Consensus 2017: Upgrading (near) monopolies with token gestures

Tokens of our youth

For almost 10 years the chatter has been ‘you promised me flying cars and you gave me 140 characters’. Suddenly this shifted to ‘the robots are coming, jobs are vanishing and WTF is happening to democracy’. One part of this is driven by the natural tendency of headline writers to solve for page views. It is also down to the inability of humans to differentiate exponential growth from linear and the propensity to underestimate the power of ‘boring’ or ‘trivial’ widely or ubiquitously spread.

Why should anyone care? Well, inequality is a real problem which leads to issues not just with effective democracy but the potential for catastrophe. Here I truly believe the answer is MORE tech for improved sunlight on the mechanics of government and MORE tech to break apart the many ‘high rent’ monopolies and oligopolies of the 20th century capitalism and finally translate the white heat of technological innovation into extraordinary productivity. That will lead to the sense of progress, fairness and well-being every human needs. So as an industry we must get better at taking risks, deploying capital, coding tech and building businesses. A few more mindfulness classes, yoga and massage would also go a long way.

Timing is everything: I chatted with a core Bitcoin developer (whose name I cannot recall) in Switzerland in January 2009 ; I bought my first Bitcoin for under $100 in May 2013; and then led the due diligence on Pantera’s investment in Bitstamp in 2013. Shoot forward 4 years and I am having lunch with a very senior banker. He himself had made 30 personal angel investments mostly in tech, but by his own admission he and his team were still ‘cave men’ when it came to crypto currency and decentralisation. I attempted to punch out for him the key bullets for why it really matters:

  • Blockchain or decentralised ledgers solve a real fundamental tech problem, known as the Byzantine General or specifically Double Spend problem.
  • It allows a fundraising mechanism that has parallels to equity but with the flexibility to tailor its characteristics to preserve the merits of decentralised systems.
  • When you bake the token into the product through crypto-economics; communications; or brokering access to protocols (viz dApps) then there is a further loop of reinforcement that democratically delivers incentives to contributors and early adopters and by cracking the ‘chicken & egg’ problem makes some previously impossible projects feasible.
  • Top talent on both the venture and entrepreneur side continues to flood into the field. Well venture ‘GPU cycles’ if not so much venture dollars.
  • Foundational capabilities are being built and standardised on a ‘cross-chain’ basis: self-sovereign identity, messaging, governance to name but a few.

From all of this .. my view is the REALLY BIG item here is decentralised self sovereign identity: how to provide a zero trust fabric for user data with attestations and policies that are easily self-managed and self-directed rules we can rely upon to govern our robot delegates. And neither of these can be left to third parties. (Viz the recent ransomware debacle, repeated commercial CRM Breaches and the list goes on).

The craft of startup science and the skill of good venture investing are the work of lifetimes. For example, the incredibly tricky trade-offs: solving ONE problem SUPER well and making that HARD choice to say ‘no’ and committing to your vision of the future and ‘priming the pump’ (to borrow the President’s phrase) for success in years to come at the clear expense of short term results. Letting go of bootstrapped custom development and services revenue is tough, and this is exactly where we at OpenOcean feel venture can play a pivotal part.

I have just hustled my way into a jet to JFK for Consensus 2017 with Token Summit right on its heels. In particular, I am looking forward to the panel on zero trust identity with our friends at Blockstack. Firstly, I have no doubt I will have my ability to learn stretched and burn through my business cards like a bushfire through dry grass. I also see an opportunity to deliver on the original decentralised promise of the Internet that was compromised by its reliance on extrinsic financing from corporates, often incumbent entities driven by quarterly earnings greed. I remember the sessions in the IETF in the mid 90’s with Cisco, Intel, IBM, and the like, driving the ‘open standards’. So, What am I looking for:

  • Projects where a token is used denote usage and / or work andnot simply underpinning a fanciful and fluently related ‘equity story’ is key. In time, with regulation and benchmarking data to support us, tokens purely designed for fundraising might also make sense.
  • Development teams with that unique blend of: savant aptitude for coding, productising or selling; boundless ambition; natural confidence; obsessive preparation; relentless passion and personal humility.
  • Insight into how to move beyond federated identity with the likes of OAuth and UMA to truly trust-less self-sovereign identity. Key problems being attribute policy management.
  • Thoughts on what happens to business models when the tech and media titans of today can no longer extract a rake or leverage from Terabytes of data swiped from the masses. When data ownership is instead decentralised, i.e. devolved back where it came from, and smart contracts enable real time nano-negotiations for the right to rent the data for a micro-moment…what then?
  • Folks who have thought through the who; at what price; what proportion of; and at what rate of their token sale.

To be involved in something that is big, that matters, that gives you hope… is addictive. When you don’t know what that next wave is, what that next rush is gonna be it’s nothing short of depressing. Frankly if you have also been round the track a couple of times and realise you can fall at any point in a marathon of sprints… and no one really cares except you… you really don’t want to throw yourself at anything other than the BIG one.

Back in 2012, I was a surfer on a sea with no swell. I hung out watching the horizon, just beyond the break, getting toasted in the sun. My actual surfing never made it much part of this stage but for surfing perhaps the sun, sea and sand is enough. But not in the startup world the crucial thing about tech waves is their relative infrequency (“Please God, Give me one more bubble”) , making sharp timing totally critical to be neither a little too early nor too late.

We are all familiar with the phases: first they ignore you; then they defame you; then they try to join you; then they try to beat you; and then you win. So the rising swell of fascination by venture firms and entrepreneurs with decentralisation is a good thing in aggregate. However for the individual, how to time it just right so as to avoid getting dumped or left to be toasted, is hard.

The most powerful mental construct yet invented, beyond even communism, Catholicism or Islam, has been consumerist capitalism (See Harari). The token-driven business models arising now, with self sovereign identity at their heart, deliver a one-two punch of equity incentive to capitalists AND a network effect in value delivered to consumers. This will turbo charge the greatest force mankind has yet unleashed. There will be beneficial bubbles (see Janeway); delays and setbacks (hard forks) and there will be regulation (our existing financial systems also need that) however at the end of the road there is a digital magnification of capitalist consumerism with exponential and literally unfathomable possibilities.

Let's do it.