Future

Why Big Tech Hasn't Joined The Crypto-Revolution

Internet giants have now started flirting with decentralization, to try and replace the so-far failed hopes of Bitcoin and blockchain technology.

Time to let go, man
Time to let go, man
Lionel Laurent

LONDON — Pop quiz: Which of Alphabet Inc., Apple Inc., Amazon.com Inc., Facebook Inc. and Netflix Inc. has shouted most to investors about Bitcoin or blockchain?

The answer is ... none of the above. Bloomberg's database of regulatory filings shows no mention of either blockchain or Bitcoin in these companies' disclosures since 2008. The closest was Netflix CFO David Wells, who said on an earnings call last year that a "borderless currency" within the next decade might be nice.

This apparent silence — and bear in mind regulatory filings don't cover social media or interviews — is telling. This is a successful billionaire class which embodies mottos like "move fast and break things' or "step by step, ferociously."

Facebook isn't going to torpedo its business model for the fun of it.

The Winklevoss twins championed Bitcoin, but Mark Zuckerberg never did. Bill Gates has been as dismissive about Bitcoin as Warren Buffett. You still can't do your shopping on Amazon using digital currencies. Given the volatility of cryptocurrencies, the regulatory risks involved, and deflating demand, it's little surprise that the biggest steps taken by the tech giants have been banning ads for Bitcoin clones.

But why has there not been more excitement about speculation-free, company-friendly blockchains, which tout distributed ledgers as efficient and secure?

Big banks like HSBC Holdings Plc have been eager to promote it as a more efficient way to move secure data around without hurting its underlying business. Yet almost a decade after Bitcoin's creation, Zuckerberg only recently pledged to study encryption and virtual currencies; he has now reportedly put a dozen people on the case.

The dinosaurs on Wall Street have been more aggressive. Financial firms have the biggest share of blockchain patents, according to law firm EnvisionIP, more than tech firms. Even then, the latter group is dominated by old-school brands like IBM.

Are tech firms simply reluctant to embrace blockchain because they see it as an existential threat? True believers argue that the technology is anathema to the powerful Silicon Valley elite, who through sheer size and market share have become incumbents themselves — like banks.

Physical representation of the Bitcoin cryptocurrency — Photo: Marco Verch

Take Facebook: It's a centralized, entrenched middle-man that sells $40 billion of ads annually thanks to user data surrendered for free. Is it any wonder that Zuckerberg might drag his feet in tinkering with this?

Blockchain startups are already being pitched that target the economics of his business: French think tank Generation Libre is proposing to help people control, authenticate and sell their data to platforms for a transparent price via a blockchain. If that took off, one could (just) imagine Facebook losing users and being forced to reinvent itself.

But maybe the tech elite knows something we don't. If big banks have survived the past decade of fintech and crypto-disruption, and dabbled with blockchain experiments to reap the benefit of a buzzword, then maybe the wealthy and entrenched forces of Silicon Valley can do likewise without needing to panic.

The promised crypto-revolution hasn't materialized.

The recent proliferation of Initial Coin Offerings was supposed to disrupt the venture capital funding model, but it seems to have been co-opted: Witness WhatsApp rival Telegram ditching its public ICO plan after raising $1.7 billion privately.

Facebook isn't going to torpedo its business model for the fun of it, and it's unlikely to view rival start-ups as a threat until users sign off en masse and seize control of their data — which hasn't happened.

Sure, big tech companies and big banks probably suffer from the innovator's dilemma, and lean towards conservatism. But the promised crypto-revolution hasn't materialized either.

Zuckerberg's dalliance with decentralization doesn't have to bring a zeitgeist with it. It could just mean that blockchain isn't as cool as it thinks it is.

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Geopolitics

"The Truest Hypocrisy" - The Russia-NATO Clash Seen From Moscow

Russia has decided to cut off relations with the Western military alliance. But Moscow says it was NATO who really wanted the break based on its own internal rationale.

NATO chief Stoltenberg and Russian Foregin Minister Lavrov

Russian Foreign Ministry/TASS via ZUMA
Pavel Tarasenko and Sergei Strokan

MOSCOW — The Russian Foreign Ministry's announcement that the country's permanent representation to NATO would be shut down for an indefinite period is a major development. But from Moscow's viewpoint, there was little alternative.

These measures were taken in response to the decision of NATO on Oct. 6 to cut the number of personnel allowed in the Russian mission to the Western alliance by half. NATO Secretary-General Jens Stoltenberg said the removal of accreditations was from eight employees of the Russian mission to NATO who were identified as undeclared employees of Russian intelligence." We have seen an increase in Russian malicious activity for some time now," Stoltenberg said.


The Russian Foreign Ministry called NATO's expulsion of Russian personnel a "ridiculous stunt," and Stoltenberg's words "the truest hypocrisy."

In announcing the complete shutdown in diplomacy between Moscow and NATO, the Russian Foreign Ministry added: "The 'Russian threat' is being hyped in strengthen the alliance's internal unity and create the appearance of its 'relevance' in modern geopolitical conditions."

The number of Russian diplomatic missions in Brussels has been reduced twice unilaterally by NATO in 2015 and 2018 - after the alliance's decision of April 1, 2014 to suspend all practical civilian and military cooperation between Russia and NATO in the wake of Russia's annexation of Crimea. Diplomats' access to the alliance headquarters and communications with its international secretariat was restricted, military contacts have frozen.

Yet the new closure of all diplomatic contacts is a perilous new low. Kommersant sources said that the changes will affect the military liaison mission of the North Atlantic alliance in Moscow, aimed at promoting the expansion of the dialogue between Russia and NATO. However, in recent years there has been no de facto cooperation. And now, as Foreign Minister Sergey Lavrov has announced, the activities of the military liaison mission will be suspended. The accreditation of its personnel will be canceled on November 1.

NATO told RIA Novosti news service on Monday that it regretted Moscow's move. Meanwhile, among Western countries, Germany was the first to respond. "It would complicate the already difficult situation in which we are now and prolong the "ice age," German Foreign Minister Heiko Maas told reporters.

"Lavrov said on Monday, commenting on the present and future of relations between Moscow and the North Atlantic Alliance, "If this is the case, then we see no great need to continue pretending that any changes will be possible in the foreseeable future because NATO has already announced that such changes are impossible.

The suspension of activities of the Russian Permanent Mission to NATO, as well as the military liaison and information mission in Russia, means that Moscow and Brussels have decided to "draw a final line under the partnership relations of previous decades," explained Andrei Kortunov, director-general of the Russian Council on Foreign Affairs, "These relations began to form in the 1990s, opening channels for cooperation between the sides … but they have continued to steadily deteriorate over recent years."

Kortunov believes the current rupture was promoted by Brussels. "A new strategy for NATO is being prepared, which will be adopted at the next summit of the alliance, and the previous partnership with Russia does not fit into its concept anymore."

The existence and expansion of NATO after the end of the Cold War was the main reason for the destruction of the whole complex of relations between Russia and the West. Today, Russia is paying particular attention to marking red lines related to the further steps of Ukraine's integration into NATO. Vladimir Putin's spokesman Dmitry Peskov previously stated this, warning that in response to the alliance's activity in the Ukrainian direction, Moscow would take "active steps" to ensure its security.

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