The “new normal” is unsettling chief executives and business executives everywhere. A post-lockdown global survey by the Gallup Group shows that only 21% of employees are engaged in their jobs. By contrast, start-ups are promising purpose and flexibility — and with funding boosted by Covid-era stimulus packages, they are attracting top talent away from traditional businesses.
Inflation, resulting from high energy prices, cheap cash and low productivity, reduces companies’ profits and increases the cost of capital. Even technology is turning into a terrible foe, producing nimble and innovative new vessels, able to outrun and outmanoeuvre yesterday’s finest.
Further out on the horizon are blockchain applications — the submarines prowling for legacy vessels steered by chief executives asleep at the wheel. The battle lines have been drawn in no uncertain terms, and many experienced executives are feeling insecure, worrying whether their traditional values of consistent hard work and integrity in leadership will be able to stand against these new and unfamiliar threats.
But when the going gets tough…
We can begin the story of blockchain with the pivotal technology breakthrough of World War II. Alan Turing believed that he could break Enigma — the cypher machine encoding communication for the German fleet — through more computing power and smarter programming. Through his unwavering focus, coupled with the actions of brave servicemen, the U-boat threat was undone and the Allies won the Battle of the Atlantic.
Turing is regarded as the father of modern computer science, which has driven a period of historically unparalleled innovation, efficiency and economic growth. We are still grappling with many concepts that were introduced by this genius. Artificial intelligence (AI) machines are judged — and only a few succeed — on their ability to pass the Turing test, the imitation game engineered by Turing in 1950. And the concept of Turing completeness is key to understanding the power of blockchain applications.
Turing completeness implies that every plausible design for a computing device can be emulated by a universal Turing machine. This basically means that, given the same sets of inputs, multiple algorithms are considered “Turing complete” if we can verify that they will, under all circumstances, come to the same answer.
Blockchains using smart contracts are Turing complete and therefore contain a fundamental mechanism for trust — they are designed to achieve universal consensus so that the status of a contract will never be disputed. This may sound trivial, but the implications are astounding.
What it means fundamentally is that we no longer require middlemen to be our trusted intermediaries — we need no checking, verifying or auditing. By universal consensus, everyone agrees on the outputs generated by transparent contracts entered into by any parties, at any stage, anywhere in the world. Such contracts will execute and conclude in a good and proper, expected way.
I am often astounded to hear corporate leaders confuse the term “crypto” with the blockchain technology that underpins it, and then dismiss the entire category by means of a straw man argument, treating crypto as something that resembles currency, just with no underlying or fundamental value.
For any executive looking to move their business forward into the next generation computing paradigm, a failure to understand the power of a Turing complete machine that can pay its network based on a consensus mechanism — with zero input from middlemen — is unforgivable naïveté.
Consider that the $1-trillion capitalisation of the crypto market represents an enormous amount of capital which is allocated to developing these novel concepts. Add to that the presently unconstrained nature of the space as well as the fact that a disproportionate number of engineers, data and computer scientists are dedicating themselves to this field. The result is crystallising in front of our very eyes — the infrastructure of the future is being developed today, and some of it is already sufficiently mature for large-scale adoption.
Not all business leaders are asleep. Recently BlackRock, the world’s largest asset management company, announced custody services for crypto assets. Central banks such as those of Hong Kong and Singapore are well advanced in launching next-generation Real Time Gross Settlement systems. The number of countries working on a Central Bank Digital Currency trial increased in 2022 to a 105% to 200% growth rate over the past two years. Exchanges such as SIX Digital in Switzerland are entrenching their lead as digital infrastructure for global markets.
However, as the chief executive of MicroStrategy, a leading business intelligence firm, found out, the current cryptocurrency market can resemble a gold rush, and there are many snake oil salesmen among the winners and losers. Caution is called for — buyer beware. Nonetheless, businesses are waking up to the huge progress and possibilities in the value being created by this sector.
I am convinced that chief executives of traditional businesses who have been diligently investing in their tech stacks still hold the upper hand in this new industry. Web 3 infrastructure will allow faster and transparent transfer, guaranteed custody and settlement, and new and immediate exchange mechanisms, among many other meaningful disruptions to established industries.
As next-generation customers flock to platforms promising responsible inclusivity and interoperability, our chief executives will do well to remember that anybody, in any paradigm will always welcome good quality products and assets. Backed by trust generated through quality leadership and hard work.
It’s time for the tough to get going.
Andries Brink is chief executive of 42Markets Group and co-founder of Mesh.Trade.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.