Cryptocurrency: To Bit Or Not To Bit

Bitcoin, the first cryptocurrency Icarus

Bitcoin started out as a peer-to-peer electronic payment system using cryptography. Potentially to replace official money from the central banks and also make banks and other intermediators obsolete when transferring money.

That was quite a revolutionary approach towards central banks, commercial banks and the whole finance industry, where you no longer need an instance, neither to the currency nor for the control. Even Paypal and credit cards could be replaced. A great new platform where you can transfer money directly from one person to another person.

The idea using a worldwide, decentralized and transparent platform, which keeps privacy and has no restrictions seems alluring.

A real revolution, right? Not only the millennials are praising cryptocurrencies as the alternative to an unequal and corrupted traditional banking system.

The reality, though, looks quite different.

Small anticipation: as everyone perceives reality according to his or her belief system, let us stay open and leave our preconceptions behind. Bashing and disabusing each other doesn’t take us further and doesn’t help raising our awareness.  

Have we not seen this before in the 18th century during the French Revolution? When in the course of events, their initiators are easily left on the track and the original idea turns negative after the positive approaches, suspends or destroys itself? The revolution devours all its children.

Let’s have some practical look. In theory, the transaction fees should be small, but since you can only buy Bitcoin via regulated partners, the fees today are often more than 10% of the transfer amount but will decrease in the long run. For one reason, the transaction fees have risen because of the block size. The participants who paid the highest fee are put into the fast track like when you go through security at the airport. The current fees are problematic and make Bitcoin useless as a currency. However, there are a couple of hundred other cryptocurrencies that have no transaction fees and do not require any financial institution in between.

With an increasing participation of users and when the adoption spreads, the blockchain will not only get longer but also the handling will get slower. To confirm a single transaction can take more than 2 hours. That is the situation today and will improve in the future.

These transfers should be fast and free – that is what we think about peer to peer, right? Why using a cryptocurrency when it works worse than transferring cash?

The speed and transaction fees problem is with Bitcoin, not so much with Bitcoin cash. The mass media is an expert on mixing those two different cryptocurrencies to put Bitcoin in a bad light. Apropos light, the answer we hear to fix the speed problem is the Lightning Network. This should make the transactions faster in the future. But will the transactions then no longer be confirmed on the blockchain, opening another door for manipulation?

There are other cryptocurrencies, which have resolved the speed and can be used feeless. Those Fintech 2.0’s etc. have learnt from early adaptors such as Bitcoin.

Apart from speculation, which is the major use of Bitcoin today, how many participants are really using Bitcoin as a payment system instead of old money? Would you accept Bitcoin? We should avoid mixing up the concept of cryptocurrency per se and Bitcoin.

How will technology adapt and make transaction low cost and fast? Today the Bitcoin network is restricted to a sustained rate of 7 tps due to the bitcoin protocol restricting block sizes to 1MB. Will the problems be solved if we just increase the block size to 8 MB?

How about cybercrime, tax evasion, money laundering and the ups and downs of the Bitcoin price? The higher volatile price is due to the fact that there are no restrictions and therefore things are happening much faster, whether it is an up or down.

Where do you store your Bitcoins? You can’t even touch them, right? How about the security of your digital wallet? How about lost passwords and someone else using your private key to get the authority to receive the Bitcoins unlocked? Today, public key encryption and passwords are also used in online banking, it’s not new and could be hacked too. There is no refund unless you can retrieve the value from a different source in a wallet you control.

Will the address format change help to reduce the confusion between Bitcoin and Bitcoin cash?

It is also obscure, that we do now know who or which group is behind the inventor of Bitcoin, Satoshi Nakamoto, which is only a pseudonym. Why hiding? Is there something we should not know about?

When Satoshi left in 2010, the main developers became part of an institutional environment. The company Blockstream became the main provider for the development of Bitcoin Core, the software which eventually validates transactions in the blockchain.

Did you know that almost half of the Bitcoins are held by the founders? Have you thought about what happens when they decide to cash in?

Bitcoin Cash

Let’s assume the temporary problems have been solved and a transaction is confirmed within a second with (almost) no fees. So how does it really work?

To demonstrate how Bitcoin can be used, take your phone and transfer Bitcoin to the other phone where you want to send the money to. The receiver can be next to you or anywhere in the world as long as you have access to the internet. There is no bank or intermediate to process this transaction and it is instant. For example, Bitcoin cash can be used as an alternative and convenient payment system. The potential for Bitcoin is in Bitcoin cash, which is for easy, almost free, almost unstoppable usage of transactions. Other cryptocurrencies in this area are Dash, Zscash and Monero which specialize in privacy and are also under attack from governments for supposedly enabling crime and money laundering.

In order to insecure the investors, politics and central banks are mixing up Bitcoin and Bitcoin Cash, which is not the same and has currently different objectives. In this context, Bitcoin is a social experiment and is mostly used for hoarding digital gold and speculation.

The higher the price is rising, the louder the admonishing voices we hear from politicians and central banks, calling for a regulation of Bitcoin. They call the term “digital currency” misleading: A means of payment should indeed have a stable value. That value is based on what people are willing to pay for it, but how can we see a stable value when the price goes up and down? These properties are missing from the Bitcoin. Are they also missing for Bitcoin Cash or just Bitcoin? Because of speculation, Bitcoin Cash is influenced by Bitcoin. The currency is extremely volatile and therefore it is difficult to price a value in Bitcoin, making the currency useless today for peer-to-peer transfers.

Cryptocurrency usages

Some people store cryptocurrencies like virtual gold. The more practical approach is to use cryptocurrencies as an alternative payment system. You can use it both for storing and exchanging values. Something has value when it is useful and not infinite in amount. For example gold. Cryptocurrencies are useful when you can transfer value. Whether it will be Bitcoin or another cryptocurrency dominating in the future, we don’t know. To remain successful, people have to use it and need to have trust in it. If you have instant reliable transactions available across the globe with nobody able to prevent them, it has more usability. It also needs the network of the community to use the cryptocurrencies. As long the community agrees on a secure network such as the blockchain, every transaction is recorded in a public ledger. This supports the idea of carrying out payment transfers across borders.

In 2017, two major US exchanges have launched futures on the Bitcoin. Venture capital firms such as Founders Fund invest in the digital currency. Investment banks are opening trading floors for digital currencies.

What does this mean?

The cryptocurrency has arrived in the classic financial world. The original idea is currently undergoing a perverted phase until things will be back to normal.

The majority of people perceive Bitcoin as an investment and trading vehicle and less as a payment system. Many have started just to buy and hold Bitcoin coins. They are just waiting to get rich. If you invest now, you are still buying in on the ground floor, right?

The current ups and downs in the price makes Bitcoin the perfect object of investment, although a very risky one. In terms of payment system, cryptocurrencies are also a victim to extreme fluctuations due to speculation and with a still high portion of fees and speed issues that makes the concept quite useless in everyday life.

Bitcoin – do you see the nice Tulips in your head?

Unfortunately, Bitcoin became a speculative object and reminds of the Tulip mania, where over 300 years ago, the speculative bubble produced flowers that cost more than a house. Bitcoin and tulips are like twins. You wouldn’t blame the tulips, right? Nor you should blame the Bitcoin. With the limit of 21 million issuable coins, the supply is fixed and also reflected somehow psychologically in the increased price. Of course you can break down Bitcoins in smaller units and argue the supply issue is irrelevant. Let’s see whether your smartphone screen has enough space for the zeros before and after the comma to show your Bitcoin amount even in Satoshi. Same happened in the opposite direction to the German hyperinflation one hundred years ago, where you paid over 100 billions for a piece of bread. Daily handling becomes difficult when struggling with all those zeros in an amount.

People use Bitcoin like a hoard of coins which is poison to a floating and liquid currency. But so do the gold lovers. I cannot go to the supermarket and pay with gold coins. I may do so after the crash for a limited time until gold permission will become illegal by emergency laws. I am just hoarding gold because I am Swiss…

Will the other one thousand cryptocurrencies become the same or different from Bitcoin? We will find out after the crash of Bitcoin whether speculative-free libertarian “peer-to-peer” payment system will succeed in the post Bitcoin era.

What is your opinion on Bitcoin and cryptocurrencies?

In the next posting, I will give you my thoughts about the role of the central banks, the blockchain, the anarcho capitalists, the role of the government, the hysteria, the impact on the environment and whether cash will survive.

How to manage yourself in the technology transformation puzzle

In my previous post I elaborated on the digital impact on people. We’ll take it from there.

Becoming aware

If you enter a new level, you first need to clean up. So how to straighten things with yourself and not with others? A deep cleanup of yourself brings you to the profound mystery of yourself. It will encourage you to follow your heart because you will recognize the pressure from outside such as globalization, digitalization, etc. and the pressure from inside such as your DNA, your origin, your source, your behavior patterns, your fears, what makes you happy, etc. The pressure releases fears which is like memories in your cells, which you are not really aware of. These memories even contain the fears of your ancestors. Hence, a good clean up also looks at your origins and ancestors.

Like in my case, my grandmother who was Russian escaped in 1918 from the Bolshevik Revolution. My grandfather suffered from World War II when he was held in a concentration camp and my parents escaped 1968 during the Prague Spring when the Eastern Block armies invaded Czechoslovakia. So you could say the 1918, 1939 and 1968 historical events require a triple clean up in my cell memories. New scientific research argues that it can take up to 7 generations which impact your DNA.

In your daily life, injuries from the past can suddenly pop up, depending on which buttons are pressed. Therefore, it is vital that good managers provide more frequent feedback. Forget about your yearly appraisal review, this is an alibi and will disappear in a couple of years. We enter a new period where companies will react on the large wave of burnouts, pressure and reduced productivity by considering the health factor of the individuals. Social and technological progress go hand in hand. Look at the expression “Human Resources”, which today is more related to exploitation. How about changing the perspective and see our employees are worth gold?

Friendly cooperation always pays off and this sort of teamwork puts a different attitude in place. Like Richard Branson’s quote where clients do not come first but employees. If you take care of your employees, they will care of the clients. I would say, companies need to enable their employees to take care of themselves, especially when the gap between the mental impacts of digitalization get bigger in the future. And I am not talking here about wellbeing programs like yoga at work and employee benefits. They are nice but only scratch at the surface. You can see this when employees return from their holidays and are trapped again in resistance when opening their email and wait until the inbox is filled up with the 386 emails during their absence.

What is your truth?

We cannot drive digitalization without the people. Digitalization does not work without people. This is not the same like robotics for example in the Private Banking. I am more thinking of a new perspective. A result from our clean up. A meaningfulness of what you are doing. Do you agree with your company, what they are doing, their values, their culture, how they deal with their people and customers? Who is in the center? People or machines? The subject “human being” cannot be digitalized. The way you talk, your emotions, feelings and contacts may be simulated by a machine but cannot be replaced. People get sick when humanity is missing. If you can combine this with a solution instead problem orientated behavior, you will be able to solve the complex problems. Start from the person being affected to the person who observes. Observation calms you down. You become less identified with the situation. Concentration and stillness rise. How can we get there?

There is an easy entry point. How do you feel right now? Where in your body does the feeling arise? Our breath and body awareness are the entry points for stillness. In this present state, your actions become much more powerful. You will start to feel your momentum. Wait for the signs in your inner level before following your impulse. You will perceive mercy beyond your mind. You will experience when spending your day that 10% of what you are thinking and doing is coming from your awareness, whereas 90% is driven by your subconscious, your autopilot.

The parts we have forgotten in ourselves reconstruct back to our real wholeness, who you really are. This is not what your personality thinks who you are – this is bringing you into presence. It’s like a full contact with your soul. You will become a maximum responsive human being. Compassion rises. The mind excludes, the heart stays connected. You will look at things around you with the eyes of your soul, with a kind of healing presence. And if you are in this oneness, your access to your intuition enables your creative forces. Your perception gets sharpened and you can differentiate between reflection of reality and truth. Digitalization has nothing to do with truth, it only tries to imitate and simulate a fraction of reality.

To keep the momentum, ask yourself every day a couple of times: Is what I am doing right NOW really closer to my goals? If not, stop doing it.

Doing your inner clean up exercise pays off in the long run. You will stay more connected to yourself and less to the things around you. Send your mind on a vacation from time to time. The mind should serve for practical things. You will intuitively know what truth is and what is not – your soul will help you to see behind the curtain. If your heart speaks up, listen to it and once you know where to go next, stick with it.

Your successful approach to dealing with change will not only give you joy, your actions will also become a blessing for others.

 

The digital impact on people

Do you remember the „New Economy“? This was the buzz word in the late nineties when my colleagues were talking about this kind of internet driven economy. It may look bizarre today, but at that time, the internet started to catch on commercially. Soon, things became crazy. You could have a dump idea like “I wash your dog.com” and could raise $2m startup funding capital. Since greed eats mind, speculators got out of control about their blind investments over the “New Economy”. Soon, the dotcom crash happened in 2002.

Today, the mainstream talks about “Digitalization” or “Industry 4.0”. However, since some people learnt from the dotcom bubble, it is slightly different. Or put it that way: the bubble is less obvious, it’s more a dark side which we do not see at first sight. You could even say it is sneaky. Why?

I cannot be wrong if I follow the crowd. Really?

Everyone knows the game about cost savings. You don’t cut only costs, you also cut common sense. One alternative is moving your IT into the cloud. What first looks like cost savings is in fact giving up your independence. You give your power to your IT vendor and there is a strong argument in favor of this: As an entrepreneur, IT is not your core competence, you want to focus on your business and decrease your IT costs. Hence, let the professionals take over your IT. The same is with digitalization. Managers can hide their mental overload and pressure to perform with “Digitalization Initiatives”. Even the politicians, at least in Switzerland, support the digitalization. However, they support in fact a kind of dependency and it may turn out to be late when you realize this. Remember that those, who have been elected have nothing to say and those on the top who were not elected are the ones, who decide in the background.

Like with the dotcom story, not the whole truth is told and things are more glorified. In the meantime, rules are set up towards egalitarianism. In the old system you were a kind of second-class citizen. In the brave new world, you will become an animal while the playground is newly organized. See this also in the context where the top 0.1% control 90% of world’s wealth. I thought the digitalization and the internet will give us more flexibility and freedom? In some ways yes, but not really. We are moving towards an ideological correction. Things are changing depending on which ideology is presented. For example, around 30 years ago, the shareholder value was the child of neoliberalism. Today, things got out of control and perverted. There is something on the horizon, whether it is a crash or a soft landing change. For sure, there is large pressure in the economy and society and an irrevocable paradigm shift is ahead. This challenge develops in a strong dynamic and overwhelms us.

The human being cannot cope anymore and falls into powerlessness. You need to change your position and become an observer. You need to follow your truth and inner qualities.

What does the digitalization do with us?

Artificial intelligence, Blockchain, IoT, Smart Analytics, Fintech, automated trading systems, Insurtech, cloud, E-ID, IT security, mobile payment, agile transformation, etc. – you name it. All is part of the new ecosystem and part of psychological problems, which lead to exhaustion and burnout. Managers keep more pressure on their employees. In today’s corporate worlds, a constant accessibility is seen as normal. Are we still able to set our priorities?

Digital detox is luxury for those who become aware and for the others, the manipulators take care of keeping us busy or entertained in the virtual world. In the past, companies were more friendly and liberal. Nowadays, we feel the pressure because the pace becomes faster. So one thing is the pace, the other thing is the increased complexity. It is an illusion to think that with digitalization, things are done when pressing a button. Employees are expected to analyze quickly highly complex problems within our globalized world.

Human beings are not machines

Managers do not only put pressure on employees, they put pressure on themselves. Stress leads into fear and pain. A downward spiral, which causes more resistance while condemning others.

One solution to cope with this new environment is endurance. Giving up resistance and providing more room to the pressure also needs some overcoming: you need to show your fear, your pain, your stress and overload. Some managers will understand, because your will be their mirror.

Apart from body symptoms such as exhaustion, burnout and mental problems, companies realize their loss of productivity. Some care, some not. If companies think they can just replace their leavers with new resources they forgot about the demographic change. In some years, there will be a shortage of skilled manpower. Of course, you can outsource and play the game of offshore enabling if you want to extend the problem.

It takes two to dance tango

The global markets, competition, companies and managers are not only causing the pressure. That is only half of the game. The individual employee contributes the other part.

The pace of the digital transformation does not correspond to the pace how we behave and work as human beings. It takes time digesting a new process, a complex task or achieving a target. Changing your attitudes takes longer if you are in resistance to the change. This is mostly the case when blaming the circumstances, the company you work for, your boss, the situation or even yourself.

Human beings follow a natural rhythm because our species are part of nature such as animals and plants. The digitalization follows its own rhythm – it is much faster. The artificial intelligence does not differentiate between night and day. How much time do you spend in the nature? We work under artificial lights in our offices and violate the natural cycles. There is obviously a conflict between the fast digital rhythm and the slow natural rhythm. It is like a clash between two physical laws.

In this constellation, the individual is determined by the digitalization, similar to the threat felt when we are micro managed. If perceived badly, this can have some serious impact on our stress level. This conflict may seem to have a relation to the job or company we work for, but in fact it has not.

People bring their own ego and authority when joining a new assignment. You do not see this track record on their CV’s, they will act according to their beliefs and character and will attract conflicts or harmony. If conflicts arise and you do not address the underlying cause, either the manager or the employee will get sick in the end. As a manager, you have the pressure from the top, however, the question is how you behave and how you lead your team.

In the next blog I will talk about how you can manage yourself in the technology transformation puzzle.

The SCARF-Model. Part 2.

How can we cover the five domains (Status, Certainty, Autonomy, Relatedness and Fairness) in our change management project?

As a change lead, choose carefully your thoughts, wordings and actions. Every direction you make will either support or weaken the level perceived of one of the elements Status, Certainty, Autonomy, Relatedness or Fairness. The impact and perception varies from country to country due to the different communication patterns. Sentences, gestures and meanings are interpreted quite differently depending on the cultural types you are dealing with.

The SCARF model supports the change lead by raising the awareness to the interactions in a change program. This is not about whitewashing difficult and critical communication during a transition. An alignment towards reward leads to be more effective.

Based on the brain research, we understand that threat responses are stronger, prompt and hard to suppress. This is especially the case in stress situations, where the threat responses exceed reward responses. Consequently, people in a transformation program are blocked in their creativity. They will lack motivation, engagement, teamwork and making decisions.

Another conclusion from the brain research shows, that by identifying a threat response, it can reduce its impact on the brain. Hence, the mapping and monitoring of the five domains helps to regulate immediately our emotions.

The change lead will manage much smother a change and transformation program if the focus is on minimizing threat responses and maximizing rewards where possible. Since a model and real life will be different, you may want to take a threat in one domain when you know that you will gain a reward in another domain.

Personal experience

There are many unspoken rules in different cultures and projects. The SCARF model supported me not only in words, which are perceived as threat or reward, but also hearing messages between the lines. Just as reaction, often unspoken and visible by body language and behavior. Often, the most important things in conversations is to hear what is not being said.

To put theory in practice, let us look at the reaction of the body and emotion when I have applied the SCARF model in challenging transformation projects. You can compare the threat like using the power from your stomach whereas the reward is when you open your heart during a conflict instead of using your “stomach power”. The rewards feels in the beginning weaker than the threat but it gives a great sense of relief and more important, it lasts longer and beats the threat.

Recommendation

The SCARF model not only provides a way of bringing conscious awareness to our interactions, it helps us to become aware of our thoughts and emotions. We realize that we are not our thoughts and emotions. We have them and most of the time, thoughts and emotions dictate our life, such as threat responses. However, we do not consist only of our thoughts and emotions. Once we realize that difference, we care less about others who want to put us down (threat) or in a pleasant way, want to keep us encouraged (reward). We change the focus from outwards to inwards so that encouragement can raise from the inside and not from the outside. Our vision becomes clearer only when we can look into our own hearts. When we seek outside, we trap into illusions. If we seek inside, we liberate and face the truth.

References

  • SCARF: a brain-based model for collaborating with and influencing others, Neuro Leadership Journal, 2008
  • SCARF Research Summary, Neuro Leadership Institute, 2014
  • Lieberman & Eisenberg (2008) The pains and pleasures of social life, Neuro Leadership Journal, Edition 1.
  • Baumeister, R. F., Bratslavsky, E., & Vohs, K.D. (2001). Bad Is Stronger Than Good. Review of General
    Psychology, 5(4), 323-370.