~ Archive for Business ~

Some thoughts about cryptocurrencies and the banking system

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Someone recently asked me about the future of the financial sector, especially that of the banks. To be upfront about it, I don’t work in the finance sector but this is my take on it.

 

With the development of Web 3, blockchain and cryptocurrency, the concept of money is going to continue with its current trajectory of journeying towards digitization and decentralization. Money has already been existing in the digital format for quite some time and I believe that this transformation was actually integral to the early growth of the financial sector at the turn of the century. Along this journey, the digitization of money also helped to spark the proliferation of many creative pursuits, ones that help to reimagine currency and its storage.

 

First, we witnessed the emergence of DeFi, which is an emerging financial technology that is based on secure distributed ledgers. This technology removes the control that banks and institutions have on money, financial products, and financial services. This means that anyone can potentially just store their money in their digital wallets without ever going through any third-party organizations.

 

I think that this trend of viewing cryptocurrency as an legitimate medium of transactions, will become stronger when Gen As enter the workforce. Gen A is the generation after Gen Z. This generation is one that lives and breathes cryptocurrency.  Why? This generation is being brought up on a steady diet of games like Roblox and MineCraft.

 

In these types of gaming construct, aside from playing the games, players can also create games for others to play and they can monetize their gaming creations in various ways, such as charging entry fees, paying for superpowers, paying to skip difficult levels, etc.

 

Plus, they can also design digital assets like jewelries, clothing’s, accessories, etc and sell these for a tidy sum of money. Last I checked, one of the players sold a piece of game weapon for around USD$32 and he/she/they/zir sold it more than 1,000 times.  There are many of such cases. Instead of USD, players/ creators earn Robux, which is the digital currency used in the Roblox game and they can store it on Roblox’s server.

 

Through platforms like these, Gen As are exposed to and have become very familiar with earning/ using digital cash. Their first experiences with money never involved any banks, unlike the earlier generations. As such, it is natural for them to view/ use cryptocurrency as an legitimate medium of transactions when they step into the workforce. Salaries by then, could be deposit directly into their digital wallets. Many mom-and-pop stores now also accept cryptocurrency.  By then, they may not even need to step into a bank or use any banking apps for any financial transactions.

 

Second, hackers and scammers have been persistently exploiting banks’ cybersecurity weaknesses and have shaken substantially the consumers’ confidence in banks. During the peak of Covid-19, the Hong Kong Monetary Authority has been busy dealing with such hacking and scamming incidents in Hong Kong. Media platforms have also been reporting similar incidents in other parts of the world and this really added fuel to the fire.

 

At the other end of the spectrum, there were also reports of spectacular weaknesses within the cryptocurrency system. Proponents of cryptocurrency like to promote the view that the blockchain is unhackable but anyone who has done some research will know that this is not true. It just takes a lot longer to hack the system with current technology.

 

These blockchains and nodes, after installation, will always become legacy systems and lagging behind new technology. Even when upgrades have been applied to these legacy systems, the improvements provided by the enhancements are still limited by previous algorithms. New technology can be developed from scratch, and that in itself can be considered as an advantage because it is not encumbered by old build. When new technology develops and computer processing power increases, hackers in the future are going to test the new technology against these legacy systems. I believe that one day it might have sufficient computing power to hack and manipulate the systems.

 

Now, its like watching a tennis match with both sides taking hits, and the bystanders glued to see which side will buckle under first and then they will flock to the safer haven. So, on this second point, I think that the resiliency, stability and security of the system, are extremely important functions of a financial system, and it signals its ability to preserve the wealth of the user. Now, it seems like banks are doing a better job at this, but I noted that not everyone is drawn to this (which I will explain later).

 

Third, the value of services provided by banks are slowly being whisked off by innovations stemming from DeFi. For e.g. people currently buy houses with vanilla products like housing loans from banks. Now, people can potentially buy houses or take out loans by crowd funding from multiple people on the blockchain. Monthly repayments can be split through smart contracts apportioned to the multiple lenders.

 

Failing to repay loan? Well, smart contracts can be designed to pick up on that after certain number of buckets, reassigning titles and activating an automatic auction through a linked property website.  Anyway, smart contracts can potentially be programmed to give out tenders for repossessions on behalf of all lenders. All these actions can be performed without a bank, lawyer(s), and maybe even without a real estate broker.

 

Fourth, at the moment, growing body of organizations and consumers are increasingly concerned about ESG and sustainability issues and how business operations contribute to carbon emissions. Cryptocurrency and its exchanges were previously under a lot of attacks for how much their technology consumes electricity and accelerates climate change. All these time, I noted that coders and technologists have been working extremely hard to make their operations more green and as many already know, some of the exchanges and mining operations are shifting to harvesting renewable energy like hydropower and leveraging proof processes that use less energy. I must say that the people who are on the side of cryptocurrency are making significant headwinds by ensuring that their Scope 1, 2 and 3 emissions are fully minimized.

 

However, I can’t say the same for the banks. The finance sector is a well-aged industry therefore it is involved in different sectors, so even though they may score well in Scope 1 and 2 carbon emissions, I am not too sure about how they will fare in the Scope 3 category. I’ll be really concerned if banks’ Scope 1, 2 and 3 carbon emissions are more than the crypto exchanges and mining operations. I belong to the Millennial generation and I think that the Gen Zs and Gen As are even more concerned about ESG and sustainability issues and this is going to affect their future choices.

 

Fifth, if you notice, we have amazing real stories of how people betted on cryptocurrency and became overnight millionaires and billionaires. People are drawn to such stories because it gives them hope of a better future. As such, many are on the lookout for new Initial Coin Offerings, hoping for a repeat of the BitCoin story. These people are not on the lookout for stability. On the other hand, they are seeking a lot of fluctuations so that they can flip their digital assets at a higher price.

 

Apart from this, we have witnessed extraordinary news reports of Non-Fungible Tokens (NFTs) artists who sold their NFT artworks for millions of dollars and because of this, we have incredible number of people flocking to peddle their NFT artworks. I am actually not concerned about how NFTs could potentially be used as a vehicle for money laundering although it really is a concern. I am more amazed at the social effects created by the invention of NFTs, how NFTs can only be purchased by using cryptocurrencies, how it has activated an extremely large global group of artists and artist wannabes and finally, how all these combined to play a critical role in generating enormous amount of demand for cryptocurrencies.

 

So I currently have these five thoughts and to quickly summarize, it will be that the draw towards cryptocurrencies will become stronger because of firstly, NFTs and second, Gen As coming into the workforce. On the accounts of ESG and sustainability, we cannot be sure that Scope 1, 2 and 3 carbon emissions of banks are more than that of crypto exchanges and mining operations. If cryptocurrencies are indeed more environmental-friendly, it simply adds another point to attracting consumers. In additional to that, innovations stemming from DeFi are competing directly with the traditional financial products offered by banks. This makes both sides equal in some sense and since its equal, consumers would have less resistance in choosing alternatives to banks. Last but definitely not the least, the cybersecurity of the financial system. It influences the consumer’s (or at least just my) perception about the resiliency, stability and security of the financial system, and how these inter-play to preserve the consumer’s wealth.

Creating a Global Talent Venture Powered by Artificial Intelligence (AI), for Consultants and Professional Service Providers

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I haven’t been writing for quite a few months. My last writing was on 17 April 2022 and between that article and now, roughly about four months, I’ve been studying about Artificial Intelligence (AI) and applying those concepts to building Genkii.io.

 

So, what is Genkii.io?

 

Basically, it is a talent venture that is powered by AI and the entire construct is to supplement consultants’ and professional service providers’ business development in a big way. Once someone or a company has listed their expertise on Genkii.io, our system will continuously monitor the digital space for business opportunities and promote relevant expertise to buyers or companies that may need them. It’s a hunter type of promotion, different from the usual passive promotion.

 

So why have I decided to start Genkii.io?

 

Well, I feel that one of the greatest challenges now, firstly, is the slow transition to a work-from-anywhere business model. At the moment, I believe that we are witnessing the tip of what the future of work might be. I predict that this trend of working-from-anywhere is only going to get stronger when the Gen A enters the workforce, and this wave is going to disrupt immigration and political systems that thrive on immigration.  This will exert substantial pressure on such systems’ ability to grow economically.

 

Second, the workforce is not as hungry as before. The prices of real estate should continue to rise, and mortgages are expected to be more expensive as the rates go higher. I think that in countries where it’s a cultural thing for people to stay with their parents, they will continue to do so.  However, I noted that more people are staying with their parents, and this is happening in countries where people usually move out after a certain age.

 

Nowadays, parents are telling their kids to quit their jobs if they don’t like it because they already have a roof over their heads. The younger generation retreats into their room, start their content creation business or begin to take on work that’s related to their skills, for e.g. doing software testing for multiple clients from anywhere.

 

Third, it’s relatively difficult for people of other colors to secure employment now, and it might become even worse when work-from-anywhere becomes the norm. Since companies might be able to employ workers from anywhere in the future, there could be the warped possibility for recruitment to take on people from just a certain region, country, etc. If this happens, it’s going to strip away a lot of employment opportunities.

 

Thus, I decided to create Genkii.io. On the surface, it looks like just any talent venture or global marketplace, but it is actually powered by an expert system underpinned by an inference engine that relies on backward and forward chaining technology. Recruitment into the Genkii.io talent venture is based purely on talent. Business development is also based purely on talent.

 

Through this platform, we are trying to support people who take on remote work, helping them to break free from certain recruitment biases and hoping that this will eventually supplement their incomes or maybe even make it their main source of income. Consultants will also be able to make use of the integrated finance system to manage payments.

 

After we launched the talent venture, we’ve so far attracted more than 800 plus talents, but we had to scale it back to the 300 consultants to maintain quality and as of the date of this writing, it has gone over 400. I’m very glad that we’ve actually managed to find a practical use case for this type of AI expert system. I sincerely hope that it could serve the global community and unlock economic opportunities for them.

 

We are still trying to improve so this is work-in-progress.

 

The future of work: Fusion of humans, robots and artificial intelligence

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The retail industry has certainly been through a lot throughout the entire Covid-19 saga and its still undergoing a lot of staffing challenges. Some workers refused to go to work because they are concerned about being infected by the Covid-19 virus. On top of this, the number of takeaways has increased dramatically, resulting in massive work load.

The industry has already been suffering from staffing shortages even before the Covid-10 pandemic and this pandemic only exacerbated the problem. So, some companies have decided to develop retail stores that are entirely powered and controlled by IT technology, such as the ones in Singapore. They call it AI-stores and the operations were designed to be cashier-less and checkout-free.

AI-Powered Retail Therapy

While most of the operations are powered by IT capabilities, humans are still required to replenish dwindling stocks and there is also limitations to how the IT capabilities could react to unforeseen circumstances.

Recently, Japan released their prototype robot that can be controlled remotely to replenish drinks stock. I think that this could augment the AI stores. This robot has a wider range of motions as compared to the stores’ mechanised fixtures. Workers who are concerned about being infected by Covid-19 can simply choose to work from home with this robot.

Plus, those who are differently-abled can now work with this robot to perform tasks that they could not perform previously. Managing the shift-work is also a major issue among management. With this robot, the manager can schedule tasks among different employees without concern about travelling time.

In a way, it is also much safer for the workers because they are not physically exposed to any potential high-risk situations (robbery?) as well.

The companies that worked on this robot are pushing for the next frontier in that they are coding more scenarios and improving hardware capabilities. This so that the robot can handle different types of products other than drinks.

While the prototype is just meant for the retail sector, the potential to extend this capability to other sectors is certainly possible. Funnily, the prototype initially comprised the robotic arm, carrier box and the motorised wheel system, and the “head” was later added on to make it more human-like to the customers.

This idea could also be extended to sectors like construction, manufacturing, maintenance work, healthcare and many other sectors as well. A company can simply set up this system in any parts of the world and access workers from anywhere. There is improved efficiencies in manpower allocation and cost-saving from having to deal less with visa applications (if the deployment is cross-border).

A lot of people focus on the idea that AI is going to exclude humans in the future of work but there are other possibilities as well.  I think maybe we should stop dwelling on how this technology could be weaponised. Instead of that, why not focus our attention on a positive future and manifest that possibility. This is a clear example of how humans, AI and robotics can come together in the future of work.

I am looking forward to the prototypes’ update. They will be announcing it soon. With this, we will be able to open up a new working environment to differently-abled people and embrace whoever was excluded from proper employment.

Imagine receiving a welcome-to-work mail package comprising the remote-controllers and googles and that is it, you can begin to start work in your room when your shift has begun!

 

Echo chamber risk and the role of middle management in information flow

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I kept encountering the phrase “Echo Chamber” this week and even though I know what it stands for, I can’t help but to look up its meaning on Wikipedia. On Wiki, it defined Echo Chamber as,

Echo chamber (media) An echo chamber is “an environment where a person only encounters information or opinions that reflect and reinforce their own.” In discussions of news media, an echo chamber refers to situations in which beliefs are amplified or reinforced by communication and repetition inside a closed system and insulated from rebuttal …

 

Just think about it, recent history is replete with examples of leaders being entrenched in their own interpretations of truth, particularly when circumstances turn against the company. Instead of responding logically to the cautionary signals all around them, they dig further into their echo chamber, listening to the deputies that they’ve surrounded themselves with.

One of the most dangerous aspects of echo chambers is that they lead to a lack of creative ideas, similar viewpoints, and identical concepts. On an organisational level, I seriously think that this can limit our chances for progress and stifle constructive discussion.

Now, with the vast quantity of information available on the internet, I don’t really think that it is difficult to obtain “evidences” that support a committee’s viewpoint. The challenge, and very useful one indeed, is to discover dissident ideas and views that do not correspond to your own point of view and build these insights into our strategy, and this can only be achieved by deliberately seeking out people and groups that are not so similar and also maybe from other industries.

The risk is, deputies or middle management might tend to form committees that comprise people who more or less mirror the views of the head honcho. Importantly, these middle managers represent the company’s culture by encouraging and implementing appropriate beliefs and behavioral patterns throughout the organisation.

Fundamentally, the flow of information in an organisation is also controlled by middle management. They are privy to crucial information and gossips (important too!) and it is up to them to communicate (or not) the critical information to the appropriate supervisors or departments. Failure to surface critical information can sometimes lead to the fall of the leader or worse, the organisation.

Perhaps leaders could also consider to be more purposeful in surrounding themselves with advisers who are competent, logical, confident, and genuine in order to counteract this Echo Chamber risk, otherwise they risk slipping into this fatal communication gap.

One good example would be Nokia; its fall from being the world’s finest mobile phone firm to losing everything by 2013 has become a case study that professors and students in business management classes have examined. Not only did they formed an echo chamber, they also fostered a very toxic work environment. According to a study (Vuori & Huy 2016) with 76 Nokia top and middle managers, engineers and external experts, they discovered the following about Nokia:

  • Nokia was plagued by organisational anxiety at the time;
  • The anxiety in the organisation was rooted in a culture of toxic working environment filled with terrified middle managers;
  • Top executives frequently intimidated middle managers by accusing them of not being ambitious enough to achieve their objectives;
  • Middle management was afraid to reveal the truth for fear of getting sacked;
  • Middle management lied to top management because they believed stating the truth was pointless; top management lacked technical knowledge, which affected how they could judge technology limits during KPI formulation; in comparison, Apple’s top management were all engineers;
  • Middle management were hesitant to openly admit that Symbian, Nokia’s operating system, was inferior;
  • Top executives were terrified of losing investors, suppliers, and consumers if they admitted to Apple’s technological superiority;
  • They were aware that developing a superior operating system capable of competing with Apple’s iOS would take several years; and
  • Rather than committing resources to long-term aims such as building a new operating system, Nokia management chose to create new phone handsets to meet short-term market demands.

Nokia’s demise was precipitated by a series of poor decisions, yet none of the company’s errors were unavoidable. I think that there are several lessons to be drawn from the demise of this technological behemoth.

Reference(s):

Vuori, T. O., & Huy, Q. N. (2016). Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle. Administrative Science Quarterly61(1), 9–51.

 

Turning a crisis into an opportunity: Crippling effects of increased level of carbon dioxide and global temperature on hydroelectric power plants in tropics and subtropics regions

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Photo by Quang Nguyen Vinh

 

Written by Zeng Han Jun

A recent survey showed that there is a slight shift in people’s interest in favor of renewable energy. According to this survey, governments should consider exerting more influence in raising environmental consciousness and bridging the gap between people’s desires and realistic energy alternatives (Zhang, Abbas,Iqbal, 2021). Popular renewable and clean energy options include hydroelectric, geothermal energy, wind energy, solar energy, etc.

 

By bridging the gap between people’s desires and realistic energy alternatives, the government could realise people’s expectation and also reduce the burden on our environmental ecosystem, but it is also important to note that operationalising, has its fair share of challenges. For example, in the United States, there is general consensus among some people that harnessing wind energy could be one of the solutions to alleviating the energy challenge. Among those who agreed, some have the Not-In-My-Backyard (NIMBY) mindset and do not want any of those power plants near their homes. 

 

Some cited personal health issues and environmental degradation, while others say that the construction will destroy the view from their houses and devalue the properties in the vicinity. All these concerns stand in the way of implementation and of course, I have to agree that these are indeed issues that should be addressed accordingly and dealt with properly. 

 

In the tropics and subtropics regions, we could be witnessing other increasingly challenging issues stemming from global temperature and carbon dioxide increase, its effect on the natural ecosystem and this might possibly disrupt the operations of hydroelectric power plants.  

 

Let me explain why.

 

As the global temperature and carbon dioxide increase, we might discover that it becomes more difficult to maintain biological control on the proliferation of aquatic weeds in many parts of the world (Baso, Coetzee, Ripley, Hill, 2021), more so in the tropics and subtropics. The tropics and subtropics region are located in parts of the world in which the sun is directly overhead at least one day of the year and is found within a band on either side of the equator from 23.5°N, and 23.5°S. These aquatic weeds can grow rapidly to cover the entire surface of lakes and rivers, some even setting deep roots and form strong lateral connections to each other as well. 

 

As mentioned earlier, these growing aquatic weeds might cause operational difficulties for hydroelectric power plants. It could lead to reduced throughput and eventually cause severe blockages. Hydroelectric power plants that are situated in Southeast Asia, would be at the greatest risk. Southeast Asian governments must anticipate these types of obvious problems and develop an integrated and multi-phased roadmap to tackle the upcoming challenges.  

 

So, do not naively assume all types of green are good. Some types of green when left unchecked, can contribute to severe environmental and commercial consequences. 

 

One of the problematic aquatic weeds is the water hyacinth species. This species grows very fast and some even flower under the right conditions. Many in fact think that it is very beautiful.  It  has a rapid growth rate in warm temperatures (Mitan, 2019) and can potentially cover the entire lake if left unchecked. This prevents sunlight from reaching the bottom of the lake and disrupts the lake ecosystem. In other parts of the world, local communities have tried to use pesticides to control aquatic weeds. Some tried to introduce insects such as weevils to feed on the water hyacinth to slow its growth but such methods also have its consequences.

 

Apart from meeting the issue head on, central and local governments could also try to mitigate the risk by transforming/ retrofitting the affected hydroelectric power plants to harness other forms of renewable and clean energy. It is more cost-effective to install alternative renewable energy devices on infrastructures that can already receive, store, transform and transmit electricity. 

 

Also, it is worthwhile to explore tapping on the creativity of the private sector to transform the issue into revenue-generating ideas such as collecting aquatic weeds, processing it and mixing the by-products with polymers to create fabrics that can be used for weaving garments thereby paving way for sustainable fashion. Or, the aquatic weeds could be harvested, processed and strengthened with chemicals to produce furniture thereby giving birth to sustainable furniture. Additionally, the private sector could also explore processing the aquatic weeds into edible food for humans, animal feeds and fertilisers, and export the final products to other countries (Oa, & Cf, 2015).

 

By including additional later stages such as breaking down these final products with pyro technology then harvesting the by-product as fertilisers (Ramirez, Pérez, Flórez, Acelas, 2021), the government, with the help of the private sector would be able to close the loop and further develop the entire idea into a circular economy. This can help to create new jobs, improve the economy and certainly goes well with the media.  

 

There are many ways to tackle the issue. The main enabler is to have a properly designed, integrated and multi-phased roadmap to guide the entire transition. 

 

References

Baso, N. C., Coetzee, J. A., Ripley, B. S., & Hill, M. P. (2021). The effects of elevated atmospheric CO2 concentration on the biological control of invasive aquatic weeds. Aquatic Botany, 170, 103348. doi:10.1016/j.aquabot.2020.103348

Oa, S., & Cf, O. (2015). Utilization of Treated Duckweed Meal (Lemna pausicostata) as Plant Protein Supplement in African Mud Catfish (Clarias gariepinus) Juvenile Diets. Fisheries and Aquaculture Journal, 06(04). doi:10.4172/2150-3508.1000141

Ramirez, A., Pérez, S., Flórez, E., & Acelas, N. (2021). Utilization of water hyacinth (Eichhornia crassipes) rejects as phosphate-rich fertilizer. Journal of Environmental Chemical Engineering, 9(1), 104776. doi:10.1016/j.jece.2020.104776

Zhang, Y., Abbas, M., & Iqbal, W. (2021). Perceptions of GHG emissions and renewable energy sources in Europe, Australia and the USA. Environmental Science and Pollution Research. doi:10.1007/s11356-021-15935-7

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