Blocko & Aergo Relationship, Aergo Token Value
Dear Aergo community,
There seems to be a number of questions related to Aergo and Blocko — specifically about their relationship. These questions have been answered (and in various ways) a number of times, so I am surprised that members of our community may still be confused.
Additionally, as a bonus, I would also like to directly answer another question that keeps coming up (and that like the relationship between Aergo and Blocko has been answered before in a variety of ways): how the Aergo token gains value.
Understanding the relationship between Blocko & Aergo
Aergo and Blocko are closely linked and their success is intricately connected.
Let me provide once again some further clarity and use some simple examples to make my point. Sorry for the long reply (the team will package this up into an article soon).
As before I will use Linux (and Red Hat that fully commercialises Linux) as a parallel between what we are trying to achieve with Aergo and Blocko.
Just like Linux, Aergo is a comprehensive and complex operating technology platform — it is also open source. Like Linux it can be used for free. Linux now powers over 80% of the public internet services we and commercial firms use. It also powers around 40% of the private data centres run by many businesses across the world. It took 10 years before Linux and Red Hat’s implementations became widely adopted; Aergo coupled with Blocko is currently in year 5 of a similar 10 year journey. Just like in London today (renowned Linux marathon) we are also in a marathon. Not a 100 metre dash.
Whilst Linux (and Aergo) are free, when businesses deploy these to help them to drive new products and services, they need to partner with a firm that can help them to integrate these technologies with their existing IT systems and complex business logic. They also want assurances — that if anything goes wrong (eg a software bug is found or a security issue emerges) — they can get immediate support. Development tools also need to be made available, so that developers can program these platforms.
These services are collectively called “subscription services”. Almost no business deploys Linux in their operations without this form of subscription service. It’s simply too risky to do so (it’s like driving a car without a seat belt, or having no health insurance). How would we all feel if the internet “was unavailable” for any length of time because there was a problem with Linux and the developers who could fix this were asleep! Subscription support services are absolutely needed. They are typically paid monthly or more typically annually by the companies that use Linux (or very soon Aergo). These services are not provided by Linux (as it’s simply a technology platform).
These services are provided by commercially and for-profit companies like Red Hat.
Linux and Red hat are in effect two sides of the same “coin”.
Aergo is like Linux — and Blocko is like Red Hat. Blocko is the firm that is very closely linked to Aergo; as it created the genesis technology, developer tools, IT deployment blueprints and libraries that are being made available (again for free) to developers and businesses who want to use Aergo.
Blocko is an amplifier for Aergo — it not only helps Aergo to build the technology, deployment libraries — it helps companies to integrate and adopt Aergo in their businesses. Blocko is actively working with its 23 enterprise clients to migrate them to an improved architecture based on Aergo. In fact it has recently decided to adopt and only support Aergo for all its business lines from hereon. This is amazing news for Aergo and all of our stakeholders.
The first example Blocko deal on Aergo is Hyundai that was announced last week.
Again using the marathon example, migrating to a new platform like Aergo can take between 3–18 months for many complex businesses. Me and my business development team experienced and saw this with Linux (whilst working at Red Hat and Suse Linux) between 2000–2010. Don’t expect press releases like Hyundai every week. This is where Aergo is different from 99% of other crypto projects.
We are not a dApp, we are not a single purpose platform. We are like Linux: a truly disruptive and very comprehensive enterprise scale platform.
In simple terms, most crypto projects are like iphone or Android phone “covers”. They are often “covers” that run on another baseline platform (like Ethereum or a variant of Ethereum they have simply “tweaked”). Like your own phone cover (if you indeed have one) — you replace them with very little consideration. Aergo is more like iOS or Android — it IS the platform. It is not a copy — it’s one of the few true “clean-room” hybrid blockchain platforms (in other words Aergo is built from the ground up — just like iOS and Android). Platforms are fundamental to a business and take time to switch to and to adopt/deploy.
Just like Linux, our long term objective is to make Aergo an alternative platform to help millions of business across the world that want to use blockchain to create value and expand their customer and business ecosystems.
Red Hat does this for Linux — Blocko enables these businesses for Aergo.
Aergo = Linux (for blockchain technology)
Blocko = Red Hat (for blockchain enterprise deployments)
Linux runs on billions of devices and millions of businesses
Aergo (and our new embedded/IoT focused product called AergoLite) also aims to run on billions of (SQLite) based devices and in millions of businesses across the world .
At last valuation (before being bought out by IBM) Red Hat was worth $34 billion USD. The entire Linux ecosystem was worth considerably more.
Let’s continue to work on Aergo and Blocko together to make a similar impact in the years ahead.
For more information on the above parallels between Linux and Aergo — please go to the following article:
“Drawing a Parallel Between Linux and Blockchain” by Phil Zamani
How the Aergo utility token appreciates value
If after reading this (and my prior posting above about the Aergo ←> Blocko relationship) you are still confused, then perhaps this is not a project you should be involved with. Aergo is a disruptive, long-term and complex project; so its perhaps best not to follow this if you don’t understand our target market, why it exists and how it adds value to developers, partners and businesses across the globe.
We welcome all kinds of people and participants to our community. However, I strongly advise that if you don’t understand what Aergo is all about and how it works in close cooperation with Blocko (and once you read the available online material the team has created about our project) — you may be best served by following other less complex projects. I want our community discussions to move beyond the baseline understanding everyone needs to have about Aergo — so we can share even more exciting (sometimes complex) future ideas, concepts and news with you. This way our community can keep on growing and maturing with people and new organisations who can help to make Aergo a success.
The Aergo main network is an open source technology platform that is free to access and use. It is created by Aergo, a not-for-profit organisation based out of Hong Kong (just like the Linux software foundation, that drives Linux forward as a platform). Economic value is made via Linux and Aergo through real-life adoption and usage. By developers. By integrators and firms that provide consulting, integration and support services. By business partners. Last but not least, by customers that deploy services on top of Linux or Aergo.
In short, accessing and using the baseline Aergo mainnet technology platform is open to anyone to use and its entirely free. Like Linux.
However, using service that run on top, alongside or in association with Aergo mainnet are paid for services. Paid via acquiring Aergo tokens. Using Linux in business is very similar — you need to purchase subscription services if you want to use Linux in production for your business.
Aergo utility tokens gain value through a complex combination of many factors. Some (not all) of these include: (i) the uniqueness of the potential future problems and new solutions Aergo can deliver to developers, partners and businesses across the world (this is often called NPV or net-present-value of future value); (ii) the range of directly associated services currently on offer; (iii) the range of services planned; (iv) current usage; (v) increased adoption levels by existing firms; (vi) future usage; (vii) future demand; (viii) the depth and breadth of complementary services planned by third parties (e.g. cloud services), (viiii) existing and likely future target market penetration and finally (x) scarcity of available Aergo tokens at any moment in time.
To help you understand, here are five (simple) examples of the Aergo utility; and why it has (and may likely increase) in value as the Aergo platform gets adopted…
- Using Aergo mainnet is free, but executing smart contracts requires a (very small) “gas” type Aergo token fee. We expect many many thousands of smart contracts to run on Aergo as it has been built for global enterprise scale.
- Enabling and using extra third party compute resources (like storage and CPU bandwidth from a cloud service provider like Amazon AWS) are unlocked via Aergo tokens. We expect many thousands of businesses to deploy hybrid blockchain solutions in the years to come. Many of these (such as banks or governments) will elect to run part of these hybrid systems on Aergo private side-chains that are hosted by security compliant block producers (such as leading telecommunications or hosting firms that we are targeting with Aergo). These side chains will also need Aergo tokens to operate (and to be “anchored”) with the Aergo mainnet.
- Obtaining integration, consulting or subscription support services from specific firms like Blocko to integrate, deploy and manage/support enterprise grade production deployments of Aergo requires Aergo tokens. As was mentioned in my last article, all of Blocko’s future services will be based on their new Aergo Enterprise product that requires Aergo tokens to work.
- Enterprise clients will likely use the Aergo utility token to acquire extra application services from other third parties. For example the future Aergo Marketplace may serve as a location and self-contained ecosystem for businesses to acquire and use dApp’s created on Aergo by professional developers. In effect they may pay developers to use (i.e. licence) these applications in their production systems via Aergo utility tokens.
- In order to secure the network, vote and manage block producers, as well as to support the underlying Aergo mainnet ecosystem, Aergo tokens need to be acquired and staked. For example, although there are a total of 500million Aergo tokens in existence, almost 150 million are reserved (i.e. in effect locked longer term) for ecosystem staking and support. There are currently just over 100 million Aergo tokens in true (not incorrectly coinmarketcap reported) circulation. We expect to have circa 200 million in circulation by end of this year. This would leave a total of 150 million tokens remaining for ALL future token users (forever!). Considering the huge target market potential of Aergo — these are likely to be in very high demand if we deliver on the promise of the Aergo project.
Imagine for one minute, if ten years ago Amazon AWS was launched with an “AWS token”; and that the number of tokens was limited. Today, the token value would be extremely high — as the ten example utilities I listed earlier for Aergo would all be in-play and drive significant value towards the (hypothetical) AWS Token.
The Aergo Token Utility and associated Token Economics are complex things to fully understand. We will soon publish a Token Economics paper that fully explains our model in great detail.
On a final related point…..
The World Economic Forum recently predicted that 10% of the worlds GDP (gross domestic product) will be stored on blockchain-based systems within the next ten years.
Today, 10% of the worlds GDP equates to 8 Trillion USD (or put another way 8,000,000,000,000 USD!).
This is the market Aergo is focused on.
So, the real answer to the question of “what value does the Aergo utility token provide?” is perhaps simply stated as “the value is proportional to the value Aergo can capture in this 8 Trillion USD opportunity”.
This is what me and my Aergo team are focused on….more on our next stage execution plans for the rest of 2019 in the next Quarterly Project Update report — that will be published this coming week.
Thanks for reading this long memo.
Chairman & CEO of Aergo