On December 14th, with Christmas in the air, another blockchain development team got cut. Po.et hired me as VP of Engineering to build the team in the spring of 2018, and within a month, we had hired our crew — one of the best teams in the industry. It wasn’t long before they were working like a well-oiled machine in view of the public in the open source GitHub repositories, and updating the community monthly in Engineering Progress blog posts. The team pushed the cutting edge of emerging verifiable web technologies, and their great performance, collaboration, and communication skills are all matters of public record.
Several months later, the company announced the completion of the first major milestone: the Bitcoin mainnet release. But almost as soon as the team’s success was announced, the adventure was over for most of the team. At least half-a-dozen of the world’s best engineers were left to scramble for jobs when they should have been relaxing and enjoying the holidays.
I wish I could say this was an isolated incident, but sadly, multiple ICO projects who raised tens of millions during the ICO gold rush of 2017 have already run out of money and are laying off dozens of blockchain engineers just as the first popular consumer apps built on these technologies are beginning to emerge. Somehow, lots of Silicon Valley startups have kept more engineers employed longer using much smaller seed and series A funding rounds.
In spite of the untimely news, the true BUIDLers (crypto-speak for “builders”) clearly see a better future that crypto technology can unlock, and we’re not going to let anything deter us from building it.
We see a future where anybody with a mobile phone and some talent can create and sell amazing things. Crypto is empowering for so many reasons, but let’s start with the obvious: The music industry was hit hard by the rise of MP3’s and P2P (Peer to Peer) file sharing services.
Between 1999 and 2016, physical music sales revenues plummeted from $20 billion to $7 billion (Inflation adjusted. Source: RIAA). It’s not that people stopped liking music, or that they no longer wanted to support their favorite artists. People are still fans. They still attend concerts, buy merchandise, collectable vinyl albums ($389 Million in 2017 — the most vinyl album revenues since 1988). The reason that musicians are getting smaller shares of music revenues is that in the digital world, there are many intermediaries and distribution channels, and up and down every channel, somebody is sitting in the middle and taking a cut.
The music industry is an extreme example, but many other industries are choking on intermediaries. The promise of blockchains is that we don’t need all those intermediaries anymore. People can create and sell digital products directly to consumers. The challenge is that digital products can be perfectly copied, and if they can be perfectly copied, they’re not scarce. Supply and demand economics makes it difficult to understand how to value digital products, and that’s why all popular digital payment systems before Bitcoin relied on intermediaries to manage the ledgers that keep track of how much money each participant controls.
Without a means of trustworthy consensus, how do you prevent somebody from spending the same dollar twice? Or selling some artwork to somebody and then selling the same artwork to somebody else, devaluing the first sale? This is the question answered by Satoshi Nakamoto in the whitepaper that introduced Bitcoin to the world.
Bitcoin solved the double spend problem, and the challenge of reaching decentralized consensus in a system where bad guys have a strong financial motivation to try to break things (the Byzantine generals’ problem). Blockchains and other Decentralized Ledger Technologies (DLT) solve that problem, creating Byzantine Fault Tolerance: The foundation of the internet of value.
The magnitude of the sea change this represents for the world is difficult to overstate. For the first time in history, humanity has the ability to collaborate without trusting centralized actors, like governments, banks, or corporate-owned marketplaces. We, the regular people, have the power to bypass the rent seekers and transact directly, peer-to-peer, governed and enforced by the laws of mathematics, trusting only in the technology that has proven secure enough to protect hundreds of billions of dollars in value. How secure is Bitcoin? As of this writing it’s securing more than $56 billion dollars. Exchanges have been hacked (meaning the exchange was insecure), but the Bitcoin mainnet itself has never been exploited in a verified hack.
From now on, nobody needs a bank’s permission to spend money digitally. People don’t need to trust their government not to print so much money that their bank account balance can no longer pay the bills. Artists no longer need to get past the gatekeepers to kick off their careers. Wherever people want to transact and exchange value, they can do that. What this means is that for the first time ever, everybody is invited to participate in the digital economy, and anybody with some skills or talent can earn and transact in cryptoassets.
Why are cryptoassets valuable? For the same reason money is valuable, and the same reason autographed artworks and merchandise are valuable: Supply and demand. A community agrees that something is valuable because the owner of the asset can sell it to somebody else. The ability to sell and resell such assets creates a fair market value: The price that something would sell for if it were sold on the open market. The reason that USD is valuable is not because an army is threatening you with guns to transact with each other. It’s because you know if somebody gives you $100, you can turn around and use that $100 to buy food for your family.
There are tens of millions of Bitcoin wallet owners, and as of this writing, there were 244,934 Bitcoin transactions in the past 24 hours — and those are just the ones that settled on-chain. Bitcoin transactions can be batched, and a significant number of Bitcoin transactions happen off-chain on exchanges, and get batched to Bitcoin all at once. There’s also a new avenue of growth: The lightning network — one way Bitcoin could break the transaction speed limit (the Bitcoin blockchain handles about 6 transactions per second) and one day compete with the likes of VISA to handle payments when you buy your coffee.
If somebody gives you some Bitcoin for something valuable, there’s a really good chance you’ll find somebody who’s willing to buy it from you. The market is new and volatile, but that doesn’t mean it’s not valuable. Over the last several years, the value of Bitcoin has grown by a factor of 10 8 times. Each time it crosses the next 10x mark, the market pulls way back before it builds up to the next 10x event like the one that peaked in January 2018.
What we’re witnessing is the big bang of something entirely new: The internet of value. This internet of value, decentralized consensus, and digital scarcity create lots of interesting opportunities. Among them:
- Self sovereign identity — you control your identity, not a government, not a bank, not Facebook or Google.
- Direct peer to peer transactions, without a bank or credit card company sitting in the middle.
- No more gatekeepers blocking people from entering the digital economy as buyers or sellers.
- Authenticated truth. Protection against fake news and deep fakes, like the famous video of Obama saying things he would definitely not say.
This is all vitally important to every one of us, because in the coming years, the internet of value is going to be the foundation for a lot more of the human experience. Soon, over the course of the next 5–10 years, those clunky VR headsets you see are going to shrink, and shrink, and keep shrinking until they’re so small and lightweight you can wear them all day long like a pair of glasses, and when that happens, the human experience will completely transform.
Instead of carrying around a cell phone, you’ll be wearing it on your face, and the digital items it mixes into your reality will look so real, you won’t be able to tell the difference between what’s digital and what’s physical unless you take them off. At that point, your collection of digital items will be even more interesting and valuable to you than your physical paintings and photographs, and collectable bobblehead dolls.
You’ll be able to place them anywhere you are at any time. They’ll snap to walls, or dance on the shelves, or even interact with you with fun games and experiences. Geeks call those valuable digital assets Non-Fungible Tokens (NFTs). I call them cryptobling, and they’re big business. In the video game market alone, in-game purchases of weapons, tools, and power-ups account for $8.9 billion in revenues. But the video game market is barely scratching the surface. As the internet of value takes over, everything valuable will be tokenized, and lots of digital content that previously had no real value will become as valuable as the limited edition boxed set you bought from your favorite band, or your collectable sneakers, or Birkin bags.
Lots of those things will be free to share and easy to copy, but some of them — the valuable ones — will have digital fingerprints called hashes, and digital cryptographic signatures that mark them as unique, or limited editions. If those ones are copied, the signatures — the digital autographs will make it obvious that it’s not the original, and somebody else owns that one. There are millions of digital replicas of the Mona Lisa floating around the internet, but only one authenticated painting hanging on a museum wall. Counterintuitively, the copies actually make it more famous and more valuable.
And just like the autograph on a first-edition book, the rarity of the digital autograph will make them valuable, collectable, and tradable on the open market.
Today I’m announcing that my amazing crypto team and I are starting something new. We intend to enter the cryptobling space, and we’re actively looking for investors so some of the developers who have recently been laid off can have a happy holiday after all. I hope you’ve enjoyed learning a little bit about our vision of the future. If you share it and want to work with us, get in touch.
P.S. Happy Holidays to all the BUIDLers and HODLers investing in the future.
He enjoys a remote lifestyle with the most beautiful woman in the world.