integrated reality, Tech and Business

Exponential Technology Revolution #3 – Integrated Reality Facts

The best way to illustrate the power of Exponential Technology Revolution #3 – Integrated Reality is to look at its real-world effects.

We will start with the examples that are already real and “in the wild”, covering 5 areas: digitized physical shops, smart cities, smart vehicles, robots and voice interfaces.

Digitized physical shopsGoogle Analytics for shops.

Shopping technology has had an incredible step forward in the last five years. If a store hasn’t changed over this period it is missing a big part of the value that IoT can bring to it. Mostly what has happened is a sensorization of the stores. Stores used to be knowable only through the sales associates, but now we can make them sense and see customers.

Sensing customers is done mostly through Wifi or Bluetooth to track the phones that enter and exit the stores, or through “person counters” which allow seeing how many individuals go through a storefront or get into a particular part of the stores. What sensing allows is to draw the funnel of where customers are and have been in a store and what movements they make. There are countless vendors of these type of technologies. They can also use WiFi information to try to identify the person. Gigya, a leading omnichannel identity management provider was recently purchased by SAP for 350 million USD.

Seeing customers is about cameras and artificial intelligence capabilities to analyze customers. You can look at customers who enter and understand demographics and sentiment. It is like having a smart associate following all your customers and seeing what they are up to. The technology is relatively straightforward so hundreds of companies are vying for position in this new area.

Of course, a concrete and impressive implementation of all this is the Amazon Go store.It tracks where you are and who you are through a “log in” at the entrance of the store and cameras. Those same cameras along with RFID tags allow knowing what you have bought and taken and charge it to you as you go out. The use case that was most obvious from the demonstration video was customer convenience, but as always Amazon also has an incredible amount of information that it can derive for customers in its store. It can be even more than the equivalent in the web.

Retail spaces are being transformed into the first digitized physical spaces. They will show us the potential of what can be done as the technology plummets in terms of cost and the skills to design this type of environments are developed at scale.

Smart cities.

Smart cities have been a buzzword for a long time already. They also represent an increasingly large investment category for governments. After all, cities are where most of the world lives and almost all of the economic activity happens. Improving cities has great return and a lot of possibilities.

At the same time, the hype hasn’t lived up to the promise. Smart cities were going to change how we lived very quickly, but for the most part, cities continue to be very much what they have been for the last five decades. This is to be expected. Change in the public sector takes even longer than in the private sector. A city, being one of the most complex entities in existence and marrying public and private, can be expected to take even longer to change.

Now, we are starting to see the first fruits of smart cities deployed in the real world and changing how we live. As usual, when those changes happen they become commonplace and stop being called smart cities anymore, but they represent substantial improvements.

There are many cities in the world vying for the title of the world’s smartest city. Santander in Spain has invested for a long time. Tempe in Finland is trying to leverage the Finnish technological legacy. As always there is a ranking for that, and the IESE ranking has many of the usual suspects at the top: New York, Berlin, San Francisco, Tokio. What is important is not the smartest city, but rather the smart things that seem to make sense for everyone and bring Integrated Reality to the fore. There are four of those very basic but smart things that seem to make sense for most cities.

Lighting. Smart lighting means LED lights and digitally controlled lighting times for the city. This might seem small potatoes but there are more than 300 million streetlampsin the world according to some estimates and they represent an important part of energy consumption and greenhouse gases for cities. Sydney has managed to reduce its energy bill by more than 30% since 2012 thanks to smart lighting, and there are many other examples across the world.

Parking. Parking is one of the most human time-wasting activities in the world. Drivers spend anywhere from 17 hours to 4 days a year looking for parking depending on the study. This is an incredible amount of wasted time. Parking sensors and displays can help drivers find parking quicker and avoid taking the car if the parking situation is too bad. The city of Santander, for example, has sensorized its parking spots in the city centers to do just that. It is also a great way to boost revenue, with smart parking companies claiming between 20 and 30% revenue uplift.

Garbage. Garbage collection is one of the most unglamorous but important tasks in a modern city. The impact of integrated reality in garbage collection covers the whole process. In waste collection, smart garbage dumps allow for collection on demand and trash type inspection. Cities like Seoul had to turn to this after even daily collection became insufficient. In waste processing, the highly intensively and back-breaking manual labor required for trash sorting is being substituted by robots which can handle trash sorting for recycling automatically and 24×7 and don’t require waste separation at origin.

Traffic. Life has changed significantly for all of us, but as usual, we take it for granted. I still remember the nerve-wracking choosing and planning you had to undergo to get to the Madrid historic city center by car in the Christmas period. You could take anywhere from 30 minutes to 3 hours to get in, the wrong choice in terms of route could easily add one hour. I first heard of Waze six years ago, when it was still an upstart. I got to meet the CEO in 2016 when they already had sold to Google. This simple application has made Google Maps smarter and allows us to know through digital how the physical reality is. Do you really want to take the car if Google predicts it will take longer than public transit? Probably not.

Cities will continue to get smarter by integrating reality more and more. We will slowly get to the point at which the physical city will have a virtual overlay that will allow optimizing its every function. This might seem only a developed world thing, but as cost drops through Moore’s law we will see “smart-first” cities in the developed world which will leapfrog into a completely new way of doing things. The smartest city in the world might be in Africa soon enough.

3D Printing. Turning digital into reality.

Everyone who is old enough will probably remember the magic of the first home printers. You could create something in the computer and then have this wonderful machine put it on paper. Now it seems commonplace and has lost its magic, but at that point in time, it was amazing.

3D Printing is an old technology, with its initial patents and industrial success in the 1980s, however, it is still in the amazing and clunky phase for the most part. You can design a 3D model, scan one using a phone and some software or a 3D scanner, or just get it from one a site from Thingiverse, and then make it real. You will make it real in orange plastic, and it won’t look very polished, but still, it is incredibly cool. Suddenly your computer and reality are connected in a very real sense.

Consumer 3D printers are getting cheaper and better all the time, Now there is a host of companies in the market and you can get one from $199 to $2.500. Quality and speed are getting better but they are far away from the dream of “build everything at home”. There might be times when they can be useful, like building some gear for your Halloween costume, but for the most part, they are a curiosity.

The real deal in 3D printing is in industrial settings. Here the longer history of 3D printing and the availability of higher quality models is taking some use cases by storm. It is still not the manufacturing use cases, as plastic injection molding is difficult to beat for anything at scale. It is mundane uses like spare parts, which you need in unit batches and where a lot of the cost is currently in inventory. Consumer-focused uses like personalization, where a small bit of 3D printing on top of a traditional industrial fabrication process can go a long way. Or really transformative cases like AI-based generative design for high tech (e.g. GE turbines, Boeing airplane frames) that is then 3D printed because it is too complex for industrial fabrication.

The current 3D printing craze will pass, but the technology will get better over time. More and more use cases will become economic, with traditional methods being economic at higher and higher volumes. Eventually, we will end in the paper printing scenario, in which only extremely high volume runs make sense with an industrial printing setting any more.

Physical robots. Embodied Intelligent Processes.

The robots are coming. Up to now most of the robots have been virtual robots, that have automated the tasks we call routine cognitive (e.g. data processing) and are little by little encroaching on non-routine cognitive through robotic process automation and cognitive. These robots are in computers and servers, and they are not exciting to see. However, there is a whole new wave of robots coming for the routine physical jobs that are a lot more like Star Wars characters.

Industrial robots have been with us for a long time, and many of the highest productivity countries and companies use them intensively. The automotive industry is a poster child of robotization of the assembly line. The most advanced countries like Korea, already have more than 800 industrial robots per 10.000 workers according to the International Robotics Federation. This is continuing and high profile M&A like China’s Midea acquisition of Germany’s Kuka shows it is still an area of rapid development and international high strategy.

However, the wave that is coming is taking robots beyond extremely high volume industrial processes. We can expect robots in many more mundane environments. We have the robotic waste sorters of the Smart City section. We have drones, that are well suited for both small weight delivery and sensing from above. We have Zume, the automated pizza restaurant on wheels. We have the 100% automated sushi restaurants in Japan. The retail robots that greet customers, show the merchandise and even do inventory counts in Lowe’s in the US and in the Softbank stores in Japan.

Advances in machine intelligence are making locomotion, sensing and physical interaction a lot more mundane. Talking to the CEO of the robot company that is helping Lowe’s he was telling me that the big change is speed and safety. Before you had to have an industrial robot in a cage, now it can interact with humans. Before sensing took too long for real-time, now it is quickly approaching workable real time for most applications.

There is no end to the variety of tasks that could be automated in this way, even without rethinking form factors and ways of doing current tasks. The important stuff from the Integrated Reality perspective is that all those robots will have virtual twins that are constantly controlled digitally. And the physical robots will be able to sense and act in the physical world, digitizing the physical environment.

Smart vehiclesI need you, Kit.

Getting into a Tesla might not look like integrated reality at first but it is extremely cool. The first times I got into one what really made me excited was the big tablet in the dashboard. That might look like the integrated reality in the Tesla, but when you talk to Tesla owners it is just the tip of the iceberg.

A Tesla is continuously reporting back to Tesla Motors almost everything. Its performance, health, location, issues, etc… Effectively Tesla Motors is always seeing the virtual Tesla which is the digital twin of the physical one. This has tremendous implications in terms of design and optimization. Tesla can see and report any problems developing, solving the problem for you and solving the problem forever in the design. It also has great safety features. If you have an accident you will get help as quickly as possible. If your physical car is stolen, its digital twin will know where it is. Finally, the Tesla is a computer, you can update it over the air and get a progressively smarter car each day.

While Tesla is the most flashy in terms of these improvements the rest of the industry is following quickly. Almost all cars will come with this functionality sooner rather than later. Adding more futuristic capabilities like cars that are able to rent themselves out while not in use or go get you with autonomous driving don’t seem to be too far out.

Voice interfaces. Alexa, I want to talk with Cortana and Siri.

Voice interfaces are booming and they probably deserve a book or at least an article to themselves. Voice could be a new interface that supersedes point and click, and even touch for a lot of use cases. The number of voice devices and applications is staggering. More than 20 million voice devices expected in 2017, and more than 10 shipped in 2015 and 2016. Applications are already in the tens of thousands.

However, the jury is still out with regard to real usage. My personal experience with Alexa and Google shows to music as the killer application. And apparently few of the other applications are gaining traction. Habit dies hard, and even small failures in performance (e.g. my device understands me two out of three times) can hamper adoption and addiction. Touchscreens also took time to adopt, and it was a very small step from point and click.

Voice is very relevant for Integrated Reality because it marries physical reality and the digital world. Speech is a very natural human art, a key part of human-physical interaction. When you touch a smartphone you take yourself outside the physical world. Talking could integrate digital in our daily physical reality more than any number of touchscreens can. Voice is also the language of magic, we have always fantasized about magic spells that change the world. Now it can start to happen.

The final important point of voice interfaces is their sensor nature. Like with the Amazon Now store, Alexa is really a data play. My Alexa and my Google are listening to every conversation (except when my youngest son disconnects them, which is quite often) and gather a huge corpus of data to analyze. The amount of client knowledge is really amazing and frightening. The corpus for machine learning of voice processing is also enormous. Voice biometrics can be relatively secure, especially when the text is dynamic making it difficult to synthesize a false positive. This could also add another layer of security to our reality.

With voice working as an interface, we would only need to create workable gestural interfaces to have full digital immersion in our physical reality. With all our devices being able to understand and obey us. We are only in the initial stages of voice and gesture. They might take their time to catch on, but the only real risk of them not being relevant is if we leapfrog them through mind-machine interfaces or virtual/augmented reality that we will see in Integrated Reality speculations.

integrated reality, Tech and Business

Exponential Technology Revolution #3 – Integrated Reality

(En español aquí)

Integrated reality is the marrying of the physical and the digital and making our interaction with it totally transparent. With the physical being fully measurable and programmable like digital is right now. And, with the digital being instantiated physically or through lifelike virtual worlds in which interaction is complete. Integrated reality also includes moving intelligent processes to the physical world through robots, sensors, and actuators, managing to substitute much human routine physical labor in the process.

Integrated reality has a wide number of technologies impacting it. First, it is based on the foundation of Intelligent Processes, Digital and AI. On top of that virtual reality and enhanced reality technologies are key, to be able to physicalize the digital and integrate digital and physical. Internet of Things and 5G networks, with connected sensors and actuators of all shapes and sizes, is a key enabling technology which “digitalizes” physical reality to any accuracy we are willing to invest in. Voice and mind interfaces will remove the filter that the keyboard, screen or mouse puts to our interaction. Finally, physical robots in the sense of integrated physical entities with sensing, actuation, and machine learning capabilities will be the avatars of software processes in the physical world.

We will perceive integrated reality as a fundamental change to our lives, as it will touch our day to day environment and even our concept of reality. Integrated reality will change the way the world works for us, and many of the things it enables will seem like magic. We will speak words or think thoughts and this will translate into actions and changes both in the digital and the physical world. The physical world will also reflect the digital world in a way that was impossible until now.

As the digital and the physical become integrated we will be able to do what we do in the digital world in the physical world. First, we will be able to measure and quantify reality constantly and effortlessly with increasing granularity, like we do with digital systems. Second, we will be able to act on the world in a software-based world leveraging automation, code and machine intelligence. Third, we will be able to integrate the physical and the digital, and even the physical from several locations. We will be able to create digital settings based on physical ones or add a digital layer to physical settings in enhanced reality.

A good way to understand the impact of ubiquitous measurement is the “Google Analytics for shops” metaphor. With integrated reality, we could be able to measure anything that happens in a store. Who comes in, what aisles are visited, which items are browsed or considered, total funnel clarity up to which point did each item get to and where did it fall in the funnel. Beyond the shop scenario, you can think innumerable others, a hairdresser, a factory, an electrical grid with damage and repairs, etc.. The possibilities in each case are endless. Having that amount of information about physical reality would probably lead to a similar impact to that of big data over the digital world.

Acting on the physical world is equally transformative. It means that we will be effectively able to “click” on the physical world even if we are not physically there and have our wishes performed. Of course, it goes beyond clicking; it means physical responses to our voice commands or even our thoughts. Pure magic, enabled by technology.  It also means embodied software processes roaming the world and doing our bidding without us having to tell them anything, and with the same omniscience, processes have in the digital world. These types of embodied software processes defy our imagination. We can now think of robots mostly, but probably the best form factors won’t necessarily have to mimic humans or mammals.

Physical and digital world integration is most relevant and dangerous psychologically and socially. We will have the opportunity to create full virtual reality worlds and interact with them realistically. The possibilities here are endless and scary. Full alienation into virtual reality is a common trope in science fiction dystopias, and could become a real societal problem, much like drugs or gaming are used to escape today. Enhanced reality is extremely potent, allowing us a contextual menu or display on reality. At the same time, it carries the threat of taking mobile phone distraction to our every interaction. Finally, virtual-physical reality combination can be very potent really eliminating distance as a factor.

Overall, we can expect integrated reality to transform totally our physical world by making it “clickable and searchable” like the internet. Additionally, we will see embodied intelligent processes substitute a large number of jobs that are routine physical causing many of the same advantages and tensions that we see with regular intelligent processes. Finally, virtual and enhanced reality will have the deepest and most psychologically and transformative impact on us.

As always Integrated Reality will be made real through seeing what is already deployed (the Facts), what could reasonably be expected to happen (the Speculations) and what could eventually see happening (the Wild Guess)

Integrated Reality Facts

  • Digitized physical shops. Google Analytics for shops.
  • Smart cities. Sensing and acting urban landscapes.
  • 3D Printing. Turning digital into reality
  • Physical robots. Embodied Intelligent Processes.
  • Smart vehicles. I need you, Kit.
  • Voice interfaces. Alexa, I want to talk with Cortana and Siri.

Integrated Reality Speculations

  • Home automation. Your robot housekeeper.
  • Virtual reality. Virtual reality as a medium.
  • Enhanced reality. Getting Google Glass to Work.
  • Physical-Digital integration. Where are we?
  • Mind-machine interfaces. Voice is so much work!

Wild Guess: Real World of Warcraft

integrated reality, Tech and Business

Revolución Exponencial #3 – Realidad Integrada

La realidad integrada es el matrimonio de lo físico y lo digital y hace que nuestra interacción con él sea totalmente transparente. Con el mundo físico totalmente medible y programable, y con el  digital instanciado físicamente o a través de mundos virtuales realistas en los que la interacción es completa. La realidad integrada también incluye trasladar procesos inteligentes al mundo físico a través de robots, sensores y actuadores, logrando sustituir el trabajo físico rutinario de muchas personas a través de la robotización.

La realidad integrada tiene una gran cantidad de tecnologías que la impactan. En primer lugar, se basa en los procesos inteligentes, digital e inteligencia artificial. Además de eso, la realidad virtual y las tecnologías de realidad aumentada son clave para poder fisicalizar lo digital e integrar lo digital y lo físico. Internet de las cosas y redes 5G, con sensores y actuadores conectados, es una tecnología clave que permite “digitalizar” la realidad física a cualquier nivel de precisión en la que estemos dispuestos a invertir. Las interfaces de voz y cerebrales eliminarán el filtro que el teclado , pantalla o mouse pone a nuestra interacción. Finalmente, los robots físicos en el sentido de entidades físicas autónomas con capacidades de detección, actuación y aprendizaje automático serán los avatares de los procesos inteligentes en el mundo físico.

Percibiremos la realidad integrada como un cambio fundamental en nuestras vidas, ya que tocará nuestro entorno cotidiano e incluso nuestro concepto de realidad. La realidad integrada cambiará la forma en que el mundo funciona para nosotros, y muchas de las cosas que permite parecerán mágicas. Hablaremos palabras o pensaremos en pensamientos y esto se traducirá en acciones y cambios tanto en el mundo digital como en el físico. El mundo físico también reflejará el mundo digital de una manera que era imposible hasta ahora.

A medida que lo digital y lo físico se integren, podremos hacer lo que hacemos en el mundo digital en el mundo físico. Primero, podremos medir y cuantificar la realidad de manera constante y sin esfuerzo con una granularidad creciente, como hacemos con los sistemas digitales. En segundo lugar, podremos actuar en la realidad en un mundo basado en software que aprovecha la automatización, el código y la inteligencia artificial. En tercer lugar, podremos integrar lo físico y lo digital, e incluso lo físico entre varias ubicaciones. Podremos crear entornos digitales basados ​​en los físicos o agregar una capa digital a los entornos físicos en la realidad mejorada.

Una buena forma de entender el impacto de la medición ubicua es la metáfora de “Google Analytics para tiendas”. Con la realidad integrada, podríamos medir todo lo que sucede en una tienda. Quién entra, qué pasillos se visitan, qué mercancia se examina o se considera, la claridad total del funnel hasta qué punto llegó cada elemento y dónde cayó del funnel. Más allá del escenario de la tienda, se puede pensar en innumerables otros, una peluquería, una fábrica, una red eléctrica con daños y reparaciones, etc. Las posibilidades en cada caso son infinitas. Tener esa cantidad de información sobre la realidad física probablemente lleve a un impacto similar al del big data en el mundo digital.

Actuar en el mundo físico es igualmente transformador. Significa que efectivamente podremos “hacer clic” en el mundo físico, incluso si no estamos físicamente allí y cumplimos nuestros deseos. Por supuesto, va más allá de hacer clic; significa respuestas físicas a nuestros comandos de voz o incluso a nuestros pensamientos. Magia pura, habilitada por la tecnología. También significa que los procesos inteligentes incorporados en robots se mueven por el mundo y cumplen nuestras órdenes sin que tengamos que decirles nada, y con la misma omnisciencia, que tienen en el mundo digital. Este tipo de procesos inteligentes en robots desafía nuestra imaginación. Ahora podemos pensar en los robots principalmente, pero probablemente los mejores factores de forma no necesariamente tendrán que imitar a humanos o mamíferos.

La integración física y digital del mundo es más relevante y peligrosa psicológica y socialmente. Tendremos la oportunidad de crear mundos completos de realidad virtual e interactuar con ellos de forma realista. Las posibilidades aquí son infinitas y atemorizantes. La alienación total en la realidad virtual es un tópico común en las distopías de ciencia ficción, y podría convertirse en un problema social real, al igual que las drogas o los juegos se utilizan para escapar hoy. La realidad mejorada es extremadamente potente, lo que nos permite un menú contextual para la realidad. Al mismo tiempo, conlleva llevar la amenaza de distracción que el teléfono móvil representa a todas nuestras interacciones. Finalmente, la combinación de realidad virtual-física puede ser muy potente, eliminando  la distancia como un factor.

En general, podemos esperar que la realidad integrada transforme totalmente nuestro mundo físico al hacer que “se pueda hacer clic y buscar”, como Internet. Además, veremos que los procesos inteligentes hechos físicos sustituyen una gran cantidad de trabajos que son físicos rutinarios y que causan muchas de las mismas ventajas y tensiones que vemos con los procesos inteligentes digitales robotizando mucho del trabajo. Finalmente, la realidad virtual y aumentada tendrá el impacto más profundo y más psicológico y transformador en nosotros.

Como siempre, la Realidad Integrada se entiende al ver lo que ya está desplegado (los Hechos), lo que podría esperarse razonablemente que ocurra (las Especulaciones) y lo que eventualmente podría suceder (la transformación potencial).

Hechos de la realidad integrada:

  • Tiendas físicas digitalizadas. Google Analytics para tiendas.
  • Ciudades inteligentes. Percepción y actuación de paisajes urbanos.
  • Impresión 3D. Haciendo lo digital realidad
  • Robots físicos Procesos inteligentes hechos físicos.
  • Vehículos inteligentes. Te necesito, Kit.
  • Interfaces de voz. Alexa, quiero hablar con Cortana y Siri.

Especulaciones de la realidad integrada

  • Automatización del hogar. Tu robot ama de llaves.
  • Realidad virtual. La realidad virtual como medio de comunicación.
  • Realidad aumentada Conseguir que Google Glass funcione.
  • Integración físico-digital. ¿Dónde estamos?
  • Interfaces mente-máquina. La voz es mucho trabajo!

Wild Guess: el mundo real de Warcraft

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.