Jules Urbach is the brilliant founder and CEO of OTOY, a rockstar virtual reality and 3D company. But reading this, I did fear at first that he’s taking a bit too much of a Magic Leap (pun intended) here:
When I ask him how virtual reality will be able to encompass our increasing habit of watching videos on our smartphones, he has one answer: sunglasses.
“You’ll be done with any other screen,” he says. “You won’t need it. It will be generated on a surface in the air. Put your finger over your palm, it’s a phone. Your desk becomes a laptop.”The resolution two generations from now will give you a 4K experience, so you probably won’t go to a movie theater. Why would you buy a wall-sized TV?”
I wouldn’t disagree with the glass approach (or, a bit more far fetched: contact lenses, like Vernor Vinge proposes in Rainbows End). But the “done withy any other screen” sounds like funky hyperbole. Screens are getting bigger for a reason. Not just because they can.
It’s not primarily a matter of technical feasibility. Engineering the super shades might take a bit longer that folding a Google cardboard, but hey the Magic Leap guys are on it. And the promise is right: no more weird little screens on microwaves, printers or fridges. Even your phone could probably live without it’s main screen. And your personal Netflix will do nicely without a non-virtual big screen on the wal.
But what’s with all those non-core watching use cases? Let’s take television. Watching TV implies somewhat that somebody is attentively following what’s happening on a screen. Which, most likely, you won’t. One of the primary use cases of any TV set (not just wall-sized whales) is the animated wallpaper. TV’s main job is to de-dull any room.
Well, seems like Magic Leap has fixed this, by enabling you to fix any virtual device spatially in any real place. Just watch the first 15 seconds of the video and see what’s happening with the YouTube screen. This might be how a future TV set behaves:
Case closed? Maybe not. TV sets do augment our physical reality in a very social kind of way. It’s an experience which may be flat but is inherently a shared, for good or worse. The question will be: why do we really put moving images on a wall-sized TV? We will have to look at the proper use cases more diligently. When I watch a movie with my daughter, projected on a wall, she watches me watching. Don’t I dare to check my Facebook while we sit together. Will I then become a glasshole, secretly overlaying the movie with my Twitter feed?
It might be more obvious with the movie theatre case. How much of going to the movies is the large screen? How important is the social aspect of a dedicated public room, a cinematic cathedral? What’s the significance of mostly going in a pack or at least a twosome, but rarely alone?
And, as a matter of practicability, you will not wear your glasses 24/7. Maybe not even the far fetched future scifi lenses.
That’s why, most likely, we’ll be surrounded by even more screens, big or small. But wearing your magic holodeck/-lens leap glasses, you might be able to easily replace what’s on those screens.
What is TV good for? The linear, traditional TV of 1969. No, really. This is a legit question. It’s the 21st century. Rigid timelines of massively parallel broadcasts of more of the same should be a thing of the past. Or, maybe not yet.
Unreal stats: is TV an immortal unicorn?
What is TV good for? The linear, traditional TV of 1969. No, really. This is a legit question. It’s the 21st century. Rigid timelines of massively parallel broadcasts of more of the same should be a thing of the past. Or, maybe not yet.
OK, look at the numbers, viewer shift is happening. To quote this complaint of the American Marketing Association:
Adults between the ages of 50 and 64 spend 191 hours per month watching traditional (rather than time-shifted) TV, according to Nielsen, and those over 65 watch more than 223 hours per month. Teens, by contrast, spend 84 hours per month watching TV.
The younger they are, the less they watch. Like bingo, traditional television smells a bit like an unkempt retirement home. People are dying here! TV is past its prime. Thank you, case closed. Or, is it?
Now bear with me. Let me read you the Oxford Dictionaries’ definition of watch.
Look at or observe attentively over a period of time.
Do 50-64 year olds “observe attentively” for more than 6 hours per day what’s happening in the box? Mind you, this is an average we’re looking at. There must be people out there “attentively observing” the tube 24/7. And if you ever observed attentively a Teenager: does the majority of teens have an attention span of 2 hours plus of single-minded daily dedicated observation of anything? Besides that: a daily active usage of 2 hours plus sounds like user stats any super successful web service would kill for. You’re looking for a Facebook killer? Take grampa’s television.
There seems to be something a bit off-kilter. So I decided to take a fresh look at this TV thing again.
and TV’s job is …
What are you looking at?!
Working with my friends at Magine TV, a Stockholm-based OTT TV service, I looked for some answers by applying Clayton Christensen’s Jobs To Be Done-framework. JTBD’s core concept looks like this: people don’t buy a product. They “hire” a product to get a “job” done. The researcher’s job is to identify the job people want to get done.
The outcome can, sometimes, be rather surprising. Christensen’s milkshake-example is all about the insight, that if you know what job a product is hired for, you can much better improve and scale.
“The fact that you’re 18 to 35 years old with a college degree does not cause you to buy a product,” Christensen says. “It may be correlated with the decision, but it doesn’t cause it. We developed this idea because we wanted to understand what causes us to buy a product, not what’s correlated with it. We realized that the causal mechanism behind a purchase is, ‘Oh, I’ve got a job to be done.’ And it turns out that it’s really effective in allowing a company to build products that people want to buy.”
Same goes with TV. We know for a fact that billions of people are “hiring” television on a daily base. But what is television’s job to them?
Jobs To Be Done is qualitative research. You try to find answers by analyzing longform interviews, which follow a clearly defined timeline. Never ask directly. Stated preferences are your enemy. You chat your people up to get the the gist of what you need to know.
As a former full time journalist, I felt quite comfortable in going this direction. And it worked reasonably well. Most results are of course proprietary. But let me share a couple of things with you: forget about inform and entertain as the core driving factors. There are two core jobs TV has to fix, depending on personal needs. Because not all of you TV viewers are created equal. What we can identify are two quite different sets of viewer personas:
there are the bespoke attentive TV personalities
and there are the many owners of an animated wallpaper
total attentive immersion: your personal off switch
Totally immersive must watch TV: your world lives in a box.
Let’s start with the fully immersed, totally attentive viewer. The job he needs done is what you would actually expect from “hiring” TV: get effortlessly tuned out of your daily life.
If there’s a Santa for media executives, the attentive viewer will make top of their wish lists. Turn on, tune in, drop out: they are the idiotes savantes you need in any ad recall measurement. There are a couple of subgroups here, which differ mostly in how they discover what they want to watch. But their typical user journey starts always like this: I’m coming home from work and need to turn off the day. The subgroups mostly differ in how they choose what to watch.
totally passive: you have a relevant subset of two handfuls of channels. You turn on and start to watch what’s on your favorite channel. If you’re not satisfied, you switch to the next channel. You prefer to zap or maybe use an EPG to get a quick overview on what’s currently up. You might even know when your fav show is running. You’re mostly satisfied with the work the professionals did in programming a timeline. Because everything else would be way too much work.
somewhat picky: you have some kind of an idea what you want to watch. Or, maybe even more important: what you do not want to watch. You might have programmed a PVR to record your favorite things. Because this one time effort brings some pleasure later on when you’re in the mood to watch something (but not anything).
totally picky: there’s just a couple of highlights you’re after. Maybe top sports events. Maybe top movies. Maybe the daily news (if you are in a decidedly un-Teen age bracket). You actively plan around those events.
You might have recognized yourself already in all three of those subgroups. Which is not too surprising. Those preferences have just a different weight. If you’re totally picky and down with the flu, you easily switch into your totally passive persona.
If you’re leaning towards pickiness, a SVOD service like Netflix sounds like a present from heaven. If you’re the totally passive viewer, you might actively hate the concept. Because, as one of the interviewees mentioned: actively looking for some program to watch is way too much work.
That’s probably one of the main reasons why series and binge watching work so well on SVOD: when a movie ends, you go back to zero and have to start searching all over again. But after the first 13 episodes of a series, you just move on to season two.
extensive wallpapering: radio with benefits
In reality, this electric fireplace is a talking animated wallpaper.
Remember the average viewing numbers? 84 hours per month, 191 hours, 223 hours for 65+. TV can look like a full time job, even if you’re not working in media. Not too surprisingly, those viewing hours are only slightly connected to attentive watching. The time is spent with media, but not on media. For those people, TV’s job, to stay in the JBTD-framework, is not immersion, not entertaining. They just need a companion.
A typical example goes like this: you work home alone, be it running a household, working in your home office, preparing your student homework whatever. You sit in front of your notebook. But somewhere in the room, not too far away is a running TV set. It’s either totally muted (if you’re the sensitive type), softly babbling (probably the majority) or blaring in full power (yes, granny, I’m looking at you).
Those TV sets are actually doing what the name television is promising: you can see something happening, far, far away. It’s a window to the world. And like with real windows looking over a street or a back yard, you’re not glued to the view. It’s a just very nice and humane distraction. Being able to look out of a window beats staring at a white washed wall. Mind you, a running TV set cannot (yet) substitute a real window. TV lacks spatial information, the color temperature does usually not match your biorhythm and the time of the day. But it adds a social layer: TV is constantly trying to tell you more or less entertaining stories. You don’t have to ask for anything, search for anything, do anything. If you open the hose, it will never stop until it gets your attention. Then you might turn up the volume and watch for a minute or two.
It’s visual radio (a medium, which used to be an immersive one as well). But without the ads literally shouting at you, because the visual attention grabbing is there as well.
The real television is a talking, animated wallpaper.
What’s the economic driver behind the so called sharing economy? Robin Chase points into one direction. Thanks to technology, we can build platforms which enable us to harvest the excess capacities all around us. As a co-founder of Zipcar, the car-sharing trailblazer, she knows what she’s talking about. Owned cars are sitting around most of the time. Rentals you get for 24 hours (which, hopefully, is a bit longer than you’re actually going to drive it). A Zipcar you get by the hour. Daimler’s Cars2Go are even rented by the minute. That’s harvesting the excess capacity of a massive chunk of hardware which usually hangs around at the curb like idling teenage mall rats after school.
Robin Chase on Excess Capacity: too much of something can become a good thing.
Her talk was partly a compressed version of her new book Peers, Inc. The gist: linear solutions for exponential problems just don’t scale. Peers, Inc. is about harnessing massive problems with scaling. How was AirBnB able to quickly offer more as much bed-inventory as the largest hotel chains? Because their technical platform leverages the power of the people to pool their excess capacity.
Of course we do know by now, that some of the drivers of the sharing economy are not that benign. Granny letting out her spare bed room once a year sounds nice. But Mr. Greedy creating new inventory by taking 3 bedrooms condos off the rental market to rent them out by the day is a rather excessive approach to excess capacity.
Harvesting excess capacity is the underlying scalable model. Mr. Greedy may be driven more by taking advantage of regulatory arbitrage. But this is a problem which fairly easily can be remedied.
The complicated part starts when sharing economy entrepreneurs understand, that one excess capacity in later stage capitalist societies is man power. Look at Über: the drivers take on the capital expense of buying the car, take on the operating expense of maintaining it, take on all the risks.
And that’s how we come back to Robin’s talk. The occasion was our biweekly Bitcoin Startups Meetup. How does this relate? Currently, most sharing economy platforms are driven by shareholder value. The Bitcoin (or crypto) model works differently. It’s a stakeholder model.
Some small steps are already happening. A couple of Denver cabbies are asking: What If Uber Were a Unionized, Worker-Owned Co-Op?Joel Dietz‘ Swarm is pushing forward in many different ways.
Crypto-based decentralized applications don’t need statements like “Don’t be evil”. Their DNA is sequenced and public from the start. This includes the potential switch of the underlying economic model, from rent-seeking shareholders to a revenue-sharing stakeholders.
Addendum: here’s some more material from a talk I gave last year on the topic: “The new decentralized sharing economy and crypto coins”
At ZapChain, the crypto Q&A central, Daniel Cawrey had a pretty funny question: Do you think bitcoin could become the currency of space?
Here’s my slightly enhanced answer.
As sci fi has a tendency to shape future technical realities (think Arthur C. Clarke and the geostationary satellite, think all things Neil Stephenson from his cyberpunk period), and as the pressing need for a non-terran currency may still lay a bit in the future, we should have a look at what sci fi has to tell us on all things currencies:
Galactic Credit Chips come in handy.
According to Wookiepedia, The Galactic Credit Standard, simply called a credit or abbreviated to cred, colloquially referred to as Republic Dataries, and later known as the Imperial Credit, was the main currency in use in the galaxy since the time of the Galactic Republic.
Around this official currency, alternative currencies seem widespread:
on Tatooine and other Hutt-controlled Outer Rim Territories, the gold-based peggat was equal to sixty-four wupiupi, or four truguts.
In some other space and time, and in a slightly more post-monetary future, the Federation credit is the monetary unit of the United Federation of Planets. To put things into perspective:
a Tribble sets you back 10 credits (that’s obviously before they unveil their rather inflationary reproductional pattern)
to use the Barzan Wormhole, the Federation pays a lumps sum of 1.5 million credits and an annual fee of 100.000 credits.
Mars (Total Recall) and the non-radioactive Earth leftovers and its space dominions (Judge Dredd) go for credits as well.
This means:
all major centralized utopias rely on a credit based system
in their lesser controlled fringes, alternative currencies are highly likely to be accepted
Which shouldn’t be too surprising. A rallying cry like To Infinity and Beyond implies one quite demanding requirement: space is infinite and to conquer infinity you need infinite resources. And to pay for those infinite resources, you need an infinite money supply.
Which is actually not that different from the economic realities of today. Space may be a rather finite commodity for us inhabitants of earth in the early years of the 21st century. But time is endless.
As long as our economic model is based on growth, we will need a money supply which can grow with time – and therefore has to be infinite.
So sorry, BTC or XBT:
If Bitcoin or one of its crypto-successors aspires to become THE currency of space, it will need to incorporate the credit principle into its money supply first. A finite resource like Bitcoin or gold will always be on the fringes, be it of future space dominations or the economies of today.
Hyperinflationary reproductional patterns: a Tribble based-currency is not advisable.
.
A dissenting sci fi opinion could be based upon Ian M. Banks wonderful construct of The Culture.
In his interstellar anarchic post-material-scarcity society, us puny humans exist in a symbiotic relationship with tremendously capable (and eternally quirky) artificial intelligences (the minds), humanoids, and other alien species, who all share equal status.
And one side effect of post-material-scarcity for everybody is: units of account, mediums of exchange and values stores are things from a rather barbaric past.
In The Culture, you will just have to forget about credits and crypto-credits and interstellar blockchains. And if you insist on living with the perils and perks of a monetary value system, you can always move to one of the Culture’s lesser enlightened neighbors, which still deal, steal and trade with credits or commodity based currencies.
“It’s hard to make predictions, especially about the future.”
But of course we can always make fairly educated guesses.
Thing is: Bitcoin is currently on a crossroads. At stake is the mother of all crypto currencies, the mighty Bitcoin. Due to its size and value, the Bitcoin network had to become a fairly slow mover. Changes take ages. But it’s becoming obvious that the status quo is not really sustainable.
The blocksize war (rather big name for a rather ludicrous challenge) can be seen as a forerunner of bigger things to come. It’s kind of obvious that the Proof of Work mechanism is working really nice, thank you. Unfortunately it tends to be a rather power-hungry (and therefore expensive) way to deliver seigniorage and validating transactions. Newer crypto contenders look into different models, like Proof of Stake, which of course have their very own challenges, but need way less power and are therefore much cheaper in operations.
To put things into perspective: about a year ago, I did a ballpark calculation onPower Hungry Crypto Coins. Back then, the equivalent of about 0.13 nuclear power plants was needed to run the mining infrastructure. Not much, one might say, to power a global currency.
But here we have the next problem: Bitcoin as a currency for everyday transactions just hasn’t taken off. As a currency, it seems a bit of a very clever solution in search for a problem. On the other hand, there are a couple of problems lying around, which would happily latch on to a blockchain based solution – well, if some technicalities would be in place. Hence all the initiatives around Bitcoin 2.0 and VC and other monies pouring into the space, efforts like sidechains, the increase of the blocksize or straight forward competitors like Ethereum.
So let’s come back to the question. The blocksize war is a mere skirmish – which could end up in a civil war. Bitcoin’s technical strength, the power of its network, is at the same time its most prominent weakness. Fiddling with technical specifications means a handful of software engineers tweaking a distributed infrastructure worth several billion Dollars. Some large changes, like the blocksize decision, need a hard fork of the blockchain.
From a miner’s perspective, forks that lower the ROI are always scary. Your margins are as volatile as the exchange value. But your operating cost, due to the energy consumption, are always to be paid in Dollars, EUR or Yuan.
And if the ultimate fork would happen, the switch from PoW to PoS, this would leave you with some server racks filled up with expensive scrap metal. Of curse, on the other hand: if competing currencies or models make Bitcoin obsolete, there’s nothing left to mine for you as well.
As a small Bitcoin holder you can just watch carefully. And if you want to treat your coins as an investment, then do as with any investment: don’t put all your eggs in one basket.
This year, I was sitting with a rather baffling question. What if there is a kind of successful product in the market, you do lots of research and such. But in the end, you still ask yourself: so what are those users really doing there? You can always ask them nicely. But you know, there’s this difference between stated preferences and reality. Ask people, and they read the NY Times and watch CNN. See the data, and you won’t believe what happens next.
Right. Stated preferences mostly reveals more about the guy asking than what’s really going on. People try to keep up appearances. That’s the human condition. If you’re not a registered sociopath or a saint or another type of fringe personality.
All users lie. But only if you ask for it.
#JTBD to the rescue
Guess what. There’s a really nice solution out there. Because the problem of not knowing what your customers really do and want is a fairly common one. Clayton Christensen, professor at the Harvard Business School, came up with the concept in the 90ies.
Jobs To Be Done refers to the core concept behind: people don’t buy “a product”. They “hire” a product to get a “job” done. Have a look at those four guys in a subway car. The “job” is always the same: How to not get bored on a subway ride. But three totally different products got “hired”. A book, a smartphone, a magazine (we don’t know about the gentleman to our left).
But that’s not the hard part. The hard part is finding out what the job really is people hire your product for. Think about a newspaper publishers. A weekend issue of the NY Times is a nice thing to stack up in your spacious living room. But unfolding it on the A-train needs lots of manual dexterity, yogi-like body mastery and a certain disregard for the people sitting next to you. It took decades to come up with newspapers sized for subway rides (and no, the NY Times isn’t one of them).
One job, 3 different products hired.
The beauty of Christensen’s concept is its simplicity:
“The fact that you’re 18 to 35 years old with a college degree does not cause you to buy a product,” Christensen says. “It may be correlated with the decision, but it doesn’t cause it. We developed this idea because we wanted to understand what causes us to buy a product, not what’s correlated with it. We realized that the causal mechanism behind a purchase is, ‘Oh, I’ve got a job to be done.’ And it turns out that it’s really effective in allowing a company to build products that people want to buy.”
You want more? Watch Christensen a bit more in detail.
To get to the bottom of the jobs question, you start with interviews. No surprise. What you want is an xray of your customers mindset when he’s using your product, when he decided to buy, and finding out what is really the job he is solving by using it. So you better start talking, and forget all your assumptions (even if they turn out right).
The interview style is pretty interesting: laid back and trying not to be leading you walk your customers along a scripted timeline. I liked it. Seems like my former journalistic life not only lead to excessive noseyness (an occupational hazard). But then, I had some help (thanks, Tor) and many helpful resources. The Jobs be Done Handbook might look rather pricey for being a self-published booklet of just a handful of pages and really hideous typesetting. But hey, it get’s its job done.
More of a challenge: most scripts, guides to scripts and examples of interviews out there are geared towards real products, bricks and mortar style. Tangible goods. Which makes it a bit hard to follow advice like “build around the Point of Sales“. As the PoS will be most likely your customer’s living room.
But hey, I got it to work. It’s just that the how part might have to become another post.
Lately, at one of our Bitcoin Startup Berlin meetups, I did a short talk about Proof of WTF: Proof of Work, Proof of Stake, Proof of Burn, Proof of Resource are a core ingredient of crypto currency technologies. And as I’m not a software architect or programmer or anything close, I will not bore you with disseminating too much semi-knowledge. Let’s just leave it like this: if you want to validate a transaction (and for the purpose of seigniorage), Bitcoin-alike crypto currencies need a network of computers agreeing upon a Proof of Something. If you want to know more, try the Proof of-links above (or ask me for the presentation, which is unfortunately riddled with too many copyrighted images to share freely anywhere).
Power hungry miners: don’t use your CPU to mine a Bitcoin.
But back to work, literally. Bitcoin, being somewhat the genetic father of practically all p2p crypto currencies on the planet, is made possible by the proof of work: a bunch of computers solving a software riddle of increasing complexity. Nakamoto’s solution was brilliant, as a proof of concept. Unfortunately, it does have some side effects. In its current state, Bitcoin has to rely on a huge network of professional miners to validate transactions, which spin out new coins as well.
At the Berlin Inside Bitcoin conference, somebody from the audience asked two of those miners on the stage, how a Bitcoin born in 2014 would look like. Would it still use a Proof of Work mechanism? Or would another solution like Proof of Stake be preferable? Now guess the answer of the guys making a living from running a network of PoW-machines. Wrong. Their statement was pretty clear: Proof of Work works, but it comes at a price. Proof of Stake or other concepts would be more future-proof.
How comes?
Proof of Work: bad Bitcoin burns too much fuel for its own good.
In physics, power is the rate of doing work. So you might rightly infer that Bitcoin’s Proof of Work based system, with its increasing complexities, might need more and more power. You’re right.
If you follow the developments of Bitcoin mining, you will have noticed some strange developments.
In the beginning, you could mine some coins with your desktop hardware, on your CPU (while browsing the web and fiddling around with a spreadsheet). Those days are long gone.
Next step: try running the mining program on your GPU, the graphical subsystem of your PC. This worked nicely for quite a while. But even high powered multi boards GPU monsters couldn’t keep up with the demanding network.
So, since quite some time, we’re into ASIC mining: single purpose computing units, which are just able to handle a single task: Bitcoin mining. And, maybe, heat your apartment. Literally.
As there are too many myths and not enough facts around, I tried some very simple calculations. To be honest, the results are something between totally scary and kind of reassuring.
What I did was the following:
Blockchain.info is publishing some stats on a regular base: http://blockchain.info/stats. They are all nice and interesting, but the only thing we really need here is the last number on the page, the hash rate.
Currently, as of 2014-04-09, the Bitcoin network is running at 46,848,838.03 GH/s
Now, let’s have a look at mining hardware. Here we go, the mining hardware comparison table. https://en.bitcoin.it/wiki/Mining_hardware_comparison
A brave spreadsheet soldier would normalize all those number. I’m not, so I just did a sloppy calculation, coming to the following:
CPU mining is running on average at approximately 6.67 KW/GH
GPU mining needs round about 0.5 KW/GH
totally new ASICs hum smoothly at 1 W/GH
Now, according to the EIA, a typical US nuclear power plant generates 11,800,000,000 MW/h per year.
This translates into the following:
running the current Bitcoin network on CPU mining hardware would need 83 fully loaded nuclear power plants
with GPU mining, we still would need six extra plants
Proof of Stake: lower energy consumption helps in many ways.
Could be better, could be worse. But what are the implications? One line of thinking goes like this: the Bitcoin network is like totally useful. Spending some energy on something totally useful should not be a big deal. Eat that, tree hugger! (OK, skip the last part.)
But my besides hurting my bleeding eco-friendly heart, the power hunger of Proof of Work has some other side effects as well. The armament race for faster, less power-hungry mining hardware definitely leads to a centralization of a core part of the network. Which, in the long run, makes the network less secure: it becomes more centralized, 51% attacks become more likely.
At the same time, the price for running the network is currently mostly paid by seigniorage, the mining of new coins. But there will be a certain point in the future, where the networks has to rely more upon transaction fees. The more power-hungry the network, the higher the cost of transactions. Because, even if you think climate change is made up by black helicopter flying aliens from a socialist parallel universe, you still have to somehow pay your utility bills.
So, I guess: sooner or later Bitcoin will have to switch the base technology. Because Proof of Work works well. But Proof of Stake seems like a more sustainable solution.
I don’t have a problem with anybody receiving some outrageous monies for his work. 19 billion USD might seem a bit over the top for a mom and pop pseudo-SMS operator. But it’s Mark Elliot Zuckerberg billions, so I don’t care if he spends them on platinum popsicles or a piece of heavily used software.
Unfortunately, the deal points to a pattern. That’s what Robert Reich is pointing out, first on his Tumblr (sold for 1.1 bn USD), then at Salon. It might be an occupational hazard that the former secretary of labor under President Bill Clinton is keeping an eye on he job market. But his diagnosis is pretty spot on:
The winners here are truly big winners. WhatsApp’s fifty-five employees are now enormously rich. Its two founders are now billionaires. And the partners of the venture capital firm that financed it have also reaped a fortune.
And the rest of us? We’re winners in the sense that we have an even more efficient way to connect with each other.
But we’re not getting more jobs.
Where’s the money? Messages don’t buy cars.
It’s the core problem of our networked digital economy (just ask Jaron Lanier). And it’s a reiteration of the pitfalls of productivity, which lead Henry Ford to his famous statement “cars don’t buy cars”.
Back then, the problem was a bit more in the open. Pay your workers well, and the humming economy will pay you back with interest.
But, as Reich states: our new economies have a different problem. It’s not that the WhatsApp-workers are impoverished human beings, wrought out in the treadmills of late stage capitalism.
The problem is: they’re hardly needed anymore. Look at a traditional telco like Sprint Nextel. Their market cap is just 50% higher. Now look at the employment numbers:
– WhatsApp: 55
– Sprint Nextel: 79,000
That’s right. Merge the app team into the telco, and it disappears as a mere rounding error.
Can productivity be the problem? Hm. In the first electrified trains, a mandatory stoker had to be on the train. This approach may have solved one family’s bread and butter problem, but reeks of institutionalized madness.
So maybe it’s more about the distribution of the productivity gains? Let’s have a look at the wealth creators of the last years: Facebook, Twitter, AirBnB, Uber, Soundcloud, and now, WhatsApp. Great services all of them, highly successful as well. I prefer (almost) any AirBnB accommodation over a run of the mill business hotel. Me likes Twitter. Facebook. You name it.
All those services share one thing: they are highly centralized. In terms of the service, and in terms of the wealth they created. I tweet and become a participating member of the attention economy. But the intrinsic value of the tweet is absorbed somewhere else. I rent out my place. But the listing service receives a huge percentage.
In terms of the value distribution, the chain looks like that
founders and early investors
later stage investors
early employees
service providers to the company
employees on the payroll
eventually: outsourced service providers (Uber drivers, AirBnB hosts, …)
You may rent out to peers. But the value distribution is definitely not peer to peer.
Producing value as in content usually is valued as zilch. Look at Medium as a new publishing model. All words are meant to be free. Not as in speech. But as in freebie.
Don’t get me wrong. Founders and early investors should get a big chunk. They’re taking an oversized risk (I know what I’m talking about). But it might be the right time to look at different models of value creation and distribution.
As I’ve been annoying everybody in the last couple of months with my harping on crypto currencies, you might know what’s coming. Yes. Let’s talk about crypto currencies.
Crypto currencies may look a bit weird. But they have some serious implications.
Just try this thought game:
– A crypto coin like Bitcoin is a token of ownership.
– Ownership always comes with increased interest (as nicely described in the endowment effect).
– Ownership of a crypto coin makes you a stakeholder in a crypto economy.
Now look at this: crypto coins like Bitcoin are basically programmable money. You can build economic entities which practically run themselves (like WhatsApp). But those new entities can share the created financial values between all stakeholders.
How can this look alike? David Johnston’s paper on Decentralized Applications is taking a very good lead here. One of his examples would be a Meshcoin: a crypto system to run a decentralized network of meshed WiFi hubs, which is not based on donations or the “hey, we could sell some ads”-model, but offers economic incentives to run and mesh up your hub with many others. Which could look like a FON on steroids.
Because, don’t forget: routers don’t buy routers and jobless Tweeters do not need any ads.
Bitcoin: the digital Hogwarts Express is leaving now.
A tl;dr might go like this: the crypto currency express is leaving now. Please take your seat and learn your magic – or stay a muggle.
No, really. As Arthur C. Clarke wrote in his third law of prediction: Any sufficiently advanced technology is indistinguishable from magic. And if you follow the arguments of two authors of the study, you will probably want to board the train to a virtual Hogwarts ASAP.
The authors know pretty well what they are talking about: Sander Duivestein is a software engineer and works at VINT, the trendwatching think tank of Sogeti (which is a subsidiary of french IT giant Cap Gemini S.A.). His co-author Patrick Savalle is the founder and technical director of Mobbr, a brand new payment platform for network economics, based in the Netherlands.
They start with a nice intro why the current trend of economist debunking Bitcoin is not Hogwarts, but hogwash. Like Alan Greenspan asking for its intrinsic value, just seeing a bubble. As his contributions to the Great Recession are quite undisputed, the verdict of the co-creator of the largest financial bubble of the history of finance could have some weight.
But Duivestein and Savalle treat the aging economists quite nicely (There is a lot of confusion about bitcoin.) They could have quoted Clarke’s first law. When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.
But they do explain to everybody, what the real, technological impact is.
Thanks to the Bitcoin protocol (crucially distinct from bitcoin, the currency it underlies), for the first time in history it is possible to transfer property rights (such as shares, certificates, digital money, etc.) in a fast and transparent way, which cannot be forged.
Moreover, these transactions can take place without the involvement of a trusted intermediary such as a government, notary, or bank. Anyone who fully appreciates these attributes will immediately acknowledge the tremendous value of Bitcoin.
It’s the platform, stupid! And this platform can have some serious implications for anybody’s way of doing business. Just have a look at the all the oversized successes of the Internet economy. What do Twitter, Facebook, Google, Yahoo have in common? They are media businesses. Their business model is advertising, meaning: they have found no intrinsic way to make users want to pay for the services they render. More than one eight of the world population uses Facebook quite extensively. But they need to extract their value exclusively from third parties.
Or look at the posterboys of the sharing economy, like AirBnB, Uber, Lyft. They are all highly centralized businesses, which outsource the grunt work to some local drone (who might even get sued for making a couple of Dollars or Euros on the side). I love AirBnB. But as a company, they’re the 1% of the digital Uberclass.
Bitcoin pioneers a different model: everyone becomes a stake- and shareholder in this new networked economy.
Bitcoin is key to the success of the Collaborative Economy. Bitcoin enables a frictionless and transparent way of sharing ideas, media, products, services and technology between people without the interference of corporations and governments.
It’s ideas like the DAC (Digital Autonomous Corporation, or Community), the Decentralized Application (DA), which are driving the process. Sometimes a bit wild-eyed. But hey, Bitcoin shows a valid path: it’s a completely bootstrapped economy, still in beta and its infancy, with a market cap of 10 bn USD (not counting the capitalizations of the startups and businesses – just the money rolling around in the system).
In a system like this, ownership rights can flow through the Internet like ‘normal’ content (from e-mail to video streaming) already does. And no one can dispute or counterfeit who has ownership. It is safe, transparent, and mathematically secure.
What we see is an emerging commercial operating system, on top of the global communications layer the Internet already offers.
What we enter, is a totally unchartered area. At the Inside Bitcoins-conference in Berlin, even the crypto-savvy lawyers talking about “Emerging Issues in Regulatory Compliance and Law Enforcement Efforts” were a bit out-of-bounds, when asked about the legal ramifications of DACs and DAs. Think about an autonomous soda machine and …
… who exactly is legally and economically responsible (say, if someone were to get sick from a can of soda from one of these machines, for example).
So why touch crazy stuff like this anyway? Duivestein and Savalle have a historic answer:
In 1937 Ronald Coase published a groundbreaking article, The Nature of the Firm. In it he posed a very simple question: “Why do firms exist?”.
In his research he came up with the concept of transaction costs to explain the nature and limits of firms. Companies exist primarily because the underlying coordination mechanisms of the market aren’t perfect.
According to Mitt Romney, corporations are people (which sounds nicer than saying corporations are oversized homunculi). But the basic idea is already nicely embodied (sic!) in the English term “incorporating”: you give a transactional structure a legal body (sic!). Coase gave the answer to the nowadays mostly unasked question why we are doing that. Yes, deflecting liabilities can play a role here. But at its core it’s all about transaction costs.
Young Harry entering Hogwarts.
Of course, the crypto currency based democratization of money and finance can be a scary thing as well.
Like any powerful technology, Bitcoin can either be seen as a Pandora’s box, or as a step towards Utopia. Bitcoin just obeys the First Law of Technology:“Technology is neither good nor bad; nor is it neutral”. Asking yourself whether Bitcoin will fail is like questioning yourself whether technology can be “un-invented”.
If you accept that there’s magic, you may ignore it at your own peril. Even if you hide all evidence in a tiny cabinet under your stair case, you might still end up as a pigtailed Muggle.
It is much better to experiment and innovate with this new platform.
And not just that. Becoming an active participant means you can shape this really new economy. Because, to stay in the metaphor: The “You-Know-Who” and “He-Who-Must-Not-Be-Named” will there be present as well, not just young Harry and his merry band of friends.
So, let’s end with Clarke, again, quoting his 2nd law of prediction. Please don’t forget: he was a prediction pro. In 1945, as a Sci Fi writer, he proposed the rather farfetched idea of putting communication satellites into a geostationary orbit, now sometimes nicknamed the Clarke Orbit. Farfetched, because it took another 12 years until the Russians launched Sputnik (first satellite ever) and another seven years for NASA to launch Syncom, the first geostationary communications satellite.
So, what is Clarke’s final advice:
The only way of discovering the limits of the possible is to venture a little way past them into the impossible.
Bitcoin raised this bar already to quite some extent.
The known world is divided into three parts: if you say Fiat,
Fiat: public image
30% (estimate) will describe something like this red thing here: four wheels, metal, internal combustion engine. Italian. Depending, of course, a bit in which part of the world you live. In Europe, you’ll get >99.9%, in South-Korea probably <1%.
0.5% will talk about evil bankers issuing fiat currencies.
the rest will just say: huh? Whatever.
Brands are about relationship. When launching their cuddly 500, Fiat (the Italians), had to put a little bit more effort into that. In the US, just 8 percent had any brand recognition at all. Fiat did some nice things: they hired JayLo, had a nice viral video making inroads, and pushed themselves up to 30%. Still room to grow, but a nice base.
If you now think, that a brand is something you can create in a lab, or by hiring a branding agency, you are wrong. Brands are the collective public image of who or what you are, in the eyes of the consumer. You can try to nudge their perception into a certain direction (hiring Roseanne instead of JayLo might not have been that kind of perfect fit for the Italian accessoire-car for the generation Desperate Housewife). But that’s just about it. Your core values will still be represented in your product, you service quality, your tonalities.
A real doge: Leonardo Loredan.
Brands are about trust. And that’s were the importance for Bitcoin and all other crypto currencies begins. As crypto currencies are backed solely by trust, supply and demand, and a mutual understanding of the economic value this produces.
Growing the whole ecosystem from 0 to 10 bn USD was already an amazing feat. But where will the future growth will come from? A network needs a reason to join. Get rich quick A.K.A. speculation on growth works only, if the underlying message comes across to a growing user base (which finally might make the step from investment to every day use). 0 10 bn is fantastic. But 10 bn USD is just about doubling the M2 monetary supply of West Samoa. So there’s some need for growth, if one wants to become a global currency.
Now, how does Bitcoinese currently sound? I’m not talking about the misinformed media misconception of yeah sure, just good for buying drugs online, tulip bubble, yadda yadda. I’m talking about how the community talks itself. Brand-linguism (if such a crazy thing would exist) would probably dissect the language as having heavy influences of survivalist, fortified with some geekspeak, with a side serving of free market lingo.
The doges of Venice would have been proud to become a part of that. But as far as I know, crypto currencies are not about creating another financial playground for the 1%.
Now, please watch this video, about another doge:
Yes, it’s a stupid one trick pony taking over popular meme and exploiting. And, no, this is NOT Bitcoin 2.0 or the future of monetary transactions and whatever else is in the DNA of crypto currencies.
But reddit, as always representing the virtual finger on the geeky pulse of the times, shows something happening here.
There’s something about this fuzzy nonsense coin, which the crypto crowd has to take serious. Because: Shiba Inu, so much impact. And nobody wants to hug any Austrian economist.
Thing is: Bitcoin is currently on a crossroads. At stake is the mother of all crypto currencies, the mighty Bitcoin. Due to its size and value, the Bitcoin network had to become a fairly slow mover. Changes take ages. But it’s becoming obvious that the status quo is not really sustainable.
gert.is 