One thing that's interesting about yesterday's Basic Attention Token sale is how quickly it went - $36M transacted in 30 sec. Lots of people were surely disappointed as they attempted to buy into the token sale only to have their orders canceled for missing the sale window. I haven't nailed this down for certain, but I suspect that all of the successful buys in the token sale were programmatically executed through smart contracts, rather than by hand. The entire sale was tied to milestones in the Ethereum blockchain, making this possible. From the BAT sale site:
"The sale of BAT will begin at the time that mining commences on Ethereum block 3,798,640 and continue until the time that 156,250 Ether has been received or mining commences on Ethereum block 3,963,480, whichever is earlier. This is the “sale period."
I honestly don't know the mechanics of Ethereum well enough to really diagnose this, but my guess is that there were lots of buy contracts that were triggered to execute along side block 3,798,640. I don't think that we are quite prepared for what a world driven by "smart contracts" will feel like - despite the fact that we have had high frequency trading for years, smart contracts that auto-execute on blockchains will bring really fast transaction execution to lots more areas of life. I am not sure that there's anything wrong with that, just pointing out that it's going to feel quite different than what we are used to today.
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), "
For the past few weeks, I've been following the FBI / Apple phone unlocking case, and digging deep into the debate around encryption, security and privacy. This debate is as old as the sun, and the exact same arguments we're going through now were fought through 20 years ago during the first crypto wars and the US government's effort to deploy the Clipper Chip as a way of sharing crypto keys between industry and government. The stance of the tech industry has always been "strong crypto or else, because Math" and the stance of the government has been "come on guys, let's figure something out here". At USV, we've been trying to look at this round of the fight with fresh eyes, to the extent possible. What we've been wondering is: is there something different this time around?[1] Has anything changed that might make us reconsider these dug-in, partisan-esque positions? Are there unintended consequences that the tech industry hasn't been considering? To paraphrase my colleague's arguments,
One thing that's interesting about yesterday's Basic Attention Token sale is how quickly it went - $36M transacted in 30 sec. Lots of people were surely disappointed as they attempted to buy into the token sale only to have their orders canceled for missing the sale window. I haven't nailed this down for certain, but I suspect that all of the successful buys in the token sale were programmatically executed through smart contracts, rather than by hand. The entire sale was tied to milestones in the Ethereum blockchain, making this possible. From the BAT sale site:
"The sale of BAT will begin at the time that mining commences on Ethereum block 3,798,640 and continue until the time that 156,250 Ether has been received or mining commences on Ethereum block 3,963,480, whichever is earlier. This is the “sale period."
I honestly don't know the mechanics of Ethereum well enough to really diagnose this, but my guess is that there were lots of buy contracts that were triggered to execute along side block 3,798,640. I don't think that we are quite prepared for what a world driven by "smart contracts" will feel like - despite the fact that we have had high frequency trading for years, smart contracts that auto-execute on blockchains will bring really fast transaction execution to lots more areas of life. I am not sure that there's anything wrong with that, just pointing out that it's going to feel quite different than what we are used to today.
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), "
For the past few weeks, I've been following the FBI / Apple phone unlocking case, and digging deep into the debate around encryption, security and privacy. This debate is as old as the sun, and the exact same arguments we're going through now were fought through 20 years ago during the first crypto wars and the US government's effort to deploy the Clipper Chip as a way of sharing crypto keys between industry and government. The stance of the tech industry has always been "strong crypto or else, because Math" and the stance of the government has been "come on guys, let's figure something out here". At USV, we've been trying to look at this round of the fight with fresh eyes, to the extent possible. What we've been wondering is: is there something different this time around?[1] Has anything changed that might make us reconsider these dug-in, partisan-esque positions? Are there unintended consequences that the tech industry hasn't been considering? To paraphrase my colleague's arguments,
The Slow Hunch by Nick Grossman
Investing @ USV. Student of cities and the internet.
The Slow Hunch by Nick Grossman
Investing @ USV. Student of cities and the internet.
" (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.
that trust, safety and security are serious issues within and around web platforms, and platform operators do have a civic duty to cooperate with law enforcement when it's necessary and lawful (on the surface this is not controversial -- it all depends on the whys and hows). Albert
where information and knowledge are locked up, rather than an open society that benefits from collective intelligence and open knowledge. The part I really want to dig into is an apparent parallel here between data security and
. With DRM, there's been a 30 year battle to lock down the entire software and hardware ecosystem in the name of controlling access to content. Internet / free culture advocates have
that the more enlightened approach is to understand that information wants to be free, and we can all be better off if adapt our culture, expectations, and business models to a world where remixing is allowed. Now, as we look at data security and privacy, I feel a lot of those same forces coming to bear: in the name of data security and privacy, we need to all get on board with a controlled software / hardware model where companies, rather than users themselves, control data flows. This is best exemplified by Apple's security model, which stores encryption keys in a separate "
" and only allows software to be installed that's signed by Apple -- conforming not only to their security policies but to their control policies. This, I think, is where some of us have gotten uncomfortable. What we don't want is the cause of security and privacy to lead us down the path to
, the way that DRM has. A risk here seems that many of the folks who are fighting for copyright reform & device unlocking, may also be unwittingly undermining those same causes in the crypto/privacy/security fight. So what I've been trying to do is
parse apart the issues of security and control
. Can we have one without the other, and can we talk about them, and advocate for (or against) them separately? (And, for bonus points, can we find ways to have both security and access to knowledge -- for example as secure data processing projects such as
that comes from centralized app stores. For example: one of our portfolio companies recently realized that by shifting from an app-store model to an API-based model, they could increase their product iterations by 1000% -- shipping new code instantly, rather than waiting weeks for app store approval. This is the kind of innovation we want, and it's just not possible with the controlled app store model. It's also important for other kinds of security -- specifically, the
, and will be increasingly important as more Internet of Things devices do more things with more data. If we move towards a world of DRM-style data lockdown, we'll have less knowledge of how products work and less control over our information. This has been a long post, so I'll just summarize by saying: I think it would do everyone good to keep looking at the encryption issue not simply through the lens of privacy and security, but also through the lens of openness and innovation, and make sure that whatever policies and technologies we support coming out of this strike the best possible balance. --
[1] the best resources from the academic community on the subject are
, a Berkman Center report pointing out the extent to which the "going dark" framing is misleading, since the overall surface area for digital surveillance has grown dramatically at the same time that strong encryption has made some data inaccessible.
" (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.
that trust, safety and security are serious issues within and around web platforms, and platform operators do have a civic duty to cooperate with law enforcement when it's necessary and lawful (on the surface this is not controversial -- it all depends on the whys and hows). Albert
where information and knowledge are locked up, rather than an open society that benefits from collective intelligence and open knowledge. The part I really want to dig into is an apparent parallel here between data security and
. With DRM, there's been a 30 year battle to lock down the entire software and hardware ecosystem in the name of controlling access to content. Internet / free culture advocates have
that the more enlightened approach is to understand that information wants to be free, and we can all be better off if adapt our culture, expectations, and business models to a world where remixing is allowed. Now, as we look at data security and privacy, I feel a lot of those same forces coming to bear: in the name of data security and privacy, we need to all get on board with a controlled software / hardware model where companies, rather than users themselves, control data flows. This is best exemplified by Apple's security model, which stores encryption keys in a separate "
" and only allows software to be installed that's signed by Apple -- conforming not only to their security policies but to their control policies. This, I think, is where some of us have gotten uncomfortable. What we don't want is the cause of security and privacy to lead us down the path to
, the way that DRM has. A risk here seems that many of the folks who are fighting for copyright reform & device unlocking, may also be unwittingly undermining those same causes in the crypto/privacy/security fight. So what I've been trying to do is
parse apart the issues of security and control
. Can we have one without the other, and can we talk about them, and advocate for (or against) them separately? (And, for bonus points, can we find ways to have both security and access to knowledge -- for example as secure data processing projects such as
that comes from centralized app stores. For example: one of our portfolio companies recently realized that by shifting from an app-store model to an API-based model, they could increase their product iterations by 1000% -- shipping new code instantly, rather than waiting weeks for app store approval. This is the kind of innovation we want, and it's just not possible with the controlled app store model. It's also important for other kinds of security -- specifically, the
, and will be increasingly important as more Internet of Things devices do more things with more data. If we move towards a world of DRM-style data lockdown, we'll have less knowledge of how products work and less control over our information. This has been a long post, so I'll just summarize by saying: I think it would do everyone good to keep looking at the encryption issue not simply through the lens of privacy and security, but also through the lens of openness and innovation, and make sure that whatever policies and technologies we support coming out of this strike the best possible balance. --
[1] the best resources from the academic community on the subject are
, a Berkman Center report pointing out the extent to which the "going dark" framing is misleading, since the overall surface area for digital surveillance has grown dramatically at the same time that strong encryption has made some data inaccessible.
