Outlier Ventures Daily Brief
Issue #17 — On Tether hack, middleware for blockchains, Deloitte’s disruption index and a survey of CFO sentiments towards Bitcoin in today’s issue
Thought Bitcoin crossing its ATH would mean increased security amongst tokens? Nope. A hack into stable token Tether yesterday pushed Bitcoin into temporary freefall, further confirming Wall-street bias (or misunderstanding?) about the risks involved in the token economy. The trend further proves the need for decentralised exchanges to arise and distribute the power central gateways to the token economy hold.
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1. Bitcoin falls on $31 Million hack of cryptocurrency peer tether 😱
Bitcoin crashed by $500 on news of a “stable coin” pegged to a single dollar named tether being hacked spread in the industry. In a formal announcement made by Tether, the team explained that a malicious player had withdrawn over $31 million from the “reserve”. USDT is used by exchanges that wish to offer the ability to hold a pegged token without price fluctuations to its users. It is claimed to be backed by dollar deposits in a bank account. Integrating the token allows traders to protect themselves from market volatility without converting back to fiat currency. Bitfinex, one of the largest exchanges interacting with USDT was twice hacked earlier and has been relying on USDT to offer a stable asset for traders to hold due to banks being unwilling to work with them. These events are only natural in the growth cycle of an ecosystem. With the arrival of distributed exchanges in the coming year, hopefully we will see fewer events like this and an overall improved security landscape.
2. Deloitte’s Disruption Index Reveals Key Investment Focus For Enterprises 💸
Deloitte UK revealed that 85% of the firms surveyed for a recent report aimed to invest in technologies such as artificial intelligence & IoT. The survey included a total of 51 organisations with a combined market cap of £229 billion. Other emergent themes of investments included augmented reality, blockchains and robotics. (Further validation of our Convergence thesis) It is interesting to note that although enterprises are willing to invest over £10 million by 2020 to maintain their edge, for 2017 only a third will be investing more than £1 million into frontier technology. This indicates that an increasing amount of capital is waiting eagerly for the right moment to enter these ecosystems. Enterprise executives also displayed discontent over the lack of technical and financial skills amongst recent graduates joining the workforce. Urgent fixes are perhaps needed in the conventional educational system. Read the index here.
3. Middleware tools could help SMEs embrace blockchains 👌🏻
A blockchain can be a great way to store *small* amounts of data (distributed storage tools like IPFS are designed for larger datasets) but how do you ensure all data sets are in the right format when acquiring data sets from multiple firms at scale? Mesh, an initiative by Venzeeaims to provide middleware that allows retail operators to convert their existing spreadsheets to immutable records on a blockchain. The data transformation process involves three steps. First, the data is validated to be accurate. Second, it’s transformed to work in the new format and eventually transferred to the blockchain. The data can then be run through pre-defined smart contract templates to serve specific various functions. Although an increasingly large number of SMEs and retailers understand the value of blockchains and data marketplaces, there are very few players enabling them to partake in the distributed economy. As data becomes increasingly distributed and immutable, a new generation of middleware providers will allow those on the sidelines to break the silos their data is currently in.
Note: The service is currently not launched yet. Private testing is set for Q1 2018. As usual, start-up mentions are not endorsements
4. Finance chiefs say bitcoin is ‘real’ but many think it’s in a bubble right now 🤔
97 members of the CNBC Global CFO Council were recently surveyed for their opinions on cryptocurrency. Of the 43 individuals that responded, 14% remained bullish about Bitcoin being real and heading upwards in price action. 27.9% believed that the cryptocurrency is very real but currently in a bubble and another 27.9% expressed that Bitcoin is a complete fraud. Notably, 30.2% of the CFOs admitted that they did not know enough about Bitcoins to have a formal opinion. It’s very easy to label every new technology as a disruptor, but Bitcoin does fit into the Christensen theory as a new-market innovation serving underserved customers. A debate can be had as to the sustainability of Bitcoin or the requirement for the general population for a decentralized crypto-currency, but not knowing enough to have an informed opinion when you are part of a CFO Council is negligent, and I would argue, bordering on a breach of fiduciary duty.
