Crypto Invest Summit — Pt. 1 of 3: Speculating While Looking For Use Cases
CryptoOracle partnered with Crypto Invest Summit (CIS) to put on a well-attended and informative event in Los Angeles last week. Everyone involved in the effort is to be commended, and I’ll cite in particular those closest to my corner of the crypto community, CryptoOracle (CO) co-founders Lou Kerner and James Haft, CO team members Jennifer Litorja, Caron Kramer and Pablo Gonzalez Ruiz, as well as CO’s man from the future in health care, Dr. Alex Cahana, who organized a great health care track.
The goal here is to serve some glasses of insight from the fire hose of content at the event. The resulting takes (e.g., quizzical views of U.S. regulation and security tokens) and errors (none, hopefully) are mine, while I try to cite particular sources and presenters where helpful. To give more context on the content here, the sessions of focus during my whirlwind were: The Future of Blockchain Gaming; The Brooklyn Project & Regulation; Building A Crypto Community; Selling & Marketing Your Token Offering; Bootstrapping Network Effects Open Discussion / Q+A; Liquidity: The True Measure of the Success; Lessons Learned From Security Token Offerings; Bringing Blockchain to the Masses; When Will Crypto Replace Fiat?; a live taping of the CNBC Crypto Trader Show; CryptoHealth Landscape 2018; How Will Blockchain Disrupt Health?; Invest like a VC; and Healthcare and Data: Privacy, Security and Ownership.
FYI, videos for CIS sessions will be available shortly at the CIS site and CryptoOracle TV.
Speculation still dictating tone of the market
Fundamentally, the crypto market remains driven mostly by speculation.This invites chartists, and one predicted from a CIS stage that the stock market’s rising wedge pattern and bitcoin’s descending wedge pattern would mean a crash for the former and a surge for the latter by year-end. You see crypto funds in bull markets, and VCs in bear markets. So say hello to my VC friend, who would just as soon invest in equity now, thank you very much, and take tokens “for free,” to quote another presenter. To its credit, Pantera says it is sticking to steady investment in utility tokens, despite the resultant volatility of results (down perhaps 70% this year vs. up 350% last year).
Looking for use cases
Unsurprisingly, Tim Draper painted with a broad brush on a sweeping canvass of opportunity: the combination of Bitcoin, blockchain, smart contracts, and big data applications should create a platform to disrupt industries in the trillions of dollars. His hit list of sectors included the usual suspects, like finance, venture capital, banking, commerce, insurance, and real estate. However, he made a point of highlighting two others — health care and government — which he sees providing particularly poor service at high cost. As if on cue, Dr. Cahana’s presentation in the later health care track showed the U.S. below the global life expectancy/cost curve. If beating an opioid addiction saves the health care system $25,000 per year, then crypto can help cut the patient in on some of the savings (e.g., through compensation for data on compliance), for a win-win. But back to Draper, who added the insights that most government functions (in particular transfer payments and insurance) are virtual, and thus more suitable for crypto disruption, and that the personalized treatment facilitated by big data analysis of blockchain data could face resistance from incumbents like drug companies, which look for one-size-fits-all blockbuster drugs prescribed at scale.
Those expansive views aside, although crypto is global, don’t expect it to attract the best and the brightest to solve the problems of the developing world. At least the experience of the large incumbent tech platforms supports this chauvinistic view. Each FANG stalwart started with the developed markets as the value engines. For example, in its first full year after going public, Google generated 75% of its revenue from the U.S. and the U.K. Bitcoin is the most valuable crypto, but its value is driven by store of value and cross-border payments use cases that are relatively unimportant in developed economies. In the U.S., talk of the travails of censorship, and certainly the censorship of value, courses through neither coastal cocktail parties nor fly-over barbecues.
Turning from censorship resistance leaves our focus on auditability, verifiability and accessibility as the promises around which to build crypto use cases, per a ConsenSys exec. Everpedia looks to improve on Wikipedia’s base of only roughly 10,000 regular contributors, but is this small band really doing that bad a job? Although Everpedia fans argue yes, Lunyr’s modest traction whispers no. Per a ConsenSys exec, the main smart-contract-inspired use cases thus far are for exchanges and gambling. From outside the crypto-verse, exchanges look like navel-gazing applications, helpful for value transfers among those who already have tokens, but does the liquidity from exchanges drive token adoption in the first place? Perhaps the argument is that all these exchanges are integral to the necessary infrastructure, but again, infrastructure to support what applications?
Gambling would seem to have breakout potential as a mass-market dapp, but only if it can drive gamification at scale, namely the use of crypto transfers to incentivize new, valuable activities. What are these activities? That is, Mr./Ms. Economist, assume that you have a can opener, i.e., you have solved crypto’s problems of scaling, governance, smart contracts and whatever else, what would crypto’s killer dapps be? One presenter suggested an uncensorable global video platform. But would the risk of permanent child porn really be worth an immutable global record of the next Tiananmen Square? Ethereum purists seem to look down at tokenized frequent flier miles as killer dapps, questioning their need for censorship-resistance and the benefits of separating the value of one company’s loyalty economy from another’s. Staking appears in many proposed dapps, but it still seems an open question whether stakes can sustainably support the reputation and authentication management for which they are often brought into service.
What new features would crypto bring to gamers? Yes, some benefits fall within the subset of improved cross-border value transfers discussed previously, although largely dismissed as a driver of adoption in developed economies. Gaming is tantalizingly close to gamification, and one presenter offered that one practical avenue for EOS in particular could be gaming. But does crypto per se expand the use cases for gamification? For example, there is evidence that intrinsic rewards better motivate creativity than extrinsic rewards — does tokenization of those rewards change that?
This is first in a series of posts on takeaways after last week’s Crypto Invest Summit in L.A. The other posts are Part 2 and Part 3.
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