We have intensively researched many Initial Coin Offering (ICO) projects to develop a complete understanding of the cryptocurrency movement. Central to this movement are its enthusiasts and critics. Some people claim cryptocurrencies are transforming the world, and every single payment in 2050 will be done with Bitcoin. Alright. Others rattle on about the novelty of blockchain and how it will disrupt the traditional distributed system software world. Maybe. An almost palpable level of uncertainty surrounds the crypto bubble, making it impossible to accurately predict what will happen in the next ten to twenty years. The one thing we can count on, however, is that finance will grow to influence our lives even more than it currently does. In other words, finance will “eat everything.”
Software Ate Everything
Why is finance a hungry beast that will soon take over every aspect of our lives? Let’s step back a bit in time to 2011, when Mark Andreessen, hailing from the top Venture Capital firm Andreessen Horowitz, published his insightful piece “Why Software Is Eating Everything.” In this article, he claims that the software industry will transform every industry, effectively turning every company into a software company in some respect. At that time, Amazon was a simple book store built on software, and Apple and Spotify were just beginning to changing the music industry through software and internet services. Seven years later, almost every company in any industry utilizes software. Take Walmart, for example. This manufacturing giant has invested millions in software and data processing, simultaneously expanding their online business. GE is building what they call ‘Predix’ to automate and improve decision making through predictive analytics in the IoT. The automobile industry has participated in this software boom by incorporating high tech censoring and auto-pilot systems into cars. The Biotech scene has jumped on board the software craze, taking advantage of novel data analytic tools to link human behavior to certain genetic characteristics. Even from a few examples, we can easily see that he was right: software ate and is still eating everything.
Finance Will Eat Everything
Fast-forward to today. People theorize about scam ICO projects lacking real products, and question whether the SEC will end up regulating it just to please such theorists. Others look at it from a crazed, profit hungry perspective, speculating how to gain 100% profit from alt-coins before the bubble bursts. I strongly believe that these misguided focuses are not the point of this movement. The true value of the ICO movement lies in how it has simplified incentive systems with micropayment and decentralized all networks.
What does this even mean? Say, for example, you are the owner of a video sharing site where people contribute small amounts of daily content available for subscribers to watch. As the owner of said business, you face a complex problem regarding customer generation: you need to have interesting content to attract new users, but in order to obtain this content you need to have users to produce it. Additionally, this business highlights the complexities that come with an online business, mainly the trouble tied to universal payments and incentive systems. Now, with tokenization, we can simultaneously safely charge subscribers, or content consumers, and reward content producers with a trusted, universal payment system. This creates incentive for content producers, and makes it easy for content consumers to pay. Using fiat currency, such as USD or JPY, complicates this process for a few reasons.
First of all, as a global, online business, it is hard to choose one currency over another. The US dollar is not the only currency used in the world, and it also becomes hard to tie a value to content when you have several different currencies. Even if the network grows, you as a business owner will struggle to understand such growth, and more importantly content consumers and producers will suffer from this lack of uniformity. Using a token places a value on content that everyone can understand, and also avoids relying on a central authority. With decentralized incentive system backed by blockchain technology, essentially, anyone can build a marketplace with products whose values are fairly traded and defined; payment to producers and payment by consumers is streamlined, no matter the size of said network, something that used to be impossible with traditional tools. Just as software took over every business and industry, this decentralized incentive system will permeate into virtually every business.
Financial services is no longer a separate industry; rather, all businesses will embed some degree of financial services into them through these decentralized payment systems.
Some may say that the traditional financial services industry is becoming less relevant and important, as the inception of decentralized payment systems will decrease it’s importance and relevance. On the other hand though, this transformation of the financial services industry makes every business a financial business. Just as software is intrinsically incorporated into all businesses, financial services will soon be at the heart of every business.
As someone who used to work for an investment bank, this is shocking. At the same time though, it’s also super exciting that we are living in such a thrilling age full of innovation and change. This movement is so much more than just a volatile and exciting game of alt-coins fluctuating on the daily; it is an ICO and tokenization revolution. Finance will eat everything.