I work at Redox, a startup in Madison, WI that provides the modern API for healthcare. I try to look at where we are currently with technology and tell the world where we’re going. I write my Quick Theories here, send out a popular weekly newsletter, and think nerdy on Twitter.
If you haven’t heard anything about Bitcoin the past couple months then it’s possible you are living under a rock. Cryptocurrencies have taken the world by storm making a run at a becoming a widely used currency for exchanging goods and services.
Although trustworthy investors like Warren Buffett are warning us against this smoke in the mirror, let’s assume for a minute that the confidence behind Bitcoin and cryptocurrencies holds steady. What else is holding it back?
The Cryptocurrency Facts
Although no one can say for sure, analysts estimate there are somewhere between 3 million and 15 million active cryptocurrency owners worldwide, with the collective market cap somewhere in the vicinity of $600-700 billion.
Now, what good is having all of that capital if you can’t spend it? Aside from a few places accepting Bitcoin (largely for the publicity), there’s really nowhere to use it. Unless of course, you are purchasing CryptoKitties.
So, why don’t businesses accept Bitcoin? Simple. It’s fluctuating value and little protection against fraud.
As far as it’s unpredictable valuation goes, well that’s just the consequence of being a confidence backed currency (just like the US Dollar). So, only time can smooth out its value.
The other problem with Bitcoin is fraud. Outside of actually understanding how cryptocurrencies work, which this guy explains very well, a major limiting factor holding cryptocurrencies back is ensuring they can be used securely.
With billions of dollars literally created out of thin air, there’s a lot of fraudsters out there concocting up get-rich-quick schemes around cryptocurrency.
Businesses aren’t going to accept Bitcoin until they can confidently protect themselves against fraud. And that comes down to the Point-of-Sale.
Cryptocurrencies at the Point-of-Sale
At the storefront level, we need to see Point-of-Sale processing systems that encourage the secure use of Bitcoin. Much like chip readers and ApplePay are making credit card transactions more secure, there need to be systems that can verify the authenticity of cryptocurrency in real-time transactions.
It would also be advantageous for the PoS provider to simultaneously exchange the Bitcoin to money since it makes little sense for a store to have Bitcoin (unless they want to invest themselves). With this system in place, both me and Subway, Macy’s, etc… could confidently exchange our goods and money without much stress.
A proper Point-of-Sale processor incentivizes storefronts to accept Bitcoin since millions of people have it with nowhere to spend it. It also incentivizes the PoS software company since they will have the opportunity to accumulate and trade Bitcoin on a massive scale (imagine Square owning thousands of Bitcoins).
At the moment, this is all theoretical considering cryptocurrency is mostly a bunch of hype. To see this become a reality in 2018 and beyond – where you can buy a cheeseburger with Bitcoin – major brands need to step up to the plate, bringing hard results to cryptocurrency progress.
Overstock.com, for example, became one of the first large companies to accept Bitcoin recently and they profited dearly. I’d love to see an even larger brand, like Disney, make a similar statement. It’d go a long way for Disney to begin accepting Bitcoin as payment for Disney World vacations?
This would encourage startups or even established companies to get underway with creating better Point-of-Sale processing systems that authenticate crypto transactions, real-time.
But, this still doesn’t solve all the consumer problems.
Nearly 4 million Bitcoin, of the 21 million that will ever exist, have been lost forever, unrecoverable, due to user negligence. How do you as a Bitcoin owner protect yourself against theft and the bigger problem – losing access to your wallet by forgetting your passwords, dropping your hard drive, or getting a computer virus.
Well, I’d take a lesson from Coinbase, the digital currency wallet and exchange. Essentially, they insure all their digital currency held online, which amounts to only 2% of the cryptocurrency they have at any given time. The rest is stored offline. While I don’t know how much it costs to insure your cryptocurrency, I’d take this practice from the experts.
It seems that at the moment the best way to you insure your Bitcoin as a consumer is just like your other valuables: a safe. Just like you should keep your grandma’s diamond ring, old treasury bonds, and gold bars in a safety deposit box at your bank. You need to create the safety deposit box version for your cryptocurrencies.
To do this, you use a method called hot and cold storage. Hot storage would be using your regular online wallet and cold storage would be a hard drive offline. This is how you create a cold storage container for your cryptocurrencies. The idea is that your hot storage is for regular use and cold storage is for a long-term keepsake. Just like the difference between a bank account and a safety deposit box.
For long-term investors, you may keep 98% of coins in cold storage, just like Coinbase. For more avid traders, it might only be 10% in cold storage.
Until FDIC begins insuring Bitcoin (or another entity steps up), the best way to insure your Bitcoin against fraud might literally be stashing them underneath your mattress… on a hard drive of course. Well, don’t actually sleep on your hard drive. But, keep it in a safe place, offline.
Risk it for the Biscuit
For many people, investing in cryptocurrency may be the largest financial risk they take in their lives. They’ve had CNBC and Good Morning America hyping the opportunity in their ear for months. And I think it’s important to remember that where there’s risk, there’s a reward. Unfortunately, that reward might not always be for the risk-taker to receive.
Like any opportunity in life, you gotta risk it for the biscuit. But, you also need to realize when the biscuit is in your hands. Otherwise, greed will turn the initial desire for one biscuit into two biscuits, then three, then four, and so on.
Gambling, investing, and taking risk is a zero-sum game. There’s always a winner and loser. My advice is to objectively judge when your risk has been rewarded and cash-out.
I hope you enjoyed this week’s Quick Theories! Please shoot me an email with any thoughts on the topic.
Disclaimer: I no longer own Bitcoin or any other cryptocurrencies. This article reflects my perspective with no intention of profiting from your decisions.
Perhaps the most frustrating part about owning technology is needing to upgrade that technology every four or five years. Many of us dread the process of transitioning old files to a new device.
The world around us is heavily impacted by technology from the cars we drive to the infrastructure of society. Yet, most of us rarely think about advancing one fundamental area of life: our garments.
Planes, trains, and automobiles. The three modes of transportation we’ve all used for the past hundred years. But, there’s a new form of travel being added to that roster, the Air Taxi.
It’s not hard to imagine the Earth before humans, but we struggle to imagine what the Earth looks like after humans.
We’d all like to think we know what a “lying face” looks like. Realistically, most of us can’t remember a face, let alone understand all the secrets a face hides.
The iPhone (and the smartphone in general) is on track to becoming the most versatile tool at your doctor’s disposal. The iPhone Doctor is a movement that brings diagnosis and treatment apps to smartphones, making the job of a Digital Doctor much more seamless.
The largest organ of our body, our skin, might become the newest technology interface. Digital tattoos fused with circuitry can be applied to the skin to replace your TV remote and other devices.
There are a plethora of problems we encounter that require audible communication. And when there isn’t someone around we trust to confide in, digital therapy and the computer therapist may soon be there to help.
Artificial Intelligence (AI) is a misleading term. It sounds like it parallels human intelligence, except faster, all-knowing, and non-forgetting. But, this just isn’t what it means when people attach the term to their innovation.
Some people are born with “the eye”, “the taste”, or “the ear”. Their bodies are more accustomed to a certain sense.
Video storytelling is getting repetitive. Many of the movies today are clearly spinoffs of the movies from our youth. Which is why the future of cinema may hold a new form of interactive video experience where viewers have the control to switch between different perspectives, thus altering the narrative.
There comes a time when every elderly person needs someone to help with chores and errands. While it’s nice to have family there, this isn’t always sustainable for their loved ones.
The planet must produce more food in the next four decades than all farmers in history have harvested over the past 8,000 years.
We can all agree that the legal system is out-of-date and at times very crooked. It’s a system that benefits the wealthy and powerful, while leaving little hope for those with minimal resources.
There really aren’t any professions completely safe from automation or Artificial Intelligence. Most visionaries will advise you to become resilient, moldable, and creative to ensure a job in the future of work.
Whether you like it or not, there’s a digital shadow that follows you everywhere. This digital shadow knows your behaviors, your intentions, your identity.
Have you ever heard something so absurdly crazy that you get that clenching knot in your stomach, fearing it’s actually true?
Soon, there will be more surveillance cameras on the street than there are pairs of eyes! Algorithms are being put in place that turns these into smart cameras – making high-level analyses of your life.
Undoubtedly, we all want to get the most out of our lives. Whether we are working out or just plain working, we have trainers, managers, and leaders to help us achieve our highest potential.
We are about to experience the most unequal societies in human history. Economic inequality has run terror on this world for millennia, leaving the poor with little option to overcome their circumstances.
You have too many options when it comes to choosing TV shows, Movies, YouTube videos, and other video content. Video content and the future of video has reached massive production levels and yet, the time in your day hasn’t increased alongside it.
Even though your brain is the oldest piece of technology, it’s also the next frontier in computing. For decades we’ve interacted with devices through our actions.
Every time you message a friend online, you are forced to choose between dozens of different messaging apps that all serve the same purpose.
We’ve all had that unfortunate moment when you send a playful text message that someone takes too seriously. Other times, you just can’t seem to find the words to convey what you are feeling.
Undoubtedly, we all want to see different parts of the world and connect with new people. Unfortunately, overcoming the language barrier is often too difficult.
Stressed, coffee-addicted journalists are evolving into major media brands themselves, leaving behind companies like The New York Times and The Wall Street Journal, to cover the news in their own way – free from the political agendas of major media.
We are just a few years away from seeing and interacting with companies that run themselves. In other words, autonomous companies (also known as RoboCorp) operated by algorithms will generate revenue all day long.
Crime investigation is an industry ripe for disruption. Shows like “The First 48” give us a glimpse into how ineffective lie detector tests and interviews can be when trying to place someone at the scene of a crime.
What would our computers tell us if we gave them a voice? We’ll soon find out thanks to Natural Language Generation which gives computers a written opinion on virtually anything.
Intelligence equals power. We are smarter than dogs, therefore we keep them as house pets. Computers will soon be smarter than humans, so they may keep us as house pets (at least that’s what Elon Musk believes).
The war on drugs is becoming digital and I’m not talking about online head shops, like Billowby. Literally, our relationship with the future of drugs is shifting toward digital drugs as a means for medication and recreation.
The same companies that brought you the internet (ISPs) now want to sell your information and squander any remaining digital privacy you have.
Google Home and Amazon Echo describe a future where virtual assistants powered by your voice take care of all your online interaction.
Big Data badly needs a sous chef. Someone to come in and prepare all the vegetables and meats so that the head chef can cook with ease.
Nobody wants to live in a glass house. We enjoy our privacy too much. Unfortunately, everything you do online may as well exist in a metaphorical glass house because it is monitored by Palantir Technologies.
Elon Musk is defining the future of transportation with Tesla, SpaceX…and now The Boring Company?! No, not boring as in twiddling your thumbs all day.
At times, it feels like technology is leading us toward a future in which our identities start and stop with a designated number.
Amazon Dash is starting a wave in technology that is tearing apart your phone and making the way we interact with devices easier than ever before.
When you hear the word digital health, there’s a chance that you either conjure up dark memories of visiting the hospital, quickly reach for your wallet to protect it from unnecessary costs, or just think of the word “boring”.
There’s always a trial period that occurs when you make a change to your lifestyle. Imagine jumping behind the wheel of one of Tesla’s autonomous vehicles right now.
In 2016, I left Facebook to put more emphasis on my personal relationships and figure out a better productivity formula. This decision couldn’t have come at a better time because one of my closest friendships was tested this year.
Learn from my mistake, that limiting your creative environment severely stagnates your ability to tap into creative inspiration. This is how I learned: My first piece of writing (by choice, not assignment) was a closure email I wrote to potential investors.
We seek creative communities (and other communities) for identity validation and protection. As far back as childhood, kids try getting noticed by the popular crowd.
You never have to decide between devoting your life to working for yourself or “giving back”. The difference between social entrepreneurship ideas, social entrepreneurship companies, and just entrepreneurs is action.
Life is a choose your own adventure book with too many choices. When deciding your path and investing in your 20s, we have too many options to spend our time.
The common view of sleep is we merely need it to restore our energy after a long day. But, what about its role in the creative process.
While it’s often hard to admit, we all get the shiny object syndrome when developing creativity. Constantly looking for the tool that will make our lives so much easier and our jobs feel like a breeze.
Samsung TVs haven’t changed in 5 years. Cameras look the same as they did in the times of Ansel Adams. Hardware hasn’t progressed at all in comparison to the exponential growth of software, except for the hardware of robotic arms – which a competition called the Cybathlon is fueling.
Organizing your ideas should be like making an abstract expressionist painting…messy. Unfortunately, organizing your ideas in a digital notebook is only hurting your creative process.