I paid $200 to attend SF Blockchain Week 2018 on Monday and Tuesday just to get a sense of the industry pulse, post-2017 run up. I came away with a few new insights and a lot of reassurance that my favorite projects are still working towards the right goals.
The crypto community is now split into anti-bank “activist” and legally compliant “legit” camps
The hedge fund and VC communities were represented on all non-technical panels, making assertive calls for regulated crypto exchanges, ICO regulatory clarity, and compliance solutions. They are not wrong to think these will be money makers, but they seem to be clueless as to how much the technical community is already working to circumvent centralized authority. For example, decentralized exchanges (DEXs) will probably come into feature parity with traditional exchanges next year, and they will be autonomous, distributed Internet entities.
As expected, the technical community was talking about “scaling” issues (Proof of Stake and State Channel issues). The difference in goals could not be more clear to me: The nerds want to replace the Internet with a decentralized anarchy and Wall St. wants new plumbing for the money machines. Of course these interests can coexist, but going forward, every trader and banker will need to have a clue about how the Internet works without leaning on their IT guy, which presents a serious learning curve.
Chain interoperability is probably the future
I now feel pretty confident saying that, in the near term, there will be hundreds, if not thousands, of public chains competing with Ethereum as a “smart contract platform for X”. Most of these chains will probably die after failing to propagate their node community fairly or securely. So why even bother? They believe they can shortcut the scalability issue by foregoing mining and instead deploy a Proof of Stake block validation system. Quickly, the difference between these:
Proof of Work (Bitcoin, Ethereum, most long-running chains): Miners buy fast computers and get paid to mine blocks and confirm transactions (relatively slow).
Proof of Stake (EOS, Dash, NEO, most new chains): Token holders with a lot of tokens get paid to not spend their tokens but instead “stake” them to validate new blocks. This is faster, but now there is a big pot of gold to steal, and a disincentive to spend money.
To my original point: it probably won’t matter to you. Several groups have have begun projects aiming to create common protocols for blockchains that will enable different networks to communicate with each other seamlessly. How will this look in the real world? Image you will be able to spend Bitcoin to launch a smart contract on Ethereum, or buy a coffee with Litecoin from a vendor who only takes Dash. This is what I mean by chain interoperability. I can see a world where all global transactions and smart contract calls take place between different blockchains, but you and I are still only spending (perhaps legally obligated) local fiat currencies. Perhap even autonomous AI-driven systems can make/receive payments with each other in a humanless IoT economy: imagine a car that owns and can pay for repairs itself. It really gets your imagination revved up.
Of course this begs the question, in a world where blockchains live and die by network security, which chain system will be “the one” to buy? Or will thousands of small local chains coexist and render token hoarding pointless? The crypto economics of the coming multi-chain landscape are unclear.
Ethereum will be a network of many subchains
A project called Plasma will turn Ethereum into a network of smaller subchains. The main idea is that users can create a smaller chain to off-load transactional data until it is recorded later on the main Ethereum chain. I can’t really explain it better than this Medium article by the Aragon guys.
Securitized crypto assets are live
One of the more interesting talks was between the founder of Indiegogo and a guy who led the tokenization and sale of a hotel in Aspen. Many interesting points here:
The financial instrument was a REIT issuing securities as an Ethereum ERC-20 token.
The tokens traded on a next gen alternative trading system (ATS), not a typical crypto exchange.
As far as I can tell, the organizer is non-technical and leveraged Indiegogo as his tech and legal advisory to comply with SEC Reg D designation frameworks. So yeah, Indiegogo is now the leader in crypto token securitization.
Minimum contribution to own a piece was $10k USD (accredited investors only).
Half of the token holders are from Asia.
Lastly, I just want to point out that I changed the mailing list platform from Mailchimp to Substack. One benefit is that I can create an exclusive paid-only list if there’s demand. I’m thinking something like $4/month for bi-monthly tech insights and condensed news summaries. If that’s something you would be interested in, please let me know.