The biggest blind spot for companies in today’s world is not the threat of a hostile takeover, labour unrest nor the loss of business as a result of an act of terror or nature.
These days, the most feared threat by many company executives is the loss of market share as a result of a new entrepreneurial entrant armed with a new business model, transacting in unregulated spaces, essentially disrupting the “business-as-usual” way of doing things in that industry.
The story of bitcoin and its mysterious inventor
We will never know for sure, but perhaps governments would have hunted them down and bankers would have sent mercenaries after them. No one has seen them. No one knows them. What we know is that whoever they are, they are a brain box — and an unstoppable one too.
What is documented is that Satoshi Nakamoto is the name used by the unknown person or persons who invented in 2008 a worldwide cryptocurrency and digital payment system or currency now popularly known as the bitcoin, together with the standard.
The standard is a platform from which all other implementations and corresponding customisations are derived. It is also widely referred to as reference implementation.
The Guardian, which has written extensively about cryptocurrencies, summarises them as follows; “cryptocurrencies, among which bitcoin is the dominant version, allow consumers to make electronic transactions without commercial banks as intermediaries, and outside the reach of central banks.”
Nakamoto designed the bitcoin, its standard and the first blockchain as an open source technology, gave access to a few developers the source code in order that they would be able to make changes and additions, then vanished. No one ever met him/her. His/her communications with the world were done electronically.
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Bitcoin is impersonal and faceless. This means, at any one time, it is unknown who holds which bitcoin — but each bitcoin’s path can be tracked through the network, via a public ledger called the blockchain.
The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem, without the use of a centralised server or credible authority. Double-spending is a problem unique to digital currencies because digital information can be reproduced relatively easily.
As of September 13 2017, the market capitalisation for bitcoin was $64,453 billion trading at $3891,27 per bitcoin with 16 563 500 bitcoins in circulation.
Before vanishing, it is believed that the mysterious creator allocated themselves 1 000 000 bitcoins. It is estimated therefore, that Nakamoto is currently sitting with a fortune of $3,89 billion dollars.
In 2015 Craig Wright, an Australian academic and entrepreneur identified himself as Nakamoto. After providing evidence that he is, many, even those that had worked with him, remain sceptical, arguing that it no longer matters who Nakamoto is because the currency has decentralised, governance is now bigger than its creator who stopped being involved with bitcoin in 2010.
Bitcoin is a disruptive technology
According to Clayton M Christensen, a Harvard Business School professor, “a disruptive technology is a new emerging technology that unexpectedly displaces an established one.” Bitcoin is disrupting banking payment systems.
Shiwen Yap, Associate editor of DEALSTREETASIA, writing for the magazine in August 2015, remarked, “…Bitcoin, which is a virtual currency devised for anonymous payments made entirely independently of governments and banks, operates on a technical solution that functions differently to the traditional payments mechanism, bringing advantages in the form of lower costs, rapidity and anonymity over traditional payment methods.”
Bitcoin is a disruptor because it is not directly covered by laws that govern other payment mediation in most jurisdictions. Shiwen continues, “With financiers becoming cognisant of the potential of blockchain technology, banks and other financial institutions are exploring the ability of the technology to simplify processes and reduce costs, with the first wave of disruption likely to be focused in the payments space (i.e money transfers, card transactions and remittances).”
Recently, Pick n Pay, South Africa, using electrum and luno conducted a successful bitcoin payment trail at its head office’s canteen. Electrum is a multi-user interface that uses servers that index the bitcoin blockchain.
Luno is a bitcoin wallet and trading platform. The outcome of the trial which was for a limited time period, raised hope and optimism at the fact that cryptocurrency technology while technically possible, can be rolled out quickly and holds long-term promise for many other applications. T
he main concern was that the cryptocurrency industry has some way to go to create a low-cost currency exchange process. Pick n Pay deputy CEO, Richard van Rensburg remarked that the company would not roll out cryptocurrency technology “until the payments industry and regulatory authorities have established a framework for managing the risks associated with crytocurrencies.”
Uber and Airbnb
I truly wish we had Uber in Zimbabwe. The public transport system in Zimbabwe is unimaginative, tired and platitudinous. It simply does not serve our needs, at most times, particularly after hours.
Substance-indulging Zimbabweans have a dangerous habit of drinking and driving and law enforcement is somewhat weak, the thrust being on revenue collection rather than traffic law enforcement.
The last five years alone, I can count more than a dozen families I know who have lost a family member to drinking and driving. Had Uber been in Zimbabwe, the sensibility would be for the intoxicated to plan their movements around Uber, an on-demand, e-hailing taxi service now operating across the globe.
Both Uber and Airbnb were disruptive competitors when they entered the taxi and accommodation industries respectively.
What is Uber?
Uber was found by Travis Kalanick and Garrett Camp as Ubercab in March 2009. Uber — a smartphone application (app), that went live in July 2010 — is designed to provide an on-demand transportation service to users by connecting willing passengers to taxi cab drivers. It is an innovative and pioneering concept that has shaken the traditional taxi industry worldwide.
The business model of Uber anchored in convenience for the user, makes it possible for users who have already downloaded the app to simply tap their smartphone and have a cab arrive at their location in a short period of time.
When it started, no money exchanged hands between the driver and the user but there is a new facility within the app where users are allowed to pay cash.
What is key is that, the connection between the driver and the user is always done via app. That connection is recorded and therefore tracked via the app. By the time the user is picked up, they know the name of the driver, type of car coming to fetch them and the registration of that car.
How cool is that? What is even cooler is that, a fairly simple, well conceived game-changing app, is bringing convenience to the user, in an industry almost as old as the invention of the car itself.
In Johannesburg, Uber has revolutionised the taxi industry to the extent that some deviant metered taxi drivers, struggling to compete, are burning Uber X, Toyota Corollas.
Uber, whose headquarters are in San Francisco, is one of the few technology companies in the world valued at over $65 billion as of July 2017. The number of new driver sign-ups is over 50 000 per month, and rides throughout the world are over one million per day and the number of registered drivers as at January 2016 exceeded two million.
What is Airbnb?
Unlike Uber, Airbnb is alive and well in Zimbabwe, catering to clients choosing an experience that is authentically local, in a home away from home. Like Uber, Airbnb, headquartered in San Francisco and found in August 2008 by Nathan Blecharczyk, Joe Gebbia and Brian Chesky, is another app — an online marketplace connecting travellers, who need accommodation with local hosts.
Airbnb has two platforms summarised as follows: the one side of the platform enables people to list their available space, a room, a flat, a house, etcetera and earn extra income in the form of a short-term or longer-term rental.
On the other side of the platform, Airbnb allows travellers to book distinct and exceptional home stays with Airbnb-registered hosts, saving them money and giving them a chance to interact with local hosts.
Catering to the on-demand, travel industry, Airbnb is present in over 200 countries across the world. As of March 2017, Airbnb was valued at $31 billion. It is presently operating in over 34 000 cities across more than 200 countries. Having over 1,5 million listings, the company has served over 36 million guests across the globe. Over 200 000 people stay at an Airbnb-listed place everyday.
How do you protect the public from moving targets?
Writing in the Guardian in September 2015, Tom Hodgkinson argued that, “this process of disruption is nothing new. In the old days, the illuminated manuscripts industry was disrupted by the printing press, and the illuminators complained bitterly.
The Monk industry was disrupted by the Reformation. Later, the weaving industry was disrupted by the spinning jenny (though now the fashion industry is being disrupted by a company that wants you to make your clothes at home, so we go full circle).”
The issue facing regulators today is, how do you protect the public from moving targets? Technological innovations are moving targets. How do you protect them from what yourself as a regulator might not fully understand the implications and what the public, often, might be unaware of? Of course, regulations that truly protect the public interest are necessary.
But often, regulations are lobbied for their creation by incumbents seeking to protect their market position. This gets entrepreneurs thinking. In order to serve the same customers in different ways, entrepreneurs establish new ways in unregulated markets. And when they succeed, it will all look obvious in hindsight.
Wisdom is often located in retrospect. Today’s regulatory headache is often tomorrow’s mainstream industry.
Uber and Airbnb have created truly massive marketplaces with minimum challenges that let customers wherever they are in the world, easily interact and participate for the mutual benefit of the transacting parties.
The interesting thing is Uber, which has become the world’s largest e-hailing taxi company, owns no cars. Airbnb, which has also become the largest accommodation provider worldwide, owns no real estate. The same can be said for Facebook — it is the most popular media owner, but creates no content and Alibaba — is the most valued retailer, but it owns no stock of its own.
Sharing economy disruptors provide secondary income streams
Essentially, Airbnb and Uber have succeeded in disrupting markets, creating what is now referred to as a “sharing economy”. They have invented applications which allow individuals to interact, transact while they simply derive their own revenue from facilitating this interaction. This is smart technology.
Airbnb has succeeded in creating a completely new type of market that was just not open to participants before. Like Etsy before it, Uber, Airbnb, and other “sharing applications” have allowed participation in markets as a secondary income stream for millions of people across the world.
By being path-finding, customer-focused and innovative in creating these apps, Uber and Airbnb, have enabled the efficient application of millions of “shares” of peoples’ time or assets to old industries but new marketplaces.
Zimbabwe possesses the capacity and capability to develop a digital economy
Governments do not innovate. Entrepreneurs do. Parastatals are government bodies whose direction emanates from their parent ministries and therefore like government, tend to be less entrepreneurial.
Be that as it may, to all enterprises out there, innovate or die. Disrupt your current business model now or be disrupted by the future, into oblivion. The role for government is to create an enabling environment. For Zimbabwe to catch up to innovations in other parts of the world, it needs to fast-pace itself towards a digital economy. But that digital economy has to be built.
Unfortunately, Zimbabwe has a negligible number of coders, the developers, who are the would-be architects of this digital economy.
As we continue to be gripped by alternative news, about who claims to have been fed ice-cream by whom and why, we are being left behind this fast-moving technological space and playing catch up is going to be arduous and hurried. Yet, we possess the capacity and capability. It is a Zimbabwean that built the system Zimra uses to collect taxes bullishly.
The same Zimbabwean digitised the Kenyan healthcare system. This Zimbabwean based tech entrepreneur, lying low, continues to do great things like building driverless cars, modernise agriculture in the country using artificial intelligence as well as build the second fastest super computer in Africa.
Virtual and augmented reality are here. When are we going to adopt them as solutions for the challenges we face in mining and general business?
l Gloria Ndoro-Mkombachoto is an entrepreneur and a regional enterprise development consultant. Her experience spans a period of over 25 years. She can be contacted at [email protected]
