Blockchain, Digital Governance, Tech and Business

Libra: Facebook’s promising attempt to create the Internet of Value

Facebook’s Project Libra was made public yesterday. It carefully addresses all the main flaws of current cryptocurrencies like Bitcoin and Ethereum by starting with a less decentralized model. It begins with transactions and will extend to also deliver the store of value and smart contract use cases. Facebook has also proactively addressed the dominance and privacy concerns lately associated with it. Libra could allow Facebook to add full and extensible financial services capabilities to its properties, creating an “Internet of Value” which Facebook will steer.

What is Libra?

Project Libra’s whitepaper was published yesterday (June 18th) causing a significant splash. Libra is a foundation backed by ~25 high profile organizations (from Visa to Uber) which will put out a decentralized database for transacting on programmable financial assets. The starting point is financial transactions through Libra coin, a stable coin fully backed by a basket of currencies and treasuries. The end game is fully programmable decentralized digital assets through the Libra decentralized database and the Jump programming language. The testnet “Libra Core” is already out for testing, and the live service will be operational in 2020.

So Facebook has put out another cryptocurrency into a crowded market of thousands of cryptocurrencies without significant adoption. Is it different to the others? Can Libra work where countless others have failed?

Can Libra become the crypto killer app?

After substantial hype in 2017, cryptocurrencies failed to live to their transformative potential in 2018 and 2019. The “Internet of Value” is not taking off even if crypto prices as on the rise again. A host of problems have plagued the key cryptocurrencies, with no solution in sight. First, lack of adoption because of missing use cases and a daunting UX for non-technical users. Second, high volatility making crypto mainly a speculative domain, increasingly regulated by the likes of the SEC. Third, the environmental and energy cost of proof-of-work. Fourth, lack of legitimacy and support by large institutions. Finally, complex governance that has prevented Bitcoin and Ethereum from adapting to user needs like transaction volume and fast transaction finality.

Libra’s design choices carefully address each of these problems making it a promising attempt at driving crypto mass adoption and creating the Internet of Value:

  • Adoption. Facebook is focusing first on the everyday problem of payments, with fancier use cases as future extensions. It is hiding the complexity of crypto by integrating the functionality in its own apps, and those of other Libra Founding members. It is also jumpstarting adoption by going for a huge global audience of users in those apps.
  • Volatility and financial security status. Libra is a fully backed stable coin based on a basket of currencies and treasuries. This will be potentially more stable than any of the current fiat currencies, providing a global and safe store of value. At the same time, this minimizes the risk of the SEC considering Libra a financial security, as there is no expectation of Libra appreciation, even if the project’s adoption is massive.
  • Energy cost. Facebook has chosen a less decentralized consensus protocol based on a limited number of validators. This eliminates energy consumption as an issue. While it might be ideologically less appealing to crypto fans, the Founding members are credible institutions that should instil trust in mass market audiences. Over time it will evolve to proof of stake as Ethereum is doing, satisfying decentralization without incurring excessive energy consumption.
  • Legitimacy. The combination of a stable coin that eliminates speculation and the highly reputable founding members creates instant legitimacy. The way the system works it should be easy for Facebook to continue to extend Libra’s validator base as the downside of not participating is significant especially with FOMO (fear of missing out), while the cost is limited.
  • Governance. Libra’s roadmap already incorporates all enhancements that Bitcoin and Ethereum wish they could incorporate, with a well thought out technical design that seems state-of-the-art. It starts with 1000 transactions per second in the main chain and 10-second finality, ready for real-world usage and easily extensible. At the same time governance through a set of business-oriented entities will ensure it quickly aligns to user needs

Overall Facebook has done a thorough job at addressing current crypto pitfalls credibly, to create a potential killer app for crypto adoption. In order to do this, it has reduced the decentralized ideological purity of other crypto attempts, something that governments and the mass market will probably see in a positive or neutral light. Only time will tell, but Libra could take to the mass market the key use cases of Bitcoin, Ethereum and other top cryptocurrencies creating the decentralized “Internet of Value”.

However, Facebook is under a lot of pressure lately. Will governments allow Facebook to take over financial services and access that data? Will Facebook’s reputation allow it to launch this effort?

Will Facebook be allowed to carry out Libra?

Facebook is currently under significant public scrutiny both in terms of its market dominance and due to privacy concerns. Libra’s design addresses both issues proactively, while at the same time creating some opportunity for defending the integration of the top Facebook properties.

In terms of market dominance, while Libra has been conceived and driven by Facebook it is a Swiss foundation with a broad set of founding institutions. It cannot be said that it is under Facebook’s control or part of Facebook. In a way, Facebook has proactively open sourced Libra with many credible partners to avoid any concern of market dominance. Thus the financial infrastructure it creates is open for anyone to use

In terms of privacy, all of Libra’s transactions will be based on public key cryptography making users anonymous except for the validator that offers the user the interface. Thus, Facebook will not have any privileged access to Libra transaction information beyond that of any of the other founding members. On top of that, Facebook has committed not to use the information from the financial transactions in which it acts as an interface for advertising purposes.

On top of this, Facebook’s wallet Calibra, could potentially be the glue that makes Whatsapp, Facebook and Instagram difficult to untangle. Or at least keeps them connected even in a break-up scenario.

So Facebook is trying to create the decentralized “Internet of Value” crypto enthusiasts have talked about, and has open sourced it to make it politically viable. Can Facebook make money out of this?

How can Facebook profit from Libra?

Tencent’s WeChat and Alibaba represent clear evolution models for Facebook. The Chinese internet giants have been allowed by regulation to take over more and more of the financial services sector in China through technology. Facebook could find a large profit pool to finance its new privacy-oriented social and communication networks vision in this model.

With Libra Facebook is trying to create an open-sourced Internet of Value that anyone can access. Facebook will not be able to make money from the underlying infrastructure. However, the Internet of Value it has designed is uniquely suited for its own properties. Whatsapp, Messenger, Facebook and Instagram are all uniquely suited to integrate financial services and profit from it. The relatively high entry barrier to participation (~10 million USD according to the press) will limit the number of startups that can enter, at least initially. Giving Facebook a headstart that will be difficult to recoup. The other founding members, while credible institutions don’t have the deep pockets, technical expertise and unrivalled user reach that Facebook has.

So Facebook is attempting to create an open sourced financial piping for the Internet of Value. If history is any guide it should be able to profit from it by building over-the-top applications on top, much as it has done with internet connectivity. This time it has the added advantage of having shaped the ecosystem from the start, probably designing it to maximize its potential to profit and alignment with its vision and values.

Libra could be one of those industry shaping moments like Android was. Of course, it can also become Google + or Apple Newton just to name a few failed attempts at making a dent on the universe. However, one can’t fail to be impressed by the thoughtfulness and comprehensiveness of Facebook’s Libra which brings together strategy, technology and finance to create something potentially transformative for the world and lucrative for Facebook. At the same time, we were already worried by the Big Tech firm dominance and Blockchain was the magic sword that was going to slay the dragons. If Facebook’s attempt to repurpose the sword works the dragons might get even bigger and more powerful.

Blockchain, Tech and Business

Blockchain needs its Netscape

The next step for the massification of blockchain is something that allows anyone to interact with it easily. Netscape Navigator was that something for the PC internet. The iPhone was that something for the mobile internet. There is enough money in the system for it to be developed, although it is unclear if it will take months or years. When it happens it should be easily visible and trigger another crypto run.

Cryptocurrencies have fallen precipitously this year. Still, the Blockchain soldiers on. Enterprise application of Blockchain is spreading. Analyst coverage is expanding. Technology investment and development is growing. Cryptocurrency trading is vibrant. Applications are being created

There is no way for a normal human to interact with the Blockchain beyond speculation

However, there is a large gap in the ecosystem. There is no way for a normal human to interact with the Blockchain beyond speculation. It is challenging even for geeky humans. I am pretty sophisticated and have tried chrome extensions and other options. The passphrases, the clunkiness, the financial risk, the lack of support… it is still too much.

This situation is not new. The internet in 1994 or mobile data in 2007 was exactly the same. Difficult even for geeks, although the potential was obviously there. The internet was solved by HTML(1989), Netscape Navigator (December 1994) and Google (1998). The combination of the three turned “the internet” into “the world wide web”. Mobile data was solved by the iPhone (2007) and the Appstore (2008). It turned “mobile data” into “the smartphone”. The world wide web and the smartphone triggered momentous transformations

When this interface is created we can expect massive adoption and the rise of at scale public Blockchain applications

Blockchain needs an interface that makes it accessible beyond hardcore technologists. When this interface is created we can expect massive adoption and the rise of at scale public Blockchain applications. It can also trigger another cryptocurrency run for the winning chains.

How will the interface work and look? Difficult to say. What is clear based on history is that it needs to be appealing for an early majority audience. It needs to be accessible enough to make a non-techy technology enthusiast interact with the blockchain easily. It also needs to have services available to make the interaction worthwhile.

5-10 billions should be enough to achieve the breakthrough

There have been 5-10 billions of capital poured into Blockchain already. Probably close to 2 billion from VC and more than ~30 billion from ICOs according to (~100 million pre-2017, 6.5 billion in 2017, 21 billion in 2018). The ICO totals are probably very overstated given the 90% drop in crypto values, but we can still place it at somewhere from 3 to 6 billion. This doesn’t even consider enterprise investment which is growing.

That amount of capital should be enough to catalyse the breakthrough the industry needs. It might take months or years, but when it happens it should quickly become obvious to everyone. So watch out and prepare for the ride when the rocket ship takes off again. I am very curious to meet the next Marc Benioff or Steve Jobs (hopefully a woman this time).

Bioprogramming, Blockchain, Digital Governance, Energy and Transportation, integrated reality, Inteligent Processes, Neurogamification, Tech and Business

Beyond Digital: 6 Exponential Revolutions – The Book

I have put together my explorations of Exponential Technologies in my new book “Beyond Digital: Six Exponential Revolutions that are changing our world” (en castellano “Más Allá de Digital: Seis Revoluciones Exponenciales que están cambiando el mundo”) which you can find on Amazon both in physical and digital format.

The book is my attempt to give anyone who wants to understand what is happening a window on six new waves of change that are coming our way through an accessible understanding of the technological underpinnings and plenty of real-world examples. The six technological revolutions I cover are:

  1. Intelligent Processes. The application of AI to information processing and the transformation it will represent in software, business, and government processes. How many processes that now require human intervention will be digitalized through AI allowing cheaper, faster and higher quality outcomes. This could be the end of drudge work and lousy customer experience but might bring significant technological unemployment and inequality
  2. Integrated Reality. How IoT, Virtual and Augmented Reality, Robots and 3D printing are blurring the lines between the physical and digital worlds. Allowing us to interact with the physical world with the same ease we do in digital, and to embody ourselves in the digital world with the same subjective experience as in the physical world. This will bend our physical world even more to our will but could create alienation and escapism as in Ready Player One or a techno-controlled police state that makes 1984 seem liberal.
  3. The New Energy and Transportation Matrix. How solar, electric and autonomous technologies will change how we produce energy and transport ourselves. Potentially bringing an age of free and clean energy and swift and secure transportation. We could potentially be able to overcome global warming, ecological impact and the toll on human lives and time that our current transportation system takes. At the same time, this new matrix will tear down the energy and transportation infrastructure jobs on which many of us depend.
  4. Digital Governance. How Blockchain technologies together with cryptography and the cloud are ushering a new age of financial markets, trust, and law. Digitising money, trust, contracts and the law to give them the same digital speed and quality we have grown used to in the digital world. Still in its early stages, it holds the promise to make our world freer and fairer, with the parallel dangers a bug or a virus could have if computer code runs our financial, legal, and even democratic systems.
  5. Bioprogramming. Understanding the code in which life has been written and learning to manipulate it is given us surprising power and flexibility in using and changing life for our own purposes. The ability to edit, program and even build from scratch living organisms, allows us to change living beings like we change computer programs. With amazing potential in terms of healthcare, human augmentation, and biofabrication, but unexpected risks as we play Mother Nature at an accelerated rate.
  6. Neuroprogramming. Our understanding of neurobiology and neuroeconomics is decoding how our brain, the most complex structure we know of in the Universe, operates and thinks. Being able to understand our neural circuits is giving us new paths in creating technology that replicates the best design principles of our brain and interacts with it effectively. It will be used to further accelerate our technology, augment human capabilities and cure the human suffering linked to brain disease, at the same time it has the potential to take digital manipulation even further robbing us of free choice.

The book would not have been possible with the help of my wife, my family, my friends, my colleagues in Deloitte and McKinsey, the readers of my blog and some dear readers of the beta version of the book who painstakingly read and help me improve the English and Spanish versions of the book. I am really grateful to all of them. As Mario Vargas Llosa says: “Escribir no es un pasatiempo, un deporte. Es una servidumbre que hace de sus víctimas unos esclavos” (“Writing is not a hobby or a sport. It is a bondage that makes slaves out of its victims”). That bondage is mostly born by those around as the slave happily bangs on the keyboard.

Blockchain, Digital Governance, Tech and Business

Bitcoin: Bubble or S-Curve?

You can find more about cryptocurrencies and other Exponential Revolutions that will shape the future in my book: Beyond Digital (here in Spanish).

I have been writing about Bitcoin and Cryptocurrencies for over a year now. The jump in prices in 2017 has been staggering, an order of magnitude. Now, with crypto between half and three-quarters of a trillion USD, the question in everyone’s mind is the same. Is it a bubble? What should I do about it?

I don’t have the answer and no one has. We are looking at an unprecedented phenomenon. It will be easy to explain in hindsight but right now we are completely at a loss to predict the future. There are two compelling and competing explanations out there about what is happening. They are making testable predictions that lead to diametrically opposed advice. The two theories are the bubble and the adoption curve.

Nasdaq Bubble and burst. Source: FedPrimeRate

The Bubble: Internet Boom all over again

The Bubble is the most widely spread explanation. It says this has happened before, many times. A new asset class is created, it starts to rise fueled by speculation and at some point, everyone buys into the game. Fear of missing out takes the best of caution and more and more people start to invest. The scarcity of the asset class drives high apparent valuations that are not real, but rather just predicated on the transaction prices of the few people that are selling vs. the crowd trying to get in. First, it is just the techies, then the financiers jump in, then the broader public and then there is no one left to jump in and prices collapse. Afterwards, the technology takes its time to develop and a small part of the asset class becomes very valuable over time.

The first bubble of this kind was the famous Tulipmania in 16th century Holland, then there was the South Sea Bubble, the 1929 stock market peak, the go-go years in the 1960s, the internet boom in the late 1990s and several real estate bubbles, the latest finishing with the 2008 crash. It is pure human mass psychology and begets stock phrases like “prices can never fall”, “this time is different” or a “we have reached a permanently high plateau of valuation”.

The facts are also consistent with the explanation, but with a much more radical speed and depth to it compared to other bubbles. The NASDAQ 1990s bubble took around a decade to form with an x11 price increase in the period from the ~500 trough in October 1990 to its ~5000 peak in February 2000. The crypto craze has done much more just during 2017, going from a ~20 billion valuation at the beginning of 2017 to a ~600 billion valuation at the end of the year. Approximately an x30 during 2017.

As more and more people have gotten into crypto prices have skyrocketed, leading to more people to get into crypto. Most people are buying and holding crypto, so there is scarcity to enter the asset class, a very small door to enter Bitcoin that bids prices ever upward. In the western world, we are living the start of the “financiers” and “everyone else” phase, with still plenty of people left to enter the cryptocurrency craze. However, in Korea, China or Japan we have been in the “everyone else” phase for a while, with governments deeply concerned about the speculation’s impact on their elderly or young.

If the bubble theory is correct there are three questions worth answering: When? How much? and How long? When will the crash come? Is what all speculators are thinking about, impossible to answer as it depends on crowd psychology. The Rockefeller anecdote about selling all his stocks when a shoeshine boy gave him a stock tip thus avoiding the 1929 crash seems a good warning sign. In some countries, taxi drivers are already recommending bitcoin investment, which could be a modern-day equivalent. How much will it collapse? Is another great question. The NASDAQ bubble collapsed to ~1200-1500 (-80%) twice, once in September 2002 and another one in February 2009. Of course, cryptocurrencies have no bottom at all, as there is almost no intrinsic value behind them, while the NASDAQ had real companies with real earnings. How long could it take to recover? The NASDAQ only confidently recouped its peak and went beyond last year, 17 years after the 2000 peak. This puts into perspective how much risk there really is. This is how long the internet’s real value took to catch up with its hype, even if there has obviously been a lot of real value. Blockchain will be a game-changing technology, but real applications are still few and far between.

4 famous S-curves. Source: Quora

The S-Curve: A New World of Value

Of course, there is an alternative explanation to the Bubble, the Adoption Curve (or S curve given its shape). The adoption curve is very widespread among starry-eyed crypto enthusiasts. It has also precedent. Eternal September is September 1993, when internet usage started growing significantly thanks to AOL (that is the bottom of the S) and it has only grown exponentially since. Of course, once the whole of the world uses the internet growth flattens (the top of the S) and it stops at that permanently high plateau.

Adoption curves or S-curves are prevalent in the adoption of technology, and for the most part have been tried and true ways of predicting technology adoption. Initial adoption is slow (bottom of the S) with innovators and enthusiasts, once the majority comes in it grows fast (slope of the S), finally the last laggards take a long time to adopt as they are anti-technology (top of the S). TVs, Trains, Electricity, Cars, and many other technologies can be explained with the S curve.

The rationale behind the S curve for cryptocurrencies is assuming that Crypto is a new asset class that is being adopted, not a stock or bond that is being subjected to an irrational euphoria. It took a long time to get started (~9 years until ~20 billion market cap) but now it is in the explosion phase and it will continue to grow until it flattens out once it reaches saturation. Where does it flatten will depend on what percentage does crypto attain as an asset class. Total wealth in the world is ~250-300 trillion USD depending on the estimates. So we are now at approximately 0.2% penetration, if it gets to 1% we still have an x5 run and if it gets to 10% we still have an x50 run, to close to $1 million Bitcoin.

The Adoption Curve has a number of important questions to be considered: How? What? and Which? How much penetration? Will it be 0.1%, 1% or 10% of the wealth? Depending on what you believe there is a big difference in potential. Real Estate is ~60% of the total wealth while Hedge Funds are 1%. What path will it take to the final penetration? S curves are about usage, not value. So a crash or correction could be consistent with it as long as usage and ownership continue to grow. Which cryptocurrencies will be used in the long term? Are Bitcoin and Ethereum Webvan and or Amazon and Google? Crypto might be 10% of the wealth and you might still lose everything if you choose the wrong cryptocurrencies. Choosing between Friendster and Facebook is easy in hindsight, but very hard in advance.

So what should I do?

Don’t invest more than you are willing to lose, diversify and hedge your bets are always good paths to follow if you feel you don’t have an edge over others. It hurts when you hedge and miss the bull run, but it hurts more when you plunge in and lose what you cannot afford to lose. 2% of your assets or one month’s salary will be substantial but not take you to bankruptcy in most situations. Go beyond that at your peril.

The bar for beating the cryptomarkets is really high. People who are really investing in cryptocurrencies are dedicating a significant amount of their time to them, doing things like participating in Slack groups, trying out every new token out there and talking to founders. If you are not doing that you don’t have an edge and will be probably better off with a diversified portfolio and limited exposure.

Blockchain, Digital Governance, Español, Tech and Business

Competición entre Criptoestados


Ya hemos echado una mirada profunda a Realidades y especulaciones de gobernanza digital. Para terminar de explorar la Revolución Exponencial # 4 – Gobernanza Digital, veremos una potencial transformación a largo plazo que podría traer: la competición entre criptoestados.

Como humanos, generalmente no nos gusta el cambio. Especialmente no nos gusta el cambio si va en contra de nuestros intereses. Dado que cualquier cambio siempre tendrá un efecto adverso en algunos grupos de interés, nos encontramos con una inercia institucional relevante. Esto es cierto incluso si el cambio es neto positivo, especialmente en los casos en que los efectos positivos son difusos mientras que los efectos negativos se concentran. A cualquier grupo de personas les resultará difícil cambiar a menos que se sometan a una tremenda presión.

La inercia institucional explica el ascenso y la caída de muchos imperios. Los griegos tenían mucha menos inercia institucional que los persas, por lo que superaron y derrocaron un imperio mucho más grande. El imperio romano sucumbió a los intereses acumulados de su clase dominante, que no hizo los cambios necesarios para mantenerlo viable. El imperio chino Song era muy avanzado tecnológicamente, pero no adoptó esas tecnologías para cambiar su funcionamiento y fue superado por Europa.

La competencia ha demostrado ser el mejor antídoto para la inercia organizacional. Europa a finales de la Edad Media era altamente competitiva y adoptó las innovaciones necesarias que China había inventado, adelantándose a ella. Las empresas juegan en un terreno competitivo que las obliga a adaptarse o morir. Sin embargo, la guerra y las revoluciones, los resultados habituales de la competencia a nivel estatal, son costosas y devastadoras. Y la privatización, poniendo todo en “el mercado”, ha demostrado que no funciona en servicios como salud, educación o seguridad.

Imaginemos que somos capaces de introducir competencia en la esfera pública de una manera segura y sin derramamiento de sangre. Imaginemos que los ciudadanos pueden elegir de manera instantánea y continua su nación-estado y proveedor de servicios público, como si fuera su marca de champú. Imaginemos que los resultados acumulados determinan fronteras y presupuestos, con nuevos estados emergiendo y otros que mueren dinámicamente y sin derramamiento de sangre. Imaginemos la responsabilización de los funcionarios públicos, la velocidad de la evolución y la innovación en la esfera pública.

Al mismo tiempo, parece un caos perfecto. Trae a la mente situaciones como los referendums de Quebec y Escocia, como el terrorismo irlandés o vasco, o los problemas actuales en Cataluña. Nuestra infraestructura pública simplemente no está preparada para este tipo de responsabilidad y cambio. La opinión común es que rápidamente colapsaría bajo la tiranía de la mayoría. Que sería imposible mantener un sistema público funcionando con voto real y descenderíamos al populismo y la dictadura.

Si bien eso podría ser cierto en una gobernanza pre-digital, con la nueva tecnología podríamos construir un tipo de gobierno responsable y programable. Podríamos tener ciudadanos verificados criptográficamente que puedan decidir a qué gobierno criptográfico quieren pertenecer en cada instante. Los cambios se ejecutarían y las cuentas se resolverían fácilmente en blockchain. Y los gobiernos estarían sujetos a la responsabilidad directa de los ciudadanos. El castigo por tergiversación o incompetencia de los líderes públicos no sería una revolución armada, sino más bien perder a los ciudadanos y finalmente desaparecer como estado. Alguien con una idea diferente podría hacer emprendimiento público y probar el modelo a una escala pequeña y usar su historial para atraer nuevos ciudadanos.

Si Blockchain y la tecnología digital pueden hacer que este escenario se haga realidad, aún está por verse. Incluso es dudoso que la naturaleza humana pueda aceptar la competencia y la incertidumbre en un nivel tan cercano a nuestro sentimiento de identidad. Sin embargo, lo que parece claro es que un gobierno público organizado de esta forma sería tan superior a las formas existentes que las superaría rapidamente. Al igual que las ciudades griegas hicieron con los persas, o los estados de la Europa medieval tardía lo hicieron con el resto del mundo.

El aumento de la presión de la competencia y el aumento de la tasa evolutiva de un estado criptográfico sería incomparable y nos llevaría mucho más lejos de lo que nunca hemos considerado. Podría arraigar en algunos de los estados fallidos del mundo como el Oriente Medio Mediterraneo, Asia Central o África que no tienen nada que perder. También podría surgir en algunos de los Estados-nación más pequeños que existen hoy, como los nórdicos o América Central, que saben que necesitan evolucionar rápidamente para sobrevivir. También podría ser utilizado por uno de los gigantes bloqueados como China, Rusia, Brasil, Estados Unidos o la UE para reinventarse e ir más allá de sus limitaciones actuales. En cualquier caso, quien desbloquee este nuevo tipo de gobierno podría superar a todos los demás de manera rápida y eficaz para dar forma a la futura evolución política del mundo.

Por supuesto, puede haber peligros. Recordemos el DAO, un fallo en la programación podría convertir esta cripto-utopía en una pesadilla totalitaria. Los primeros intentos pueden descender a la anarquía y la violencia a medida que se desactivan las restricciones tradicionales. No será un viaje fácil, y es improbable que el primer intento funcione.

De todos modos, vale la pena intentarlo. Vemos el regionalismo, el populismo, la desigualdad, la corrupción y la globalización que amenazan el edificio de las libertades que ha construido la democracia capitalista. Incluso vemos una nostalgia preocupante por los autócratas y tiempos más simples en la mayoría de las naciones desarrolladas. Las dictaduras pueden hacer maravillas con monarcas-filósofos platónicos. Hay muchos ejemplos en la historia como Lee Kuan Yew de Singapur, Augusto y Trajano en Roma, las Isabeles de Castilla e Inglaterra en el Atlántico, Washington, Jefferson, Lincoln y Roosevelts en EEUU, sabios emperadores de China o Ashoka en la India. “Felicior Augusto, Meior Traiano”, pedía el Senado romano a cada nuevo emperador. Sin embargo, por cada Augusto o Trajano, la historia ha demostrado que tenemos al menos 5 Nerones, Caligulas, Heliogabalos, Comodos y Domicianos. La competencia criptoestatal nos llevaría desde promesas de 4 años hasta decisiones en tiempo real basadas en realidades. Y de ser forzados a elegir la opción menos mala, a tener nuevas opciones para elegir que aparecen y se testan continuamente. No nos exigiría privatizar lo que funciona mejor como público, sino que nos permitiría someter a nuestras instituciones públicas a la disciplina de la competencia y al poder purificador de la creación y la destrucción.

Blockchain, Digital Governance

Exponential Technology Revolution #4 – Digital Governance Speculations

(En Español aquí)

We already took a deep look at Digital Governance Realities in a previous post. To continue exploring Exponential Technology Revolution #4 – Digital Governance we will look at some speculations. There is some evidence to justify the speculations, but no real deployments yet.

Digital Governance Speculations

Public cryptocurrencies a cryptocurrency with state backing.

Once Bitcoin started to gain traction the obvious next step was the hybridization of Bitcoin and a fiat currency. Of course, this is a very scary step also for any government to take, so we still haven’t seen it. However, it is probably only a question of time until we have the first cryptocurrency with the backing of a National Bank and the consideration of legal tender.

A blockchain backed fiat currency could be a true gamechanger. With the legal backing of a state and the algorithmic inflation protection and flexibility of a cryptocurrency. This could very quickly challenge the dollar’s role as the reserve currency of choice and Bitcoin’s role as the premier crypto store of value. So the stakes might be really high for a public cryptocurrency.

There are rumors of cryptocurrencies being considered by several national governments:

China. After several unsubstantiated rumors. Yao Qian, the Director of the Digital Currency Research Industry (backed by China’s Central Bank) laid down the plan for a state-backed cryptocurrency in the ITU meeting. The goal would be to create a stable cryptocurrency that solves the Yuan’s inflation troubles

Sweden. Apparently, one the worlds most advanced nation in terms of going cashless is exploring the launch of the eKrona. This was communicated late last years with a two-year timeframe.

Russia. Rumor has it that Vladimir Putin meets often with Vitalik Buterin to discuss cryptocurrencies. The Russian government has gone from a very negative stance on cryptocurrencies to some of its foremost members expressing direct support for a state-backed cryptocurrency, and even an apparent announcement of the CryptoRubble.

US. For the US we have mostly speculation, like this prediction from currency expert Doug Casey.

Singapore. Singapore’s monetary authority (MAS) is backing a proof of concept of Utility Coin with a banking consortium. This would be the equivalent of the IMF’s Special Drawing Rights, but with a blockchain infrastructure. Singapore has a history of moving boldly to new technologies when they think there is value to be captured.

Estonia. If it is digital Estonia is in it. So beyond a lot of other very interesting Digital Governance initiatives, Estonia is exploring the creation of a state-backed cryptocurrency.

Overall national cryptocurrencies are still in the planning and speculation stage, but they could be a real step ahead in terms of Digital Governance.

Digital ownership and access taking the middle-person out of marketplaces, fractionalizing ownership and shedding light on supply chains.

Marketplaces have taken the economy by storm. What used to be deep and dark markets like property rentals, taxi drivers, hair salons or nannies are being opened up and made transparent by marketplaces. These platforms like AirBNB or Uber put themselves in the middle of service providers and customers and create a much easier discovery and contracting experience while taking a substantial cut of the pie.

Digital Governance can extend this transformation in three ways. First, there are several projects aiming to create decentralized open source marketplaces with no middle-person. Second, others are trying to fractionalize ownership to make everyone play on both sides. Third, it is difficult to trace the origin of goods, so transparent supply chains can change the game substantially., a decentralized AirBNB. Could you do without AirBNB but keep its functionality? That is’s premise. Imagine an open source platform for listing platforms and making offers on them. Imagine that the transactions are operated in a blockchain and that same blockchain controls the locks of the property and arbitrates disputes. It is a DAO for AirBNB and one that doesn’t need to take a 15% cut of every transaction.

Elon’s dream of having everyone own a Tesla. Elon Musk is the Henry Ford of our age, he even wants to put a Tesla in the hands of each person much like Mr. Ford did with the Model T. He has given us cheaper and cheaper models, the Powerwall and solar panels. Now he wants to give us back the unused time of our car (95% by most estimates) so we don’t have to pay for it. How does he intend to go about it? Fractional ownership. Much like the tried and true ownership sharing for holiday homes but much more nuanced and flexible thanks to Digital Governance. Start adding a percentage column to the list of things you own. Maybe you only need 1% of that gym towel.

Supply chain transparency. Finally, most of the world’s supply chains both digital and analog are very hard to track. You don’t know where that tomato you are eating came from. Was it produced by slave laborers in North Korea? Has it been exposed to dangerous chemicals? Blockchain promises to easily and cheaply track everything there is to track on each item and solve those questions. The change that could come from that is astounding. Many companies are piloting this, with Walmart and IBM having some of the most visible projects.

Crypto-Law the greatest legislative step forward since the Code of Hammurabi.

Crypto-lawyers sound like something really cool and scary, a bit like ninjas. I believe that this is going to be one of the world’s foremost professions in the near future as laws and code merge.

The law is a set of contracts between everyone in a given state. Admittedly it is an extremely complex set of contracts. The legislative and judicial branches of government are responsible for updating and enforcing those contracts. The increasing complexity and analog methods we use are making both branches grind to a halt while we spend enormous amounts on them. This makes all of us extremely unhappy.

Could we put the law into Ethereum? Would it auto-enforce? Could we refactor it to simplify it? Could we simulate the impact of changes before they happen? Would taxes self-collect? Could we fork it to try two different approaches to A/B test? The answer to all of this seems yes but remember the DAO. We don’t want our world to be taken over by the evil genius who finds the bug. We need to do it step by step.

The Github of Hammurabi isn’t even close to a large stone stelae in terms of coolness, however, it could be a lot more practical to enforce, evolve and understand. After all, we have little to show for legal innovation since Hammurabi gave us that first written code of laws.

Blockchain, Digital Governance, Español, Uncategorized

Revolución Exponencial #4 – Especulaciones sobre la Gobernanza Digital

Ya echamos un vistazo a ejemplos reales de Gobernanza Digital en una publicación anterior. Para continuar explorando la revolución tecnológica exponencial n. ° 4 – Gobernanza digital, veremos algunos conceptos todavia más especulativos. Hay algunos hechos para soportar las especulaciones, pero aún no hay implementaciones reales.

Criptomonedas públicas una criptomoneda con respaldo estatal.

Una vez que Bitcoin comenzó a ganar fuerza, el siguiente paso obvio era la hibridación de Bitcoin y una moneda fiduciaria. Por supuesto, este es un paso aterrador para cualquier gobierno, así que aún no lo hemos visto ocurrir. Sin embargo, es probable que solo sea cuestión de tiempo hasta que tengamos la primera criptomoneda con el respaldo de un Banco Nacional y la consideración de la moneda de curso legal. Una moneda fiduciaria respaldada por una cadena de bloques podría ser una verdadera disrupción. Con el respaldo legal de un estado y la protección de la inflacióny la flexibilidad de una criptomoneda. Esto podría desafiar rápidamente el papel del dólar como la moneda de reserva de elección y el papel de Bitcoin como el primer almacén de valor cripto.

Dado esto, el premio para el ganador podría ser muy alto para una criptomoneda pública. Hay rumores de criptomonedas que están siendo considerados por varios gobiernos nacionales:

China. Después de varios rumores sin fundamento. Yao Qian, el Director de la Unidad de Investigación de Divisas Digitales (respaldado por el Banco Central de China) comunicó el plan para una criptomoneda respaldada por el estado en la reunión de la ITU. El objetivo sería crear una criptomoneda estable que resuelva los problemas de inflación del Yuan

Suecia. Al parecer, uno de los países más avanzados del mundo en términos de eliminar el efectivo está explorando el lanzamiento de eKrona. Esto se comunicó a fines del año pasado con un período de exploración de dos años.

Rusia. Se rumorea que Vladimir Putin se encuentra a menudo con Vitalik Buterin para discutir sobre criptomonedas. El gobierno ruso ha pasado de una postura muy negativa sobre las criptomonedas al apoyo por elementos de peso del gobierno, e incluso a un aparente anuncio del CryptoRublo.

US. Para EE. UU. tenemos especulaciones, como una predicción del experto en divisas Doug Casey.

Singapur. La autoridad monetaria de Singapur (MAS) está respaldando una prueba de concepto de Utility Coin con un consorcio bancario. Esto equivaldría a los derechos especiales de giro del FMI, pero con una infraestructura blockchain. Singapur tiene una historia de moverse audazmente hacia las nuevas tecnologías cuando cree que hay valor para ser capturado.

Estonia. Si es digital, Estonia está en ello. Más allá de muchas otras iniciativas de Gobernanza Digital muy interesantes, Estonia está explorando la creación de una criptomoneda respaldada por el estado.

Las criptomonedas nacionales en general aún se encuentran en la etapa de planificación y especulación, pero podrían ser un paso adelante en términos de Gobernanza Digital.

Propiedad y acceso digitales eliminando al intermediario, fraccionando la propiedad e iluminando las cadenas de suministro.

Los marketplaces han tomado la economía por asalto. Lo que solían ser mercados profundos y oscuros como alquiler de propiedades, taxistas, peluquerías o niñeras se están abriendo y se hacen transparentes por los ellos. Estas plataformas, como AirBNB o Uber, se colocan en medio de los proveedores de servicios y clientes y crean una experiencia de contratación y descubrimiento mucho más fácil al tiempo que capturan una parte sustancial del pastel.

La gobernanza digital puede extender esta transformación de tres maneras. Primero, hay varios proyectos con el objetivo de crear mercados descentralizados de código abierto sin intermediarios. Segundo, otros están tratando de fraccionar la propiedad para hacer que todos jueguen en ambos lados. En tercer lugar, el origen de los productos en la mayoría de los mercados es poco trazable, por lo que las cadenas de suministro transparentes pueden cambiar sustancialmente el juego., un AirBNB descentralizado. ¿Se puede tener la funcionalidad de AirBNB sin un AirBNB ? Esa es la premisa de Una plataforma de código abierto para listar plataformas y hacer ofertas en ellas, donde las transacciones se operan en una cadena de bloques y que la misma cadena de bloques controla los bloqueos de la propiedad y arbitra disputas. Es un DAO para AirBNB y uno que no necesita tomar un recorte del 15% de cada transacción.

El sueño de Elon: que todos tengan un Tesla. Elon Musk es el Henry Ford de nuestra época, incluso quiere poner un Tesla en las manos de cada persona, al igual que hizo el Sr. Ford con el Modelo T. Nos ha dado modelos más baratos, el Powerwall y los paneles solares. Ahora quiere devolvernos el tiempo no utilizado de nuestro automóvil (el 95% según la mayoría de las estimaciones) para que no tengamos que pagar por él. ¿Cómo piensa hacerlo? Propiedad fraccionada. Como la multipropiedad de las casas de vacaciones, pero mucho más matizado y flexible gracias a Digital Governance. Comienza a agregar una columna de porcentaje a la lista de cosas que tienes. Tal vez solo necesites el 1% de esa toalla de gimnasio.

Transparencia de la cadena de suministro. Finalmente, la mayoría de las cadenas de suministro del mundo, tanto digitales como analógicas, son muy difíciles de auditar. No sabes de dónde vino ese tomate que comes. ¿Fue producido por trabajadores esclavos en Corea del Norte? ¿Ha estado expuesto a productos químicos peligrosos? Blockchain se compromete a hacer un seguimiento fácil y económico de todo lo que hay saber para cada elemento y resolver esas preguntas. El cambio que podría surgir de eso es asombroso. Muchas compañías están probando esto, con Walmart e IBM teniendo algunos de los proyectos más visibles.

Criptoleyes el mayor avance legislativo desde el Código de Hammurabi.

Los cripto-abogados suenan como algo realmente genial y aterrador, un poco como ninjas. Creo que esta va a ser una de las principales profesiones del mundo en el futuro cercano a medida que se unan las leyes y el código.

La ley es un conjunto de contratos entre todas las personas de un estado. Es cierto que es un conjunto de contratos extremadamente complejo. Las ramas legislativa y judicial del gobierno son responsables de actualizar y hacer cumplir esos contratos. La creciente complejidad y los métodos analógicos que utilizamos hacen que ambas ramas funcionen tremendamente despacio mientras gastamos enormes cantidades en ellas. Esto nos hace a todos extremadamente infelices.

¿Podemos poner la ley en Ethereum? ¿Se aplicaría automáticamente? ¿Podríamos refactorizarla para simplificarla? ¿Podríamos simular el impacto de los cambios antes de que sucedan? ¿Los impuestos se cobrarían automáticamente? ¿Podemos bifurcarlo para probar dos enfoques diferentes para una prueba A / B? La respuesta a todo esto es que sí. Sin embargo, hay que recordar el DAO. No queremos que nuestro mundo sea tomado por un supercriminal que encuentre el “bug”. Tenemos que hacerlo paso a paso.

El Github de Hammurabi ni siquiera está cerca de las grandes estelas de piedra en términos de espectacularidad. Sin embargo, podría ser mucho más práctico de hacer cumplir, evolucionar y comprender. Después de todo, tenemos poco que mostrar en la innovación legal, desde que Hammurabi nos dio ese primer código escrito de leyes.

Blockchain, Digital Governance, Tech and Business

Exponential Technology Revolution #4 – Digital Governance realities

blockchain techjuice

(En Español aquí)

The best way to illustrate the power of Exponential Technology Revolution #4 – Digital Governance is to look at its real-world effects.

We will start with the examples that are already real and “in the wild”, covering 4 areas: private cryptocurrencies, ICOs, digital registries and marketplaces, and smart contracts, autonomous organizations and forks, The sheer volume of examples makes this post quite long, even if it only skims the surface. We will leave speculations such as public cryptocurrencies and crypto-laws for a later post.

Private cryptocurrencies. Offer a decentralized and pre-determined store of value and interchange mechanism.

Trustleness with Digital Governance has allowed a real explosion of cryptocurrencies. Going from nothing to a market cap of over 150 billion dollars (October 2017) in less than a decade. Cryptocurrencies use blockchain technology and cryptography to create totally decentralized money that people trade on exchanges. Cryptocurrencies are the first privately created currencies to achieve massive adoption and could change drastically how money works.

It is important to understand that, for the most part, cryptocurrencies are totally dependent for their valuation on what people are willing to pay for them. They are only based on the shared fiction of their use as a store of value. If this shared fiction evaporates they would go to zero immediately as they have no alternate source of value. Gold can be used for jewelry and industrials processes. Even virtual gaming currencies such as World of Warcraft gold can be used for entertainment. Cryptocurrencies are mostly annotations on a database with no value beyond what we are willing to pay for them.

We will illustrate cryptocurrencies through several stories. First, through Bitcoin, the philosopher’s stone that unlocked the blockchain world. Second, Ethereum, which expanded the concept of Bitcoin to smart contracts and computing, and might have value beyond a pure store of value. Third, we will explore the five largest Bitcoin look-alikes that focus on the “currency” function. Finally, we will quickly cover several true tokens that go beyond a pure store of value.


Bitcoin (#1 ranking according to – 75 billion euro market cap 15/10/2017) is a modern fairytale story. We have a mysterious wizard figure, that creates fabulous wealth as if by magic and then disappears and is never seen again. The genesis of Blockchain technology and Bitcoin came in November 2008 when the Bitcoin whitepaper was published by Satoshi Nakamoto. No one knows if Satoshi is a person, a group of persons and what is the real name or nationality. Based on the whitepaper the first bitcoin server node was created in January 2009, at the beginning it was mostly Satoshi mining, with more than one million bitcoins mined in the first months by Satoshi himself. Satoshi then disappeared the last email in April 2011, passing down the reins to Gavin Andresen at the Bitcoin Foundation.

In the early days, Bitcoin was considered a medium of exchange and one of the most famous Bitcoin transactions was two pizzas for 10.000 bitcoins in 2010. At October 2017 prices that would be 25 million euro per pizza. In those days Bitcoin prices were in cents, bitcoin parity with the dollar made the news, and mining could be done with home computers. That was the early wild days of Bitcoin. Those were also the days in which the only security flaw in Bitcoin was exposed and promptly corrected in August 2010.

The first Bitcoin gold rush can be dated from the 2 USD price low point in Dec 2011 after the first “Bitcoin crash” to the collapse of Mt.Gox in February 2014. Here Bitcoin started to make the news with a CNBC piece and a media apparition in the Good Wife series. However, it was still pretty much unknown. The first real media attention came through its use in the Silk Road, the darknet illegal market for drugs and other items, and the publicized trial of Ross Ulrich or Dread Pirate Roberts, the alleged kingpin of the site. The life of the Silk Road from 2011 to October 2013 coincided almost exactly with the first Bitcoin gold rush, confirming that the first killer use cases of many technologies is borderline legal. This era also led to industrial mining, with the first dedicated ASICs appearing in 2013 after a brief use of GPUs.

The rest of 2014, 2015 and 2016 was apparently a lost epoch for bitcoin, with the price moving sideways and even collapsing temporarily to the low hundreds. However, it was undoubtedly an era of infrastructure and usage build up. Blockchain technology started to become popular beyond hacker circles, with banks especially starting to explore it. Ethereum and other cryptocurrencies appeared. Mining got really industrial. The community thrashed out how to increase transaction volumes through SegWit and larger blocks. Strong infrastructure services like Coinbase or Kraken helped popularize bitcoin in particular and cryptocurrencies in general.

This lead to 2017 which up to now has been a year of price explosion and Bitcoin domination. Bitcoin has climbed to the several thousands of dollars with pundits predicting even more lofty peaks. Bitcoin has become firmly entrenched as a reliable store of value in a world of increasing risks around fiat currencies (Euro-weakness, Trump tax cuts, etc…). Bitcoin has also managed to survive some pretty major events: a hard fork that created Bitcoin Cash or the banning of cryptocurrency exchanges in China in September. It is facing its biggest technical challenge with the implementation of Segwit 2x in November. Each challenge has made it stronger, as Bitcoin adepts have seen that Bitcoin is resilient and secure, at least until now.

Bitcoin has some severe limitations preventing it from exploiting the full power of blockchain technology and the Digital Governance of money and property. These limitations have created the rest of the cryptocurrency innovation we will see. First, is its very limited flexibility. This has lead to Ethereum and the rest of the ICO Cambrian explosion. Second, its limitations as a medium of payment (speed, blocksize, mining footprint) have led to the other improved stores of value. These alternatives to Bitcoin seem to have strengthened it rather than substituted it.


My first exposure to Ethereum (#2 – 25 billion) was in late 2015. I was still struggling to understand what the Blockchain meant and if Bitcoin was useful beyond purchasing heroin from Afghans in the Silk Road. I was introduced to this concept created by a wiry Russian whizkid that had just started operating earlier that year. It claimed to expand the potential of the blockchain much beyond what Bitcoin could do. If Bitcoin was just a store of value, Ethereum was a computer that was Turing complete, that is to say fully programmable.

I started digging deeper and trying to read and understand more about it. Those were the days of “it is not about Bitcoin, it is about the Blockchain”, so I tried to understand what was behind the technology. Being an engineer I was surprised that the basic technology was not very complicated to understand. Ethereum however, took it to a whole new level. From a database to an operating system and a programming language.

During 2016 we started to see the first inklings of the potential of smart contracts. The DAO (Digital Autonomous Organization), the first organization with no people in it, just a smart contract, was created in May 2016, raising more than $150 million dollars. This represented a number of firsts which we will cover later.

From there Ethereum continued to evolve, creating the ICO Cambrian explosion that we will discuss later. ICOs have been the third blockchain killer application after buying drugs and storing value.With this killer application, Ethereum became the infrastructure for most cryptocurrencies cementing a place in the ecosystem second only to Bitcoin.

For me, Ethereum also has a very personal meaning. Ethereum is the first cryptocurrency that I bought. It was still in the 10-20€ range when I started and I lived through the ups and downs to the 200-300€ range it is now usually in. I am still banging my head against the wall for not moving quicker!

Ethereum is still evolving quickly, with a new major update requiring a fork being deployed as I write this words (less than 2.000 blocks for Byzantium). Whether Ethereum will become the blockchain distributed computer of choice like Bitcoin has achieved with the store of value function is still to be seen. Functionality will be much more important, and other alternatives are trying to quickly outmaneuver it. However, whatever happens, Vitalik’s brainchild has undoubtedly taken Blockchain and Digital Governance to the next level and deserves a page in its history.

Improved stores of value: Litecoin, Ripple, Bitcoin cash, Dash, Monero

The success of Bitcoin and its limitations in terms of transaction speed and cost have led to the creation of a host of other cryptocurrencies that are focused on being an equivalent to Bitcoin that is efficient in transactions. Many people call these the silvers compared to Bitcoin’s gold, but its creators are convinced that a lot of value can be created through silver.

The five main alternatives, which are all in the top 10 market cap as of October 2017, market themselves as Bitcoin+, each with a particular focus:

Litecoin (#5 – 3 billion) is the most straightforward. It is just Bitcoin faster block time and a memory-hard vs. computation-hard mining algorithm (leading to more distributed mining). It also moves faster with improvements and it tends to be the trial ground for the Bitcoin improvements such as SegWit

Ripple (#3 – 8 billion although disputed as the float is relatively small) is totally different but positions itself as a medium of exchange. Ripple aims to take over international transfers and has several banks working with it to do so.

Bitcoin cash (#4 – 4 billion ) is the result of the August fork of bitcoin. Allowing for a bigger blocksize (8MB vs. 1MB) and faster difficulty adjustment.

Dash (#6 – 2 billion ) is also faster than Bitcoin (2,5-minute vs. 10-minute block time) and is focused on being more user-friendly (human-readable addresses, anonymity, instasend). It also has a formal governance process that should allow it to decide and fund its evolution much faster than Bitcoin.

Monero (#8 – 1 billion) focuses mainly on greater privacy for users, allowing them to keep hidden their account balances. It also has improvements similar to the other stores of value we have seen: a better mining algorithm, larger and adaptative block sizes, faster transactions.

These five are just the largest of the store of value alternatives, but there are many more like zcash, focused on anonymity, and surely many more will come. Whether one will be able to substitute bitcoin or significantly erode its position only time can tell.

The token Cambrian explosion

Ethereum and the ERC20 token standard, which we will review later, created an easy way to create a cryptocurrency for anything. The abundant money in the cryptocurrency space created by the 2017 price multiplication of Bitcoin and Ethereum was available to fund it. So crypto-enthusiasts launched themselves in a veritable Cambrian explosion of tokens (a token is generally used to describe a cryptocurrency that has a function beyond the pure store of value).

We will most probably end 2017 with more than 1000 cryptocurrencies. Among them we have much variety. There are the stores of value (Bitcoins+), attempts to create better Ethereums (e.g. Cosmos, Neo – #9 – 1 billion), there are even what could well be real Ponzi schemes (e.g. Bitconnect – #10 – 1 billion but only tradeable on their propietary exchange) but for the most part, we have tokens that attempt to solve some different decentralization challenges.

These tokens span the ridiculous and the most probably fraudulent, but for the most part, they are honest attempts to solve real-world problems. We will quickly cover 5 examples taken from the most valuable and the most interesting:

IOTA (#11 – 1 billion) is one of the most valuable and most interesting, focused on creating an extremely low-cost transaction infrastructure for the Internet of Things, where billions or trillions of devices will interact with low power and extremely low-value interactions that will add up to Integrated Reality.

NEM (#7 – 2 billion) is focused on property and has features such as human-readable namespaces similar to those of the internet and “mosaics” which represent property and can be distributed.

Omisego (#14 – 600 million) attempts to disrupt and substitute financial institutions by creating a token that can be used to decentralize financial transactions.

Storcoin J (not in the top 100) is a very interesting attempt to decentralize storage of information. Creating a token that is traded and at the same time is used as a payment method and reward for long term information storage.

Basic Attention Token (#41 – 100 million) is another fascinating token, in this case by the creator of Mozilla. It attempts to reward content producers when they receive the attention of users. Allowing to go beyond advertising and to a real economy of attention.

There are literally hundreds of tokens, many of them thoughtful attempts to use Digital Governance to transform some of the world’s most intractable problems. If history is any guide this Cambrian explosion will lead to a lot of dead ends, but also to many amazing and world-changing innovations.

Initial Coin Offerings – The magic behind the Cambrian explosion

Late in 2015, only months after its creation, Ethereum incorporated informally the ERC20 standard. A standard for tokens or coins to be created and sold easily on top of the Ethereum blockchain. This unleashed Initial Coin Offerings or ICOs. ICOs have become the killer app for Ethereum and fuelled most of its growth. Surprisingly enough the ERC20 standard wasn’t formally adopted as an Ethereum Improvement Proposal (EIP) until September 2017, and Ether, the Ethereum coin, doesn’t even comply with the ERC20 standard.

An Initial Coin Offering is at its core a very simple concept. An organization creates a supply of a new cryptocurrency based on a given algorithm and sells part of them to the public. It is not selling a stake in the organization, it is rather selling part of the ecosystem. How to do this (e.g. Zug-based foundations) and how to structure the coins themselves (the famous whitepapers) is much more complex.

The ICO boom of 2017 based on ERC20 has been comparable only to the most intense manias of all times, like the Internet Boom or the tulip mania in seventeenth-century Holland. Approximately 200 ICOs raised close to 3 billion dollars up to October 2017, surpassing the amount raised for Blockchain by Venture Capital.

The capital raising has been fuelled by an incredible bull market for Ethereum and Bitcoin that has created many instant millionaires who are happy to reinvest part of their proceeds. This easy money means the investment criteria are quite relaxed when compared to professional investors. A couple of kids with a whitepaper (the equivalent of the Internet Boom powerpoint) have been able to raise tens or even hundreds of millions of dollars with no real product or market traction behind them. Regulation has also fallen far behind ICOs, making them a lot simpler than IPOs and allowing regulatory arbitrage.

We can expect many of the companies that have raised money this way to crash and burn, as they did in the Internet Boom. However, when the chaff is separated from the grain we can expect some of them to be the titans of the blockchain economy, much like Google, Salesforce and Amazon emerged from the ashes of the dotcom bust.

We have also witnessed a completely new way of raising money. An incredible democratization in access and simplification in process. As well as the opportunity to consider a whole new way of integrating customers and ecosystem in the fundraising process. ICOs have come to stay, even though the current laxity will disappear.

I have been involved with several companies considering ICOs, both companies I invest in as well as others I advise. I have been surprised by three main differences compared to the traditional capital raising process:

First, the amount of money available is staggering making it a lot easier to raise more capital quickly. If this continues it will really boost the entrepreneurial ecosystem and pressure VCs significantly, as they are predicated on capital scarcity.

Second, the regulatory and legal uncertainties are still very significant. There is scant precedent and the SEC and other agencies are still only starting to intervene. We are also seeing some jurisdictions, such as Zug in Switzerland, invest heavily to become the “Global Delaware” of ICOs.

Third, ICOs allow a much more nuanced and complex kind of capital raising. Instead of selling the ownership of the company, you are selling tickets to the ecosystem. Depending on how you structure those tickets and the ecosystem you create, you might be able to jumpstart a business model that would be difficult to access from a traditional organization.

Stay tuned to ICOs as they will be part of the future.

Digital registries and markets

I have watched companies and the public sector react to and internalize the Digital Governance revolution over the last three years. It usually starts in disbelief, “Don’t talk to me about this, it is only useful to buy drugs and create Ponzi schemes.” Then you move to “Help us understand it and see if there is something useful”. Finally, you quickly end up in “I need to get into the action, what should I do immediately?”.

I have seen this evolution with large banks, other corporations, and nation states. The main difference has been in the speed of going through them and incorporating into the organization people with real expertise and focus. There are early adopters both in government and enterprise, but even followers are starting to move faster.

Creating institutions or central organizations that leverage Blockchain for some specific thorny trust issues tend to be some of the first use cases that governments and enterprises gravitate to. They solve a pain they have today and that traditional technologies and ways of thinking are not equipped to solve. All over the world, we see four use cases that seem to be incredibly well suited for Digital Governance: Land Registries, KYC Registries, Trade Finance Registries and Stock Exchanges. We will also briefly touch on the cryptocurrency infrastructure which represents a whole new set of institutions that have emerged and are “blockchain-native”.

Land Registries are some of the oldest and most important human institutions. After all, according to Savils, Real Estate represents over 200 Trillion USD in total value and over 60% of mainstream assets. They are also some of the less evolved and more at risk from corruption, as they continue to be similar to their Mesopotamian earliest predecessors. Digital Governance allows evolving Land Registries to a digital, decentralized and trustless model. This threatens the current infrastructure wholesale while promising an incredibly more efficient and reliable fabric for our real estate transactions. There are already pilots in at least Illinois, Costa Rica, Georgia, and Sweden. A good mix of developed and developing markets.

KYC or Know Your Customers registries are an obscure but extremely important piece of the banking and financial global infrastructure. They allow verifying who financial institution customers are to avoid money laundering, tax evasion, and terrorism. Right now each financial company does it independently with great cost and pain for users. The potential to do it jointly with Blockchain technology is very obvious, leading to happier users, governments, and companies. It is being piloted in most countries either by consortia or by governments.

Trade Finance registries would solve one of the central problems of global trade. Currently importing or exporting requires a maze of documentation and verifications in the sender and receiver sides to ensure the goods are really shipped and the accompanying financing is made available at the right time. Both Hong Kong and Singapore are trying to create Trade Finance registries that put them at an advantage as global trade hubs. Other countries are also looking at the problem to capture opportunities.

Stock exchanges are looking how to evolve again. Digital technology has transformed them fully, but with blockchain, they could go even a step further. Instant trustless hyper-efficient settlement seems to be a realistic goal. The exchange that develops and deploys this technology could stand to win a preeminent position in the global stock markets. The Australian Stock Exchange (ASX) is investing heavily in transforming itself, and other large exchanges like Nasdaq want to become the Blockchain guide for the rest of the smaller exchanges.

Cryptocurrency infrastructure has been built up quickly over the last 3-4 years. It has gone quickly from nothing to an infrastructure to support a close to 200 billion market in October 2017. This infrastructure includes exchanges (e.g. Coinbase, Kraken), wallets (e.g. Ledger, Jaxx) and many other value-add providers (e.g. Shapeshift). Not surprisingly many of these firms have used Blockchain extensively for their developments and is a great example of Digital Governance.

Smart contracts, digital corporations and forks

May 2016, that was the moment when the potential of Blockchain really dawned on me. I got to see one of the most amazing epics in which a whole new concept was created, its dangers shown brightly and a new word coined in less than two months.

I had already been looking at Blockchain for some months then, and Ethereum had really started to attract my attention. I suddenly learned about an organization that had managed to raise 150 million USD in Ethereum. That got my attention. I speak often with entrepreneurs and venture capitalists and know how difficult it is to raise money for a company or a fund for a venture capital company. Raising 150 millions in weeks was beyond remarkable.

My second shock was that the company was totally based on Smart Contracts. There were no people within it, it would work exclusively as an automatic organization run by code. Putting 150 million euro in a purely code-run organization seemed like an incredibly important and interesting experiment to me. The experiment was even called the DAO, Digital Autonomous Organization. A beautiful combination of ancient Chinese philosophy with a pure expression of what they were trying to do.

Many of my clients understood Blockchain and its implications through the DAO. You could build something completely trustless and endow it with the code that would run it. It might work or not as a profit-making enterprise, but it aimed for something much more important, it was a demonstration of the power of Ethereum.

Of course, it very quickly provided another incredibly important example: the dangers of programming organizations and bylaws. In Jun 2017, an unknown hacker identified a bug in the organization’s smart contracts that allowed to empty its coffers through a trivial procedure. It was a second-order consequence of some apparently unimportant lines of utility code. The renowned security and programming experts who had reviewed the code had missed it completely, but someone had found it.

As with many of Bitcoin’s stories it seemed out of a fairy tale. Say the magic words and the genie would give you all the gold. It was very real magic that quickly started to empty the DAO’s coffers to the chagrin of its creators. Now a great moment of decision came, you could just accept the flaws in the smart contracts as an unintended “feature” and let the attacker keep the 150 million. Alternatively, you could change Ethereum to prevent it.

Vitalik and some of the other leaders did just that and “forked” the Ethereum blockchain into two alternate realities. Reality A or “Ethereum Classic” (#12 – 1 billion) was a world in which the “feature” was kept and the attacker kept the 150 million. Reality B or “Ethereum” was a world in which the DAO contract was amended as if by magic and the theft never happened. The two paths were open for the Ethereum miners and community to choose. They could decide their own adventure and they did.

Approximately 95% of the community voted for Reality B and supported Vitalik and the rest of the leadership. Now Ethereum is valued between 200-300€ while Ethereum Classic is between 10 and 20€. We can say that reality is ~95% B and 5% A through the fork.

And so the DAO brought us a demonstration of smart contracts, the concept of a fully autonomous organization, an example of the dangers of bugs in smart contracts and the powerful concept of a fork.

Blockchain, Digital Governance, Español

Revolución Exponencial # 4 – Ejemplos Reales de Gobernanza Digital

blockchain techjuice

La mejor manera de ilustrar el poder de Revolución Exponencial # 4 – Gobernanza Digital es observar sus efectos en el mundo real.

Empezaremos con los ejemplos que ya son reales abarcando 4 áreas: criptomonedas privadas, ICOs, registros y mercados digitales, y contratos inteligentes, organizaciones autónomas y “forks”. El gran volumen de ejemplos hace que este post sea bastante largo , incluso aunque solo roza la superficie. Dejaremos especulaciones como criptomonedas públicas y leyes criptográficas para una publicación posterior.

Criptomonedas privadas. Un almacén de valor y mecanismo de intercambio descentralizado .

La Gobernanza Digital ha permitido una verdadera explosión de criptomonedas. Pasando de la nada a un valor de mercado de más de 150 billones de dólares (octubre de 2017) en menos de una década. Las criptomonedas usan la tecnología blockchain y la criptografía para crear dinero totalmente descentralizado que las personas intercambian electrónicamente. Las criptomonedas son las primeras monedas creadas de forma privada que logran una adopción masiva y podrían cambiar drásticamente cómo funciona el dinero.

Es importante comprender que, en su mayor parte, las criptomonedas son totalmente dependientes para su valoración de lo que las personas están dispuestas a pagar por ellas. Se basan en la ficción compartida de su uso como una reserva de valor. Si esta ficción compartida se evapora, irán a cero inmediatamente, ya que no tienen una fuente alternativa de valor. El oro se puede usar para procesos de joyería e industriales. Incluso las monedas de juegos virtuales como el oro de World of Warcraft se pueden usar para entretenimiento. Las criptomonedas son en su mayoría anotaciones en una base de datos sin valor más allá de lo que estamos dispuestos a pagar por ellas.

Ilustraremos las criptomonedas a través de varias historias. Primero, a través de Bitcoin, la piedra filosofal que desbloqueó el mundo del Blockchain. En segundo lugar, Ethereum, que amplió el concepto de Bitcoin a los contratos inteligentes y la computación descentralizada, y podría tener un valor más allá de su papel como moneda. En tercer lugar, exploraremos las cinco alternativas más importantes a Bitcoin que se centran en la función de “moneda”. Finalmente, cubriremos rápidamente varios tokens que van más allá de una reserva pura de valor.


Bitcoin (#1 ranking segun – capitalización 75 billones de euros 15/10/2017) es un cuento de hadas moderno. Tenemos una hechicera misteriosa, que crea riqueza fabulosa por arte de magia y luego desaparece y nunca más se vuelve a saber de ella. La génesis de la tecnología Blockchain y Bitcoin llegó en noviembre de 2008 cuando el whitepaper de Bitcoin fue publicado por Satoshi Nakamoto. Nadie sabe si Satoshi es una persona, un grupo de personas y cuál es el nombre real o la nacionalidad. En base al whitepaper se creó el primer nodo servidor Bitcoin en enero de 2009, al principio era principalmente Satoshi minando, con más de un millón de bitcoins extraídos en los primeros meses por el propio Satoshi. Satoshi luego desapareció, con el último correo electrónico en abril de 2011, pasando las riendas a Gavin Andresen en la Fundación Bitcoin.

En los primeros tiempos, Bitcoin era considerado un medio de intercambio y una de las transacciones de Bitcoin más famosas fue dos pizzas por 10.000 bitcoins en 2010. A octubre de 2017, el equivalente sería 25 millones de euros por pizza. En aquellos días, los precios de Bitcoin estaban en centimos, la paridad de bitcoins con el dólar fue noticia y la minería se podía hacer con ordernadores normales. Esos fueros los primeros días idílicos del bitcoin. Esos también fueron los días en que el único defecto de seguridad en Bitcoin fue expuesto y corregido rápidamente en agosto de 2010.

La primera fiebre del oro de Bitcoin se puede fechar desde la caida del precio a 2 USD en diciembre de 2011, el primer “crashde Bitcoin”, hasta el colapso de Mt.Gox en febrero de 2014. Aquí, Bitcoin comenzó a aparecer en las noticias con una pieza en CNBC y una aparición en la serie Good Wife. Sin embargo, todavía era bastante desconocido. La primera atención real de los medios surgió a través de su uso en Silk Road, el oscuro mercado ilegal de drogas y otros artículos, y el juicio publicitado de Ross Ulrich o Dread Pirate Roberts, el presunto capo del sitio. La vida de Silk Road de 2011 a octubre de 2013 coincidió casi exactamente con la primera fiebre del oro de Bitcoin, lo que confirma que los primeros casos de uso de muchas tecnologías son sólo parcialmente legales. Esta era también condujo a la minería industrial, con la aparición de los primeros ASIC dedicados en 2013 después de un breve uso de las GPU.

El resto de 2014, 2015 y 2016 aparentemente fue una época perdida para bitcoin, con el precio sin avanzar e incluso cayendo temporalmente a los pocos cientos. Sin embargo, fue sin duda una era de creación de infraestructura y acumulación de uso. La tecnología Blockchain comenzó a hacerse popular más allá de los círculos de hackers, y los bancos comenzaron a explorarla. Aparecieron Ethereum y otras criptomonedas. La minería se volvió realmente industrial. La comunidad analizó cómo aumentar los volúmenes de transacción a través de SegWit y bloques más grandes. Importantes servicios de infraestructura como Coinbase o Kraken ayudaron a popularizar el bitcoin en particular y las criptomonedas en general.

Esto llevó a 2017, que hasta ahora ha sido un año de explosión de precios y dominación de Bitcoin. Bitcoin ha ascendido a un precio de varios miles de dólares con expertos que predicen cotas aún más elevadas. Bitcoin se ha consolidado firmemente como un almacén de valor confiable en un mundo de riesgos cada vez mayores en torno a las monedas fiduciarias (euro-debilidad, recortes impositivos a Trump, etc.). Bitcoin también ha logrado sobrevivir a algunos eventos importantes: un fork que creó Bitcoin Cash o la prohibición de los intercambios de criptomonedas en China en septiembre. Además, se enfrenta a su mayor desafío técnico con la implementación de Segwit 2x en noviembre. Cada desafío lo ha fortalecido, ya que los adeptos de Bitcoin han visto que es resistente y seguro, al menos hasta ahora.

Bitcoin tiene algunas limitaciones severas que le impiden explotar todo el potencial de la tecnología blockchain y la Gobernanza Digital del dinero y la propiedad. Estas limitaciones han creado el resto de la innovación en criptomonedas que veremos. Primero, tiene muy poca flexibilidad. Esto ha llevado a Ethereum y el resto de la explosión cámbrica de ICOs. En segundo lugar, sus limitaciones como medio de pago (velocidad, tamaño de bloques, huella minera) han dado lugar a otras opciones mejoradas (e.g. Litecoin, Dash). Estas alternativas a Bitcoin parecen haberlo fortalecido en lugar de sustituirlo.


Mi primera exposición a Ethereum (#2 – 25 billion) fue a finales de 2015. Todavía estaba luchando para entender qué significaba Blockchain y si Bitcoin era útil más allá de comprar heroína de afganos en Silk Road. Me presentaron este concepto creado por un genio ruso que acababa de comenzar a funcionar a principios de ese año. Afirmaba expandir el potencial de blockchain mucho más allá de lo que Bitcoin podía hacer. Si Bitcoin era solo una reserva de valor, Ethereum era una computadora totalmente programable.

Comencé a profundizar e intenté leer y comprender más sobre esto. Esos fueron los días de “no se trata de Bitcoin, se trata de Blockchain”, así que traté de entender qué había detrás de la tecnología. Al ser ingeniero, me sorprendió que la tecnología básica no fuera muy complicada de entender. Ethereum, sin embargo, lo llevaba a un nivel completamente nuevo. Desde una base de datos hasta un sistema operativo y un lenguaje de programación.

Durante 2016 comenzamos a ver los primeros indicios del potencial de los contratos inteligentes. La DAO (Organización Autónoma Digital), la primera organización sin personas, solo un contrato inteligente, se creó en mayo de 2016, levantado más de $ 150 millones de dólares. Esto representó una serie de innovaciones que cubriremos más adelante.

A partir de ahí Ethereum continuó evolucionando, creando la explosión Cámbrica de ICO que discutiremos más adelante. Las ICO han sido la tercera aplicación clave de blockchain después de comprar drogas y almacenar valor. Con esta aplicación clave, Ethereum se convirtió en la infraestructura para la mayoría de las criptomonedas cementando un lugar en el ecosistema solo por detrás de Bitcoin.

Para mí, Ethereum también tiene un significado muy personal. Ethereum es la primera criptomoneda que compré. Todavía estaba en el rango de 10-20 € cuando comencé y viví los altibajos hasta alcanzar el rango de 200-300 € donde está mientras escribo. ¡Todavía estoy golpeando la cabeza contra la pared por no moverme más rápido!

Ethereum todavía está evolucionando rápidamente, con una nueva actualización importante que requiere un fork desplegándose mientras escribo estas palabras (menos de 2000 bloques para bizantium). Ya se verá si Ethereum se convertirá en la computadora distribuida de blockchain preferida igual que Bitcoin ha logrado con la función de almacenar valor. La funcionalidad será mucho más importante, y otras alternativas están tratando de superarlo rápidamente. Sin embargo, pase lo que pase, la creación de Vitalik sin duda ha llevado a Blockchain y la Gobernanza Digital al siguiente nivel y merece una página en su historia.

Almacenes de valor mejorados: Litecoin, Ripple, Bitcoin cash, Dash, Monero

El éxito de Bitcoin y sus limitaciones en términos de velocidad de transacción y costo han llevado a la creación de una gran cantidad de otras criptomonedas que se centran en ser un equivalente a Bitcoin que es eficiente en las transacciones. Muchas personas llaman a estos la plata en comparación con el oro de Bitcoin, pero sus creadores están convencidos de que se puede crear mucho valor a través de la plata.

Las cinco alternativas principales, que se encuentran entre las 10 principales del mercado a partir de octubre de 2017, se comercializan como Bitcoin +, cada una con un enfoque particular:

Litecoin (# 5 – 3 billones) es el más sencillo. Tiene un tiempo de bloque más rápido que Bitcoin y un algoritmo de minería más exigente en memoria que en computación (lo que lleva a una minería más distribuida). También se mueve más rápido adoptando mejoras y tiende a ser el terreno de prueba para las mejoras de Bitcoin como SegWit.

Ripple (#3 – 8 billones, aunque se disputa ya que el porcentaje distribuido es relativamente pequeño) es totalmente diferente, pero se posiciona como un medio de intercambio. Ripple apunta a hacerse cargo de las transferencias internacionales y tiene varios bancos que trabajan con él para hacerlo.

Bitcoin Cash (# 4 – 4 billones) es el resultado del fork de Bitcoin en agosto. Permitiendo un ajuste más grande de bloques (8MB vs. 1MB) y más rápido.

Dash (# 6- 2 billones) también es más rápido que Bitcoin (tiempo de bloqueo de 2,5 minutos vs. 10 minutos) y se centra en ser más fácil de usar (direcciones legibles para el ser humano, anonimato, instasend). También tiene un proceso de gobierno formal que debería permitirle decidir y financiar su evolución mucho más rápido que Bitcoin.

Monero (# 8 – 1 billón) se centra principalmente en una mayor privacidad para los usuarios, lo que les permite mantener ocultos los saldos de sus cuentas. También tiene mejoras similares a las otras tiendas de valor que hemos visto: un mejor algoritmo de minería, tamaños de bloque más grandes y adaptativos, transacciones más rápidas.

Estos cinco son solo los más grandes, pero hay muchos más como zcash, centrados en el anonimato, y seguramente vendrán muchos más. Si alguno puede sustituir a Bitcoin o erosionar significativamente su posición, solo el tiempo puede decirlo.

La explosión del Cámbrica de tokens

Ethereum y el token ERC20 estándar, que revisaremos más adelante, crearon una forma fácil de crear una criptomoneda para cualquier cosa. El dinero abundante en el espacio de criptomonedas creado por la multiplicación de precios 2017 de Bitcoin y Ethereum estaba disponible para financiarlo. Los cripto-entusiastas se lanzaron a una verdadera explosión cámbrica de tokens (un token se usa generalmente para describir una criptomoneda que tiene una función más allá del puro almacenamiento de valor o intercambio).

Probablemente terminaremos 2017 con más de 1000 criptomonedas. Entre ellos tenemos mucha variedad. Existen los almacenes de valor (Bitcoins+), los intentos de crear mejores Ethereums (por ejemplo, Cosmos, Neo – # 9-1 billón), incluso existen lo que podrían ser esquemas Ponzi (p. Ej., Bitconnect – # 10-1 billón pero solo comerciables en su intercambio propietario), pero en su mayor parte, tenemos tokens que intentan resolver diferentes desafíos de descentralización.

Estos tokens incluyen lo ridículo y lo probablemente fraudulento, pero en su mayor parte, son intentos honestos de resolver problemas del mundo real. Rápidamente cubriremos 5 ejemplos tomados de los más valiosos y los más interesantes:

IOTA (# 11 – 1 billón) es uno de los más valiosos e interesantes, se centra en crear una infraestructura de transacción de muy bajo costo para Internet of Things, donde billones o trillones de dispositivos interactuarán con baja potencia e interacciones de extremadamente bajo valor para construir la Realidad Integrada.

NEM (# 7-2 billones) se centra en la propiedad y tiene características tales como espacios de nombres legibles para los humanos similares a los de Internet y “mosaicos” que representan propiedades y se pueden distribuir.

Omisego (# 14-600 millones) intenta alterar y sustituir a las instituciones financieras al crear un token que se puede usar para descentralizar las transacciones financieras.

Storcoin J (no entre los 100 primeros) es un intento muy interesante de descentralizar el almacenamiento de información. La creación de un token que se negocia y al mismo tiempo se utiliza como método de pago y recompensa para el almacenamiento de información a largo plazo.

Basic Attention Token (# 41 – 100 millones) es otro token fascinante, en este caso por el creador de Mozilla. Intenta recompensar a los productores de contenido cuando reciben la atención de los usuarios. Permitir ir más allá de la publicidad y busca crear una verdadera economía de atención.

Literalmente hay cientos de tokens, muchos de los cuales son inteligentes intentos de usar la Gobernanza Digital para transformar algunos de los problemas más intratables del mundo. Si la historia es una guía, esta explosión cámbrica conducirá a muchos callejones sin salida, pero también a muchas innovaciones asombrosas y que cambiarán el mundo.


Ofertas iniciales de monedas (ICOs): la magia detrás de la explosión del Cámbrico

A fines de 2015, solo meses después de su creación, Ethereum incorporó de manera informal el estándar ERC20. Un estándar para crear y vender fácilmente tokens o monedas sobre la cadena de bloques Ethereum. Esto desató las ofertas iniciales de monedas o ICOs. Las ICO se han convertido en la aplicación clavede Ethereum y han alimentado la mayor parte de su crecimiento. Sorprendentemente, el estándar ERC20 no se adoptó formalmente como una Propuesta de Mejora de Ethereum (EIP) hasta septiembre de 2017, y Ether, la moneda Ethereum, ni siquiera cumple con el estándar ERC20.

Una oferta inicial de monedas es en esencia un concepto muy simple. Una organización crea un suministro de una nueva criptomoneda basada en un algoritmo dado y vende parte de ellas al público. No está vendiendo una participación en la organización, sino que está vendiendo parte del ecosistema. Cómo hacer esto (por ejemplo, fundaciones basadas en Zug) y cómo estructurar las propias monedas (los famosos whitepapers) es mucho más complejo.

El auge de las ICOs basadas en ERC20 de 2017 ha sido solamente comparable a las manías más intensas de todos los tiempos, como Internet Boom o la Tulip Mania en Holanda del siglo XVII. Aproximadamente 200 ICO recaudaron cerca de 3 mil millones de dólares hasta octubre de 2017, superando el monto recaudado por Blockchain por Venture Capital.

La recaudación de capital ha sido alimentada por un mercado alcista increíble para Ethereum y Bitcoin que ha creado muchos millonarios instantáneos que están dispuestos a reinvertir parte de sus ganancias. Este dinero fácil significa que los criterios de inversión son bastante relajados en comparación con los inversores profesionales. Un par de chavales con un whitepaper (el equivalente al powerpoint del Internet Boom ) han podido levantar decenas o incluso cientos de millones de dólares sin un producto real o tracción en el mercado. La regulación también se ha quedado muy por detrás de las ICO, lo que las hace mucho más simples que las IPO y permite arbitraje regulatorio.

Podemos esperar que muchas de las empresas que han recaudado dinero de esta manera se estrellen espectacularmente, como lo hicieron en Internet Boom. Sin embargo, cuando la paja se separe del grano, podemos esperar que algunos de ellos sean los titanes de la economía de Blockchain, al igual que Google, Salesforce y Amazon emergieron de las cenizas del crash puntocom.

También hemos sido testigos de una forma completamente nueva de recaudar dinero. Una increíble democratización en el acceso y la simplificación en el proceso. Además de la oportunidad de considerar una forma completamente nueva de integrar clientes y ecosistemas en el proceso de levantar fondos. Las ICO han venido a quedarse, a pesar de que la laxitud actual (regulatoria y de criterios inversores) desaparecerá.

He estado involucrado con varias compañías considerando las ICO, tanto compañías en las que invierto u otras que aconsejo. Me sorprendieron tres diferencias principales en comparación con el proceso tradicional de levantar capital:

Primero, la cantidad de dinero disponible es asombrosa por lo que es mucho más fácil obtener más capital rápidamente. Si esto continúa, realmente impulsará significativamente el ecosistema emprendedor y meterá presión a los VC, ya que se basan en la escasez de capital.

En segundo lugar, las incertidumbres regulatorias y legales siguen siendo muy importantes. Hay escasos precedentes y la SEC y otras agencias aún están comenzando a intervenir. También vemos que algunas jurisdicciones, como Zug en Suiza, invierten fuertemente para convertirse en el “Global Delaware” de las ICO.

Tercero, las ICO permiten un tipo de aumento de capital mucho más matizado y complejo. En lugar de vender la propiedad de la empresa, está vendiendo participaciones en el ecosistema. Dependiendo de cómo estructure esas participaciones y el ecosistema que cree, podría arrancar un modelo de negocio que sería difícil de crear desde una organización tradicional.

Estén atentos a las ICO ya que serán parte del futuro.


Registros y mercados digitales

He visto a las empresas y al sector público reaccionar e internalizar la revolución de la Gobernanza Digital en los últimos tres años. Suele comenzar con incredulidad: “No me hables de esto, solo es útil para comprar drogas y crear esquemas Ponzi”. Luego pasas a “Ayúdanos a entenderlo y ver si hay algo útil”. Finalmente, rápidamente terminas en “Necesito entrar en acción, ¿qué debo hacer de inmediato?”.

He visto esta evolución con grandes bancos, otras corporaciones y estados. La principal diferencia ha sido la velocidad de ir a través de ellos e incorporar a la organización personas con verdadera experiencia y foco. Hay algunos que adoptan rápido tanto en el gobierno como en la empresa, pero incluso los demás comienzan a moverse más rápido.

La creación de instituciones u organizaciones centrales que aprovechan Blockchain para algunos problemas específicos donde la confianza es importante tienden a ser algunos de los primeros casos de uso que gravitan los gobiernos y las empresas. Resuelven una necesidad que tienen hoy y que las tecnologías y formas de pensar tradicionales no están equipados para resolver. En todo el mundo, vemos cuatro casos de uso que parecen ser muy adecuados para la gobernanza digital: registros de propiedad, registros de KYC, registros para trade finance y bolsas. También abordaremos brevemente la infraestructura de la criptomonedas, que representa un conjunto completamente nuevo de instituciones que han emergido y son “blockchain-native”.

Los registros de la propiedad son algunas de las instituciones humanas más antiguas e importantes. Después de todo, según Savils, Real Estate representa más de 200 billones de USD en valor total y más del 60% de los activos principales. También son algunos de los menos evolucionados y están más expuestos a la corrupción, ya que siguen siendo similares a los primeros ejemplos mesopotámicos. La gobernanza digital permite que los registros evolucionen hacia un modelo digital, descentralizado y sin necesidad de confianza. Esto amenaza la infraestructura actual  al tiempo que promete un tejido increíblemente más eficiente y confiable para nuestras transacciones inmobiliarias. Ya hay pilotos en al menos Illinois, Costa Rica, Georgia y Suecia. Una buena combinación de mercados desarrollados y en desarrollo.

Los registros de KYC o Know Your Customer son una parte desconocida pero extremadamente importante de la infraestructura financiera global y bancaria. Permiten verificar quiénes son los clientes de instituciones financieras para evitar el lavado de dinero, la evasión de impuestos y el terrorismo. En este momento, cada empresa financiera lo hace de forma independiente con un gran costo y dolor para los usuarios. El potencial de hacerlo conjuntamente con la tecnología de Blockchain es muy obvio, lo que llevará a usuarios, gobiernos y empresas con mejores resultados. Está siendo pilotado en la mayoría de los países por consorcios o por gobiernos.

Los registros de Financiación del Comercio resolverían uno de los problemas centrales del comercio mundial. Importar o exportar actualmente requiere un laberinto de documentación y verificaciones en los lados del emisor y del receptor para garantizar que los bienes se envíen realmente y que la financiación que lo acompaña esté disponible en el momento adecuado. Tanto Hong Kong como Singapur están tratando de crear registros de Trade Finance que los sitúen en una ventaja como centros de importanción y exportación globales. Otros países también están analizando el problema para capturar oportunidades.

Las bolsas de valores están buscando cómo evolucionar una vez más. La tecnología digital los ha transformado completamente, pero con blockchain, podrían ir incluso un paso más allá. El cierre de transacciones instantáneo y sin necesidad de confianza parece ser un objetivo realista. La bolsa que desarrolle e implemente esta tecnología podría ganar una posición preeminente en los mercados bursátiles mundiales. La Bolsa de Valores de Australia (ASX) está invirtiendo fuertemente en la transformación y otras grandes bolsas como Nasdaq quieren convertirse en el guía de Blockchain para el resto de las bolsas más pequeñas.

La infraestructura de la criptomoneda se ha construido rápidamente en los últimos 3-4 años. Ha pasado rápidamente de la nada a una infraestructura para soportar un mercado cercano a los 200 billones en octubre de 2017. Esta infraestructura incluye exchanges (por ejemplo, Coinbase, Kraken), carteras (por ejemplo, Ledger, Jaxx) y muchos otros proveedores de valor añadido (por ejemplo, Shapeshift) . No sorprende que muchas de estas firmas hayan utilizado Blockchain extensivamente para sus desarrollos y es un gran ejemplo de Gobernanza Digital.

Contratos inteligentes, corporaciones digitales y forks

Mayo de 2016, ese fue el momento en que realmente vi el potencial de Blockchain. Pude ser testigo de excepción de una de las epopeyas más sorprendentes en la que se creó un concepto completamente nuevo, cuyos peligros se mostraron espectacularmente y se acuño una nueva palabra. Todo en menos de dos meses.

Ya había estado mirando Blockchain durante algunos meses, y Ethereum realmente había comenzado a llamar mi atención. De repente me enteré de una organización que había logrado levantar 150 millones de dólares en Ethereum. Eso me llamó la atención. Hablo a menudo con empresarios y venture capitals y sé lo difícil que es recaudar dinero para una empresa o un fondo. Recaudar 150 millones en semanas era más que notable.

Mi segundo shock fue que la compañía se basaba totalmente en Smart Contracts. No había personas en ella, funcionaría exclusivamente como una organización automática administrada por código. Poner 150 millones de euros en una organización puramente codificada me pareció un experimento increíblemente importante e interesante. El experimento también se llamaba el DAO, Digital Autonomous Organization. Una hermosa combinación de la antigua filosofía china con una expresión pura de lo que estaban tratando de hacer.

Muchos de mis clientes entendieron Blockchain y sus implicaciones a través del DAO. Podrías construir algo completamente confiable y dotarlo con el código que lo ejecutaría. Podría funcionar o no como una forma de ganar dinero, pero apuntaba a algo mucho más importante, era una demostración del poder de Ethereum.

Por supuesto, rápidamente proporcionó otro ejemplo increíblemente importante: los peligros de las organizaciones autonomas basadas en el código. En junio de 2017, un hacker desconocido identificó un error en los contratos inteligentes de la organización que permitieron vaciar sus arcas mediante un procedimiento trivial. Era una consecuencia de segundo orden de algunas líneas de código aparentemente sin importancia. Los reconocidos expertos en seguridad y programación que habían revisado el código no lo habían visto, pero alguien lo había encontrado.

Al igual que con muchas de las historias de Bitcoin, parecía un cuento de hadas. Di las palabras mágicas y el genio te daría todo el oro. Fue una magia muy real que rápidamente comenzó a vaciar las arcas de la DAO para disgusto de sus creadores. Ahora llegó una gran decisión, se podía aceptar los defectos en los contratos inteligentes como una “característica” no intencionada y dejar que el atacante se quedara los 150 millones. Alternativamente, se podía cambiar Ethereum para evitarlo.

Vitalik y algunos de los otros líderes hicieron exactamente eso y “bifurcaron” la cadena de bloques de Ethereum en dos realidades alternativas. La realidad A o “Ethereum Classic” (# 12 – 1 billón) fue un mundo en el que se mantuvo la “característica” y el atacante se quedó con los 150 millones (en Ethereum Classic). La realidad B o “Ethereum” era un mundo en el cual el contrato DAO fue modificado por arte de magia y el robo nunca sucedió. Los dos caminos estaban abiertos para los mineros y la comunidad de Ethereum para elegir.

Podían decidir su propia aventura y lo hicieron. Aproximadamente el 95% de la comunidad votó por la Realidad B y apoyó a Vitalik y al resto del liderazgo. Ahora Ethereum está valorado entre 200-300 € mientras que Ethereum Classic está entre 10 y 20 €. Podemos decir que la realidad es ~ 95% B y 5% A a través del “fork” o bifurcación.

Así el DAO nos enseño en la práctica los contratos inteligentes, el concepto de una organización completamente autónoma, un ejemplo de los peligros de los errores en los contratos inteligentes y el tremendo concepto de un “fork” o bifurcación.


Blockchain, Tech and Business

Exponential Technological Revolution #4: Digital Governance

blockchain techjuice
IMG: Techjuice

This post is part of the 6 paradigms shifts beyond digital series.


(En Español aquí)

With Digital Governance we move into 4 to 6, paradigm shifts that will impact our values and sense of meaning. Digital Governance means making trust digital. It substitutes human based adjudication and decision making, with a digital decision and adjudication system that implements laws and contracts in code. This means substituting our shared fiction of law and property with an actual implementation that will enforce it directly.

Some of the most wildly successful creations of the human mind have been surprisingly ethereal. Laws (Hammurabi Code 1754 BC), money (Lydian Lion 600BC), contracts (first stock company 1602AD). They are “shared fictions” that give incredible cooperating power to large groups if they are believed and enforced. They are fictions because their enforcement mechanisms are not tied to the physical world, but rather dependent on the shared belief on them. If people stop following a code of laws, lose faith in a joint stock company or stop believing in a given currency its magical potency banishes. Digital governance holds the promise to turn these shared fictions into digital realities which will enforce themselves, boosting belief and ensuring compliance.

Digital Governance has its roots in Digital technology and Intelligent Processes. Beyond that, Digital Governance builds on two critical technologies that give it its power. First, cybersecurity and cryptography which are two disciplines that are at the heart of how digital governance can be achieved. We need a wholly different level of security and reliability to transfer our governance to the digital realm. Second, is Blockchain or Distributed Ledger Technology (DLT). Blockchain Technology is a new way to store data and code that, through cryptography, allows decentralized and tamper-proof storage of information and execution of instructions. There are many different implementations of Blockchain technology, Bitcoin and Ethereum are the most well known. However, the relevant thing is how Blockchain technology allows solving effectively the problem of digital collaboration and information sharing even in a totally distributed scenario without trust between participants. We can expect Digital Governance to evolve to leverage Integrated Reality heavily, as it needs to implement its decisions in the real world.

Digital governance will allow us to fully digitize and automate our money, our institutions and our laws and contracts. This means that we will enter into contracts or enact laws that are defined by specific code, against a decentralized shared registry of assets, money or other information. This contracts or laws will be automatically checked and executed without the need of human intervention, and without the possibility of favoritism, corruption or adjustment to common sense. We can expect this to change money, property and contracts and finally laws and institutions.

Money will change because digital governance will allow the issuance of “gold standard” money which is algorithmically bound to obey certain rules. Throughout history, money has been limited by the trust its creators could generate. Will the US Federal Reserve stick to the gold standard? Algorithmic trust will ensure that issuers have to execute what they commit to. Increasing trust by reducing flexibility, and widening the number of potential issuers once this trust bottleneck is handled.

Contracts and property will change because they are based on the legal system of countries. These legal systems are complex and difficult to enforce. Legal texts also allow different interpretations while “coding a contract” forces to chose a specific interpretation, even if it can have unintended consequences. So-called smart contracts will allow completely predictable contracting arrangements that are independent of legal codes in specific countries and their enforcement systems.

Institutions will be built to deal with the new trustless property, contracts, and money. Institutions can become platforms for smart contracts, money issuance, smart property registries and more, that have substantially more trustworthy and predictable outcomes. This new Digital Governance institutions will be trusted because of their code and might be independent of nation states and even private.

Finally, laws and regulations themselves can become digital. Laws and regulations are notoriously complex and only getting more so. The capability of analog institutions like legislators, legal systems, and enforcement agencies to deal with this complexity is more and more in question. Transforming the legal system to digital governance would allow instantaneous adjudication and complete clarity for all citizens and actors. At the same time, the great risk is that digital governance can have “bugs” that can be exploited with no common sense being able to rein them in. So we can expect to have a human final court of adjudication to deal with this for a long time.

Once these changes are underway, we can expect Digital Governance to fundamentally reshape a number of industries. Financial Services and Insurance will be redefined along with money, contracts, and property. Wholesalers might see their roles significantly streamlined, as trust can be extended to unknown parties. The public sector will be transformed. This might take its time as the public sector can sometimes set its own pace of change, but combined with Intelligent Processes we can expect a radical reduction in the number of government workers dedicated to information processing and compliance. Lawyers will see their jobs change, programming lawyers will come at a premium, and they might be more needed than ever but in a completely different role.

There are at least eight use cases that we are seeing today which will already reshape our world:

  • Private cryptocurrencies offer a decentralized and pre-determined store of value and interchange mechanism.
  • Public cryptocurrencies are cryptocurrencies offered by national banks choosing to issue legal tender with a blockchain infrastructure backing.
  • Initial Coin Offerings are a new token-based funding mechanism for companies and organizations
  • Smart contracts and digital corporations represent perfectly defined and self-enforceable contracts and institutions.
  • Digital registries and markets create autonomous and reliable trusted institutions, both public and private.
  • Digital ownership and access allow taking the middle-person out of marketplaces.
  • Digital Law could be the greatest legislative step forward since the Code of Hammurabi.
  • Digital Government could bring democracy to the digital age and make it competitive in terms of speed and results.