No matter how much technology has changed our day to day lives, both at home and at work, what remains essential to running a successful business is customers—how you treat them, how they feel about your product or service, and whether they share those good (or bad) feelings.

In decades past, interacting with customers and helping to manage their problems and expectations was something that was left mostly to humans, which meant any good or bad things could also be subject to staffing or competing deadlines. But technology has helped with that in a unique way: by automating much of the customer journey through artificial intelligence, or AI.

Customers may not realize it, but a part of the process with many companies is already managed by AI. It’s helping with predictive needs, to name just one area. And its use will only continue to grow. This graphic explains what it’s doing and how business will continue to use AI.

Click To Enlarge

Via Salesforce

On April 6, 2016, the Department of Labor released a 1000-page document known as the Fiduciary Duty rule (DOL fiduciary) requiring financial advisors to always act in the best interest of the client, expanding the meaning of “investment advice fiduciary” originally defined under the Employee Retirement Income Security Act of 1974 to also include retirement investment advice. Asset managers have since faced a new set of intricate regulations to comply with, tight timelines to meet, and structural/operational changes to enact within their own firms.

From the very beginning, the fiduciary rule had the weight of inevitability and the social pressure of protecting investors’ morality behind it. Assets under management in America alone nears $40 trillion, most of which is managed by the US’s largest 50 banks.

While the industry foresaw change with the DOL fiduciary rule, my marketing team saw opportunity. What if we could prepare our subject matter experts to react quickly, time our content with the news cycle, and launch an advertising campaign that could help demystify the rule for our clients and potential prospects? Better yet, what if we could be the leading consulting firm on the rule and how to implement it? We immediately got to work.

Program execution

• Web presence: Ahead of the game In advance of the April 6th announcement, we developed a classic microsite, and built it out with thought leadership, media placements, and videos, all of which were keyword-optimized. Front-and-center, we placed a jargon-free description of what the DOL Fiduciary Duty Rule really meant and how we understood its possible effects. Also quickly available to visitors was a highlighted drop-down list describing various services related to DOL Fiduciary rule and how we could help. Throughout the first added our DOL-focused publications, webcasts and videos, as well as other related content.
• Thought leadership: A deep-dive and first-to-surface We are never surprised by a regulation. At the time of the announcement, marketing was prepared (at 6 a.m.!) to work alongside a five-member client services team to tear apart the 1,000 page ruling; we published a paper within 48 hours. We also scheduled interviews beginning at 11 a.m. that day with two thought leaders who were media-trained.
• Media coverage: And then some In advance, and in anticipation of the announcement, two subject area experts had been previously identified and were prepped for press interviews. We arranged for interviews on the day of the DOL announcement with The Wall Street Journal, Financial Times, Reuters, Reuters TV, Bloomberg, CNBC and CNBC Closing Bell.
• Webcast(s): Ramping up and following up In February 2016, we held a webcast to present industry perspectives and impacts, discussing four major impact areas: business models, operating models, technology and data, and compliance programs. By polling our webcast participants, we also confirmed concerns that we assumed were top-of-mind for our clients. Once the rule was announced, we held a follow-up webcast within two weeks. The April webcast reviewed the regulation, compared the proposed rule to the final, discussed industry impacts and reactions, next steps and FAQs.

Over the course of 14 months, we helped PwC grow a dedicated DOL team of nearly 200 employees serving 25 clients, 120 projects, and of course we booked business. Best of all we got the call every marketer dreams of from the project team to “please turn your marketing off we have too much demand!”

In much of industry, the idea of “Digital Transformation” has taken root. At the core of this process is the need to replace antiquated and “slow” processes, products, and service offerings with agile, automated, and “smart” processes, products, and service offerings. In addition, digital transformation is about the inclusion of all potentially interested parties (employees, partners, customers, influencers) in the creation and execution of new lines of business and innovation.

While the concept of Digital Transformation has been around in the entire Internet Age, necessary elements have indeed been missing. First, not always were the underlying technologies ready for “prime-time.” What works in manicured and controlled environments doesn’t always work at scale or in fast-moving, instant-decision environments. Second, the culture of transformation has not always been present with many forces internally and externally being focused on the power of the status quo. Third, Digital Transformation requires the foregrounding of certain parts of the organization at the perceived expense of others parts. With these constraints, the prevailing scenario for transformation has been characterized by the gap between intention and execution.

Of the organizational barriers that impede the progress for Digital Transformation, the schism between IT and Business is perhaps the most profound. Business users in organizations are governed by entirely different imperatives than IT teams are. While business changes, roles and cultures do not always keep up with the dynamism of business models and the directives that come out of the C-suite.

Business users are defined by the “Power of NOW!” while IT is chartered with issues of security, governance, compliance (and at times control) that if applied in the canonical methodology, are antagonistic to the time-based agility that has come to define modern business.

This happens even when IT teams and Business teams are friendly and believe in the same overall set of goals. This is the result of technology configurations that were not flexible or adaptive, two defining characteristics of true Digital Transformation.

When IT and Business are in Harmony, agility is possible in a way that does not run afoul of the core mandates of IT. When IT and Business are in structural harmony, all of the manic energies of the organization can be trained on the same end goal.

Running IT like a Business and running Business in an IT-native world are keys to Digital Transformation. At stake here is the ability of organizations to navigate the shoals of modernity and complexity, in which every expanding pools of data and ever-growing avenues of expansion characterize business.

As such, Digital Transformation is the ultimate expression of IT-Business Harmony and IT-Business Harmony is the starting point of real Digital Transformation.

Guest post by:
Romi Mahajan, KKM Group
Srini Venugopal, Epicor Software

Data is the watchword in organizations large and small. In fact, how an organization frames data is the single most important determination of future success or failure. As some put it, Data is the new “oil,” the commodity of most value in the modern age.

Many business leaders understand this intuitively. As business-users in the organization are forced to make larger number of critical decisions with larger “payloads” on a more frequent basis, the idea that these decisions must be data-driven is at the fore. Gut instinct is fine but gut instinct inflected with timely, contextual, and comprehensive knowledge of relevant data is a winning strategy.

While the idea of being “data-driven” is fundamental and powerful, most organizations fall short. Intentions are necessary but not sufficient. For most organizations, the technology and operational infrastructure that defines their “data” is predicated on notions that made sense in an earlier era in which there were simply less sources of data and less change to existing sources. The “size” of the data question makes for a complexity that is not pre-defined and therefore the solution to the data problem has to be flexible and adaptive. Data infrastructure maturity is necessary in today’s business environment and has 4 basic qualities: Governance, Security, Agility, and Automation.

Without these 4 qualifiers, 2 core facets of the solution are absent- democratizing access to data and liberating IT from the backlog and fatigue associated with constantly-changing business needs. Business-users work in the “NOW” timeframe while IT has its own rhythms. In order to truly be data-driven in a way that scales, organizations must empower business-users while simultaneously freeing IT to innovate. While there are cultural hurdles to this state, the biggest blockers are infrastructural.

Until very recently, good enough was, alas, good enough. The internecine conflict between Business and IT was considered just a fact of life, a “cost of doing business.” With automation technology, business users’ data needs can be managed on the fly and without the need for reactive hand-coding, conferring agility to the business teams and handing time back to the IT teams to innovate and more resources from lower value tasks to higher value tasks. This structural win-win is available today and harmonizes the needs of Business and IT.

If data is the new oil then an infrastructure to capitalize on it is necessary- an infrastructure that is mature and “Hub”-like. While all organizations are different, they are similar in their data needs and the data platforms that win will accommodate diversity and change inherently.

Guest post by:
Romi Mahajan
Chief Commercial Officer, TimeXtender

It’s no secret that the rise of computer apps is transforming both the marketing and customer experience. One of the most intriguing developments in app development is in the area of chatbots that not only can send communications to customers but also respond “intelligently” to conversations.

Recently, I had the pleasure of speaking with Christian Brucculeri, the CEO at mobile messaging company Snaps, a developer of chatbots and other marketing technology products for companies. Brucculeri explained some of the background of how chatbots came to be, as well as their usefulness as a marketing tool.

“Typically chatbots represent a conversational interface between a consumer and a machine,” Brucculeri said. “They’re applications that have linguistic structure. It might allow you to ask a question and try to find an answer. They enable one-to-one communication between brands and consumers at scale, and they leverage technology in order to do that.”

Certainly chatbots have close technological relatives we’re already used to, like Apple’s Siri, Google Home and Amazon Alexa. You might call automated phone systems—the kind people love to hate—as a chatbot’s second cousin. But so far these are far from able to use artificial intelligence to understand language, and respond appropriately.

And while the technology can be used for entertainment purposes—think Snapchat or Facebook Messenger, for example—its greatest impact is potentially coming in marketing, Brucculeri told me.

Creating conversations, not messaging

“We work with brands across several industry verticals, including tourism, hospitality, entertainment, media, CPG, retail, quick-serve restaurants and more,” he said. “For example one apparel brand delivers a 30-day workout experience using basic Facebook Messenger. For some hospitality brands, they’re trying to manage their ongoing relationship with consumers and help them manage their rewards accounts.”

In many ways, this sounds similar to most apps we’re used to. So, what makes chatbots a different kind of app?

“Where chatbots get really interesting is in personalizing media and responses,” Brucculeri suggested. “Here, you can really do one-to-one marketing at scale.” Brucculeri said Snaps has developed such chatbots for sports teams, where a fan might receive notices of games, results and highlight videos. In the stadium, a chatbot might help a fan find restrooms and snack counters, based on physical location.

Brucculeri said Snaps is developing chatbots that function on a variety of existing platforms. Facebook Messenger, which launched a chatbot in 2016, may be most appropriate in accessing consumers, he said, but there’s also Kik, WeChat, Slack and many others, each of which may be experience-specific.

Chatbots also can be connected to customer relationship management platforms, such as Salesforce, to deliver notifications at the right time to the right person, Brucculeri said.

“We do CRM integration and user matching to log in and do account management,” he said. The result might enable companies to find new customers, engage with existing customers in a fun way, getting customers to take some form of action, or managing the relationship in other ways.

Improving the customer experience

Customer service, driven by artificial intelligence, also can be aided powerfully by such matching, Brucculeri said. Instead of hitting a bunch of digits to get routed to the right person, the artificial intelligence capabilities of chatbots—the two-way ability to listen and respond appropriately—can improve this experience immensely.

“A chatbot can do this in ways that are more convenient, simple, fast, and better for the customer and probably less expensive for the customer-service function,” he said.

The future of chatbots is an intriguing one, as technology evolves and as the bots themselves get “smarter” and more humanlike in their analyses and responses.

“We’re long on the idea that conversational interfaces will continue to evolve. Whether consumers are texting with or talking to them, automated systems like bots are almost certainly going to have a role in our future lives” Brucculeri said. “We see conversational media becoming the next wave and being potentially bigger than application media itself. I think in three years, people might be talking to bots more than they’re typing in bots.

“But the main idea remains the same,” he said. “Might I one day launch a chatbot on Alexa, Amazon’s voice control system? How about getting some type of visual element to go along with that, such as HoloLens, Microsoft’s holographic headset? Can these things become really rich experiences, far better than just staring at our phones and typing?

“I think some of the form factors are going to change, but I think the fundamental elements are going to be the same, which is conversational commerce. People increasingly will be talking to their computers, and they’re going to get a lot done by doing it.”

Agile marketing increasingly is being recognized as a powerful key to content effectiveness. Buyer interest and trends can change in the blink of an eye, in particular as social and other media drive the news. Breaking news creates windows of opportunities, but only if marketers are quick and smart enough to take advantage of them.

On topic of agile marketing is what some have called newsjacking, which means responding quickly to news items of the day. More than just quickness for its own sake, the increased focus on what customers are interested in greatly improves content relevance.

And did I forget to say it can produce stupendous ROI results? It can produce stupendous ROI results!

I’m proud to say my latest efforts in this area on behalf of PwC have been recognized by ITSMA with its highest honor, the diamond award in its 2016 Marketing Excellence Awards global competition. Below, I’ll explain some of the elements of the winning program.

The quick or the dead

Keeping up to the minute with who’s buying what, matched with what you’re selling, and how you’re connecting and delivering for your customers is a dynamic and fluid challenge. As Financial Services and U.S. Brexit Marketing Leader at PwC here in New York I have a particular interest in rapid-response content creation, in particular how it can benefit our customers in their day-to-day decision making.

But professional service firms often impose inherent drags on marketing response. Internal reviews and multiple approvals have to be adhered to, and design and layout of messages, and distribution via Web, e-mail and social media, consume big chunks time.

That’s a shame, because firms like PwC are well-positioned to offer keen, insightful analysis of breaking financial news—analysis that’s effective only if it’s quick out the door. Think of it as a client calling a very knowledgeable friend to get “their take” on the news. Marketing best practices demand it, but more importantly so do current and prospective clients who have to make rapid decisions based on sometimes complex new regulations often rendered in government speak.

Knowing how the content game is played

We already distribute thoughtful briefs on new regulations, as well as deeper analysis. What we needed was a quick-response campaign platform tied to newsworthy events that we already knew were on the horizon, and that our customers also anticipated.

Consider the U.K.’s June 2016 referendum to eventually leave the European Union. It seemed that Brexit follow-up was always catching people flat-footed, with how-come and what-if analysis that was too uncertain and too late.

But the calendar revealed key dates that would produce news and content opportunities. We knew, for example, the Bank of England would hold a policy meeting on a certain day. We knew the particular date that the UK’s GDP numbers would be released, that the Economic and Financial Affairs Council was meeting in Brussels, and more. From these and other events, we were able to prepare preliminary analysis based on expected news, and get it out the door in two days or less—unheard of in most professional services firms.

The key is not responding to events, but rather anticipating them with compelling marketing content your customers want and need. I’ll give you a single example that turned out great for us, and impressed the ITSMA judges.

A combination of hard work and opportunity

• Market trigger: We knew that the U.S. Department of Labor planned to release details of a new trading law on April 6, 2016. It was a complex revision of previous regulations that changed how broker-dealers, investment advisers, insurance agents and consultants are compensated when dealing with investment and retirement accounts. A big yawn? Nope … it was and is of keen interest to an immense financial services community.

• Web presence: In advance, we developed a classic microsite, and built it out with content, news, video and keywords.

• SEM: We launched Google search ads two days prior to the DOL announcement, scheduled to run for two full months. We wanted to own this conversation.

• Scrum prep: We threw together a five-member client services team with the sole task of tearing apart the anticipated 1,000-page DOL ruling to fully understand what was in it.

• Thought leadership: Two PwC subject area experts were identified and prepped for press interviews.

• Media opportunities: In advance, and in anticipation of the announcement, we arranged for interviews on the day of the DOL announcement with The Wall Street Journal, Financial Times, Reuters, Reuters TV, Bloomberg, CNBC and CNBC Closing Bell. (Not bad for a day’s work!)

And the payoff? Our keyword buy results were among the strongest ever recorded for any PwC paid-search campaign, with the highest ever click-through rates and the lowest bounce rates. And we booked business in the first week of the campaign.

If all this seems daunting, don’t worry. Pick your spots, develop content in advance and think like the folks who are going to consume it. Agile marketing works; moreover, in many industries it can be the rule breaker that makes for outsized competitive success. So roll up your sleeves and make it happen!

This has been a great series of conversations with cryptocurrency expert Alex Tapscott, and we’re just about done. Alex is founder and CEO of Northwest Passage Ventures and coauthor—with his dad, business theorist Don Tapscott— of the book “The Trust Protocol: How Blockchain Technology Will Change Money, Business and the World.”

In previous conversations, we delved into the issue of security, trust and the structure and solidity of blockchains, bitcoin’s major technical innovation. Here, we discussed a topic near and dear to my heart … regulation. In short, who’s minding the store, and what does government think about cryptocurrency?

“There’s a misconception that’s held by a lot of people that governments are ambivalent and in some cases hostile to cryptocurrency, but that’s simply not true,” Alex said. “Yes, countries like Russia, Iran or Bangladesh are not onboard with digital monies, but in most mature, developed countries, governments are looking at this as a tool and an opportunity, not as a liability.

“The reason is quite straightforward. Consider central banks, which have three important roles in business and the economy—to manage monetary policy like interest rates and money supply; to act as a lender of last resort in the case of crisis or liquidity crunches, putting credit and capital back in the system; and to act as regulator.

“And when it comes to being a regulator, what do you care about the most?” Alex continued. “You care that consumers are being protected, that companies are not violating the law or committing crimes, and perhaps most importantly you care about risk in the system. You want to ensure that risk is not being concentrated in the wrong places where it could eventually lead to a crisis.”

Alex said that a great advantage to a blockchain, from a regulator’s standpoint, is that they can see transactions happening in real time, and can identify pretty easily whether or not money is flowing in ways that might be suspicious, or to places (Iran, China) where money laundering or other nefarious dealings have been known to take place rather often.

“One of the reasons why the global financial crisis happened was that regulators were unaware of how risk was getting concentrated in the hands of different intermediaries,” Alex explained. “A lot of those transactions were done bilaterally, at different parties, where Goldman and Lehman Brothers (for example) might not know how much each of them owed to each other. And often they were using really antiquated technology where the records would be held in Excel spreadsheets or filing cabinets.”

Alex noted that if these transactions had been cleared and were settled on a public ledger like a blockchain, regulators would have had much better visibility and would have been able to react more quickly when things looked like they were getting out of hand. It’s certainly an interesting position.

Another point Alex made—and that regulators should appreciate—is rapidity of response.

“Consider monetary policy,” Alex said. “When you cut interest rates—whether it’s to increase spending or borrowing, or boost investment in equities or consumer confidence … whatever—you’ve got to wait a few months to randomly sample retailers and check in with banks, these types of things, to see how credit books have grown. And that means that your response to things are slow.

“But if you had a digital dollar that was issued on a blockchain, and you cut rates, you’d be able to see in real time all the metadata about how that money was circulating and flowing through the system,” Alex said. “That would give you much better information on whether or not your policy was effective. Many regulators are saying blockchain technology could help them do their job a lot better, and it’s the reason regulators and government officials in many parts of the world are really keen on this technology.”

I want to thank Alex Tapscott for sharing his views about bitcoin, blockchain and the future of digital currency with me, and of course with all you readers. Please feel free to review previous posts in this blog series, about digital currency security, building trust, blockchain details, and reputational issues. And as always, I’d love to here your thoughts.

Your neighbor borrows money from you. When he pays you back, would you prefer a) cash; b) a check; or c) cryptocurrency? While the third option may give you pause, it may only be because digital money is new and hasn’t established the trust you give to the first two. Consider it a branding problem.

Cryptocurrency expert and author Alex Tapscott agrees. Over the course of several blogs, Alex and I have discussed the different forms of digital money, their blockchain platforms that make transactions possible, scalability and—most importantly—trust. The essential question on many people’s minds is, How do you move from greenbacks, which everyone (mostly) has confidence in, to something as “mystical” as bitcoin?

“Here’s the thing,” Alex said. “In 2015, a lot of banks and companies and governments were waking up to the potential of this technology. They loved the idea of frictionless payments, of secure networks, of lower cost, of better speed. But they didn’t like the idea of opening up their companies to anonymous networks of participants.

“The blockchain innovation is the most-important part of the equation,” Alex continued. “Bitcoin is just the incentive mechanism which helps to secure the network. I have spoken to people in the financial services industry, and also big technology firms, who readily acknowledge that if they’re going to build consortium and private blockchains, they’re going to need to reconcile this issue of how to secure transactions.”

Alex mentioned Mt. Gox and Silk Road, two of the more popular scandals impacting digital currency and hurting its reputation badly, and in recent news the Hong Kong bitcoin exchange Bitfinex said it had some $72 million stolen in a serious hack—an amount that has slumped, due to loss of confidence in the currency.

“If I speak to the uninitiated with the subject, and I say ‘bitcoin,’ a lot of times they say, ‘Isn’t that just criminal money that drug dealers and ransomware perpetrators use to commit crimes?’ ” Alex said. “I won’t downplay the fact that there’s a major communications issue around bitcoin. Some of us have wondered if it’s too late to rebrand this whole space to help cleanse it of its troubled past.”

Alex used the analogy of the Internet as the structure of content, in the same sense that blockchain is the structure of digital currency, and how branding can actually facilitate trust.

“With the Internet back in 1994, people hadn’t really arrived on a term for it. Was it the ARPANET? Was it the information superhighway? Was it the network of networks? Eventually we landed on the term ‘Internet,’ which has got a sort of aura of elegance to it that the words like ‘blockchain’ and ‘bitcoin’ do not yet have.”

Alex and his dad, business theorist Don Tapscott, actually did come up with a new term for these vague concepts in their new bestseller, “The Trust Protocol: How Blockchain Technology Will Change Money, Business and the World,” just published by Penguin’s Portfolio imprint.

The new term is the “trust protocol.”

“I’d say that there has never been a system designed where security is more at the heart of it than with blockchain,” Alex told me. “I think that big, open public blockchains are the most secure way to move and store and manage anything of value than anything we’ve ever created. Just look at history: If the NSA, the CIA, JPMorgan, Morgan Stanley, Target, LinkedIn, Twitter and Home Depot can’t secure financial data or data about identity, then no one can. These are companies and governments with enormous resources.

“The problem is that they’re all centralized and they all control data,” Alex said. “If you could take that and decentralize it across a network, it would make it much harder to hack. It doesn’t mean it’s impossible to hack, but it’s significantly harder to hack a blockchain than it is a conventional database because you don’t just have to hack one source, you have to hack millions of different computers in a very short window of time.”

Next time, Alex and I will look at more issues concerning cryptocurrency, and how they might figure in your future—how bitcoin and blockchain can disrupt entire industries. Stay tuned!

Those of you who have been following my recent posts about digital currencies may remember my recent discussion with Alex Tapscott, founder and CEO of Northwest Passage Ventures. He’s the co-author along with his dad, the business theorist Don Tapscott of the best selling book ‘The Trust Protocol: How Blockchain Technology Will Change Money, Business and the World. ” In my last post, we delved a little into the topic of blockchains, those public ledgers that allow digital currencies like bitcoin and others to be sent to others as a form of payment. Here, Alex discusses the different forms that a blockchain can take.

“There are lots of different ways to make a blockchain, with some being public and some private, and a lot of times people don’t really know what that means,” Alex said. “Basically a public blockchain is simply one that is open and permissionless, where anybody can access it regardless of where they are or who they are.

“And typically public blockchains have a native token, a cryptocurrency like bitcoin or in the case of Ethereum—a blockchain-based computing platform that can execute peer-to-peer contracts—a cryptocurrency called ether. Public blockchains have a lot of positive attributes. Because they’re open, they have many different participants, and the more participants there are, the more transaction validity you get.”

Alex acknowledged fears that cryptocurrencies might be hacked, with bitcoins or other currencies actually stolen, but said public blockchains help mitigate the risk.

“The more different people you have, the more distributed it is, which generally speaking reduces the chance of attack, because you have to attack many computers rather than one computer. Also, because you’ve got lots of different computers, there’s more energy and more computing power going into this blockchain, which makes it more secure for the most part.

“Now, there is a flipside to public blockchains which makes it somewhat limited, at least today. Transactions in a public blockchain have to be broadcast across the whole network. This means that the number of transactions that the blockchain can handle is limited because, remember, it does requires a lot of computing power and a lot of energy. So the question of scalability is one that’s still unresolved in public blockchains.”

By contrast, Alex noted that private blockchains are made up of participants who have permissioned access. And with fewer participants a private blockchain can manage a higher transaction volume, he said.

“And it can manage more types of transactions, too, because the rules are set by the participants, and they can change the rules to meet different types of assets. Everyone trusts each other somewhat, and can trust that they each have the necessary computing resources to manage the blockchain. That means it’s unlikely that someone won’t have the ability to participate fully.

“Also, because private blockchains are permissioned, they are, generally speaking, more palatable to regulators, because you could grant permission to different parties in a transaction. One of those parties could be an auditor like PricewaterhouseCoopers, for example. One of them could also be a regulator who could look in to see the metadata and validate what’s happening.”

In future posts, we’ll delve into a lot more about the future of cryptocurrencies, including setting up private blockchains, regulatory aspects, security and more. Watch for it!

I’ve had a great time chatting with cryptocurrency expert Alex Tapscott about the future of digital money, and how it may (probably) change our lives. In my last post with Alex—founder and CEO of Northwest Passage Ventures and coauthor with his dad Don of the book, “The Trust Protocol: How Blockchain Technology Will Change Money, Business and the World”—we discussed the all-important topic of security: Who actually is minding the store on these new types of monetary transactions involving such things as ether, bitcoin and other new digital currencies?

A major issue—perhaps the single most important issue, actually—is trust. There’s plenty of trust in the U.S. dollar, but what about bitcoin and other digital monies? I asked Alex how one establishes trust in this brave new world of digital currency?

“Traditionally we have an intermediary to establish trust, those agencies that verify the identity of parties, perform the processing, and the clearing and maintaining of reliable records. Now, intermediaries—call them banks, credit card issuers, PayPal, you name it—do a pretty good job at that, but they have certain limitations. They’re centralized, they cost money, they capture data, and doing so can slow things down if they’re using old technology.”

Well then, I thought. what’s the new paradigm for digital currency? Who is governing whether bitcoin and other digital monies are “real” or not? Alex discussed a bit about blockchain—bitcoin’s main technical innovation, a public ledger for bitcoin transactions allowing users to connect to the network, and send and verify transactions.

“With blockchain, you’ve got a new platform where trust is not established by a third party, but rather established through maximum collaboration and clever code,” Alex replied. “In a public blockchain (more on this later), you have an incentive mechanism in that users commit computing resources to validate transactions, and then are rewarded for reaching consensus on what is ‘true’ by receiving bitcoin or an Ethereum ether.”

But, I asked Alex, how do you validate a crypto transaction? After all, it’s not script, like the U.S. greenback or the euro.

“Right now, there are a whole bunch of different solutions that have been proposed. A mining method is called a ‘proof of work.’ So in exchange for doing lots of work, you have the chance of getting rewarded. But there are other different ways of validating a blockchain, like ‘proof of stake,’ which basically just confers validating power on whomever owns a share of the network.

“So, if you have 10 banks in the network, and each of them owns 10%, then no transaction is valid unless all 10, or some plurality or majority, can reach consensus,” he said.

Since we were dealing with the all-important topic of trust here, I had to ask: How much effort does it take to break a blockchain and steal money? Trust is the key to the new world of digital currency, right?

“One of the great advantages of the bitcoin blockchain is that validating transactions takes a lot of work, so guess what? Hacking transactions to try to break the blockchain—to steal money—takes an equal or greater amount of work! That’s what makes it really safe. So in order to hack a transaction on the bitcoin blockchain—to, say, send the same $20 twice or sell the same share 10 times because you’re trying to make 10 times the profit—you wouldn’t just have to rewrite one transaction. You’d have to rewrite every transaction, basically back to the beginning of the blockchain, and do so in a really short window.”

Alex told me he feels that proof-of-work blockchains that use a native token like bitcoin, or Ethereum’s ether, are the ones that are likely to succeed. “I think that private blockchains that don’t have that could work, but I don’t think they’ll ever be as secure.”

Next time, we’ll look a little closer at public versus private blockchains, to get a better feel for why Alex thinks one may prevail over the other, at least in the short term. Stay tuned!