How Blockchain will lead us to an Open, Trustworthy, and Reliable Entrepreneurial Environment — Fireside chat with Dr. Jun Wu and Dominic Williams (Dfinity)
Amidst the hype and frenzy around cryptocurrencies such as Bitcoin, the true meaning of blockchain may seem lost to many investors and entrepreneurs in the industry. What is the blockchain technology and what can it bring to today’s business world? How can it disrupt the power dynamic shared by large tech giants that collectively control so much of our internet and computing resources?
Amino Capital’s Dr. Jun Wu sat down with Dominic Williams, the President and Chief Scientist of Dfinity, to discuss the true meaning of blockchain and its potential to not just disrupt business landscapes but give back power to common internet users and companies.
The Dfinity project is an open source platform for distributed cloud computation. It uses the principles of original blockchain technology and aims to develop a decentralized “internet computer” that will become the cloud 3.0. For many, distributed cloud computing is the key innovation that may transfer power away from the monopolistic tech giants such as Google, Amazon, and Microsoft. Key differentiating factors of Dfinity includes its solution to the latency issue that plagues many traditional blockchain systems.
Dominic started the session with an overview of blockchain technology, and key insights into identifying trust-worthy start-ups in the ecosystem.
When you look at most media today, you can always come across the term “blockchain”. For readers without technological backgrounds, can you give an overview of what is the concept of a “blockchain”?
In today’s industry, blockchain can mean very different things to different people. Essentially, blockchain is a distributed computing construct that makes it possible to create decentralized services. The first decentralized service is Bitcoin, and it is relatively simple.
Satoshi introduced the first blockchain to the world using a mechanism called a ‘proof of work’ for a distributed ledger. The ledger consists of a bank account like address, the balance, and an access control script. If you can unlock the control script, you can move bitcoin from one address to another. What’s important is that, for the first time, everyone in the network can agree on the shared ledger, even though there is no central controlling organization. And this is the big breakthrough.
In today’s world, although the internet itself is a decentralized and public network, the services connected to the internet are monopolistic. Satoshi and his blockchain innovation enabled a ledger service to be truly decentralized, extra-national and robust. It’s a new branch of computer science that focuses on creating distributed services. The point is, the blockchain concept can be used for more than just monetary ledgers but different types of decentralized services. An example being Ethereum’s Smart Contract platform.
Given the hype around blockchain today, how can investors without technical knowledge distinguish all these “blockchain” startups?
It’s a challenging space to invest in. The reason is that though there are many movements by enthusiasts like myself that see how blockchain can re-invent the internet, there are many investor interests that followed the movements and it sort of became what it was like during the dot.com boom. Another challenge is that this area can be very technical and complex. It’s not easy to look from the outside and understand the underneath technology. What has happened is that a lot of opportunistic entrepreneurs has dipped into the buzzwords to bamboozle investors.
Try to ignore the word “Blockchain” when you look across these companies. Dfinity actually tries very hard to avoid the word “blockchain” in its marketing material. We believe that you have to have the right product-market fit to persuade people to use your services. You have to precisely articulate what your advantages are compared to existing solutions.
Most importantly, look at the teams of these companies. The underlying technology of blockchain and its applications are very complex. If you really want to create a next-generation platform, you need to have researchers and engineers who are capable of dealing with the technicality and with backgrounds from relevant areas.
Lastly, avoid any belief systems or suspicious names that may exist in some companies today.
Today, data security is a big concern for many people, especially after incidents at companies such as Facebook. How can blockchain help with data security?
There are different ways. There are new technologies that allow you to run software with some privacy guarantees, for example, SGX. In principle, those technologies can be run by tech giants like Google or Facebook. The difficulty is that they ultimately control the software stacks. It means that you are left to having to trust the large corporates to protect your data. The conflict of interest is that the corporates can only store away so much of these data since they need to monetize your data in their business models. On the contrary, decentralized and distributed network platforms remove the need of trusting a single entity, either private corporates or governments, to protect your data.
Similarly, this also means that entrepreneurial companies that build their services on top of large datasets, such as Zynga, no longer need to rely on or trust large corporate giants such as Facebook or LinkedIn for their data or services. Today, the internet is a difficult place for aspiring entrepreneurs to build their startups. If you think about the big companies that exist today, not many have been formed recently. The rate of creation of unicorn companies has dramatically slowed down and there is a reason for this. The internet has become a monopoly, and it’s very dangerous for entrepreneurs since they have to trust tech giants to not take away their access to data.
By transferring data to a decentralized and distributed network, we are also transferring power away from large tech giants. Tech giants can no longer change their rules abruptly, via changes in their database APIs for examples, and disrupt the business models of companies in their monopolistic ecosystems.
The point is, platforms like Dfinity is not just trying to solve the privacy problem, but the general problem of trust. With platforms like Dfinity, you can create new services using the autonomous software. The autonomous software is a new kind of software that exists without being controlled by a single entity or organization. You can build the governance into the software so that it can update itself. The services can be created by foundations or startups that relinquishes their controls of the software and this provide guarantees about how user data is maintained and protected. The protocols are tamper-proof and can be set up so they can never be changed by anyone.
Consequently, startups and innovator can be guaranteed that the access to data and APIs will never be changed. This gives entrepreneurs a choice to build their services on a platform that they can trust and be given guarantees of the ways they can access to data.
Once this takes root, it will create “mutualized network effects” where everyone who builds on this “open internet” can give each other guarantee of how data can be used and accessed. “Network effect” is what drives innovations and the “open internet” can create this effect through building mutual trusts.
How did Dfinity solve the latency issue that plagues many traditional blockchain technologies? (In BitCoin,the confirmation of 6 blocks and its finality is 60 minutes, while the Dfinity network can achieve 2 confirms with a finality of 5–10 seconds.)
Dfinity solved the problem with a protocol that’s specifically designed for a decentralized network, and it’s very resistant to attacks. Generally speaking, we found a way to generate random numbers in a decentralized network — called a random beacon, in a very efficient way that works with networks of any size. Each new random number is created with 22 kilobytes of network traffic in under a second. The sequence of random number is unmanipulable, unpredictable, and unstoppable. Everyone in the network can cryptographically agree upon the sequence of the number without running a consensus protocol (which is slow and inefficient). This random number can drive other protocols and makes the system very efficient.
If today’s entrepreneurs who may not necessarily possess the technical knowledge of blockchain, how can they enter the market?
You don’t necessarily need to be very technical to build on top of a platform. In fact, a big objective of the Dfinity project is to simplify the development of services on its platform. Dfinity has a new software model. There is no storage API, you just write the software and the abstraction persists and we aim to develop a model that’s automatically secure, available, and accessible.
If you want to create decentralized services, you should start by understanding the properties of the platforms that enable you to create your services. Specifically, the real game is to re-invent internet services in an open way. As an entrepreneur, you can make money from this. You can use autonomous software to create a software system that acts like an open source business. What you are aiming to do is to give people guarantee of how data is used and how you enable your services. The power is that you can create a software that people trust more. A big opportunity is to create a system in an industry that can be shared by all participants. If your system does not allow power to be centralized to any point, it can persuade the participants in the industry to be willing to use your services.
I think in the long run, we will see a lot of internet services that are open, decentralized, and autonomous. We are going to see things like open-sourced Salesforce, which would allow redistributions of much of the current revenues for today’s large system integrators. If there are more open-source and autonomous platform, the center of gravity in terms of power will shift to them from the monopolistic companies today.
To sum it all up:
• In today’s world, although the internet itself is a decentralized and public network, the services connected to the internet are monopolistic.
• Decentralized and distributed network guarantee its users how data is accessed, and the guarantee can never be taken away.
• By transferring data to decentralized and distributed networks, we are also transferring power away from large tech giants.
• In the long run, we will see a lot of internet services that are open, decentralized, and autonomous.
• These distribute services will shift power away from monopolistic companies today back to common users and entrepreneurs.
You may see the fire side chat in its full-length at: https://www.youtube.com/watch?v=elvcWealLVE&t=3s
About AMINO Crypto Fund
AMINO Crypto Fund is an internal crypto hedge fund launched by venture capital firm AMINO Capital with a focus on blockchain technology, digital assets and cryptocurrency.
It is our belief that the blockchain infrastructure needs to be built out, and that even a 1% improvement will help significantly. Looking forward, disproportionate returns will go to those investing in infrastructure. Our mission is to serve as the catalyst for a true blockchain-led transformation of business and society.
AMINO Capital is a venture firm based in Palo Alto, managed by Larry Li, Dr. Jun Wu, Dr. Huican Zhu, Jack Smith, Dr. Max Ibel, Zaki Manian, Tom Ding, Charles Ling, and Dr. Sue Xu. AMINO focuses on seed to growth stage investments in big data and data driven technologies, including Assemblage (acquired by Cisco), Orbeus (acquired by Amazon), Ozlo (acquired by Facebook), Woomoo (acquired by Priceline), Contastic (acquired by Sugar CRM), Mobike (acquired by Meituan), Evertoon (Acquired by Niantic | PokemonGo), Human Longevity Inc, Skycatch, Skuchain, Webflow and Grail. We are also early backers of next generation blockchain protocol, and led the seed and A round of String Labs, which incubated one the most anticipated ICOs in 2018, DFINITY. We participated in pre-sales and ICO of DFINITY, Kadena, NuCypher, Kyber, 0X, Grid+, OmiseGo, which later became known as the first ICO unicorn.