Imagine ordering a powerful new pneumatic nail gun. You arena��t a roofer; you bought it mostly as a toy because you like power tools. The first thing you would do after unpackaging it is start looking around for things to nail and nail you would: walls, your workbench, walls, boards, and walls. You have a new toy- a new technology- and you want to use it wherever you can justify using it.

Seven years ago blockchainsA�were invented as part of Bitcoin. For year one, almost no one knew the project existed. In year two, people learned how to make use of the currency. During year three, people started using a different blockchain, Namecoin, to hold domain name information in a system which was academically interesting but not widely used. Since then people have started trying to hold all kinds of things in blockchains: deeds, contracts, and all sorts of documents. On the outside, it sounds sensible: a censor-proof fully distributed persistent data storage system.

An Organization Finds a Fun Power Tool

Last week DARPA, the U.S. Defense Departmenta��s Advanced Research Projects Agency, put out a request for prototypes for a secure messaging platform. Potential participants are tasked with creation of a platform which uses a�?a decentralized messaging backbone to allow anyone anywhere the ability to send a secure message or conduct other transactions across multiple channels traceable in a decentralized ledger.a�? In particular, they want a blockchain. Ita��s rare that DARPA demonstrates much misunderstanding of new technology but this RFP makes it clear that DARPA has jumped on the a�?Just use a blockchain!a�? bandwagon without regard to their huge downsides. DARPA has found a nail gun and by God, it wants to use it.

The problem is that blockchains are bad at storing data. They arena��t even intended to be a data storage system- theya��re a consensus mechanism and thata��s it. A consensus mechanism is a way for a bunch of entities who dona��t trust each other to come to a consensus about the order of events. An event may be the transfer of money or the creation of a document. Everything else that DARPA wants, blockchains cannot do. They want a system where a�?Regulators with access to the ledger [can] read the correspondence and thus easily verify that a transaction didna��t violate Federal Acquisition Regulations,a�? despite the fact that blockchains will not help with access control nor will they help to guarantee transparency. If officials and contractors dona��t want a contract to be stored where regulators will review it, blockchains will not help.

DARPA wants a system to work such that a�?Troops on the ground in denied communications environments would have a way to securely communicate back to HQ,a�? despite the fact that blockchains by themselves arena��t encrypted and do nothing to help you if you have no way to communicate already. Encryption and the other features DARPA wants could certainly be layered on top but then the blockchain only serves one purpose: decentralization. According to the document, decentralization comes with two benefits: security and cost.

Two problems: Blockchains dona��t secure data and they are very expensive.

a�?Legacy messaging and backoffice infrastructures, traditionally based on centralized, unencrypted hub-and spoke database architecture,a�? the document states, a�?are expensive, inefficient, brittle and subject to cyber attack.a�? Except concerning cyber attacks which I will address later, this is wrong. Centralized infrastructures are vastly cheaper and more efficient than any known decentralized system. In Amazona��s cloud, AWS, renting a pair of redundant medium-sized database servers, 100 GB of storage, 5 medium sized communication servers, and a load balancer costs $2800 per year [1]. That comes with a base performance of 300 input/output operations per second with the ability to burst if needed. In ClearChat, when one person sends a message to three people in a group, our server must do 15 database operations including the work for acknowledgments so this server setup could handle 20 messages and small files per second or 631 million per year. Thata��s 0.4 cents per 1000 messages. Bitcoin, on the other hand, costs about $8 per transaction, or 1.8 million times more.

The Cheaper Option

a�?So what?a�? you might ask. a�?Maybe the benefits are worth being 1.8 million times more expensive. Or maybe we can make a cheaper blockchain.a�? We can actually. Bitcoin is expensive, ultimately, because a lot of useless work is done when adding blocks to the blockchain. But this work is self-imposed- a trade-off for not having to trust anyone. But if there is a central agency, like the DoD, who packages messages and documents into blocks and adds them to their own blockchain without doing any useless work, we could allow and accept that simply because we trust DoD. They could achieve redundancy by doing this in five different data centers so that if one goes down the others can continue on just fine. But if we go this far then what is the point of using a blockchain? Why not just have DoD store messages and files, along with a time-stamp, in redundant databases that they control and from which they refuse to delete data? This would be much simpler, more flexible, and would achieve all of the same goals.

As for using blockchains to achieve cyber-security, there is nothing more secure about blockchains over a simpler append-only database. Ultimately you arena��t trusting the blockchain or database to keep your information secret- you trust your own end-to-end encryption. Companies and government should do what wea��ve done: a centralized service with redundant hot servers and databases spread out across the country and protect peoplea��s information using end-to-end encryption. Ultimately this is the inevitable outcome for DARPAa��s latest challenge.

DARPAa��s Perfect Encryption App and the Folly of Blockchains for Everything

References

1. MySQL database server: t2.medium multi-availability-zone: $795 / year.
2. Storage: $0.230 per GB-month (SSD) x 100 GB x 1 year = $276 / year. This includes a base performance of 300 input/output operations per second but can burst much higher if needed.
3. Servers: t2.medium EC2 instances (2 vCPUs with 4 GiB of memory each) x 5: $1510 / year.
4. Load balancer: $0.025 / hour = $220 / year.

One of the great benefits of doing business in person is the ability to have a face-to-face interaction. Being able to put a face to a name and shake a hand goes a long way in influencing a purchasing decision. As business increasingly shifts online, how can prospects receive the same level of interaction from the companies theya��re engaging with and buying from?

At FinovateFall 2016, we provided a glimpse into some of the great ways that wea��re enabling companies to delight their customers and provide a best-in-class customer experience. One of our highlighted examples revolves around putting a face to a name.

One of the strengths of SaleMove is its ability to allow companies to easily identify and engage with customers and prospects using our Overseer business logic engine. Identification and engagement rules can be based on website behavior, but they can also be based on data companies choose to share with SaleMove.

Under this scenario, it becomes easy for a company to identify existing customers and the level of servicing and communication provided to them can take on a very different look.

As a consumer, imagine being able to log in to your investment account and seeing a link on your dashboard to communicate with your RIA. By clicking the link, you immediately begin an online engagement through the medium of your choice (video, voice, or chat) and are routed intelligently to your advisor.

Choosing video, youa��re now a�?face to facea�? with your advisor. Ita��s just like being in his office. This a�?in-persona�� experience online allows you to strengthen your relationship with your advisor, build trust, and feel more confident .

Taking the experience even further, using SaleMove CoBrowsing, your IRA can now share your browsing session and provide a personalized, guided walkthrough of your account and relevant investment charts or tools.

This is the future of the online customer experience. Only, this future is very much a reality today with SaleMove.

A full year has now passed since the U.S. EMV liability shift took effect on October 1, 2015. The shift disrupted the credit card industry, directly influencing merchantsa�� businesses and the level of fraud liability risk to which they are exposed. Over the past year, a lot has changed and both consumers and merchants are adapting to the new payments environment, but we still have a long way to go as an industry.

Mainstream press and most people only became aware of EMV chip cards around the time of last yeara��s liability shift.A�In reality, the shift from magnetic stripe to chip-based credit cards in the United States has been in the works for much longer.A�At CardFlight, we had teams working on developing and deploying EMV solutions since 2014.A�We are proud to be one of the only mobile solution providers in the U.S. to receive EMV certifications and approvals prior to the liability shift.A�In fact, I spent last October 1 in Washington, DC as a guest of the Electronic Transactions Association, where CardFlight was one of the companies featured for having EMV-enabled point of sale solutions available to merchants.

As attention and interest in the EMV chip card migration picked up from all sides, it quickly became clear that October 1, 2015 was not a big bang, but rather an interim milestone in a broader shift.A�Less than half of all credit cards in circulation contained chips, few merchants had deployed EMV-enabled solutions, and both consumers and retailers had limited experience completing chip card transactions.

More remarkable, there was a dearth of real data about where the market was actually at.A�While EMV was a hot topic in the press, most published statistics relied onA�surveys, individualA�anecdotesA�or forecasts rather than real transactional data.A�Because CardFlight processes transactions on behalf of tens of thousands of merchants in all 50 U.S. states, we have access to cold hard data about the cards customers are using and the technologies merchants are using to accept those payments.

We created something called the CardFlight EMV Migration Tracker, which assesses the impact of EMV chip card migration within the payments industry, something we hoped would serve as a resource for other companies to understand how the EMV migration changes their own businesses and the market overall.A�We first published this in December 2015 and since then have updated it quarterly with new data.A�Today, on the anniversary of the liability shift, we are publishing our latest update.

So, where are we at now?

• 78% of cards now contain EMV chips, up from 46% in October 2015.
• American Express leads the way in EMV card issuance, with 96% of their cards now EMV-enabled.
• 73% of CardFlight merchants are EMV-enabled, more than 2.5x the national average.
• More than half (56%) of CardFlight transactions in September were EMV a�?chip on chipa�?, showing our success in leading consumers and merchants through the EMV migration.

As an industry, wea��re in a time of transition.A�Nearly 4 out of 5 cardholders have EMV chips on their credit cards.A�With roughly 30% of U.S. merchants now EMV-enabled, customers are getting used to dipping the chip instead of swiping the magnetic stripe.A�Of course, this only leads to further confusion at merchants whose terminals have a chip card slot but havena��t yet upgraded it with EMV-certified software.

Amidst all this change and confusion, many people forget the whole reason the shift: reducing fraud.A�Counterfeit card fraud is one of the leading sources of fraud losses in the credit card ecosystem, and EMV technology makes this type of fraud nearly impossible.A�For retailers who completed or are close to completing their upgrades to EMV, MasterCard reports a 54% decrease in counterfeit fraud costs year-over-year.

Whether you like or dislike EMV, and whether you have found the migration straightforward or confusing, one thing is certain: EMV chip cards will be the primary way to pay for in-person commerce in the United States over the next few years.A�While the first year of this migration has been a wild one, the trend lines are clear.

Interested in more data about the EMV chip card migration?A�You can also download the full October 2016 CardFlight EMV Migration Tracker with charts and additional data points here.