There is a massive wave of change on the horizon, and most people don’t even know it yet. We are on the cusp of the age of Blockchains and Decentralized Systems, and maybe you have a small but important sensation telling you that something big is happening.
I’ve been exploring this controversial and innovative subject for a number of years now, and I can honestly tell you it’s like being in on a huge secret. Blockchain is going to recreate our world in a way that makes us more secure, more trusting, more cost-effective, and more inclusive. But in the short term we’re about to see some serious disruption take effect.
Blockchain in the Mainstream
On the latest episode of the Microsoft Partner Network podcast I talk with host, Rachel Braunstein, about how blockchain is making its way into the mainstream already.
At its most basic, blockchains are a distributed ledger that enable a peer-to-peer, immutable, highly secure method of transaction without a central intermediary. You’ve likely heard of the blockchain technology as it relates to cryptocurrency like Bitcoin. But it’s so much more than that.
As I explain in my eBook, The CMO Primer for the Blockchain World, there is a widespread and growing loss of trust in brands and institutions on a global scale. The blockchain is technology’s trust building response. Large corporations including JP Morgan Chase and even Walmart are already making investments and rolling out implementations built around this revolutionary technology. There is increasing momentum around mainstream adoption, even if it’s not obvious to the public right now, but soon your customers will all but demand the security, transparency, and privacy the blockchain allows.
How Blockchain Enables Trust
As I discuss in the podcast, blockchain is the technological response to the massive loss of consumer trust brought about by the financial crisis of 2008. That trust matters, because as customer expectations continue to skyrocket, brands are struggling to keep up. The arrival of social and mobile-empowered customers has increased the pressure on companies to deliver truly great customer experiences. Blockchain enables trust in these key ways:
- Greater confidence in the integrity and accuracy of the data being used (for customer insights, for financial transactions, etc.)
- Perpetual access to customer data will become more difficult to obtain.
- Identification of behavior patterns across an ecosystem will be more challenging.
- Expectations of a frictionless experience will increase.
What that means from a business perspective is that you need to actively measure CX and how it connects to revenue, costs, and risk, otherwise you’ll be missing out on important opportunities to prove your worth as a brand and as a business partner.
Rethinking Business in a Blockchain World
As I’ve said, blockchain is powerful because it enables customer trust. But at the same time, it will also give rise to a new set of competitors with vastly different business models than what works in today’s market. For partners looking to succeed in a blockchain world, you need to think strategically about how you are going to market your company as customer expectations are changing. Consider these three questions:
- How does blockchain as a “trust machine” offer marketers an opportunity to differentiate and gain competitive advantage?
- What are some of the opportunities and initial use cases for marketing in a blockchain world to drive greater ROI?
- What might be the long-term impact of blockchain adoption on how marketers understand ideas such as customer experience and branding?
Each of these questions are important because the implications and potential of blockchains and decentralized protocols on the depth and breadth of marketing are vast. There will be even more to explore and learn in the months and years to come.
Because at this point, no one knows all the answers about the impact of blockchains on businesses as we know them. This is only the beginning of an exploration of how these technologies will impact the market and help companies reengage with customers in the not-too-distant future.
For more about how I see blockchain revolutionizing business, check out the first episode of the new Microsoft Partner Network podcast series, Hacking the Future. Subscribe for weekly downloads of amazing conversations with industry experts and thought leaders on the cutting edge of business and technology. Download past episodes of the Microsoft Partner Network podcast on iTunes, SoundCloud, iHeartRadio, Google Play Music, and YouTube.
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Chat more about how your business is getting on board with blockchain and other emerging technologies in the Microsoft Partner Community.
Rachel Braunstein: Hi. I’m Rachel Braunstein and this is Hacking the Future with Microsoft Partner Network. In this new series, we’re here to help you futureproof your business.
Jeremy Epstein: Guys, this blockchain thing is the real deal. The important thing about blockchain is not how it works; that’s cool. It’s that it works. For the first time ever, we now have a way to transfer items of value, assets, directly between two people with lower cost, less risk, and less time than going through third party institutions like banks, brokerage houses, credit card bureaus. And that to me is what the revolution and the implications of the arrival of this technology are all about and that’s what I think is the game changer here. Instead of people or institutions, you put your trust in math and software code.
Braunstein: From blockchain to social selling, we’re exploring how technology is reshaping business as we know it.
Alright, welcome back to the Microsoft Partner Network Podcast. I’m here today with Jeremy Epstein. Jeremy actually is doing, he did, two sessions here—one around Blockchain, Bitcoin, and Decentralized System, and then Lessons of Unicorn Marketing, How to Challenge Traditional Thinking About Marketing to Drive Results in a Cloud First, Mobile First World.
Epstein: It’s been a crazy conference.
Braunstein: It’s been a crazy conference for you. Who are you, Jeremy? Let’s find a little bit about that and let’s get into blockchain.
Epstein: Yeah, we can do that. So, Jeremy Epstein. I’m the CEO of a company called Never Stop Marketing, which I like to say is not just a company but a way of life because you never stop marketing, I know that Braunstein. And what I do is I spend the bulk of my time in the world of blockchain and cryptocurrencies, specifically focused on helping the startups in this really powerful emerging technology, take their engineering story and translate into something that most people don’t understand so that they can drive their business objectives adoption much faster, lower risk, and with less cost. That’s the bulk of my effort. The rest of the time is taking all the stuff I learned from these people and going to traditional companies and be like, guys, this blockchain thing is the real deal. You may want to pay attention and hopefully that some people will be like, okay, I’m going to get on top of this before I get my head crushed in.
Braunstein: Yeah. So, let’s start with a little bit of the basics. Not everyone, I would say most people don’t understand what blockchain is.
Epstein: Right, and that’s okay. I mean, we are so early in this thing. I mean at its absolute basic core, blockchain is basically a database. But what’s different about blockchain is that instead of one person or one entity or one organization having a centralized version of that database, everyone has a copy of it. So, imagine you and all your friends are looking at the exact same spreadsheet at every time. But the rules, what are known as the protocol, basically define how new entries are made to that list, that spreadsheet if you will. And also, the rules are such that no one can go back and actually change or modify or delete a previous entry. So, it’s an ongoing list of a record. And what that does is instead of having all of the information in one place, it distributes it across a global decentralized network. Now, the benefits—now, the technology’s cool, don’t get me wrong, but just like you don’t know or you don’t care that SMTP is the protocol that makes your email work, you just know emailing is better than faxing or writing a letter—the important thing about blockchain is not how it works. That’s cool. It’s that it works. And for the first time, we now have a way to transfer items of value, assets, directly between two people with lower cost, less risk, and less time than going through third party institutions like banks, brokerage houses, credit card bureaus. And that to me is what the revolution and the implications of the arrival of this technology are all about and that’s what I think is the game changer here.
Braunstein: So, you’re telling me with blockchain I don’t need to use my Bank of America account.
Epstein: That’s exactly what I’m telling you.
Braunstein: I don’t need my American Express?
Epstein: You won’t, correct.
Braunstein: That’s like a – –
Braunstein: That doesn’t really make sense, right?
Epstein: Well – –
Braunstein: What about cash?
Epstein: Great. So, actually, cash is a perfect example because what happens with cash right now is you know when you have a 20-dollar bill and you give it to me, you know you no longer have the 20-dollar bill and I know I have it. And even Rachel and Kevin and everyone else who’s not in the room barring any like horrific counterfeiting problem, but assuming it’s really difficult, they have trust in the integrity of the system. Okay? Now, when you transfer items of information, when you send me a picture or you do an awesome video like a promo video or whatever, if you were to post that, you have a copy of the video and I have a copy of the video. With information, that doesn’t matter. But with assets, it’s critically important that everybody know that the previous owner of the asset is no longer the present owner of the asset. So, historically for the last thousand years, the only way to ensure that an asset has transferred from you to me is by using a centralized institution like a bank, like a credit card bureau, like a settlement house. Because they’re the ones in a globalized world, you don’t have to trust me, but if we both trust Bank of America, it’s okay. But now, what blockchain does is it says, okay, we’re going to provide that same function where we can guarantee that you no longer own the asset and I currently own the asset and everybody else who’s not in the room knows that that has happened, but we don’t need an institution to do it. So, instead, we use software code. We write this protocol that basically governs how we make sure that one asset moves from person A to person B and that the entire network that everyone who has visibility to all these transactions has consensus. That’s the game changer, right? So, you don’t need Bank of America or a company or a person to certify the transaction; you put your trust instead of people or institutions, you put your trust in math and software code.
Braunstein: How would I do that amid all of the crazy security issues? Like, Brad Smith was talking about that today and it seems kind of crazy to trust in the code.
Epstein: My question is why wouldn’t you? Because if you think about this, it’s not an accident that the Bitcoin blockchain, what’s known as the Genesis Block, the first moment of the Bitcoin blockchain happened on January 3rd, 2009. If you go back in history, that was three months after the global financial meltdown. We all felt betrayed best case scenario, and totally abused and manipulated worst case scenario or just out of money by the banks, right? Because what happens when you have centralized institutions are three things. Number one is you have all of the information about all of the counter parties. Your information’s all at Bank of America; my information’s all there. That’s why the hackers go after them, right? So, you have to keep everything safe from millions of people coming after you, right? In a decentralized world, instead of having all the money in one bank, you have money in hundred thousand places. Like, would you rather rob one bank where all the money is or go to 100,000 people’s homes, right? So, you actually have greater security by decentralizing the information. You have less risk because even if you compromise one home, it doesn’t mean all the other homes have been compromised. But if you compromise Bank of America, millions of people are affected. And you have less cost because now if you go through a third party, you have to pay to keep them in business. Right? And it’s less time. Like, when you’re flying here from Seattle, is it faster to fly direct or change planes in O’Hare? It’s faster to fly direct, right? Peer-to-peer’s much faster. So, if time is money, that’s a positive benefit because you now took less time. You have less risk because information is now distributed and you have less cost because you don’t have to keep these third parties in business. So, when he talks about security, he’s talking about it from a traditional mindset, which is I have all this data in one place and I need to build the biggest possible walls. I say, forget about the walls. Everyone has access to the ledger, but we have software rules that everyone can inspect; it’s open source and we can verify and we have very specific ways so that even if a few nodes are compromised, the integrity of the system is maintained, so your assets are actually protected better than by trusting one institution.
Braunstein: So, why isn’t everyone doing this yet?
Epstein: It’s a great question. It’s like in 1991, when I got email and I told people everyone’s going to be using it. Ah, I’m never going to use email. Oh, I’m never going to use a website. Oh, I’m never going to feel comfortable putting my credit card online. I’m never going to need Facebook. I’m going to use Twitter. I’m like, yes. Eventually, you’re going to get there. I’ll sit around and wait for you to show up; it’s going to happen. So, the answer is I don’t know why they’re not here; all I know is it’s inevitable. I just don’t know what day it’s showing up. It’s going to happen because the benefits from security risk and cost perspective are so obvious. The fundamentals are there. And it’s starting to hit the mainstream. I mean Bitcoin’s the best example. It’s been up for nine years. The network has never gone down. Name any other network on the planet where that’s affected. It’s never been compromised, right? And now, you have this mainstream adoption. I mean this week alone, the lead op ed of the Wall Street Journal, the cover story of Forbes were both about Bitcoin and blockchain and cryptocurrencies. The lead story and the cover story in Barron’s last week, so like it’s happening, right? All of these people who say why isn’t everyone doing this? And I would say, well, go to a place like Cyprus or Venezuela or Turkey or China, where people don’t trust their national currency because they’re being devalued. You have three choices. You can watch your currency, your value be inflated away by the government irresponsibly—not so appealing; number two is you can go buy a bunch of gold—good luck getting that through the airport; or number three is you could buy a bunch of Bitcoin, get it on your phone, fly to Germany, bang, you’re on the ground, you’re off and running. So, the answer is a lot of people are doing it. It’s just that people who live in the U.S., you know, we have a relatively stable economy and for now, we’re the world’s reserve currency. So, you don’t have that economic imperative to do it. But make no mistake about it, like, the benefits are there. More and more people are doing it. The liquidity is there. The speed’s there. The inspectability, the transparency, like, again, I know this thing is coming. I just don’t know what day it’s going to show up and so, eventually, the question is going to be like why aren’t you using a blockchain based technology as opposed to why are you?
Braunstein: So, are there any businesses that are more traditional that you’ve seen really start to use this technology in a new way or any examples?
Epstein: Yeah, that’s a great question. So, I mean what you’re seeing is I think there are going to be two phases of blockchain adoption. The first phase is sort of where existing companies say, oh, this is really cool. We can cut costs. We can increase security, reduce risk. Let’s adapt this to our existing business processes. So, they’re going to do that. Like, banks are the first one. All of the big banks are doing this right now; how do we do this to offload some of our back end infrastructure costs? So, they’re plowing ahead with that and it’s going to work. They’re going to save a ton of money. They’re going to probably unfortunately lay off a bunch of people who have become redundant, but it’s going to deliver some shareholder value for them. But to me, that Phase 1 is analogous to what happened in the late 1990’s where everyone was all excited about corporate intranets, like yeah, those are nice. But know where it’s really sexy? The public internet. And that’s what Phase 2 is all about. 20 years ago, there was not a soul that you know or anyone who could’ve said, I foresaw Facebook or Uber or Airbnb or Seamless, alright, I mean Amazon or any of these companies. Why? Because before the internet became “mainstream,” it just was impossible to exist. Right? I’m asking, imagine a unicorn that ferries you to work. Like, I can’t even do that, although my daughter would love, but you know? So now, what’s really going to be exciting is this new wave they’re not companies loosely calling them, they’re going to be around simply because the blockchain technology, the distributed nature, the peer-to-peer transaction, the ability to account for value in micro units that transact at ridiculously cost effective ways has never been there before. Now it is. So, you’re going to have a whole new set of companies. So, you’re going to see traditional companies struggle not with Phase 1. That’s obvious for them, like, let’s just adopt this new technology. But they’re going to struggle with Phase 2, which is how do we deal with these entirely new startups that don’t have our existing legacy. So, the first one that I can see that’s really thinking about this is the messenger service Kick. Right? So, they’re probably like the sixth or seventh top ranked messenger service. So, they basically I think realized, we can’t compete with Facebook Messenger or WhatsApp? So, what are we going to do? We’re going to decentralize ourselves. So, essentially, they’re creating a cryptographic token based on a blockchain that they’re going to issue to each of their users that becomes a currency. And then those people will get rewarded for the things they do on the platform and they’ll buy things from other people on the platform and it’ll all be done on cryptocurrency—no credit cards being swiped.
Braunstein: Doing like, buying what on there?
Epstein: They’ll buy either digital goods like stickers and whatever or they can start buying physical goods.
Braunstein: So, you hypothetically buy a pair of shoes.
Epstein: For sure. I mean, I’ve already bought physical stuff. You go to Open Bazaar right now, which is like a decentralized Amazon, so that means anyone can set up a store, it doesn’t matter. I bought earrings for my wife on Mother’s Day. I bought a t-shirt. You can buy shoes. There’s all kinds of stuff that you can buy already, so that’s exactly what’s going to happen because all people need to do when it comes to cryptocurrencies is say, do I value this? And if you think about it, four years ago, the Bitcoin price was $80. Today, it’s $2382, right? Why? Because more and more people believe. That’s all what money is; money is all of us a huge magic trick we’re playing on each other. We both believe that this picture of Andrew Jackson or Harriet Tubman I guess is worth $20, whatever that means. But you’re willing to take it from me; I’m willing to take it from you, so on so forth. Once you say I’m willing to take Bitcoin or I’m willing to take Kin, which is what Kick tokens or Ether or any of these 850 tokens that are out there, then it has value. And I’ve been paid in Bitcoin or cryptocurrencies and I pay other people. So, by definition, it’s already there.
Braunstein: So, like, if you think about a place like Amazon, are they starting to think about Bitcoin?
Epstein: I would think that Amazon probably is like, hey, we could take Bitcoin for payments for sure.
Epstein: I would be interested to know if a true market leader is going to be able to reinvent themselves because typically, the true market leaders are the ones that have the most difficult time reinventing themselves. So, I would think like a tier 1 kind of e-commerce player would start thinking about that type of thing. I mean, look, Amazon’s amazing and I just finished this book about Jeff Bezos, so I’m not putting by the guy and he’s far smarter than I am and we both have the same amount of hair. That’s about the only thing we have in common, but he definitely has a little bit more money than I have.
Epstein: By a lot. Anyway, but you know so I’d be shocked if Amazon isn’t thinking about it in some ways, given everything that’s happening. Certainly on their supply chain, I would start thinking about how to use blockchain because basically a supply chain is just tracking value, right? So, it’s how do we track everything at every step of the way to know where every book, every Kindle, whatever it is at every stage and to have 100% certainty that this is where it is. So, I would think that they’re thinking about that, but they don’t call me yet.
Braunstein: Can you go back to, you said isn’t right now one Bitcoin trading at $2300, that range.
Epstein: Dollars, yeah.
Braunstein: Dollars. So, from what I understand it’s very risky and volatile. Can you explain that a little bit because you’re telling me that I have to pay $2300 to go get one Bitcoin? How much is a Bitcoin going to get me?
Epstein: Well, what if I told you that there’s a 10% chance that one Bitcoin’s going to be worth $50,000 in like five years? Would you then think it’s risky? Like, that’s the question. So, like, what’s powerful about crypto and Bitcoin, for example, is they’re only going to ever be 21 million Bitcoin ever created, right? So, you don’t need to be a PhD in economics to know that if you have finite supply and increasing demand, the price goes up. So, right now, you could say, what could 2300 Bitcoin get me? And I can say, well, you can buy shoes, you can buy all kinds of stuff. You can transact internationally for basically no cost. Try to buy something from—I mean I’m doing a project right now with this company called Open Bazaar, right? They’re like a decentralized Amazon or eBay. There are women in Argentina who have smartphones, but they don’t have credit cards, they don’t have bank accounts. They have no access to the global market, but they can set up a store in Open Bazaar because there’s no one who tells them that they can’t. eBays says you can’t. Amazon says you can’t. Open Bazaar says you can. So, they can make these beautiful rugs and shirts and all these things that they do and then sell them. And then what do they do? Is they sell them, then they get paid in Bitcoin. And if you’re in Argentina, you want to know why there’s a disproportionate number of Argentinians involved in the Bitcoin world? It’s because they’re sick and tired of their government inflating the value of their money away multiple times over the last 12 years. So, that’s why they value. So now, you have these women in the barrios of Buenos Aries, who don’t even have a bank account, but now they have Bitcoin and they have it on their phones and it’s not cash in their mattress that can be stolen or worse, like their husbands come home drunk and beat them up and take their money. That doesn’t happen now. So now, they have financial inclusion, greater financial security, and access to the global market. That was previously impossible.
Braunstein: But how do you know if those people are actually going to deliver their good to you?
Epstein: Right, that’s a fair question in that one. In the Open Bazaar example, they have moderation service. These guys happen to be working with an NGO.
Braunstein: That’s really where the opportunity comes from is this.
Epstein: That’s one of the, yeah, for sure. There’s moderation services, they’re assistance services, there’s all types of things. There’s going to be entirely new businesses created. But coming back to the idea of Bitcoin has a store value, like you actually have better, you might have volatility now, but over the long term, like the bet I’m making is that you actually have greater security holding onto your Bitcoin now than watching your dollars get inflated away at 2% a year, which we kind of put up with. Like, you’re actually better off—what I tell people, this is not financial advice, you should do whatever you want—but what I tell people is like, look, take 1% of your investable assets, go put it into Bitcoin and don’t think about it for five years. There’s a 20% chance you have absolutely nothing left and you need to remember there’s a 20% chance, but – –
Braunstein: I mean you invest in anything and you have that.
Epstein: Right, but there’s an 80% chance it works out really, really well. And, again, it’s 1% of your assets, so it’s not going to kill you. That’s what I tell people. Be smart about it. We’re still early enough. The total market capacity for Bitcoin right now is less than Bill Gates’ total net worth, so we have plenty of upside. It is. It’s like $52 billion.
Braunstein: Oh yeah, 52, yeah.
Epstein: So, there’s plenty—Gates is like $75 billion or whatever, so like there’s plenty of time. What this does is it transforms money. It transforms the way that assets are transacted and anybody whose business is being that trusted third party, they’re in the crosshairs of the disintermediation.
Epstein: But I’m not passionate about this or anything.
Braunstein: So, what does that mean actually for the protection of people and their goods and yeah?
Epstein: That’s a great question. I mean, we’re definitely in the early days and there is certainly a caveat emptor thing, but what’s going to evolve because remember the currencies here are digital. And when you say it’s digital, by definition, it’s programmable. Right? So, if you think about all of the terms and conditions and policies and legal and everything that surrounds a current business arrangement, what are they? They’re a series of if/then statements, right? What’s a contract? If you do this, then we’ll do that. If you don’t do this, then we’ll do that. Well, that’s all software code is. If this, then that, right? So, imagine being able to hard code the business and legal rules directly to the performance of the assets. So, for example, this Bitcoin or this cryptocurrency cannot be released until we have verification that the product was actually delivered. How will we, what’s our trusted what’s called an oracle. How do we trust that this thing is all, when FedEx says that this thing was signed for with this tracking number. If that gets signed for, bang, then the money’s released or whatever. So, you can set up these triggers that, for example, say, I’m not going to release my money until these certain criteria are met. And then the other person can sign it with their what’s called their private key, their cryptographic signature.
I’ll give you a very simple example that I use. It’s not quite sort of shipping products overall, but it’s one that I think a lot of people, especially partners can understand. So, let’s say you are an SEO firm, right? And let’s say I want to hire you to make me number one for the term blockchain and marketing in the world, right? So, what will I do today? I go to you and like, hey, Rachel Braunstein, could you make me number one? Yep, sure, Jeremy. Our SEO firm’s the best. We can do this. It’s going to take two months. But any time someone searches for blockchain marketing, NeverStopMarketing.com’s going to come up. It’s going to cost you $20,000. Okay. It’s going to take us two months. Fantastic. So, what happens? You do your magic. Two months later, you Bing it and you come back and you have this thing and you’re like, hey, screenshot, Jeremy. I totally did it. You’re like, yep, you crushed it. Awesome. Send me an invoice. You send me an invoice. I push it over to accounts payable, maybe 30 days later you get paid, whatever okay. Imagine this scenario. We both go to smartcontracts.com, which is actually a site, and we set up a series of if/then statements, which is if for this term blockchain plus marketing returns this URL NeverStopMarketing.com on this date as proven by the feed that we get from the Bing.com site, then release this money, which I’ve put in escrow to this address. You sign it. I sign it. And if those criteria are not met, release 30% because I’m just paying you for your effort. Then, two months from now, you don’t have to do anything. The contract itself queries the site, see if the terms are met, and if it is, the money gets released to you. You get paid in 10 minutes. Pretty good deal, right?
Epstein: That’s what’s going to happen with these smart contracts, right? Because every asset, digital assets and physical assets, will have a representation on a blockchain, which is immutable. It can never be changed. And the ownership can only be transferred by the person who actually owns it. No one else can take it away from you. In a centralized institution, Bank of America go in, they could just erase your account and you would have no recourse. In a crypto world, where you control all of your assets, no one can take it. Yeah, I could come into your house and point a gun to you and take it from you, but barring that, like, nobody can take it away from you. That’s huge empowering of the individual. Huge empowerment. And then when everything gets digitized, you program the rules into it and that’s how you got some protection. Is it perfect? No. Is there a long way to go? Absolutely. But that’s where this thing’s going to go.
Braunstein: Who created it?
Epstein: So, the “it” being blockchain?
Epstein: Yeah. So, I mean there have been a lot of people working for many years on sort of the theory of blockchain, right?
Epstein: But sort of a couple forces converged in the late 2000’s, which is in order to have a blockchain work at global scale, there were a couple things you needed. Number one is you needed pretty big global network. Two billion people connected to the internet, check. Number two is you needed fast speeds to be able to maintain the consensus because if your copy of the spreadsheet as it were is like three months behind mine because your bandwidth is low, that doesn’t work either. But now, pretty much high speed internet is available to most people for relatively low cost. Fine. And number three is you needed a fast enough, more powerful enough computers to be able to process this. So, we’ve hear a bajillion times our phones are 8,000 times more powerful than the rocket to the moon, right? So, all of that came into play at the end of the first decade of the 21st Century. And so, like, I get it when people are like, wait a second, you’re telling me this is a big deal. I’m saying, yeah, the theory of blockchain existed for a long time, but the ability to actually implement blockchain didn’t really exist ‘til the end of the 2000’s. And so, as a history major, I get it. When I’m like, hi, the history of the world was one way and then on January 3rd, 2009, when this guy who’s called Satoshi Nakamoto. It’s kind of like a pseudonym. No one really sure who he is. He basically released what’s known as the genesis block, which is the first block in this chain. Now, remember, coming back to the idea of the spreadsheet, you have a bunch of entries in your spreadsheet and then they all get wrapped up together like 1 through 100, wrapped up, sealed with a key, and then 101 to 200 get wrapped up, sealed with a key. But each one is cryptographically linked to the one before it. So, you have a series of blocks cryptographically linked together in a chain, hence, blockchain. And so, each one is connected and, therefore, when you’re at block 3000, to go back and change block 7, you have to go back, change block 7, change everything in between and you have to do it before everyone else realizes you’re doing it. That takes ginormous amounts of community power. So, basically, what Satoshi Nakamoto gets credit for is having created the Bitcoin protocol, the rules, and the blockchain, released it into the wild on January 3rd, 2009. But it’s basically the culmination of years and years of research of how do you create digital cash? How do you solve what’s known as the double spend problem, which is how do I make sure that I don’t spend the same $20 twice, right? I can’t take a picture of it and send it to you. So, that’s who kind of gets credit for it. Does that answer your question?
Braunstein: Yeah. That’s crazy.
Epstein: Yes, I’ve been doing this for a year and I’m still confused.
Epstein: Year and a half actually.
Braunstein: You’re pretty much blowing my mind. So, I have a lot more questions. One key question is for our partners. Azure has some capabilities, what do you think that, I mean, what do you do? How do you even think about this?
Epstein: Right. So, that’s a great question. I think for most businesses today, there are three things I tell people they have to do. Number one is you have to understand how value is created in a blockchain based or decentralized way. I have a nine-page post on my blog, NeverStopMarketing.com/blog. You should go check that out, right? But like, there’s a lot there. And it’s a very different way of how value is created in the world that we’re currently familiar with. So, you have to spend your time start thinking like, how does a blockchain, not how does it work, but like how does it create value? How are tokens, these things that represent value, represent your ownership, how does that work? Like, you have to get your head around it. You don’t have to be a Jedi Master of it. But you have to understand sort of the fundamentals of it. That’s important and because that’s going to allow you to position yourself for what I think’s going to be a pretty big dramatic shift in how the economy works. That’s part one. The second this, especially for partners who have a lot of developers, it’s worth investing some time and money in encouraging them, how do you program a blockchain? How do you program these assets? How do you write smart contracts? Right? I actually have one vendor of mine who did a smart contract on that SEO example just like I shared with you. He was like, I want to do it just to see what happens. So, we did it, right? Like, there’s going to be more and more of these examples, where you can get paid faster, have total proof that you completed your work, higher client satisfaction, but you have to understand how to write these contracts. And it’s not super hard, it’s just you need to spend the time doing it. And the third thing, which is probably less important for some of the smaller partners, is you’ve got to tell your lawyers, like, dude, this stuff’s coming because lawyers are going to be ticked off. Why? Because like 90% of the stuff they do is going to go out the window. It’s going to get automated. You know? They’re going to be a little unhappy, but you know what? Too bad. Whether you like it or not, that’s what’s coming. So, I would say like, understand the potential of the technology to create value. If you want to dig deep on how it works, be my guest. It’s super cool. There’s like SHA256 hashes and merkle trees and all that stuff—that was just to establish street cred, you know, that kind of thing. The second thing is get your devs starting because your clients are going to start asking about it and if not, you can start helping them see the potential. And number three is get your lawyers ready, so they don’t give you a headache.
Braunstein: What does a partner do? We’re already having difficulty in conversations with our customers about moving to the cloud, right? How do you have a conversation about Bitcoin?
Epstein: It’s 2017 and people are still having that conversation?
Braunstein: We’re having that conversation.
Epstein: That’s actually no joke. I was in a meeting with a Microsoft person and one of their customers who was like still totally on prem and I was just thinking, like, what year is it? Are we? Literally? And it was just like a time warp. I’m thinking, alright, good luck for you guys. I’m shorting your stock. That’s basically the conclusion I realized, like, if you still are doing on prem, you’re done in this town. You know, look, there’s always an adoption curve and some of the customer solutions are probably farther off, but the thing I’ve been amazed at watching is the pace of innovation in this industry. If you think about it, there was an article in the Wall Street Journal maybe two months ago about, oh, there’s 1,700 retail stores that closed last year. And people are like, oh my God, retail’s changing. I’m thinking, I was doing e-commerce in 1999. We knew this day would come. So, it took 20 years. Fast forward, mobile, right? Steve Jobs introduces the smartphone and people are like, I don’t need that smartphone. Now, 10 years, it’s oxygen. Like, you would rather like die than give your smartphone, right?
Epstein: Okay. Everybody’s like that. Like, no, like people pay $30,000 for a weekend of detox, like they’re that addicted, right? So, okay, that’s a half life. So, blockchain like when I started working hardcore in this industry like just over a year ago, I’m thinking, like ah, this thing’s a couple years off. The pace of what’s happening, there are pilots everywhere, everywhere around the world, every industry. So, I think if you’re a partner, every one of your clients has heard of Bitcoin and may have heard the term blockchain. Okay? This is an opportunity for you to become a thought leader, to come in and say, look, there’s this thing coming. It’s like, hey, there’s this thing called the internet. It might be a big deal. Like, it’s that big. Let me educate you. Let’s start thinking about this. Where could we start doing pilots? Can we do something? Is there an industry consortium that’s developing for you? Like, you can really get ahead of a lot of these bigger companies, especially partners, in terms of like helping educating, getting them ready. Because it’s like saying, well, what industry’s going to be affected by the internet? Wrong. What industry’s not going to be affected? Answer: None. They’re all going to be affected, just like every single one of these companies or industries are going to be affected by blockchain. Sorry, I don’t mean to yell. I just get super passionate about this, you know. It’s just, that’s where if you’re a partner, educate yourself. And you have a chance to move yourself. All these partners tell me, like, oh we’re in this commodity race to the bottom on pricing. I’m like, dude, get out of that game. Go in and say, you know what? I’m going to be a value add. I’m going to tell you there is this tsunami coming. It’s 50 miles off the coast. Most people don’t know it’s coming. I’m going to help you get ready for it because it’s going to affect you. Let’s start looking out at the horizon. Let’s start thinking about this. Yes. We need to fix the here and now. But if you want to be around and still valuable in 1, 2, 5 years, you know, alright a year probably you have enough time, but beyond that, like, if you’re retiring in the next year, you’re probably good. But this is a great chance for a partner to seize the day. And Microsoft, to its credit, has done a lot. They’ve been really aggressive in supporting and getting out there on the blockchain technology. So, I think if you’re a partner and you’re really smart about it, you have a great chance to sort of reposition yourself to move up the stack and get out of a lot of this commodity sort of price war that so many of them sadly are stuck in. And even if you’re not, like, it’s still a chance to increase your margins and add value, why not?
Braunstein: Yeah. Okay, well that is awesome. Thank you, Jeremy, for being with us. We really appreciate it. I hope everyone learned a lot about blockchain. I certainly did.
Epstein: I’m still learning; we’re all learning.
Braunstein: We’re all learning. We’re all in it together.
Braunstein: Thanks, Jeremy.
Thanks for listening to Hacking the Future with me, your host, Rachel Braunstein. You can follow me on Twitter at rkbraunstein and follow us at MS Partner. Check out our show notes for more information from today’s episode. And don’t forget to subscribe and leave us a review.