Bitcoin’s Big Problem: Transaction Delays Renew Blockchain Debate
Bitcoin is facing a major problem as the time it takes transactions to be processed has increased dramatically leading businesses to stop accepting the cryptocurrency and others to issue warnings that the problems could be terminal.
The problem is not something that has come out of the blue with those within the bitcoin community as well as researchers pointing to this looming issue for some time. The problem relates to how transactions are processed on the blockchain, the decentralized, distributed ledger technology that underpins bitcoin.
The average time it takes for a bitcoin transaction to be verified is now 43 minutes, and some transactions remain unverified forever. Some of the problem stems from the fact that anyone can add a fee to every bitcoin transaction, which bumps that transaction up in the queue, meaning that those who didn’t pay such a fee — or didn’t pay a sufficiently big fee — may be waiting hours and sometimes even days for a transaction to complete.
This is how it works. When someone uses bitcoin to pay for an item in a shop, that transaction needs to be verified on the blockchain. This is done by what are known as miners, individuals or groups who use massive computing power to solve increasingly complex mathematical equations to mine new bitcoins, which come in “blocks” and are mined about every 10 minutes. These blocks are used to record all transactions made on the bitcoin network, and have a maximum size of 1 megabyte (MB), meaning they can record just seven transactions per second at most.
To put this in context, Visa says its payment system processes 2,000 transactions per second on average and can handle up to 56,000 transactions per second if needed.
The result of the slowdown in transaction clearance rates has led some businesses to give up on bitcoin completely while others are recommending users to switch from bitcoin to alternative cryptocurrencies like litecoin.
The problem grew so large this week that at one point there were 40,000 bitcoin transactions waiting to be cleared — though at the time of writing, that figure has dropped to under 10,000. This drop has mirrored a drop in bitcoin’s dollar value this week, going from over $917 on Friday to under $863 yesterday, according to Gemini's tracker.
The bitcoin community has split into two distinct groups over the past years. The first group is known as Bitcoin Core, the network’s volunteer developers who want to change the way the signatures are stored on the blockchain rather than increase the size of the blocks. The other is known as Bitcoin Classic, a group comprised of developers and enthusiasts who propose the adoption of an alternative blockchain (incompatible with the original) that would increase the block size to 2 MB, a move it believes would increase user adoption.
Bitcoin’s architecture worked well when it was not widely used, but with over 200,000 bitcoin transactions processed every day and a market capitalization of over $14,588,828,445, the system is beginning to creak.
The problem was flagged up earlier this year by one of the main developers of bitcoin over the last five years, Gavin Andresen, who told MIT Technology Review at the time that the problem with bitcoin’s limited transaction rate "is urgent."
"Looking at the transaction volume on the bitcoin network, we need to address it within the next four or five months,” Andresen said.
Then last January, another core bitcoin developer Mike Hearn penned a widely read missive on Medium, which declared bitcoin a failure. “[Bitcoin] has failed because the community has failed,” Hearn said. “What was meant to be a new, decentralized form of money that lacked ‘systemically important institutions’ and ‘too big to fail’ has become something even worse: a system completely controlled by just a handful of people in China.”
These concerns were backed up last month with the release of a research paper from a large group of researchers mostly affiliated with Cornell University, titled “On Scaling Decentralized Blockchain.” The research suggests that bitcoin would need a complete redesign if it is to support a much larger network of users and transactions.
In a blog post this week, Andresen said that the block size limits are there to protect the network from attacks — and so far that method has been effective. He added that the current problems could be highlighting an underlying problem. “In my view, people are using the block size limit for something it was never meant to do — to influence how people use the bitcoin blockchain, forcing some users off the blockchain,” he said.
It is time for a new evolved enterprise solution.
Enter the impending launch of a new type blockchain that is a POS (Proof of Stake) in contrast to Bitcoins POW (Proof of Work). A truly exponentially expanded distribution that has no latency and gets even faster as it grows.
The technology is in the phone apps, not big cumbersome Mining Computer systems.
And this prevents the density of miners in one area or country as Bitcoin is mostly mined in China. And there are many reasons to have concerns in that regard.
A new type of Blockchain coin that delivers a wallet that transacts all fiat and crypto currency, comes with a VISA debit card and is part of the POS system, thereby earning you money on an ongoing basis.
MCC (My Crypto Coin)
Launches January 10th on to all the exchanges, it will be exciting to watch how this progresses. MCC is in the final days of a Crowd Funding where you could fund at any level and find yourself holding a fortune as a result. Do not delay. Come to our meetings. There are only a few days left.
We have the opportunity right now to take a very good risk to acquire results into the millions of dollars.
Here me out and come to our live webinars. Time is running out.
The lessons learned in business. Paying attention and seeking knowledge. Pursuing wisdom and mentors with wisdom and experience
Case in point, Bitcoin 2009, where were you?
You see back in 2012 when Bitcoin was trading around a penny, I was aware of the new revolutionary tech called Blockchain. Aware, but very ignorant. I had $50,000 invested in bulk silver coin and gold 1 ounce Maple Leafs. I was totally focused on the wrong preparations for the immediate future
I am a smart, experienced, entrepreneur and have been my entire life. I created and built Veretekk with nothing more than my visions, and my bare hands. There was no one before me to teach me. I joined UCSD’s Super Computer center to learn how to build the tools I envisioned and with the help of George Kremeneck and the partnership I built with Jeff Balmeo, we, laid the foundations, for what is now Markethive, the first off, Market Network (evolving from the Social Networks). I invented Inbound Marketing in the mid 1990’s Way way too early.
Markethive is a new wave technology, born from 20+ years of endeavor, innovation and dedication. It’s time has come. Why? And why am I discussing the summary history of and birth of Markethive?
Because it needed the Blockchain to morph into the most powerful social network what the pundits have identified as the new Market Networks that will dwarf the “Social Networks” and we are the first to produce one.
But Markethive needs a Blockchain to produce a shopping platform that every single human could utilize to build wealth regardless of nationality or residency. That is our mission, and MCC’s blockchain has given us the foundation to do it.
So, how in the world did I miss it in 2009-2012? I was not “Paying Attention” If I had paid attention, I would have liquidated my small holding of silver and gold, and purchased $50,000 worth of Bitcoin at less than a penny per coin.
Segway to the near completion of Markethive, discovering that Markethive was actually a Market Network, a new market to supersede the Social Networks, as has begun recognition of this new burgeoning SAAS, Social Network, market platform predicted to eclipse the Social Networks and become the first Quadrillion dollar market.
Markethive (over 20 years in development) is ready to launch, as the new Market Network.
In that process we are seeking capital investors. And along came MCC, as this new emerging Blockchain company, they see the future and raw power potential in Markethive.
So James Wilfong and I talked about their investing into Markethive. We negotiated 5% of the Markethive stock for $5 million. This comes about in January after their ICO (Initial Coin Offer).
A few weeks after the negotiations I started really looking at the bitcoin market, educating myself, researching etc. As I did so, it started to form from the fog, that perhaps MCC (MyCryptoCoin) was more then I realized at first.
Now understand; as I did this research it dawned on me that back in 2008 when I started buying up Gold and Silver bulk coins (not collector coins) at around $800 per ounce. About $50,000 worth.
If I had paid attention to the Bitcoin revolution and bought the same amount I would have over $4.5 billion today. This caught my attention. I have seen a similar event with the Internet, but this is actually hundreds of times more intense. In fact, this trend (revolution) will likely be bigger than any other event in the history of mankind.
I started to realize that what MyCryptoCoin was doing was not just another coin, MyCryotoCoin’s DAO (Do you know what that is?), Their own Blockchain, their own proprietary Wallet, all developed with engineers that came from Bitcoin and Etherium, are about to launch the next level in this revolution. I call it bitcoin V2 and will address and solve the latency of Bitcoin, will give Markethive the ability to offer an Ebay type shopping platform that will allow all forms of live payment processing within 2nds.
Listen carefully, Markethive will be able to offer an Ebay type shopping platform that will accept all forms of payment. With MyCryptoCurrency over coming Bitcoins bottle neck of latency, transactions in crypto coin, fiat accounts (ACH), credit cards, 3rd party wallets like Payza, and Paypal will all be accepted with instantaneous transactions. Instant, no waiting (like) occurs with today’s crypto coins.
This is a substantial technical advancement that will both catapult Markethive becoming a trillion dollar Market Network, eclipsing LinkedIn (A social network) with monthly profits in the billions. Think I am kidding?
Fueled by MCC (mycrytocurrency) another huge disruptive company poised to launch, which I am convinced will eclipse Bitcoin, because they will be launching the “Latency” solution Blockchain, an advanced Wallet that solves the online Merchant Account issues and a series of other proprietary technology that will bring the CryptoCurrecy revolution into the main stream.
I missed the first wave with Bitcoin in 2009 but I am firmly paying attention this time.
Come to the meetings! Do not miss this! CHECK THE CALENDAR
Digital Alchemy: The greatest opportunity is upon us.
I turned 39 when I entered the Internet with my Mosaic browser, Macintosh and experienced html 1.0 for the first time in 1992.
As it was with the Internet, (I was there at the birth) the pundits and critics claimed it was too complicated and would never succeed. It surged forward and changed the world, made many wealthy and laid the foundation for millions of new inventions. It certainly changed my life. I made a few million myself, but was quick to squander it in those early days.
It was at this frontier I built the first self-replicated website, the first online interactive application, the first self-replicating PDF and by 1996 had built the first automated marketing system, which had the first email auto responder, the first of what was called Traffic Portals and the first massive broadcaster (The Hammer) all of which was the foundation of what is known today as Inbound Marketing. I custom built (private labeled) these Automated Marketing “Social Networks” for over 70 MLM companies in the 90s.
Then came Google.
Like Search Engines and “nobody ever envisioned Google would crush Yahoo” and surge forward delivering more technologies and again changed the landscape of business.
I know I was there.
Next was the emerging Social Networks. Pundits claimed they would represent Web 2.0 and change the industry and become a trillion dollar industry and it did. First to claim notoriety was “MySpace” soon to be crushed by heavy weight Facebook. Imagine buying a piece of Facebook back then like Peter Theil did. He dropped $500k into FB and is now worth Billions. LinkedIn, Twitter, Pinterest, Instagram, Youtube all and mush more turned snot nosed visionaries into billionaires.
I know I was there.
My Bitcoin perspective goes way back to the beginning of the Internet. I remember folks saying the Internet was too complicated and would never really amount to anything. Perhaps many of you do as well.
Fast forward to 2009 and the birth of Bitcoin occurred. It had many ups and downs but it surge forward. If you or I had purchased $1000 worth of bitcoin in 2012 at.008 cents per coin, today that purchase would be worth $93 million today, cash, based on the USD.
It is now being projected Bitcoin will reach $1 million, PER COIN! Many experts agree: Raoul Pal (former GLG Global Macro Fund and Goldman Sachs funds manager) thinks Bitcoin could be worth $1,000,000 USD sooner than later.
The bitcoin future may be the greatest door to wealth ever.
Only education will direct us in the right direction.
So let us get educated!
Check the calendar for coming events.
Founder and CEO
Blockchain opens 10 millionth bitcoin wallet after Brexit and Trump boost
London-based bitcoin wallet provider Blockchain has opened its 10 millionth digital wallet.
It comes almost two weeks after the company's cofounder and CEO Peter Smith told Business Insider the company would "pretty easily" have its biggest ever month for activity in November, following a surge in use after Donald Trump's shock election victory in the US.
He told BI shortly after the election: "People are basically hedging against economic instability. It's a worrying time to be holding a lot of British pound or if you're America — people flee to safe haven assets. Bitcoin is one of those."
Smith says in an emailed statement on Wednesday: "Hitting this milestone at this particular moment isn’t a coincidence. In the wake of the Brexit vote, the US Presidential election and a weakening Yuan, we have seen unprecedented levels of activity and transaction on our platform, which further suggests that people are embracing the need for a more globally accessible currency system, and one that does not exclude over one-third of the world’s population.
"We are excited to play such an important role in powering the world’s shift to a more open, fair and accessible financial system."
Blockchain lets people download software onto their computer that lets them open a digital wallet to store cryptocurrency bitcoin. The wallet, which lets people store their own bitcoin rather than hold it with Blockchain, can also be used to pay for things using bitcoin.
Blockchain employs around 25 people in London but also has offices in Luxembourg and New York. The company is the world's biggest provider of digital wallets for bitcoin, with over 50% market share, and processes over 150,000 transactions a day on average. It has raised over $30 million (£23.9 million) to date.
I (we) are pursuing funding for Markethive. It is a long and winding road. In this quest, we have met very innovative amazing people. Case in point James Wilfong a partner owner of an upcoming crypto coin company called MyCryptoWorld has an amazing system that is to the Crypto Coin market as Markethive is to the Inbound Marketing world.
The friendships between MyCryptoWorld, Markethive and Greenfire is growing and is opening up some amazing possibilities. This is what we are talking about this Sunday.
Come join me as I run the workshop system that lifts you up into entrepreneurial exceptionalism!
Markethive is a Market Network. That means it is basically broken down into 3 facets all integrated.
A market platform for conducting business
A social network primarily for entrepreneurs
A SAAS (Software as a Service) Inbound Marketing platform
All systems (Facebook included) have a learning curve. Our focus, our goal, is to deliver to you a gentle intuitive fun and rewarding learning process. We are in the process of turning the entire process into an automated structure. Regardless, this learning structure is designed to build you into a powerful , wealthy, successful entrepreneur.
Are you an entrepreneur? Good question. Not necessarily easy to answer. So here are a few definitions:
The classic definition (I do not totally agree with)
noun: entrepreneur; plural noun: entrepreneurs
a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so
Most people would agree that an entrepreneur is a person who has started his or her own business. But that basic definition barely scratches the surface. It does little to capture the true essence of what it means to be a risk-taker, innovator and individual willing to carve his or her own path in a world that doesn't always take kindly to people who fail to follow the status quo.
Are you itching to venture out on your own, but you wonder if you have what it takes to choose the road less traveled? Check out what these company founders and business leaders think makes a truly successful entrepreneur.
However, before we venture further defining what exactly is an “entrepreneur” and other aspects breaking it down and related concerns like “venture capital” and the proverbial “entrepreneurial ecosystem, let me direct you along the paths of getting quickluy up to speed, as I believe that is exactly what you need. To succeed, attain structure, stability, vision and ultimately wealth.
Getting into our Workshops:
I made this simple little instructional video so you clearly see how easy it is to assimilate this ecocenter and huge powerful platform.
OK now about being an entrepreneur!
"Entrepreneurship is all about embracing challenges. When you're building something from the ground up, you need to get into the weeds and problem solve. All the weed whacking often allows you to better hone in on a better big-picture strategy — why did this happen? How do I solve it? How do smarter people than me solve it? With a young company, when you experience a new challenge, it's usually a growing pain. So while it can be difficult to get through, it's for the best possible reason — your company is getting bigger!" – Jennie Ripps, CEO of Owl's Brew
"To me, entrepreneurship means being able to take action and having the courage to commit and persevere through all of the challenges and failures. It is a struggle that an entrepreneur is willing to battle. It is using past experiences and intelligence to make smart decisions. Entrepreneurs are able to transform their vision into a business. I believe this process is at the core of any true entrepreneur." – MJ Pedone, founder and CEO of Indra Public Relations
"Being a successful entrepreneur requires a great deal of resourcefulness, because as an entrepreneur, you often run into dead ends throughout the course of your career. You need to be able to bounce back from losses if you want to be successful. Know that there will be much more disappointment than progress when you first start off, and you need to have a short memory in order to put the past behind you quickly. It's imperative to stay optimistic when bad things happen." – Vip Sandhir, founder and CEO of HighGround
"Entrepreneurship is the ability to recognize the bigger picture, find where there's an opportunity to make someone's life better, design hypotheses around these opportunities, and continually test your assumptions. It's experimentation: Some experiments will work; many others will fail. It is not big exits, huge net worth or living a life of glamour. It's hard work and persistence to leave the world a better place once your time here is done." – Konrad Billetz, CEO of Frameri
"To me, entrepreneurship is completely dedicating yourself to creating something out of nothing. It's not simply taking a risk and hoping to realize big rewards. Creating something out of nothing also tends to present numerous challenges and roadblocks which seem insurmountable. I believe the great entrepreneurs, who I look up to, can help their team push through those roadblocks and find solutions." – David Greenberg, CEO of Updater
"Entrepreneurship is the mind-set that allows you to see opportunity everywhere. It could be a business idea, but it could also be seeing the possibilities in the people that can help you grow that business. This ability to see many options in every situation is critically important; there will be unending challenges that will test your hustle." – Preeti Sriratana, co-founder and CEO of Sweeten
"It is not about making a quick buck or deal. Successful entrepreneurs look past that 'quick buck' and instead look at the bigger picture to ensure that each action made is going toward the overall goal of the business or concept, whether or not that means getting something in return at that moment." – Allen Dikker, CEO of Potatopia
"Entrepreneurship is a lifestyle, in that being an entrepreneur is ingrained in one's identity. [It] is the culmination of a certain set of characteristics: determination, creativity, the capacity to risk, leadership and enthusiasm. I don't think you can be an entrepreneur without these qualities, and for me, that idea was ingrained in me very early on. An entrepreneur is part of the foundation of who I am, and who I strive to be." – Eric Lupton, president of Life Saver Pool Fence Systems
"Entrepreneurship is an unavoidable life calling pursued by those who are fortunate enough to take chances [and are] optimistic enough to believe in themselves, aware enough to see problems around them, stubborn enough to keep going, and bold enough to act again and again. Entrepreneurship is not something you do because you have an idea. It's about having the creativity to question, the strength to believe and the courage to move." – Jordan Fliegel, founder of CoachUp
"The journey of entrepreneurship is a lifestyle for many of us; we are wired this way and have no choice. We are driven by an innate need to create, build and grow. In order to be a successful entrepreneur, you must have an underlying positivity that enables you to see beyond the day-to-day challenges and roadblocks, always moving forward. You must also be a master plate juggler, able to switch between thinking, genres and activities moment to moment. Most importantly, you must not be afraid to fail, and you must be comfortable living with risk and unknowns — a state of mind which is certainly not for everyone!” – Justine Smith, founder and CEO of Kids Go Co.
"Being an entrepreneur is about giving everything you have when the going gets tough and never giving up. If you truly love and believe in what you're doing, then you must hang in there. Entrepreneurship is not knowing everything about your business. You must humble yourself and not work from your ego. Always be willing to grow, change and learn." – Jennifer MacDonald and Hayley Carr, founders of Zipit Bedding
"Entrepreneurship is seeing an opportunity and gathering the resources to turn a possibility into a reality. It represents the freedom to envision something new and to make it happen. It includes risk, but it also includes the reward of creating a legacy. Anti-entrepreneurship is satisfaction with the status quo, layers of controls and rules that hamper forward movement, and fear of failure." – Maia Haag, co-founder and president of I See Me!
"When it comes to being a successful entrepreneur, I think one must possess grit. The stakes tend to be high, the bumps in the road frequent. Remaining focused, regardless of the obstacles, is paramount. That said, being an entrepreneur means being in full control of your destiny. If that's important to you, then all of the challenges associated with striking out on one's own are but a small price to pay.” – Mike Malone, founder of Livestock Framing
Reid Hoffman Tells Charlie Rose: "Every Individual Is Now An Entrepreneur."
Facebook, Twitter and Instagram all started life as revolutionary networks that brought existing real-world relationships online. Today, they are aging utilities, powering an outdated version of the social internet.
As social networks like Twitter, Facebook, and Instagram grow larger, they skew disproportionately toward supernodes—celebrity, meme and business accounts. An estimated 8% of of all accounts are fake spam bots. The average Instagram user posts 2.69 times a day, while the average user with over a million followers posts 8.58 times. 80 million photos are posted a day, but the average engagement rate per post is 1.1%. On Instagram, 50% of posts are generated by less than 3% of accounts. Facebook is a bit more stable because it has a cap on the number of friends you can have. Still, original sharing like posting photos to your Facebook feed or updating your status is decreasing 21% year over year.
Today it’s no longer enough to “connect the world.”
If you want to survive, don’t just build a network. You have to build a hive, and eventually a hivemind.
The Existential Crisis of the Network
Even though some social networks have grown to include billions of people, the ramp up in communication hasn’t increased proportionally. Even as you add friends or follow users, you can only talk to so many. Facebook users with over 500 friends only actively communicate with between 10 to 20 people. Similarly, Twitter users who have follower counts of over 1,000 share strong ties with fewer than 50 of their followers.
Myspace’s rapid user growth precipitated an equally rapid decline. It’s a cautionary lesson that growth in the network doesn’t equate to growth in business value. Networks can’t just be neutral. They have to be instrumental.
A network connects different people and gives them many points of contact for communication and transaction. A network is a neutral description of how connections between composite parts form a system. As networks mature, we’re starting to see something completely new emerge.
When it comes to car travel,
Google Maps gives us the distance between point A and point B, but Uber moves us from A to B faster.
When it comes to socializing,
Facebook gives us a way to connect, but Messenger helps us to communicate.
When it comes to shopping,
eBay allows us to buy anything online, but Amazon Prime gives us what we want when we want it.
The value of being connected isn’t in being networked. It’s having an opinion and taking action toward an outcome.
A single honeybee weighs around 1/10th of a gram. Add up all the honeybees in a hive, and you get around five to eight pounds worth of honeybeesâ—âbut you don’t get a hive. The beehive is an 80-pound mass that includes every individual bee, but is much more.
The hive is a smarter, evolved network that is bigger than the sum of its parts. The hive:
Increases the frequency of interactions between nodes and creates more touch-points within the hive. It’s how the hive learns and makes informed decisions in response to a changing external environment.
Decreases friction between nodes and creates a higher level of synchronicity between members of the hive. This produces stronger ties between individual members and allows the hive to act collectively.
Because of the increased frequency of interactions, a hive behaves more intelligently, and because of the decreased friction between nodes, a hive can do more than transfer data. It responds and evolves based on that data. The hive isn’t just more networked. It’s more densely populated with organic, living components.
Though not obvious, the hive is becoming central to the way we think, behave and interact. The best way to understand emergent human hives is to observe how hives operate in nature.
Increasing Frequency of Interactions: Ant Colonies Move as Liquids and Solids
An ant colony is so in sync that a mass of them can stick together to form solids or melt into fluids as a single body. By simply holding onto each other or letting go, the viscosity of a cluster of ants changes. They’re able to do so because of the high frequency of interaction between ants in a colony.
For ants, communication is survival. If you apply pressure to a ball of ants, the ants nearest to the top will begin to act as though they are dead, increasing the fluidity of the writhing mass of ants. The harder the ants are pressed, the more fluid they become to absorb the pressure. The more ants there are linked together, the more pressure they can collectively withstand.
What allows ants to adapt so quickly isn’t the content of a transmitted message, but the way one ant presses against another triggers a chain reaction through the entire cluster. It’s how ant clusters can form rafts to avoid drowning and build bridges out of their bodies to cross gaps.
The fluidity of ants allows them to thrive in almost any environment. They’ve colonized every continent except Antarctica, making up 15–25% of terrestrial animals on Earth.
Consumerization of the Enterprise: Mass Alignment in the Workplace
Tools like Google Apps for Work, Slack and Github are making us more like ant clusters. They increase the frequency of interaction within an organization. People can communicate and switch tasks faster, make smarter decisions based on data and use smarter tools that talk to one another.
Rather than being individuals sitting alone in cubicles, we’re like a cluster of ants crawling and moving around and on top of each other with shared tools that everyone can access.
The image above on the left shows how email communication patterns follow organizational hierarchies at an HP research lab. The image on the right shows the pattern of developers collaborating over chat. With a network model like email, you have to jump from one person to the next to get the information you need. In a hive, real-time communication occurs seamlessly between people.
The high frequency of interaction gets everyone on the same page and working in sync:
People to people interactions: With the hive, a higher frequency of interactions means that work can be assigned on an ad-hoc basis with a tool for real-time chat like Slack. People can switch jobs more rapidly based on what the hive needs. One study shows that the top 20% of developers were also the ones that chatted the most frequently.
People to data interactions: What was specialized knowledge accessible via technical interfaces is now common knowledge exposed through conversational interfaces. Think Lookerbot for analytics and internal company data.
Data to data interactions: The workplace hive gives us insight where we once only got reports. Tools that everyone in the company uses creates massive amounts of data, which helps people use tools more efficiently. This workflow data used to be valuable only as a system of record. Today, it produces actual business intelligence.
The net result is a vastly smarter organization aligned around shared goals. With more interaction between workers and tools, a business can transform from solid to fluid depending on the needs of the hive.
Decreasing Communication Friction: Bee Swarms Operate like Neural Nets
A swarm of bees on the move resembles the movement of neurons in the human brain. That’s how they’re able to colonize new nesting sites within hours of leaving their old one.
This doesn’t happen through a centralized intelligence where the queen bee shouts down orders. Instead, it’s through the low-level communication of scout bees that reduces friction for the entire hive and allows for rapid and collective decision-making.
A hive has around three days to find a new nest site before it dies. Finding the right home means exploring possible sites in a one-mile radius of the queen. The queen can’t go out and look at sites on her own, and doesn’t have the bandwidth to process every possible location that the scouts find and make a good decision quickly.
Instead, scout beesâ—âwho represent 3% of the entire hiveâ—âare responsible for choosing the new hive. When it’s time for the hive to move, around 50 scouts are sent out to look for a promising home. When a scout finds one she likes, she does a “waggle dance” to signal the location to the other scouts. Scouts check out a variety of sites and dance around the one they think will help the hive survive.
As soon as 30 or so scouts gather around a new nest site, the rest of the hive is already lifting off into the air.
The decision-making process of bees reduces friction for how a massive collection of individual parts can evaluate a variety of inputs quickly and intelligently. Ultimately, 30 bees decide the fate for 10,000.
Mobile Messaging: The Formation of WeChat’s Hive
While networks like Instagram and Twitter are beginning to wear thin, messaging apps like WeChat are frenetic hives of activity that build economic empowerment. Like honeybee scouts, messaging apps decrease the friction of centralized nodes in the 1:1 communication between individual nodes and allow for emergent behaviors.
WeChat began five years ago as a messaging service. Today, you can use it to pre-order dumplings from a street-vendor, call a taxi, read the news, and even buy a house.
With WeChat, we see the evolution of a consumer product through the three stages of want, need and utility to the hive. At each stage, WeChat focuses on reducing friction by providing infrastructure for users. On WeChat, all it takes is a critical mass of people adopting new behavior to turn it into a utility that benefits the whole hive.
Wantâ—â2011: When WeChat launched, it let you send messages, voice clips, photos and that’s about it. Over the next year, as China moved from 2G to 3G, WeChat gave users the ability to make voice and video calls. It automatically compressed videos people uploaded to save cellular data. People wanted to use WeChat because it allowed you to easilyâ—âand cheaplyâ—âtalk to other people.
Needâ—â2012: WeChat users in China were often reluctant to download standalone apps because of high data costs. The launch of “official accounts,” or chatbots, emerged within these constraints. People could read the news or check bank statements via text message to an official account. Their needs were met entirely within WeChat’s platform.
Utilityâ—â2013: The addition of mobile payments and WeChat Wallet provided a new layer of utility for users and drove the wide scale adoption of commercial behavior onto the platform. One group of Chinese students built a fruit delivery business on WeChat because other fruit stands on campus were expensive, poor quality and inconvenient. In an interview, one student points out that “WeChat is a bit more agile [than Taobao]. Asmall entity can still have its own brand.”
As WeChat grows, new utilities emerge on the platform. Each increases the time users spend on WeChat’s platform thus reducing friction between users. The latest progression of this is the launch of Applets, which will allow developers to build full HTML5 apps on top of WeChat.
What drove WeChat’s growth wasn’t the launch of any one feature. It was the individual fruit vendors, taxi cabs, and mom-and-pop shops that WeChat made life easier for. In the long run, this might be the winning strategy.
In 2015, 12,000 new companies were born on platforms like WeChat every day. The hive isn’t created from access to new functionality. It’s how new functionality creates new economic opportunity.
The Transformation of the Network to the Hive
The increase in the frequency of interaction and decreased communication friction of the hive can be traced to a move toward synchronicity between people over history. Once, a story passed down verbally from father to son turned into myth after a thousand years. The invention of writing and the first spread of literacy allowed the transmission of the first written history.
As technology has advanced, the delay between the transfer of information has decreased. Paved roads allowed couriers to deliver messages, while cables wired along those roads enabled telegraphs and then radio broadcasts. Eventually, you got email, instant messaging, SMS, camera phones, all the way up to live video.
As information networks become distributed from giant data centers to cellular towers and the cloud, the amount of bandwidth available to the individual continues to rise. We’re no longer limited to a broadcast radio model, where one signal is received by many nodes. Today, we send and receive higher quantities of data at higher frequencies, through texts, photos and videos. We sync with each other instantaneously, and all the time.
This is what allows networks to converge into hives, from the individual to the organization.
Instrumentalizing the Social Network
The function of the social network is to connect people and to grow the size of the network. What originally came about through increasing connections is now focused on delivering a better, more immediate experience.
Facebook in 2012:
Our mission is to make the world more open and connected.
Facebook in 2016:
Our top priority is to build useful and engaging products that enable people to connect and share through mobile devices and personal computers.
In 2012, Snapchat described itself on its website as:
Snapchat is the fastest way to share a moment on iPhoneâ—âup to 10x faster than MMS!”
Today, the renamed Snap Inc.’s website reads:
We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate.
Facebook and Snap Inc. are both converging around how we communicate and share experience, and they’re doing it by building a family of brands.
From the beginning, Snapchat has built itself around the camera and user experience. As the company moved from 1:1 communications to a broader platform for sharing experiences, this has not changed.
Facebook’s efforts to mimic Snapchat’s ephemeral messagesas well as its initiatives on products like Instagram Stories and its move into virtual reality through the acquisition of Oculus Rift all demonstrate a move away from the network, and toward a moments-driven hive.
The original experience of Facebook was more connected, but also a lonely experience. You put one version of yourself online and lived another one in real life. The original Facebook showed a version of you that you wanted to see.
Rather than alienating people, Facebook and Snap Inc. today are moving toward a vision of the future around creating real, shared experiences that actually bring people together.
Google, Uber, Tesla and Autonomous Vehicles
The map is possibly the most literal rendering of the network. A map connects physical locations together, and shows you how to navigate from one point to another. The autonomous car is built on top of the map, but it’s instrumentalized around actually taking you between points.
Autonomous vehicles can be imagined because they’re built on top of the information networks of Google’s Maps and Streetview, projects that Google undertook to organize the world’s information.
At Tesla, they’re building autonomous electric vehicles on top of their network of vehicle sales, service centers and Supercharger stations. Self-driving Teslas have already collected 100 million miles of autonomous driving data and 780 million miles of human driving data from the sensors it builds into each vehicle.
Meanwhile, Uber is moving towards autonomous cars through the ride-sharing marketplace it has built. Through the Uber app, the company collects 100 million miles of driving data each day. In contrast, the average American only drives 15,000 miles a year.
Why are all these vastly different companies converging on the autonomous car? That’s because for these companies, it’s about platform and hive, not just about roads without drivers.
Google’s 10-K, 2016:
From the start, the company has always strived to do more, and to do important and meaningful things with the resources they have.
Uber’s blog, 2016:
The old Uber was black and white, somewhat distant and cold. This belied what Uber actually isâ—âa transportation network, woven into the fabric of cities and how they move. To bring out this human sideâ—âthe atomsâ—âwe’ve added color and patterns.
For Google, the search giant, it’s about putting information to work. It is leveraging its massive data sets, of roads, driver behavior, and physical objects, and continuously feeding data back to the system. Uber, meanwhile, has evolved from a white glove black car service into a transportation hive. Through logistics and cleaner, cheaper interfaces, Uber directs human actions more efficiently through algorithms. The autonomous car was the next logical step.
By allowing cars to get from A to B more predictably, autonomous cars will reduce the number of cars on the road, and the number of deaths in car accidents, and even the amount of money for insurance. The hive is what gives us a shot at collectively solving these seemingly impossible problems.
The Future is the Hivemind
A network’s value is traditionally tied to the idea of more—this is what’s known as a “network effect.” The more people and things there are networked, the more possible connections there are between nodes, and the more valuable the network grows.
And yet, the world we’re moving to will be defined by the idea of more with less. Global warming and drought mean fewer resources to work with. At the same time, population growth is beginning to stall across America and Europe, and with it the “free lunch” economic growth that comes with a rising population.
A hive is more than the sum of its parts. Through the hive, a network of drivers and riders also work as a turnkey resource that other services can be built on top of. For companies that operate as hives, sheer quantity matters less than it did for older generations of companies. By increasing interaction and decreasing friction between nodes, they accelerate growth through virtually unlimited, real-time access to data and people.
Hives colonize instinctively as they grow, which is why we’re seeing so many companies converge around the similar trends. But the sequence that they grow in matters. The next big companies will have to do more than just pick the right trends. They’ll have to nail the right timing by moving in sync with their composite parts.
They won’t just be hives. They’ll be hiveminds.
Markethive has already reached this hive mind level. Interesting that others are suspecting this phenomena and here we are! The original and first Market Network.
Founder, Creator and CEO
If you ever wondered what drives Markethive? This video explains it all. We did this for you. This is why it is basically free. This is why it was built, for all of the entrepreneurs who strugle and have a dream.
I’ll say it: the days of outbound marketing are over.
The "Wolf of Wall Street" mentality of harassing customers over the phone, sending spamy emails, and going door-to-door to close deals has become much less effective in recent years. Customers have access to so much information every day, they’ve become increasingly resentful of marketing intrusions. The rise of blocking tools such as caller id, spam folders and ad blockers is not coincidence.
Inbound marketing is the new normal. That’s the idea that if you provide value to customers first, they will respond by returning that value back and doing business with you.
To get a peak under the hood inbound marketing, and get tips on how others can use it, I had a chance to chat with A.J. Agrawal – an entrepreneur who built his business, Alumnify, around it. A.J. is a fellow contributor at Entrepreneur as well as at Forbes, Huffington Post, and others.
Here’s an edited version of our e-mail interview:
Why begin with universities?
We started there because we saw a strong decrease year after year in alumni engagement. Right now, alumni engagement is at an all time low – under 10 percent. It was obvious that institutions were struggling to adjust to the new ways their alumni were communicating and engaging. So we saw the opportunity.
For about 85 years, alumni engagement was pretty steady. Then all of a sudden, in the 90’s it began to fall drastically. In panic mode, many schools chose to double down on the outbound marketing tactics that worked in the past: cold calls, snail mail, and increased email addresses. They also deployed better data tacking and software to help optimize open email rates as well as make the giving process easier for graduates.
But these strategies had no effect (or even a negative effect on engagement) because they were built on an overall strategy that was broken. So we decided we would build inbound marketing solutions to provide value to alumni first.
How do you begin inbound practices?
First, make sure you know what inbound marketing is. At its core, inbound is anything that provides a tremendous amount of value to your target customer without asking anything from them in return. There are tons of ways to do this and the best part is that most of the major strategies can be done for minimal cost.
One thing we recommend to companies we work with us is to start by getting a blog set up and to have someone be responsible for publishing regular content. One of the nice things about inbound marketing is that it requires companies to build major assets for their business. Your content library is a huge asset and will eventually help your SEO, and pull in more customers to your website.
Other popular inbound strategies include webinars, eBooks, infographics, mobile apps built to help your customers, and optimizing your social media.
Each business is different, so the strategy depends on factors including audience, industry, and expertise. Like most things, the hardest part is just getting started. Once you find an inbound strategy that starts to work, it becomes much easier to fine tune and expand on your traction.
Do you avoid outbound strategies?
Not at all. While inbound is definitely the future, some customers still respond well to outbound strategies. Even as an inbound company, we still cold call customers and send promotional emails once in a while — but as part of a complete plan.
When thinking about the brand I want for Alumnify, I don’t want prospects and customers avoiding our phone calls. The image of a customer seeing an Alumnify Team Member calling them and saying “Not these people again” is my worst nightmare. And it should be any entrepreneur’s nightmare too.
Instead, I believe that the key to getting customers to love us is to provide value without asking for anything in return. For example, we have a free inbound marketing email list we just launched yesterday with weekly tips and webinars. And I’m always happy to help any fellow entrepreneur hammer out an inbound strategy. That type of approach may take more work in the short run, but it’ll also help build a much better brand to our customers in the long run.
This is an article about a similar Inbound Marketing company like Markethive. Unlike Markethive, Pardot is not a social network, but is only an Inbound Marketing platform. In that aspect, they are a shadow of what Markethive does.
One of the more popular questions I get from entrepreneurs that are curious about selling a company is how we arrived at the Pardot acquisition price. My normal response is that we had $10 million in trailing twelve months (TTM) revenue at time of sale and we got 9.5x TTM. Well, since we’re more than three years out from the deal (see 3 Year Anniversary of the Pardot Exit), there’s actually much more to how we arrived at the acquisition price.
And, as you might expect, arriving at the price of a fast-growing SaaS startup isn’t as logical as you might think.
The original offer came in at $60 million. Looking at our growth rate (100%/year) and our run-rate ($13M ARR), we said we could wait 12 months, get to $20 million TTM, and then sell for 5-7x. We countered asking for $140 million.
Not knowing what would happen, but confident we were in a great place in a great market, we felt good about our counter.
48 hours later they came back and offered us $70 million. Time to play ball. We countered at $120 million.
48 hours later they came back and offered us $80 million. We countered at $110 million.
48 hours later they came back and offered us $90 million. We countered at $100 million.
48 hours later they came back and offered us $95 million. We said no. $100 million is our final offer.
Then, the final wrinkle emerged: they couldn’t pay $100 million. Even with $210 million in cash on the balance sheet at the time, they had already filed paperwork with the SEC to do a secondary offering, and based on rules as a public company, they’d have to withdraw the offering if they acquired a company for more than a certain percentage of assets. Well, $95 million was the max they could do if we wanted to do a deal now.
$95 million — take it or leave it.
We said yes. The deal closed 42 days later.
Not all acquisition prices are logical. Our deal was driven partly by our revenue, market multiples, market opportunity, and SEC rules. Go figure.