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 Coinschedule.com (~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).

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.
Blockchain, Tech and Business

6 technological revolutions beyond Digital

 

Iceberg
IMG Source: Barbara Avalos via Guillermo Avalos

There are 6 technological revolutions beyond Digital that will bring uncertainty and change to our world in the next two decades. These revolutions are already proven and working and are in the process of being deployed across the world.

 

In the traditional view of technological revolutions, like the one espoused by Carlota Perez in her “Technological Revolutions”, it takes 70 years for each cycle to fully deploy and the next one to come to age. If this were true we would spend the next 30-40 years deploying Digital fully. It would be a time of less uncertainty because Digital is mature and predictable already.

However, there are six technological revolutions that stand ready to cause radical change over the next couple of decades. They will bring most of the uncertainty and change as they start deployment while Digital runs its course. The change they will bring will be more fundamental than Digital, as they will touch our physical reality more deeply, even reaching our bodies and minds. These changes are also obscure for us at this point. We cannot fully imagine them, so they will be difficult to adapt to.

These six revolutions go well beyond just the next extension of digital. All of them are empowered by Digital and build on its complexity. At the same time, they bring very different disciplines to bear:  AI, biology, chemistry, display technology, sensors and actuators, cryptography and even psychology and neurology. All these disciplines transform and extend the potential of digital beyond its current capabilities.

The 6 key paradigm shifts that are coming are:

Intelligent  Processes. Digitally empowering with AI helpers all the processes in our world, both business and personal. All our actions will be empowered by virtual intelligences that will record, automate and support our decisions. Software-as-a-service enhanced by AI will be deployed to every corner of our world, eliminating most manual and repetitive tasks and giving us unforeseen wisdom in our decisions. Many processes will take care of themselves as if we had an army of helpful elves at our disposal.

Integrated reality. Fully merging and integrating the digital and the physical world. Recording completely the physical world through sensors, and enhancing its perception for humans through digitally augmented reality. Allowing for programming and action in the physical world by deploying actuators and robots that can do our bidding with the same ease that they do in the digital world today. Eroding the difference between “real reality” and “virtual reality”, as the real is enhanced through digital and the virtual can have a real counterpart.

New Energy-Transportation Matrix. Continuing the journey of more energy and transportation capability per human. Using solar power and storage to make energy practically free and nonpolluting for everyone. Leveraging autonomous transportation to reduce the real and cognitive cost of travel and transport by at least an order of magnitude.

Digital Governance. Using blockchain, integrated reality, marketplaces and AI to make laws and contracts automatic, self-enforcing and intelligent. Substituting human based adjudication and decision-making by code-based laws and enforcement. Reducing the cost and time of the legal system to a fraction and eliminating non-compliance. Substituting fiat money for cryptography-enabled intelligent mediums of exchange. Making corruption impossible, but our governments and companies hackable.

Bioprogramming. The control and programmability of organisms including our own bodies and genomes, allowing to transcend health and access biofabrication. Being able to create new lifeforms and alter existing ones. Making biology the equivalent of web page programming. Impacting life expectancy and quality of life dramatically. Opening up digital ethical questions about reproduction and identity

Neurogamification. The full leverage of our knowledge of our brains and psychological control mechanisms to increase engagement and attention in all settings. Understanding how we can be influenced and motivated. Making superhuman feats of willpower, learning and concentration routine. Revealing advertising and manipulation as the next super-weapon. Opening up difficult questions about free-will and meaning.

The impact of this six can be expected to be astounding, much deeper and broader than what we have experienced through digital. The tail end of digital deployment combined with the big 6 will probably create a world that is difficult to recognize. It might be a world of Abundance, like Peter Diamandis and Singularity University defend, or it might be something else we cannot understand today. For sure, it will bring difficult ethical debates and questions as we get closer to our core as beings.

Companies, individuals, and investors will see the ground shift massively, many losing their position if they don’t move fast enough. The best proof of this is Google’s and Facebook’s obsession with some of these trends. Google’s shift from Mobile-first to AI-first shows the lessons learned from the deployment of mobile and how even a top 5 company feels it needs to transform or die. We can apply the same to the most valued jobs or sectors. Will there be a need for programmers when AIs are being taught to code? What will be the value of gold, the euro or the dollar when you can use cryptocurrencies as a value reserve instead of trusting politicians?

These paradigm shifts are not idle speculations. Rather they are realities that are routinely leveraged in some corners of the world. As William Gibson famously said, “The future is here, it is just unevenly distributed”. What we will see is the extension and perfection of these existing technological revolutions across the economy.

Based on a broad survey of many futurist analysis and trends these six seem the most relevant for the next couple of decades. However, there are another five paradigm shifts that could be relevant in the longer term (20-50 years). Hopefully for many of us still well within in our lifetimes. These additional technological revolutions are Nanoscale Technology, Commercial and Residential use of Outer Space, Mind-machine Interfaces and Integration, Quantum Computing, and General AI/Virtual People. These technology revolutions are still in the theory, science fiction, and initial experiments stage. We should watch them emerge over the next decades.

Blockchain

Cryptocurrencies: Theory and practice

(En español aquí)

We have seen that the blockchain is the next step in the evolution of information technologies. Blockchain allows for inmutability, auditability, resistance to tampering, decentralized trustless sharing, smart contracts and much more. Blockchain as a technology has many different use cases. It has been used for birth registries, banking technology, identification systems, supply chain transparency, diamond tracking and much more. However, the “killer app” for now has been cryptocurrencies and that is what has been in the news.

Cryptocurrencies have now a market value of over 100 bn €s (fluctuating wildly every day) and have become a force to reckon with. Global CEOs criticize it. Most of this value is in Bitcoin and Ethereum which represent two-thirds of total value, with the top 5 coins representing over 80%. There has been a continuous launch of new cryptocurrencies through Initial Coin Offerings or ICOs, which China recently banned at least temporarily.

Blockchain technical advantages are uniquely suited to create cryptocurrencies as next generation mediums of exchange and stores of value. Immutability, auditability and resistance to tampering allow creating a “coin” that is immune to the counterfeiting or debasing of physical coins. Cryptographic security means coins are safe and there is no stealing possible (at least while the private keys are safe). Smart contracts and programming create great flexibility in its functioning going beyond simple money. Algorithmically limited supply of coins allows guaranteeing there will be no inflation.

Cryptocurrencies have two types of value, a utility value and a medium of exchange value. The utility value represents what some tokens can do natively. Some tokens like Ethereum give you access to computing power, others like StorCoin J allow you to store information. The medium of exchange value is based on shared belief, if someone will accept a cryptocurrency as payment layer, then it has a value now. Of course, the moment that shared belief disappears, the value disappears. Bitcoin has no utility value, only exchange value. It is arguably the first currency that has achieved its status without either government fiat (e.g. post-gold standard dollars) or utility value (e.g. gold). Of course, like its critics like to point out. it could lose its value in an instant when confidence is lost, much like fiat currencies sometimes do (think the Bolivar, not the dollar).

The bear case for investing in crypto currencies is related to its exchange-value only nature:

  • Volatility, potentially down to zero. Having no utility value and no government fiat means that Bitcoin and many other cryptocurrencies could drop immediately to zero value just based on loss of confidence or a swift move to a better alternative.
  • Proliferation and fraud in the long tail. There is an increasing number of coins, many of which have been put together by very few individuals. Can any of this coins be the “bitcoin-killer” destabilizing current market caps? Will many of them be pure Ponzi schemes?
  • Need to preserve the private keys. A cryptocurrency is totally safe as long as the private key is safe. However, the person holding the private key is human whether it is an exchange (Mt. Gox) or an individual that loses the key or is swindled from it.
  • Sensitivity to regulation and protocol evolution. Regulatory actions, like China’s ban of ICOs, or protocol evolution, like Bitcoin’s hard fork in August, can have strong destabilizing effects on their values.

The bull case for investing in cryptocurrencies can be summarized in just one phrase: “cryptocurrencies are just one new asset class for people to have in their portfolio”. If this is the case then the question is what percentage of the portfolio will people have in cryptocurrencies. Total wealth in the world is estimated at 250 USD Trillion so current cryptocurrency capitalization of ~125 billion USD represents 0,05% of total wealth. If you think people will hold 1% of their assets in crypto you have still a 20x rally in price (given that supply is limited). If you think the number is 10% as some commentators have ventured you have a 200x, just enough to reach the $1 million Bitcoin some of the most bullish promoters defend.

Investing in Cryptocurrencies

Investing in cryptocurrencies used to be extremely difficult and reserved to the technically savvy, but a host of startups are working to make it really easy. These startups include exchanges (Coinbase, Kraken, Bittrex…) in which you can buy and sell criptocurrencies, wallets to help you store them (Jax, Parity,…) and other utility players (Shapeshift, Prism,…).

I personally believe that while cryptocurrencies are an extremely speculative investment they might have their place in a portfolio. Investing in crypto is also a way to get to understand a bit better a very different world that is emerging. To invest in crypto it makes sense to go through several stages, based on my own experience and that of some other people I know that invest I would think the following could be appropiate

  1. Invest a trivial amount in Bitcoin and Ethereum through the app of one of the most user-friendly exchanges even if commissions are high (in my case it was Coinbase). That will give you the feeling for the volatility.
  2. Understand more about Bitcoin and Blockchain with some of the great resources on the internet. The 10 papers in this article are a great starting point.
  3. Make a speculative investment mainly in Bitcoin and Ethereum, and if you feel like it Litecoin and Bitcoin Cash, through one or several of the more cost-efficient exchanges (e.g. Kraken). Invest only what you can afford to lose completely, consider it tuition fees.
  4. Finally, you can go deeper into the rabbit hole and start investing into exotic coins. This requires in depth investigation and specialist knowledge. You might want to do things like joining the slack channel of the developers and reading the white paper.
Blockchain, Español

Criptomonedas: Teoria y Practica

Hemos visto que el blockchain es el siguiente paso en la evolución de las tecnologías de la información. Blockchain permite la inmutabilidad, la auditabilidad, la resistencia a la manipulación, el intercambio descentralizado sin confianza, los contratos inteligentes y mucho más. Blockchain como una tecnología tiene muchos casos de uso diferentes. Se ha utilizado para registros de nacimiento, tecnología bancaria, sistemas de identificación, transparencia de la cadena de suministro, seguimiento de diamantes y mucho más. Sin embargo, la “killer application” por ahora han sido las criptomonedas y eso es lo que ha estado en las noticias.

Las criptomonedass tienen ahora un valor de mercado de más de 100 billones de euros (que fluctúa significativamente cada día). Se han convertido en un factor a tener en cuenta que los CEO globales critican. La mayor parte de este valor está en Bitcoin y Ethereum, que representan dos tercios del valor total, y las 5 primeras monedas representan más del 80%. Ha habido un lanzamiento continuo de nuevas criptomonedas a través de ofertas iniciales de monedas o ICOs, que China recientemente prohibió por lo menos temporalmente.

Las ventajas técnicas de Blockchain son especialmente adecuadas para crear criptomonedas como medios de intercambio de próxima generación. La inmutabilidad, la auditabilidad y la resistencia a la manipulación permiten crear una “moneda” que es inmune a la falsificación o degradación de las monedas físicas. La seguridad criptográfica implica que las monedas son seguras y no hay robo posible (al menos mientras las claves privadas estén seguras). Los contratos inteligentes y la programación crea una gran flexibilidad en su funcionamiento más allá del dinero simple. El suministro limitado de monedas garantizado de forma algorítmica evita la inflación.

Las criptomonedas tienen dos tipos de valor, un valor de utilidad y un  valor de intercambio. El valor de utilidad representa lo que algunos tokens pueden hacer nativamente. Algunos tokens como Ethereum dan acceso a la potencia de la computación, otros como StorCoin J permiten almacenar información. El valor de intercambio se basa en una creencia compartida, si alguien va a aceptar una criptomoneda como pago más tarde, entonces tiene un valor ahora. Por supuesto, el momento en el que la creencia compartida desaparece, el valor desaparece. Bitcoin no tiene valor de utilidad, solo valor de cambio. Es probablemente la primera moneda que ha alcanzado su estado sin el apoyo del gobierno (por ejemplo, los dólares post patrón oro) o el valor de utilidad (por ejemplo el oro). Por supuesto, como a los críticos les gusta señalar. podría perder su valor en un instante si se pierde la confianza, como ocurre a veces con las monedas fiat (piensa el Bolívar, no el dólar).

El caso negativo de inversión en divisas criptográficas está relacionado con su naturaleza de valor de cambio únicamente:

  • Volatilidad, potencialmente hasta cero. No tener ningún valor de utilidad ni fiat gubernamental significa que Bitcoin y muchas otras criptomonedas podrían caer inmediatamente a cero valor basándose sólo en la pérdida de confianza o en un paso rápido a una alternativa mejor.
  • Proliferación y fraude en las monedas exóticas. Hay un número creciente de monedas, muchas de las cuales han sido creadas por muy pocos individuos. ¿Puede cualquiera de estas monedas ser el “bitcoin-killer” que desestabilice los valores actuales del mercado? ¿Serán muchos de ellos puros esquemas de Ponzi?
  • Necesidad de preservar las claves privadas. Una criptomoneda es totalmente segura siempre y cuando la clave privada sea segura. Sin embargo, la persona que tiene la clave privada es humana, ya sea un exchange (Mt. Gox) o un individuo que pierde la clave o es estafado de ella.
  • Sensibilidad a la regulación y evolución del protocolo. Las medidas regulatorias, como la prohibición de los ICO en China, o la evolución del protocolo, como el fork de Bitcoin en agosto, pueden tener fuertes efectos desestabilizadores en sus valores.

El caso positivo para invertir en criptomonedas se puede resumir en apenas una frase: “las criptomonedas son  una nueva clase de activo para que la gente tenga en su portfolio”. Si este es el caso, entonces la pregunta es qué porcentaje de la cartera tendrá la gente en criptomonedas. La riqueza total en el mundo se estima en 250 USD trillones por lo que la capitalización de la criptomoneda actual de ~ 125 billones de dólares representa el 0,05% de la riqueza total. Si la gente llega a tener el 1% de sus activos en cripto  todavía tiene un 20x rally en el precio (dado que la oferta es limitada). Si llega a tener un 10% como algunos comentaristas se han aventurado usted tiene un 200x. Eso sería suficiente para llegar al bitcoin de $1 millón como defienden los más optimistas.

Invertir en Criptomonedas

Invertir en criptocurrencies antes era extremadamente difícil y reservado para los expertos, pero una serie de startups están trabajando para hacerlo realmente fácil. Estas startups incluyen exchanges (Coinbase, Kraken, Bittrex …) en los que puedes comprar y vender criptomonedas, wallets para ayudarte a almacenarlos (Jax, Parity, …) y otras aplicaciones (Shapeshift, Prism, …).

Yo personalmente creo que mientras que las criptomonedas son una inversión extremadamente especulativa aunque podría tener su lugar en una cartera. Invertir en cripto también es una manera de llegar a entender un poco mejor un mundo muy diferente que está emergiendo. Para invertir en criptomonedas tiene sentido pasar por varias etapas, basadas en mi propia experiencia y la de algunas otras personas que conozco que invertir creo que lo siguiente podría ser apropiado:

  1. Invertir una cantidad trivial en Bitcoin y Ethereum a través de la aplicación de uno de los intercambios más fácil de usar, incluso si las comisiones son altas (en mi caso fue Coinbase). Eso da perecepción dela volatilidad.
  2. Entender más sobre Bitcoin y Blockchain con algunos de los grandes recursos en Internet. Los 10 artículos de este artículo son un gran punto de partida.
  3. Hacer una inversión especulativa principalmente en Bitcoin y Ethereum, y si te apetece Litecoin y Bitcoin Cash, a través de uno o varios de los exchanges más baratos (por ejemplo Kraken). Invertir sólo lo que puede darse el lujo de perder por completo, se están pagando unas clases.
  4. Por último, para los más aventurados, adentrarse en el agujero de conejo y empezar a invertir en monedas exóticas. Esto requiere una investigación en profundidad y un conocimiento especializado. Es posible que desee hacer cosas como unirse al canal de slack de los desarrolladores o leer el white paper.