What’s the point of blockchain?
Dieter answers this question and more at TechVancouver
Dieter recently presented at TechVancouver, an organization that brings together Vancouver’s tech leaders, innovators, and enthusiasts for short TED-style presentations with the goal to collectively advance Vancouver’s booming tech scene.
A lot of people expect Dieter to reply to the question “What’s the point of blockchain?” by talking about “Magic Internet Money!” — those mystical cryptocurrencies of which we hear so much. But he believes cryptocurrency is just the beginning.
Before everyone knew about the internet, the thing they were excited about was email. They could understand it; the value it brought to their lives was clear. But if you ask anyone today what the value of the internet is, they’re going to list Spotify, Netflix, Instagram, maybe Wikipedia if they’re feeling academic. Email brought us to the internet, but it wasn’t what made us stay. Cryptocurrencies are going to be for blockchain what email was for the internet. It will bring users to these platforms, and probably remain an integral part of them, but it’s not going to be what we’re talking about.
Now, when we talk about blockchain colloquially, we mean data storage with an indelible history that no one can change. We mean strong rules about what can be added (ie you can’t spend the same coins twice), we mean anyone can access it but no one controls it (which is mindblowing), and, thanks to the advent of Ethereum, we mean true and complete computation.
What does this all bring together? What’s the point? The point is the transformation of the software industry in four keys ways.
True Ownership
In a digital world, if you have a file and send it to a friend, you still have the file. The term “send” is really as misnomer, because what we’re actually doing is making a copy. In a blockchain world, assets are moved, not copied. If a user sends a Kitty to their friend, they no longer have it, and the friend does. It’s up to the owner to decide how, when, and what to do with their assets.
Before the digital world, assets that we bought were ours to do with as we pleased. If you bought a book, you could read it, give it as a gift, even use it to prop up your couch. In many ways, the digital world was a step backwards. When we buy a song on iTunes, we say we “own” the song, but we don’t. We own a license that lets us listen to it. You can’t lend that song to a friend, or give it as a gift — and you definitely can’t use it to prop up your couch!
Blockchain brings the traditional, intuitive notion of ownership to the digital world. When you own a cryptoasset, you decide how you use it, who you give it to, and how you sell it. You have total control over how it’s dispersed. And, by the same argument, the “creator” of that asset has no control over what happens to the asset once it’s bought or given away — which can be both scary and exciting!
Blockchain creates the best API ever
When we launched CryptoKitties, it didn’t take long before a team created something called KittyHats. The app lets users buy accessories like hats and tuxedos for your Kitty. When the Kitty is sold, the accessory goes with it: you own the cat but the cat owns the hat.
This team didn’t contact us and let us know they were creating this app. They didn’t ask us permission, and we couldn’t have stopped them if we wanted to (which we didn’t, by the way, we are in love with them). They have access to our smart contract, which means they can do literally everything we can do except release new traits (it’s our one secret power).
As a user, you get to choose how much or how little you associate with these side projects. If you don’t like KittyHats, you simply don’t instal the plugin — voila, no KittyHats. One user talked about creating a disease for cats where they could infect their cat, and every cat in the wallet of the infected cat would get the disease. Not as a computer virus, but as a computer game. A fun add-on. They can do that, and we can’t stop them even if we don’t think diseases are really on-brand for our adorable cartoon cats. So there are upsides and downsides to open APIs!
Provable scarcity
We knew that provable scarcity was part of blockchain, but we had no clue how important it would prove until we realized how it could be generalized.
The rules of CryptoKitties are public. Anyone who can read the code (which isn’t everyone, to be fair) knows all of our rules. These rules are enforced by the network, not by us, which means we can’t break them. And any user can learn that by reading the smart contract, held on the network.
For instance, we have a limit to the number of Generation 0 cats there will be in the game — 50,000. We can’t change our minds and create more Gen 0 cats without rewriting the smart contract. Of course, someone could release a smart contract that gives them the power to change the rules, but that power would be visible to all potential users. They might choose to stay away from that smart contract and stick with ones that have more guarantees for their users.
Immortal software
Like civil engineering or architecture, software engineering has reached a point where we are building things that will outlive us.
In the good old days of shrink-wrapped software, the software was physical. If your company went out of business, users could still run that software. True, they couldn’t get updates, but it would at least continue to work. Then we moved to software as a service, which allowed for cool network and social software, but it also introduced software lifespans. If Twitter the company goes away, so does Twitter the website.
But if we ever disband the CryptoKitties team, the CryptoKitties themselves don’t disappear. In 100 years, if you own a Kitty and pass that private key down to your grandchildren (as long as the Ethereum network still exists), the Kitty will still be there, and probably belong to your descendants.
And that? It can change everything, if we let it.
