Many yellow bikes standing in a line

7 Legal Issues to Consider in the Sharing Economy

The sharing economy is an ecosystem where people exchange goods and services over the internet, free or for pay. Today’s sharing economy offers numerous opportunities for drivers, hosts, and customers, but certain safety and legal concerns still haven’t been resolved. Businesses in the sharing economy, such as Uber and Airbnb, operate within a legal gray area simply because the law is still learning how these companies work. The new economy poses challenges to housing and traffic laws, and it has resulted in labor disputes in many places. Aside from the legalities, there are concerns that companies aren’t doing enough to ensure driver, host, and customer safety. Below are several legal and safety concerns inherent in the sharing economy.

Rights of Ownership

many people standing in line

Selling your spot in a line?

Can someone share something they don’t own? For instance, the app betrspot lets people sell seats and spots in line. Transactions only transfer occupancy and not ownership, but venues may argue that seats and queue spots are non-assignable licenses and can’t be sold. The earliest ventures into the sharing economy—peer-to-peer file sharing systems—were shut down due to copyright violations. Newer ventures involve lesser questions of ownership, but it’s still worthy of consideration.

Consumer Protection Matters

When someone looks for a pet sitter or a handyman service, how do they know they’ll get the services they pay for? There are understandable fears that an unregulated transaction is a risk to consumer safety. For instance, food exchanged on sites such as LeftoverSwap may have been prepared in an unsanitary manner, which endangers the public health. To solve this problem, companies are implementing two-way rating systems for providers and customers. These systems serve as a self-enforcing protective layer for the consumer and engender a sense of community. Additionally, they’re less expensive than conventional enforcement methods, although research raises concerns that participants may practice discrimination at times.

Taxation Troubles

As far as taxes are concerned, is a rideshare provider such as an UberX driver a franchisee or a small business owner? There’s been little agreement on how to tax participants in the sharing economy simply because there are many different business types. In some instances, a participant may not have to pay certain taxes. For example, it’s not clear whether a host must pay an occupancy tax, but they still have to pay federal and state income taxes. In many situations, it is unclear how transactions could or should be taxed.

Insurance Issues

Who is liable?

When someone uses his or her personal vehicle for ridesharing purposes, are they covered by personal insurance, commercial insurance, neither, or both? If an accident happens, a driver must use their personal insurance policy, but the insurer may deny the claim on the grounds that the vehicle was used for commercial purposes. While ridesharing companies usually provide drivers with a commercial policy, these do not cover vehicle damage. For instance, California companies offer $1 million in liability coverage, which is significantly higher than many states’ minimum coverage level for taxicabs. Additionally, a commercial policy may not offer coverage when a ridesharing driver isn’t in service. Various tragic incidents have highlighted the need for better insurance regulations in the sharing economy, and some ridesharing companies have implemented coverage for any driver who’s logged in and ready to take a fare. Generally speaking, the economy presents an opportunity for insurers to come up with novel solutions for businesses and individuals.

Liability Limits

Take this example. A new skier rents equipment from gearcommons only to injure himself in a tumble down the ski slope. Is the company liable? While companies in the sharing economy face many of the same issues encountered by brick-and-mortar corporations, their presence on the digital platform creates entirely new issues. When something goes wrong, an injured person can argue that the service provider negligently screened goods or participants. However, the company can contend they are only an intermediary that serves to connect businesses and people and have no liability. Companies’ claims often reference the Communications Decency Act, which protects online content providers from content-related liability.

Zoning Problems

If someone lives in a place that’s zoned exclusively for residential dwellings, are they in violation of the law if they rent their condo or apartment in the short term? What about renting a single-family home for a weekend? Today’s zoning codes draw firm lines between different land uses and, depending on the location, do not always make accommodations for flexible uses. Cities’ demographics are rapidly changing, and populations are increasingly becoming single, young, and professional. These shifts have already had an effect on housing availability with the rise of micro-houses. This, combined with concerns over housing affordability and the change from a 9:00-5:00 work day to project or freelance-based jobs means the zoning aspect is in need of a fresh perspective.

Permitting and Licensing

While common sense may dictate that a “pop up” potluck event may not need a business license, one can’t really be sure. Many companies in the sharing economy are by-products of licensed and heavily regulated industries such as restaurants, hotels, and taxi services. It is often unclear whether a sharing model requires the same licenses and permits as a traditional operation.

The Final Word

The modification of traditional laws and legal practices is expected to be an ongoing effort for the foreseeable future. Some countries are further ahead than others in terms of supporting the new economy, which can best be seen as a return to a more primitive and basic way of performing transactions. Because of this, we can anticipate significant difficulties on individual, municipal, state, and federal levels. As this emerging economy grows and develops, the law must change along with it. To remain in compliance, participants should keep up to date with developments and protect themselves from unfair legal rulings. By considering the factors listed above, a buyer or seller in the share-based economy can get the services they need while staying on the right side of the law.

methods of company valuation

Methods of company valuation

Business valuation allows you to establish what your venture is worth. The process involves a number of key steps aimed at reaching an accurate valuation. Some of the key steps include adjusting financial statements, selecting appropriate methods of company valuation and applying the chosen techniques. Before gathering the relevant information, you need to determine reasons for the valuation.

Methods of company valuation

1. Asset Valuation

This method entails the valuation of your firm’s tangible and intangible assets. It places emphasis on property that produces cash flow. The value of the assets is determined by the market or book value minus the company’s total liabilities.

Some of the items considered in the valuation include real estate, equipment, patents, inventory, trademarks and more. The approach offers some degree of flexibility when it comes to the inclusion of assets and the determination of their value.

Asset valuation is usually conducted before selling or purchasing an asset. You can also perform the valuation prior to taking out insurance for an asset. The approach can be based on various factors, including transaction value, cash flow or comparable valuation metrics.

The value of your company may be greater than the value of recorded assets. Records may not incorporate proprietary solutions and internally developed products. Intangible assets can be difficult to valuate and they may come in the form of special services and products that help the firm to stand out.

2. Historical Earnings Valuation

The current value of your business is determined by its ability to capitalize earnings or cash flow and liquidate debts. The value of the business takes a knock when revenue is low. These factors can be used to determine the firm’s historical earnings valuation. In addition the entire valuation process can be regarded as an economic analysis exercise. The key inputs for the exercise come from your firm’s financial information.

To valuate historical earnings, you need the balance sheet and income statement. Incorporating business information covering between three and five years provides a practical way to create a more comprehensive view. However, you have to recast or adjust historical financial statements. This is aimed at establishing a link between income, operating expenses and the required business assets.

3. Discount Cash Flow Valuation

This valuation method provides an accurate assessment of your business’ potential future earnings. You use it to determine the venture’s attractiveness as an investment opportunity. The approach achieves the objective by discounting future net cash flow into present value estimates. Investors will find the opportunity attractive when the value of discount cash flow valuation is greater than the cost of the investment.

Several variations are applicable when assigning values to the discount rate and cash flows. The process involves performing complex calculations with the aim to establish the returns an investor would gain. You adjust the returns for the time value of funds, which guides by the assumption that money is worth more today than tomorrow. On the other hand, you assess the future value of investments using WACC as the discount rate.

4. Future Maintainable Earnings Valuation

The Future Maintainable Earnings (FME) methodology is a simplified version of the discounted cash flow. You can employ the FME when expecting the profits to remain stable for the foreseeable future. The method involves the evaluation of expenses, profits and sales covering at least the past three years. The result enables you to perform accurate forecasts and determine the value of your business today.

Earnings-based valuations require careful considerations of various key factors. These include the separation of assessments involving surplus or unrelated liabilities and assets. You should determine the capitalization rate, which matches an investor’s preferred rate of return. In addition, it should reflect future growth possibilities. The earnings estimates should cover historical and forecast operating results.

5. Relative Valuation

A relative valuation model provides a practical way to compare your company’s financial value against similar businesses. When you make comparisons based on business assets, the method helps you determine a reasonable asking price. The approach is an alternative to the absolute model, which establishes intrinsic value based future cash flow projections discounted to their present value.

Relative valuation achieves the objective using benchmarks and multiples. Identifying an average makes it easier to choose a benchmark. The average also enables you to confirm relative value.

Some of the relative valuation ratios used in the process include enterprise value, price to free cash flow, price-to-sales for retail, operating margin and price to cash flow for real estate. When it comes to methods of company valuation, the price-to-earnings (P/E) ratio is one of the most popular multiples. It entails a simple calculation. You simply divide the stock price by earnings per share.

When your firm has high price-to-earnings (P/E) ratio, this means it is trading more profitably than other companies in its sector. In contrast, people regard a firm with a low P/E as undervalued. You can implement this approach on any multiples with the aim to determine an entity’s relative market value.

Blockchain

What is Blockchain and How Will It Change the Global Economy?

Blockchain is the new buzzword among bankers in the know. For those who are still new to the concept, this article will help explain how the technology works and how it is likely to impact the future of banking. Read on to find out more.

What is Blockchain?

A Blockchain is an unchangeable, secure, open ledger system. Unlike a conventional bank, everyone on the ledger is able to view the chain’s transactions across its entire lifespan. It is essentially a database that is copied and shared across all of its main users.

When using a Blockchain system, each monetary transaction is represented as one “block” online. This block is then shared using the web with all relevant parties via a closed network. Everyone in the network then approves the transaction, at which point the block is added to the chain and the money is transferred from point A to point B with less hassle.

Although it was initially created to record Bitcoin and other cryptocurrency transactions, the technology has begun to catch on in a variety of other contexts as well. It is moving in the right direction to become more widely adopted by mainstream society in the near future.

What are the Advantages?

Allowing all users access to the centralized database comes with a variety of advantages. The most obvious of these is that everyone has access to the exact same records, which removes the need for reconciliations. It also offers a long-term transparent record for future use.

Distributed ledger technologies can also significantly reduce the amount of time required to settle transactions. Once all of the system’s initial flaws are addressed, it will also add a good deal of security to transactions. As the technology develops, it could result in revolutionary new business models as well.

What are the Flaws?

Blockchain technology is still in its infancy. In order to be universally adopted, the technology will have to be perfect to remove any possibility of external editing.

What Does the Future Look Like?

BlockchainIt is very likely that banks and other financial firms will be the first entities to adopt Blockchain technology. Currently, nine percent of financial services firms are already investing in related technologies. It is predicted that 36% of those not yet actively engaged in investing will be within the next three years.

According to the IDC, by 2020 $45 million will be spent by financial institutions on enabling Blockchain technologies. By the same year, 20% of global trade finance will likely incorporate distributed ledger technology. Financial institutions are not the only businesses that stand to gain from the use of distributed ledger technologies, though.

The PwC recently found that 11 percent of leisure and hospitality companies have already begun to invest in associated technologies. They are joined by 12% of healthcare companies, 7% of energy and mining companies, and 6% of automotive companies. Ultimately, the possibilities are endless.

New Regulations

Because the technology is so new, most governments haven’t yet established set rules to govern cryptocurrency. This allows startups to use Blockchain technology in innovative new ways. However, it also makes more risk-averse businesses less likely to begin implementing their use until more regulations are put into place to mitigate risks.

Some international organizations and national governmental agencies have begun the process of establishing regulations. Japan has already recognized Bitcoin as a legal currency, and various U.S. agencies have begun to establish policies on virtual currency and its use.

Why Invest?

Venture capitalists are already rushing to invest in distributed ledger technologies. Nearly $1.8 billion in investment funding has already entered the market. Forward-thinking investment firms and businesses would do well to consider doing the same.

There are a number of tech companies engaged in improving existing distributed ledger technologies. As they progress in their projects, they will be able to further improve transaction speed and scalability. Those interested in getting in on the ground floor would be well-advised to look into investing soon.

Skyrocketing Demand

The future of cryptocurrency is looking promising. There are few universities that offer relevant courses through their computer science programs, yet the need for developers continues to grow. Experienced engineers are currently commanding salaries of about $250,000 per year, and these numbers are likely to increase to meet rising demands.

The impact that cryptocurrency and distributed ledger technologies are likely to have on emerging markets is almost certain to be particularly stunning. Across the world, developing economies could stand to gain quite a bit from Bitcoin and other similar technologies. The global economy is likely to experience significant changes as a result.

A Few Parting Words

The need for skilled developers and investment capital is predicted to grow exponentially in coming years. Forward-thinking companies interested in investing in Blockchain technologies stand to gain quite a bit as they continue to impact the modern global economy. Find out more about fintech, cryptocurrency, and distributed ledger technologies online today to discover why.

social purpose business

Understanding a Social Purpose Business and Its Place in a Community

Employees are changing. They no longer wish to simply earn a paycheck. They want to change the world while doing so. For this reason, many people now opt to work for a Social Purpose Enterprise or Social Purpose Business, but what exactly is this?

Definition of a Social Purpose Business

What is a Social Purpose Business? This type of business is one in which the organization puts helping others above conventional business goals, such as improving the rate of return and boosting investor value. For example, a business that takes all after-tax profits and donates this money to one or more charitable causes is a Social Purpose Enterprise. Think of Paul Newman and his famous salad dressing. He doesn’t make money off of the sale of the products, choosing to donate them instead.

A Social Purpose Business focuses on an environmental or social mission and remains strategically committed to this mission. Their social purpose is a critical element of their overall business model and, as a result, will reflect on the organization’s commercial activity as well as influencing its capital allocation. This purpose is seen in every aspect of the organization, and the Social Purpose Business emphasizes its commitment to the mission in its marketing efforts.

Pitfalls and Problems

Running a Social Purpose Business may appear simple at first glance, yet nothing is further from the truth. The organization must determine how to make a profit while also working for a good cause. Should they operate as a for-profit business that earns money for a non-profit organization or rely on a non-profit to generate their income? This is one problem that must be tackled early on.

The first type is a Social Enterprise and focuses on finding the right balance between social, environmental and economic priorities. Doing so allows them to create blended value by providing a product or service. This may also be referred to as a business with a double or triple bottom line.

In contrast, the second type of business relies on a non-profit organization for income and you would call them a social purpose enterprise in most circles. A business in this category focuses on their social objective, simply using any monies brought in to achieve the goals they have established with regards to this objective. Revenues are of importance here, but the social goals are considered to be just as important.

Examples

A Habitat for Humanity ReStore is a Social Purpose Business that falls under the first category. The purpose of these retail locations is to generate income to provide homes for those in need. But they do so while maintaining the balance between bringing in the funds to accomplish this and providing a social benefit to the local community. The same is true of Salvation Army thrift stores that you can find in many local communities. Individuals supporting these retail locations find comfort in knowing their money will be going to a good cause.

In contrast, Goodwill stores are a social purpose enterprise. These stores help create jobs for individuals with disabilities, teaching them a valuable trade while providing goods for the community. Although they sell products as other retailers do, the ultimate goal is to assist those in need within the community. The retail locations simply provide them with a way to do so.

Regardless of whether a consumer makes use of a Social Purpose Business or social enterprise when they are obtaining a product or service, doing so helps the community. For this reason, many individuals now opt to support businesses of this type whenever possible. When they do so, everyone in the community wins.

The Arrival of Automation: Will a Robot Take Your Job?

The Arrival of Automation: Will a Robot Take Your Job?

The Arrival of Automation: Will a Robot Take Your Job?Job automation has arrived and it’s already saving manufacturing businesses a good deal of money. But with tech masterminds like Mark Zuckerberg and Elon Musk celebrating the rapid rise of artificial intelligence and automated labor, there’s reason for some workers to be worried about their jobs.

How Artificial Intelligence and Robots Save Money and Put Jobs in Jeopardy

How Artificial Intelligence and Robots Save Money

Human workers have a lot of needs. Sick days, paid holidays, minimum wage, government-mandated lunch breaks and other hallmarks of a humane employment situation can attract talented workers. But these perks aren’t necessarily good for the bottom line, especially when it comes to menial jobs with high turnover. Robot workers, on the other hand, don’t really need much other than some routine maintenance and the occasional big fix for an equipment malfunction or software bug.

It’s no surprise, then, that some businesses are bringing in robots to take the place of their low-level employees. With high rates of productivity and no need to worry about everyday HR concerns like salary and performance reviews, robots are proving a worthwhile investment. It’s an attractive prospect that has many business leaders wondering how they can replace some of their human laborers with computers, machines, and robotics that operate autonomously and perform the same work for less than a human employee.

As it stands now, we’re still in the early phases of the predicted robopocalypse of job automation, but if recent innovations are any indication, the robot job takeover could happen sooner rather than later. In particular, open-source artificial intelligence (AI) efforts such as Elon Musk’s OpenAI make the source code for AI programs available to anyone who wants to use it. This could make it much more efficient for developers to write code for computerized bots and other artificial intelligence, even at smaller companies and startups.

Which Jobs are at Risk?

Which Jobs are at Risk?

This all means that skilled and unskilled labor jobs, particularly those focused on tasks that involve repetitive gestures and the creation of identical items in an assembly-line fashion are at high-risk for robot replacement. Many laborers, especially those in automotive manufacturing, are already seeing large-scale job loss as manufacturing bots move onto the factory floor. Construction may be next as robots prove their worth in manufacturing and, in March 2017, the CEO of Taco Bell and KFC’s parent company indicated that he sees a big future for automated food prep in the fast food industry.

Even some menial office jobs, particularly those fulfilled by receptionists and assistants, are considered prime targets for automation. Paralegals, whose jobs are largely based on fact-finding, could also see themselves made obsolete by the right artificial intelligence (AI) program on their lawyer boss’ computer. But some higher-level jobs may also be at risk. The senior VP of digital marketing could feel the squeeze when marketing automation makes the human involvement in everything from social media posts to email blasts all but unnecessary. A manager may be needed to monitor feeds and other such oversight tasks, but the menial labor will likely be taken over by a specially coded computer program. And as more and more jobs get taken over by robots, recruiters, temp agency workers, HR professionals and others who deal with the human side of labor may also feel the squeeze.

However, there are plenty of jobs that aren’t considered to be vulnerable to job automation. For example, we aren’t at the point of letting the robots program or design themselves, so anyone who wants a secure career future may want to start learning how to program AI and engineer robotic machines. It’s highly likely that robots will be used to service and repair other robots, though, which means that a displaced factory worker who hopes to a robot mechanic isn’t exactly setting a realistic long-term career trajectory.

History and the Robot Uprising

History and the Robot Uprising

So will a robot take your job? If you’re a low-level worker in fast food, automotive manufacturing, bookkeeping, financial analysis or other industries in which menial, repetitive tasks are the name of the game, you have good reason to be worried. However, that doesn’t necessarily spell a future of widespread poverty. After all, if a significant percentage of wage earners are completely displaced by automation, the economic impact could do immense financial damage to the companies investing in robot workers in the first place. If no one can afford to buy cars, what’s the point of having robots build them in the first place? Job automation allows for high levels of productivity, but that productivity isn’t worth the investment if it isn’t actually driving revenue gains.

There’s also a question of the human touch. Job roles such as bank teller, financial advisor, and even movie star are said to be on the chopping block, but nuance and emotional awareness are notoriously difficult tasks for AI to master. Anyone who’s become frustrated by Alexa or Siri’s inability to understand pronunciation subtleties knows this firsthand. AI will likely get better at human-style interaction with time, but will that really mean that the benefits of social interaction itself become obsolete?

The point is that future jobs will likely look different than the jobs of the present day, but that doesn’t mean there won’t be any jobs for humans. This false assumption dates all the way back in the 16th century when Queen Elizabeth I of England denied a patent to a man who’d invented the automatic knitting machine. The queen was afraid that such a machine would make it impossible for poor women and girls to earn money with their knitting skills. Hundreds of years later, textile factory jobs ended up being a boon to many, especially after the introduction of safe labor practices and fair wage laws.

Even the 20th century had its fair share of unfounded hand wringing over the prospect of new technologies. Economists in the 1960s raised the alarm about computers taking jobs and destroying the economy, but they actually facilitated the creation of dozens of new career paths. Job automation may be the end of work as we know it, but likely not the end of work altogether. So, while robots in the future may take all or part of your job, historical context tells us that there will likely be another opportunity waiting for you in the brave new automated future. What will the future and technology hold? Self-driving cars, 100% person-free labor market with humanoid robots doing everything people once did? Though a robot takeover seems a little farfetched right now, who knows what the future skills of robots will bring.

impact investing

Impact Investing, What It Is and Why People Need to Be Aware of This Option

With the help of Impact Investing, individuals and businesses find they are able to boost their social impact bonds. However, many are still unfamiliar with this investment option and how it will fit into their overall financial portfolio. Furthermore, they aren’t aware of the benefits of impact investing. Now is the time to clear up any misconceptions people have to ensure those who wish to make use of this investment option can do so with ease.

What Is Impact Investing?

People want to know what is impact investing? Impact investing is a technique in which a person puts their money into a business that focuses on generating not only financial returns, but also is concerned about having a positive social and environmental impact on their community or world. Impact Investing dedicates itself to finding those businesses that will provide an attractive financial return alongside a concrete social return.

Who Makes Use of This Investing Technique?

Investors who want to play a role in this environmental or social movement choose to make use of Impact Investing to do so. They purposely allocate their capital to support companies of this type while expecting to obtain a return on the money they invest. They do so with the intent to engender a positive impact on the planet either socially or environmentally. At this time, Impact Investing is limited to a small group of investors, yet they are very socially minded and passionate with regard to their investments.

Others are beginning to take notice of impact investors. This includes groups such as insurance companies, endowments, foundations and pension funds. Individuals are also starting to make use of this option when they go to invest their money as they recognize doing so makes financial sense. They learn they can make money while also doing good in the world.

The Benefits and Drawbacks of Impact Investing

With the help of Impact Investing, businesses and individuals find they are able to accelerate justice, of concern to many. You can see higher environmental, social and governance standards often in companies that impact investors choose to put their money in, and this benefits the investor. A company looking to improve in these areas tends to witness lower capital costs, higher operational efficiency and stock prices. This benefits not only the investor, but the planet as well.

Impact Investing doesn’t tend to provide the same returns as traditional investing, however, when you consider tangible money. Nevertheless, impact investors need to consider the social impact of their investment to truly determine the value of this option. Those who do so tend to feel confident putting their money into a company committed to improving the world.

How Impact Investing Affects Businesses

Businesses must ensure any tax-exempt foundations they run are putting a minimum of five percent of their endowment each year on charitable purposes. By making use of Impact Investing they can ensure their dollars benefit the community and the planet as a whole. Furthermore, they are able to maximize the funds they are investing by choosing this option.

Many investors now emphasize social entrepreneurship when they talk about where they want to put their funds. Impact investing is a major part of this, and more people need to be aware this option is available. Fortunately, more financial advisors are offering this option to their clients and this is expected to continue in the future. People love to obtain a good return on investment when they are providing funds, but they want more now.

Impact investing allows them to obtain both in one investment when they choose wisely. This is one option every person and business should consider now and in the future.

distirbuted ledgers

Distributed Ledgers: Providing Security and Efficiency

Conventionally, accounting information is held centrally and revisions or additions are carried out privately by accounts professionals. But when you are operating across borders and in cyberspace, this kind of system can become a liability, providing cyber-criminals with opportunities and leading to inefficiency.

Distributed ledgers may well be an effective solution to these problems. They take the form of databases which “distributed”. That is, they exist across a network of nodes and are not held in one particular place. Importantly, when the database is changed, every node on the network is notified. So whatever transactions take place, they don’t escape scrutiny.

How do Distributed Ledgers Work, and Why Are They Useful?

distributed ledgers blockchainThe underlying technology in distributed ledgers is based upon the Blockchain, which in turn forms the basis of the cryptocurrency Bitcoin. As with Bitcoin, distributed ledgers combine transparency and security – valuable commodities for all companies.

When a change is made to one node on the distributed ledger, this change is immediately communicated to all other holders in a peer-to-peer network. This means that if a cyber-attacker decided to launch an attack on your transactions system, they would find it much harder to take it down.

Corrupting one dataset or file wouldn’t be sufficient, because all other nodes possess a full record of the network’s transactions. To succeed, cyber-attackers would have to take down every node at once – a tall order.

But security isn’t the only advantage of running distributed ledgers. It’s certainly a major consideration, but other factors are stimulating interest in the technology as well.

Many complex international businesses see distributed ledgers as a way to cut costs and raise the efficiency of their administrative bureaucracy. Just to take one projection, the investment bank Goldman Sachs believes that distributed ledgers could save global businesses $6 billion per year.

These savings would come by reducing the cost of every transaction. With responsibility for managing a firm’s ledger distributed, centralized oversight can be slimmed down, reducing the cost of doing business.

So there are at least two major benefits associated with distributed ledgers. As well as providing security in an increasingly risky business environment, they are seen by many as a route to increased efficiency.

If these projections materialize, or come close to materializing, this is a technology that companies, governments and even (or perhaps especially) charities cannot afford to ignore.

Understanding the Links Between Distributed Ledgers and Cryptocurrency

We mentioned above that distributed ledgers are based upon the Blockchain, which has also formed the basis for Bitcoin – easily the most famous cryptocurrency in the world, but what form does this link take in reality?

Firstly, let’s quickly define what we mean by the “Blockchain“. Basically, this is a database that is distributed across a peer-to-peer network. As the name suggests, the chain is made up of “blocks”, each of which has a specific time stamp. This allows members of the network to know who amended the chain and when.

distributed ledgers dataChanges to the chain are generally not possible on the initiative of a single user. Instead, they have to be accepted by all network nodes in some form. When that happens, the whole chain is transmitted to every node, and the process can begin again.

There’s a good reason why a functional distributed ledger would be based on something like Blockchain.

It’s all to do with trust. In a distributed network like this, every member can see when changes are made. Nobody can fiddle with the data without every member being notified.

Naturally, in some cases, there will be dissent about what constitutes the most accurate version of the ledger. However, distributed ledgers generally work around that problem by specifying in advance what proportion of members need to agree before the chain is approved.

When that capacity to generate trust is allied to efficiency and security against outside interference, it’s easy to see why the technology is causing a stir.

What are the Prospects for Distributed Ledgers Moving Forwards?

At the moment, distributed ledgers are an immature technology. Many of the benefits are hypothetical, rather than real. We don’t yet know how valuable the technology will be for banks, retailers, government departments and aid agencies.

Some doubts have been raised. For instance, trading platforms may not prove practical owing to the demands for data storage about millions of transactions and the speed at which such platforms are updated.

However, there are likely to be many suitable applications. These stretch from registering property claims in areas where property rights are unstable, to mapping solar panel installation strategies, clearing loans and negotiating intellectual property rights for music.

One thing is very real: the excitement about distributed data storage systems. Over the next few years, that hype will start bearing fruit, as distributed ledgers start to solve real world problems. How revolutionary they will be is yet to be seen.

Blockchain Technology

Exploring Technology’s Cutting Edge: Can Blockchain Work for You?

Blockchain TechnologyAs cybercrime and snooping become increasingly common, more and more consumers, business leaders, and private individuals are getting quite concerned about the safety of their sensitive information online. This is particularly relevant when it comes to financial transactions, which often happen in insecure and dangerously transparent digital forums. If you’re dissatisfied with your current online security options, it’s time to become familiar with blockchain technology. This relatively not-so-new technology is gaining major traction in the business world for the myriad possibilities it offers for online security and anonymity.

Blockchain Basics

What is blockchain? As with all complex technology, it’s difficult to give a quick, simple answer. Further complicating the linguistic distillation of the concept is the fact that this is a truly international technology that has been developed, altered, and defined by different people across the globe. Plus, translating complicated computing concepts into plain English can be quite difficult. Chances are that if you’ve heard of blockchain before and tried to read about it, you’ve walked away somewhat confused. Essentially, a blockchain is a database that’s used to create and store a series of chronological records relating to a specific item or event. The blockchain is often mentioned in the same breath as Bitcoin because it’s the technology used to track Bitcoin digital currency as it is spent, sold, or traded.

Bitcoin

The name “blockchain” is descriptive. These databases are a series of digital “blocks,” each of which is distinguished from the blocks ahead and behind in the chain through the use of timestamps. One great thing about this structure is that it’s nearly infinitely scalable, making it suitable for a variety of complex tasks. This recordkeeping system is also designed to be extremely secure and resistant to tampering, making it a top choice for a variety of different situations in which anonymity, protection, and integrity are at a premium.

Part of what makes blockchains so secure is that they can be decentralized, meaning they aren’t linked to a central authority or manager that’s responsible for overseeing the security of each record. This means that cybersecurity attacks in which millions of users’ data becomes compromised are highly unlikely with a blockchain. It also means that if one node in the network of databases stops operating, the entire system can continue operating. Blockchain applications that use this decentralized approach are known as decentralized applications or DApps.

Diving Deeper

Blockchain technology can trace its origins to the early ‘90s when developers worked on creating discrete records of cryptographically secured information they referred to as blocks. The goal was to create distinct data structures that could be kept private and secure through the use of encryption. The concept really took off when the digital currency Bitcoin was first under development. The anonymous cryptocurrency designer known as Satoshi Nakamoto needed a way of creating timestamped records to show the details of financial transactions. Thus, encrypted blocks were linked into a chain, and blockchain was born. Of course, this simple overview doesn’t even begin to scratch the surface of what blockchain technology is, how it works, and what it can do.

It can be helpful to compare and contrast blockchain with other digital technologies in order to understand its potential. One common analogy comes from journalist Sally Davies, whose comparison between blockchain/Bitcoin and the internet/email is frequently cited by those attempting to give a basic, beginner-friendly overview of the blockchain. Essentially, blockchain is to Bitcoin what the internet is to email. That is, just as the Internet can be used for much more than email, the blockchain technology that supports Bitcoin transactions has many potential applications beyond mere cryptocurrency exchanges. Limiting our Internet use to email only would be a mistaken waste of technological potential and, so the analogy goes, it would be a similar mistake to limit our use of blockchain technology to cryptocurrency transactions alone. Bitcoin is just one blockchain technology application out of potentially thousands.

In the context of this analogy, though, it’s important to note that there are some essential differences between blockchain and the Internet. One major difference is that the Internet is a communications network, while a blockchain is a database of information. On a very high level, the two technologies function in a theoretically similar way, but blockchain isn’t a replacement for the Internet as we know it. In fact, blockchain is more of a function of the Internet, like email, than a standalone communications network. At this point, you’ll need an Internet connection of some sort to access a blockchain.

Think of it this way: There’s only one “big I” Internet that the average person use, but there are multiple different blockchains. You can create intranets and extranets, but when you’re talking about “the internet,” you’re talking about the network that uses TCP/IP protocol that you can access with a connection through an Internet service provider (ISP) like Comcast, Charter, or CenturyLink. You can also have “a blockchain,” referring to any distributed database of a specific type, but when you’re talking about “the blockchain,” you’re talking about a specific company or application’s database. Blockchain technology in its current form is strongly tied to Bitcoin, but it’s not the only blockchain that exists.

The Ledger: Blockchain’s Public Face

Blockchain’s Public Face

So, as an encrypted, decentralized, tamper-resistant database, blockchain is a completely opaque, shadowy world, right? Well, not exactly. Privacy and data security are top priorities, but there’s a degree of transparency involved in the standard blockchain. Bitcoin is actually a great example of this; you can see when Bitcoin transactions happen in the blockchain wallet. You just can’t see specific information about who was involved with a transaction.

Tech experts often describe blockchain technology as a “decentralized ledger,” with “ledger” being the operative word in this situation. A ledger is a record, and that’s exactly what a blockchain is. Data integrity is central to the blockchain concept. Each of the blocks in a blockchain serves as a record for an event and to go back and alter those events is next to impossible. If you want to go back and alter part of an agreement, for example, you’d need to add a new record stating that the change was made rather than going into the original record of the agreement and changing the terms. These features make trustworthiness an element of operation in blockchain technology, which is a somewhat unusual feature for this kind of tech tool.

The idea that there’s a degree of integrity, trustworthiness and public transparency associated with the blockchain concept may come as a surprise to some. If you don’t know a lot about Bitcoin, you may be wary of the association of a technology with currency that was hyped as a way for criminals to get paid online. This isn’t a fair characterization. In short, blockchain and cryptocurrency are not the sole provenances of criminals.

Though it can’t be denied that the anonymous, decentralized nature of blockchain technology makes it alluring to black market types, Bitcoin trading, much of which is carried out with blockchain wallets, is becoming a legitimate financial market of sorts. As of this writing, Bitcoin price is has skyrocketed, indicating the minting of some major financial players. Plus, the public ledger doesn’t lie. As mentioned earlier, it’s difficult—if not impossible—to alter the record of a blockchain. The participants in the transaction may remain anonymous, but the transaction itself typically is not.

All of this points to some highly disruptive potential for blockchain technology in the financial sector. It’s important to remember that blockchain is not proprietary to Bitcoin and that means there are lots of other ways to use this technology for financial transactions. At this point, blockchain is still a relatively inside-baseball topic in tech, but you can count on that changing in the coming years. Blockchain may even represent the future of banking. Blockchain wallets are streamlined and secure in a way most modern banks are not, which could be broadly appealing to consumers if they’re introduced to the technology in the right way. Also of potential appeal to consumers is the fact that participants in a blockchain transaction have equal status with respect to information access. This would put the customer on the same informational footing as a financier when monetary transfers are being made.

Other Uses for Blockchain Technology

Transactional financial applications aren’t the only way blockchain is set to shake up the way we do business and access personal information. The blockchain wallet is certainly useful, but that’s just the tip of the iceberg. There are already some interesting applications for blockchain being put in practice right now. One blockchain-based Bitcoin alternative is the cryptocurrency competitor Ethereum, which took the technology a step further by allowing computer programming code to run from its databases. As a distributed public network, Ethereum is becoming a playground of sorts for developers who want to build DApps of all sorts, not just those relating to cryptocurrency. This is a highly promising development that shows how powerful a blockchain can be.

One highly vulnerable area that blockchain technology can improve is the storage and retrieval of medical records. As our personal health histories are digitized, many people simply take for granted that their doctors’ offices are doing the right thing and protecting personal healthcare information in a reliably secure manner. Unfortunately, though, this is often not the case. Hospitals are major targets for cybercriminals looking to perform massive medical identity theft hacks, and the implications of these attacks are frightening. Medical identity theft exposes its victims not only to the stress, hassle, and financial ruin of traditional identity theft but also to potential criminal charges. If the person who steals your medical identity uses it to try to scam dangerous prescriptions from doctors and breaks laws relating to insurance fraud using your name, you could be in serious trouble. All of the blockchain’s powerful encryption, privacy, and decentralization abilities can revolutionize the way we think about protecting, sharing, and housing records of our healthcare.

In essence, anything that involves recordkeeping can make use of blockchain technology. As consumers become more concerned with what’s in the products they use, companies committed to transparency can easily use blockchain to automate supply chain transparency and make each step in the manufacturing process available to their consumers. Blockchain may even have a role to play in the future of elections, providing the right balance between privacy, integrity, and transparency.

Smart Contracts and Modern Labor

One last example of blockchain’s potential to disrupt all aspects of our lives: Smart contracts. A smart contract is essentially a computerized agreement between two parties that makes the execution of that agreement dependent on specific conditions. For example, if a small business owner hires a graphic designer to create a logo for a rebranding effort that business owner and the designer could enter into a smart contract stipulating that $250 will be paid out upon the successful completion of the job. The business owner puts $250 into a blockchain wallet, which is then held by the blockchain application until the designer submits the logo and asks for funds to be released, which the business owner will do after agreeing that the job has been completed in a satisfactory manner. It’s quick, easy, secure, and possible without a middleman.

Business leaders in all fields should be particularly interested in the opportunities presented by smart contracts, a blockchain application that automates and digitizes contractual agreements for the sale or exchange of goods and services. One major reason is that smart contracts can easily cut out middlemen in the gig economy. Companies like Uber, Airbnb, Ebay, and even the Amazon seller marketplace may find that their contractors and merchants are fleeing in order to use peer-to-peer blockchain networks to conduct business directly with their own customers. Why pay a user fee when you can do business directly with a service provider?

Clearly, blockchain is a force to be reckoned with and it’s going to have a growing influence in all areas of business in the years to come. Stay on the lookout for news about blockchain, and as you make hiring decisions in tech positions, be mindful that those who are in the know about blockchain are likely to deliver value in the future.

The 4 Asian tigers economy growth

The four Asian Tigers, also known as the Asian Dragons, are the fast-growing economies of Singapore, Hong Kong, Taiwan and South Korea. The four Asian nations have consistently sustained high-growth economic rate since the 1960s, charged by rapid industrialization and exports, which facilitated these economies to be in line with the world’s wealthiest nations. In 2015 South Korea officially overtook Japan in GDP terms moving second place to China in terms of financial feasibility.

Emergence of the Four Tiger Governments

The world economy growth began to pick up during the early 1960’s after the World War II and the Korean War in the early 1950’s. Major leaps in air telecommunications and air travel coupled with probable world peace indicated that world countries were opening up their borders and thus the Four Tigers took advantage of this opening. The four countries had viable trade economies, established ports, high literacy levels and advanced infrastructure inherited from their colonial masters.

asian tiger singapore

Singapore is one of the smallest nations but has the highest GDP between the four asian tigers.

Owing to this development, the Asian Tigers took advantage of the situation since they were quite poor in the 1960s; these countries had plenty of inexpensive labor. Combined with educational restructuring, they were smart to leverage this amalgamation into a low-priced, yet industrious labor force. The Asian Dragons devoted to social equality in terms of land reforms, promotion of property rights and welfare of agricultural workers. In a little while, products and services from these nations were in high demand.
A booming stock exchange had already begun in 1891 in Hong Kong; thus it was reasonable when it drifted to financial services from the export market. Hotly followed by Singapore the two tiny nations are currently important global financial centers. During that interval South Korea and Taiwan were propelling the 1980’s -1990’s tech boom, nowadays Taipei and Seoul are leaders in cutting-edge technology and also home to the biggest names in electronics. These advancements happened so quickly hence the nickname ‘The Asian Miracle‘.

The economy growth of the Four Asian nations enabled them to sail through the local 1997 Asian Financial Crisis and also 2008 World Economic Crisis. At present these four nations significantly get enlisted in IMF’s global list of top 40 advanced economies.

Break Down of the Four Tigers

South Korea

During the 1960s, the gross domestic product (GDP) per capita of South Korea was akin with the poorest nations in Africa and Asia. However, in the following four decades, South Korea began shifting from an agricultural economy growth by embracing robotics, software development and electronics. This policy was successful, and as verified by the World Bank, the country’s GDP grew steadily at 10% annually in the year 1962 to 1995 to become an Asian economic powerhouse.

Taiwan

asian tigers smallest nation taiwan

Taiwan is home to the biggest electronic brands.

The proximity of Taiwan to China has provided a leeway for economic growth. Taiwan has prospered in the last forty years regardless of the litigious association with China, and its per capita income exceeds $45,000. Despite not being a United Nations member due to China’s pressure it is still a noteworthy exporter with a GDP of over $ 1.1 trillion, establishing the 23.4 million people nation as an Asian economic giant. Taiwan might not be the richest ‘tiger’; however, it has possibly undergone the most remarkable growth.

Hong Kong

Hong Kong’s economic growth began taking off during the 1950’s, therefore, becoming the first of the of the East Asian countries. Encouraging tax incentives and inexpensive labor allured many large and mid-sized companies to invest in Hong Kong, and the 1970′ and 80’s was a phase of construction, with public housing, skyscrapers and rail user trains being financed by the new-found riches. Hong Kong’s GDP between 1961 to 1997 grew by 180 times making the country one of the richest in the world. A supportive regime, lack of public debt and stringent regulations showcases that the country is placed well for continual growth notwithstanding a less impressive rate.

Singapore

Akin to Hong Kong, Singapore’s booming economy growth is entrenched in the world of business. Initially esteemed for its tactical position in South East Asia and impressive docks, it was effortlessly able to get the most out of on its repute as a trade center. Today, Singapore is now among the world’s leading money exchange centers, and the nation prides itself in exceptionally diverse expat society which pinpoints of the high volumes of overseas investment obtained over the years. Nowadays, Singapore has the highest GDP in all the Four Tigers.

Lessons learnt from the economy growth of the four Asian Tigers

It is debatable that the Four Asian Tigers benefited from being positioned at the correct places and time, World War II had come to an end, imperialism was drawing to a close, and proliferation needed at least one economically strong Asian business center.

On the other hand, without anyone knowing, the ‘miracle’ intensification of these four countries was principally attributed to excellent governance. Each one of the four nations has placed firm directives and anti-corruption measures, while conventional economic arrangements have permitted each country to stay away from public debt and increase large reserves of savings and capital. These actions preordained that, when predicament hit, they only had a minimal effect, and recovered immediately as soon as the markets did well again.

asian tiger hongkong

Hongkong is considered to be the first of the “four Asian Tigers”.

Also, the benefaction of China was a hugely significant factor in four nations. China has gone through an outstanding economic revolution over the past five decades, and the Four East Asian Tigers have been able to take advantage from this via the Chinese investment while being ambitious to make paths of their own.

It is apparent that the economy growth of a nation relies on its economic guidelines and the facilitation of an export-leaning trade. The Four Asian governments benefited from these strategies and institution of free trade hence is no shocker that the four countries now have the urbanized state status.

The Asian economic crisis of 1997 had an effect on all the Four Asian Tigers. The worst hit was South Korea who relied on external loans as it affected its currency when it fell to as low as 50%. Losses in South Korea, Hong Kong and Singapore were as low as 60% in terms of dollars. The four nations however recovered from this calamity more quickly than usual.

In 2013, the joint economy of the Four East Asian Tigers added up to 3.81% of the global economy with a totality Gross Domestic Product (GDP) of 2,366 billion US dollars. Together, their combined economy is close to the GDP of United Kingdom’s 4.07% of the global economy.

The rapid economic escalation of the four Asian nations has often been nicknamed as the “Asian miracle”. The basis of this Asian miracle was the institution of a certain macroeconomic setting. Each country among the four coped with the three variables of the financial system in budget deficits, exchange rates and external debt to various levels of accomplishment. The Four Asian Tiger’s financial plan arrears were kept to near to the ground limits in that it could not interfere with the macro economy. External debts were also not in existence excluding South Korea whose high borrowing levels were canceled by elevated exportation.

The four Asian nations are currently well placed in the global economic rankings, and on condition that they remain on persisting on what they have always endeavored to there is every reason to consider that they will continue to be economically stable for a long time.

Smart Contract Technology and the Future

Smart Contract technology has come a long way over the years. However, many people remain unaware of this technology or have heard of it, yet fail to understand what it can accomplish through the use of computers. What are smart contracts? How do they benefit individuals and organizations? What is the future of this technology? These are only three of the many questions one may have when they hear the term Smart Contract, and there are numerous others.

What Are Smart Contracts?

Wouldn’t it be nice to eliminate the middleman when conducting a wide variety of transactions? Smart Contract technology allows users to do exactly this. With this type of contract, assets can be exchanged with no need for a middleman, and the transaction is completely transparent and conflict free. They are similar to other legal agreements in that they establish the rules and penalties relating to the arrangement, but they also enforce these obligations.

How does this differ from a traditional agreement? Smart Contract technology allows the terms of the agreement to be written into computer code, and the code and agreements are maintained in a distributed, decentralized blockchain network. Originally created for bitcoin, the technology is now used for a variety of other purposes. Any transaction a person wishes to complete without the help of the legal system, some type of external enforcement mechanism or central authority, may be carried out with the help of this technological advance.

Case Studies

smart contract

Smart Contracts are able to strenghten the communication inside a company.

The Depository Trust and Clearing Corporation opted in 2017 to make use of Smart Contract technology to process in excess of $1.5 quadrillion in securities. Doing so helped to save the organization money by reducing communication problems and improving workflow. Independent processing discrepancies were eliminated, thus minimizing the risk of expensive lawsuits and delays in settlements.

In the past, financial institutions invested a great deal of time and manpower in handling customer accounts. Smart Contract technology helps to reduce the burden by taking on certain tasks, such as transferring payments to other financial institutions when they arrive at a bank and logging any change of ownership. Barclays Corporate Bank is now making use of this technology to carry out these processes and saves time and money by doing so.

The Future Of Smart Contract Technology

Individuals will find this technology being employed more frequently as individuals and organizations learn more about the benefits of using it. Experts predict it will take on routine tasks, such as risk assessments and real-time auditing, for credit companies, certified public accountants, and merchant acquirers, among others. Lawyers benefit from Smart Contract technology and will be able to make use of templates to produce contracts as opposed to writing them. Healthcare, the automotive industry, and real estate are other industries that may be impacted by smart contracts. It’s only a matter of seeing how far the technology can go and in what time frame.

The cost savings an organization can achieve by making use of the technology will benefit other industries too. No third party is needed in this situation, thus the risk of manipulation is eliminated. Documents are encrypted on a ledger shared by all parties in the transaction, which ensures no contracts are lost and less time is spent manually processing documents. Furthermore, human error becomes less of an issue as the contracts are all automated.

Smart Contract is a term every individual should know thanks to the anticipated expansion of this technology in the future. A person may find the way they conduct business changes as a result of this technology, for example. Although the process behind the creation of these smart contracts may confuse many, the benefits are easily seen. Individuals need to keep this in mind and embrace these changes. The technology is not going away any time in the foreseeable future and may never do so.