Why Bitcoin Falls Down; No More Growth for Wells Fargo; Misunderstanding Augmented Reality as a Gimmick (via Autonomous ?NEXT)

Hi fellow futurists -- here are our top 3 favorite thoughts.

Why Bitcoin Falls Down  

Remember the mantra. Tech innovations swing between the extremes of meme and electricity. Memes are human sentiment, the animal spirits of the market shooting up and crashing down. Yahoo message boards, Reddit posts, Telegram communities, excited media articles. Electricity, however, is real. It's discovery and taming led to an industrial revolution, light and progress. Today's laundromats might be boring and tame, but imagine the first robotic clothes washer animated by electric powers unseen. All tech innovations have a bit of each. Crypto is enjoying its meme moment. Why is Bitcoin going down, after it went up? Let's talk about the factors that are adding up to the current sentiment.

(1) The first is definitional -- Bitcoin (and all crypto) is a volatile early stage technology asset and these massive run-ups and falls are a feature of the asset class, not an exception.

(2) The second is that data points about hacks and Ponzi schemes have been dominating the news. From Tether (which may be trying to print billions of sovereign currency) to Bitconnect (likely Ponzi scheme with a proprietary coin falling from $2.6 billion in marketcap)  the Coincheck hack ($500 million Japanese exchange hack), to Arise Bank ($600 million ICO shutdown by the SEC), billions of USD equivalent value keep are literally evaporating from the crypto economy due to bad actors. These issues are not new in the space, but now there is mainstream attention with nearly at trillion at stake, and the regulators are starting in enforcement actions.

(3) The futures market that so many crypto natives were excited about allow professional investors to actually take a bearish view. Oops. This sentiment should reflect back into the price mechanically.

(4) Decentralized systems will supposedly erode the control of centralized systems. So we should not be surprised when centralized systems fight back when coopted for this purpose -- from Facebook's Bitcoin ad block and regulator crackdown on fake bots, to the refusal of credit card issuers and banks to keep financing crypto purchases, to asset managers like Vanguard announcing they won't create vehicles for the asset class.

None of this should be new information. If in 2002 you asked the music labels whether they like Napster, not only would they answer with a resounding NO, but they would talk about Digital Rights Management and all their plans to fight back. Welcome to creating product-market fit.

Source: Volume of CME Bitcoin Futures, Bitcoin Market Cap

Wells Fargo Forbidden From Growing by Federal Reserve 

In the legal tradition, civil courts can do one of two things: (a) make a party pay damages for injury resulting from a particular action by that party, or (b) prevent the party from taking an action in the first place through an injunction. Meaning, they can make you pay for your mistakes with money, or put you in time-out. The Federal Reserve has just put the entirety of Wells Fargo in time out by forbidding it from growing until it fixes the mistakes that led to its scandals (like opening 2 million fake accounts, aggressive sales tactics, etc). Wells has already paid $185 million in fines, so this is a cherry on top. The firm can add no more assets over the level it had at end of 2017.

This move is a potent reminder of sovereign power, and how it could be effectively used. All this noise about scams, fraud, crypto, and Ponzi schemes -- all this can hit a wall. Every exchange can be shut down. Every bank can be unlicensed. Sovereigns have teeth, and they should not be afraid to use them (for the right reasons of course). This is far easier to do with well regulated centralized entities, like one of the world's largest public banks; decentralized crypto may survive even such an attack. Other examples of sovereign power can be seen in the transformative European legislation of PSD2, GDPR and MiFID II. These regulations force open bank data into accessible APIs that support fintech, create a personal right to be forgotten that forces a company holding your data to delete it, and separate investment research from trading to prevent inducements. 

Similar force could be used to deal with propaganda bots and the overrech of the big tech companies. We know that GAFA are dealing with millions of fake accounts (not unlike Wells). But these accounts manipulate information, public opinion, commercial outcomes and financial investment. From this point of view, Facebook's block of crypto-related ads is self protection, trying to prevent the system from being coopted for financial manipulation and regulatory response. See how the New York state Attorney General is going after the firm that manufactured fake accounts. We can also look at the healthcare alliance between Amazon, JP Morgan and Berkshire in this light -- a way to start remedying social unrest resulting from automation and increasing concentration of wealth, a first step to universal income.

One solution is fairly simple. Until Facebook, Google/Youtube and Twitter get their social news problems under control, they could be restricted from adding new accounts over the level of 2017 year end. Now that would be one way to fix the attention economy.

Source: CNN Money

Misunderstanding Augmented Reality as a Gimmick. 

Financial services companies are failing to engage with virtual and augmented reality (VR/AR) in a meaningful way. But that does not mean AR is not moving to the mainstream. The latest symptom of this is Google's commitment to building AR into the web browser. A user will be able to come across an object on the web, which can then be taken out and rendered within the living environment of the user. Three dimensional objects within the web browser so far have not taken off due to bandwidth and processing limitations, but that will change over the coming years. See of example, Punk Office, a company that is using 3D scanning of people's bodies to help clothing retailers map products onto their bodies. It is a small jump from this to Amazon's smart mirror, which can then connect the digital avatar to its retail catalog. All this physical / digital melding powered by machine vision of course.

The way financial companies have engaged with the medium so far is to make small games or media experiences. For example, Ally Bank created a game to catch dollars flying around in your living room during the Super Bowl. Citi and Wells, among others, have created VR experiences (think concerts, immersive videos) that do nothing but advertise in a next-gen medium. The Financial Brand wrote a great post on the ways banks are using this tech last year, and the examples are roughly consistent: (1) various marketing experiences, (2) virtual offices and branches, (3) touring real estate investments, and (4) taking 2D trading and wealth interfaces and rendering them in 3D. 

This is fundamentally wrong. Sprinkling 3D on a complicated financial product, like trading, or sending people into a weird interaction with your virtual banking branch does not make the banking experience simpler or better for the customer. A simple mobile app or chatbot will do. What we need is not financial products rendered in gimmicky 3D, but to add finance features to digital objects and their attributes. This is why Augmented Reality retail makes sense. People will make some purchases natively in AR, and new payments experiences will support this activity. Similarly, this is why the VR crypto economy can make sense. From the financing of virtual land, to the monetization of attention, to the overlay of financial actions over the physical world in smart devices, incumbents need to think broader about this opportunity.

Source: Google, Amazon (smart mirror), Lucyd Lens

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