By James Brodie on The Capital

Crypto was born in the last financial crisis as a direct response to fiscal and monetary irresponsibility by governments and central banks. Its unique characteristics position it perfectly to mature during the current one. This article explores 10 reason why now is the time for crypto to thrive:

1. UNLIMITED STIMULUS — Debasement of fiat currencies and mounting sovereign debt:

  • Global stimulus exceeds $6T with central banks expanding balance sheet up the risk spectrum.
  • M2 money supply is skyrocketing in recent weeks, with a concomitant decrease in your spending power. …

As a Crypto Fund Manager, it is my duty to keep abreast of all blockchain developments within the Asset Management space. I’d like to share my recent experience testing the Melon Protocol for the establishment of a Blockchain Native Crypto Fund.

As 2018 came to a close, so did my decade long career in the pharmaceutical industry. I was previously the Director of Discovery Research at British Biotech company, GW Pharmaceuticals, whose goal it was to develop medicines from cannabinoids; compounds unique to the cannabis plant. My role there had exposed me to Bitcoin back in 2012 while I was scouring the internet to identify medicinal uses for cannabis. Geographically separated individuals with similar pathologies had found solace in social media platforms and were sharing their experiences with one another in the treatment of their complex and chronic conditions. Here they…

Diversity and Multicellular Organisms

Previously in this series ‘On the Origin of Blockchains’, I have explained that the notion of a niche within the natural world is a useful reference point to help understand how blockchain networks can evolve to colonise financial, technological and commercial niches in the digital world.

Bitcoin is establishing itself in the money niche. Smart contract platforms, with their added complexity, are opening up new niches. In this sixth piece in the series, I will investigate how mutated blockchain elements (genes) and cryptoassets (metabolites) in “second layer” protocols are improving the fitness of networks (species) and expanding their reach.


Smart Contracts Enable “Cellular” Complexity

In the previous part of ‘On the Origin of Blockchains’, I described Bitcoin as appearing from the “primordial soup” because it was a convergence of technologies that had previously existed. The genius of Satoshi Nakamoto was bringing all of these constitutive blockchain elements (genes) together to solve the double spend problem without the need for a trusted authority or central server.

In this fifth part of ‘On the Origin of Blockchains’, I will delve further into biology and the genesis of life in order to make some striking comparisons with the evolution of blockchain and the role of smart contracts.

The Genesis of Blockchain

At this stage, it is worth taking some time to reflect on how the blockchain elements we’ve discussed so far in this series first emerged, in order to understand their limitations and why mutated elements have started to gain traction in other decentralised networks.

To do this, we must go back to 2008, when Satashi Nakamoto released the Bitcoin whitepaper that described a “Peer-to-Peer Electronic Cash System”.

It would be wrong to suggest that everything proposed in the Bitcoin whitepaper was entirely new.

The constitutive parts existed already but it was Satoshi Nakamoto’s genius that brought them all together to…

Network Success is Driven by Incentive Design

Having already covered how decentralised networks can expand and colonise a niche as well as how blockchain elements are like genes that define the behaviour of a network, it is time to explore one of the most critical factors in a network’s success — its incentive design.

Incentive design matters because it encourages existing participants and new entrants to help grow a network.

Good incentive mechanisms are designed to enhance the growth of individual network participants and/or encourage new network participants to run the software and increase the size of that network.

Most blockchain elements are responsible for defining network…

From Protocols to Network Participants

The first part of the ‘On the Origin of Blockchains’ series explained how open source software develops, resulting in decentralised networks that are more resilient and that can expand niches within a range of ecosystems. These niches are then competed within and dominated by blockchain networks, which succeed based on the blockchain elements or “genes” that they are made up of.

In this second instalment, I will delve further into the topic of blockchain genes, including how different types are suited to different use cases, and how participants or “cells” recognise these genes and interact on this basis.

The flow…

Evolution, Ecology and Blockchains

This is the first in a series of thought pieces that, through the lens of biology, identifies cryptoassets and blockchain networks that are most likely to succeed within the new niches that have arisen from decentralisation.

You can find out more about the background to this thought piece, the way it has informed the ID Theory investment thesis and links to the other articles in the series embedded throughout the introduction to ‘On the Origin of Blockchains’.

To begin, it’s worth stating an important proposition that underpins this series which relates to the theory of evolution:

If the output of…

ID Theory’s Thought Piece on Blockchain Evolution

I think almost everything about humans and human civilisation is explained better by evolution than anything else.

- Naval Ravikant, Co-Founder of Angel List

There are numerous thought provoking articles that give a nod to evolution when describing the progression of Bitcoin, cryptocurrencies and blockchain.

Recent notable examples include Dan Held’s Planting Bitcoin, Tom Shaughnessy’s Mutating Toward Preeminent Protocols and Nico Papanicolaou’s natural selection piece.

However, these concepts are not new. They came to prominence after the release of the Tezos whitepaper in 2014¹, which described a mutating, evolving and self-amending blockchain. …

James Brodie

Chief Investment Officer at ID Theory

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