ThinkTWENTY20

My ThinkTWENTY20 Editor in Chief Gerald Trites and I were discussing blockchain projects recently. ThinkTWENTY20 is, of course, a visible innovative magazine for financial professionals who want a deep dive into contemporary issues and their application to our profession and its practitioners. That means those with innovative solutions will reach out with press releases and editorial content ready to go.

Our readers may recall my article in an early edition of the digital magazine on fads and fallacies of blockchain related to the profession. I have had some excellent mentors – including some of the foundational contributors to blockchain itself, referenced in the Bitcoin whitepaper – and have a strong malarkey-meter for pretense in the PR.

To that end, Jerry and I mused: would our readers appreciate annotated versions of articles and press releases that expose error, unhood hoodwink and untangle the yarns? Would you like to see a regular feature of “Send Eric an article or press release about blockchain and Eric will tell you what’s wrong with it.”?

You would find common themes meandering through the malarkey. In many cases, these themes come about because the authors believe that the reader doesn’t understand the topic and have oversimplified their statements to a point of inaccuracy. The press release we were mulling over said their solution was good because it was “based on computer technology”!

For common theme #1, look for the word “encryption” in the article or press release. This touches a nerve for me particularly, as encryption for XBRL was one of my first missions; you will find my name on the XML Encryption specification from the World Wide Web Consortium as a results.

You will often see a phrase such as "blockchain technology has superior encryption capabilities." In fact, neither the Bitcoin nor the Ethereum blockchain has any encryption inherent in it. Encryption means that you take something and obscure it (turn consumable content into unreadable cyphertext) in a way that only people with the tools to recover the original content can do so – a two-way process. Blockchain uses the keys that might be involved in such a process, but for authorization and not encryption. Blockchain uses hashing – a one-way algorithm not two-way, to create a unique fingerprint used for data integrity.

For common theme #2, look for attacks on Bitcoin: better than Bitcoin, safer than Bitcoin, uses less energy than Bitcoin; a “better Bitcoin,” “[our coin] opens the door to a perhaps not so distant future in which there will no longer be any circulating currencies as we know them today, and which will be replaced by a global virtual currency system.”

For common theme #3, look for indications that success demands that all users converge on their blockchain and their coin or token. Most “triple entry accounting/bookkeeping” solutions have this as a requirement.

Common theme #4: Overpromising: “risk free,” “completely private,” “hacker-free.”

Common theme #5: Every piece of information a user needs is on the blockchain, understandable and available.

Common theme #6: Blockchain makes transactional costs disappear.

And there are other telltale signs.

What do you think? Would you like to see web sites, press releases and articles annotated to help you understand what is being promised … and overpromised?

If you have not seen the US Securities and Exchange Commission’s educational website, Howeycoins (https://www.howeycoins.com/index.html), it is worth a visit. Spurred on by the goldrush of Initial Coin Offerings (ICOs) in 2017—2018, it showcases high-return guarantees, regulatory approvals, famous team members and supporters, so-complex-they-must-be-good explanatory whitepapers that have proven successful in getting people to separate from their hard-earned cash in the hope of huge returns.