“Ethical Markets recommends this insightful commentary by Marc Baraka Strauch, MA, MUP, expert on early stage sustainable investing and member of our Advisory Board ([email protected]). We asked Marc to represent Ethical Markets at this conference on “The Future of Money and Technology” in San Francisco, December 2017. This report portrays in depth, the state of play between Silicon Valley techies and their disrupting cryptocurrencies and Initial Coin Offerings (ICOs) and the effects on legacy finance and the world’s fiat currencies. Marc also raised the growing concerns of Ethical Markets on the social and environmental consequences of these technologies, including for example the CO2 emissions caused by bitcoin mining using massive consumption of mostly fossil electricity, as well as computer power, which we describe in my “Hey COP23: Bitcoin Mining CO2 Emissions Exploding!” as well as the issues I describe in “Restoring Net Neutrality”. These include the current global political debates described in “The Darkening Web” which I reviewed on seekingalpha.com and how two competing paradigms of the global internet are colliding in Geneva (Russia’s use for propagandizing and weaponizing information in their current cyberwars against Western values; China’s controlling its own population) versus the USA’s naïve view as a democratizing open “public square”, but now dominated by advertising and clickbait!
Currently, the USA is losing this battle at the United Nations (UN) agency the International Telecommunications Union (ITU), and how the US lost control and ICANN is history. Governance of the Internet has migrated into to UN space. In our TV show “The Future of the Internet” with NASA Chief Scientist Dennis Bushnell (who wrote the Foreword to my “Mapping The Global Transition to the Solar Age” London,2014, e-book) the Internet is very fragile and the USA is the most vulnerable due to our most critical, ubiquitous infrastructure. We are indebted to Marc Strauch for the deep insights in this report.
~Hazel Henderson, Editor”
The Future of Money and Technology
A Brief Report of the San Francisco Conference
For: Hazel Henderson, Ethical Markets
From: Marc Strauch, Living Economy Advisors
This is a brief report on the conference ‘The Future of Money and Technology’ produced by Brian Zisk, and held at the Kabuki Hotel, San Francisco, California on December 4, 2017.
A complete agenda and speaker and panelist roster can be viewed at http://www.futureofmoney.com/
I attended this conference representing Hazel Henderson and Ethical Markets, under the auspices of Living Economy Advisors. My attendee badge noted me as representing Ethical Markets.
This report is divided into six sections: (1) Synopsis, (2) The Hubbub About Cryptocurrency, (3) Money and Technology (4) The Future of Money and Technology, (5) Technology, Money and Ethical Markets, and (6) Conclusion.
The Future of Money and Technology conference brought together the best and brightest visionaries to discuss the rapidly evolving human experience of money based on innovations in technology that enable new business models, new social trends and new ways of operating in the world.
Speakers and panel topics included the varied and changing roles of nation states, traditional banks and credit card companies, businesses, organizations and individuals. All of this in context of money and cryptocurrency, capital formation and ICOs, startups and emerging game-changing companies, and investment from the cryptocurrency community, traditional venture capitalists and most recently mainstream institutional investors.
One commentary running as an undercurrent throughout many of the talks and panel discussions was the radically evolving notion of how value, of both individuals and companies, is being newly defined by the marketplace.
Though the common thread throughout the conference was one of how to use technology to make money there was an underlying meme that transformed the fabric of the conference into a tapestry. This meme was using technology to change the world based on an intrinsic sense of social responsibility. Though the conference was comprised primarily of money “geeks” it appeared to me, that they shared a common purpose of using money for social change. [Read More]
The Hubbub About Cryptocurrency
Blockchain technology, cryptocurrency and initial coin offerings (ICOs) have transformed the world in 2017. Though Bitcoin, the world’s first cryptocurrency, has been in use since 2009, it was not until 2017 that Wall Street, central banks, nation states and individual investors really took notice when two important events took place.
First, the value of Bitcoin (BTC) rose from roughly $400 in January 2017 to roughly $14,000 at the end of December 2017. This was highlighted by a spike that topped $20,000 around Christmas and a 2017 year-end market cap of about $228.6B. Attendant to Bitcoin was the equally rapid rise of approximately 1,400 globally traded alt-coins with a 2017 year-end global market cap of about $628.7B including Bitcoin.
Second, according to Forbes, “Initial Coin Offerings have quickly grown to account for more startup funding in blockchain-based companies than all of venture capital. Nearly $2.3 billion has been raised to date in ICOs, with the large majority of that taking place in the first half of 2017.”
Until these two events occurred, most mainstream finance people relegated Bitcoin, cryptocurrencies and ICOs to some digital techno-money dream developed by software geeks that they didn’t understand and did not take seriously because it did not directly impact their business, the business of money as a commodity.
The moment that Bitcoin and the other cryptocurrencies started showing dramatic financial gains, the Wall Street crowd took notice. To them it was not much different than a currency play on the FOREX exchanges. Technology aside, this was a market they understood very well.
Second, the moment that ICOs raised substantive amounts of money outside of traditional Wall Street IPO offerings and venture funds, by going direct to non-accredited investors in non-regulated forms of capital formation, the finance world took notice. After all, their monopoly was at risk. And, of course, they wanted in on the game.
Money and Technology
Technology, in all of its various permutations continues to radically transform all aspects of life on planet earth.
Perhaps most significant, is the internet and world wide web and all of the resulting cloud-based applications that utilize this rapidly growing and evolving infrastructure. It could be said that in the past twenty-five years, since the exponential consumer adoption of the Web, that users have hit four significant technological milestones, each one reaching more people more quickly than the previous advancement.
The first was the internet and web itself, as it gave people an unprecedented opportunity to connect electronically beyond the confines of time and space enabling individuals, businesses and organizations to easily, quickly and cost-effectively, represent themselves virtually in the new world referred to as cyberspace.
The second, e-commerce, transformed the ways in which humans transact business and conduct commerce, moving physical three-dimensional transactions into the virtual world with all of its attendant digital and virtual benefits.
The third, mobile communications, in particular the use of smart devices including smartphones and tablets, enabled robust rich communications, improved productivity, deeper and wider social connectivity and instantaneous
e-commerce wherever we are, whenever we want, transcending geography and with it, the intent to associate brands more directly with consumers and foster a deeper sense of connectivity.
The fourth significant wave is the use of blockchain technology for secure, traceable, auditable and transparent peer-to-peer transactions. As a technology, the block chain is as important as was the advent of the internet itself. It is only a matter of time before we will see virtually every online transactional platform, whether in data or commerce, adopt the block chain as foundational technology for increased security and auditability as well as efficiency and cost-effectiveness. The adoption of block chain technology will soon be as ubiquitous as is cloud-based computing today and peer-to-peer sharing of MP3 files was in the early 2000’s.
While the blockchain is foundational technology, the first and arguably most important application is the creation of cryptocurrency.
Money as a human invention that defines parity in value for day-to-day transactions has transformed from gold coins to paper currency to digital tools such as credit and debit cards and now, digital blips on a computer screen or mobile device. Still, despite our relative sophistication with global ATM networks and the internet, the business of money and commerce requires a global infrastructure composed of federated central, retail and correspondent banks to operate securely, efficiently and seamlessly.
In short, monetary transactions and banking remain rooted in old technology and power structures.
Cryptocurrency radically changes this complex, integrated and redundant ecosystem by enabling individuals to carry electronic wallets via apps on their smartphones (and computers and dedicated USB memory sticks). These e-wallets hold various cryptocurrencies in digital formats and enable the holder to exchange cryptocurrencies directly with other individuals holding e-wallets in seamless and direct, trusted and secure peer-to-peer transactions. All this, without the need for a trusted third party such as a retail bank, a nation state’s central bank or a global integrated system of banks for settling financial transactions in different nation state fiat currencies.
The closed global financial system that was put in place at Bretton Woods in 1944 and created the financial framework for global banking and nation states, as well as the basis for building the post WW2 global economy and growing transnational business conglomerates, is now in process of being disintermediated.
Cryptocurrencies are the single most important disintermediation tool, and event, since the internet gained widespread consumer adoption and disrupted the conventional pre-digital marketplace. With sufficient consumer adoption worldwide, cryptocurrencies pose significant potential destabilization to both the central banking system of the nation state and the power base that controls global financial markets.
The second significant disrupter is the transformative value of initial coin offerings as a tool for capital formation outside of (at least for the moment) the traditional hierarchical socio-economic framework of Wall Street, investment banking, governmental regulatory systems, institutional and accredited investors and the “old-boy” network.
Partially as an evolution of crowdfunding based on social community sourcing, ICOs have democratized the process of capital formation for many startup and emerging companies. ICOs empower individuals and businesses to deal directly and independently with each other without the need for a middle-man and associated fees. ICOs minimize transaction delays, lower costs, and for the moment until new SEC regulatory controls are enacted, circumvent traditional regulatory controls that have long been the provenance of traditional banking and financial systems.
Some people believe that the very nature of how each of us as individuals and the work and/or services we provide in the economy, especially as independent contractors could eventually be defined by individual coin offerings based on the intrinsic value that each of us as individuals provide in the global economic ecosystem.
This vision is potentially more true for the knowledge workers and services professionals and post-information workforce than typical office workers and those working in retail or manufacturing.
Yet, in a world that has become increasingly smaller and more intimate due to geographically independent workers based on digital skillsets, it is only a matter of time and demography when this experience will become more dominant throughout the world.
This transition has already significantly influenced the old economic status designations of nation states based on geography such as ‘west’ and ‘east’ and ‘north’ and south’ as well as economic maturity distinctions such as ‘developed’ and ‘developing’ or ‘under-developed’.
These terms have become archaic nomenclature of a pre-digital world further flattened by accelerated broadband penetration and mobile telecommunications that have enabled lesser developed nation states to leapfrog seventy-five years of terrestrial infrastructure in countries that went through industrialization cycles earlier.
The Future of Money and Technology
The focus of the conference is evident by the title, ‘The Future of Money and Technology’. The conference highlighted how technology has significantly influenced the “tried and true” conventions of money and how the next generation of money is already upon us and in use by a wide variety of people and companies worldwide.
Financial institutions, long controlled by a few are now disrupted and disintermediated in an open source, highly democratized social experiment. A new paradigm has emerged, defined by its very creators and users. In large part, this shift is fueled by the leading edge early adopter entrepreneurial techno literati who have dominated the digital disrupter scene since the mid- to late 1990s and those of Gen Y (millennials) and Gen Z who have inherited that mantel as digital natives.
The preponderance of the conference was dominated by emerging companies laying the block chain foundation for the next disruptive wave of consumer and business adoption. Several examples of highly innovative companies who presented at the conference, and who are friends and professional colleagues, include:
- HoloChain (https://holochain.org). Distributed computing and applications that create a new alternative web for truly peer-to-peer applications.
- Hashgraph (https://hashgraph.com). Decentralized data structure and consensus algorithm that is: (1) Fast: with a very high throughput and low consensus latency, (2) Secure: asynchronous byzantine fault tolerant, and (3) Fair: fairness of access, ordering and timestamping.
- Economic Space Agency (ECSA) (https://economicspace.agency). Next generation, distributed autonomous organization (DAO) creation tools and governance design platform.
Government, in all its forms, whether regulatory, commercial or financial was conspicuously absent. Several leading international banks were represented on panels, in particular, J.P. Morgan Chase, Capital One and MasterCard, by their internal groups responsible for digital innovation.
Despite the token presence of old line financial institutions, it was clear that the future technological groundwork is being laid by start-ups and emerging companies and not traditional retail banks and mainstream financial institutions despite their financial clout and market longevity.
Even in light of this rapid head start in fintech innovation it was clear that those at the top of the financial food chain have every intention of maintaining their market position by utilizing the technologies and tools of crypto innovators.
MasterCard, for example, who has never experienced a network outage in more than 50 years of being in the middle of federated transactions throughout the world has every expectation that they will evolve their transactional middleman position in the emerging world of main street “mom and pop” cryptocurrency transactions. The same is true for J.P. Morgan Chase, which, despite their CEO’s very public admonishment of Bitcoin in October 2017, has every intention of maintaining their global stature as a two-hundred-year-old bank by actively participating in, and possibly even market making, the cryptocurrency market frenzy in whatever ways possible.
The wheels of commerce and power continue to be wielded by those who control financial transactions by being in the middle and through the exponential growth of money and credit through applying the precepts of fractional reserve banking.
This scenario has changed radically over the past twenty-five years with the creation of hundreds if not thousands of new millionaires and billionaires minted by emerging technologies. This phenomenon of new wealth created from the digital multiverse took a radical hockey stick growth curve in the past two years due to new cryptocurrencies and the rapid and global growth of cryptocurrency markets and ICOs.
Now, money, banking and finance, the very province of a select few, has, for the first time, the distinct potential for massive democratization due to new decentralized technologies focused on all aspects of finance and commerce and its widespread and rapid adoption.
Technology, Money and Ethical Markets
So, what does technology and money have to do with Ethical Markets and its mission?
The confluence of three key trends, demography, technology and changing social values form a perfect storm of global disruption.
(1) Demography. More than fifty percent of the world is less than thirty years of age and more than 89% of people under 30 live in emerging and developing economies, particularly in the Middle East and Africa.
(2) Global adoption of digital technology. The ability of anyone, anywhere, even without formal schooling, to leapfrog established industry leaders using digital tools to create ground-breaking technologies and companies. This global phenomenon is in part fueled by the ubiquitous adoption of social media and mobile phones, thereby giving more people highly leveraged economic and social power.
(3) Changing social norms and values. Egalitarian and socially responsible values are now more at the forefront of personal, business and financial decisions worldwide. This is especially true when it comes to building new companies based on socially venture models and/or investing new wealth in what is generally referred to as impact investing. These changes reflect more life-supporting and progressive values reflective of a younger generation of digital natives raised in an open source, social media infused world of personal and societal values. How and where this generation spends their money is a direct mirror of who they are and what they value.
This conclusion is evident, in part, by the Ford Foundation’s decision to divest its portfolio of fossil fuels and according to Fast Company magazine, by “Xavier de Souza Briggs, the Ford Foundation’s vice president for economic opportunity and markets, putting the value of the emerging market for impact investments at north of a trillion dollars, as managers of union pension funds, sovereign wealth funds, and high net worth individuals start taking an interest”.
The conference did not at all address the larger environmental concerns of the massive amounts of electricity currently consumed in Bitcoin mining nor any of the three points outlined above, its focus remaining solely on technology as a tool for the disruption of existing financial and monetary markets and industries.
As is wont for technology conferences, technologies are considered neutral tools beholden to the consciousness of the creators and users and neither “good” nor “bad”, simply an evolutionary process of humans as tool builders.
The next generation of fintech entrepreneurs are focused on using technology to create new financial and business models that are truly disruptive, not simply porting analog business models to a digital environment.
These new technologies and business models are reflective of their generation and the world they have inherited. They see a world of obvious economic inequity, with grave environmental challenges, and with distinct and obvious social injustices based in large part on inadequate education to meet the needs of today’s global economy, limited access to economic development tools and capital, socio-economics, skin color, and geography.
They also see a world of extraordinary possibilities due to the decentralized uniting power of social media and mobile devices and the high financial and social leverage power of technology supported by changing social norms and values.
While these points were not part of this conference, I left the conference highly enthused, motivated and inspired by the panelists I heard, the people I met and the conversations I had.
Most important, I observed an overwhelmingly positive, constructive and proactive group of frontrunners on the leading edge of applying technology for overarching social good.
While it may not be said for all attendees, I also had the distinct feeling that this was a group of people, who, despite their obvious focus on technology and making money, put their money where their values are – and, their values are squarely aligned with those of Ethical Markets.
 Forbes, “Inside The Meteoric Rise of ICOs” – https://www.forbes.com/sites/chancebarnett/2017/09/23/inside-the-meteoric-rise-of-icos/#70470485670c
 UNESCO Statistics on Youth – http://www.unesco.org/new/en/unesco/events/prizes-and-celebrations/celebrations/international-days/world-radio-day-2013/statistics-on-youth/