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The Blockstack Signature Fund Conference, Berlin

Axica Hall, Pariser Platz, Berlin

Blockstack Berlin: Signature Fund held a blockchain conference at the strikingly beautiful Axica Convention Center, designed by the famous architect Frank Gehry.

Being in Berlin, we enjoy regularly interesting blockchain events. Berlin is a major hub for blockchain and digital activism, with a lot of interesting meetups featuring thought leaders from the space. The speaker list for this event, however, was impressive. Edward Snowden via Skype among others and Nick Szabo, the engineer behind the concept of smart contracts. Nick Szabo is considered by some to be a likely candidate for being the actual Satoshi Nakamoto. William Mougayar, author of “The Business Blockchain”, Peter Van Valkenburgh from Coin Center as host, Chris Burniske from PlaceholderVC and author of “Cryptoassets: The Innovative Investor Guide to Bitcoin and Beyond”, Ari Paul from BlockTower Capital and Elizabeth Stark from Lightning Labs.

The conference was recorded and the videos can be watched on YouTube.

Introduction by Peter Van Valkenburgh, Coin Center

The conference brought together global leaders from the blockchain ecosystem and the crypto space, from the traditional banking and private equity industries. The venture capital industry was especially represented, both in the discussion panels, and among the audience.

The event was organized by Blockstack, “a New Internet for Decentralized Apps”.

Ryan Shea, Blockstack and Web 3.0

We follow the progress of Blockstack since they were one of nine cryptoprojects at the first batch of the University of Princeton in 2015. Blockstack uses the lower layers of the traditional internet and focuses on decentralizing the application layer. Blockstack provides key tools and infrastructure to developers by enabling decentralized storage, authentication and identity. They recently raised $52 million with their ICO.

Ryan Shea (Blockstack)

Ryan Shea from Blockstack was among the first speakers and introduced his view of a Web 3.0.

While Web 1.0 originated in the ’90s during the age of the PC, Web 2.0 came with the mass adoption of mobile devices, driven by giants like Google and Facebook and powered by cloud computing. The internet in its current form still has multiple barriers and represents a “walled garden”, controlled by centralized entities. These have grown to become more powerful than we originally expected.

Web 3.0, Ryan argues, will be the age of decentralized internet, where we are the ones in control of our identity, our data and our interactions. And it will all be powered by decentralized applications (dApps).

Santiago Siri (Democracy.earth, Sovereign)

Santiago Siri, Crypto-politics and governance

The next speech was titled “Crypto-politics: Beyond the Nation State” was given by Santiago Siri from Democracy.earth. He drives Sovereign, an open source and decentralized democratic governance protocol for any kind of organization.

Santiago discussed the way, how governments are struggling to maintain their power in the digital age. Some of them, he said, are taking a knee-jerk approach to crypto by banning it. This approach is, as we all can easily imagine, counterproductive.

Given the global nature of today’s workforce, blockchain projects and experts are able to freely move around the globe and are not limited to just one geographic location. Some countries, predominantly the countries with fossil fuel oriented economies, have already pursued, or are considering pursuing an “Initial Country Offering”, as Santiago puts it.

ICO: Initial Country Offering and governance

The controversial Venezualian “Petro”, a cryptocurrency which is claimed to be backed by oil, was cited as an example. Other countries like Russia and China are known to be considering crypto-fiat.

However, whether with the Petro or with the Russian crypto-rouble, we still find ourselves under the governance structures of the past. The governance frameworks of today have become obsolete and have not experienced any innovation in the last decades or even centuries.

Due to the unchanging status quo, powerful stakeholders and intermediaries learned how to manipulate and abuse it. By enabling permissionless and transnational networks, Blockchain could become a foundation of the governance of tomorrow.

“Not working for an utopia is a really silly idea. Remaining cynical and not believing in the future is pointless.” — Santiago Siri

The governance of public projects was also a topic at the Annual eGovernance Summit 2018 in Berlin, where we were invited on a panel to discuss, how blockchain technology and its components such as tokens and smart contracts, could be used to improve the governance. As blockchain technology scales and sees wider adoption, we imagine a lot of governance and decision-making being distributed and new entities such as DAOs and DACs emerging.

You can read about the egovernment summit in our recent update here.

Investor Panel (left to right): William Mougayar (author), Andy Bromberg (CoinList), Brittany Laughlin (Lattice Ventures), Richard Muirhead (Fabric Ventures), Ari Paul (BlockTower Capital)

Investing in a Decentralized Eco-System

Next up was the investor panel, which had many great discussions and multiple interesting points raised. It focused around the investment aspect of the space from the venture capital and crypto hedge fund’s point of view.

One of the key takeaways was that the space is still in its early stage and VCs themselves do not have yet fully developed frameworks for assessing and evaluating projects and crypto-assets. A lot of traditional metrics are still being applied. Most of the blockchain projects being open-source and essentially “forkable”, they compete for network effects, since this are the only thing deterring users from switching to another dApp using a “forked” code. Here, being the first to kick-start network effects and being able to create a vibrant developer community is key.

Although some recent ICOs were raising high sums, the associated project risks were also substantial. Some of the bigger risks quoted was the prospect of an ICO’s communications being hacked, smart contracts being exploited or websites being hijacked. In these cases a lot of the created value can literally evaporate in an instant. We have seen this play out several times already.

Telegram’s ICO

Another hot topic discussed was the Telegram ICO and why it has been so successful among non-crypto VCs. It is rumored to have raised up to $1.3 billion at the time of this writing. The reason, according to the panel, was that a Telegram ICO is an “easy pitch” — having already a widely adopted product with a large user base, which is now going to be monetized via the Telegram tokens (TON). Other projects such as Blockstack, enabling “decentralized internet with, for example,. social network dApps” are much harder to pitch to a traditional investor, since there is no obvious pain-point in today’s internet for them. “Facebook and Google are doing just fine, why do we need to decentralize those?”

More institutional investors, please

Another issue addressed was the lack of professional investments in the space. Compared to traditional financial markets, where more than 90% of capital is controlled by professional and institutional investors, this number lies in crypto below 10%. This is possibly one of the main reasons for the high volatility of the market, as the markets with low professionalization are generally less stable. As result, the emergence of new crypto-funds and their increased competition is considered to be important, increasing the share of professional and long-term investments.

Token distribution: First ICO’s, now Airdrops

One of the recent trends in the ICO space has been the so-called airdrops. Many projects, having secured enough funding via early investments from their partners, decide to forego their ICO completely. Simply airdropping a percentage of the token supply to certain wallets based on certain conditions arguably avoids creating legal uncertainty and incurring further costs. With an airdrop, a project selects which people to give their tokens to, financially incentivizing them to interact with their platform.

Airdrops to take over a community

Airdrops are also a powerful tool in business competition and can interestingly be used for a crypto version of a hostile takeover, according to Andy Bromberg (more on his views here). How? A company X can see all wallets holding tokens of the competing company Y on a public blockchain. If company X wants to take over company Y’s user base, they just airdrop token X to the wallets of token Y holders under the condition that token Y holder burn their token Y in order to unlock the airdropped token X. The potential of airdrops in combination with a strategic set of incentives is widely underestimated. This could also be combined with a prior accumulation of competitor’s tokens and their immediate “dumping” on the market during the burn process. This could be done in order to negatively impact the price of the tokens Y to further encourage token holder to switch to the token X.

Concerns have been raised about the risk of overregulation. However, regardless of the direction that regulations is going, the market is expected to self-regulate itself in the long term, with good actors outpacing bad ones.

Nick Szabo, the inventor of smart contracts

Nick Szabo and Scarcity

Another highly-anticipated speaker was Nick Szabo, the inventor of smart contracts. In his speech, Nick went deep into our understanding of how human societies function and the role that money plays in them.

We live in a so-called “social fog”, comprising people and requiring trust between them. The capacity of the human brain, however, is limited to having continuous interactions with not more then 150 people, in order to be able to generate trust in a natural way. Hello, Dunbar number. As soon as larger groups emerge, the need for institutions to provide trust becomes mandatory. Through history, it has been up to those institutions to establish the rules, under which societies operate. This also included the institution of money and the monetary policy. The means of influencing the monetary policy is having control over the money supply, in other words being able to adjust the scarcity parameter of a given currency.

Scarcity is one of the main characteristics of value. However we should not trust a single entity with creating scarcity, since this allows it to control the whole financial system. Being in control of the money supply gives institutions the right to censor any transaction or to raise the transaction costs so much that the transaction itself stops making economic sense:

“Every time that money becomes more a medium of censorship, it becomes less a medium of exchange.” — Nick Szabo

Edward Snowden, interviewed by Peter Von Valkenburgh

Edward Snowden and Privacy

One of the most awaited interviews was with Edward Snowden conducted by Peter Von Valkenburgh (watch here). Snowden dialed in from Russia, as he personally could not be in Berlin due to well-known circumstances. The main topic of the interview was the way we could use blockchain and related technologies to correct the imbalance between government and the governed. We should empower the individuals by providing them with control over their assets and personal data. One of the most important aspects of freedom is being able to freely transact with each other. Privacy-centered cryptocurrencies or payment tokens are one of the ways to combat the omnipresence of modern surveillance. Hello, Monero, Dash, Z-Cash. The ultimate goal of surveillance is to make people behave as if they are under it even if they, in fact, aren’t. Snowden thus urged the audience to embrace technological innovation as possibly the only way to rescue our freedom.

“Are we going to improve our technology or rescue our democracy? We are the only ones to solve it. We cannot wait for anyone else. Stop looking at status quo. Let’s make proactive, progressive society with correct values at core.” — Edward Snowden

Snowden is following the crypto space very closely and is a proponent of Zcash (ZEC), a privacy-centered crypto-currency utilizing the zk-snarks technology. CryptoKitties also didn’t go unmentioned, with Snowden being aware of the scalability challenges that blockchains in their current state are facing. Upon finishing the interview the audience gave him what seemed like a minute-long ovation.

Chris Burniske (Placeholder VC), Mik Naayem and Dieter Shirley (CryptoKitties)

Cryptokitties and Scaling

CryptoKitties were a prominent topic throughout the whole conference. They were addressed in context of Ethereum’s scalability, investing in digital art, and also in the context of driving blockchain adoption. The first adopters of most of the new technologies are often the gamers. Mik Naayem and Dieter Shirley from Cryptokitties addressed in their talk with Chris Burniske the misconceptions around the CryptoKitties project and how this has challenged the Ethereum Foundation and thedApps developers to further work on scalability solutions. One of the lessons learned from the CryptoKitty Ethereum network “invasion” was that all projects need proper risk management strategies and contingency plans. Using the Ethereum Classic (ETC) chain as a fall-back solution could currently be an option and be included in the contingency planning.

Most of the second half of the conference was dedicated to presenting the applications on Blockstack, of which there were quite a few exciting projects. The variety of projects presented ranged from decentralized social networks and podcasting platforms to user IDs compatible with healthcare and insurance services.

The event brought together people from various areas of the blockchain ecosystem, from VCs and crypto hedge funds to developers, traders, early “bitcoiners” and lawyers. We had a blast, networking and meeting our friends there.

Thanks for the awesome speaker line-up and the insights shared. Also, many thanks to the teams and, of course, to Blockstack for organizing such an event at such a nice location!

We loved it!

Ciao

ASTRATUM is a blockchain venture studio, developing strategies, solutions and ventures.

We developed as early as 2016 a distributed mobility solution, combining blockchain, smart contracts and IoT devices for a global automotive group. We also developed a blockchain strategy for one of the world’s largest business network operators. Further, we assisted a leading European venture capitalist investing in the leading decentralized crypto exchange. Our regular “blockchain dine&talk” in Berlin introduce cryptocurrencies and blockchain to top executives from a leading German financial services group. Our international team relies on experts with outstanding professional experience and the necessary skillset to address the interdisciplinary challenges of the cryptoeconomy. We believe that distributed technology like blockchain is a game changer, and that a blue ocean strategy is the best approach to develop meaningful innovation. We also believe Distributed Business to be the future of business in a global, digital economy with billions of connected people.

Besides corporate innovation in e.g. mobility, fintech 2.0 and real estate, we develop our own ventures. One of them, project Vaagnar, is a distributed Air Traffic Management system for UAV’s (drones). It is based on research done by our founder around blockchain and drones and marketplaces for the Internet of Autonomous Things. We collaborate with investors and team up with exceptional individuals for each of our ventures.

ASTRATUM is founding member of the Blockchain Association Germany (Bundesverband Blockchain) and of the Distributed Sky Alliance. Further, we are Industry Partner of the Technical University Berlin for Sustainability and Mobility Management.

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