Category: blog

Tech Perspective: Facebook – Should I be Scared?

March 30, 2018 / Hannah / 0 Comments

Tech Perspective: Facebook – Should I be Scared?

By Paul Parisi, President & Founder

Finally, we may all be understanding what is surfacing in the news. Facebook is indeed a “maker of manners,” as King Henry says to Kate in the end scene of Shakespeare’s Henry V–Facebook is used to affect our reality.

As The Outer Limits intro states:

“There is nothing wrong with your television set. Do not attempt to adjust the picture. We are controlling transmission. If we wish to make it louder, we will bring up the volume. If we wish to make it softer, we will tune it to a whisper. We will control the horizontal. We will control the vertical. We can roll the image, make it flutter. We can change the focus to a soft blur or sharpen it to crystal clarity. For the next hour, sit quietly and we will control all that you see and hear. We repeat: there is nothing wrong with your television set. You are about to participate in a great adventure. You are about to experience the awe and mystery which reaches from the inner mind to – The Outer Limits.”

So does Facebook. This is the whole point of Google and Facebook – to know you better than you know yourself and, for a handsome fee, to offer advertisers access to you. That is the equation – Facebook, Google, et al. are not web companies. They sell advertising. That is it. No matter what you think they do, they sell YOU to advertisers.

As Tim Cook, CEO of Apple, so aptly said back in 2014, when talking about Google, that if you are not paying for something, “You’re not the customer. You’re the product.” The same goes for Facebook, Instagram, Snapchat and (insert any name here).

So what is the hip 21st century person to do? It is critical that you remember that when you use a website or app, the site is tracking EVERYTHING you do. They (Google, Facebook, etc.) don’t care specifically about you. There is no screen in some data center displaying what you are interested in, or what you have said. That would be way too much work. But there are bots (small pieces of code) that buzz through your data and make predictions on how you might think about something. Then advertisers can buy the ability to expose ads to you to reinforce or trigger off that information. This is called manipulation, and you need to be aware of to what degree this is happening.

So back to the question of what should you do. The only way to limit this exposure is to opt-out and never use these services. Yes, opt-out! Close down your accounts and never access these services (any of them) ever again. You see, it’s not really about the service having your info, it’s about how the app is used to carefully craft a world they want you to see, and, ultimately, to get you to respond in a certain way. Maybe buy something, maybe reinforce a political view, maybe change a political view. They provide “rose-colored” glasses (or whatever “color” is most effective) to manipulate your worldview. They allow an advertiser to deliver a reinforcement or challenge to your viewpoint to produce the outcome they want to occur.

Chicken Little and I were discussing this very issue just last week. (As is typical for New England, she was holed up in her bunker in northern Vermont way off the grid. You have to actually drive there and then hike in for 10 miles.) Bottomline, as she shrieked from under her bed, “This is way past ‘the sky is falling’…”.

In closing, what did you expect? Not to be too negative here, but did you really think it was all about personal, altruistic endeavors? Let me know what you think – let’s have a conversation. By the way, if you decide to stay in, we can help you stay secure even in the midst of the storms.

Not sure how to keep up with these things? Get your IT assessment from SaviorLabs today.

From the Cutting Room Floor: Working with Video

July 11, 2017 / Hannah / 0 Comments

Today on the Edge of Innovation, we are talking with Brian Gravel about Media Technology and working with video.

Introduction

From the Cutting Room Floor: Working with Video

Paul: So early on we talked about you were in your studio and in your video practice really, you shoot everything in 4k. Are you doing drone shots in 4K as well?

Brian: Yeah. Oh, yeah.

Paul: Wow. So let’s just talk about that for some of our more geek listeners. You get 4K video. What do you record in? Is it MP4?

Brian: Yeah, yeah. We usually use MP4 format.

Paul: H.264?

Brian: Yeah. That’s the codec but the MP4 file size is—, usually it’s in the sweet spot of you have that quality but the file size itself is not really massive.

Paul: So you’re shooting at the compressed.

Brian: Yeah.

Paul: You, you don’t have the raw.

Brian: Right. We’re not getting that.

Paul: Yeah, because that’s crazy. It’s a lot of space. I mean, what is it? 2 gigs a second or something like that? It’s ridiculous.

Brian: I saw Canon just came out with a DSLR, the Mark V or VII.

Paul: Yeah…

Brian: I don’t know what version it’s on.

Paul: Yeah, the Mark IV, I think it’s called. Yeah.

Brian: And that’s shooting basically uncompressed 4K, and I think we figured it was like 10 minutes of footage was like 100 gigs of storage.

Paul: Wow.

Brian: Which is crazy.

Paul: I mean, it’s a lot of space. So you’re having it in-camera compressed.

Brian: Yeah. Correct. So we already have like a pretty digestible, usable format coming out of that.

Paul: So you take that and what do you do with it? It’s on an SD card or is it…?

Brian: Yep. It shoots the micro SD card.

Paul: Okay. So you got that. You bring it back to your shop and you plug that into a computer, and you copy those files to it. You’re backing it up, I imagine. You’re putting it online, or what are you doing? Just keeping it local in a sand or something?

Brian: Yeah. We have our own internal processes for storage and backing up. And yeah, for the most part, we’re just getting the footage off the drone, digesting it. A lot of clients are taking it raw, just need footage or pictures to use what they want to use of that. And then other times, we’re editing pieces together for them.

Paul: And what do you guys use for editing?

Brian: We use a range of tools. I’ve gone through the whole Avid, Final Cut, Adobe stack. And for me, it’s less about the tool and more about what people are comfortable on. So as we’ve grown as a company, we’ve evolved with those tools and we’re primarily in the Adobe product line.

Paul: It’s a broad suite where, you know, when you have Photoshop…

Brian: When they switched to Creative Cloud, you’re getting all the tools for a monthly cost, it made sense to use them because they really try to create a synergy between the products at that point. Whereas before, you were buying kind of the products piecemeal, which I think works out better when you have a whole array of tools vs. I have my editing tool for this, my color correction tool for this.

Paul: Right. Exactly. So I’m trying to paint a picture for our people at home. Alright. They go out and buy a drone, so now I’ve got to get Adobe Creative Cloud. Okay. I mean, it’s what? $60 a month. So it’s not terrible. But I’ve got to learn Premiere now, Adobe Premiere to edit.

Brian: Yeah. It’s the same thing. You know, there’s different ways to get around it. You can go buy a $400 drone from BestBuy and have something like iMovie and edit on.

Paul: Okay. So that’s fair.

Brian: Yeah. I mean, you can definitely do things. If you’re a budding professional or starting a business or something along those lines, there’s definitely ways you can get in at a low cost and work your tail off too.

Paul: I want to put this together. I’m just trying to give people a window into the process. We’re, not going to teach them how to do it. So, I edit it. I want to put some text in, things like that. Now, it’s never as easy as it seems. It seems, so you just put the text it. But now what do you guys do for that? Is that after effects or…?

Brian: Yeah. We’re using that Adobe product suite. So yeah, we use a ton of tools out of that. It’s really up to our editors. We have three fantastic editors on staff. So I leave it up to them as far as what they would do. If I was to go in and dust off my video production skills and get back into editing a project, I would be caught in a completely different league than our, our lead editor. So it really depends on the comfort level of what you’re using the tools for.

Paul: Right. So now, you bring up a good point. I mean, editing has two aspects. One is cutting it up but actually deciding where those cuts are for what you want the end user to experience. And so you have different people. How variant is that? You know, if you had three editors, are you going to get three different stories? In different subtle…?

Brian: You definitely could. Yeah. For sure. I look at our team as each person has their own kind of strength, and depending on the project is how we divvy up who’s doing what.

Paul: Sure. So you select the right person for the right task.

Brian: Yeah.

Paul: Yeah. Cool. So if you had one that was more of let’s say a school project. You know, you’re doing a university or something, you’d choose one of your editors over maybe a corporate project.

Brian: It’s even within projects.

Paul: Really?

Brian: Yeah. You lay out the rough cut, and the other person will finish the color correction and the titling and all that stuff. And while one person may be working aftereffects, creating templates for the assets, and the other person may be implementing them.

Paul: Yeah, and as you’re listening to this, don’t let what Brian said go by too quickly. The color correction. That’s probably one of the most under, or unknown, aspects for a normal consumer. You take a picture inside and you take a picture outside and then you come back and take it a different day. The color of the scene changes dramatically in all of those. And somebody has to make those all look good together. And that’s a lot of work.

Brian: It is. It’s very time consuming. We get budgets and projects that range quite dramatically. So, you know, I would say that’s probably one of the first things to go on a on smaller budget project, just because the general nature of time to put together even like a rough cut and eventually a final product is very time consuming. And then when you’re short on how much time you can actually put into the project because of the budget, you have to look at ways like, “Okay. You know, what can we do here to get the project done at what the customer can afford, essentially?”

Paul: Right. Now were you ever involved in film or tape editing?

Brian: Yes.

Paul: So we’ve seen a dramatic reduction in the amount of work it is to do that. So hopefully, you know, as things go on, it will be easier and easier.

Brian: Yeah, it’s definitely happening with tools and things like that. But, you know, there’s just so many…video is a very hard final product to convey to a person who’s never done anything with video or photos before because you’re so used to seeing it in media, TV, online.

Paul: And we’re very sophisticated consumers because we see good production.

Brian: Yeah. A lot of lead-ins are like, okay, we’ll shoot it in 4K video. Well, I can shoot 4K video on my iPhone.

Paul: That’s right. Exactly.

Brian: And you can. But it’s a whole different process once you start putting together a story. And it takes time to do that. And that’s where I think people see these final products, and if they’ve never edited a video before, they don’t understand a lot of times how much time goes into that product. So that’s one of the challenges of my aspect of doing sales and business development is to kind of convey, what a person could do at different levels of budget. It’s like, well I’m comfortable in this budget area. Well here’s some examples of different things you could do with this. So you’re like, let’s get creative with what you want to do and how could we tone it back a little bit so that we get that effect but don’t have hundreds and hundreds of hours into it.

Paul: So let, let me ask you. You sort of touched on something there, that there’s probably multiple aspects but there’s two aspects. There’s the technical —getting the pictures, getting the video, editing it, all that kind of stuff, color grading it. But then there’s the story. And which one do you think is more important? How do they mix? Is it 50/50? Is it 10…?

Brian: Yeah. I don’t know if there’s like a percentage balance. I mean, both are equally important. It’s kind of like you could shoot beautiful video, but if you have crappy sound, it could ruin a project. I think the technical aspect is: if you have people who are good technically capturing video and audio, then editing becomes a lot easier. You can dedicate more time to the story. Versus, if you are spending a lot of time in editing, cleaning up what, what should have, could have, been better onsite when you were doing production.
So the story part is important because you could have the greatest footage in the world. If you don’t have somebody who can tell the storyline and explain… You know, we ran into this with, a lot of profile pieces that we were doing a few years back. And we were shooting hours of footage and trying to reduce it to a five-minute snapshot of a company’s 100-year history and rolling it in a package with two other videos that were doing the same thing. How do you successfully recognize someone’s accolades and tell a company’s story of their innovation and their 100-year history in a 5-minute piece, you know?

Paul: The story becomes critical.

Brian: Yeah. So, you know, it depends on the project. And then we run into that too with customer testimonials. Like grabbing those parts that really encapsulate and excite people versus somebody just getting on camera and saying, “Well, I really like this company because…”

Paul: Right. Right. Right. So, you had also touched on something there. Sound. It seems like people are willing to sacrifice video quality — I mean, they consume YouTube. They do all these different things, and they sort of give it a pass. I mean, obviously, if you can have a high-quality image, it’s great to see that. But people aren’t going to stop watching something just because it’s not a high quality. But if the sound is bad, I’ve seen people won’t even engage. So, what’s with that? I mean, how do you talk about that at all? Is that true? Do you find that?

Brian: Yeah. I’ve found that because of things like the iPhone and us being a very camera-centric world, that getting quality video is not as difficult as getting quality sound and knowing how to get quality sound.

Paul: Yeah, that’s an art. I mean, it seems like, “Well, no, just put a microphone in front of somebody.” But it’s just not that.

Brian: No, it’s not at all. Especially when you go out and shooting on location. The studio is pretty simple if you have decent gear and it’s quiet, you’re going to get good sound. You go out and shoot in the city with traffic going by or even just doing an interview outside and a plane going overhead, you don’t realize… That’s where I think you can see the big difference between, if you watch something on TV versus something someone shot homegrown.

Paul: Well it was interesting. We had a video crew here, I think, in January. They were doing something on the Craigslist killer because one of the companies I was with, we helped catch him with the technology.

Brian: Oh, no kidding.

Paul: Yeah. And but what they did is they brought in two high-end Cannon cameras. They were dual. They had the interviewer-interviewee, and we’re in the middle of it, and they had me wired, a lapel mic, and I think the other person had a lapel mic, and they had a sound for the room, and in the middle of it, he said, “Wait.”
I’m like, what?
The water cooler went on.

Brian: Or the AC or something.

Paul: Yeah. And he said, because he says he didn’t care that it was there, but he didn’t want the change. It’s almost like color grading, you know. It’s like, imagine, if you will, in the middle of a shot, you turned on fluorescent lights. The color just changed dramatically, so it’s going to be disturbing to the viewer. But sound, you know, is something that people, I’ve found, just are not tolerant of bad sound because they can’t deal with it. There’s no way to fix it. With an image or a video, I can sort of imagine what it is. And so that’s interesting.

So sound is critical. So do you guys have… Are your editors doing sound as well or do you have different people for sound?

Brian: Yeah. Again, I’m fortunate. I have a lot of talented people in our group. And, they know what a good quality production is, and they know how to get that production value. And we’ve invested in equipment that helps it a lot.

Paul: Yeah. So you’ve got the best advantage. But it’s really taking… I think the critical thing you’re bringing out here is that the person sitting in the seat is what makes good or bad content really sing. You can only do so much with the content. And the person there making it all work together is critical.

Brian: Yeah. And from a business perspective, knowing what, what medium you’re playing to… I mean, most of our stuff is going online. And most of our clients have a finite budget of what they want to spend or can spend. So getting the best quality for that medium, for that project budget, I think, is a tricky thing to refine. You know, going back to your photography days, you know, you could put tons of time into editing photos, but at some point you need to say—

Paul: Print it.

Brian: Exactly. And I think for anyone in the creative space, there’s a perfectionist in them all. And finding the balance of time and how to do things quickly but efficiently, and with high production quality. We’ve gone in and nailed that down. And that’s why I think we’ve been successful.

Paul: Excellent. Now is there anything else you want to talk about, that we haven’t covered? Any areas you want to touch on?

Brian: I’m happy to talk about anything you want, really. I think we did cover a lot about the different pieces, of how we got into drones and, you know, came into this thinking, talking primarily about drones, but what I’ve enjoyed about this conversation is that you can see how the drone piece fits into the whole scope of what we’re doing, but it’s a lot—

Paul: It’s evolutionary.

Brian: Yeah. But there’s a lot of other components that go into creating the products that we’re putting out, one. And two, like, the reason why we’ve engaged in drone stuff is really at the epicenter of our company — technology. It’s a media. It’s all those things wrapped into one. That’s why the space for us is very exciting.

Paul: Yeah. Very cool. And I think that as we — I think we touched on earlier — if you’re using stock photos on your website, don’t do it. Stop. Go take them down. It’d be better to have a blank space, and nowadays, we need to have video. Gotta have good video.

Brian: Agreed. And to that point, we’ve been through an exercise with clients lately where because of the designs of websites now, the photo — or photos, I should say — and video are changing the whole look and feel of it. And we had this interesting project recently where we were tweaking all these style elements, fonts, and this, and colors, and, and really, like we changed a couple of different photos, and all of a sudden, it made sense. And then, then it became, alright, well, you know, the photos are driving the page, so, like this is kind of like the type of photo that you need to fit in. You can switch your photos up whenever you want, but, you know, certain ones are going to work with the other elements of the page a lot better then. And I think that’s a big… It’s not like something that’s just come about. This has been happening for years, but it’s one of those things that it’s changing the course of how you’re designing sites is that imagery is almost becoming… You almost need to put that first and then build around it versus the opposite way, which I think was kind of the way it was being done, which is you built the shell and you pop some photos in. And the photos helped it along but yeah, it’s very different now.

Paul: Yeah. I agree. You have the creative director of a magazine or even a video shoot, and they’re thinking of holistically how it works. And that’s magic in a lot of ways. And I think because of the ability now for just the average person to produce a website, they aren’t used to having to take all those things into account. And then they don’t know why. Why does mine not look as good as theirs? Well, because they’re taking in all these subtleties into account. And I think you’re absolutely spot on. And I think the same thing’s happening with video, but I think people are a lot more tolerate with video than they are with photos. Because a bad photo, just sitting there, not moving is a bad photo, and it just yells that at the top of its lungs. But a video, you know, boy, you get a connection with that person, and, it’d be nice to have it high quality, but even if it’s not, it’s better than not having it.

Brian: Yeah. Even in video, like video use as assets in sites versus just a click play video, you know. Like how it’s presented, how it’s formatted, and how it renders on a phone or a browser. We have people, believe it or not, who are still on things like Internet Explorer 9 or 8. And you…

Paul: They should have their internet taken away.

Brian: Amen to that. I should say the same thing, but you know, the whole experience changes if you can’t… If that video is not loading, and it’s your whole background to your page, yeah, it looks cool on that Mac that the 17 year old has on running Chrome or Safari, but to someone who’s making a decision about whether or not to engage your services or not, and is on an older browser or something that it’s not playing, they’re like why is this big black screen?

Paul: Reflects badly.

Brian: Yeah. It’s always part art, part function. Right?

Paul: Yeah. Absolutely. So anything else you want to cover? Any particular topics?

Brian: No. Thank you very much for having me.

Paul: Oh, yeah. Absolutely.

Brian: Any time you want to geek out, I’m happy to have a conversation.

Paul: It is a lot of fun. It is a lot of fun, and we’re also open. If you come up with something you want to talk about, we’ll put it out and talk about it and we tend to be a little eclectic, you know, and not just when we’re talking about this part of business or whatever. We love technology and it just sounds like just like you guys do. It’s a great time to be alive. I mean, 30 years ago… Well, let’s say 50 years ago, you couldn’t do all these things. You know, you had to be in a dark room. You had to do all these different things. You couldn’t even buy a video camera, you know. So, it’s a wonderful time to be alive.

Brian: Yeah. And I’ve been fortunate enough over my lifetime and my career to really go through these unique set of stages with technology. You know, I filmed on VHS tapes and eventually mini DV and then I was like, why are we recapturing DV tape when we could shoot the SD card? And so from a video standpoint, I’ve seen, even my freshman year of college, which I don’t want to date myself, but back in early 2000s, the cameras alone, like what you could do, with shooting on little Canon Elura that were shooting standard definition, and now, even like six years, seven years later, people are shooting high def video on their phones.

Paul: I know. It’s amazing. Isn’t it?

Brian: Crazy.

Paul: You couldn’t have predicted it. I just like wow. Just the storage needs of YouTube. It’s just incredible.

Brian: I remember we built this site. It was called Boston Nocturnal. It was a nightlife site, and the whole premise was we’d deliver a weekly video about bars and nightclubs and events going on in Boston. This was 2005, ’06 timeframe. So YouTube was just coming along, and we made a very conscious decision at the time that we did not want to put our videos on YouTube. We wanted to embed them in flash player on the site because it was more professional.

And I think about a decision like that at the time, not knowing, you know, where YouTube would go. And it’s eventual acquisition by Google and things like that is to, how different your mindset goes in just a short amount of time. And now if a client asks how we’re going to put it on our site, I’m like, “You’re going to put it on YouTube, and you’re going to embed it on your site because you’re getting more bang for your buck as far as getting it found and sharing it and so on.” So yeah. You’re right. It’s a neat time to be in technology and the creative space. And I’m just amazed by young people coming out of school and even, you know, stories of like 11-year-olds who are hacking and things.

Paul: No barrier. They’ve never seen a world where they didn’t have these tools.

Brian: Or even my two-and-a-half-year-old who, you know, consistently asks me for “his” iPad. I said…

Paul: Well, he has it right.

Brian: Yeah. It was like, okay. And he wants to watch his videos, and he can go through YouTube kids. And that’s just, to me, amazing. And I think the people who embrace technology and realize that it’s not everything but it is the way of the world, you know, those are the people who will end up having that good balance.

Paul: That’s right. I agree. Well, we’re here with Brian Gravel, and he’s with GraVoc in Peabody, Massachusetts. He’s the vice president of creative technology. And we’ve had a great talk. I think this will end up being a couple of different podcasts. So if you’re hearing this, go back and listen to the other episodes as well. So, Brian, thank you for coming. Really appreciate it.

Brian: Thank you for having me, Paul.

Paul: Absolutely. Thank you.

Also published on Medium.

Looking back: The Edge of Innovation – A Discussion on Cryptocurrency

April 4, 2017 / Hannah / 0 Comments

This episode of “The Edge of Innovation” is about Cryptocurrency. The Edge of Innovation is produced in partnership with SaviorLabs.

Show Notes

A New Alternative to Bitcoin

Transcript

Sections

Intro to Cryptocurrency
Cryptographic Math
Bitcoin and Banks
Arbitrage Opportunities

Paul: This is the Edge of Innovation, Hacking the Future of Business. I’m your host, Paul Parisi.

Jacob: And I’m Jacob Young.

Paul: On the Edge of Innovation, we talk about the intersection between technology and business, what’s going on in technology and what’s possible for business.

Intro to Cryptocurrency

Jacob: So, Paul, I’ve heard a lot about this idea of cryptocurrencies. It seems like a lot of people have brought that category up, especially as it relates to Bitcoin. I’d be curious to know, what exactly is cryptocurrency. Can you explain what it is? What does it do?

Paul: Sure. First of all I think it’s important to take a step back and drop the word crypto and look at what currency is. If you go into your pocket and get some change or a dollar bill out, that’s currency. I’m speaking from the United States. If you’re in Europe, you might have euros or another type of currency.

But if I give you a piece of currency from another country, it sort of looks like a toy. You don’t understand what it is. You don’t understand its value. If I give you a yen, a bill, it’s 1000 yen, you don’t know if that’s $1000; you don’t know if it’s $10. You don’t know if it’s a penny. And same thing: The dollar has a bigger penetration globally, and people tend to want to trade in it. So, we understand, certainly as Americans, the intrinsic value of a dollar.

Now, one thing that’s very difficult in currency as I just alluded to is the exchange of currency. You’ve been to an airport, and you can exchange your dollars for euros, and you’re sort of, “What does that mean?” Or dollars for Canadian dollars, or dollars for Australian dollars. I’m going to give you one euro for every $1.50 you give me. So, if I wanted to go buy a can of coke that’s $2 here in America, let’s say, that’s sort of like one and a half euros in Europe.

We’re not used to doing that translation in our head. And so that’s why it’s very difficult for anybody to be sitting there and saying I do that translation. Any new type of currency, whether it’s crypto, euros, whatever it might be is going to face the problem of how do you convert.

The reason why we convert is because the institutions that back those currencies put a value on them. And the world’s view of those institutions puts a value on them. It used to be that the United States had a currency that was based on the amount of gold it had in storage. And that was done away with. So, now we’re working on what’s called the full faith and credit of the United States. And the same thing with the euro zone. They back it, and they have a certain tie-in to value.

As we’ve heard in different discussions of late, different countries can change the value of their currency. And change how much goods are worth to the outside world so that they can make a trade advantage or disadvantage. So now, when we come to cryptocurrency, you say, “I want to buy a bitcoin.” Well, what’s it worth? There is no coin.

Cryptocurrency is based on the idea that is it a string of bits, ones and zeros, that is a large number that represents something. That basically represents a share of the amount of cryptocurrency that’s out there.

Well, why can’t I just make a new set of numbers? And write down a new random string of numbers? And that’s where the bitcoin or the cryptocurrency comes in, because there’s some strong math that has to be done to create those valid strings of numbers. When they’re issued, they’re recorded in a ledger. And they’re recorded in that ledger by more than one person, or really computer. And so, what you have is it’s very difficult to get the needed numbers of people that are out there to agree that this number has been issued.

It’s a little bit esoteric as I’m saying it. And it is esoteric.

Jacob: Yeah. You sort of lost me. So, you have to get people to agree to that number?

Paul: Yes. Exactly. So, if I go and write something in the ledger and say that Paul has $10. The people who control that ledger, because it’s a public ledger, all have to agree that yes, Paul has $10. Now, that sentence is easy for us as humans to understand. But it’s cryptographically significant. And what that means is that we use both private and public key encryption, a way to encrypt something that only the person that has the key can decrypt it.

These journal records are stored in something called the blockchain. The blockchain is really one of the coolest inventions of the past five or ten years, and is ways to record these and have everybody do the cryptographic work on these signings, and record them in the blockchain and say, “Yes, I agree with that.” “Yes, I agree with that.”

So, Paul said something in there with his cryptographic signature and then the other people calculate that and say, “Yes, I confirm that.” And you have to have a majority of people saying, “I confirm that.”

Now, if you’re thinking about that and we’re going at this very surface level because it gets very complicated very quickly… If I could convince more than 50% of the people that are verifying that blockchain to lie and literally take “Paul has $10” and say, “Yep, that’s valid,” I have effectively broken the trust of the blockchain. It other words, I’ve manipulated it. So, I didn’t have $10. I just said I had $10. And you could do that. There’s a thing in computers, never say never. There’s always ways to hack things. It would be hard, but it’s certainly not impossible.

It would be very hard because you’ve got them distributed all across the world and they’re all doing this work. And that’s what a bitcoin miner does. It validates those blockchain entries, among other things.

But the key thing is a person in business looking at bitcoin is to really start to think of it as a different currency. Now, if you’re in America, you probably don’t accept euros on your website. You may not accept Mexican pesos on your website. So, you say, “Why would I? Because the majority of the people that are coming here don’t use those currencies and they wouldn’t know what they are.”

And it’s important to note that our credit card system is not designed to deal with multiple currencies, because there has never been a motivation to do it. If you go down to the restaurant and you want to buy a bowl of soup, and it’s four dollars, you know what $4 of value is. The minute I say that’s one bitcoin, you’re like, “I don’t know. What is one bitcoin worth?”

And coupled with that, bitcoin has been relatively volatile. So, you have indications… Zimbabwe over the past couple of decades has had rampant inflation. So, a loaf of bread could have been a thousand bits of their currency, whereas yesterday it was at one unit of their currency. So, you understand that when you’re going through it, and it’s constrained.

In the whole Greece scenario… I have a friend who’s a developer there and sells his software internationally, and if he sells it with the Greek currency, there’s all sorts of problems. If he sells it in American dollars, that’s relatively stable. But you can check every day with the currencies, the conversion rates between Canadian dollars and US dollars and euros, and they fluctuate.

What’s that fluctuation caused by? That’s caused by the banks saying how much it’s worth and controlling that, and the governments make statements and the Federal Reserve, etc.

So, what controls bitcoin’s value? Well, it’s what anybody is willing to give you. That’s the ultimate judge of value. So, if you have a house you want to sell and you put it on the market for $10 million, and somebody comes along and says, “I’ll give you a dollar for it,” well, it’s worth a dollar. If somebody comes along and says, “I’ll give you $100,000,” well, now it’s worth $100,000. But that is the ultimate definition of what value is.

CryptographicMath

So, in the bitcoin world, what they’ve done is there’s a limited number of bitcoins that can be created through this cryptographic math. In the early days, the cryptographic math was very easy, because it was sort of like low-hanging fruit, the easy problems to solve. But as we’ve progressed, it becomes more and more difficult. It’s at the point now, where if you’re generating cryptographic bitcoins, the amount of electricity that you need to do it is very close to the amount of bitcoin value you would get out. So, if you run a computer for a year, and you say it costs me $10 to run that computer in electricity, you may get about $10 worth of bitcoins out.

So, all of these things coalesce to say what is bitcoin worth. Well, if you look at it, they’re about $450. Who knows what day they were recording this or what day you’re listening to this, and it changes wildly. We’ve seen fluctuations anywhere from…just huge fluctuations. That is fundamentally a problem with cryptocurrency, is that people don’t have a sense, or will not have a sense when they take it out of their pocket, or use their phone, of how much they’re actually spending.

If I could convince you to give me one bitcoin for this cup of soup, that doesn’t sound like a lot. Well, it’s worth about $450. So, now it’s like, “Wait a minute. How do I deal with micro-payments? I have to give you 0.0002 bitcoins.” Well, of course, we do this all on our phones or computers. So they handle all of that, sort of chopping it up into bits.

But you still don’t know what 0.0002 bitcoin is. You have no concept of that. Well, you say, “I’ll compare it to dollars.” So, that’s an intrinsic problem with cryptocurrency, is it doesn’t have any tie to the real world. And people…we’ve got thousands of years of dealing in the real world.

So, you could have the typical scenario where your kid goes on Amazon and buys all these things, thinking they’re all free, and it’s going on your credit card. They didn’t have a comprehension of how clicking the button changed to money. So, you look at it and say, “It’s only $2. Go ahead and do that.” The whole iPhone and iTunes store is spend a dollar. It’s no big deal. It really prevents you from putting that filter in to say, “Wait. That’s $10. I’m not going to spend that.” You don’t do the value calculation.

But now when we present it as a bitcoin or as other cryptocurrency, you’re going to be like, what does that actually mean?

So, there are some intrinsic things for it to overcome. One of the reasons people have felt that cryptocurrency would be good is because it’s hard to hack.

I don’t know that it is hard to hack. There has been a lot of high-profile people, examples where there have been hacks of people who owned bitcoin on behalf of other people. They broke in a stole it, the digital signatures that represent your bitcoin.

So, if you take an external hard drive or a memory stick and put this big, long cryptographic key on it in a text file and you put that through the wash and it gets destroyed, that’s gone. It can never be returned. Just like if it were a dollar bill and you shredded it, it’s gone. You can’t go back to the US government and say, “Well, I had a dollar bill. Here’s its serial number.” They’re going to say, “Tough.”

So, it has those same attributes. So, there’s no advantage there. But I will say, it’s probably more difficult for me to get your wallet out of your pocket and take the dollar bills out of it than it is for me to potentially hack in and get a file on your computer and copy that off and use those cryptographic keys.

So, there’s a lot to be figured out there. One of the use cases “it’s really cool“ you say, I have a phone. It has a fingerprint reader and I can spend bitcoins. Well, the only way it will let you spend the bitcoin is because you scan your fingerprint. Well, that’s good. I’d have to cut off your finger in order to steal the bitcoin or the cryptographic currency, which isn’t terrible. I could also take a scan of your thumbprint and maybe work around that. It’s got to be worth it. If you only have $10 is bitcoin, why waste my time?

So, there’s all of these challenges swirling around cryptocurrency. One of the other advantages that has been extolled is that it’s secret or private. That’s just patently false. The Silk Road prosecutions by the FBI used the blockchain to figure out who spent the money and traced it back. And the blockchain is basically a chain of blocks of information and you can follow them through to figure out who originated the money.

And if you go out and try to say, “I want to buy some bitcoin…” This is one of the things I try and play with is trying to figure out how to be anonymous. You cannot anonymously buy bitcoin. There is no way to do it. They want a credit card number. They want your social security number. They want everything you can. These are government mandated, or at least done in acceptance of government saying something like this needs to be done. Because they want to be able to come in and audit and say, “Who did you sell bitcoin to?”

So, if I go out there and go to anybody, I’ve got to prove who I am. I’ve got to send them a bunch of signatures. I have to send them a phone bill, something that’s got my address on it, that has my name on it… This is really things that I have to do. I can’t just take a credit card and buy some bitcoin.

In the future, we should have a talk about how to be anonymous and different options in there, because it’s a cool thought experiment.

Paul: What’s the advantage? Well, it is a one-world currency. I don’t know if that’s an advantage. There’s talk that the end of the world will be… Part of a one-world currency will be one of the things. Well, are we seeing that happen? I don’t know. But it is the idea that one bitcoin is worth $450 today, for example, here in the United States. And in Australia, at that some moment, it’s worth $450. Whereas, the minute I have to convert a currency, it’s the matter of how much somebody will give you for it.

Bitcoin and Banks

Jacob: In some ways, what you’re describing sounds a bit like the Wild West of currency, which I find interesting. I don’t know if that’s a correct application or analogy, but it does interesting to me that in light of all of those concerns and some of the positives of it, that you recently recommended an article about Bank of America and other large financial industry entities getting into cryptocurrency and trying to get into the blockchain dynamics of that. Can you talk a little bit about why they’re trying to do that and what advantages there are for big banks in doing that?

Paul: Sure. Well, all of these flaws…and there are other flaws which we haven’t talked about, about the scalability and the programming and all kinds of things like that, sort of the soft underbelly. Forget about all those. There’s a lot of money to be made in any new currency. So, any of those entities are going to want to invest and get their pieces of the pie. So, Bank of America… It was Bank of America, right?

Yeah, so they’re out there saying, “Somebody is going to make money on this. We want to have patents that say when you…” Let’s make up a silly patent. Every time you convert bitcoins to dollars, you have to do this lookup on the exchange, and you have to compare it with this exchange, and you may arbitrage some of those exchanges. Well, we’ll write a patent on that. And all the patent is, is a specific way of doing things, a methodology that isn’t generally obvious by just looking at. Like a door, it would be difficult to patent a door now, or a hinge that uses a door. But the first guy who figured out the hinge could have patented it because it wasn’t necessarily obvious by just looking at it.

So, as we develop patents, those things become obvious, and they want to stake their claim, and they certainly have the resources to do that. And this is sort of staking their claim, like the Old West, the gold claim. They’re going to go out there and do everything they can because they have armies of engineers who can think up idiosyncratic ways of doing things and then patent that.

Now, what will happen is they’ll patent things and they will get those patents awarded. And what will happen is people will then come back and say, “No. That’s an obvious application and shouldn’t have been awarded a patent.” So, our patent system is relatively broken in that way. But, of course, they would be doing that. And every big company is doing that.

So, one of the examples I’ve seen being around is it’s so difficult to buy bitcoins. Why don’t you have somebody buy them for you?

Well, there’s some regulatory problems there, but I could start an offshore organization that says I’m going to buy bitcoins for you and hold them for you. So, I’m never going to transfer them to you. So, I’m going to put a ledger together that I own that says, “This bitcoin belongs to Jacob. He has one bitcoin.” And I keep them in my bank.

And this is one of the problems that has happened is people have broken into those banks because they didn’t have good security and stole that ledger. And then I have some bad news for you Jacob. I know you have five bitcoins stored here, but I lost the money. I literally lost the bills. So, you can sue me, but usually these organizations don’t have a lot of assets.

Jacob: What are the ways in which you’ve seen entrepreneurs and startups engage cryptocurrency in their business model?

Paul: Well, right now, given it’s such an early stage, very Wild West, you have people that are primarily saying, “How do I get cryptocurrency? How do I take it? How do I accept bitcoin? How do I do that?” That’s where all the innovation is about right now. It’s nothing really sexy. It’s just a matter of…

Here’s the thing. You open a bookstore on the internet, Jacob’s Books, and you go out and find used books and rare books all over, and you list them on your site, and you say, “Here’s a first edition of this book. It’s $500 or 1.1 bitcoins.” If you got a check for $500, or you got $500 on your credit card, you’d feel fine. If you got 1.1 bitcoins, you would feel, “I better go cash it in right now.”

You see, you have a decision now. You can now be a currency trader. You can decide to be the arbitrage person that says, “Based on the indicators, I think bitcoin is going up this week.”

Jacob: Right. So, I can get that and say, “This 1.5 bitcoin does, for today, equate to $500. But I could hold onto this and this book that you would have sold for 500 USD, it could have make $1000, depending on how bitcoin goes up in two years.”

Paul: Yes. Or it could go down. So, you have a huge thing to think about. A whole mind share that you’re not designed, you’re not used to thinking about. You don’t arbitrage currency. You could do the same thing with the Canadian dollar or euros, is say, “Pay me in euros.” Because they’re going up. If you pay me Chinese currency, they’re devaluing their currency. So, if I gave you 100… I don’t even know what the Chinese currency is, but if I gave you 100 of their pieces of currency, and it was worth $10 today, there’s a good chance in six months it might be worth $8.

Well, you would feel bad about that, a 20% loss on it. What in the world am I doing here?

Jacob: So, is it advantageous for businesses to transition their primary currency over the cryptocurrency, where it’s not just static money, but it could in effect be a bit of a stock option/currency as well?

Paul: You could do that. I think that’s ill-advised because the forces that control the fluctuation in that are very Wild West. There could be a break-in on somebody that steals a bunch, and they’re very volatile. It could go down ridiculously.

Jacob: So then, what are the entrepreneurial future ideas for using cryptocurrency?

Paul: Well, just because it’s not a great idea to use it doesn’t mean people will be smart enough to not use it. It has a lot of pizzazz and appeal right now, and gee-whiz. So, I think building tools and allowing people to use cryptocurrency on your website are good ideas.

Now, if you have a website that sells to children, they’re probably not going to use cryptocurrency. So, you do have to evaluate that, and say where does it make sense. So, if you look at TigerDirect accepts bitcoin. Well, their clients are nerds. So, I buy from TigerDirect and I’m a nerd, so I can understand that.

Amazon doesn’t accept it yet. So, it hasn’t really moved into the mainstream. But that leading edge…it’s cool to do. I don’t think most of the people that are running websites or commerce websites out there are going to see a big uptick in conversion because they have added cryptocurrency to their website. But I could be wrong. It’s sort of an underwhelming situation.

Jacob: And would it be advantageous for organizations or companies that are more international, per se, rather than ones that are just domestic?

Paul: Well, it’s not a substitute for accepting local currencies. Because if you go and you say, “I’m going to expand to Mexico. I’m an American. I’m going to expand to Mexico. We only offer bitcoins and dollars.” That’s not a big market. That’s not a lot of people that are carrying bitcoins around or dollars. So in order for me to do that, I really need to still reach out.

Now, if you fast-forward 30 or 50 years, that may be different. And it more than likely will be somewhat different. The biggest thing with the cryptocurrencies and a proper iteration would be that they couldn’t be manipulated.

So, the scarcity of cryptocurrency is real. There is only a certain number of coins or cryptocurrency that’s available. And it is very much limited to that. Whereas, dollars are largely fictional. There is nothing stopping the US government from printing. If we had a million dollars in circulation, they could print another million dollars tomorrow. There’s nothing stopping them from doing that.

What does that do? Does it change the price of a cup of soup from $3 to $6 because we just diluted the money supply? It doesn’t because we’re not programmed that way as people. We interface with money and say, “It’s $3.”

Inflation has to happen. That’s a different thing where the costs change and expenses and values change. But when it’s dealing with just currency, I can print as much money as I want.

With a cryptocurrency, you can’t do that. So, I can’t manipulate the value of the currency relative to the world market. And that’s one big advantage to cryptocurrency. It can’t be manipulated as easily. I won’t say it can’t as easily as a government backed…

Jacob: So, for businesses, it would seem to me that potentially for established businesses, it would be risky but worthwhile to explore the idea of cryptocurrency right now. Would it be better to wait for cryptocurrency to develop further?

Paul: No. I think you’re going to have to have some… This is the time where you start to look at it and say, “Do we want to do that?” The real question for a business is when you actually get a customer spending cryptocurrency, do you convert that to your local currency. Do you convert to dollars? That’s the crisis.

Now, you may say, “We’ve got one customer who has a subscription website, and it’s a few thousand dollars.” So, if somebody comes in and buys that in bitcoin, let’s say it’s 10 bitcoin, $4500. That’s what it’s worth today. Tomorrow it goes up to $500. They feel good. Let’s cash out. But tomorrow it goes down to $350. They’ve just lost $1000.

We’re not wired that way in our heads. So, you do need to make those decisions as when do you take and convert that money into fungible assets in your currency.

Jacob: So, it would be helpful for CFOs within a company to have a handle on how that stuff works

Paul: Absolutely.

Arbitrage Opportunities

Paul: I do think there’s a huge business opportunity there, is to be the arbitrage organization. And if you offer that with the proper insurances… So, you go and you get an insurance policy from Lloyd’s of London or one of the big insurance companies like that that says, “We will arbitrage. We’re buying currency, using dollars, and we’re buying bitcoin. Today we bought them at $450. Oh, we see it going down.” And they do their magic, and they know it’s going to go down the $350 tomorrow. Well, they would go out and buy a lot of it, because they also know that the next day it’s going to go back up.

Now, they make mistakes, but they do it in such volume that those mistakes are leveled out. Offering that arbitrage service to a small business or a business is a huge advantage. That doesn’t seem to exist right now.

Jacob: And it seems like another advantage for an entrepreneur asset in this area would be basically training and consulting for CFOs and the financial industry in ways that they don’t understand cryptocurrency.

Paul: Absolutely. I think there is an opportunity for that. But I think even more so, there’s an opportunity for these…somebody to offer. We’ll take that offer.

Jacob: I see. Not just consulting but just to take it away.

Paul: We’ll just do it for you. Because arbitraging only works when you have vast amounts of investments. So, if you’re good at that, why not offer that, broker that arbitrage?

Jacob: The Edge of Innovation is brought to you in partnership with SaviorLabs. SaviorLabs exists to help businesses mature and strategize for the future. Learn more about SaviorLabs at saviorlabs.com.

Thank you for listening to this episode of the Edge of Innovation: Hacking the Future of Business. For the show notes and more information about Paul, please visit paulparisi.com.

The Edge of Innovation is produced by Jacob Young, in conjunction with copious amount of coffee. Music on today’s episode is from bensound.com. Paul can be found on twitter at PDParisi and on LinkedIn at linkedin.com/pdparisi. This episode, like all our episodes, is transcribed and available at paulparisi.com. Thanks for listening, and we’ll see you next week.

Also published on Medium.

My Kingdom for a Font!

September 23, 2016 / Paul / 0 Comments

Do you know the difference between an m-dash and an n-dash? What about a hyphen? Differences such as these are probably perceived by your eyes and brain on a daily basis, and they affect the nature of how you process content- but it is unlikely that you spend considerable time pondering their intricacies. When choosing a font, it is critical that you consider these factors. Every letter and curve tells its own story in beautiful art that deserves respect.