My name is Matt and I recently joined Frontier Foundry, a blockchain Venture Studio. We specialize in founding startups that leverage the blockchain for everything from the reliable archiving and tracking of data to token based economies embracing new models of raising venture capital, creating thriving value protocols. I am tasked with learning everything about the blockchain ecosystem; this includes the technology, the ethos, the new models and everything from the frontier of blockchain.
I have been a creative developer all my life, making HyperCard stacks when I was 5 and game mods when I was 15. I have been on the web since the early days and even back then wondered why it was so difficult to develop a webpage that was hosted, distributed and supported by its users. I was 12 at the time and perhaps a little naive.
20 years later… From the bumpy and highly skeptical beginning of Bitcoin 2008–2014, the first crowdsale of MasterCoin, to Ethereum and several ICOs (initial coin offerings) later; we’ve hit fever pitch. While everyone is rightfully dazzled by IoT, AI and VR, 2017 will be the year everyone will know about blockchain. The protocols of value are upon us.
Blockchain technologies at their core are protocols that enable safe, public, permission-less transfer of value. If I want to send someone a dollar, I don’t have to go through an intermediary (banking website or PayPal) to make this happen. This creates an internet of value… and I didn’t coin the term. From value comes investment, development, new business models and economies. If software is eating the world, then big fat value protocols (blockchains) will assign a unique hash to track each and every bite.
What are these technologies anyway?
At an extremely high level these protocols are a mixture of math, cryptography, economics and game theory. The key problem blockchain protocols solve is known as Byzantine Fault Tolerance, where all computers on a network (sharing a common protocol) must arrive at a consensus on the current state of reality. “Reality” in this sense could be a distributed ledger like Bitcoin or more generalized application state in Ethereum.
And this is only the beginning. Value protocols enable the instant, permission-less transfer of value, much like the internet enables the instant transfer of information. Value comes in all forms however, and state machines built on a public permission-less blockchain like Ethereum can encapsulate the value of IoT data, AI computational resources and property titles in VR. These are uses for frontier technologies, what about our existing infrastructures?
Today if you want to purchase something on the internet you don’t pay for it yourself. In fact, since the barter and cash days, we’ve never paid for anything ourselves. We punch in some account numbers and ask a corporation, “Is it ok for me to have this now?” This model of centralized payment and settlement systems that determine our value and who we transfer it to are nothing more than a complicated and convoluted layer of governments and corporations we must trust and whom take a cut of our “language of value”. We’ve seen what has happened due to these over-complicated systems, from Enrons to housing debt bubbles. Are we better off to trust math, fault tolerant networks and a protocol that if, given some time and explanation, anyone can understand?
Melt it Down
Banking, real estate, insurance and even the stock market may one day be decentralized. As large institutions begin automating and offloading their services, inter-mediation and security to blockchains the institution itself will melt away leaving only the value protocol. There is a question of public vs. private blockchains, but that may be another blog post. In the future, there may no longer be a need for bank tellers, insurance brokers, real estate agents or stock brokers, as power is given back to users through decentralized value protocols.
The stock market was invented to raise public capital for projects beyond the scope of a corporations current capital, in the hopes that the project would be a success and interest on the capital loaned would make stock holders wealthy in their sleep. Somewhere along the way we lost this spirit, and I believe it’s safe to say that for a large portion of the population, this is not how they see the stock market functioning today. It is not a utility for public good.
ICOs or Token Crowdsales
We now have a new technology. The blockchain. To create a public and permission-less, verifiable record of investment in a project. This has spurred a record amount of capital raised for new projects that use a blockchain coin or token as a proof of investment and potentially a unit of value in a new application economy and ecosystem. If a token is used as part of a new application, there are several new business models to explore, since every user is essentially a shareholder. Additionally, new models for governance of an application by it’s users will ultimately usher in several large decentralized applications that may be created entirely by their users.
If I post something on Facebook, I have to trust Facebook that they will allow my friends and family to see what I have posted. That they will not censor me, delete my data or at the very least bubble up my post at the appropriate time for my friends to see it. And what if we have an issue with Facebook, or Google, we want to disable a feature, or never see a particular image again? Can we make changes to these applications? Can we get our data out and use it elsewhere? Sadly, the answer today is no.
I would love to change the world, but they won’t give me the source code ~ Anon
ICOs are more than raising obscene amounts of money for pie in the sky ideas. It is about investing in our decentralized future. Your tokens are votes, api keys, shares and/or currency. This is about owning a truly valuable piece of a project that (hopefully) is built for the public good, out in the open.
To the Frontier
We are excited at Frontier Foundry to kick off several exciting projects in the blockchain space. Community, education and best practices for founding successful blockchain ventures will be our primary focus. These are early days, and our hope is that through public dialog, open source and genuine enthusiasm for a more efficient, fair and connected future, we can bring value to everyone.