There has been lots of attention this week on cryptocurrencies and blockchains, what with Consensus conf and the Token Summit and lots of relatedannouncements. And with like lots of new things (thinking back to Twitter circa 2010) I find myself spending a lot of time explaining to people what blockchains and cryptocurrencies are, and why we think they're interesting. It has taken us years to peel away layers of understanding around Bitcoin and blockchains -- see "Bitcoin as Protocol" (2013), "
" (2016). We've been chewing on this idea that cryptocurrencies aren't just digital money, they're something else -- they're a new way of storing and verifying data, a new way of building tech platforms, and a new way of monetizing activity on the web. One way I've been thinking about it recently is that cryptocurrencies are the native business model for open source and open data. I come from a background working in open data, open source, and open standards -- mostly in the context of cities and governments. I spent the better part of 2008-2011 working to advance standards like
). The big takeaway from that time was that standards don't propagate themselves -- you need some sort of major driver to pull them into market (in the case of GTFS it was Google Maps). What we have now learned from cryptocurrencies and blockchains is that they can provide that driver. By creating an economic incentive -- the cryptocurrency or token -- to create a shared open data asset, we now have powerful driver for open data, interoperable through open standards. This is the point of Joel's
piece -- that with cryptocurrencies and blockchains, we can now monetize the underlying token and let the data be open, rather than controlling the data and monetizing access. This is a really big deal. Take that a step further, we can now re-think how we build "platforms". Think social networks like Twitter, who have historically been forced to close down their APIs in order to keep attention within their own ecosystem, rather than let it "leak" to third parties. Blockchains and cryptocurrencies offer an alternative here as well -- by monetizing through an underlying cryptocurrency, we can now afford to be "open" when it comes to platform interoperability. As much as I dislike the
"Interoperability Finally, the potential of rarepepe model doesn’t end with simple digital asset collection and trading. What’s even more remarkable about this token model is that third party developers or projects can bring external value and use cases to pepe tokens thanks to their open and permissionless nature. Interoperability and permissionless nature is what differentiates tokens on the blockchain from closed proprietary systems or private blockchains whose essences are control and permissioned. Whether you like it or not, as long as it’s on an open and public blockchain people will create unexpected use cases and synergies that even token issuers cannot imagine sometimes. In my opinion, this is the biggest advantage of using tokens on a public blockchain and this type of cross collaboration has started to emerge already with Pepe. For example. the Rarepepeparty project is developing a trading card game with some RPG element utilizing rarepepe tokens and user created memes. If you own those cards in your wallet and prove its ownership, you will be able to play your dank pepecards within the game."
So what we have here is now a new business model for platforms. Whereas in the past, you had to lock down your platform in order to control the flow of eyeballs, either for transactional revenue or ad dollars, now the incentives are flipped -- the more people who use it and build on it, the better, so let it be open. So really, what we have now is a new business model for attention. One where we can be open to share attention with others, as long as we are bound by an underlying cryptocurrency or token. This is relevant to any platform or network with an advertising-based business model. As everyone knows, it's hard to make money in the ad business if you're not Facebook or Google, so it's exciting to think that maybe you don't need to be in the ad business to build a successful and sustainable social platform. This is what Kik is pioneering today with the launch of the Kin token, and if this works I suspect it will be a model that many ad-supported networks follow.
Two weeks ago at USV's annual CEO Summit, Muneeb Ali from OneName explained the blockchain in a way I hadn't heard before, and which I thought was really helpful: the blockchain is time.
That's a somewhat abstract way of saying it, so more concretely we could say that:
The blockchain is database of verified public timestamps.
Every bitcoin transaction is kept in a public ledger, and that ledger is verified and maintained by all of the computers participating in the Bitcoin network. This "chain" of transactions is known as the blockchain, and each transaction is essentially a public timestamp that can contain data.
The key aspects of the blockchain's timestamps are: decentralized (no one entity controls the database of timestamps, and everyone in the network confirms that timestamp has happened -- this is "mining"), immutable (once a timestamp has been verified and recorded, you can't un-do it), public (all of the timestamps are publicly visible, though some aspects of the data are encrypted), and programmable (you can write code against the blockchain -- for example, triggering some sort of action based on the details of a "smart contract" embedded in a timestamp).
Importantly, each of those timestamps contains a packet of data which can hold lots of things: details about a financial transaction, details about a contract between two or more parties, a hashed version of almost any document, etc.
One way I've described this is similar to the way people used to use postmarked envelopes to verify that something had happened at a certain time. For example, signing a will and putting it in an envelope, and mailing it to yourself -- the post office's postmark on the envelope, which has the date of the stamp, proves that whatever was put in the envelope was done so before the date of the stamp. IIRC, more than once, a mystery on
was resolved using this technique, where a witness dramatically unseals a postmarked envelope before the judge.
The blockchain is essentially a digital, public, programmable version of that. Which we've never had before.
Previously, every app kept its own notion of time. So if I post something on Facebook, Facebook saves that post and timestamps it. We have to trust them to get that right, and not to change it ever in the future. This is fine for cat photos, but less fine for a financial transaction, or a deed to a house.
Here's that same idea in diagram form:
So in some sense, the Blockchain is a public database -- it has the effect of moving data that was previously kept within the walls of one or more apps out into a shared public database. But to get a little more specific, it's really a public database of timestamps -- a new ability for anyone to state, publicly and immutably, that a certain thing happened at a certain time.
Maybe that is obvious to folks who have been working in this space for a while, but I found it to be a really helpful way of thinking about things -- and of explaining it to people who are new to the idea. Thanks Muneeb!
