Highlights from Berlin’s Cryptocurrency Conference: BlockShow Europe 2018
Exhibitors, speakers, and media folks all descended upon the Estrel Hotel and Convention Center in Berlin, Germany for the two-day BlockShow Conference. Comparatively, this year’s conference focused heavily on regulations, institutional investment into the industry, and the never-ending search for the blockchain’s “killer app.”
Over the course of May 28-29, 2018, BTCManager soaked up emerging industry concerns as well as which projects are turning the most heads.
Corporate Giants, Zug Valleys, Mainstream Investments, and Tokenization
Bitcoin was starkly missed at day one as everyone seemed eager to explore its underlying technology, the blockchain more closely. As such, parties in the supply chain and logistics had much to contribute.
Artiona Bogo touched specifically on managing invoice fraud and how current practices still allay inefficiencies for many companies. Bogo continued by adding that leveraging a blockchain could help in the fraudulent reselling of pharmaceuticals, a growing problem in the United States.
Enterprise Use Cases: When Interoperability?
First and foremost, especially from a logistics point of view, is the question of interoperable blockchains. “If we throw in a blockchain, and then two or three other actors are also using their own blockchain, because that’s what they were sold, there’s going to be a problem if the two can’t communicate correctly.”
Following that, Tavener also reminded the audience that regulatory authorities must lead innovation rather than enterprises. Frank Fu, an investor and ICO advisor at MyDFS, added that “governments are still trying to figure out how best to position themselves and there is a lot of uneven jurisdictional ground to manage.”
A recurring theme throughout the conference was the idea of “regulatory arbitrage.” The emergence of decentralized business layouts means that more often than not, firms spring up where legislative overhead is lowest. Once saturated, or subject to a government crackdown, they move on to the next crypto valley.
Even so, Zug, Switzerland, still seems to offer much more than regulatory freedom. As one of the first crypto hot spots, the European town also offers a brand that cannot be beaten.
In the panel “Beyond Zug: The Rise of Blockchain Valleys,” Olga Feldmeier of SMART VALOR, returned to Switzerland’s rich history in finance and banking. More to that, the recent regulatory framework released by FINMA provides a helping hand to those interested in participating in the local crypto economy. In these guidelines, they outline three varieties of possible tokens; Payment, Utility, and Asset.
“‘Shady’ is a certainly a harsh word,” continued Feldmeier, “But businesses in Zug are not particularly intimidated, or ‘scared,’ by Malta and the like.”
Equity Backed ICO or Venture Capitalism 2.0
Regardless of location, it seems that the global attempt to reign in ICOs has proven relatively successful if only to attract institutional investors.
When attempting to predict when we would eventually see the trillion dollar markets start pouring into the cutest little emerging economy of $300 billion at press time, Patrick Lowry of “decentralized VC firm” Iconiq Lab, explained that only “modern regulation” will pave the way for such an insurgency:
“Regulators like to think about these things like different kinds of ‘buckets.’ So that one’s a currency, we put it here, that one’s like a commodity, so we put it here, and so forth. But what we’re dealing with, blockchain technologies and cryptocurrencies is really only limited by the human imagination.”
At once, authorities hope to cleanse the market of foul play, but in so doing, they also risk quelching swaths of innovation. Earlier in May 2018, SEC Commissioner Hester Peirce touched on this exact point in an address to her colleagues; lest we lift our heads from the proprietary sandbox, we may miss the whole beach.
The heap of investing experience on the “Getting Blockchain Investments Mainstream in 2018” provided another piece of insight into the future of the ICO. While heady in its fundraising capabilities, projects that earn $10 million in the equivalent of a seed round is simply ridiculous.
More important to note is that fact that a vast majority of these projects have yet to deliver a workable product. In an interesting back and forth between Lowry and Crypto Finance AG’s CEO and co-founder Jan Brzezek, the two discussed the ICO’s rightful place in the funding of a project.
As a first option, it could serve as an outright replacement for Series A funding for projects looking to tokenize aspects of their holdings.
Alternatively, one could offer an equity-backed ICO along with a smart contract that releases a set amount of funds once the project reaches certain benchmarks. “The key,” iterated Lowry, “is to keep teams incentivized to deliver a final product.”
Cow Tokens and Fractional Ownership in a Tokenized Economy
Assuming your product already exists and an ICO isn’t even needed, managing partner of Refactor Capital David Lee described the digital economy in a tokenized world.
As an example, Lee explains that it is already an attractive proposition for farmers in China to digital commodify livestock to better share their value. With the hypothetical “cow token,” one can own the leg of a cow, put that on a blockchain, and, voila, lance mass speculation on living creatures.
Despite the slippery slope that mass-commodification implies, Lee did offer an interesting outline for his investment techniques. When it comes to finding the next unicorn among the cows, he follows the 3C’s, 5D’s, and LASIC:
Day two opened with the introduction of Wikipedia founder Jimmy Wales. The internet entrepreneur recounted the audience a myriad tales of his failures and staggering success following the internet’s favorite encyclopedia. “Success,” he humbly explained, “Even Jimmy Wales can do it sometimes.”
From there, Wales explained a problem with the current crypto industry that can easily be extrapolated across all sectors; quality journalism. Whether it be CNBC, CNN, or Fox News, mainstream media keeps seeming to get things wrong when it comes to publishing accurate and unbiased information.
The problem is crypto-specific in a few ways. The first being the sheer reality that we are indeed in the midst of a bubble. This fact iterated Wales, means that eventually, perhaps not soon, and perhaps not until after another dramatic rally, bubbles pop. To the chagrin of many, this fact is so deftly evaded by legitimate media folks (especially those that are crypto-specific) that many forget its certainty.
The second point comes in the business models of most, if not all publishing channels. The ad-based revenue generator creates a preference for click-bait articles, over-the-top features, and plain fake news (assuming it conjures some kind of controversy).
Imagine the New York Times paying a professional journalist $3 per word and asking them to spend three weeks to investigate how exactly Puerto Rico is turning into the next crypto valley. Naturally, the quality of writing is going to be high; a publication like that can afford to dish out for something like that. Then comes publication time and the article is very well-received, and it may even go viral on Twitter. All great news, right?
Of course. But let’s imagine a second article written by a blogger with the title “Which Top 7 Forked Coins Should You Have in Your Portfolio for 2018?” Now, an article like this takes a day and a half to write and can go equally as viral as the New York Times piece, but the author is paid roughly $50 (if at all) for the piece.
Both hypothetical articles generated the same amount of traffic and the same amount of ad revenue, with one pretty big difference. Wales hopes to make clear that from a business perspective, article number two, that which was far cheaper to commission, will become the new journalistic norm. Queue nightmarish music and the end of journalism as we know it.
The ban of crypto ads on Bing, Facebook, and a growing list of social media outlets is only unsettling, in the eyes of Blockgeek founder Ameer Rosic, for those aren’t “agile enough” to work around these platforms. “Facebook is a private company; they can do whatever they want. So, if the only way you know how to get your product out there is by Facebook or Twitter or whatever, then you’re in trouble. You need multiple avenues to reach your market,” continued Rosic.
The apathy in general regarding Facebook’s ban, in particular, was iterated by claims that Zuckerberg’s colossal data collecting machine will indeed meet death very soon. The world is decentralized, and Evan Luthra of EL Group International boldly claimed Facebook’s demise in only a handful of years. What a wonderful and exciting decentralized future we may be in for.
Samantha Stein of TechCrunch spoke on behalf of all the journalists still beaming after Jimmy Wales’ presentation and indicated that before advertising, we need to be covering real stories of adoption in the space.
“It’s still very early days. We’re still working on the protocol level and what we really need to focus on is developing an network of experts who can help unbundle the technical aspects.”
Basically, we all need to settle down about finding the next bitcoin and start rolling up our sleeves before the bubble pops.
Privacy and Blockchain
Bouncing from Facebook to adoption to best practices, and back to Facebook, the privacy panel had much to say about how to protect our data.
There is a real gray area as to how exactly blockchain technologies can do this, but everyone seems content to let the technicals slide and fling as many buzzwords together as possible. First things first, however, how do you define privacy?
Anita Schjøll Brede, CEO of Iris.ai, explained how some people just don’t get it:
“Often times when talking about privacy, I have to go back to square one and say ‘look, your data, all that stuff you put out there, it’s worth something.’ People just don’t get that; these companies need that info.”
But when can we really do in a decentralized future where our contacts, friends, and family live on literally all four corners of the world. Well, we certainly give up, reports co-founder of Hosho Group Hartej Sawhney, “Every time you hear or say the phrase ‘Facebook is a utility,’ you should get a deep sinking feeling inside you. That idea sucks.”
The prospects are promising, however, once privacy is defined. In an ideal blockchain-based world, citizens would enjoy the luxury of a self-sovereign identity.
“Let’s say you want to visit the doctor for a check-up and they want to know your blood type. With a self-sovereign identity and smart contract technology, you could grant him or her that information and even set a time-lock for when that information will no longer be accessible to the doctor,” informed Samantha Zirkin of Point 93.
For a retail personalization expert like Zirkin, the prospect of monetizing sizing information, for example, so that clothing stores are paying for your data is highly appealing. The world of privatized data access is a rabbit hole in and of itself, but it’s a world that, for the most part, looks brighter than current practices.
Make it Fast: Scalability and Next Generation Blockchains
First generation blockchains like Bitcoin have a lot to learn from third generation renditions like Ripple? Perhaps not, would be the logical response, especially when chief cryptographer of Ripple David Schwartz explained that Bitcoin’s Lightning Network is a “game changer” even for companies like Ripple.
More to the point, Schwartz admits the fact that Ripple’s network doesn’t look nearly as decentralized as Bitcoin’s, but the word decentralization has, these days, come to mean something entirely different:
“People aren’t really looking for ‘decentralization,’ they’re basically just looking for a technology that isn’t going to just change the rules all of the sudden or a technology that prevents concentrations of power. Ripple does all of this, but, yes, it looks different than Bitcoin.”
The world may even look like an interoperable mix of centralized services and decentralized services. Moderator Ran Neu-Ner of CNBC’s Crypto Trader asked if people actually care about these things in the first place. As much as we’d like all of our grandparents to invest in a little bag of decentralized currencies, the reality of that situation is far too dreamlike.
It is indeed an exciting time for such a promising emerging technology, but there is still a lot of good old-fashioned hard work that needs to be done.
Excavating the bad actors, realizing the limits of an agnostic innovation, and getting down to brass tacks regarding infrastructure are all on the agenda for this year. An interesting an recurring metaphor of blockchain as “web 3.0” was also held up for everyone at BlockShow 2018, but how legitimate is such a comparison?
It took the internet to reach its full fruition after 25 years of existence, and it has only been a decade since the inception of Bitcoin. Who do you think will still be around in 15 years? Hard to say, but maybe it is high time we took our eyes away from the moon and return to earth.