Category Archives: Blockchain, Crypto, ICOs

OSC approves first ICO in Ontario to TokenFunder


OSC LaunchPad | Nov 23, 2017

Release:  OSC Launchpad approves Token Funder to be the first token offering out of Ontario

OSC approves initial coin offering

Investment Executive | James Langton | Nov 23, 2017

The Ontario Securities Commission (OSC) has approved Ontario's first-ever regulated initial coin offering (ICO).

Under the auspices of the Canadian Securities Administrators' "regulatory sandbox", the OSC granted regulatory relief to Toronto-based Token Funder Inc., which will exempt the firm from the dealer registration requirements, and allow it to carry out an ICO under existing prospectus exemptions.

"We are pleased to announce that we just approved the first token offering out of Ontario. It is important that we continue to foster innovative new ways to raise capital and invest, and this announcement is a testament to the dedicated support we are providing in this space," the commission says in a statement.

According to the OSC's decision, the firm was established to create a "smart token asset management platform", which is intended to, among other things, "facilitate third-party issuers raising capital through the offering of blockchain-based securities, including tokens and coins."

Token Funder also intends to provide token and coin management and governance services for issuers, and to facilitate token transfers, subject to regulatory approval.

The proposed ICO will be used to fund the creation of the platform, and to facilitate transfers of digital FNDR tokens under prospectus exemptions. The firm is planning to create 1 billion FNDR tokens on the ethereum blockchain, and to distribute up to 200 million on them as part of the offering (raising around $10 million).

The relief was granted with conditions, including: the firm will conduct know-your-client (KYC) and a suitability review for each investor; and investors undergo a comprehensive onboarding process to ensure, among other things that they have a "detailed understanding" of cryptocurrency and digital token offerings.

This "should not necessarily be viewed as a precedent" for other firms, the OSC decision says.

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit


Most ICOs Fail: Tale of Two Worlds


Hackernoon | Eric Risley | Sep 26, 2017

The number of Initial coin offerings has surged over the past six months. However, all is not as rosy as it appears. A nuanced assessment of token distribution activity tells a tale of two very different issuer experiences. Architect Partners evaluated over 100 project white papers augmented by data published by Smith + Crown and to move beyond the breathless headlines.


Yes, there are many successful token distributions. Since the beginning of June 2017, 46 projects have completed an ICO in line with their stated objectives, raising over $1.6 billion. On average these projects have raised $36mm to fund their efforts although outliers skew the data as the median raise was $19mm. Clearly these projects have demonstrated excellent receptivity by token purchasers.


However, most ICOs fail, sometimes miserably, at achieving their objectives. The vast majority of issuers indicated their token distribution goals via a stated goal, a soft cap or a hard cap. We simply evaluated final results vs. stated objectives. If an issuer achieved greater than 75% of their hoped-for token distribution, we considered it a success, below that level, a failure.

The token distribution market has quickly become more difficult. In June 2017, only one project failed to reach their objective. However, subsequent months tell a far different tale. From July 1 through September 25th 2017, 51 ICOs launched with high hopes, yet failed to meet their own objectives. These represented an astounding 59% failure rate for all ICOs during that time period.

Join us Nov 16 for a Toronto event:  New Frontiers in Capital Innovation - Initial Coin Offerings

Some may contend that even failure is beneficial to a project as it raises funds to allow the initiation or continued development of the project and team’s vision. In some cases, that’s a quite reasonable argument, however, in many cases the value proposition of the actual token issued is seriously compromised, perhaps permanently. Also, the level of capital raised from a failed token distribution is rapidly declining, from a median of $4mm in July 2017 to $2mm in September 2017 and 21 (43% of the total) raised $1mm or less from their efforts.

Chart: Token Distribution Success Rate

The chart below details each project evaluated and the results:

Lessons and The Future

We are clearly seeing a first step in the maturation of the ICO market. While each token distribution success and failure requires its own analysis, it’s clear that the market is doing what markets do best: make efficient decisions. That’s not to say all the successful token distributions will become successful projects and vice versa, however, a stark two-tier market has quickly developed via “crowd behaviour”.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit


Vancouver Conf + Hackathon (NOV 28): 3rd VanFUNDING 2017 New Frontiers Fintech Conference + Sandbox Hackathon (Registration Now OPEN)


NOV 28:  3rd Annual VanFUNDING 2017

New Frontiers Full Day Fintech Conference (#VF2017)

When:  Tuesday, NOV 28, 2017 (8am - 6pm)

Venue: Morris J. Wosk Centre for Dialogue (Asian pacific hall)

580 W Hastings St, Vancouver, BC V6B 5K3 (map)

$350 Registration / *$395 VIP Pass

 $250 Member Discount / *$295 VIP Pass

*VIP Passes (Include Nov 28 + Nov 27 Networking)

NOV 28:  VF2017 Sandbox Hackathon

Full Day Mini-Hack + Cash Prize + Rewards

When:  Tuesday, NOV 28, 2017 (8am - 6pm)

Venue: Morris J. Wosk Centre for Dialogue (Concourse)

580 W Hastings St, Vancouver, BC V6B 5K3 (map)

*$400 Small Team (2-3 members)

*$650 Large Team (Up to 6 members)

* Hackathon is co-hosted with the BC Securities Commission


NOV 27:  VIP Networking Reception


Monday, NOV 27, 2017

Venue:  TBD

$75 Registration

* Networking with speakers, partners, investors and VIP attendees


View #VF2017 Release

Not to be missed - will sell out! Last conference of the year...

3rd VanFUNDING 2017 (#VF2017) is an immersive full day financial innovation forum and premiere hackathon hosted by the National Crowdfunding Association of Canada, partners and affiliates on Tuesday, Nov 28 in downtown Vancouver, Canada at SFU's Morris J Wosk Centre for Dialogue. #VF2017 is a leading conference dedicated to accelerating access and development of emerging financial technologies, funding opportunities and capital innovation markets across Canada and around the world. The conference ignites venture markets and provides opportunities for startups and scaleups seeking to connect with financial innovators, private capital markets, investors, and partners to expand their networks. The 2017 agenda covers the hottest topics from Blockchain smart contracts and Initial Coin Offerings (ICOs) to the latest developments, emerging regulations, new business models in PeerToPeer (P2P) crowdfinance, fintech, alternative finance, cryptocurrencies, artificial intelligence applications, and global financial marketplaces. Other vital capital innovation topics will cover international developments, perk/rewards, lending, equity, royalty, market provisioning and infrastructure; investor marketing, leadership culture, cyber security and legal and financial considerations.

Learn the Latest Funding Opportunities and Fintech Market Developments and Plug into a Collaborative Community of Experts, Investors, Stealth Startups, Prospective Partners and Financial Innovators

VanFUNDING 2017 is a not to be missed BLOCKCHAIN and FINTECH FUNDING conference that pushes boundaries to discuss the latest developments, educate, inspire, and connect ‘You and your vision’ with leading innovators, entrepreneurs, investors, vendors, thought leaders and policy makers in the quickly emerging sectors of fintech, P2P, crowdfinance, blockchain ICOs, digital currencies and alternative finance.

Be part of the Future of Financial Services - Get Involved Today!

Interested in speaking? Applications Now Open

Partnership opportunities available! Sponsorship Info

Volunteer? Apply here

MEDIA pass? Visit here


Questions or in-kind Partnerships?



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View Last year: Speakers | Partners | Wrap-up


Global Regulators Play Bitcoin Whack-a-Mole as Demand Explodes


Bloomberg | By Olga Kharif and Camila Russo | Oct 11, 2017

Regulators worldwide are finding that it’s incredibly hard to control the explosive growth of money tied to no nation.

Russian President Vladimir Putin is the latest to call for regulation of cryptocurrencies, saying there are “serious risks” they can be used for money laundering or tax evasion. Finance Minister Anton Siluanov has called for regulating digital money as securities, while central bank officials vowed to work with prosecutors to block websites that allow retail investors access to bitcoin exchanges. “We think this is a pyramid scheme,” said Sergey Shvetsov, first deputy governor of the central bank.

See:  The Summer of ICOs: VC Implications


Global efforts to regulate digital money have accelerated in the past month since China banned initial coin offerings and ordered all cryptocurrency exchanges to close, following inspections of more than 1,000 trading venues over a six-month period. At least 13 other countries have imposed new rules or announced plans to tighten regulations, including South Korea, which also banned ICOs. Last week, European Central Bank Governing Council member Ewald Nowotny said the bank is discussing "concrete legal restrictions" on digital coin sales.

It’s a development that creators of bitcoin, the best-known digital currency, saw coming, and prepared for. Since it works on a peer-to-peer network, users can buy and sell coins and secure and perpetuate the system without any government or central bank involvement. Trying to control it is “like trying to catch water,” said Alex Tapscott, chief executive of NextBlock Global Ltd., a venture-capital firm that invests in blockchain startups.

Nine years after a mysterious coder that goes by the name Satoshi Nakamoto unleashed bitcoin on the world, some see it as a revolutionary use of technology that takes power away from governments and gives it to individuals, like handheld video cameras in the hands of civil rights activists, or social media during the Arab Spring uprisings.

"As cryptocurrencies gain wider acceptance, their ability to undermine politicians increases,” said Roger Ver, an early investor in bitcoin who is known as Bitcoin Jesus, for proselytizing about the digital currency in its early days. "The invention of bitcoin is one of the most liberating technologies in all of human history. It is on par with the importance of the invention of the printing press, or the internet itself."

Digital currencies live on computers and can be held by millions worldwide, bought and sold on websites, at MeetUps, or in person-to-person meetings. Even if there’s no ATM or exchange nearby, anyone with access to the Internet can buy them. And they can be used to purchase everything from a sandwich to a carpet to a house, or they can be held as an investment.

An investment of $1,000 in bitcoin in 2012 would now be worth about $4.9 million, while the number of transactions continues to increase. In the second quarter, they reached an average of about 291,000 per day for bitcoin and nearly double that when other major cryptocurrencies are included, from about 60,000 per day in 2013, according to researcher CoinDesk.



Bitcoin Mining

China is the leader in bitcoin mining capacity -- computers that are used to support bitcoin transactions and then get paid for the service with newly minted coins. Regulators have so far refrained from any action in that area. Wu Jihan, CEO of Bitmain Technologies Ltd., the world’s biggest mining operation, said in an interview that regional governments are welcome to legally set up bitcoin mining farms which are clean and considered part of the high-tech industry.

See:  Canadian Regulatory ‘Sandbox’ Seeks to Avoid Crypto Coin Quicksand

Cryptocurrencies are attractive where there are restrictions on taking cash abroad or where the local currency is weakening because of inflation. In Venezuela, a place with both problems, bitcoin’s weekly trading volume spiked to an all-time high in early April, when violent clashes between protesters and police started. The government has conducted raids on bitcoin miners, accusing them of “internet fraud and electricity theft.”

The same combination of capital controls, high inflation and a weakening currency have driven demand for cryptocurrencies across Latin America. Bitcoin demand spiked in Argentina in 2013 after former President Cristina Fernandez de Kirchner banned dollar purchases, while Ecuador and Bolivia are among the few countries that have outright bans on the currency.

By contrast, the U.K. has exempted bitcoin from value-added taxes, and says it should be considered a foreign currency for corporate tax purposes. The U.K. was early in publishing clear directives, ruling in 2014 that "bitcoin may be held as an investment or used to pay for goods or services at merchants where it is accepted.”

Crypto-Friendly Japan

Japan this year began enforcing a law that recognizes bitcoin as a legal method of payment, and overseeing cryptocurrency exchanges -- effectively providing clarity and support to local entrepreneurs. That’s something Vietnam may do as well.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit


Bitcoin is making banks nervous. Here’s why


World Economic Forum | Marc-David L. Seidel | Oct 6, 2017

Technology blogs and financial news networks are buzzing about blockchain, a cryptographic, distributed trust technology. The key innovation is how it reduces the need for central third-party institutions to serve as central authorities of trust — banks, courts, large corporations, stock markets and even governments, for example.

Distributed trust enables co-operative forms of organization without a centre. It can distribute power away from centralized institutions to those that traditionally have less power. Such powerful institutions do not let go of their influence easily.

The ongoing debate about how to regulate distributed trust technologies assumes that the advocates of the technologies will seek both legal status and enforceability. Scholars proposethat such developments in distributed trust are a competitive threat to nation-state paper currencies.

Much of the current, popular focus is on cryptographic currency — or cryptocurrency — applications such as Bitcoin.

Bitcoin vs. banks

Regulators are struggling to deal with a fundamental shift in market structure. National central banks are implementing policies to keep control and regulate distributed trust technology.

For example, the Chinese government has banned several types of distributed trust activities, and is launching its own non-distributed, centralized digital currency.

The Japanese government has made Bitcoin a legal payment method, and major Japanese banks are planning to launch a J-Coin digital currency pegged to the Yen which may be built on a blockchain.

Upcoming Related Events:

Russia initially treated non-approved currency trades as illegal, but is now determining how to regulate them.

In fact, traditional centralized, powerful organizations like banks, governments, regulators and technology behemoths are all spending billions figuring out how to use and control distributed trust technologies.

But distributed trust technologies have many uses beyond cryptocurrency.

Volunteer-driven communities

Organizational theory has a lot to say about this transition. Distributed trust technologies are organized in what we call a Community Form (C-Form) of organization.

C-Forms are not new. They have been around since the 1800s when the Oxford English Dictionary was created by a distributed community of volunteers.

The growth of C-Forms was accelerated by technological developments enabling inexpensive peer-to-peer communication. C-Forms came into focus with the last internet-enabled major organizational shift to distributed information-creation platforms.

As a result of that innovation, we have seen many forms of information production shift to C-Forms. Open source software such as the Linux computer operating system, which competes with Microsoft Windows and Apple macOS, is produced and shared by individuals in C-Forms instead of centralized software companies. Encyclopedias such as Wikipedia are created by individuals in a C-Form instead of a centralized publishing house. Video content on Vimeo is produced and shared by individuals in a C-Form instead of centralized studios.

See:  Where is technology taking the economy?

Similarly, distributed trust technologies are shifting the organizational landscape of how trust is produced and managed from centralized institutions to a C-Form.

The development of distributed trust technologies is having a similar enabling effect on the growth of C-Forms replacing the trust functions of centralized institutions.

Fundamentally, this is a decentralization of power.

Power shift

Many of our previous assumptions about formal organization are being challenged by shifts to distributed forms of trust.

Individuals can now enter into direct peer-to-peer trusted exchanges with strangers. They no longer need a central institution to vouch for the other party. A blockchain-enabled microgrid in Brooklyn is already allowing individuals to sell their excess solar energy directly to neighbours without involving a central utility company.

This is a drastic shift to many of the underlying assumptions about how markets and society are organized. As power centralizes, opportunities emerge.

Many Silicon Valley success stories are simply centralized platforms. They capitalize on the power and legitimacy of enabling trusted interactions for others.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit


This ICO for an AI blockchain is the most tech-hype idea of the year


Wired |

We might have just hit Peak 2017 Buzzword: a startup is about to launch an Initial Coin Offering (ICO) to fund a blockchain-based network of Artificial Intelligences (AI), called SingularityNET.

Its goal — as the venture’s Kurzweilian name sort of gives away — is fostering the emergence of human-level artificial intelligence on a decentralised, open-source platform, spoiling the game for governments and technology colossuses striving to conjure up general AI in their secretive data centres.

The driving force behind the project is Ben Goertzel, a Hong Kong-based AI researcher and Chief Scientist of Hanson Robotics, a company specialised in building humanoid robots — such as eerie talking head Sophia. Over the last few years, Goertzel has grown wary of the concentration of AI power in the hands of a few Silicon Valley giants.

“I don’t think that what’s happening—with a few companies essentially owning AI, hiring every AI researcher, and buying every AI startup— is best for humanity,” he says. “It means that eventually human-level AI will come from these big corporations.”

Making that undesirable, Goertzel’s reasoning goes, is the fact that those companies might train their AIs towards finding new ways of lining their makers’ pockets—for instance, by perfecting targeted advertising—rather than tap into their power for tackling serious issues like climate change. Government-funded AI research is also problematic, as the resulting AI would be in thrall to powerful lobbyists or self-serving bureaucrats.

See:  The Age of Artificial Intelligence in Fintech

To break the AI oligopoly, Goertzel is turning to the blockchain, the digital scaffolding underpinning cryptocurrencies like Bitcoin. Transactions on a blockchain are collectively processed by a multitude of computers (“nodes”), a structure ensuring that no single party controls the network. Recent developments have expanded the technology’s potential beyond exchanging digital currency: second-wave blockchains like Ethereum can run whole applications, able to interact with each other through self-enforcing sets of rules dubbed “smart contracts.” These features make the technology particularly attractive to Goertzel.

“SingularityNET’s idea is to create a distributed AI platform on the [Ethereum] blockchain, with each blockchain node backing up an AI algorithm,” Goertzel explains. AI researchers or developers would be able to make their AI products available to SingularityNET users, which would pay for services with network-specific crypto-tokens.

Initially, the plan is to have a system that provides visibility — and payment — to independent developers of AI programmes. “As a customer, you'll be getting AI from anyone, be it a technology giant or a programmer in Ethiopia or Kazakhstan,” Goertzel says. At first, these programmes will probably be relatively mundane applications, such as translation services or image recognition software.

The wrinkle is that, courtesy of the smart contract mechanism, these AI agents would be capable of communicating with each other, and even working together when necessary. For instance, Goertzel says, a translation application coming across a picture while translating a file could automatically ask (and pay) a computer vision programme to caption the image. Over time, Goertzel hopes that these repeated synergies would go on to become something more complex.

“We want create a system that learns on its own how to cobble together modules to carry out different functions. You'll see a sort of federation of AIs emerge from the spontaneous interaction among the nodes, without human guidance,” he explains. “It’ll have AI inside each and every nodes, and between them, and they’ll learn how to combine their skills.”

The expected endgame is that these swarms of smart nodes would get as intertwined as clusters of neurons, eventually evolving into human-level AI. Goertzel admits that it might take decades for that to happen, but he is positive that the primary purpose of the SingularityNET project is bringing about “beneficial Artificial General Intelligence” (that is: human-level AI).

Despite the hype which has characterised AI products — essentially, anything using some measure of machine learning — over the last couple of years, a hype partly fuelled by objective breakthroughs such as DeepMind AlphaGo’s achievements, the prospect of human-level AI spontaneously arising anytime soon is pretty remote. But if that were to happen, Goertzel says that what comes out of SingularityNET would be a strong AI that is beholden to no one and theoretically open to everybody to use; its decentralised infrastructure would also ensure that it would be very hard for ill-disposed parties to take it down. That resilience is good if the resulting super-intelligent entity is a juggernaut of artificial wisdom, humanity and self-restraint — much less so if what the network begets is the villainous robo-villain Elon Musk keeps warning us about.

But Goertzel is relatively untroubled by the Skynet scenario, which he thinks could be prevented by ensuring that SingularityNET's nodes only host beneficial projects.

See:  [Nov 16, Toronto Event]: New Frontiers in Capital Innovation – Initial Coin Offerings (ICOs)

“One way to go about this would be to guarantee that a certain percentage of the network is devoted to tasks that are voted by the community as being of common benefit: charitable tasks, biomedical research, education,” he says. “If the first human-level AI grows up helping everyone, then it's more likely that it'll that ethos. It's not a guarantee, but it's certainly better than it would be if it were spawned from a killer robot or an advertisement engine.”

All of this is very far off in time, though. Right now, Goertzel and his partner Simone Giacomelli hope to launch the project in the second quarter of 2018. In November, SingularityNET will crowdfund the completion of the project by launching an Initial Coin Offering or ICO: the sale of virtual tokens—to be used as a form of payment on the platform—to future users or speculators betting on the tokens' appreciation over time.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit


Where is technology taking the economy?


McKinsey&Company | By W. Brian Arthur | Oct 2017

We are creating an intelligence that is external to humans and housed in the virtual economy. This is bringing us into a new economic era—a distributive one—where different rules apply.

A year ago in Oslo Airport I checked in to an SAS flight. One airline kiosk issued a boarding pass, another punched out a luggage tag, then a computer screen showed me how to attach it and another where I should set the luggage on a conveyor. I encountered no single human being. The incident wasn’t important but it left me feeling oddly that I was out of human care, that something in our world had shifted.

That shift of course has been going on for a long time. It’s been driven by a succession of technologies—the Internet, the cloud, big data, robotics, machine learning, and now artificial intelligence—together powerful enough that economists agree we are in the midst of a digital economic revolution. But there is less agreement on how exactly the new technologies are changing the economy and whether the changes are deep. Robert Gordon of Northwestern University tells us the computer revolution “reached its climax in the dot-com era of the 1990s.” Future progress in technology, he says, will be slower.

So in what way exactly are the new technologies changing the economy? Is the revolution they are causing indeed slowing—or is it persistent and deep? And if so how will it change the character of the economy?

I argued a few years back that the digital technologies have created a second economy, a virtual and autonomous one, and this is certainly true. But I now believe the main feature of this autonomous economy is not merely that it deepens the physical one. It’s that it is steadily providing an external intelligence in business—one not housed internally in human workers but externally in the virtual economy’s algorithms and machines. Business and engineering and financial processes can now draw on huge “libraries” of intelligent functions and these greatly boost their activities—and bit by bit render human activities obsolete.

See:  The Age of Artificial Intelligence in Fintech

I will argue this is causing the economy to enter a new and different era. The economy has arrived at a point where it produces enough in principle for everyone, but where the means of access to these services and products, jobs, is steadily tightening. So this new period we are entering is not so much about production anymore—how much is produced; it is about distribution—how people get a share in what is produced. Everything from trade policies to government projects to commercial regulations will in the future be evaluated by distribution. Politics will change, free-market beliefs will change, social structures will change.

We are still at the start of this shift, but it will be deep and will unfold indefinitely in the future.

The third morphing

How did we get to where we are now? About every 20 years or so the digital revolution morphs and brings us something qualitatively different. Each morphing issues from a set of particular new technologies, and each causes characteristic changes in the economy.

The first morphing, in the 1970s and ’80s, brought us integrated circuits—tiny processors and memory on microchips that miniaturized and greatly speeded calculation. Engineers could use computer-aided design programs, managers could track inventories in real time, and geologists could discern strata and calculate the chance of oil. The economy for the first time had serious computational assistance. Modern fast personal computation had arrived.

The second morphing, in the 1990s and 2000s, brought us the connection of digital processes. Computers got linked together into local and global networks via telephonic or fiber-optic or satellite transmission. The Internet became a commercial entity, web services emerged, and the cloud provided shared computing resources. Everything suddenly was in conversation with everything else.

It’s here that the virtual economy of interconnected machines, software, and processes emerges, where physical actions now could be executed digitally. And it’s also here that the age-old importance of geographical locality fades. An architecture firm in Seattle could concern itself with the overall design of a new high-rise and have less expensive workers in Budapest take care of the detailing, in an interactive way. Retailers in the United States could monitor manufacturers in China and track suppliers in real time. Offshoring took off, production concentrated where it was cheapest—Mexico, Ireland, China—and previously thriving home local economies began to wither. Modern globalization had arrived and it was very much the result of connecting computers.

The third morphing—the one we are in now—began roughly in the 2010s, and it has brought us something that at first looks insignificant: cheap and ubiquitous sensors. We have radar and lidar sensors, gyroscopic sensors, magnetic sensors, blood-chemistry sensors, pressure, temperature, flow, and moisture sensors, by the dozens and hundreds all meshed together into wireless networks to inform us of the presence of objects or chemicals, or of a system’s current status or position, or changes in its external conditions.

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These sensors brought us data—oceans of data—and all that data invited us to make sense of it. If we could collect images of humans, we could use these to recognize their faces. If we could “see” objects such as roads and pedestrians, we could use this to automatically drive cars.

As a result, in the last ten years or more, what became prominent was the development of methods, intelligent algorithms, for recognizing things and doing something with the result. And so we got computer vision, the ability for machines to recognize objects; and we got natural-language processing, the ability to talk to a computer as we would to another human being. We got digital language translation, face recognition, voice recognition, inductive inference, and digital assistants.

What came as a surprise was that these intelligent algorithms were not designed from symbolic logic, with rules and grammar and getting all the exceptions correct. Instead they were put together by using masses of data to form associations: This complicated pixel pattern means “cat,” that one means “face”—Jennifer Aniston’s face. This set of Jeopardy! quiz words points to “Julius Caesar,” that one points to “Andrew Jackson.” This silent sequence of moving lips means these particular spoken words. Intelligent algorithms are not genius deductions, they are associations made possible by clever statistical methods using masses of data.

Of course the clever statistical techniques took huge amounts of engineering and several years to get right. They were domain specific, an algorithm that could lip read could not recognize faces. And they worked in business too: this customer profile means “issue a $1.2 million mortgage”; that one means “don’t act.”

Computers, and this was the second surprise, could suddenly do what we thought only humans could do—association.

The coming of external intelligence

It would be easy to see associative intelligence as just another improvement in digital technology, and some economists do. But I believe it’s more than that. “Intelligence” in this context doesn’t mean conscious thought or deductive reasoning or “understanding.” It means the ability to make appropriate associations, or in an action domain to sense a situation and act appropriately. This fits with biological basics, where intelligence is about recognizing and sensing and using this to act appropriately. A jellyfish uses a network of chemical sensors to detect edible material drifting near it, and these trigger a network of motor neurons to cause the jellyfish to close automatically around the material for digestion.

Thus when intelligent algorithms help a fighter jet avoid a midair collision, they are sensing the situation, computing possible responses, selecting one, and taking appropriate avoidance action.

There doesn’t need to be a controller at the center of such intelligence; appropriate action can emerge as the property of the whole system. Driverless traffic when it arrives will have autonomous cars traveling on special lanes, in conversation with each other, with special road markers, and with signaling lights. These in turn will be in conversation with approaching traffic and with the needs of other parts of the traffic system. Intelligence here—appropriate collective action—emerges from the ongoing conversation of all these items. This sort of intelligence is self-organizing, conversational, ever-adjusting, and dynamic. It is also largely autonomous. These conversations and their outcomes will take place with little or no human awareness or intervention.

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The interesting thing here isn’t the form intelligence takes. It’s that intelligence is no longer housed internally in the brains of human workers but has moved outward into the virtual economy, into the conversation among intelligent algorithms. It has become external. The physical economy demands or queries; the virtual economy checks and converses and computes externally and then reports back to the physical economy—which then responds appropriately. The virtual economy is not just an Internet of Things, it is a source of intelligent action—intelligence external to human workers.

This shift from internal to external intelligence is important. When the printing revolution arrived in the 15th and 16th centuries it took information housed internally in manuscripts in monasteries and made it available publicly. Information suddenly became external: it ceased to be the property of the church and now could be accessed, pondered, shared, and built upon by lay readers, singly or in unison. The result was an explosion of knowledge, of past texts, theological ideas, and astronomical theories. Scholars agree these greatly accelerated the Renaissance, the Reformation, and the coming of science. Printing, argues commentator Douglas Robertson, created our modern world.

Now we have a second shift from internal to external, that of intelligence, and because intelligence is not just information but something more powerful—the use of information—there’s no reason to think this shift will be less powerful than the first one. We don’t yet know its consequences, but there is no upper limit to intelligence and thus to the new structures it will bring in the future.

How this changes business

To come back to our current time, how is this externalization of human thinking and judgment changing business? And what new opportunities is it bringing?

Some companies can apply the new intelligence capabilities like face recognition or voice verification to automate current products, services, and value chains. And there is plenty of that.

More radical change comes when companies stitch together pieces of external intelligence and create new business models with them. Recently I visited a fintech (financial technology) company in China, which had developed a phone app for borrowing money on the fly while shopping. The app senses your voice and passes it to online algorithms for identity recognition; other algorithms fan out and query your bank accounts, credit history, and social-media profile; further intelligent algorithms weigh all these and a suitable credit offer appears on your phone. All within seconds. This isn’t quite the adoption of external intelligence; it is the combining of sense-making algorithms, data-lookup algorithms, and natural-language algorithms to fulfill a task once done by humans.

In doing this, businesses can reach into and use a “library” or toolbox of already-created virtual structures as Lego pieces to build new organizational models. One such structure is the blockchain, a digital system for executing and recording financial transactions; another is Bitcoin, a shared digital international currency for trading. These are not software or automated functions or smart machinery. Think of them as externally available building blocks constructed from the basic elements of intelligent algorithms and data.

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The result, whether in retail banking, transport, healthcare, or the military, is that industries aren’t just becoming automated with machines replacing humans. They are using the new intelligent building blocks to re-architect the way they do things. In doing so, they will cease to exist in their current form.

Businesses can use the new opportunities in other ways. Some large tech companies can directly create externally intelligent systems such as autonomous air-traffic control or advanced medical diagnostics. Others can build proprietary databases and extract intelligent behavior from them. But the advantages of being large or early in the market are limited. The components of external intelligence can’t easily be owned, they tend to slide into the public domain. And data can’t easily be owned either, it can be garnered from nonproprietary sources.

So we will see both large tech companies and shared, free, autonomous resources in the future. And if past technology revolutions are indicative, we will see entirely new industries spring up we hadn’t even thought of.

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