By Robert Ochieng,
Let us talk about the unstructured data perspective of how the global geopolitics and culture is going to affect the adoption of crypto currencies. Cryptocurrencies being money can be looked at as a medium of exchange and as store of value. The devaluations of fiat currencies in Venezuela, Zimbabwe and Turkey in the recent past present compelling cases for the use of crytocurrencies as a store of value. Of course there is also the issue of inflation eg a loaf of bread used to cost Ksh 20(u$0.20) and now the same load or bread costs Ksh 50($0.50) in Kenya for example. There is also the aspect of crypto currencies as an investment creating a speculative aspect of the digital currency. The speculative aspect might not have been in the original thesis for the creation of Bitcoin or any other top altcoins and crypto currency projects but it has become a key part of the ecosystem. Globally the adoption of cryptocurrencies will be influenced by different factors in different countries and regions.
Google Is the most used search engine in Africa and in the USA while Baidu and Naver are the most used equivalents in China and South Korea respectively. This doesn’t surprise me. This is because they are in line with what has become the trend for software adoption globally. The aspiration to have a software or hardware player that dominates in all the regions of the world remains elusive. Cryptocurrencies won’t be the exception. Let us look at specific crypto currency projects and their possible adoption dynamics.
Ripple,XRP, The elephant can also dance
It uses byzantine fault tolerant algorithm. It is Iterative and tends to favor speed over security making it potential for violation of atomicity in distributed systems. Transactions on XRP network are created by a subnet of all nodes in the network hence it does not have network wide consensus. This means that it is not truly decentralized. The company prides itself as ultimate disruptor of cross boarder payments and money transfer which is currently dominated by SWIFT, Paypal, Visa and Mastercard. The payments space is already crowded with players like Apple, Google, Tencent, Alibaba making inroads.
Also it is not all the times that existing players are kodak’d by disruptive entrants. A good case is that of Zynga the online video game company that was seen in 2011 as the ultimate disruptor of the traditional game companies like Electronic Arts and Nintendo. As at the end of 2017, Zynga made less revenue than it made in the year 2013 yet Electronic Arts digital revenue have more than doubled over the period. Nintendo, Microsoft and Tencent have leapfrogged them on the online game industry. Ripple has made some very interesting partnerships in the financial sector but the days ahead remain tough and depends on how the industry leaders like SWIFT respond. The elephant can also dance! IBM has done it for over 100 years.
NEO, China, Russia and South Korea
China has got the world’s best digital ecosystem and it the envy of the world’s biggest social media and technology companies. It has played a very important role in the adoption of cryptocurrencies and will remain a key player going forward. China,Russia and South Korea have their own equivalents of US backed technologies and firms that have dominated on the global front. They are therefore very likely to create their own cryptocurrencies in line with this trend. It might not be NEO but it is important to look at crypto currencies emerging from these 3 countries.
Indeed companies that invested in early stage Chinese companies such as Yahoo and Softank in Alibaba, Naspers in Tencent have made tremendously gains on their investments. As such the strategy of investing in Chinese backed companies rather than trying to take them head on in China has paid off handsomely. In the recent past we have seen Uber retreat from the Chinese market and invest in Didi Chuxing. We have also seen them divest in the Russian and 13 neighbouring markets and invest in Yandex, the Russian company that whose products are the equivalents of Google and Uber. Walmart has also invested in JD.com in China. These developments are in line with the technology dynamics of these markets. Amazon, Facebook and Google might know how to swim very well in the ocean but Alibaba and Tencent know how to swim in River Guangzou. Crytpocurrencies are likely to mirror this interesting trend.
For the sake of this article let us refer to reinvention as the improvement made to the original product or idea such that it appears totally different from the original product or idea.
For many years Weetabix was marketed in Kenya and many markets as a foodstuff for children going by the commercials. This has changed and most commercials position it as a cereal foodstuff that is good for consumption even to adults. This is a good example for reinvention of a product. Similarly, detergents were being markets for ‘whitening’ clothes. Over time, manufacturers realized that scent is a big part of clothing and now the scent aspect of detergents feature prominently in the commercials of detergents. For the crypt currency ecosystem, we have seen many reinventions from forks and project spin offs. Ethereum was built to improve on the limitations of Bitcoin and it allows smart contracts which cannot be achieved on Bitcoin. There have been forks on Bitcoin, the most noticeable ones being Bitcoin cash and Litecoin that promise faster transactions. Stellar and ripple were both created by the same person but are currently running separately. This is an example of a spin off.
There are very interesting stories of great spin off in tech such as Saleforce Founder Benioff was once a senior VP at Oracle; he would later form Saleforce which became very big on cloud sales of ERP. Veeva founder Peter Gassner used to be an executive at Saleforce. Veeva specializes in offering cloud computing for life sciences and health sector. The semiconductor industry has also had very interesting spin offs. The founders of AMD and Intel used to work together at Fairchild semiconductor. Nvidia, the now leading GPU maker which is one of the best companies positioned to take advantage of AI technologies like self-driving has its founder Jensen Huang as a former employee of AMD. He would leave and form Nvidia and the rest is history.
Forks or spin offs could lead to cannibalization of original products or ideas. These by-products or ideas could act as moderating ideas to their predecessors moderating their adoption.
Below are examples of pairs to look at.
- Bitcoin vs bitcoin cash
- Ripple vs stellar
- Reddcoin vs Steem
- EOS for example promises to have better governance and transactions speeds than ethereum as well as simplicity of build decentralized applications (Dapps). Steem and Reddcoin are both gunning for social media games and payments.
Privacy in Cryptocurrencies
Since most cryptocurrency transactions are traceable through public ledgers, there is still demand for the so-called privacycoins like Monero or Zcash. I am a big fan of blockchain for business. Privacy on blockchains will become increasingly important as more businesses begin to use smart contracts to process transactions.
Supplier of Suppliers
Redhat Systems survived the dotcom crash and is now thriving in the cloud computing craze. This is because if you look at Amazon, Oracle and Microsoft as end user suppliers of cloud computing, Redhat Linux Systems is actually a common supplier of Redhat Linux OS to these 3 top cloud computing companies. This is akin to what Intel used to be to PC manufacturers. There was always an intel processor or component inside irrespective of the PC manufacturer. EOS and Ethereum being the leading platforms on which decentralized applications can be built are going to play very critical roles as platform players in the blockchain ecosystem. It is the same thing with Nvidia supplying chips to different self-driving companies giving it unrivalled advantage in the self-driving craze if it works.
Global adoption of cashless transactions
Countries such as Canada, Australia, South Korea and German are leading globally in regards to the adoption of cashless transactions and are likely to help drive the adoption of cryptocurrencies. Many would agree that cryptocurrencies are more traceable already than dollars in briefcases and cash transactions