San Francisco conference shows promise and perils of cryptocurrency
SAN FRANCISCO (KGO) -- First there was Bitcoin, and now there's a growing frenzy around investing in all sorts of cryptocurrency.
On Monday, a traveling conference rolled into San Francisco, featuring a showcase of companies aiming to disrupt their industries using blockchain technology.
"I think the blockchain is the biggest revolution of our time," said Vishal Gurbuxani, co-founder of Team In Residence, a sponsor of the CryptoEconomy World Tour.
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The blockchain is the mathematical magic that makes cryptocurrency work. It's the basis of Bitcoin, Ethereum and now over a thousand other currencies, including many created by startups like the ones on the tour.
"We've got everything from healthcare to food, to solar, to environmental, to financial, to legal," said Team In Residence partner Mona Akhavi.
Solve Care Foundation is one such startup, aiming to replace mountains of medical bills and bureaucratic approval processes with a simple, virtual token issued to patients by insurance companies. It would make bills in the mail and the dreaded "out of network" rate a thing of the past.
"Choose anybody in this room as a doctor instead of me telling you who you can choose," said Solve Care CEO Pradeep Goel, who founded the company after leaving his job as a health insurance company CIO. "Pay him directly using my coin, and the doctor having the guarantee the coin will be redeemable."
There are coins for drone delivery, coins for free Wi-fi, and new ones launching every day.
"An ICO is an initial coin offering, it's the new way of raising capital," Akhavi explained.
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Forget the stock market -- in the crypto economy, companies mint their own brand of virtual coins and sell those to investors. It's a brand new market with huge ups and downs.
"We're still very early days," said Gurbxani. "Probably 80 percent of the investors today are speculators."
Though the blockchain makes trust a matter of mathematics, people still need to trust a cryptocurrency before they're willing to buy it. That's where the marketing comes in.
"You see a lot of the scams that come into play where people are getting tricked into doing things because they're not doing the right research," said Captiv8 co-founder Krishna Subramanian.
More than ever, he said, marketing agencies are looking for influencers: trusted voices on social media to endorse new currencies.
"We're trying to help these ICOs find their 'Oprah effect,'" he said.
For people attending the traveling conference, there's a steep learning curve.
"I think there are so many pieces, there's a lot of terminology," said Sonia Hunt, a marketing VP who's also interested in cryptocurrency as a personal investment.
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One startup aims to make the confusing new world more palatable by helping users program complex transactions called "smart contracts" in plain English -- or whatever language they speak natively. Instead of using a middle man like an escrow company, smart contracts automatically transfer money once an agreed-upon set of conditions is met. The startup called Iolite aims to make that tool available to real estate brokers, insurers, lawyers and other professionals who aren't programmers.
World Wifi is minting virtual tokens that allow users to get free home Internet service by sharing their connections with international travelers who pass by outside. A 3-way transaction between advertisers, router owners and users who need internet access can happen without all the usual obstacles.
"Money and borders and the global order of currencies," said Fred Ledbetter, an adviser to the company.
In other words, if cryptocurrency delivers on its promise, everything you learned in your economics class could wind up getting filed under "history."
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