Interview: ‘It’s a fad and a bubble, it has no real value & other myths about Bitcoin and other cryptos’

Interview: ‘It’s a fad and a bubble, it has no real value & other myths about Bitcoin and other cryptos’

Ryan Berkun, the creator of Coinplan, the cryptocurrency investing and wealth management platform, talked with Finrazor about several common mistaken beliefs related to cryptocurrency, and shared his ideas about the bright future of the crypto industry itself

Myth: Bitcoin is a fad

There are different assumptions about the whole phenomenon of bitcoin — it is called a ‘geek thing’, sometimes it is believed to be a product of a well-designed conspiracy theory, etc. So, what is the primary, justified, reason for its existence? What if it is a fad?

The primary reason for bitcoin’s existence is censorship resistance. It’s the ability to own your own money without anyone denying you of it.

In 2009, when the housing bubble collapsed, bitcoin was being developed in the background by anonymous person (or a group of people) going after the name (or pseudonym) of Satoshi Nakamoto. And the initial premise was to create an additional cash that no one, no single party control.

So, the primary purpose of Bitcoin is to have a censorship resistant money, meaning no one can say ‘No’ to an individual owning [a property]. The spread of Bitcoin [reflects] how we deem money available and all right there.

Then, the secondary use cases is — a lot of people like to promote it — the ability to easily transfer value or money from one part of the world to the next [without all the bureaucracy], and the ability to have a global currency. At least, I believe Bitcoin will be, the [real] global currency. Also, the ability to have a store value that isn’t fluctuating based on political turnover, unlikely we see in Venezuela like now.

The primary purpose of Bitcoin is to be censorship resistant money.

And why won’t it cease to exist? Or what could lead to its disappearance?

So, my answer is going to be, Bitcoin will exist because no one controls it. If one country tries to stop it through regulation, like India has done recently, others will allow it to thrive, like Singapore and Zug in Switzerland.

Myth: Bitcoin has no real value

Bitcoin and cryptocurrencies are said ‘to be not backed by anything, therefore having no intrinsic value’, in comparison with fiat money.

If we take a closer look at dollars, we’ll learn that they ‘represent’ the relevant amount of gold — a fairly valuable item. But we cannot say this about crypto as they relate to the blockchain they exist within, it looks like a closed system. What are cryptocurrencies backed by and what do you think of its’ intrinsic value?

[Here comes even one more myth.] The US dollars are actually not backed by gold. It’s backed by the forfeiting credit of the US government, meaning that how strong the government is, the underlying value that gives support to the US dollar.

But for Bitcoin, the underlying value is not gold, similarly, it is actually:

A blockchain is an ever-growing record of data, organized in blocks linked together in a chain by cryptography.

So, bitcoin is noble, and the intrinsic value of it comes from the blockchain which is a database (or a ledgered information) that is not [something having no connections with the reality], it is owned by a single part and also owned by everyone at the same time. Owning the bitcoin blockchain is similar to have an access to the Internet. If you have an access to Internet, you have an access to everyone else’s hosted websites on the Internet, per se, no country is censoring what websites to go to. So the intrinsic value of Bitcoin comes to:

  • that is blockchain,
  • the first value proposition of censorship resistance, meaning that I myself own digital currency which is bitcoin, and
  • the network effect.

The amount of people that support the network is similar to the number of people that support the US dollar, [but its innovation potential is way more promising].

28.5 million bitcoin wallets hold more than 0.001 BTC, Bitcoin transactions per day: around 200K+, Bitcoin volume per day: around 700K BTC.

Likewise for bitcoin, where the backing of a network is distributed globally, also the innovations are coming from the ability to transfer money digitally from one part of the world to another or pay for some items to merchants right from your own money with digital cash — almost like using cash, but digitally.

So to sum it up, the intrinsic value of bitcoin comes from several factors, one being the blockchain technology itself, another — be an initial premise of bitcoin for censorship resistance, and third — be the network of people that support it.

Myth: Bitcoin is a bubble. BTC follows a pyramid scheme


They say that the real value of bitcoin is exaggerated, and some people use it as an unfair tool for making money. Following this scheme, all the hype about the subject just helps to overheat the market and attract new ignorant investors with FOMO, trying to catch the trend. So, what if the supply and demand for BTC is artificial, and BTC a bubble, following a pyramid scheme?

I do believe that this is the case for what we saw in the 1970s: there were a lot of speculative investments from no sophisticated investors that did join [the Stock market bubble] because of hype; and what we have seen in the 2018 market run, that’s far, has been a correction.

Bitcoin was not a bubble and these high swings like we saw in December were not new to the history of Bitcoin, this has happened numerous times in history. The swings of how high and how low it goes has been decreased, meaning that it is becoming more concise as the network itself gets stronger.

The chart shows the swings of Bitcoin from December 2 to 31, 2017

So, I think, for investors, everyone should do their own research to understand what is the technology, what is needed before placing an investment and if it is too risky allocate a small degree of their portfolio whether that’s 1 to 3%.

Myth: You can’t buy anything with Bitcoin

My local grocery won’t sell me goods via BTC. Anyway, I’ve heard about the cases when the sell real-estate for cryptocurrencies, but isn’t this a PR & marketing campaign? So, is the adoption of BTC as a payment tool is a matter of time or is this the demonstration that one can’t buy anything with Bitcoin?

I think, the first kind of idea, that it will come with time, [is the case]. Right now there are merchants that are accepting crypto, but Bitcoin is too volatile for most merchants. Anyway, that volatility will only decrease all the time as:

  • network is stronger those using/holding bitcoin, but
  • the actual market value increases, so manipulation is not that possible in the market.

Bitcoin’s cap right now is at about 200 billion, and that is minuscule when you compare it to other industries [without speaking about countries’ GVA]. For example, it is significantly smaller than the size of Apple, a single company.

7 June 2018, Apple Inc. Capitalization: $954.7 billion

Because Bitcoin in terms of its capitalization, it is easy for large investors to manipulate its economy and move the price up and down, but in time it will become less volatile and that will enhance merchants' acceptance.

In addition, there are new technologies being developed on top of the Bitcoin network that will allow merchants to accept cryptocurrency and Bitcoin with almost no delay in transaction time. Except Bitcoin, they want to transact to US dollars, they will be able to do it instantly. One of those platforms is called the Lightning Network, which is a layer on top of Bitcoin that is building instant transactions from the one person to another on the Lightning network using bitcoin. Let’s see how things are with and without it.

Without Lightning

If I would like to buy a MacBook from Apple, I will have to get to my Bitcoin wallet, and say ‘I want to send my bitcoin to Apple, the merchant’.

That transaction can take anywhere from 10 minutes to several hours to complete (and if we were speaking of congestion of network in December, that could take half of the day for that transaction to occur). During the transaction the price of bitcoin might fluctuate from 1 to 10% at that time and this was way too high for merchants to be able to accept that risk (ed. comment: since their income figures would be inaccurate as the entire economy is tied to dollars — rent, salaries, etc.)

With Lightning network

Bitcoin will be able [to be transacted or converted immediately].

There is a company called ‘Lightning Lab’ that connects Coinbase to the Lightning network. If I have a coin on this account, and a merchant has a coin on this account [as well], I can then send my Bitcoin to Lightning Lab, they will send Bitcoin through Lightning network to the merchant, and the merchant will get this Bitcoin on the Coinbase account instantly.

There will be no time difference in the scale of transactions sent, thus a transaction of a big sequence of Bitcoin will be instant.

Thoughts on volatility

So, if volatility is a natural ‘side-effect’ of an emerging market, its fact can’t be used to blame and bury the crypto. But if it is possible, it should be finally lessened. What will ‘cure’ volatility?

One [part of the answer is] a larger market cap. A market cap that Bitcoin has, 200 billion, is not extensive… For example, the ETF market alone is at 3.5 trillion dollars under assets.

So, [the first favoring factor] would be simply more money flowing into the Bitcoin ecosystem, and another [factor] would be merchants’ acceptance of cryptocurrencies: the more merchants accept it as a way of currency, the lower the volatility will be.

The more buyers and sellers we have, the quicker we will be able to enjoy it as a mass-market thing, the quicker it will come to a fair market price and maybe that will work the thing to become more consistent.

And one of the ways to make it happen is to talk about the phenomenon of blockchain and cryptocurrencies, explain the features and break down the myths: this helps to get it closer to all the people (— ed. comment).

[We should definitely talk about it], that’s why we are here. When people show people that this is a real technology with real value that solves real-world problems and could be the technology that we will use for the future, [they eventually let it become a part of their (and, thus, our) reality].

Myth: Every ICO will go to zero

They named the 2017 year a year of ICO. But the greater part of ICO fails to make a successful product. It it true that every ICO eventually will go to a zero?

I think that one of the problems of cryptocurrency is that there is a lot of scams out there and investors should very hesitate before investing in ICO.

The reason is that you are not investing in a company but in a function of one the features on a platform or technology.

I think 80% of ICOs were deemed scams in 2017, but of course, they were successful, legitimate products made through it. (Let us not forget that ICO is a method of raising funds, and despite the fact the accessibility and simplicity of investing process have its effects, there is not a direct correlation between ‘ICO’ and the product beneath it. — ed. comment).

ICO investing is very risky, but it can be very lucrative. Some of these projects will become next facebooks, googles, and amazons — but a very few of them. Investors must do their own research when investing into ICOs, [learn not only the perspective of the product itself but how they are going to ‘own’ the business, as well.]

Security tokens

There is one method of tokenization that is coming out [and deserves a better look]. It is called ‘security token offering’, STO.

If Security, the actual coin is backed either a revenue or some type of accutive generating (accutive security tokens can be tied to different features of the business whether it’s revenue or another). Thus you own a part of a real working business. Those coins would be treated as a security by the SEC — similar to investing in Apple stock.

That’s an awesome opportunity for real companies that enlist these tokens, and I have a feeling that many of new startups, who wants to reach their mature size, will be listing as security tokens.

Myth: Crypto is used mostly illegally

The research throughout shows that the majority of bitcoin usages and transactions is not illegal and is not for evading taxes, investors right now don’t have a clear solution for listing taxes for cryptocurrency and it’s not one of the things we in Coinplan are providing, in terms of our platform we offer: we will be offering taxes as part of the ability for investors to understand exactly whether their properties mostly are and how they can manage taxes in the cryptocurrency space, because it’s one of the biggest issues.

People run businesses; business owners apply different technologies; some people violate laws and got arrested. [There isn’t a necessary interconnection between these concepts.] But when things happen, the broad audience just don’t know exactly what reaction to take.

In terms of illegal drug transfers, I can’t speak for the world that large, but that original notion, I think, is died out as Bitcoin is used for destruction of transfer.

There is a lot of good that happens with the ability to own your own money, and we are watching that the ability to send money from, say, America to Australia [without all the governmental structures as third parties], and it doesn’t have to be [necessarily] used for drug smuggling, ‘due to’ one of these [conjunctions] of Bitcoin to be ‘fully’ anonymous.

Myth: Bitcoin is anonymous

Bitcoin is actually not anonymous: the wallet addresses, whether they are not high directed to the individual, can be traced back by algorithms to the actual individual addresses and receivers. Thus, it’s not so safe to do illicit transactions through the Bitcoin network as everyone in the world without knowing it can see ledger transactions and analyze it better, and potentially get back to the criminals conducting that illegal activity.

The research has shown that the majority of crypto usage is not for illicit purposes and that people also want to pay their taxes, they just need more guidance somehow.

Myth: regulation will kill either the idea or usability of cryptocurrencies

Compliance and custody in the cryptocurrency market have been increasing over time. If we look at Coinbase, we will see that they hold cryptocurrency in funds under the same regulation as major financial institutions, in terms of KML and RAC.

But ask me about the source of funds and where will be directed to — I think the gap is here to stay even if cryptocurrency becomes a market that will be regulated over time and has increasingly been so.

If you want to sign up to Coinbase — I think is one of the easiest ways to get and to buy Bitcoin and other cryptocurrencies — you must go through the KYC-process, that helps to prevent money-laundering and terrorist funding methods.

Slowly but surely more regulation is coming, and all this makes cryptocurrency more legitimate and a more mass-market for the future.

At least in the US, they are treating it positively and there is a lot of people at the head of government institutions that are very favourable of cryptocurrency and blockchain technology.

They are moving slowly. Right now no one knows what the regulation will be because there hasn’t been any [comprehensive, final decisions], but regulators (SEC, CFTC, FINRA) are open to innovations, [but besides], they want to be sure that no one gets scammed. [Definitely,] the government wants investors and people in this market don’t get scammed and don’t get into trouble with fraud or protected, the financial status protected.

In terms of regulation specifically on the cryptocurrency, [there was actually some favorable news recently:] the SEC report stated Ethereum to be sufficiently decentralized, so now it will be treated more as a commodity and less as a Security.

The main goal of regulation is to make sure that people are safe, but they also don’t want to cut out innovation. Regulators are open, but they haven’t made big moves yet, and that’s a big grey area for everybody in the cryptocurrency space.

All in all, the core idea of regulation is positive and it will lead to the brighter the future for cryptocurrency and legitimacy for blockchain projects.

Myth: Bitcoin creators to be imprisoned

There are rumors that ‘the CEO of Bitcoin went to jail’, and consequent shadows cast on the whole system...

[Let’s discuss every part of the statement.]

In terms of the Bitcoin creators, it’s kind of unclear, no one knows who they are. [As generally accepted], the creator goes by pseudonym Satoshi Nakamoto; but it could be one person as well as a group of people — the world hasn’t yet identified who it built and where it was built.

In terms of its CEO, it’s an irony that there is a myth because there is no one managing bitcoin from a corporate or organizational level; there is no access or control to committing code, and, in particular, there is no organization [commercially and directly] promoting it. Bitcoin is essentialized and everyone in the world has an access to, there is no central authority holding it.

Silk Road, Ross Ulbricht, Charlie Shrem and their relations to Bitcoin

In terms of ‘the CEO going to jail’, this is all about because of Ross Ulbricht, who created the Silk Road website. Silk Road was a place used to illicit selling of drugs, where Bitcoin was promoted as the preferred method of payment.

(Mr. Ulbricht did go to jail for lifelong — a double-lifelong sentence plus 40 years, namely. Yet, enthusiasts believe that court decision to be too strict, and even vote for his freedom.

Also, Charlie Shrem, a US-based entrepreneur, was accused of running a scheme with Floridian Robert Faiella to sell Bitcoins anonymously to users of the Silk Road website. According to prosecution documents, Faiella ran a business on the Silk Road website under the name BTCKing, where he let users exchange cash for bitcoin anonymously in exchange for a cut. Faiella fulfilled those orders using BitInstant, where Shrem was chief executive and chief compliance officer. As a result, he actually went to jail in 2014 and was let out [in 2016] — ed. comment)

But, [again], bitcoin has no CEO, no company is running it, it is a decentralized protocol that anyone in the world has access to.

Ryan Berkun, the creator of Coinplan

So, a long time ago, during my undergraduate years, I really wanted to create something [fresh and useful]. That time I saw [creating] software in coding and programming as the only way to do so.

In my first semester, I started to teach myself how to code. I was staying up to 3 a.m. learning how to create IT-products. Besides, I would sit on classes at the university [and sometimes find them insufficient] because the professor was going [either] too slow [or] made mistakes which I had already gone over [during my own ‘classes’]. That self-knowledge strategy how to grow up in a programming world was the best way for me to learn as quickly as possible.

Coming back to the summer of my freshman year, my undergraduate day, I launched my first app with my friend. It was called Request. It was an app that allowed you to send song request to the DJ, and we thought we were going to make it big.

We spent a month building the app and we ended up, we went out to different bar owners. Actually, back then, we were 19 at that time so we couldn’t get into the bar itself, but we pitched what we were doing, [and usually managed to meet the bar owners]. Some said they liked it. Then we went all around the town, talking to people, learned how people like it…

We collected so many contacts, organized them and about a week later we reached out all of that bar owners, and — such a disappointment! — few of them responded to us with significant interest.

So we turned on our heads. We knew what to do, needless to say, we kept experimenting in improvising and starting to become Djs ourselves, and DJs in different places to promote our product.

That was where I really learned [what a startup means] — the startup methodology means to figure out who your target customer is and how to really run a business in addition to creating technology.

So, since then I have been building different applications and different projects. Besides, I have been trading in the Warren exchange and Stock market, learning different things: technical analysis, how news influence the price, how to value a company.

In about 20, I began writing algorithms to directly trade on the foreign exchange market. I was able to use a foreign exchange market, where the price to get in was next to nothing (when you put in a dollar to start trading on it), and with these algorithms, I slowly started developing greater expertise. As in the ‘Request’ times, I was bringing other traders involved to use algorithms as if they can really enhance it and make a profit out of it.

Then coming to my junior year, and we decided to be focused on it and give these algorithms to others. That time people started requesting cryptocurrencies and bitcoin, and that’s how we really started to learn about it.

2017 came, and in September we were playing around with cryptocurrency, writing machine learning and AI algorithms to trade Bitcoin and other coins.

When the epiphany of different initiatives and sectors of blockchain started out, that really hit us. We went through weeks of brainstorming every day, staying up all night and examining all possible news about cryptocurrency and blockchain, which could wave out our third parties and change our future. The ecosystem of technology and modern life, as we know it, was being disrupted, we were so excited and we wanted to just get in as involved in the blockchain space as we could. So we started researching every coin out there, every protocol, every platform and began investing.

And this is where we faced first problems of investing in cryptocurrencies: because of the market is too fragmented, it’s very difficult to enter as a newbie. But we saw a direct ability to solve this problem of making cryptocurrency investing in it simpler. We ourselves did not want to see us as traders, we were more building [a tool] [compiling] portfolios. And the ability to build portfolios easily was near impossible at that time.

It took at least an hour and a half hard working to build a decent portfolio, a very time-consuming process. It took pretty much time to connect to different main exchanges like Coinbase, GDAX, Binance, Kucoin, [and keep track of what you are investing in. It would be great to somehow tie all the accounts together on a single platform to let] the user set the coins he wants to portfolio, set the rates once and make it go, really go.

For us it was the major solution, so we decided to give it out to some bar traders and other people online. And we got people interested! Then we started to develop the platform, one of them was arbitrage technics, another one was an integration of our prediction algorithms to the platform.

In about April we decided to have a deep brainstorm. We got really focused on the research of the market, figured out what’s really out there, what is just beginning, and where we can position ourselves best to make cryptocurrency investing as easiest possible for the next 5% in the world that wants to invest here. And what we saw to be promising, was wealth management — that’s a space that hasn’t been explored too often. Right now in the cryptocurrency space there are a lot of products that are focused on only trading. [But trading is demanding, and it isn’t the cure-all], and that’s what we really came up with the Coinplan.

Coinplan is a cryptocurrency wealth-measuring platform that allows users and investors the ability to design their portfolio, track the market, but also to invest in really cool, diversified coin bundles or portfolio of cryptocurrencies. We want to make it as easy, for the next 5% in the world to come into the cryptocurrency market, and really be allocated and diversified almost instantly.

We see ourselves modeling the fintech giant ‘pyramid’ in the financial space that bringing back to the cryptocurrency side. So with our bundles we are offering something unique [yet accessible] — users can connect their Binance accounts, and with a click of a button invest into portfolios and indexes run by thought leaders such as Bloomberg (actually, they’ve just put out the BGCI index, the index of the TOP cryptocurrencies they track). A user on the platform can also directly invest into a Coinbase fund, a Coinbase release, or Chinese index which is an awesome composition of TOP-30 cryptocurrencies that will be updated every month.

So we are really giving our users the ability to have a platform to invest into a diversified bundle of cryptocurrency, diversified, run by thought leaders in the financial space, and with almost no friction.

We are here to make cryptocurrency investment and wealth management as easy as possible, to use it as a catalyst to bring blockchain projects and cryptocurrency to mass-market and scale.

Bitcoin

BTC
Price
4,002 USD -1.37%
Volume, 24h
1,719,147,325 USD
12.38%
Marketcap
70,433,667,197 USD
51%
Emission
84%

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And all the logistics work is done not by SharedChain own assets or employees, but private firms that contract for and compete for business in this massive shared supply chain system. SharedChain has nothing to do with seller relationships and business with retail stores or final customers — that’s for their clients to decide and manage. Blockchain and cryptocurrency aren’t required for this system to operate, but is being added to achieve the blockchain benefits in supply chain operations. It will take all the above, including another huge change in supply chain process described next, to pull off the massive, revolutionary change in eCommerce and retailing needed to stop Amazon and check Walmart’s destruction of small businesses.The shared Chain system is not just for business to consumer retail sales like Amazon or eBay. It’s a supply chain system for B2B sales as well — a highly efficient shared but optimized system that will supply small stores with much lower costs than they can achieve on their own. By bundling eCommerce sales, shipments to retailers, deliveries to pick up centers, and home delivery in one big, massive supply chain and delivery system, SharedChain will achieve more network effects and bundled delivery economies of scale than Amazon. Again, quoting Lee’s Supply Chain Quarterly article, “because this supply chain process system is constructed as a partnership by connecting the power of all participating members, each member will benefit from the size of the supply chain process system.”[xvii]As the Wall Street Journal’s top blockchain reporter, Paul Vigna, writing in MIT Technology Review explained, “Google, Facebook, and Amazon turn economies of scale and network-effect advantages into de facto monopolies.”[xviii] A shared supply chain and eCommerce system used by hundreds of thousands of small retailers and manufacturers, operated by thousands of independent warehouse and transportation firms, can exceed the scale of Amazon and Walmart.Blockchain and a massive shared Supply Chain and Internet eCommerce system provide two powerful spears — but a third is needed to take on Amazon.This third spear, another key part of the shared supply chain system Luke Lee designed, hits Amazon where it’s most vulnerable. Amazon’s system of long distance, rush shipping of individual packaging has inherent big costs and environmental damage from transportation energy waste and individual shipping packages. This third key feature of SharedChain is that it is based on local markets shipping goods from local warehouses — not long-distance rush shipping. Furthermore, the SharedChain system rarely ships individual packages or one order a time — goods for multiple destinations come from multiple local warehouses through the local Distribution and Transportation Center to local delivery centers — in bundled pickups and deliveries, in crates and reusable totes — not individual cardboard packages stuffed with foam and plastic. Lee’s SharedChain system has a huge, vital business process change. It provides a much better way to enable what has become a key tenant of supply chain operations today: Just In Time (JIT) delivery. Lee’s solution is not high tech but a return to an old-fashioned logistic practice: local warehousing. Since SharedChain sourced goods are sold by local markets (115 would cover the U.S.), this system can do same day delivery easily — faster and much cheaper than Amazon!A great theory, but does it work? After a year of investment and software development, SharedChain system did a market test in Los Angeles, and it worked brilliantly. From order to delivery took four hours — at far less expense than Amazon.This third point in the SharedChain Trident enables effective competition against Amazon. SharedChain can deliver many goods much faster at much lower cost!While consumers love faster delivery and lower price, they will also appreciate the reduction in environmental damage of the SharedChain system. Rather than using aircraft and long-distance trucking to quickly move goods from local warehouses for just in time delivery, SharedChain’s return to local warehousing favors bulk ocean and rail shipment of goods which wastes far less energy. The avoidance of wasteful individual packaging, and its costly toll in damage to marine life, is another big consumer appeal for SharedChain.Amazon’s dominance is from network effects and physical economies of scale in moving mountains of goods through the supply chain. Writing in Hackernoon, KJ Erickson, CEO of Public Market, lamented that “Far away from the internet’s original promise of unfettered peer-to-peer exchange, online commerce is today dominated by a small handful of middlemen marketplaces that charge outsize commissions for access to a consolidated buyer pool.”[xix]The only way small firms can compete with Amazon — or Walmart — is to band together and share their supply chain to achieve the economies of scale that can match Walmart in prices and, sourcing from local warehouses, beat Amazon in both prices and speed of delivery.Network effects are economies of scale on the Internet. But there are sometimes more important economies of scale in physical operations, like bundled deliveries and fully loaded trucks. Even more big cost and time savings accrues in supply chain operations if you’re sourcing from a local warehouse, not rush shipping an item with air freight and long-distance trucking.Retailers and sellers do their own marketing, have their own eCommerce sites (front ends — with SharedChain system hidden in the background, accessed by their system). The SharedChain system takes care of finding and registering warehouses onto their system and aggregates/organizes/optimizes the routing and distribution of products in the local market. In sum, as Lee noted, his new “supply chain process system has the potential to induce a Supply Chain Revolution in real markets, just as the Internet did in information.”[xx]SharedChain is not a retail name or brand — it’s a “backoffice” Internet system, eCommerce network, and shared supply chain/distribution system. SharedChain has pledged to never compete with its clients — never offering products for sale, no “store label” brands, no investment in any physical assets to compete as a warehouse or transportation provider (Amazon operates its own warehouses and even has its own fleet of aircraft to further steal business from any other firm). SharedChain is pledged to be the software, blockchain, back office system for a shared supply chain and eCommerce system.SharedChain is not a fully decentralized marketplace as some blockchain enthusiasts want, but is a shared supply chain and eCommerce system that greatly limits centralized control to the minimum needed to organize and optimize the physical delivery of goods. You can’t do a shared completely decentralized supply chain and local distribution operation with absolutely no one in control (or responsible). An optimized supply chain and delivery system sourcing from dozens or hundreds of warehouses in a locality, with bundled deliveries of products out to hundreds or thousands of retail stores, pick up centers or home delivery requires complete central control or you can’t achieve the efficiencies and cost savings vital to cut expenses and match Walmart prices and beat Amazon prices.The SharedChain blockchain will be the primary means that thousands, eventually millions of suppliers and retailers interact with the SharedChain database and supply chain/eCommerce system. When a supplier has finished goods ready to ship, they’ll enter a “digital asset” representing them into the SharedChain blockchain, which passes the data (if properly formatted and authenticated) into the SharedChain database. Blockchains should not hold big databases. They are great as a distributed ledgers of key transaction data, but are not efficient as giant databases. As the goods are transported to the local market, the blockchain can track them to be sure the custody of control is not broken (counterfeit goods), IOT temperature and time stamp inputs can be added, and arrival at the local warehouse in the SharedChain system verified. SharedChain’s massive, shared supply chain system with blockchain could be a god-send for IOT sensors, Big Data and AI. SharedChain will provide a huge, open supply chain blockchain that IOT devices can serve, generating data for analysis.The SharedChain blockchain is not necessary for their system to run now, but they will be adding a private Hyperledger Fabric blockchain to reduce the threat of hackers and nefarious groups ability to access the SharedChain system and to enable the many other improvements blockchain offers. Large users of the system will be asked to operate a node, and groups that can validate the quality and authenticity of products (such as organic or not, meeting claimed standards) will also be invited to both operate nodes on the blockchain and certify whether sellers did meet standards. The SharedChain utility token will be used to query and transact on the SharedChain system. As blockchain identity control and protection services advance, more consumers will take control of their identity to prevent Amazon and Facebook abuse — and the SharedChain system will accommodate this.Blockchain will enable major improvements in improving the safety and reliability of the supply chain while reducing costs and errors. Again, blockchain may be the most valuable tractor on the farm — but can’t alone replace the farm. The inventory database, routing and bundled, mixed delivery optimization, and the vast majority of the computing will not be run on a blockchain. Outside users will query and transact through the blockchain, digital assets will be created to track the provenance and ownership of goods, smart contracts will be leveraged to automate billing — but the vast majority of the data and computer calculations will be off chain. Blockchain plus all the other elements of the SharedChain shared supply chain system and process redesign and some central coordination and control are all essential for success.Sellers cannot easily access their customer on Amazon, and can be kicked off the Amazon platform if they try to directly connect. SharedChain’s system allows suppliers to deal directly with final customers or retail stores, whatever they want. SharedChain will promote and facilitate Reddit (or other) discussion groups, with many specialty channels to link consumers, suppliers, stores and facilitate interactions — the freedom of communication Amazon outlaws.Retailers who have signed up for the SharedChain system are highly motivated — they need an alternative to the current crushing vise of Amazon eCommerce domination and Walmart lowest prices to survive. Walmart annihilated “Mom and Pop” and small independent retail stores. I was a University of Nebraska Regent representing southeast Nebraska, and my district was littered with dead villages that perished when Walmart forced the small stores out of business. The cafes and barbershops followed when shopping switched to the Walmart out of town, and village downtowns and often the entire town perished. Amazon is finishing the small retailer genocide, and taking out large national chains as well. “During the first weeks of 2019, retailers shut down 23% more stores than they did at the start of 2018, according to Coresight Research. The firm concludes there’s “no light at the end of the tunnel” for troubled store companies.”[xxi]Amazon and Walmart abuse manufacturers of all sizes, but the smaller firms are less able to deal with it. Walmart also excludes small suppliers because they can’t meet the volume requirements and stringent warehouse delivery requirements they dictate. Sellers pay high fees to sell on the Amazon platform or get a slot in a Walmart store. KJ Erickson, CEO of Public Market, an open data protocol for marketplace eCommerce, notes that the net effect of Amazon policies, charges and competition is that “only the largest sellers are able to profitably use the platform.”[xxii] A recent Inc Magazine article entitled “An American Small-Business Horror Story: One entrepreneur’s tale of his time in Amazon purgatory” detailed the countless ways Amazon abuses small suppliers. “Amazon conspicuously fails to safeguard the interests of small businesses while advancing its own at their expense.”[xxiii]Amazon doesn’t just spy on customers and sell their data, they analyze seller data and copy the best performing products — cheating their key clients. Their apparent goal is to replace all third-party sellers and products with Amazon Basics versions. In March 2019, Amazon was testing a “pop-up feature on its app that in some instances pitched its private-label goods on other seller’s product pages.”[xxiv] An entrepreneur who knows Amazon and blockchain, believes that Amazon seller’s fear and hate Amazon’s unfair competition. He wrote that “Most sellers would do ANYTHING to control their company’s destiny. If that means promoting a blockchain based e-commerce platform (BBEP), you can bet your ass they would”[xxv] While thus far Amazon’s exploitive business model has made Jeff Bezos the wealthiest man in the world, it also lays the ground work for suppliers, large and small to eagerly abandon Amazon for better alternatives like SharedChain.Normally a startup faces a huge marketing challenge in building awareness and acceptance. SharedChain plans to “declare war” on Walmart, issuing press releases and staging media events with small retailer and business associations to condemn Walmart’s unfair and illegal practices in dodging taxes, forcing manufacturers to give them discounted prices, and exploiting workers who file 5,000 lawsuits annually against Walmart. Walmart has a big cohort of detractors who condemn the profiting of the Walton Family, with $150 billion in net worth from inheritance, not work — more wealth than the bottom 40% of Americans! Walmart’s enemies hate their practice of hiding cash and assets overseas to avoid paying U.S. taxes while sourcing most of its goods sold in the U.S. from overseas. SharedChain expects industry associations and word of mouth support from sellers and retailers to champion this alternative to Walmart and Amazon abuse.Strong consumer support for SharedChain is also likely. Older Americans remember how Walmart destroyed small towns and “Mom and Pop” neighborhood stores when their unfair practices ruined their business. The appeal of helping small stores and reducing the environmental damage Amazon’s long-distance rush shipping and packaging waste causes will also boost the switch to small retailers using SharedChain. Small businesses, sustainable business, and “economics as if people mattered” — the theme of economist E. F. Schumacher’s famous book “Small is Beautiful” is still a strong appeal.The modern version of Schumacher’s philosophy in our shared economy is “Shared Small is beautiful.”SharedChain can stop the destruction and abuse of Amazon and Walmart, helping not just small businesses, but small town and urban neighborhoods recover and improve our society, economy, and quality of life.Only one firm today has the three-pronged approach that’s needed to halt Amazon. SharedChain is the one platform that can make network effects in both communication and supply chain physical economies of scale for the first time. Size of individual producers or sellers do not matter anymore, just price and quality of their products.SharedChain may appear to have a ridiculous “mouse that roared”[xxvi] preposterousness, tilting at the Amazon windmill — and taking on Walmart as well. But their proposition is based on the shared economy, an army of mice, very angry mice. The small retailers and small manufacturers who have been crushed by Walmart and Amazon are very angry indeed. Enabled by blockchain technology, the patented Internet supply chain technology of SharedChain, and this switch from just in time delivery to local warehouses — this army of small companies could well defeat Amazon. Their market test was convincing: 4 hours from order to delivery at a much lower cost than Amazon. Consumers like same day delivery at lower cost than Amazon. They will also prefer small local stores that can match Walmart prices, provide far better customer service, and beat Amazon in speedy delivery.SharedChain is raising equity now to launch at functional scale.[xxvii] Many people who have looked at SharedChain compare the company’s potential to Amazon and Uber. Uber started operations in July 2010, and in October 2010 raised $1.6 million (valued at $5.4 million). A few months after that they raised $11 million in their first Venture Capital round. Despite many years of no profits, in 2018 they reached $60 billion in valuation. SharedChain has no investment in equipment or facilities, very low operating costs, and should be profitable by 2020. Uber has Lyft and other competitors — SharedChain has a patent for its system. The retail sales industry dwarfs the size of the taxi/shared ride industry.SharedChain may seems to be preposterous in taking on Amazon and Walmart — not David versus Goliath, but Arya fighting The Mountain and The Hound at the same time. But these are poor analogies because it’s not SharedChain alone, but thousands of small stores and thousands of manufacturers, and thousands of warehouse, logistics and transportation firms, all united via the SharedChain system against Walmart and Amazon.Consumers want small neighborhood and village stores back. They care about the environment and packaging killing marine life. They don’t like big tech companies profit by spying on customers and selling their personal data. They would like an economy that operates as if people matter. Blockchain alone can’t achieve this, but a full system like SharedChain can.[i] Fortune Staff, “The Shrinking Middle Class: How We Got Here, And Why,” Fortune Magazine, December 24, 2018[ii] Richard Howells, “What’s Ahead For 2019: New Business Models And Changing Supply Chain Roles”, digitalistmag.com, Jan 7, 2019[iii] Bernard Lunn, “Decentralized Marketplaces to beat Amazon = big opportunity or cypherpunk pipedream?” dailyfintech.com, June 30, 2018[iv] Deloitte, “Breaking blockchain open, Deloitte’s 2018 global blockchain survey”[v] https://openbazaar.org/[vi] https://particl.io/[vii] Olga Neroda, “Blockchain is the future of e-commerce,” hackernoon.com, Jul 10, 2018[viii] https://medium.com/bitboost/engineering-heavy-cash-light-good-bye-from-bitboost-33ea6dc8b1f1[ix] Kyle Wang, “Blockchain and the Journey Toward a New Internet Architecture,” hackernoon.com, Jan 22, 2018[x] William Mougayar, The Business Blockchain, Wiley, 2016[xi] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xii] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xiii] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xiv]Luke Ho-Hyung Lee, U.S. Patent 8,793,194 B2, July 29, 2014[xv] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xvi] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xvii] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xviii] Michael J. Casey and Paul Vigna, “In Blockchain we Trust”, MIT Technology Review, April 9, 2018[xix] KJ Erickson, “Blockchain plays can create new rivals to Amazon and eBay,” paymentssource.com, September 24 2018[xx] Luke Ho-Hyung Lee, “How a “3-D” supply chain process system could revolutionize business,” Supply Chain Quarterly, Quarter 2, 2013[xxi] Doug Whiteman, “These Chains Are Closing: Tons More Stores in 2019. The retail landscape is on the way to looking even bleaker.” Moneywise.com, March 7. 2019[xxii] KJ Erickson, “Blockchain plays can create new rivals to Amazon and eBay,” paymentssource.com, September 24 2018[xxiii] Jeff Bercovici, A recent Inc Magazine article entitled “An American Small-Business Horror Story: One entrepreneur’s tale of his time in Amazon purgatory,” Inc Magazine, March/April 2019, p. 55.[xxiv] Jay Greene, “Amazon Imposes on Seller’s Listings,” Wall Street Journal, March 17, 2019, p. A1[xxv] Matt Ward, “Blockchain vs The Big Four: How Cryptocurrencies and Decentralization Affect Google, Amazon, Facebook and Apple,” Hackernoon.com, Feb 5, 2018[xxvi] The Mouse That Roared is a 1955 Cold War satirical novel by Irish American writer Leonard Wibberley, adapted into a Peter Seller’s movie[xxvii] SharedChain is offering equity to accredited investors on the crowdfunder.com equity crowdsourcing websiteBeating Amazon with Blockchain was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Using Blockchain To Improve The Gaming And eSports Industries Is Right Around The Corner

Using Blockchain To Improve The Gaming Industry Sometime in October of 1958, a man called William Higinbotham officially introduced something he had been working on for quite a while. The game, Tennis for Two is probably the first video game ever made and was played by two individuals using separate controllers directly connected to an […]
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