Breakout Startups #10- Blockstack
The Pioneer of the “New Internet”
If you join a company, my general advice is to join a company on a breakout trajectory.” — Sam Altman, Former President at Y Combinator
In the 10th edition of Breakout Startups Memos, we are profiling Blockstack, the company aiming to build the “Decentralized Internet”.
Disclaimer: Blockstack is an investor in Xpo Network through Signature Fund.
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What is Blockstack?
Blockstack is a full-stack decentralized computing protocol that enables a new generation of applications where developers and users can interact fairly and securely.
The Case for Decentralization
In his famous blog post titled “Why Decentralization Matters”, Chris Dixon says,
Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.
When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, and Twitter vs. its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.
For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.
We have seen this happen again and again in the past few years and this is where a platform such as Blockstack kicks in. Now,
Why Blockstack?
The core ideology of Blockstack is no company should have majority of the power on the Internet.
Blockstack aims to be a pioneer in building the Web3 as the world progresses away from centralization enabling developers and users to come together!
But how do we move towards this “Can’t be evil” internet?
Muneeb writes..
Google has a famous motto “Don’t be evil.” But maybe it should be “Can’t be evil.”
No company on the internet should have so much power that they get to debate if they should be evil today or not.
In a “Can’t be evil” model¹, trusting “good guys” is replaced by cryptographic ownership of digital assets and mathematical proofs of security.
This is exactly what Blockstack aims to do.
A truly open and free internet is not just a theoretical concept. There are technologies available today that can make it happen.
1. Decentralized domain name systems like BNS (used by Blockstack), Namecoin, ENS (used by Ethereum), and others are already available. They generally use blockchains to build a global DNS-like system in a fully decentralized manner; no single company can censor a website or forcefully take away the ownership of a domain.
2. Decentralized storage systems like Gaia (used by Blockstack), Swarm (used by Ethereum), IPFS, Storj and others distribute data on many peer nodes and remove the reliance on any single company for serving content. Some systems, like Gaia, repurpose existing cloud storage providers and can give comparable performance to existing services.
3. Applied cryptography has been around for decades and forms the basis for many secure, decentralized systems. The technology is seeing a renewed interest and is getting easier to use with friendly interfaces for managing private keys and better-designed software.
4. New browsers with blockchain support like Brave, the Blockstack browser, Mist and others are already available and support blockchains in various ways. Brave enables blockchain-based payments. The Blockstack browser connects to a new decentralized internet.
You can read more about it here:
Team
- Muneeb Ali- Founder and CEO, Blockstack PBC
- Patrick Stanley- Growth, Blockstack
- Diwaker Gupta- Head of Engineering, Blockstack
- Jeff Domke- Head of Product, Blockstack
- Xan Ditkoff- Production Partner, Blockstack
Funding
- Blockstack has raised a total of $93.8M in funding over 9 rounds.
- The company also did the First SEC-Approved Token Sale on Sep 10, 2019 where they raised $23M.
- The company has raised money from prestigious VCs such as Union Square Ventures, Y Combinator, Digital Currency Group, Naval Ravikant and others.
- The company also has got marquee investors such as Albert Wenger and Dave Morin on its board.
Strengths
- App Mining Program
Blockstack has a growing App Mining program which incentivizes developers to build on top of the platform. Every 30 days, Blockstack pays $200k to the best apps in its ecosystem. This has worked very well as a strategy to incentivize developers.
Currently, there are over 250 Apps built on top of Blockstack.
Currently, Product Hunt, TryMyUI, Awario and New Internet Labs serve as the current app reviewers.
2. Community Support
Blockstack has a booming and engaged community of developers and users as well who regularly engage with the product and help with the feedback. You can check out their communities here:
Along with this, Blockstack recently partnered with Lambda School to help students building decentralized software applications on the platform.
The company also hosts a series of events regularly across the world to create awareness about the product. Check it out here:
Weaknesses
Blockstack only has one major competitor i.e Ethereum. Ethereum has a strong first mover advantage when it comes to building the community. But, Blockstack has been trying to make inroads into the ecosystem with their programs.
They have several initiatives such as the one listed below which are rapidly making inroads into the Ethereum ecosystem.
Key Points
- Muneeb Ali moved from Pakistan to Sweden with almost no money, living on one McFish burger a day at McDonalds and whatever snacks he could find in his research lab. He lied about getting funded by his university in Pakistan. This paved the way to Princeton where he met Ryan Shea and the later this duo went on to start Blockstack.
- Blockstack initially started out as OneAuth, is a distributed identity system, kind of like Facebook Auth, built on the blockchain. The company was started in 2014 and was a part of that year’s Y Combinator batch as well.
