William Mougayar

On Tech, Business, Society.

Tag: globalization

Reflections in Times of Crisis- This Global Pandemic

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On March 28, 2020

In Entrepreneurship

Given the global quarantining in place (some pegged it at 3 billion people doing it), the world is not just on pause, it is also on reflection and introspection.

As many of us move away from normal routines to the abnormal ritual of staying at home, and radically changing our interaction habits, this is a time to reflect, re-think, and evaluate what is really going on.

For many, staying at home or disrupting the work routine is a break from the rat race they are used to, but it is also a perfect inducement for some critical thinking.

Here are the key themes that are sticking in my mind:

Working at home: exception or normality?

As more of us get used to this new normal, many will ponder if they would ever want to return to an office again. This forced situation might be a blessing, and I am sure it will lead to some reduction in actual permanent office space requirements. 

Prosperity to online services 

Suddenly, banks are now touting their online services and reminding us that we can do much of our banking without visiting their branches. Not only banking, but also education, e-commerce, entertainment, self-services, and online deliveries are getting a big shot in the arm. Again, these new tastes are going to linger for many, and much of this will not go back to physical choices. 

Reliance on China: damned if we do and if we don’t?

China is the manufacturing hub for the world. The virus disruption has sent ripple effects to the entire world as supply chains, manufacturing, and product availability were all affected, domino-style. I am sure that many businesses are going to reconsider the degree of dependability they have on a single country. It’s simple risk management 101.

Global interdependencies are real

I have been a fervent student of globalization and its impact on the world economy and society. The current pandemic, like many others that preceded it are global in nature. I am surprised that the World Health Organization waited until March 11th to declare COVID-19 as a pandemic, for pedantic reasons. The alarm bell should have been sounded much earlier, as the disease was on its way to becoming a pandemic. This gives me great concern about the effectiveness of non-governmental global organizations that are plagued with bureaucratic and rigid processes, and not always grounded in reality.

The nanny states are at their best, but at what cost?

Many Western and developed governments have enacted emergency relief measures to make-up for the economic losses at the personal and business levels. They are handing out subsidies to ease the financial pains, left right and center. Yes, they can print money and that’s in their powers, but they are also perpetuating nanny state behavior. We will owe it them back. That said, the better government responses are the ones that reacted much earlier with a focus on reducing the outbreak with aggressive universal testing, so that the eventual economic impact was dampened (e.g. South Korea, Taiwan, Singapore). Governments that are front-ending their strategies by handing out big checks are playing catch-up sadly and trying to cover-up the latency in their leadership.

Was there Chinese misinformation?

I am still pondering that question. I do read (in English) some of the Chinese published reports and newspapers, and one can discern the degree of doctoring in what is published. While the subject of Chinese government control practices is a longer one, in this case, this wasn’t an internal issue, because it has affected how the world reacted to this pandemic. I wished China had done more to sound the alarm bell earlier, and been more prescriptive with the rest of the world about what they learned and what they did. It appears they are doing more now, but also the fire is now raging. It is no longer the flame it was in January outside of China.

Focus on self-reliance and savings

Many people live paycheck to paycheck. Many businesses rely on daily cash flows to continue operating. While this is inescapable for many, the current situation is a time to consider ensuring that emergency funds are always in place. I am sure credit card bills are going to go-up as a result of going through this crisis.

Bill Gates’ Moment

We are all thirsty for knowledge trying to understand this global virus situation, and I do believe that the more informed we are, the better we can fight it and curb it. There is more to it than learning about regularly washing our hands, a practice that was religiously ingrained in me at a young age. As the son of a doctor, my Dad used to wash his hands at home like he was scrubbing for surgery, and washing our hands prior to a meal was a rite of passage into the dining room table.

I was particularly impressed and learned a lot watching this recent TED video interview of Bill Gates by Chris Anderson. I highly recommended it. It made me more knowledgeable, and mentally better prepared to deal with COVID-19. Bill Gates has been thinking about pandemics and how the world can deal with global health emergencies much longer than most of us. His depth and insights shine throughout the 50-minute interaction.

I liked his idea of issuing digital certificates to record and verify that people have been tested, and following that with a national (maybe global?) tracking system. I am sure blockchain enthusiasts will jump on that idea, but there is more to it than just technology. A good database system could do the job equally well.

Bill Gates notes the tragedy of this situation is that we are going to take the pain in the economic dimension, in order to minimize the pain in the disease and death dimension. He says, “Bringing the economy back is a reversible thing, but bringing people back to life is not.”

Like many other tragedies of our times,- world wars, civil wars, natural disasters, previous health outbreaks, global terrorism, we will survive them and get stronger as a result. The world is resilient.

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The Self-Effacing Globally Decentralized Organization

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On July 22, 2018

In Think Tank

I have been an avid student of globalization for over 2 decades, and while globalization has its many advantages, its pitfalls are several fold and felt on society.

Global companies are big, and for them, growth is the primordial goal. They need to open new locations and continue to introduce new products in order to continue to grow. American, Asian and European companies have perfected the art of global growth by expanding their presences everywhere there is an emerging market. I reflected on globalization during a recent trip to Italy, as I realized that the global retail brands had taken over Rome and Milan. In the apparel category, shopping areas and streets that used to be filled with small Italian artisan designer brands 15 years ago, are now supplanted by mostly American and global fashion and designer brands. The streets signs look the same as you would see in an traditional mall, with many similar brands everywhere. How many Timberland shops do you really need to see while walking 30 minutes in Rome? It seems that the old “Walmart taking over Mainstreet” phenomenon in small towns has now hit the big cities, and it’s not the work of Walmart, it’s rather death by a thousand brands. This bring us to the blockchain, and making me ponder what kinds of global organizations will it create? From what we can see today, there are 2 types of organizations that are emerging: companies that will grow the traditional way like today’s global organizations do, and others that will be global via a self-effacing way of decentralized propagation. In the emerging global-traditional types, we have the likes of Coinbase, and they are easy to spot and follow. These companies will have a global footprint as they grow and expand beyond their bases. But on the other side, we have the new self-effacing blockchain organizations. These are not your typical organizations. The most visible ones at this point are protocols that enable a multitude of other projects, and some will achieve a global footprint that rivals traditional global companies. In that camp, we have Bitcoin of course, as well as Ethereum. There is no official central organization behind Bitcoin. Its growth and direction are largely shaped by the global community that touches it. Ethereum has been very much on the same path. The Ethereum Foundation did plant the seed for the Ethereum protocol, and was responsible for the initial burst of technology development around it by funding EthDev, the original “core” development group. But today, the Ethereum Foundation (and its principal creator and founder, Vitalik Buterin) are going out of their way to act like an organism that doesn’t solely drive the Ethereum related agenda and activities, but rather acts more as one of its spokes, and takes much of its direction from its community. The Ethereum Foundation is doing a great job self-effacing itself in favor of a truly decentralized community with several discrete parts that move along a general directional path that is common and transparent to all. Maybe this gives a glimpse about to expect when we have more of these types of organizations, ones that are started with the specific intent of not evolving as central command and control organizations, but rather like ones that gradually step back and are comfortable being in the shadows of who they are enabling. Let’s hope the blockchain generates several organizations that are well intentioned on enabling the creation of many new players, many of which will help to create others, like a distributed network of businesses that are chained with one another. For these types of organizations, they are like a nucleus that generates benefits in the exhaust of their activities. Let’s hope that many independently decentralized blockchain businesses flourish and continue to shine in their originality, just like Milan and Rome used to be peppered with smaller, unique shops from independent designers that were original and creative.]]>

The Blockchain Union

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On January 22, 2018

In Featured, Think Tank

european-union-brexit-political-map-with-european-union-member-statesI recently spent a few days in Geneva, Switzerland, and rented a car on the week-end to make side day trips to neighboring France. This wasn’t the first time I had driven across Europe in a car, but it was the first time since the Schengen Agreement abolishing border checks and enforcing a common visa policy went into effect.

What struck me as we passed multiple times the pseudo-border between Switzerland and France was the openness and ease of passage between the two countries.

Over 4 crossings (twice back and forth), the range of experiences included total openness across a deserted border crossing, to officers signaling cars to keep moving, to being stopped briefly once for 20 seconds and asked 2 simple questions by the French authorities: where we were headed, and where we came from. Perhaps due to my impeccable French, no documents were ever requested.

We can expect this kind of openness within the EU, and I had already experienced it flying or taking the train between EU countries. But Switzerland is a special case, being surrounded by EU countries (except a tiny border with Liechtenstein), while not being an EU member. As it turns out, Switzerland has reciprocal agreements whereby the Swiss Confederation has adopted various provisions of European Union law in order to participate in the Union’s single market.

Within the EU, this openness is possible because EU countries respect and accept each others border crossing practices and procedures. Had I been crossing outside of the EU, the scrutiny and passport checks would have been different and elevated.

This frictionless experience made me think of the blockchain analogy.

Once you have an account with an exchange or receive cryptocurrency to an address, you can start sending cryptocurrency without permission to another address that is part of the blockchain world, the “Blockchain Union”. This permission-less environment is an operating trademark of the blockchain. Your transaction’s flow isn’t interrupted while it traverses the ebbs of blockchain networks, accounts and wallets.

Contrast that to the global banking environment that is full of “border-crossing” checkpoints, and subject to strictly managed entry and exit points for money deposits, withdrawals or transfers. Each bank has its own borders, often dictated by geographical regulation. You can only open a bank account where you reside or do business.

The irony of this analogy is that- while the intent of the current banking system is control and “knowing who their customers are”, that system breaks as soon as the customer or their transaction leaves one bank and go to another. While each bank administers its own independent “know your customers” processes, these processes aren’t connected or related to one another.

Blockchain networks are more cohesive and transparent. You can easily traverse them and see transaction history across addresses, regardless of geographical or location origins.

Related to this, I ran yesterday this Twitter survey, wondering what would happen if fiat-to-crypto linkages were more seamlessly connected.

I was surprised by the results, expecting to see more crypto-to-fiat inflows initially, because I thought that many crypto-wallets were bursting at the seams with crypto holdings that are looking to be converted into fiat. However, the crowd seems to think that more fiat will flow into the crypto side, initially at least.

This tweet replying to my survey probably echoes the sentiment of many:

Regardless of the real outcome of this survey question, the banking world is getting surrounded by the crypto world. More than 2 years ago, I’ve wrote a post about Why There is No Global Cryptocurrency Bank yet, and much of it still applies. For traditional banks, resistance to the crypto world will be futile. Their existing set-up had a purpose: they didn’t want a borderless world to interfere with their monopolist operations, something that the blockchain threatens.

If the fiat-to-crypto-to-fiat borders were more fluid, we could imagine a scenario where users can use the crypto world as a global on-ramp to make money transfers seamlessly, in essence by-passing the proverbial SWIFT system. For example, a user could send fiat to their crypto account then use that to transfer to another recipient’s crypto wallet. The recipient can then move the money to their bank account. The whole process could take 15 minutes and cost minimal transaction fees, certainly less than the cost of a standard international wire transfer.

The blockchain world is like a global Union. Once you’re in, the borders and barriers are minimal, frictionless and permission-less. But it is full of friction as soon as you want to leave it, or enter it from the traditional side. The friction between the non-blockchain and blockchain worlds is real. It is not dissimilar to the difference between travelling within the European Union and outside of it.

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Bitcoin is messy. Let’s fix it.

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On January 3, 2014

In Think Tank

“This is not just money for the Internet. This is a new Internet of money.” — Andreas Antonopoulos, Bitcoin expert Bitcoin is the first large-scale, peer-to-peer, crypto-currency platform experiment that has a real chance to making a significant impact on how we use money around the world. To begin to understand it, you need to think of it as an open “money platform”, and not just a new type of currency. Once you detach its currency-related speculative and volatile characteristics; within its own ecosystem, Bitcoin attacks the traditional money supply chains and breaks down traditional barriers and conventional practices. That is why it is feared by some, misunderstood by many, and embraced by the early few. But its long-term success is not assured. It must be guided, and it must be focused. I’ve recently become a huge proponent of Bitcoin, as a result of my own analysis, not of anyone else’s. Earlier, I wasn’t against it. I was neutral, because I couldn’t understand it at a level where I could form a defensible opinion without pandering to other viewpoints. I kept asking questions, and kept receiving fewer answers than I was hoping for, even from those who had invested in it. But that didn’t deter my optimism for Bitcoin’s future. Then I reached the conclusion that one of the issues that is currently hurting Bitcoin’s prospects was a lack of clarity around its future, in the eyes of users. Furthermore, the challenges and barriers surrounding Bitcoin’s evolution were not being addressed systematically. We can’t just say: “let the market develop”. A mess, with the passage of time and some experimentation doesn’t always result in a less messy situation. Sometimes, things get worse if a path isn’t given some guidance. I’m suggesting that it’s time to put some order and simplicity in the mind of people about what Bitcoin is, what it’s not, what it could be, and what needs to happen around it. That order needs to be simple, and without obfuscations of jargon that is incomprehensible to the average person. Let’s not forget that the future of Bitcoin will depend on the average person’s understanding of it, which will precede their usage of it. No one will use something they don’t comprehend, at least up to a minimum level of understanding.

Bitcoin’s Early Days

Bitcoin today is a little like the Internet in its early days, around 1994. It’s equally full of excitement and skepticism. But the Internet turned out to be a wonderful thing, as the excited group won over the skeptics. But that didn’t occur by happenstance, or by sheer enthusiasm or market forces. It happened because, early on, we were able to identify the challenges to the Internet’s commercialization, and one by one, they were tackled, such that the barriers of entry kept getting smaller and lower, and the opportunities became larger and more reachable. I saw this up close with the Internet, circa 1994, having participated in the advocacy of its early commercialization, via my affiliation with CommerceNet whose sole purpose was to help remove the barriers to adoption, evangelize its vision, and expose its benefits, by working on technological, educational, legal and regulatory initiatives that lubricated the Internet’s early development days. Today, Bitcoin’s challenges are larger than its known opportunities, at least to the extent that they could be easily understood by the average person. We need to fix that gap, if we want Bitcoin to flourish.

Attacking it via a Framework Approach

We need to look at Bitcoin holistically using a Catalyst-Barrier-Solution framework perspective. This framework consists of accurately depicting the Catalysts: Business Drivers and Technology Enablers. Second, we need to table the Barriers that include Market, Legal/Regulatory, and Behavioral/Educational Challenges. Finally, we need to tackle the Solutions to each one of these barriers, one by one. There should not be any illusion about the reality needed here. If we ignore the issues behind these barriers, many of them will not get solved on their own, nor will they go away. The message behind this framework is to help us focus on what’s important. Magical things start to happen when business drivers are strong, when technology enablers are ready, and when solutions to challenges are found. So, I’ve made this attempt to list them below, according to this framework. Btw, I have used a very similar framework in 1996 to depict the Internet’s characteristics in my book Opening Digital Markets, but have adopted it for Bitcoin. Screen Shot 2014-01-03 at 11.34.37 AM

Business Drivers

  • Money transfer fees are too high
  • Internet missing a native software protocol for payments
  • Money transfers cannot be accomplished without an intermediary
  • Money transfer process is too complicated
  • Money settlement timeframes are too long
  • Too many players involved in the process of money transfers
  • Peer to peer transfers are not easy to accomplish
  • Micro-transactions are still a challenge, and not widespread

Technology Enablers

  • Strong underlying cryptography
  • Reliable mining process that is part of its resiliency
  • Decentralized transactions, no choking point
  • Globally decentralized ledger of assets
  • Digital signatures (can’t be forged, but can be securely verified)
  • Transparent transactions
  • Intrinsic payment protocol, native to the Internet
  • Distributed blockchain process is very reliable
  • Multiple APIs exist
  • Natively peer-to-peer
  • Antifragile system: any weaknesses are fixed by a change in behavior
  • Doesn’t need a third party to authenticate (block chain does it via proof of work) 

Technical Challenges

  • Under-developed infrastructure
  • Lack of applications
  • Scarcity of experienced developers
  • Immature middleware and tools
  • Not well integrated yet into the fabric of the Internet

Market Challenges

  • Competition from other digital wallets
  • Integration with existing POS not widespread
  • History of failed prior attempt at digital currencies
  • Perception that it enables fraud and criminal activities
  • Mining Bitcoins consumes a lot of energy
  • Few retail locations where you can buy with Bitcoin
  • Volatility of currency value
  • Large number of currency speculators

Legal/Regulatory Barriers

  • Unclear regulation
  • No protection or guarantees on transactions
  • Irreversible transactions, even on incorrect ones
  • Risks of government blockage
  • First currency that doesn’t have a sovereign entity behind it
  • Several governments issuing Bitcoin warnings

Behavioral/Educational Challenges

  • Difficulty in understanding it
  • Bitcoin’s usability is not great
  • Perception that it’s led by anti-banking motives
  • Buying or spending Bitcoins is still not easy
  • Unclear safety and security of using it
The above lists may not be complete, but the bullets give you an idea about what we need to focus on, in order to continue to assure the success of Bitcoin. It is surprising to note that the list of consumer behavioral challenges is not that long, because users want simplicity: they want to be able to understand it, believe that it is safe and secure, that it’s available, and that they can use it as easily as they can operate their smartphone.

The Bitcoin Landscape

Another way to understand Bitcoin is by portraying its evolution around 3 successive layers of architecture. I’ve again borrowed from a popular segmentation method I used in the late 90’s to explain the Internet. First, you basically need a strong set of Infrastructure capabilities as foundational elements. For the Internet, it was TCP/IP, HTTP, SMTP, etc. Then, you need to see a number of Middleware services that are built on top of the Infrastructure. Finally, thousands of Applications will flourish by relying on the Infrastructure and Middleware services, as they get built on top of them. There is a certain required sequence of iterative evolution to this landscape depiction, but it can serve as a clear visual representation of reality. Screen Shot 2014-01-03 at 12.38.34 PM

Understanding the User Vision

The groundswell activity around Bitcoin technologies is mind-boggling. Thousands of software engineers in hundreds of companies are developing innovative services and applications around Bitcoin because they have seen its future, and it has captured their imagination. But the Bitcoin vision that matters is the one that users see, because they are the ultimate proof point of Bitcoin’s success. There is enlightenment in noting that from a user adoption angle, Bitcoin’s skepticism is way lower in less developed countries where the monetary systems are frail and corruption is rampant. There, people are seeing Bitcoin as an efficient and liberating system, away from the grips of central governments mediocrity. We must follow their lead, because they are seeing the effects of decentralized money when it empowers them. After all, Bitcoin’s vision in the eyes of its founder, Satoshi Nakamoto was very simple: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” In layman’s terms, Bitcoin is:
  • An incredibly easy and cheap way to transfer money between people
  • An alternative currency to pay for retail products and services
  • An easy way to add a payment option to products and services without a central gatekeeper
That is the essence of Bitcoin, at the consumer level. Of course, there are derivative business related products that will exist (ref. the Applications segment in the above slide), but if we don’t get past the critical mass of adoption at the consumer level, none of the other services will matter.

Getting Educated on Bitcoin

Moving forward, we all need to get better educated on Bitcoin. We need to understand it, and help others that don’t understand it yet. If you have one hour to invest, I strongly recommend this seminal video by Andreas Antonopoulos. I have not heard anyone more articulate about Bitcoin than Andreas. We need to address Bitcoin’s challenges, collectively, and systematically. Perhaps, what is lacking is some authoritative consortium organism that sets and re-enforces the required agenda, and lubricates the work that is required to remove the barriers, whether perceived or real. Few of the challenges will disappear if we ignore them. Most will need to be tackled head-on. Therefore, we may need to fund a new organization, or strengthen an existing one, as a non-profit organization that will be recognized as a global authority on Bitcoin, and whose sole mission will be to educate, remove barriers, advocate, and combat legal and regulatory barriers that are being erected to block Bitcoin’s success. This type of organization could take a page from what CommerceNet did, circa 1994-2001. [you’ll need to review web pages prior to 2001, because CommerceNet’s direction changed after] Bitcoin cannot be above the law, around it, nor under it. It needs to deal with the existing perceptions about its safety and security, and it needs to turn many of its detractors into supporters. Ignoring all of them will not help. We need less negative punditry around Bitcoin. There has been a recent flurry of opinions written by known authors who have attacked Bitcoin, but in that process they have shown their ignorance or lack of education about it. A Bitcoin-supported money system is going to happen. There is no question about it. It is unstoppable. So, let us work on putting a little more order and guidance into its evolution, removing or lowering barriers, tackling challenges, accurately describing its vision, and focusing on innovation around its application. Now is the time to elevate Bitcoin’s evolution and put it on the right path of global support. Bitcoin’s success is urgently needed.]]>

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