A New Direction for Elemetric — Data on the Blockchain
Elemetric has always been about data — we just believe that data is undergoing a major change.
Elemetric began with a vision to make the market research industry smarter, addressing critical data challenges that we highlighted from time spent working alongside researchers. While the product took a few different turns throughout, each was always about making data more automated, more actionable, and more accessible — adding value through insights.
One huge thing I learned, though, is that some of the most interesting questions in the contemporary world of data are being addressed in an nascent but rapidly emerging space — a space that currently exists outside the purview of market researchers, advertisers, and even data scientists.
I’m talking about blockchain.
Blockchain, in my opinion, has the potential to have a once-in-a-generation, transcendent impact on the commercialization of data.
The potential use-cases could re-invent how corporations, governments, and consumers share data and interact with one another, driving relentless efficiency for transactions and creating entirely new paradigms for security, identity, and utilization of data among the world’s largest organizations.
I’ll explain more of that below, but with this post I’m trying to accomplish 2 things:
- Discuss my areas of interest and why I’m uniquely positioned to build a company in the space.
- Explain why I’m confident that blockchain is poised to be a world-changing technology that will have far-reaching effects across a number of huge industries.
My Areas of Interest & Competitive Advantage
I wrote an article last week entitled,” Blockchain Puzzle Pieces — Understanding Application Stacks and How Value is Created” that details the different opportunities for building software within a blockchain ecosystem.
One concept that became clear in my research is the idea that data has become the most valuable asset in the world, which has driven monopolistic network advantages for entrenched players across many industries, including banks and FAANG internet giants (Facebook, Apple, Amazon, Netflix, Google). I believe blockchain has the ability to recalibrate that scale —creating a new hierarchy of economic leaders, driven by technological advances that were previously not possible.
Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and — crucially — new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways. It changes the rules for markets and it demands new approaches from regulators. Many a battle will be fought over who should own, and benefit from, data.
Data is giving rise to a new economy, The Economist, 5/6/17
To be clear — I do not believe that consumers, at-large, have issued a mandate for blockchain to revolutionize the world of consumer privacy.
In fact, market research would suggest that most Americans actually don’t care that much about their privacy, and struggle to understand the scope of online surveillance, taking very few steps to protect or conceal their identities.
I do believe, however, that the decentralized aspects of blockchain technology have the potential to drive enormous economic incentives across a huge number of industries that would, as a byproduct, upend the data model that has reinforced the powerful (sometimes monopolistic) feedback loop which has created a moat around entrenched players in different industries.
As someone who has worked with data for nearly a decade — as an analyst, as a marketer, as a data scientist, and as a product-focused entrepreneur — I feel compelled to explore this opportunity that has the potential to change how business and consumers work with data, redefining industries and revenue models in the process.
The project, specifically, that I’m working on will be outlined here on Medium in the coming weeks. I’d love for everyone reading this to follow me, sign-up for my email list, and stay tuned for further updates!
Why I’m Betting on Blockchain:
Blockchain is (today) driven by uninformed speculation; but that’s okay.
The past 6 months have been a mania-filled frenzy of cryptocurrency investment, with the total number of investors in the market growing from an estimated <1 million in late 2016 to more than 3 million people today.
Fueled by the idea of a 21st-century gold rush and the very real 30x growth of ETH over the past 12 months, hordes of individuals with no knowledge of the space or underlying technology have registered on Coinbase or participated in ICOs, seeking new and unfamiliar digital fortunes.
This is not a bad thing.
From the infamous (but dated) “Why Bitcoin Matters” in NYT’s Dealbook, published in 2014, Marc Andreessen writes:
It is perhaps true right at this moment that the value of Bitcoin currency is based more on speculation than actual payment volume, but it is equally true that that speculation is establishing a sufficiently high price for the currency that payments have become practically possible. The Bitcoin currency had to be worth something before it could bear any amount of real-world payment volume. This is the classic “chicken and egg” problem with new technology: new technology is not worth much until it’s worth a lot. And so the fact that Bitcoin has risen in value in part because of speculation is making the reality of its usefulness arrive much faster than it would have otherwise.
This trend holds truer in 2017 than it did in 2014, when the market cap was under $10B versus $150B+ today, despite the notable lack of a “killer app” to justify the validation.
Again, I think that’s okay.
The cautionary tales of the Dotcom era (Pets.com, Webvan.com, eToys.com, etc.) will certainly have contemporary equivalents — as heavily-funded ICOs with big names and extensive media coverage fail to develop any meaningful technology.
Conversely, though, I believe that this new era of blockchain will also give us the equivalent of Google and Amazon, although the winners and losers are certainly not sorted yet.
As to the “killer app” problem — it’s true that despite all the publicity and attention, there still is no essential, demonstrably useful application built on blockchain outside of financial markets. At this time, though, the current set of tools makes it hard to build any app, not to mention a “killer” one.
That will be changing soon, though.
See the diagrams below from Fred Ehrsam, a co-founder of Coinbase:
dApp developer stack in 2014:
dApp developer stack in 2017:
In the time it took me to paste those diagrams, I could have deployed a web app on Heroku, or put up a listing to hire one of 12 million mobile developers worldwide to create an MVP version of a new Android App, ready and deployed in just a few days.
Point being — it’s very easy to built web and mobile apps in 2017.
Today, the web is a very old place, with an infrastructure that developers in 1998 couldn’t fathom. The “Gold Rush” of developer tools over the past 10 years has resulted in remarkable efficiency in building and scaling software applications.
This is not the case for the decentralized web.
From the CEO of Zeppelin Solutions, a leading technology provider in the emergent blockchain space:
We realized that only a small group of blockchain experts was capable of building distributed applications. Developing blockchain applications is hard, and making them secure is even harder. For a new decentralized internet to emerge, more people were needed to build it. That would only happen once the right tools and standards were in place, lowering the barriers of entry to new developers.
All of this leads me to the second thing about blockchain:
(B) Blockchain is a Transcendent Technology, Outside of Speculative Valuations
The Whitepapers released by Satoshi Nakamoto and Vitalik Buterin, on Bitcoin and Ethereum, respectively, represented the culmination of 20 years of research on cryptocurrencies and 40+ years of research on cryptography, by thousands of researchers, mathematicians, cryptographers, and computer scientists at the most prestigious organizations around the world.
The problem, which was often considered impossible before the release of the Bitcoin whitepaper in 2008, was the tracking of unique digital assets without a centralized ledger. The far-reaching implications are that you can track individual “things” online (files, data, money, etc.) without the ownership problems associated with centralization.
In Andreas Antonopoulos’s book, Mastering Bitcoin, he lists the four key innovations that contributed to this solution as:
- A decentralized peer-to-peer network (the bitcoin protocol)
- A public transaction ledger (the blockchain)
- A set of rules for independent transaction validation and currency issuance (consensus rules)
- A mechanism for reaching global, decentralized consensus on the valid blockchain (Proof-of-Work algorithm)
With Ethereum, Vitalik Buterin added tremendous functionality to the underlying blockchain technology of Bitcoin, creating a Turing-complete programming language to enable the building of “smart contracts”, which can then be run on the “Ethereum Virtual Machine”.
So What Does This Mean?
If you Google “Why is Blockchain Important”, you’ll get countless articles from publications more authoritative than myself (like Fortune, HBR, PWC, MIT, Wired, and McKinsey) about how blockchain technology could change the world.
It’s safe to say that some of the smartest, most informed people in the world are excited about the potential impact of the technology.
At this time, though, a lot of the value outside of speculative markets is hypothetical; but each new protocol iteration or completion of a “missing piece” from the developer stack (again, below) brings tactile value and breakthrough innovations closer to commercialization.
Signal Inside of Noise
In 2017 thus far, the cryptocurrency market cap has grown from $18B to more than $150B, with $1.3B poured into ICOs alongside sizable investments from blue chip VC’s like Andreessen Horowitz, Union Square Ventures, Sequoia Capital, DFJ, and more.
Major companies are also investing in the technology, with IBM establishing itself as an early leader, and world-renowned businesses like J.P. Morgan, Microsoft, Intel, UBS, and more throwing their support behind protocols like Ethereum and Ripple.
A lot of questions remain to be answered, but with enthusiasm echoing throughout Silicon Valley, on Wall Street, and in the forums of Crypto-anarchists the world over, it’s clear that there is a lot of potential value that can be created.
I truly believe that blockchain can revolutionize the world of data, creating a new playing field for companies competing and capitalizing on the world’s most valuable resource.
As mentioned before, I’ll be explaining my position in the space over a series of Medium posts in the coming weeks so please — follow me, sign-up for my email list, and stay tuned for further updates!
And if you’re excited about the space, want to ask a question, or just have a conversation about blockchain — please send me a message and I’d love to grab a coffee or schedule a phone call.
If you’re in Chicago, I’ve also started a Meetup.com group with 90+ members focused on entrepreneurship in blockchain — our next meeting is on 9/11/17.
