower cost and high levels of trust.
  2. If you aren't in the ecosystem that evolves to serve your customers, you will lose your customer base and likely your business.
  3. Blockchains already exist for food safety, country of origin, manufacturing processes, funds transfer, smart contracts and financial services, to name just a few.
  4. If you move very quickly, there may still be an opportunity to be a driver of the blockchain and ecosystem that is rapidly developing to serve your customers.
  5. According to Gartner, IBM, McKinsey and other analysts blockchain will have a more powerful disruptive effect than did the Internet.
  6. In my lifetime, I have been associated with four major disruptions: Electrical to Electronic; Wired to Wireless; Analogue to Digital; and, the Bandwidth/Capacity of Optical Fibre. The speed at which blockchain is being embraced is beyond anything I have witnessed, possibly because there are so few barriers and such a high degree of benefit for all.
In my advisory activities, I use the term 'digital velocity' to define the acceleration (velocity) an organization must achieve to overcome the cultural and process inertia (gravity) preventing change and therefore future sustainability.

This is going to sound harsh, but I observe that many are ambivalent or ignorant of the consequences they face, while others sit on the deck of their  modern 'Titanic' discussing competitive improvements as the ship silently slips below the waves. My intent here is to sound an alarm and to provide a call to action.

Blessed are those who find wisdom, those who gain understanding, for she is more profitable than silver and yields better returns than gold. Wisdom, she is only a friend to those who act. It's time to get the help you need and act!


1 comment:

  1. Great post with beneficial information to all thanks for sharing with us. I like it very much.
    Cryptocurrency development