The New Economy… are you ready? 

What new economy? This is the first question that comes to mind. I hope to expand and explain some terminology and language that is being thrown around in the general media about this “new economy”. Covering the jargon and strategic intent, we can be better prepared to ask the important question – “how will this affect me and my business interests?”

The “new economy” is a general term that refers to blockchain, cryptocurrencies and all the nuances of ICO economics. I will be taking the position of a novice – yep “explain it to me as if was a three year old or a golden retriever” as the saying goes. 

First, some background on blockchain. It first started being developed after the 07-08 financial crisis – why? The simple strategy was – to move away from centralised financial systems with no accountability, transparency or effective controls to a decentralised, open user to user network. A critical factor for the “new economy” is the rise and acceptance of the web, internet or IOT (internet of things). Commerce on the internet does rely on large centralised financial institutions serving as trusted third parties to process electronic payments – note that the US fed estimates global ecommerce sales will top $27 trillion by 2020 – with Asia Pacific showing the fastest growth of 31.5% in 2017 compared to 2016 according to eMarketer.

With the current trust-based systems there are large costs associated with mediation of payment disputes, merchants then require more info from buyers that they would normally require – resulting in a certain percentage of fraud.So, the need for an electronic payment system based on cryptographic proof instead of trust became a realistic goal. This new system allows any willing two parties (peer to peer) to transact with each other without a trusted 3rdparty. Hence blockchain came into being – it is said to be the brain child of a group of people known by the pseudonym “Satoshi Nakamoto”. 
However. since its humble birth the blockchain has emerged as a real technical force. Blockchain is code - encrypted code that allows digital information to be distributed but not copied. Blockchain is the fundamental technology (code base) on which new economy is being built. Blockchain has provided the backbone for a new type of open internet, bringing the rise of the digital currencies called crypto currencies.

Where does this blockchain exist? And what does it really do?
Information held on a blockchain exists as a shared, and continually reconciled, database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralised version of this information exists for a hacker to corrupt or a corporation to control. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

How far has this new economy come since 2008? According to Coinmarketcap.com and Mike Novogratz from Galaxy Investment Partners, the cryptocurrency market captiliasation will hit $2 trillion USD in 2018. It would appear that the new economy is here and moving fast. How is your business placed to take advantage? How will this play out in your everyday & financial life?

In my next article I will uncover crypto currencies, the why, what and how. Stay tuned…

Note – the authors currently hold cryptocurrencies.

Common definitions of the new economy jargon: care of Wikipedia, NASDAQ, Investopedia and other enlightened experts.
Blockchain
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Don & Alex Tapscott, authors Blockchain Revolution (2016).

Node
A network of so-called computing “nodes” make up the blockchain. (computer connected to the blockchain network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the blockchain network. A network of so-called computing “nodes” makes up the blockchain.

Decentralisation
A global network of computers uses blockchain technology to jointly manage the database that records crypto currency transactions. That is, crypto currency is managed by its network, and not any one central authority. Decentralisation means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning of the new economy.

Cryptography
Cryptography is associated with the process of converting ordinary plain text into unintelligible text and vice-versa. It is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. Cryptography protects data from theft or alteration and can also be used for user authentication.

Cryptocurrencies
At the most basic of levels, cryptocurrencies are, limited entries in a database no one can change without fulfilling specific conditions. A cryptocurrency, i.e. Bitcoin consists of a network of peers. Every peer has a record of the complete history of all transactions and thus of the balance/ledger of every account. A transaction is a file that says, “Alan gives X Bitcoin to Alice” and is signed by Alan’s private key (a unique string of encrypted numbers). It’s basic public key cryptography, after signed, a transaction is broadcasted in the network, sent from one peer to every other peer. This is also the basic premise of peer 2 peer technology.

ICO - Initial coin offering
According to the NASDAQ, an Initial Coin Offering, also commonly referred to as an ICO, is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It's somewhat similar to an Initial Public Offering ( IPO) in which investors purchase shares of a company.

Crypto Exchange
Cryptocurrency exchange, Crypto exchange or digital currency exchange (DCE) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money, or different digital currencies. They can be market makers that typically take the bid-ask spreads as transaction commissions for their services or simply charge fees as a matching platform. 

DCEs can be brick-and-mortar businesses, exchanging traditional payment methods and digital currencies, or strictly online businesses, exchanging electronically transferred money and digital currencies. Many digital currency exchanges operate outside of Western countries, avoiding regulatory oversight and prosecution, but DCEs often handle Western fiat currencies, sometimes maintaining bank accounts in several countries to facilitate deposits in various national currencies.

Generally exchanges accept credit card payments, wire transfers or other forms of payment in exchange for digital currencies or cryptocurrencies. As of 2018 regulation of cryptocurrency and digital exchanges in many developed jurisdictions remains unclear, many regulators are still considering how to deal with these types of businesses. 

New Economy or the new everything? The New Economy Part Two Do you value local search?

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