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Matt Harris has invested in FinTech companies since before the term was coined. He was initially attracted to the field partly because of the lack of attention he was getting 20 years ago. Recently, I reached and covered the four main segments of FinTech: payments, loans, investments and insurance. (In this interview also claims that the real estate sector is worthy of consideration as the fifth segment.) The wider interview will be published shortly. Of interest in this segment of our interview was his opposing view on blockchain. He is an investor in crypto-currencies, which invests personally and shares the reasons he believes blockchain is a hammer for nails.
(To hear a full podcast version of this interview, click & nbsp;this link. & nbsp; This is the 30th interview in the series of technical Influencers. To listen to past interviews with the likes of former Mexican president Vicente Fox, Sal Khan, Sebastian Thrun, Steve Case, Craig Newmark, Stewart Butterfield and Meg Whitman, visit & nbsp;this link. To read future articles in this series, follow me on & nbsp; on Twitter & nbsp;@PeterAHigh.)
Peter High:& nbsp; You are in the investment committee of a group of digital currencies, to which you referred to as a company that provides a front row position to cryptocurrencies and blockchains. The cryptocurrencies, in particular Bitcoin, have been a bit in the news a little bit. in recent years, as the fortunes have been made and lost due to the extraordinary volatility of cryptocurrencies. What is your thought process on the evolution of cryptocurrencies and how much are you bull in that space?
Bain Capital Ventures Managing Director Matt HarrisCredit: BCV
Matt Harris: & nbsp;I was referred to as a maximalist Bitcoin because because it refers to cryptographic resources, I tend to be dramatically more bullish on Bitcoin than any other currency or asset that has been developed. While I believe that pricing is inherently speculative, I get the case for Bitcoin, and I spent hundreds of hours talking to Bitcoin owners. While unfortunately there are no Bitcoin users, Bitcoin owners tend to believe in the same way that people have believed in gold as a store of value for millennia. This deposit of value is not necessarily considered stable in the short term, but is seen as a reserve of value that is separate from the whims of governments and the inflationary tendencies of legal currencies. It is instinct, rather than universal. Similar to many people, I've never owned gold in my life, but about 5% of people with means end up owning gold, and they consider it a hedge against inflation and chaos. For this new generation of young people, the idea that gold has intrinsic value makes little sense. Frankly, apart from the fact that gold has been valued this way for hundreds of years, there is no intrinsic logic in the gold to be valuable, so Bitcoin is much more appealing to this demographic .
So how it is today, there are $ 7 trillion of gold over land right now, and there's about $ 200 billion worth of bitcoins. I consider the way we think of non-fiat value stores as a game of market shares. We are starting to see what percentage of people will want to own the new digital currency, as opposed to the venerable shiny metal. For me, this is the case of bulls on Bitcoin. While I do not have a crystal ball on where it will go from here, I made sure to own a good amount on my personal account and spend a lot of time on it through DCG.
The second category in which I have my conviction comes from the first. If you believe that people will want to invest and keep Bitcoin and other cryptographic assets, then you will need a multitude of aspects of the market structure to facilitate this. If you're going to do it, you'll need the following;
- Training places;
- trade;
- Business solutions;
- Ways to sell short and go long;
- If you're going to trade these unnamed denominators, you need something called a stable currency;
- Excellent management companies;
With DCG, there are some wholly owned subsidiaries and asset management businesses, as well as events and media. Through DCG, we have invested in 115 different companies. Many of these are oriented towards capital market use cases that assume that there will be an emerging and evolving market for these assets, and therefore, will need elements of the market structure. While there is still no evidence of success, I find the notion of extremely intriguing distributed applications. I think of these as open-source protocols with an internal token.
Many of the apps we use today as consumers, such as Facebook, Uber and Airbnb, and those we use for our businesses, such as Slack and Outlook, are software-based tools that are now owned by companies or are companies themselves. I'm interested in the notion that these should be open source protocols, owned by anyone and powered by tokens that users must purchase, own, use and earn through the use of new school versions of Uber, Facebook, Outlook, and Slack . This is a great idea and there are thousands of highly qualified teams made up of engineers and entrepreneurs who are building these applications on Ethereum. Many of them are launching these tokens before they are in use, pre-selling them and using the funds to build the software. Many of them will fail, and many of them have already failed. Hundreds of millions of dollars have already been lost in terms of mark-to-market because this structure lends itself to the type of advertising pumps and landfill schemes. However, this does not mean that it is a bad idea, it only means that it is subject to abuse. Although we have been cautious in the world of distributed application and associated token, we remain fundamentally intrigued by the idea behind the movement.
The last segment we consider is corporate blockchain. This implies the idea that the architecture of the blockchain database that supports Bitcoin and Ethereum is a radical novelty. Some believe that there are business use cases within an enterprise or between and between businesses where there are existing workflows that can be transformed in a transformative manner through the implementation of this new database structure, with its distributive nature at the center. However, I was relatively skeptical in this area. While there will probably be some cases of use, there will be less than what is generally believed. Frankly, the real innovation behind Bitcoin is the lack of trust or lack of permissions. This is the idea that people can exchange Bitcoins without having to know one another and without having a central counterpart such as Visa, Mastercard or The Depository Trust & amp; Clearing Corporation [DTCC] stay behind and cancel the transaction. This is a magical innovation, as billions of dollars can move freely without anyone being able to change or censor transactions.
However, this idea is not something that has utility in the context of the business entity. In the corporate blockchain world, you often hear the phrase, "authorized blockchain." If you believe that the absence of permissions is the inherent quality of the blockchain, then the idea of an authorized blockchain is clearly ridiculous. However, this is an extremely negative view, and there are many fantastic people who have an abundance of money that desperately tries to find a nail for which the blockchain is the right hammer. Thanks to this dedication, the nails will be found, and I am sure there will be successful projects. That said, I suspect that when the final analysis will be performed regarding all the time, efforts and money that went into it with respect to the results, I believe it will be considered a weak use of resources.
High: & nbsp;Suppose that time and attention, especially among the many large companies investing in space, are based on a misunderstanding of the ultimate value that technology should have?
Harris: & nbsp;No. It would be ineffective to walk around Barclays and try to attract people's attention by trying to organize resources and budgets. If you said, "We need to upgrade all our databases, we need to switch from the relational database to the NoSQL databases or even to the distributed master books," people would say, "Get in line." They would tell you that everything should be updated, including chairs, but spending resources, time, and poor attention to database upgrades is bad money because ROI is so vague.
It's no secret that there are new database structures and switching from flat files to relational ones in the early years & # 90; was a smart move. While it took 15 years, we moved the mainframes to the client server, we moved from flat files to relational, everything improved and we should continue to do so. However, nobody would start to distribute money, titles and promotions to database developers. On the other hand, the rise of blockchain to prominence through Bitcoin has created a huge opportunity to create what people call, "Theater of Innovation." You could go to Jamie Dimon and say, "I know you hate Bitcoin, you've been super-public about this, and you're right because Bitcoin is for drug dealers." What is interesting is the blockchain. It was an incredibly elegant and intelligent way of saying that has co-opted bitcoin's momentum and made it safe and exciting for corporate America. As a result, a large amount of time, resources and budget were allocated to the database upgrade project in a way that would never have happened otherwise.
There is a real transformation potential here. With the current system, it takes two days to adjust the transactions of US shares via DTCC, but if every single stock was on a blockchain or a distributed ledger, transactions could occur instantly. Technology is not what prevents us from doing it. Instead, it is a social problem. There are thousands of counterparts who are used to a set of standards and should all agree on a new set of standards. This transition is similar to how in the United States, NACHA has finally developed real-time payment standards that allow you to perform a real-time ACH. It took 15 years, but nobody uses it because the delay is not a problem in 99.9 percent of the use cases. In fact, having a little delay when moving money is beneficial because it reduces fraud and risk. After 15 years, NACHA has finally figured out how to make payments in real time without any distributed ledger or blockchain just by making sure that banks agree on a new set of standards saying that you do not need blockchain and nobody wants it. My skepticism is that if this service were so radically desirable, we would already have it.
Peter High& nbsp; is President of & nbsp;Metis strategy, a & nbsp;business& nbsp; and IT consulting company. His latest book is & nbsp;Implementation of a global IT strategy. He is also the author of & nbsp;World Class IT: Why companies succeed when IT triumphs.& nbsp; Peter moderates & nbsp; the & nbsp;Forum on World Class IT& nbsp; podcast series. Speak at conferences all over the world. Follow it & nbsp; on Twitter & nbsp;@PeterAHigh.
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Matt Harris has invested in FinTech companies since before the term was coined. He was initially attracted to the field partly because of the lack of attention he was getting 20 years ago. Recently, I reached and covered the four main segments of FinTech: payments, loans, investments and insurance. (In this interview also claims that the real estate sector is worthy of consideration as the fifth segment.) The wider interview will be published shortly. Of interest in this segment of our interview was his opposing view on blockchain. He is an investor in crypto-currencies, which invests personally and shares the reasons he believes blockchain is a hammer for nails.
(To hear a full podcast version of this interview, click this link. This is the 30th interview in the Tech Influencer series. To listen to past interviews with the likes of former Mexican president Vicente Fox, Sal Khan, Sebastian Thrun, Steve Case, Craig Newmark, Stewart Butterfield and Meg Whitman, please visit this link. To read the future articles of this series, follow me on Twitter @PeterAHigh.)
Peter High: You are in the investment committee of a group of digital currencies, to which you referred to as a company that provides a front row position to cryptocurrencies and blockchains. The cryptocurrencies, in particular Bitcoin, have been a bit in the news a little bit. in recent years, as the fortunes have been made and lost due to the extraordinary volatility of cryptocurrencies. What is your thought process on the evolution of cryptocurrencies and how much are you bull in that space?
Bain Capital Ventures Managing Director Matt HarrisCredit: BCV
Matt Harris: I was referred to as a maximalist Bitcoin because because it refers to cryptographic resources, I tend to be dramatically more bullish on Bitcoin than any other currency or asset that has been developed. While I believe that pricing is inherently speculative, I get the case for Bitcoin, and I spent hundreds of hours talking to Bitcoin owners. While unfortunately there are no Bitcoin users, Bitcoin owners tend to believe in the same way that people have believed in gold as a store of value for millennia. This deposit of value is not necessarily considered stable in the short term, but is seen as a reserve of value that is separate from the whims of governments and the inflationary tendencies of legal currencies. It is instinct, rather than universal. Similar to many people, I've never owned gold in my life, but about 5% of people with means end up owning gold, and they consider it a hedge against inflation and chaos. For this new generation of young people, the idea that gold has intrinsic value makes little sense. Frankly, apart from the fact that gold has been valued this way for hundreds of years, there is no intrinsic logic in the gold to be valuable, so Bitcoin is much more appealing to this demographic .
So how it is today, there are $ 7 trillion of gold over land right now, and there's about $ 200 billion worth of bitcoins. I consider the way we think of non-fiat value stores as a game of market shares. We are starting to see what percentage of people will want to own the new digital currency, as opposed to the venerable shiny metal. For me, this is the case of bulls on Bitcoin. While I do not have a crystal ball on where it will go from here, I made sure to own a good amount on my personal account and spend a lot of time on it through DCG.
The second category in which I have my conviction comes from the first. If you believe that people will want to invest and keep Bitcoin and other cryptographic assets, then you will need a multitude of aspects of the market structure to facilitate this. If you're going to do it, you'll need the following;
- Training places;
- trade;
- Business solutions;
- Ways to sell short and go long;
- If you're going to trade these unnamed denominators, you need something called a stable currency;
- Excellent management companies;
With DCG, there are some wholly owned subsidiaries and asset management businesses, as well as events and media. Through DCG, we have invested in 115 different companies. Many of these are oriented towards capital market use cases that assume that there will be an emerging and evolving market for these assets, and therefore, will need elements of the market structure. While there is still no evidence of success, I find the notion of extremely intriguing distributed applications. I think of these as open-source protocols with an internal token.
Many of the apps we use today as consumers, such as Facebook, Uber and Airbnb, and those we use for our businesses, such as Slack and Outlook, are software-based tools that are now owned by companies or are companies themselves. I'm interested in the notion that these should be open source protocols, owned by anyone and powered by tokens that users must purchase, own, use and earn through the use of new school versions of Uber, Facebook, Outlook, and Slack . This is a great idea and there are thousands of highly qualified teams made up of engineers and entrepreneurs who are building these applications on Ethereum. Many of them are launching these tokens before they are in use, pre-selling them and using the funds to build the software. Many of them will fail, and many of them have already failed. Hundreds of millions of dollars have already been lost in terms of mark-to-market because this structure lends itself to the type of advertising pumps and landfill schemes. However, this does not mean that it is a bad idea, it only means that it is subject to abuse. Although we have been cautious in the world of distributed application and associated token, we remain fundamentally intrigued by the idea behind the movement.
The last segment we consider is corporate blockchain. This implies the idea that the architecture of the blockchain database that supports Bitcoin and Ethereum is a radical novelty. Some believe that there are business use cases within an enterprise or between and between businesses where there are existing workflows that can be transformed in a transformative manner through the implementation of this new database structure, with its distributive nature at the center. However, I was relatively skeptical in this area. While there will probably be some cases of use, there will be less than what is generally believed. Frankly, the real innovation behind Bitcoin is the lack of trust or lack of permissions. This is the idea that people can exchange Bitcoins without having to know each other and without having a central counterpart such as Visa, Mastercard or The Depository Trust & Clearing Corporation [DTCC] stay behind and cancel the transaction. This is a magical innovation, as billions of dollars can move freely without anyone being able to change or censor transactions.
However, this idea is not something that has utility in the context of the business entity. In the corporate blockchain world, you often hear the phrase "authorized blockchain". If you believe that the absence of permissions is the inherent quality of the blockchain, then the idea of an authorized blockchain is clearly ridiculous. However, this is an extremely negative view, and there are many fantastic people who have an abundance of money that desperately tries to find a nail for which the blockchain is the right hammer. Thanks to this dedication, the nails will be found, and I am sure there will be successful projects. That said, I suspect that when the final analysis will be performed regarding all the time, efforts and money that went into it with respect to the results, I believe it will be considered a weak use of resources.
high: Suppose that time and attention, especially among the many large companies investing in space, are based on a misunderstanding of the ultimate value that technology should have?
Harris: No. It would be ineffective to walk around Barclays and try to attract people's attention by trying to organize resources and budgets. If you said this, "We need to update all our databases, we need to switch from the relational database to NoSQL databases or even to distributed registers", people would say "get in line". They would tell you that everything should be updated, including chairs, but spending resources, time, and poor attention to database upgrades is bad money because ROI is so vague.
It's no secret that there are new database structures and switching from flat files to relational ones in the early years & # 90; was a smart move. While it took 15 years, we moved the mainframes to the client server, we moved from flat files to relational, everything improved and we should continue to do so. However, nobody would start to distribute money, titles and promotions to database developers. On the other hand, the rise to blockchain celebrity through Bitcoin has created a huge opportunity to create what people call "Innovation Theater". You could go to Jamie Dimon and say "I know you hate Bitcoin, you've been super-public about it, and you're right because Bitcoin is for drug dealers." What is interesting is the blockchain. It was an incredibly elegant and intelligent way of saying that has co-opted bitcoin's momentum and made it safe and exciting for corporate America. As a result, a large amount of time, resources and budget were allocated to the database upgrade project in a way that would never have happened otherwise.
There is a real transformation potential here. With the current system, it takes two days to adjust the transactions of US shares via DTCC, but if every single stock was on a blockchain or a distributed ledger, transactions could occur instantly. Technology is not what prevents us from doing it. Instead, it is a social problem. There are thousands of counterparts who are used to a set of standards and should all agree on a new set of standards. This transition is similar to how in the United States, NACHA has finally developed real-time payment standards that allow you to perform a real-time ACH. It took 15 years, but nobody uses it because the delay is not a problem in 99.9 percent of the use cases. In fact, having a little delay when moving money is beneficial because it reduces fraud and risk. After 15 years, NACHA has finally figured out how to make payments in real time without any distributed ledger or blockchain just by making sure that banks agree on a new set of standards saying that you do not need blockchain and nobody wants it. My skepticism is that if this service were so radically desirable, we would already have it.
Peter High is the president of Metis strategy, a company and IT consulting firm. His latest book is Implementation of a global IT strategy. He is also the author of World Class IT: Why companies succeed when IT triumphs. Peter moderates the World Class IT podcast series forum. Speak at conferences all over the world. Follow him on Twitter @PeterAHigh.
