A Defining Moment: Silicon Valley, Blockchain Tech, Cryptocurrency, and the Future of the US Innovation Economy
Historically, Silicon Valley has been a bastion for innovation. It’s a place which embraces grandiose ideas for how the future might look and where a “betting the farm” mentality is celebrated. People from all walks of life come to Silicon Valley to help build and nurture our future. Founders and early employees wear scar tissue with pride. As long as lessons were learned hopping from one “what if” to the next, and integrity intact, a shot at tomorrow’s rocketship moment remains, even if prior attempts stalled out on the launchpad.
Blockchain technology is by no means new. Satoshi Nakomoto published the famed Bitcoin white paper in October 2008. Nakomoto explored the application of cryptography and distributed networking to create a novel technology, blockchain, which would allow for a decentralized digital currency. Nakomoto was hoping to eliminate centralized authorities from sitting in the middle of the exchange of currency. Central authority figures in finance, many argue, provide more negative externalities than utility, especially when certain use cases are considered. Microly, Western Union and wire transfers are horribly inefficient; macroly, central banks, if not managed with integrity, won’t act in the best interests of citizens.
Blockchain technology allows for applications far outside of peer-to-peer money transfer, and arguably far more important. For example, beyond protocol (http://beyond.link), the company I cofounded with Denis Benic (cofounder/CTO, ink.me) and Guri Ahluwalia (former CTO IBM Blockchain, IoT, and Cloud) has created a universal, blockchain-enabled, “high-level protocol” for IoT. Very precisely, we’re deploying technology which will prevent your DVR and webcam from being hacked and used as part of a DDoS to take down half of the internet, something which happened in October 2016. We’re also creating the technology which will allow your refrigerator to order food and secure your flying car. We imagine a future where all the devices in the world are united as one by the same language. The combined processing power could be directed to good use, to solve our biggest problems; like facilitating a protocol which helps cure cancer, for example.
beyond protocol is solving important problems which will drive us all forward. Blockchain technology equips beyond with the ability to battle the “bad guys” — the malicious hackers who are compromising the vehicles we drive and the hospitals where are children are born — who, as of now, are winning the struggle for our future. However, this battle is at the backdrop of a larger war, which, if not acknowledged and thoughtfully assessed, might spell the doom for a technology which could usher in a technological renaissance. And this war might be lost in Silicon Valley, the global center for technological innovation.
Blockchain technology and cryptocurrency are not congruous. Cryptocurrency, can provide utility in some blockchain use cases. For example, machines “pay” to message each other using using micronized currency issued by beyond protocol. The micronized currency has a rational market value — the utility derived for the remittance of a message. This methodology is very similar to the pay-per-SMS model cell phone service providers employed ubiquitously in the past. Similarly, these machines use this currency to place orders for consumables. Your dishwasher can’t autonomously order detergent tabs using fiat or wire transfer. beyond protocol’s application of blockchain technology benefits from the use of a cryptocurrency for sure, and the currency has a rational foreign exchange value to fiat. This is different, however, than the application of blockchain technology to social networking. Although a cryptocurrency might make sense in this model to incentivize use of the network, the cryptocurrency should not have any significant foreign exchange value to fiat.
The lack of sophisticated understanding of the proper applications of blockchain technology and cryptocurrencies among US legislators and mixed messages from the US regulatory system are scaring Silicon Valley’s founders, the group of people most equipped to leverage the technology to solve today’s greatest problems. Some are throwing their hands in the air and pursuing other less impactful projects, while others are exiting the country to pursue their blockchain ideas in ecosystems lacking the resources and expertise needed to hatch these endeavors effectively.
What’s worse, novice entrepreneurs in foreign nations lacking the expertise to scale projects are raising large sums of money from funders who likely to lose everything. As this plays out in the months ahead, it is likely enthusiasm for blockchain technology will dwindle, and our brightest minds might table innovating on the technology altogether.
We’re approaching a defining moment in history.
