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The IBM–Maersk blockchain effort was doomed to fail from the start

The IBM–Maersk blockchain effort was doomed to fail from the start

Blockchain projects continue to experience failure rates in excess of 90%, and it seems that with every passing moment, more and more “successful” companies add their underperforming blockchain project to the graveyard. One of the most recent blockchain failure victims was Moller-Maersk, which recently announced the termination of its highly publicized TradeLens offering — a global trade platform built on IBM blockchain technology. 

These failures, however, were totally predictable and, in many cases, would be avoidable if companies more closely observed certain lessons in innovation diffusion.

Lesson 1: Innovation is not monolithic. One of the biggest mistakes companies make is to treat innovation as a monolithic concept. Innovation is anything but monolithic. Unfortunately, business associations, business press and business schools love to create an endless parade of innovation lists and innovation awards that reinforce the idea that all innovation is the same.

Clayton Christensen’s New York Times best-selling book The Innovator’s Dilemma was one of the first major attempts to distinguish innovation types. His work was helpful in starting the conversation, but a better framework for categorizing innovation comes from Rebecca Henderson and Kim Clark, who identified four types of innovation: incremental, modular, architectural and radical.

Related: From Bernie Madoff to Bankman-Fried, Bitcoin maximalists have been validated

While there are innovations that may fit in the modular and architectural category, blockchain is, at its core, disruptive. Given that disruptive technologies replace existing frameworks, interactions and intermediate institutions, the most successful early applications and innovations will come from smaller/startup firms rather than IBM, Maersk or other Fortune 100 companies.

Lesson 2: Complexity is an innovation killer. This is especially true for modular and radical innovation. Everett Rogers noted the inverse relationship between complexity and the willingness and ability to adopt an innovation. This complexity not only relates to the blockchain application itself but also to internal decision-making processes, the level of change required to adopt, and how much new knowledge is needed to implement.

Details of IBM-Maersk’s canceled plan to build a blockchain platform. Source: IBM-Maersk

Experts have outlined the difficulty of implementing projects like TradeLens, as “the technology is complex, requires more computing power and is more expensive to run than existing databases.” Adding to the complexity of the IBM–Maersk blockchain shipment project was the highly complex nature of the two large multinational corporations.

In the last round of major technological innovation — namely, the social media space — it was not the established players that built the tools, technology, platforms, etc., that drove early innovation and adoption. It was startups — organizations where decision-making cycles were short, minimal internal change was required to adapt, and new knowledge was able to be assimilated almost instantaneously.

Given these dynamics, initial successful innovative breakthroughs for blockchain are more likely to be found in simplistic applications developed by much smaller, more entrepreneurial firms that replace or reshape simple processes around how work gets done, products get made or transactions are facilitated between two parties.

Lesson 3: Different innovation types require different levels of risk tolerance. One of the key differentiators between the four types of innovation is the risk tolerance required to be an effective innovator. The risk-tolerance level for incremental innovation is low, while radical innovation requires a significantly higher risk tolerance.

An important note is that tolerance here is not just looking at the risk or probability that a project might fail. Assessing innovation risk also looks at the likelihood of catastrophic failure for the entire organization — meaning if the adoption or innovation fails, the entire organization risks failing, not just the innovation.

Billy Beane’s application of sabermetrics to the roster construction and management of the Oakland Athletics in the early 2000s is a well-known example of a modular innovation application. This innovation posed a high personal and organizational risk that no other Major League team was willing to take.

Related: The Federal Reserve’s pursuit of a ‘reverse wealth effect’ is undermining crypto

Failure for the A’s would not have been catastrophic (i.e., the team ceasing to be a Major League franchise). However, the costs would have been extremely high. Beane would have lost his job (as well as many others). A dissatisfied fan base would have punished the team by staying home and ceasing apparel purchases, leading to a massive drop in revenue. And the A’s would have become a glorified Minor League team.

Blockchain, as a radical innovation, requires an even higher level of risk tolerance for innovation and adoption — a willingness to risk it all. Companies that tinker around the edges (incremental or architectural innovation) with a project, where if innovation fails, they can just walk away, are much more likely to experience blockchain failures in this early stage of innovation.

Blockchain and other decentralized technologies hold great promise for much-needed change away from the current trend toward more concentrated modes of production and power. The ultimate task is to align our time, efforts and resources with the innovation lessons provided here to give this blockchain technological revolution the best shot to succeed.

Lyall Swim is the chief innovation officer for Atlas Network. He holds a doctorate in education with an emphasis in organizational leadership from Pepperdine University. He has a bachelor’s degree in communications and an MBA from Brigham Young University.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Uzbekistan Collects Over $300,000 From Crypto Sector – Taxes Bitcoin News

Uzbekistan Collects Over $300,000 From Crypto Sector – Taxes Bitcoin News

While operations with digital assets are not taxed in Uzbekistan, the government is receiving a growing amount of revenues from the industry. The increase in budget receipts has been attributed to the licensing regime and the introduction of fees for crypto companies.

Crypto Exchange in Uzbekistan Pays Over $10,000 a Month to the State Coffer

Licensed crypto firms have paid 3.5 billion Uzbekistani som (more than $310,000) to the budget in the course of 2022, Uzbekistan’s regulatory authority responsible for the oversight in the sector revealed during a press conference, quoted by the crypto news outlet Forklog.

At the briefing, the National Agency of Perspective Projects (NAPP), a body subordinated to the president, announced the results of its activities. Officials said that the government has been able to collect the money thanks to the revamped licensing system and the imposing of fees for businesses working with digital assets.

Five crypto platforms are currently authorized to legally operate in the country and they have paid the said total. These are the state-controlled exchange Uznex and four smaller exchanges – Crypto Trade NET, Crypto Market, Crypto Express, and Coinpay.

Since October, crypto service providers in Uzbekistan are required to pay fixed monthly fees for their activities. These range between over $10,000 for cryptocurrency exchanges like Uznex and around $500 for the smaller trading platforms, also referred to as “crypto shops.”

At the same time, operations of individuals and organizations related to crypto transactions are subject to taxation in the Central Asian nation, even when carried out by non-residents and companies based in other jurisdictions, according to the current law.

However, the government in Tashkent has previously warned Uzbekistan’s citizens to avoid unlicensed exchange services. In August 2022, it tried to restrict access to online trading sites based outside the country. Uzbekistanis were allowed to buy and sell coins on domestic exchanges in November, 2021.

The NAPP also noted that 80% of the fees paid by the licensed crypto firms go to the state budget, while the remaining 20% are transferred to its own accounts. In late June, 2022, the agency presented registration requirements for miners who are relieved from taxation as well. Cryptocurrencies, mining and trading were regulated with a presidential decree issued two months earlier.

Tags in this story
Crypto, crypto companies, crypto exchange, crypto exchanger, crypto firms, Cryptocurrencies, Cryptocurrency, Exchange, exchangers, FEE, Fees, License, licensees, licensing, regulator, som, Tax, Taxation, Taxes, Uzbekistan, Uzbekistani, Uzbekistani som

Do you think Uzbekistan will start taxing crypto companies in the future? Share your expectations in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.




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Experts Predict Future Regulation of Crypto Exchanges by 2025, With Split Opinion on Similarity to Traditional Finance – Regulation Bitcoin News

Experts Predict Future Regulation of Crypto Exchanges by 2025, With Split Opinion on Similarity to Traditional Finance – Regulation Bitcoin News

Following finder.com’s reports on bitcoin and ethereum predictions, the product comparison site polled 56 specialists in the fintech and cryptocurrency industry to gauge their thoughts on future regulation of crypto exchanges. The experts predict that virtual currency trading platforms will be regulated, but not until 2025 or 2030. When regulation does occur, 76% of Finder’s panelists expect the trading platforms to be treated similarly to traditional financial institutions.

87% of Finder’s Fintech and Crypto Experts Believe Exchanges Must Disclose Proof-of-Reserves Audits

A recently published report from finder.com, which polled 56 experts in the fintech and cryptocurrency industry, shows that 87% believe exchanges will need to disclose proof-of-reserves audits and liability records. The specialists reveal that standard regulations for crypto exchanges will not occur until 2025 or 2030.

While 76% of the panelists believe crypto trading platforms will be regulated similarly to traditional finance platforms, 17% expect this to happen by 2024. 22% predict regulation by 2025, and 35% expect it to take place in 2030.

“Any exchanges that remain need to get with the program, proof of reserves and liabilities should be prerequisites and non-negotiable for people selecting where they trade,” Swyftx’s head of strategy Tommy Honan said.

Honan believes, alongside 87% of the panelists, that exchanges need to provide a record of liabilities and proof-of-reserves. “Exchanges also need to continue to upskill their users on self-custody and lean into new and innovative products that support it,” Honan added.

Split Views on Crypto Regulation: 15% Buck Tradition, Half Believe Industry Will Weather the Storm

About 15% of Finder’s panel, including Cryptoconsultz CEO Nicole DeCicco, do not believe crypto exchanges should be regulated similarly to traditional financial institutions. However, DeCicco predicts that standard regulations will be enforced throughout the crypto industry by 2024.

“It’s imperative though we warn investors about the risks involved,” DeCicco said in a statement. “At Cryptoconsultz we teach our clients to think of cold storage and self-custody solutions as their bank account and centralized exchanges similar to the money one might pull out of an ATM and walk around with in their pocket,” the executive added.

Approximately 42% of Finder’s experts believe that the number of customers for crypto exchanges will continue to decline following several bankruptcies in the industry, including the FTX collapse. 84% of the panelists emphasized that the cryptocurrency industry will survive the FTX implosion that occurred in November 2022.

42.31% predict that more crypto trading platforms will go bankrupt due to customer losses, with more than 15% thinking this will happen in five years and 26.92% within a year. However, exactly half of Finder’s panelists believe that no such event will occur.

You can check out Finder’s crypto exchange regulation prediction report in its entirety here.

Tags in this story
bank account, bankruptcies, Centralized Exchanges, Cold Storage, crypto exchanges, Cryptoconsultz, Cryptocurrency, customer decline, customer losses, Exchanges, experts, Finder’s Experts, Finder’s Report, Fintech, FTX collapse, future prediction, industry survival, investor warnings, liability records, Nicole DeCicco, number of customers, panelists, PoR, Proof of Reserves, Regulation, Self-custody, standard regulations, Swyftx, Tommy Honan, Trading Platforms, Traditional Finance

What do you think about the predictions of Finder’s experts on the future of crypto exchanges? Do you agree or disagree with their views on regulation and the potential impact on the industry? Share your thoughts in the comments below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.




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Sam Bankman-Fried's holding company files for bankruptcy

Sam Bankman-Fried’s holding company files for bankruptcy

Emergent Fidelity Technologies, a Sam Bankman-Fried holding company based in Antigua and Barbuda, has filed for bankruptcy protection.

According to court records filed on Feb. 3, Emergent Fidelity Technologies submitted a voluntary petition to declare bankruptcy under a Chapter 11 filing in United States Bankruptcy Court for the District of Delaware. The company was already the target of a lawsuit filed by crypto lending firm BlockFi in November regarding the status of roughly 55 million shares of Robinhood.

The Robinhood shares — worth more than $590 million at the time of publication — have been a point of contention among parties including BlockFi, FTX creditor Yonathan Ben Shimon, and Bankman-Fried himself. The Justice Department announced on Jan. 6 it had seized the shares as well as roughly $20 million in U.S. dollars as part of the case against FTX and its executives.

Emergent Fidelity Technologies claimed ownership of the shares and the $20 million as its “only known assets,” previously held by brokerage firm Marex Capital Markets before the DOJ seizure. According to a declaration by Angela Barkhouse, one of the Joint Provisional Liquidators in the case, Emergent Fidelity Technologies filed for Chapter 11 in the same court as FTX to pursue a “form of joint administration” between the two bankruptcies.

“The [Joint Provisional Liquidators’] duties are to the Debtor’s creditors, whoever those creditors may be,” said Barkhouse. “Given the many parties claiming to be creditors or outright owners of the [Robinhood shares] in proceedings in the U.S., the JPLs believe that chapter 11 protection is the only practical way to empower the Debtor to defend itself, the Assets, and its creditors’ interests in the U.S.”

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According to Barkhouse, Bankman-Fried owns 90% of the firm, and FTX co-founder Gary Wang owns the remaining 10%. Bankman-Fried’s criminal trial is scheduled to begin in October, while Wang has already pled guilty to fraud charges.