Blockchain: The Next Great Disrupter?

The internet killed and refined many businesses, upsetting industries and settled ways of doing things (business, personal, social, etc)—whether such change is inherently good, a potential source of good, or some inevitable dialectical force of history.   Similar fanfare surrounds the new networking opportunity of blockchains.  Although still early in the process, it is receiving more hype and attention than the internet (and its various and competing, complementary, and coincidental variations) at a similar point on the timeline of its development.  A great deal of money is already flowing into the development of blockchains, some actual blockchains, others merely using the name[1], with the too big to fail banks jumping in, as well as many small start-ups.  The potential seems to be enormous and the promises even greater—the elimination of corruption, near completion removal of transaction costs, perfect transparency, and IBM’s blockchain introductory, explanatory website even referring to it as “a single source of truth”[2].  Without ascribing it with such glory, the notion of blockchains will likely be implemented by banks and other financial intermediaries soon, as a means to lower transaction costs and lower risk on complex financial transactions.[3] 

 

Once the protocols are established, which are not insignificant and from a conceptual point of view are not much different that the current system—protocols, rules, etc. have to be established, agreed upon and followed, and the cryptography is in place, again assuming it will be far superior to previous attempts, and the ledger is secured (can it be absolutely secure and incapable of manipulation) and other terms and conditions known and yet to surface (including contract terms) are in place, then the system of decentralized nodes can operate.  Again, the assumption that the nodes are incapable of manipulation because they are perfectly transparent—that doesn’t eliminate potential tampering before or when entered into the ledger or misuse, abuse, or manipulation of human and business relationships.  Additionally, hacks will occur, there are will be mistakes, etc.  There have already been cases of theft and hacking involving bitcoins, including a very prominent hedge fund.  So while humanity continues to seeks to improve itself and eliminate corruption and continue to simplify life and business processes, the truth remains that no system created will ever eliminate corruption, will perfectly streamline transactions, or for that matter eliminate risk.  They are built into the system—whether you believe in a creator or a chain of spontaneous events.  Will this make commerce more streamlined?  Probably, but let’s not see it as the solution to all our problems.

 

(For more see Ito, Joichi, Neha Narula, and Robleh Ali, “The Blockchain Will Do to the Financial System What the Internet Did to Media”, Harvard Business Review, March 8, 2017.)

 

[1] Ito, Joichi, Neha Narula, and Robleh Ali, “The Blockchain Will Do to the Financial System What the Internet Did to Media”, Harvard Business Review, March 8, 2017.

[2] https://www.ibm.com/developerworks/cloud/library/cl-blockchain-basics-intro-bluemix-trs/

[3] Ito, “The Blockchain Will Do to the Financial System What the Internet Did to Media” 2017.

Start-Ups--Sign of Hope in Midst of Decline in US Productivity Growth

Seemingly in answer to a previous HBR article, “Do Startups Really Create Good Jobs?” and the studies it cited, HBR published a new article, “The US Startup Economy Is in Better and Worse Shape Than We Thought”, referencing a paper published by MIT researchers that addressed the health of American entrepreneurialism.  The paper focuses on not just the number of start-ups in an area—but the quality of these startups—a novel concept.  They refer to “innovation enterprises”—as those startups that are likely to grow and multiply adding many more employees.  They in turn graphically plot areas that will likely prosper. 

The paper’s authors ultimately argue that American entrepreneurialism is not in decline, as measured by quality of new ventures—not quality. They also challenge the assertion of top economists (Summers and Robert Gordon are cited) that we are facing decline in economic growth (more correctly—a decline in productivity growth).  The authors argue that there has been steady growth in entrepreneurialism.  So while this growth can't cover for the whole economy—it does, the authors argue, provide some potential, a bright light of hope in the face of economic doom—or rather the clearly documented decline in productivity growth in the US economy and around the world.

Do Startups Really Create Jobs?

Harvard Business Review recently asked, "Do Startups Really Create Lots of Good Jobs?"  It has been taken for granted that Start-ups are great and good for the economy and in the eyes of many superior to traditional business development models.  The study calls this new conventional wisdom into question.  Are we so sure of it's inherent goodness (goodness in economic terms)?  Like most things in life, we would be wise to step back and consider and ponder all the implications and effects. 

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Google's Old Haunt

I just signed a lease today and am setting up my office at ROC in Santa Monica (corner of Arizona Ave and 6th Street).  For Non-Santa Monicans--that's 1 block off Wilshire-- a few blocks from the glorious and grand Pacific Ocean and the Third Street Promenade (pretty great--but not quite as grand).

The building is a creative, collaborative workspace for startups including a number of socially conscious businesses, and those entities, such our firm, who support them.  It has a definite incubator feel and has, at this time, at least 1 incubator among its tenants.

The former Google office space--now multi-multi-tenant--has free Intelligentsia coffee and espresso, 1980s soda machines, bathrooms on each floor--and a great rooftop lounge/workspace--great for meetings and consults on those warm, sunny Santa Monica days in February!  

All in all, the combination of innovation in tech and media, along with the decidedly innovative bent in workspace makes it perfect launching pad for the Denson Law Group.