Most people don’t want to admit it, but with 200 million books in print and around 2,500 titles most of us must at some point come across the “For Dummies” series, which covers everything from Herb Gardening to Stock Investing and much, much more. So it was only a question of time that the people behind it did one on Blockchain, which was authored by Tiana Laurence, a serial entrepreneur and Bitcoin enthusiast. We spoke to Tiana about the book, Blockchain & Bitcoin and what the future holds for cryptocurrencies.
The basics of Blockchain
The book aims to explain the basics of blockchain, smart contracts, and cryptocurrencies or how Tiana put it when we spoke to her: The target of the book is trying to explain the technical aspects of the very interesting things that happen in the blockchain area to business people, and not just talking about the math but rather show why it is important to everyone. It isn’t a book for dummies only and to be fair, at many stages a good technological understanding of blockchain is highly beneficial.
So it wasn’t surprising that when asked how we should explain blockchain to our grandmothers, Tiana pointed a comparison that highlights that to the potentially biggest achievement of blockchain technology: Trust. “Blockchain creates the same kind of trust as we have with paper. When we used to go to the bank we ended up with a receipt for a deposit and that proved that you put the money in the bank. And in the same sense, blockchain is giving that to digital world, it creates receipts that allow you to prove that something happened at a given point in time”, Tiana explained. Why is though that people need know about Blockchain, what is it that makes it so important, and do all people need to know about it? Not necessarily everyone, she said, but it’s technology that will enable other technology. She compared it to social media and how we use, i.e. not everyone needs to know about the software that enables social media, but everyone uses social media and needs to know the bigger aspects of it. Similarly, the bigger aspects for blockchain right now are its ability to move value faster and cheaper and also the permanent nature of it. Tiana also pointed to some of the interesting applications that can be build on the blockchain like decentralised organisations, which allows to basically incorporate a company without ever having met people and be able to conduct business globally.
The future of Bitcoin
As an early Bitcoin enthusiast, she has been following the development of the cryptocurrency for many years. With regard to the recent events she hopes that it becomes a store of value rather than a simple digital currency. According to her, if we live in a blockchain world and Bitcoin is the most secure one, which we would use to, for example, buy property while using other ones that are faster for daily transactions like DigiByte. DigiByte’s advantage, she explained, lies in the setup as it has five algorithms as opposed to Bitcoin’s single algo. Keeping in mind that with Bitcoin a lot of the mining is done out of China, it is also very depend on what the Chinese government wants to do, for example, if China decided to put up the firewall, it would make life very difficult. At the same time, she doesn’t seem to be overly concerned though. “China has regularly banned Bitcoin on some level and what I see is the pattern that they lock it down until they get a better understanding and then they release it back to what it is. Is think what China is doing is smart because they need to understand what this is.” Instead she is more concerned about the overall ICO situation as “these ICOs could create another economic bubble as so much money has been raised in such a relatively short time”. Like others she compares it to the Wild West and sees parallels to the 1920s when anybody could put up something and there has been a lot of money going into it without discernment. Likewise, she doesn’t think that most people distinguish between equity and a token and are not fully aware of the associated risks and consequences. ICOs, in her opinion are therefore not something the average investor should touch but only high net worth individuals that can take those risks. Another point she made was that eventually the projects behind the ICOs are nothing else but startups, and in some cases even only concepts of startups that are not even functional yet. With an average fail rate of startups of 90%, one could argue that statistically 90% of these ICOs are bound to fail, too. It is for that reason that she highlighted the advantage of more traditional fund rainsing instrument as startups have to develop a solid business model and have to pitch many times to investors to get funding. At the same time, Tiana referred to an example where she had seen people that with three weeks of preparation and one day of fundraising raised $10million to emphasise that with ICOs such risk mechanisms are not in place.
Advice for Blockchain Startups
So, what is her advice for Blockchain startups then? “I think what we often see in that space is that we’re living in eco-chambers and we need to go out what the actual problems are. We should take a step back and say that while we may understand the technology very well, we might not understand the problems very well we are trying to solve. So my advice would be, ask a lot of questions, find ways of collaboration in particular with people that really understand the problem and the potential solutions. Yes, blockchain is revolutionary. Yes, the technology is amazing. But we also have to understand the core problems that people are facing in order to solve them.”
“Blockchain for Dummies” by Tiana Laurence is published by Wiley. It is available for purchase at the publisher’s website and Amazon.com.