Will Companies Survive In The Era of Powerful New Technologies

Companies are so far the core of modern capitalism. Whatever material comforts we enjoy are largely its by-product.  But the question is, in the time of powerful new technologies of crowd substitute like DAO (Decentralized Autonomous Organization), block chain/ bitcoin, smart contracts, whether companies will be a passe ? 

Before arriving at any conclusion, let us examine what new technologies offers to us ? 

DAO
Precisely three years back, the capitalist world witnessed largest round of crowd funding ever. It was birth of DAO (Decentralized Autonomous Organization), an entity existed simultaneously nowhere and anywhere and operate solely with steadfast iron will of immutable code. It existed only as open source software to execute smart object with no human or institutional layer outside the software-no CEO, Board of Director, or employee, not even at steering committee like that run Linus. It was hailed as solution to overcome biases and deficiencies of the core and to democratize the business. Within 28 days the real money poured in to support the organization, US$162 million came within 28 days.

However, on June 17, 2016, a hacker found a loophole in the coding that allowed him to drain funds from The DAO. In the first few hours of the attack, 3.6 million ETH were stolen, the equivalent of $70 million at the time. Once the hacker had done the damage he intended, he withdrew the attack.

Unsurprisingly, the hack was the beginning of the end for the DAO. The hack itself was contested by many Ethereum users, who argued that the hard fork violated the basic tenets of blockchain technology. To make matters worse, on September 5, 2016, the cryptocurrency exchange Poloniex delisted DAO tokens, with Kraken doing the same in December 2016.


The DAO teaches a valuable lesson about the importance of establishing secure blockchain platforms. The DAO’s hack was not due to a problem inherent on the Ethereum blockchain; it came from a coding loophole exploited by an intelligent hacker. Had the code been written correctly, the hack could have been avoided.

Blockchain and Bitcoin

Blockchain is the technology the underpins digital currency (Bitcoin, Litecoin, Ethereum, and the like). The tech allows digital information to be distributed, but not copied. That means each individual piece of data can only have one owner.

You may hear it described as a “digital ledger” stored in a distributed network. Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.The information is constantly reconciled into the database, which is stored in multiple locations and updated instantly. That means the records are public and verifiable. Since there’s no central location, it harder to hack since the info exists simultaneously in millions of places.

Blockchain technology was invented in 2008, but only came into the public conversation when Bitcoin launched.
Why Is It Called Blockchain : A block is record of a new transactions. When a block is completed, it’s added to the chain. Bitcoin owners have the private password (a complex key) to an address on the chain, which is where their ownership is recorded. Crypto-currency proponents like the distributed storage without a middle man — you don’t need a bank to verify the transfer of money or take a cut of the transaction. Blockchain is not only  going to be used   currency and transactions but also banking as well as complex company transactions. 

To give you an idea of how seriously it’s been studied and adopted, more than a thousand employees are  working on blockchain-powered projects in IBM alone. They’ve also set aside US$200 million  for development. Financial and tech firms invested around US$1.4 Billion  in blockchain in 2016 with an increase to US$2.1 Billion in 2018. 

The fact remains that despite of initial enthusiasm, Blockchain and Bitcoin also experience the problem.

Human error - If a blockchain is used as a database, the information going into the database needs to be of high quality. The data stored on a blockchain is not inherently trustworthy, so events need to be recorded accurately in the first place.The phrase ‘garbage in, garbage out’ holds true in a blockchain system of record, just as with a centralized database.

Unavoidable security flaw : There is one notable security flaw in bitcoin and other blockchains: if more than half of the computers working as nodes to service the network tell a lie, the lie will become the truth. This is called a ‘51% attack’ and was highlighted by Satoshi Nakamoto when he launched bitcoin.

For this reason, bitcoin mining pools are monitored closely by the community, ensuring no one unknowingly gains such network influence. And there is a serious dispute over the architecture concided with another serious worrying trend : the concentration of a great deal of the world's total bitcoin mining power concentrated in China 

It's also important to consider the role that the Chinese market may have had on the digital currency space in between September 2017 and February 2018, when the government ban took place. The increased interest among Chinese investors during this time may have "encouraged the price of bitcoin to skyrocket." In turn, sky-high prices prompted more Chinese investors to become interested in the space. With so much interest among the Chinese investor population, it may have been that the authorities grew concerned about bitcoin potentially challenging the their own currency Yuan.  The response? Implement a ban in order to tamp down interest and restore the earlier status quo. In the process, the bitcoin bubble, whether technically meeting the definition of that term or not, collapsed, and BTC prices fell by more than 60% early in 2018.There is likely much more to the story of China's role in cryptocurrency markets than this. For instance, it's unclear of 90% of all bitcoin trading came through China in September of last year, or if it was only 90% of all BTC-RMB trading. The former would likely suggest a much more dramatic role for the Chinese investor base in the global bitcoin market than the latter.

So, the concentration of Bitcoins in China is particularly troubling. The Chinese government has a long history  of overseeing its financial institutions closely and  intervening in them directly. This scene is fundamentally at odd with the Bitcoin or cryptocurrency dream, complete freedom from any kind of government interference. Having control over Bitcoin or blockchain behind the great fire wall of China, many felt, would turn the dream into nightmare.

Can Companies Survive Technology Disruption

Yes, at the moment trouble experienced by disrupting tools like DAO, blockchain highlight a fundamental question about the rise of cryptocurrencies, smart contracts, powerful platforms and other recent digital developments. But as we get better at writing smart contracts, building powersful networks that brilliantly combine collective benefits and self interest, increasingly democratizing powerful tools for innovation and production, will we still rely so much on industrial era companies to get business or production done ?

The answer is : yes, we need the companies in future also.

The changes are happening so fast and are very complex. Thriving within it requires a great deal of constant coordination, not all of which can be accomplished via a automatic update and conversations among the peers from remote locations through skype or social media. Such activities are highly valuable, but they do not remove the need for the transmission belts of the organization, the middle level managers in company's hierarchical system. these people solve the small problems, escalate major ones, interpret and clarify communication both upward and downward, negotiate and discuss with their peers, and excercise their social skills in many many ways. The managerial structure help to make transmission of any organizational work smoothly and prevent them from seizing up.

 

Also, human social, inter personal skills remain so valuable that most of us does not find numbers and algorithms  alone very persuasive. Smart companies still invest heavily in gentle art of persuasion, not only with their customers but also their own people. So the analytical input by artificial intelligence, tech platforms paired with social skills helps good ideas spread and accepted.

We human being want to work together and help each other out, and that is why it should be encouraged to do so. That power can build amazingly complex things like double decker jetliner, a 2,700 foot tall skyscraper, a pocket size computer.

It is a fact that leading companies will survive in the tech revolution taking place, will look different from the industrial era. But they will almost all be easily recognizable !