Commentary on the CMO Primer for the Blockchain World

Jeremy Epstein has written an ebook called The CMO Primer for the Blockchain World. It deals with how the blockchain “trust machine” has an impact on branding, customer experience, advertising and more.

In the book he confronts the diminution of trust in business and how blockchain can improve trust. Only some 43% of people in nearly 30 countries have much faith in governments  and their institutions. In America it is even worse, with only 2 in 10 having much trust and 8 in 1o having less or little faith in “fake news,” according to  Pew.

But things may change with Blockchain technology which forms a computer-friendly, open-ledger to aid the reliability of transactions.  Big companies are already using the “trust machine.” These include JP Morgan Chase and Walmart – even though it can be most disruptive to business-as-usual, especially “paper-pushing” functions.

Some $380 million was placed into technology in the first half of 2017, and the investing continues.  Blockchain is a significant technology and the book puts together numerous top technologists who share their thoughts and admit they don’t have all the answers by any means.

The goal is to help with preparation and assist in the transition. In one of the book’s forewords, Jeremy Skule, chief marketing officer for Nasdaq talks about how the world is challenged by a crisis of trust.

He freely admits there’s a “loss of faith in the system, a sense of unfairness.” The question becomes, “what steps are needed in order to re-establish trust and confidence in many of the things that we once took for granted?”

He says that at his company there is a commitment to use the newest powerfulo technologies like blockchain, even though – actually because – it is disruptive.

He quotes Fredrik Voss, Nasdaq’s Vice President of Blockchain Innovation, as saying, “We’ve taken it upon ourselves to be a leader in terms of encouraging people and companies to explore this technology and understand it better.”

Skule also says blockchain technology can make settlements and transfers of securities safer and faster. And he says he is making markets safer by increasing surveillance using blockchain.

We are integrating machine learning and other cognitive computing capabilities with our SMARTS surveillance solutions to monitor trade data alongside unstructured data elements, like electronic or audio communications taking place in chat rooms, social media or email to enable the detection of any wrongdoing more quickly.

He says Nasdaq is just starting to scratch the surface with blockchain. And that it will help people reintegrate control of their own data.

In fact, in another foreword, Dave Rishi, CMO of Dun & Bradstreet, says this is why decentralization is becoming popular. Big cloud-based websites will gradually die, which will “pose a huge challenge to marketing teams.”

But he doesn’t see this as a negative. Instead of raiding clouds for information, companies will have to get data the old fashioned way by delivering “real, authentic value to customers so that they are willing to voluntarily part with their valuable personal data.”

Contrast this with today where companies like Facebook, Google, and Amazon have such centralized power that consumers have no choice but to share their data with them, even in ways against their wishes when these sites demand it.

Throughout the book, this idea that blockchain will give people more control and allow them to be more in charge of their own data is regularly repeated. In fact, blockchain’s revolutionary qualities are similar across industries. Blockchain allows people to collect information at one time in one place. And the information, while widely dispersed, can be considerably safeguarded.

The downside to all this is just what has been mentioned above in Skule’s commentary about the increased surveillance that blockchain and SMART tools make possible. The problem with blockchain is that it does what its users ask of it. And most users at large companies are using it to reinforce the company’s status and dominance.

Blockchain is surely a radical way of pursuing commerce, but it can also make the more oppressive parts of big business even more efficient.  On the other hand, Epstein’s idea of community driven marketing is a good one. The community itself will end up with considerable control as a result of blockchain and SMART contract operations. And even more importantly, individuals within the community.

The result will be an empowered community that runs contrary to the surveillance and overreach of big business. But if Epstein really wants to see his ideas properly communicated and entrenched he will have to deal with the largest issues facilitating the bigness of these huge corporations.

These include intellectual property rights, corporate personhood, central banking and regulations. They need to be confronted at the same time, even while community driven marketing advances.

It is a local consensus that may prevail if the circumstances are appropriate, but the very largest firms will have to be stripped of judicially granted powers. At least such will have to be reduced.

This does not mean they need to be turned into fully regulated entities like the telephone company once was. The impetus of blockchain is, rather, towards deregulation. The natural evolution of Community Based Marketing along with its disruption will be strengthened by such a move.

Escape From Banking

It is hard to see why people don’t believe that cryptocurrencies are in a bubble. Presumably, this bubble could end in October or continue a while longer, buttressed by central-bank, interest-rate manipulations.

There are two movements at play here; cheap “hot” money coming from the central banking cartels and regular people trying to flee or diversify from the fiat world. We have still not seen major financial institutions really enter this space.

There are up to $1.5 quadrillion in derivatives, while securitized debt and stocks are in the area of $116.4 trillion. Government bonds are around $56.7 trillion while bank money (fractional reserve) is $50 trillion. Obviously, cryptocurrencies have a long way to go. Nonetheless by almost any objective means they are in a kind of bubble. They may eventually be a much bigger market, but they are surely growing too fast at present.

Certainly there are many great ICOs that provide a great deal of value and there are others that do not. Time will weed out those that don´t as the wild west of ICOs is coming to an end. Presumably, this overall bubble could end soon or continue a while longer, buttressed by central-bank, interest-rate manipulations.

Every decade has its bubbles, and this one is growing ever more extreme. Now bitcoin has surpassed the the entire market cap of PayPal by $400 million. Recent trading raised the bitcoin market cap to a $70.6 billion, higher than than PayPal, with a cap of $70.2 billion.

A few months ago ethereum was seen as performing a “Flippening” in which it would beat out bitcoin and go on to be the world’s most valuable coin. Not anymore. Bitcoin is way ahead.

The real flippening may be bitcoin beating out PayPal. This is made even more incredible by bitcoin’s lack of any underlying asset. PayPal is a huge processor of money. Bitcoin is digital currency with no underlying value.

Currently, cryptocurrency’s are worth a total $139.8 billion, led by bitcoin. It may be a testament to just how lousy our money system is that invisible unbacked monetary units are gaining so much power.

Central banking is not something many people make a fuss about, but it is not that hard to understand. Some people have the monetary might to make money from nothing and others don’t. But now those who don’t are striking back with currencies their own that don’t posses many of the fundamentals of money.

Bitcoin is not physically attractive, and not durable in a physical sense but it is apparently valued by those who want to escape from our current central banking system. Those behind central banks are equally determined that there is not going to be any escaping in the longer term. This battle has just begun.

EU Does to Blockhain and ICOs What It Has Already Done to Securities

The European Union is constructing a “blockchain-based gateway” for listed corporations.

Valdis Dombrovskis, vice president of the European Commission and European Commissioner for the Euro and Social Dialogue, explained what it was about.

Dombrovskis wrote:

[T]he commission is currently working on developing a [distributed ledger technology]-based European Financial Transparency Gateway (connecting and making available data listed companies must report to national databases) and a European Blockchain Observatory/Forum. 

He also said the Commission was starting something called, “Blockchains for Social Good,” a competition going forward at the same time as the EU’s Horizon 2020 research and innovation program.

The problem with all this is that the EU is not a private organization and therefore the models being initiated are gradually promoting public blockchain and cryptocurrency solutions.

These solutions have not worked especially well for the EU’s largest companies. There is no reason to think they will work any better for blockchain and cryptocurrencies.

Like America’s largest companies, Europe’s biggest corporations are virtual monopolies, raised up by judicial decisions that buttress intellectual property rights, corporate personhood, central banking and regulation,

In the absence of judicial decisions, such corporations would be far smaller. Instead, Europe is moving ahead to turn the market for initial coin offerings into the same kind of market that generates monopolies in the security industry.

There is nothing very positive about this. It only shoves a potential day of reckoning further down the road.

Goldman Starts to Play With Today’s Currencies, and Tomorrow’s

Goldman Sachs is counseling institutional investors to give cryptocurrency a closer look.  Goldman analyst Robert D. Boroujerdi has recently told portfolio managers that cryptocurrencies must be paid attention to.

With the total value nearly $120 billion, it’s getting harder for institutional investors to ignore cryptocurrencies.

Industry people now are beginning to view ICOs as valuable offerings. Boroujerdi points out that the money at work with cryptocurrencies cannot be ignored.

Whether or not you believe in the merit of investing in cryptocurrencies (you know who you are) real dollars are at work here and warrant watching especially in light of the growing world of initial coin offerings (ICOs) and fundraising that now exceeds Internet Angel and Seed investing.

It is not necessarily a good thing for Goldman to get involved in crytpocurrencies. The largest and most powerful firm on Wall Street has the ability to reconfigure cryptocurrencies and boost their profiles considerably.

Additonally, cryptocurrencies are surely in a bubble and Goldman’s partipation can only aggravate the bubble. The bottom line with cryptocurrencies is that they ought to be market driven as much as possible.

When the crash comes, the currencies that are the most market driven will suffer the least damage. But the ones that are propped up by artificial conditions will have the farthest to fall – and may not come back.

Goldman has no great affinity for untrammeled markets. It will certainly take short cuts to build currencies that are not overwhelmingly market based. Some of these currencies will be quite large for a period of time before collapsing.

Take the recent example with Goldman in Venezuelan bonds. Goldman was able to purchase $2.8 billion in bonds for $865 million from the cash strapped dictator. This was done through the state owned oil company, but going directly to the central bank. This is nearing a 50% interest rate where no investment in Venezuela has a return even remotely close. Goldman now stands to make a nice profit from the purchase which can only be repaid with more pain inflicted on the local community. These are the types of short sighted investments Goldman is known to execute.

Of course there is little capitol by percentage in cryptocurrencies compared to stocks and bonds, but over time the cryptocurrencies bubble could become quite large indeed. There are up to $1.5 quadrillion in derivatives, while securitized debt and stocks are in the area of $116.4 trillion. Government bonds are around $56.7 trillion while bank money (fractional reserve) is $50 trillion.

When the larger bubble collapses, we may end up with a debt jubilee and this is entirely possible given the way debt continues to climb. Global negative-yielding debt, for instance, just climbed back above $10 trillion. Rates have stayed too low for 20 years and when stocks and bonds collapse, cryptocurrencies could collapse too. Nothing goes up forever-

However, over a longer time period the remaining cryptos  may grow a good deal larger. Imagine if even a very small percentage of fiat moves into the cryptocurrency market. Currently there is still very little in the crypto market by percentage.

Meanwhile governments want digital currencies so such currencies will go forward. And Goldman will likely play a hand in them as well.

SEC’s ICO Ruling Is Questionable

The SEC is at it again, regulating initial coin offerings (ICOs) as if they were securities, according to the Distributed Ledger.

The Ledger provides an explanatory article, one telling us how lawyers explain the situation. But there really is no explanation.

ICOs don’t as a matter of course offer equity in a company. They are currencies, not stocks. They may reflect a corporation’s value, but not directly,

The SEC doesn’t seem to care. It wants to “dialogue” on the matter but the dialogue will take place within the parameters the SEC has laid out.

The SEC is simply superimposing securities law onto ICOs. The larger issue is that the SEC’s regulation is superimposed on top of the regulation that the market itself has provided.

“The U.S. Securities and Exchange Commission (SEC) issued an investigative report today cautioning market participants that offers and sales of digital assets by ‘virtual’ organizations are subject to the requirements of the federal securities laws,” a recent SEC press release explained.

What’s going on is that the SEC has simply decided to regulate  rather than build a new regulatory code from scratch. This may be simpler, but that doesn’t make it correct.

ICOs may be headed for a massive die off, but that doesn’t mean the SEC ought to protect market participants. The real problem with markets is central banks. People are so desperate to get away from government money that they will buy anything, even speculative ICO investments.

Get rid of manipulative central banks, not ICOs. Then these massive waves of hyped investments will die of their own accord. Of course, when it comes to ICOs,. some will survive, as they should – just as some websites survived after the dot.com bust. The ones that survive will be the best run and best managed.

But the SEC is part of a central bank conglomerate, that regularly causes the rise in speculations. It is promoting the very problem it then wants to cure. When you get rid of central banking, you can also get rid of Washington’s regulatory apparatus. We won’t hold our breath.

India’s Currency Battles Are Heating Up

India is considering discouraging citizens from using cryptocurrencies. India has been going round and round on them without coming to any decisions.

India’s government created a professional group that a number of economists and others including central bankers, to look at bitcoin and other digital currencies. Now the group has told the Indian government that it ought to discourage people from using them.

Right now, India using more and more bitcoin because the Indian government has made it difficult for Indians to used cash. The government withdrew cash from society supposedly to combat money laundering and other crimes. It was supposed to replace the old cash but it hasn’t yet.

Thus there is far too little cash in India, and people are turning to cryptocurrencies. The government caused the problem but is now being advised to fix it by discouraging them. India’s situation is the result of meddling with money and the cure according to central bankers and others is to reduce alternative monetary methods.

Such battles in India are among the first of their

Central Banker Says Banks May Not Create Digital Currency Any Time Soon

The head of Chile’s central bank thinks a central bank-issued digital currency is not going to be available any time soon.

During a recent speech, Mario Marcel spoke about blockchain and cryptocurrencies. He talked about their positives including efficiency and also about negatives like a flash crash.

He also talked about various central bank projects and said a practical central bank currency was years away.

“[Central bank digital currencies (CBDC)] seems to lead inevitably to the replacement of the classical role of central banks at the top of a tiered liquidity system to that of a massive retailer, where deposit-taking may soon combine with loan-making,” he told attendees, adding: “This means that a real CBDC may still be many years away.”

In fact, central bank digital currencies will be far different than normal cryptocurrencies and much less free.

By definition, if a central bank runs a digital currency, it will be in charge of the value and volume of money. Of course cryptocurrencies define at least the volume of money now. But central banks make regular adjustments.

Central banks like the digital part of cybercurrencies but they want a lot more control. A central bank cybercurrency ultimately will operate like a regular state-run currency today except it will be digital.

One the other hand, cybercurrencies combined with numerous breakthroughs will give people options outside of state-based money. It may be difficult for central banks to regain the kind of control over currency that they had in the 20th century.

Investors and central bankers both have access to “private” money now. A fight may be brewing between the two sides.

 

What Is Money?

Initially gold and silver were valuable as is. But now it becomes valuable as a “facilitation of exchange” as well. As it does, people employ gold and silver for new purposes.

Over time the division of labor becomes larger and people become more efficient. Money becomes broadly employed due to the many transactions it facilitates. Thus the market gives rise to money. But it doesn’t happen quickly. It doesn’t become popular rapidly as bitcoin has done.

People are buying cryptocurrencies today, but more as an investment more than as “money.” Money is a “tool of production” that makes good and services easier to obtain. People do not invent money on purpose. Real money is predictable and creating it is a long-term process.

Ultimately, money is marketplace-based. The volume and value of money is determined by the market. What we have today is quasi-public money in which value and volume are determined by other forces than the market.

Wampum, for instance, was private. As were gold and silver. As soon as you have a small group of people issuing money and determining how much, then you don’t have money but an investment, which you can invest in – like bitcoin at $3,000 a coin.

It is why some people don’t consider cybercurrencies to be money. It’s voluntary but it has fixed denominations. Or worse like ethereum, it doesn’t have a cap except what the people at ethereum decide to offer.

Central banks and monetary control are bad for the economy and eventual cause large swaths to become dysfunctional. It is why our monetary system basically rearranges itself by going out of business every 40 or 50 years.

Something new inevitably springs up to take the place of what has become ruined. Now we are moving onto yet another “new” system of quasi-public, digital cybercurrencies that will replace the petrodollar which in turn replaced the gold denominated dollar. Real, long-lasting money evolves and is not dictated.

On the other hand, cybercurrencies, the good ones anyway, are directly linked to the underlying investment. they represent the value of the investment and may go up as the investment goes up.

They are not money in the traditional sense. But they might be considered a placeholder for the value of the larger project and thus, depending on their closeness, may be a liquid metaphor for its worth.

If money were not controlled by central banks the price would likely lift gradually rather than fall constantly as it does now. People would see their savings gradually accrue in value and this would expand their net worth over time.