Have you heard of the term vapourware?
It was coined in 1982 by a Microsoft engineer. It basically means a computer project that is endlessly hyped, endlessly promised and then fails to deliver.
The project is vapour – there is nothing behind it except marketing.
Right now, that’s how you could describe almost every crypto project out there. An endless sea of vapourware, getting bigger by the day.
What has crypto actually achieved so far, are there really any real-world tests, or real-world partnerships going on – or is it all just vapourware?
I’d be willing to bet that right now, you’re probably of the opinion it’s mostly just vapourware. And given most of the mainstream media coverage, I couldn’t blame you.
That’s why today, I’m going to talk about some of the most promising real-world projects going on right now. After that, you can decide if it really is all just vapourware, or if there’s much more to it than that.
Either way, you’ll be far more clued up about some of the biggest business developments going on in the world today.
So to get us started, let’s take a look at the biggest vapourware scandal of all time.
Bill Gates receives Golden Vapourware award for Microsoft Windows
It may surprise you to know that the original vapourware scandal was Microsoft Windows.
The software that went on to become the world’s most widely used computer program ever and launched one of the biggest brands in history. It was written off as vapourware.
On 19 November 1983, Bill Gates announced Microsoft Windows. He famously predicted it would be running on 90% of all PCs by the end of 1984. As Wired writes, “he was off by 90%.”
Windows wouldn’t actually end up being released until November 1985. Exactly two years after Gates’ announcement.
Gates though, never being one to take himself too seriously, arranged a comedy roast for Microsoft in Las Vegas the day after Windows first shipped.
It was here he received a Golden Vapourware award form InfoWorld’s editor, Stewart Alsop. He even tried to give the event some real vapour with buckets of dry ice.
Fast forward to today and… well, everyone knows how big Microsoft Windows – and Gates – became.
Right now, most cryptos are in a similar vapourware position. There are many promises, and nothing major yet delivered. However, 2018 has widely been termed crypto’s year of delivery.
So, let’s take a look at what impact crypto is having on three of the world’s biggest industries: trade, transport and finance.
Trade: IBM general manager announces blockchain partnership with shipping giant Maersk – predicts “15% increase in world trade and 5% increase in global GDP”
In January I attended London Blockchain Week with Sam Volkering.
Among the speakers was Jason Kelley, IBM’s general manager of Blockchain Services.
He talked about how blockchain can be used to solve real-world supply chain problems.
He said the traditional supply (or value) chain is owned by intermediaries. This is the process the supply chain takes.
Production > distribution > processing > regulations and compliance > manufacturing > point of sale.
At every step of the way there is an intermediary taking a cut. IBM’s vision is that the blockchain will eliminate these intermediaries.
He showed us the partnerships it is forming with Walmart and Maersk. Maersk is the world’s largest shipping company. If any industry can benefit from blockchain technology, it is Maersk. And it knows it.
In fact, as Kelley showed, it projects that the savings and efficiency gains the blockchain will provide will lead to a 5% increase in world GDP and a 15% in world trade volume.
Here’s the slide from Kelley’s presentation.
Source: Harry’s phone camera
Kelley’s take on blockchain was that it’s not about the tech, it’s about the outcome. Blockchain technology is the best way to produce that outcome and so IBM is jumping on it.
This a real-world adoption and use by two of the world’s biggest companies. And it’s all starting this year.
Look out for big things from IBM in this space. Kelley is on point.
Transport: Volkswagen partners with top ten crypto to trial self-driving, self-charging, self-paying cars
In January the Chief Technical Officer of Volkswagen group – Johann Jungwirth – announced he was joining the advisory board of a top ten crypto.
Since then Volkswagen has announced an official partnership and begun trials using this crypto to handle all autonomous payments in its driverless cars.
Here’s what Jungwirth had to say about the partnership in February:
Imagine every MaaS electric self-driving vehicle as entrepreneur with its own identity, wallet, autonomous pricing and payments for parking, charging, cleaning, maintenance, etc. I am a big believer in Distributed Ledger Technology and Decentralized Computing.
Basically, Volkswagen – the world’s second biggest carmaker – will run its electric cars on crypto technology. And this isn’t some distant pipedream. The trials are happening right now.
Finance: smart bonds, on the blockchain, have already been trialled and proven to work by UBS
Last year, companies around the world issued $3.5 trillion of bonds. That’s about the same as the entire GDP of the UK.
It’s a world, like most of finance, which is controlled by gatekeepers and is largely off limits to individual investors.
Bonds are mostly bought issued, sold and traded by investment banks and asset managers.
Smart bond built on the blockchain will do away with those gatekeepers and let individuals invest directly.
They would also massively cut down on inefficiencies and be incredibly easy for companies to issue.
Here’s how smart bonds work.
- A company creates its own token on the blockchain.
- That token has smart contracts built in that mirror how bonds currently work.
- Investors can buy the bond directly from the company, and later through an exchange, or by trading with other investors. It is like any other crypto.
- The smart contracts in the token give its holder a set pay out every six months (or at whatever interval was chosen).
- This pay-out is pegged to the dollar and not to the price of the crypto. So crypto market volatility doesn’t affect it at all.
- Then at the end of the set term the smart contract then pays out the principal, also pegged to dollar value, not crypto value.
It sounds like a great idea, right? So why isn’t it all over the news, where are the trials?
They have already taken place.
Since cryptos that allow smart contracts, such as Ethereum, first appeared on the scene, smart people saw smart bonds as a major use case.
And although cryptos have really only been mainstream for six months or so, people have been working on the smart bond idea for much longer.
One of the biggest banks in the world, UBS, saw the potential right away and immediately started trials in London.
In December 2016, UBS reported on this successful trial. Here was its conclusion:
This experiment validated our initial assumptions on smart contracts and virtual currencies, and confirmed the applicability of these logics across our use cases.
It also confirmed the potential benefits for our clients, the regulators and our organization: clearing and settlement on blockchain could be faster, more efficient and transparent while reducing settlement risk and operational cost.
Smart bonds are coming. And they will shake up finance in a way not seen for decades, if ever.
These are just three industries and three examples. There are many more industries undergoing equally big changes thanks to blockchain. And there are many more examples in each industry.
Energy – the world’s biggest industry – is in the midst of a huge disruption from crypto technology. (And I’m not talking about Venezuela’s oil-backed crypto, make of that one what you will.)
There are much bigger things going on in the energy markets, which my colleague James Allen is now covering. If you haven’t seen his webinar with Nick O’Connor yet, you really need to. You can watch it here.
So, are cryptos just vapourware? Or are we seeing the start of the biggest change to business and the biggest opportunity for investors since Microsoft Windows?
Let me know what you think: email@example.com.
Until next time,
Editor, Exponential Investor
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