As Bitcoin investors, what are some of the most exciting aspects of the blockchain? You have supply chains, and these are supply chains that not only exist in terms of the movement of actual goods, but in terms of actual provision of services, and we look at global service industries, advertising stands out with over $600 billion dollars in advertising spend annually. So from that standpoint there are great efficiencies to be gained in advertising, if you go back and we look historically, John Wanamaker out of Philadelphia had said with advertising he knew that half his budget was wasted, he just didn't know which. So people have been asking for greater accountability in the advertising industry, historically and the introduction of blockchain technology is going to improve transparency and improve tracking with respect to the execution.
When you look at the advertising industry, and you go from lets say an advertiser, a Fortune 500, Fortune 1000 company, say Proctor & Gamble with over a $2 billion budget, they'll have a number of advertising agencies that they'll work with and in terms of executing advertising campaigns, the agencies themselves will turn to a variety of intermediaries. Now to the extent we look at this extended supply chain, relative to ad campaign execution, the use of the blockchain will be used to better track actually how these dollars are going down through the supply chain, how they're being executed in terms of what individuals are they actually being shown to and what conversion rate there is coming back.
Even though there may be a very convoluted, using blockchain will be able to introduce greater transparency and accountability and in the process reduce the waste, more particularly, the area most people are looking at is advertising fraud which is a number estimated to be around $16 billion dollars for the industry in 2017, that's an estimate from WPP group. Obviously if we can just reduce $16 billion dollars off of fraud by introducing blockchain, everybody is going to benefit.
There's clearly wide range of legal opinion right now and we really haven't set precedent but the majority view and advice of the companies we've been involved with is that the funds that you raise from your initial coin offering can be used to develop the technology to support the use of the coin, however, if you look at the parent company that's bringing about that are promoting this blockchain application, funds raised for that entity have to be in a separate bucket which could be taken from a traditional venture capital investor, but these are funds that should be raised and kept separate and segregated from the money raised by the ICO, which can be used to support the technology which the utility token, which the ICO will be used with.
The challenges of running into Bitcoin is just trying to transact using Bitcoin as a payment mechanism is turning out to be substantially slower than people might hope for. You can process a transaction via Visa, a traditional payment processor far faster than you can with Bitcoin and it's these payment processing performance characteristics which alternative currencies or cryptocurrencies are going to have to content with. Bitcoin, if it's really going to be competitive going forward is going to have to start addressing this slow payment processing speed. Obviously there are other protocols, such as Ethereum or EOS which are being developed that have much faster processing times than Bitcoin, but it's clearly a space that's evolving and people have to pay close attention to it all.
September 19, 2018
September 19, 2018
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