Blockchain Isn’t Hot Sauce

Guest post by Samson Williams, Partner – Axes & Eggs
and Keynote Speaker – Ascendant CSS Spring 2019 Conference 


I started telling people that blockchain isn’t hot sauce in mid-2017 to help explain why initial coin offerings (ICOs) were just the latest form of unregulated, online gambling. In November 2017, with Bitcoin nearing a high of $19k per bitcoin, I was telling anyone who would listen that 98% of ICOs were destined to fail. As of April 2019, ~87% of ICOs have failed and the global investor community has come to realize that it’s true; blockchain isn’t hot sauce. However, it should be noted that a 2% survival rate for entrepreneurs looking to leverage an emerging, novel technology is actually a sign of a healthy startup ecosystem.

Samson Williams, Keynote Speaker – Ascendant CSS Spring 2019 Conference

“So what?”

So what, right? As compliance managers, SMEs and leaders, why do you care that blockchain isn’t hot sauce? Here are eight reasons why blockchain not being hot sauce matters (or should matter) to compliance professionals:

  1. You can’t “invest in blockchain.” You can invest in businesses that leverage blockchain technology to be more profitable. If blockchain doesn’t make your business more profitable, why would you use it?
  2. Less than 1% of businesses will ever be true blockchain businesses. This statement requires a little explanation. AOL (American Online) and Comcast Cable are internet service providers (ISPs). Amazon, Google, Uber, and other web/mobile app based businesses are not ISPs but they do use the internet as a tool to generate profits. Consensys is the blockchain equivalent of AOL. They are a true “blockchain business.” Leveraging Consensys’ ERC20 protocol and others, Consensys is happy to build you, or any business, a blockchain infrastructure on which to conduct your business for a fee, of course. Does your business need a blockchain infrastructure to make money? This would mean making your company more profitable than it currently is, not just for a quarter but for the long run. For 99% of businesses the answer is “No.” Blockchain as a technology will be a help desk job by 2024. So the real question is, Do you want to invest in today’s blockchain “AOLs” or tomorrow’s businesses that leverage blockchain, as Amazon does the internet, as a tool to generate profit?
  3. Blockchains come with risk. Do you want everyone to be able to see all your business records? What are the legal requirements of “self-reporting” when you have 100% transparency to every transaction? What are the moral, ethical and reputational realities of having the ability to monitor and potentially prevent 100% of malfeasance within your business operations? How do you maintain data privacy when records are “immutable?” What are the regulatory requirements for managing data, access and records internationally, when using a blockchain? #GDPR
  4. Cryptocurrencies are a customer service battle. Customers want convenience in banking. Banking is a verb. Ultimately customers will choose whichever noun (bank, Facebook, Apple, cellphone, etc…) that can provide them with the most convenient banking services and experiences. So, how does KYC/AML work on a burner phone?
  5. Stablecoins don’t exist but nonetheless come with real risk. From JPMorgan to Facebook, institutions are rolling out new, ever more clever ways of creating “value” from thin air. How has the industry acknowledged the risk of stablecoins? How do we as an industry verify the value of something made, not by a government-backed bank out of thin air, but by some other private institution that provides banking services? So-called stablecoins present a variety of unknown risks that your institution and you as compliance experts will be tasked with discovering. So, what is a stablecoin? And what exactly makes it stable?
  6. Shitty data on a blockchain is shitty data on a blockchain. Blockchain isn’t quality assurance for your data. However, your business’ data is its most valuable asset. How will you profitably manage your data in a decentralized ecosystem?
  7. Blockchains present a whole new world of cybersecurity risks. Systemic risks of blockchains will not be known until after they’re built and hacked. Who wants to volunteer to be hacked first?
  8. Smart Contracts aren’t smart, nor contracts. Smart contracts are at best “terms and conditions.” You don’t want to find this out the hard way.

The above is by no means an exhaustive list of why Blockchain isn’t hot sauce. Blockchain isn’t hot sauce because it does not magically resolve even basic business issues such as operations, customer acquisition, service delivery, or profit generation. Blockchain also does not fix human issues of trust, transparency, and accountability. That said, blockchain technology is here to stay.

Looking forward to seeing you all in a couple of weeks at the Ascendant Compliance Solutions Strategies Spring 2019 Conference in Miami. Come prepared to discuss what blockchain is, why blockchain is here to stay, how its poised to impact your wallets and which technologies will be even more disruptive to your business operations, organizational culture and bottom lines than blockchain.

See you in South Beach!


It’s not too late to join us in Miami. For more information or to register, click here.

Related Content

Latest Content

Custody Concerns Continue

You timely filed your Form ADV within 90 days of fiscal year end, but did you properly answer all the questions related to custody? Not surprisingly, the Form remains confusing for many advisers, as does application of the Custody Rule itself. The SEC has issued guidance, letters to the industry, alerts and FAQs, but things … Continued

The Importance of Effective ADV Disclosure: Staying Ahead of the Regulators

This ComplianceCast will discuss how firms can mitigate risk by having effective disclosure in their Form ADV Brochure. Our panelists will be CSS Ascendant Senior Consultant Ariana Monchick and Jessica Matelis, Partner at Foley & Lardner and former Senior Counsel at the SEC Division of Enforcement. They will discuss: Required disclosures The types of conflicts … Continued

Regulation Best Interest, Cybersecurity Top Concerns at IAA 2019 Compliance Conference

The Investment Adviser Association (IAA) represents the interests of investment advisers in Washington D.C., and the IAA Investment Adviser Compliance Conference 2019 was a forum for the discussion of future potential rulemaking. Cybersecurity and Fiduciary Rule considerations were headline topics, with custody and marketing right behind. The following is a summary of key issues discussed … Continued

The Challenges of Building a Global Compliance Program

Compliance programs face challenges in balancing global requirements with local exceptions while incorporating the fast pace of regulatory change, addressing critical business needs and obtaining the necessary resources necessary to manage the program. Trends and thinking on the subject were center stage at the recent CSS London event “Looking at the Year Ahead – Global … Continued

Coming to America – California Adopts GDPR-Like Privacy Regulation

After a number of firms struggled last year to get their marketing and information systems into compliance with the EU’s General Data Protection Regulation (GDPR), advisers to U.S. clients will soon be facing similar requirements on the home front.  On the heels of the Cambridge Analytica scandal, California enacted the California Consumer Privacy Act of … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.