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Reflections in Times of Crisis- This Global Pandemic

Given the global quarantining in place (some pegged it at 3 billion people doing it), the world is not just on pause, it is also on reflection and introspection.

As many of us move away from normal routines to the abnormal ritual of staying at home, and radically changing our interaction habits, this is a time to reflect, re-think, and evaluate what is really going on.

For many, staying at home or disrupting the work routine is a break from the rat race they are used to, but it is also a perfect inducement for some critical thinking.

Here are the key themes that are sticking in my mind:

Working at home: exception or normality?

As more of us get used to this new normal, many will ponder if they would ever want to return to an office again. This forced situation might be a blessing, and I am sure it will lead to some reduction in actual permanent office space requirements. 

Prosperity to online services 

Suddenly, banks are now touting their online services and reminding us that we can do much of our banking without visiting their branches. Not only banking, but also education, e-commerce, entertainment, self-services, and online deliveries are getting a big shot in the arm. Again, these new tastes are going to linger for many, and much of this will not go back to physical choices. 

Reliance on China: damned if we do and if we don’t?

China is the manufacturing hub for the world. The virus disruption has sent ripple effects to the entire world as supply chains, manufacturing, and product availability were all affected, domino-style. I am sure that many businesses are going to reconsider the degree of dependability they have on a single country. It’s simple risk management 101.

Global interdependencies are real

I have been a fervent student of globalization and its impact on the world economy and society. The current pandemic, like many others that preceded it are global in nature. I am surprised that the World Health Organization waited until March 11th to declare COVID-19 as a pandemic, for pedantic reasons. The alarm bell should have been sounded much earlier, as the disease was on its way to becoming a pandemic. This gives me great concern about the effectiveness of non-governmental global organizations that are plagued with bureaucratic and rigid processes, and not always grounded in reality.

The nanny states are at their best, but at what cost?

Many Western and developed governments have enacted emergency relief measures to make-up for the economic losses at the personal and business levels. They are handing out subsidies to ease the financial pains, left right and center. Yes, they can print money and that’s in their powers, but they are also perpetuating nanny state behavior. We will owe it them back. That said, the better government responses are the ones that reacted much earlier with a focus on reducing the outbreak with aggressive universal testing, so that the eventual economic impact was dampened (e.g. South Korea, Taiwan, Singapore). Governments that are front-ending their strategies by handing out big checks are playing catch-up sadly and trying to cover-up the latency in their leadership.

Was there Chinese misinformation?

I am still pondering that question. I do read (in English) some of the Chinese published reports and newspapers, and one can discern the degree of doctoring in what is published. While the subject of Chinese government control practices is a longer one, in this case, this wasn’t an internal issue, because it has affected how the world reacted to this pandemic. I wished China had done more to sound the alarm bell earlier, and been more prescriptive with the rest of the world about what they learned and what they did. It appears they are doing more now, but also the fire is now raging. It is no longer the flame it was in January outside of China.

Focus on self-reliance and savings

Many people live paycheck to paycheck. Many businesses rely on daily cash flows to continue operating. While this is inescapable for many, the current situation is a time to consider ensuring that emergency funds are always in place. I am sure credit card bills are going to go-up as a result of going through this crisis.

Bill Gates’ Moment

We are all thirsty for knowledge trying to understand this global virus situation, and I do believe that the more informed we are, the better we can fight it and curb it. There is more to it than learning about regularly washing our hands, a practice that was religiously ingrained in me at a young age. As the son of a doctor, my Dad used to wash his hands at home like he was scrubbing for surgery, and washing our hands prior to a meal was a rite of passage into the dining room table.

I was particularly impressed and learned a lot watching this recent TED video interview of Bill Gates by Chris Anderson. I highly recommended it. It made me more knowledgeable, and mentally better prepared to deal with COVID-19. Bill Gates has been thinking about pandemics and how the world can deal with global health emergencies much longer than most of us. His depth and insights shine throughout the 50-minute interaction.

I liked his idea of issuing digital certificates to record and verify that people have been tested, and following that with a national (maybe global?) tracking system. I am sure blockchain enthusiasts will jump on that idea, but there is more to it than just technology. A good database system could do the job equally well.

Bill Gates notes the tragedy of this situation is that we are going to take the pain in the economic dimension, in order to minimize the pain in the disease and death dimension. He says, “Bringing the economy back is a reversible thing, but bringing people back to life is not.”

Like many other tragedies of our times,- world wars, civil wars, natural disasters, previous health outbreaks, global terrorism, we will survive them and get stronger as a result. The world is resilient.


28 (Tougher) Questions for the SEC on Blockchain Regulation

There is mounting pressure on the Securities Exchange Commission (SEC) to further clarify their policies and positions pertaining to the impact of blockchain technology on the financial sector. Of specific interest are the classification and regulatory requirements pertaining to the initial generation of cryptographic tokens that are tied to new companies, protocols and projects.

Arguably, the SEC is the most influential (and largest) securities regulator in the world. By their actions (or inactions), they have considerable influence (and overreach capabilities) over what other financial regulators decide around the world, and how they think about this space.

Despite some innovative directions from other jurisdictions such as Malta, Gibraltar, Liechtenstein, Cayman Islands, Singapore, the UK, Japan, and Switzerland, and the publishing of thoughtful reports from FINMA, FCA (and one from the UK Government), MAS and ESMA, a substantial and well researched report from the SEC is still missing.  

For background, in December 2018, SEC Chairman Jay Clayton was interviewed twice, at the Consensus Invest conference, and by Andrew Ross Sorkin on TimesTalk. Unfortunately, both interviews were dominated by soft ball questions, and neither interviewer challenged him with more pointed questions. Previous to that, on June 6th 2018, Chairman Clayton sat down with CNBC’s Bob Pisani to discuss the SEC’s position. One week later, William Hinman, Director, Division of Corporation Finance gave remarks at the Yahoo Finance conference titled, Digital Asset Transactions: When Howey Met Gary (Plastic).

While Chairman Clayton and Director Hinman tried to clarify some positions, the outcome of their interviews and talks included contradictory implications, continued lack of clarity, and resulted in more market confusion. What is even more problematic (and unfortunate to entrepreneurs) is that the SEC continues to believe that the status quo in continued enforcement of existing rules is the best path forward.

There are some key (and tougher) questions on people’s minds. Here is a list of questions we should be asking the SEC. The industry is eager to see the SEC try to answer them with depth and substance.

Can you define “sufficiently decentralized” more precisely? And clarify whether that is the one and only condition for the classification of tokens as a utility? If not, what are other conditions? And why have you said that only Bitcoin and Ethereum are not securities?

How do you envision the progression process from a token generation event to the classification of a given token as a utility? If you have assumed that all tokens are securities to start with, what evolutionary path could make them cross-over to a non-security status?

Since you are planning to lighten up the filing requirements for small to medium public enterprises, why not consider the emerging token-related projects category in the same league, and provide a lighter regulatory regime?

What are your comments on the recent bills that are being proposed?

Specifically, the Token Taxonomy Act (H.R. 7356), introduced on Dec. 20, 2018, by Congressmen Davidson and Soto; “To amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude digital tokens from the definition of a security, to direct the Securities and Exchange Commission to enact certain regulatory changes regarding digital units secured through public key cryptography…”

Would you consider a moratorium on new actions similar to the historic stance the White House took in 1997, when they issued a seminal report called Global Framework for Electronic Commerce, specifically outlining a “Do no harm” policy?

I have outlined this historical precedent, in this article, Revisiting “Do No Harm” for Blockchain Regulation.

What scares you the most about the cryptographic tokens? What are the open issues and questions that you are currently grappling with? How about sharing them publicly and asking for input?

Do you only see blockchain technology as DLT or also as a business model catalyst? Do you believe that the blockchain ha more profound implications than just being a DLT that offers efficiencies to the financial markets? Why not recognize there is something new here in terms of business models?

During the interview with Bob Pisani, Chairman Clayton’s opening remarks were: “Let me start with the technology: distributed ledger technology; incredible promise. It can drive efficiencies not only in the financial markets but in a lot of markets.”

But, the blockchain is a lot more than “distributed ledger technology” (DLT), which represents maybe 10% of its potential functionality. DLT is a simplified moniker that floats in enterprise circles. It is a limiting way to view the blockchain, and is typically used in the context of: DLT is OK, but cryptocurrency is not.

A more exciting opening statement might have been “the blockchain is a fundamental technology that is potentially as significant as the web, and therefore we recognize its potential disruptive characteristics, not just on the market, but on us as well.”

Is the entire staff at the SEC fully aligned with the same positions, or are you having divergent views on how to tackle the space?

What are your thoughts on “security tokens”? Will you allow the tokenization of native and non-native assets on the blockchain in areas such as real estate and commodities?

Do you plan on releasing clear guidelines that would include the conditions for which not all tokens are perceived to be securities?

Do you recognize that one role for these tokens is to be a currency, therefore it cannot be a security. Is currency considered a security?

In the June 2018 interview, Chairman Clayton said: “… cryptocurrencies, these are replacements for sovereign currencies,- replace the Dollar, the Yen, the Euro with Bitcoin. That type of currency is not a security.”

By acknowledging that cryptocurrencies are replacements for sovereign currencies and not securities, did Chairman Clayton put his foot in his mouth, or is that a bankable statement?. Today, many cryptocurrencies are on that path. By creating their own private economies, cryptocurrencies such as Kin or Steem are fiat replacements where users earn them and spend them. Therefore, they should not be considered as securities.

Under which circumstances are tokens considered a utility?

Are you worried that your current stance and positions have forced companies to seek other jurisdictions and has reduced the level of blockchain entrepreneurship activity in the US?

Would you consider exempting from registration overall or individual investments below a certain level?

What experts have you consulted with in order to educate your staff with a deep understanding about the blockchain?

Have you been consulting with other jurisdictions outside the US? Do you plan on co-ordinated policies or positions across different nations?

Are you co-ordinating with other regulatory entities in the US, such as a joint and common policy is clearly communicated? Do you plan on, or can we hope for universally co-ordinated actions, such as what CFTC Chairman Giancarlo has already advocated?

Why haven’t you published a comprehensive report or asked for public consultation in a meaningful way? Some examples include what the CFTC or FCA have started.

Do you plan on publishing your learnings from the dozens of subpoenas and voluntary information requests you have conducted in the past year and a half?

Would you go out on the field and present your latest thinking while meeting entrepreneurs? Why not engage amicably instead of antagonistically with the industry? (eg. FINMA has done 3 public roundtables in Switzerland)

Can you lay out your plans and priorities for the next 12 months pertaining to cryptocurrency and blockchain technology?

Can you clearly state your position pertaining to alternative trading exchanges?

What specifically are you seeing as lacking in the ETF proposals? Why not make that public?

What innovative steps are you taking that allow entrepreneurs to be innovative while still protecting consumers? Are you not worried that you may be throwing out the baby with the bath water?

What is your viewpoint pertaining to stablecoins, especially those that are pegged to a fiat currency?

Do you realize that a lack of cohesive, comprehensive, published guidelines is actually creating confusion, uncertainty and is equivalent to cryptic messaging where the market is left reading the tea leaves and guessing your next moves?

Are you considering opening a new registration process for ICOs?

Have you undertaken a thorough analysis of what other jurisdictions around the world have been doing, and whether there are learnings or best practices from them?

It is unfortunate that the SEC is digging their heels by saying that the current regulation “will continue to work well”, while not recognizing the blockchain’s novelty elements.

To imply there is nothing new here is an insult to entrepreneurship, startups and the whole US tech ecosystem.

The SEC has not been open with the industry. They have left the industry trying to second-guess them, and read their tea leaves. Their real agenda is not clear. It is hidden.

For the sake of the industry, some further clarity is needed.

The market expects more thought leadership from the world’s leading and most respected regulator. If not now, when?


Marketing Strategies and Practices for Blockchain Projects and Startups

If you are a blockchain startup, open source project or decentralized protocol and believe that you don’t need the right kind of marketing to succeed, think again.

“Marketing” has traditionally been a weakness in the early lives of many tech startups for a variety of reasons. Most startups are often led by young or inexperienced CEOs or project leaders who come from a strong engineering or product mindset. These founders either don’t understand or don’t appreciate the value of marketing, and certainly that comes from a lack of experience or education on the subject. Most blockchain companies/projects founders are no different.

At the root of this situation lies a common and fundamental misconception: not knowing the true meaning and functions of marketing.

Marketing Mistakes

Wrongfully, marketing is prematurely equated to shouting about a product prior to having it ready for the market to try. Others think that marketing is about hiring a PR firm, polishing a website, publishing a blog post, promoting on social media, designing a great logo with new colors and fonts, or producing videos about your product.

Unfortunately, during the ICO frenzy days, the term marketing has been bastardized around excessive usage of the above named activities. Therefore, marketing has received a bad rap in blockchain circles because it has been equated to pumping bad ICOs where the marketing consisted of purely unchecked promotion.  

In the past few months, I have had several conversations with founders of blockchain related projects and companies who clearly didn’t seem to understand, let alone appreciate the value and priority they should be giving to doing a better job at marketing. When I challenged them on their marketing, or broached the topic, the responses ranged along the following flavors:

  • We’re not ready for marketing until the next product is released and announced
  • We have it in the budget for next year to hire a PR firm
  • I’ve been doing videos that will air as advertising later
  • We prefer to deliver first, and then talk about what we have done
  • Marketing is expensive and we don’t have the budget now
  • We hired a design firm and redoing our website with a new visual identity
  • We don’t need marketing, we focus on our community on Reddit

All of the above are the wrong answers, and point to not understanding the various parts of marketing.

Marketing is a Process

So let’s start with the basics and further discuss what marketing is, or is not about. First, there are 3 parts to marketing:

  • Product marketing – explaining what the product does (features/benefits), and how it is differentiated from others.  Goal: Positioning the product.
  • Corporate marketing – positioning the company and communicating its messages in a variety of means. Branding and Marketing Communications is a big part of it. Goal: Generate Awareness and Preference.
  • Customer marketing (sometimes labelled as field marketing, direct marketing or content marketing) – getting in front of your target market to generate adoption, leads and sales. Goal: Generate Adoption and Loyalty.

The kind of marketing that is often deficient in blockchain companies or projects is Marketing Communications, i.e. how to strongly and clearly message in a few words what your project, company or product do for the user/customer. But this must be done as a continuum. Messaging is not a single shot of sound bites around a launch event. To make it even more effective, it must be customized to the specific audience you are trying to reach: customers, investors, employees, media, influencers, partners, etc.

The process of creating the messaging is a complex exercise that has several layers designed to answering the WHY, WHAT and HOW of your value proposition. Many companies nail the WHY (Elevator pitch), but don’t follow through with the WHAT (Competitive positioning and Core value proposition), or the HOW (Product/Solution messaging and Technology differentiation).

Marketing is a process that evolves along a series of objectives, from Awareness, to Consideration, to Trials, and then Loyalty. Different tools are effective for each one of these steps. For example, thought leadership focuses on the awareness aspect and trying to shape the market by educating it. The brand leadership helps to influence the prospect’s perception towards you. You want to gradually progress from letting your target market care, understand, believe, then act to try your product.

Brand Strategy First

Here is the right order of progression for the following activities:

  1. Brand Strategy
  2. Positioning Statement
  3. Messaging Elements
  4. Visual Identity

Sadly, a common mistake I see is starting with the visual identity and thinking that it is branding. Often, that is the result of being led by an inexperienced CMO or one that came from the PR/Communications side, or when the organization has hired a brand design firm instead of a brand strategy firm. Most brand design houses (and some PR companies) will tell you they will take care of your messaging and branding, but that is the tail wagging the dog. Brand strategy takes a very unique skill, and there are few brand strategy experts that do a great job with it. One brand strategy firm with whom I have had experience working with, is Brandsinger.

In a nutshell, if you are not occupying a position in the minds of users/customers (and the prospective market), then your brand value is zero. Someone else will come and articulate their value proposition better than you, and will subsequently occupy that position. If you are first to deliver a product, it may not matter. You need to be first in occupying that specific position in the minds of your target market. The battle is a battle of the minds, as rightfully spelled out in the seminal book on that topic Positioning: The Battle For Your Mind, a classic book that I have perhaps read over 20 times (over a course of 25 years), and almost memorized and put into practice accordingly. The sequel to that book, – Marketing Warfare, is also a must read marketing classic from the legendary Ries and Trout, the two authors of that series of work.

Blockchain Examples

Let’s give it some blockchain and cryptocurrency flavours.

Bitcoin occupied first the digital money position and still does to this point. Ethereum exploited a weakness in Bitcoin,- its ease of programmability and development platform potential, and it currently owns that position. All other (newer) blockchains have to attack Bitcoin or Ethereum as the reference points. Most of them have to raise the volume and intensity of their marketing in order to make an assault on these established leaders. It is always more expensive to attack than it is to defend a position.

ZCash and Monero have exploited the privacy niche. Coinbase occupies the safety ladder in cryptocurrency exchanges. Binance is trying to attack it with a me-too strategy focused on scale, and they are extending their brand with new services. LoomX has been good at becoming a Layer 2 leader for Ethereum. Take any other segment. For example, when you think file storage, you probably think Storj or Filecoin because that’s the position they are occupying. When you think prediction markets, you probably think of Augur or Gnosis. And when you think of stablecoins, Maker comes to mind.

Back to Basics

For those of you who know me from the blockchain market only (over the past 6 years roughly), you may not know that I’ve previously spent a long career in sales and marketing with a variety of positions and experiences in direct sales, field marketing, corporate marketing and several startups as founder and default chief marketer. More specifically, since I exited the operational world via my last startup in April 2013, I’ve written extensively about startup marketing in the early years of this blog. All of it still applies, as I focused on explaining the basics of market positioning, marketing strategy, messaging, brand strategy, and related marketing topics.

There is no point re-inventing marketing for the blockchain sector. So, I’m going to link to some basics that I’ve already written about. Here, I collected the 12 most pertinent blog posts into a single one that links to them: Startup Marketing Compendium of 12 Posts on Positioning, Branding, Messaging and more. Then I wrote one more, The Biggest Blind Spot of a Startup CEO is Ignoring Their Brand.

So please go read that series, and if you need help implementing some of that, don’t start by hiring a PR agency. Rather, take an introspective view, and hire the right marketing person first.

Another common weakness with blockchain companies is they fail to tell their stories in non-technical terms to the market. It is not enough to excite the developers.

And don’t just focus entirely on social media publishing. Unless you have 1 Million+ Twitter followers in your target audience, promoting on social media will only make a dent in your awareness goals.

Remember, marketing is not just writing a press release. It is not shouting from the rooftops. It takes finesse, planning, thought, accuracy, targeted actions, and iterations to get it right.

And timing is so important. Sometimes the marketing is way ahead of delivery, and sometimes it is way behind it, but when the timing and sequence are right, that’s when the magic of results happens.

Allow me repeat this: marketing is a process. Learn it, acquire experience in it, practice it, but don’t be amateurish about it.


The Blockchain is Still Waiting for its Web, Here is a Blueprint for Getting us There

the-road-aheadThe blockchain landscape is still very technical. Aside from the early enthusiasts and pioneers, it is hardly comprehensible to the masses, and it will continue to be that way, unless it breaks out of its technical shell.

This isn’t unlike the predicament the Internet was stuck in, prior to the Web.

So, what if blockchain technology is more like the Internet, which means that we are still waiting for its Web layers to emerge, in order to fully exploit its capabilities?

Today, blockchain protocols, solutions, or platforms are not straightforward to work with. At least, they require a good degree of technical know-how that far exceeds what an average web developer or savvy semi-technical business person can do with the Web today. But does it have to be that way forever?

Blockchains Have Many Common Features

If you examine the variety of available blockchains, many of them handle the same few basic functions, centered around recording (digital) value without requiring a third party to move it.

Outside of this core capability, a number of additional functions and features are typically found:

Blockchains Interaction Layers

  1. Central nucleus: Records of Value
  2. Basic Features Layer: Ownerships, Balances, Transfers, Assets creation, Time-stamping, Security, Programmability.
  3. Interaction Layer: Verification of transactions, Proofs (of existence, or other), Movement history, Technical or Business Logic, Storage, Settlements, Identity, Naming.
If this set of functionality is generic in multiple blockchain platforms, why do we need many ways to call them up? Why not institute a common way to check identity, asset ownerships, time-stamping, etc. across any blockchain?

Note that I didn’t include cryptocurrencies, shared distributed ledgers, or even decentralized protocols in these layers because they are applications and outcomes of blockchains.

If you stand back from the nitty gritty of these layers, you will realize a key abstraction that is common to most blockchains: how they shatter the intermediary trust paradigm by enabling transactions to occur at the peer-to-peer level, without the necessity of central choke or delay points.

Since there is so much homogeneity in functionality intent, then why are there so many different and incompatible blockchain technologies and software? That’s because each blockchain implements these basic features and interaction layers in its own way.

Learning from the Web’s History

This scenario is not unlike the position the Internet was in, prior to the Web. Tim Berners-Lee described that period well, circa 1989: “In those days, there was different information on different computers, but you had to log on to different computers to get at it. Also, sometimes you had to learn a different program on each computer. Often it was just easier to go and ask people when they were having coffee…”.

Since millions of computers were already being connected to a fast growing Internet, Tim figured the way to solve this problem was to have them share information via an emerging technology he proposed, called hypertext (structured text that uses logical links between nodes containing text) that he described in a seminal 1989 document called “Information Management: A Proposal”.

“By October of 1990, Tim had written the three fundamental technologies that remain the foundation of today’s web (and which you may have seen appear on parts of your web browser):

HTML: HyperText Markup Language. The markup (formatting) language for the web. URI: Uniform Resource Identifier. A kind of “address” that is unique and used to identify to each resource on the web. It is also commonly called a URL. HTTP: Hypertext Transfer Protocol. Allows for the retrieval of linked resources from across the web.” [Source: http://webfoundation.org/about/vision/history-of-the-web/]

As a footnote to this backdrop, Tim’s boss originally gave a lukewarm response to the paper, handwriting on it “Vague, but exciting”. In truth, some vagueness in a protocol is a good feature, because it implies that its scope is widely encompassing, without being too restrictive. One could argue that Satoshi Nakamoto’s paper was also vague, pertaining to the fullness of its targeted applications beyond the peer-to-peer exchange of electronic money. Ethereum, for example was built specifically as a general-purpose blockchain platform environment, and didn’t want to be specific, as an original design objective.

Since their early days, the Internet and the Web have matured nicely, and today they both rely on close to 200 standards, categorized along the following segments:

  • Web Layer: HTML, URI, Java, CSS and more.
  • Application Layer: HTTP, DNS, FTP, SMTP, POP and more.
  • Transport Layer: TCP, UDP, DCCP, RSVP and more.
  • Internet Layer: IPv4, IPv6, IPsec, ICMP, IGMP and more.
  • Link Layer: ARP, PPP, Ethernet, DSL, ISDN, FDDI and more.

[Derived from: Internet protocol suite, https://en.wikipedia.org/wiki/Internet_protocol_suite.]

These standards are what make the Web work so well. When you are developing Web applications, setting up an infrastructure, or building new products, you interact (directly or indirectly) with these standards, knowing exactly what to expect.

Unfortunately, blockchains don’t have that luxury yet, as each platform is made-up of its own set of technologies and methods to work with it, resulting in a balkanized learning curve and adoption behavior for software developers and architects.

Blockchain Technology is Too Fragmented

Each blockchain has its own set of technology tools, middleware and API’s that applications developers need to contend with. An engineer that knows how to program Bitcoin needs to relearn what they know, in order to develop on other blockchains. For example, exchanges that support multiple cryptocurrencies have to deal with different integration technologies for each implementation.

It is true that each blockchain platform has developed its own technology stacks and interaction methods, but these are vertically integrated to themselves, and for their own ecosystem. In fact, most blockchain platforms don’t share that much in common, resulting in choice lock-ins, lack of interoperability, and potentially dead-ends that are hard to untangle.

The state of collaboration between blockchains is even worse, and plagued by timid efforts for building bridges and lateral co-operative capabilities. One day, it shouldn’t be inconceivable to have technology that crawls entire blockchains, in the same way that search crawlers spider websites to index or categorize vast content.

Of course, many technologies start by being proprietary. What follows is that some of them get adopted widely, and they become de-facto standards. In other cases, groups get together and agree to support a given standard, to serve everybody. Today, not enough of the latter is taking place, although many leading blockchain technologies are hoping to gain enough market klout that would let them become that de-facto choice.

In hindsight, I wished we didn’t give up on Bitcoin APIs so quickly. Two years ago, Bitcoin APIs were all the rage with more than a dozen companies vying for that space, as the entry point to develop Bitcoin applications. Then, the majority of them slowly opted out of that business, or stopped highlighting it as a key offering. Today, we still have several (Bitcoin) API-based offerings from companies like Factom, Tierion, Gem, Colu, BlockCypher, Neuroware, and Coinbase (to name a few). There are benefits to seeing a multitude of APIs take hold and get adopted. Even if some of them overlap in functionality, at least they will point to the need for an eventual standardization.

Bitcoin is making progress at its own pace, via technology releases aimed primarily at solidifying its own ecosystem. Although they have the largest cryptocurrency footprint, that doesn’t negate the need for their technology to also work with other parts of the overall crypto-tech ecosystem.

The Decentralization of the Web Rewires Standards

In order to grow-up, blockchains will eventually need a lot of standards that are vendor and solutions agnostic.

So many areas are ripe for standards developments: smart contracts, tokens, security, storage, messaging, identities, naming, record-keeping, and more.

The Internet and the Web have their standards. Where are the blockchain equivalent? 

A standard set of middleware interfaces would insulate participants from the hardest parts of the technology, and expose more succinctly its utilitarian features. Lowering the barriers of entries would empower more developers to enter the blockchain, similar to the roles that HTML, HTTP, URLs and Java played for the Web.

Distributed applications that run on a blockchain infrastructure are architected differently than Web applications that were built for the Web’s architecture.

In a traditional web application, you have client side Javascript code that is run by users inside their browsers and server-side code that is run by a host or company. By contrast, in a distributed application, you have smart logic running on a virtual network of computers (the peer-to-peer network), and client-side code running in a special browser (or client), with the blockchain ledger acting as a shared resource.

With this new type of rewiring, comes the need to also rewire a variety of blockchain standards and technology layers.

Conceivably, blockchains could rely on a number of standards above the Internet’s existing standards, to allow a smooth bridging from one layer to another. That would be a breakthrough.

A blockchain universal stack could resemble something like this. Basically, we would add 3 layers on top of the Internet:

Blockchain Standards Topology
  1. B-Browsers – Users interact with them, Apps gets plugged here.
  2. B-Standards – Where Trust-related standards would play, as depicted in my “Interaction Layers” diagram.
  3. Blockchains – Various blockchain technology and platforms serve functions.
  4. Internet
  5. Networks
  6. Computers

Blockchain browsers (B-Browsers) are going to be important, as we will start to see them in 2017. They will be used to launch blockchain applications, and might look like normal applications we are familiar with, except that they will carry with them some new features that are enabled by blockchain back-ends (instead of databases).

Some of the exciting new blockchain browsers to watch include MetaMask, Blockstack and Mist. These currently have a technical slant, and they are not yet geared at the casual end-user, but they will eventually evolve to become more end-user friendly. A new breed of blockchain applications will come in the form of peer-to-peer browser experiences (e.g. OpenBazaar), while another type will be bolted straight on the current Web, but with a blockchain back-end (e.g. Steemit).

A trust services layer could be that API veneer that homogenizes how we create, move, check states, inspect proofs, follow historical paths, etc.- i.e. perform the functions that blockchains handle well.

Blockchains interoperability is inevitable, but we don’t know exactly yet at what levels, unless we get closer by iterating near the real friction points.

Discrete Efforts Are Not Enough

Nothing great has ever been adopted widely all over the world, unless it was somehow homogenized to make it easily assimilated by the masses.

We need universal tools that no one owns, but that benefit everybody, similar to the Web technologies that liberated the Internet.

Tim Berners-Lee explained why this was so important for the Web: “Had the technology been proprietary, and in my total control, it would probably not have taken off. You can’t propose that something be a universal space and at the same time keep control of it.”

There are promising examples of blockchain related standards, and we need to see more of them.

In the de-facto category, two notable mentions are IPFS (Inter Planetary File System), and an Ethereum-led token issuance standard, labelled ERC20 (which is becoming a de-facto standard in Initial Cryptocurrency Offerings). IPFS is not just focused on the blockchain, although they are a good match, as IPFS has proven to be popular with blockchain applications (e.g. OpenBazaar), where permanent IPFS links get placed into a blockchain transaction.

A few consortiums have also placed blockchain standards on their working agenda, and I enumerated them in my State of Global Blockchain Consortia article.

In the industry-led camp, we will need to follow the ISO/TC 307 Blockchain and electronic distributed ledger technologies technical committee who has stated their serious intentions by partaking in the blockchain standards roll call.

On the enterprise-side, the jury is still out, as vendors place their software in open source repositories, or declare an open standard with a handful of their customers, in the hopes of letting this work become a real standard via sheer adoption, e.g. Hyperledger, Digital Assets, Chain, and R3. Placing software in the open source realm is a good practice, but there is a difference when it starts that way from Day 1 (e.g. Bitcoin, Ethereum) versus doing it a posteriori to gain more market acceptance.

Furthermore, I am a firm believer that private and public blockchains need to also share common standards. It would be inconceivable that the Internet and private Intranets wouldn’t interoperate or interconnect at the very least; yet, we are building private and public blockchain technologies and applications without due regard to the inevitability of that intersection.

Let’s Not Compete on Standards

Yes, I am seriously talking about standards. It is not too early, even if I thought last year that we shouldn’t rush blockchain standards before their time. In 2017, we will need to start seeing serious discussions about universal standards, along with real intentions from industry participants to work together for that aim to materialize.

We need to realize that, in addition to competing in the marketplace, we have to also co-operate on common technical objectives.

In an ideal world, the blockchain field would produce an orderly architecture stack that carries popular standards, commonly used by all of its participants. It would be the resulting mix of de-facto and industry-led standards.

As a side benefit, the existence of standards could also lubricate network effects, a much needed success characteristic. In turn, that would entice new marketplace entrants to focus on their differentiation, instead of building the same overlapping technology pieces.

You don’t typically win by competing on standards, yet you don’t know what is a standard initially, so you might start by competing on everything. A sign of industry maturity will be seen when we hear of companies dropping certain proprietary technologies in favor of cooperative efforts.

That said, we shouldn’t suspend everything in order to just work on standards, in a vacuum. Vendors and blockchain core developers must continue to work on their own technologies while closely monitoring adoption, and always being sensitive about opportunities for industry collaboration. We can’t force standards on the market, but the market will need to embrace standards over time.

If blockchain technologies ignore the eventuality of standards, we are going to see less adoption.

Maybe we should think of the blockchain as a public good utility, and encourage an evolution that is not unlike the Internet’s, in terms of openness and neutrality of access.

Will the collection of blockchain technologies turn into another giant Internet, or will their journey unfold into a messy and fragmented evolution, like the database market, prior to its consolidation?

We have had the blockchain for a while, and it is gaining adoption. New and exciting applications are being built on blockchain technologies. Now is the time to realize that the blockchain’s best future days ahead will depend on how well we expose its capabilities more universally, and more openly. If not now, when?


Why Blockchain is the New Website

Fast forward to 2015. The blockchain is the new website. Yes, blockchains are geeky, (and the challenge is to take out that geekiness), but fairly soon, every company will have a blockchain, or be on a blockchain, or several ones, just as organizations are involved in many websites today.

Why is the blockchain like a website, and what’s the novelty that blockchains bring to companies, individuals, society and governance?

If the website was the starting point, let’s remember the key mini-revolutions that the Internet brought us since 1994: Personal Communications, Self-Publishing, E-Commerce and the Social Web. In hindsight, each of these four phases was defined by the functions they disrupted: the post-office, print media, supply chains/physical stores, and the real world.

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From 2015 onward, we will enter the Blockchain Promise phase, demarcated by the key theme of Decentralization of Trust, unleashing the advent of value flow without intermediaries.

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The blockchain is therefore a capability for Exchanging Assets Without Central Intermediaries. With the decentralization of trust, we will be able to exchange anything we own, and challenging existing trusted authorities and custodians that typically held the keys to accessing our assets, or verifying their authenticity.

We can think of Bitcoin as the training ground for what blockchains can enable, because Bitcoin is the most widely used blockchain application, containing all the required elements of a new economic ecosystem with committed participants and a good degree of technological, business process, societal and governance innovation.

Bitcoin, the cryptocurrency, is the quintessential digital asset class that moves efficiently and transparently across a global blockchain that knows no boundaries. Think about other asset classes that you are familiar with that can mimic Bitcoin’s capabilities, and you can start to imagine some of the possibilities. Therefore, if you haven’t used Bitcoin first-hand, you may not get the inherent advantage of a quicker appreciation and understanding of its potential. Seeing assets move swiftly without intermediaries is an eye opening experience, and that is just a starting point. It’s like surfing the web for the first time, which suddenly gives ideas about the possibilities ahead.

The fundamental innovation with the blockchain is that the ownership of the asset is with the owner of the asset, not with a (central) party who owns a database that points to a record that says who is the owner. The current status of accounts and ledgers for money or other assets are really mirrors of some (central) database that determines who owns what. When you initiate a transaction from your own accord, the database reacts by conducting checks and balances, and then makes an update that reflects the changes after the finality of a settlement takes place. If the central authority wanted to lock out user/ownership access, they can.

Instead of requiring each central intermediary to maintain their own database, and burdening them with reconciling it with another recipient database, the blockchain is a record that is shared by multiple parties who have a stake in it, and agree to participate by updating a single version of the database (ledger), each adding their own part of the pie. But this read/write aspect is not the only difference. There is added granularity around access rights by whom, of what, when, and under what conditions, yielding an entire spectrum of programmability and optionality.

Imagine if any real world asset could be mirrored on the blockchain either directly (via transfer or creation), or indirectly (via anchoring), it would create a large inventory of tradeable blockchain assets, and a resulting groundswell of economic activity.

So, the first steps involve finding what is appropriate for the blockchain, starting with your current operations. Just as with your first website when the question was: “what information can we publish on it?”, there are initial questions you can try answering first, to uncover potential blockchain use cases. Namely:

  • what types of assets can we transfer or create on the blockchain? (use case example: the Nasdaq Linq private stock exchange initiative)

  • what data or processes can we notarize on the blockchain, so we can later enable peer to peer transactions to occur without someone in the middle to check them (use case example: the KPCB Edgecoin project)

Therefore, the blockchain is an asset normalization platform that can enable a new liquidity in transactions, hence creating large networks of usage and value effects, with benefits in speed, cost, quality or outcomes. For example, what if all the loyalty points and rewards you own could be tradeable against a common cryptocurrency that is global and universal, and that would create a new giant marketplace of value exchange.

Moving assets, identities, ownerships, contracts, balances, records or data on the blockchain may be the first phase of getting direct exposure to it, and the equivalent of the electronic brochures depicted by the first websites in the mid-90’s.

How do you initiate steps to get you there?

Scan each area of your operations, and retrace your steps from when you first dipped into the web, and find out if there are analogies worth implementing.

Study how to write smart contracts, which is the basic unit of programming a blockchain for business purposes. It is the equivalent of being taught HTML and Java during the early Internet days. And master how to create assets or tokenize existing ones on a blockchain. Learn how to interact with some of the leading blockchain APIs and become versed in how to program a blockchain. Acquire this knowledge internally, and don’t outsource it, because you would be outsourcing the experience you need to gain from your own direct interactions with the technology. Finally, pair a technical person on your team with a business manager, and let them keep their minds in lockstep until their creativity juices start flowing into these magical moments that happen when business and technology understand each other. Repeat that pairing process across as many departments or business units as needed.

Think of any current process that can be replaced by a decentralization-focused construct that can be governed by blockchain transactions, where value can be created and exchanged. Similar to the web, you will be able to set-up private blockchains (like a private Intranet). And you will be expected to link your blockchain with other companies’ blockchains, so getting ready internally will make you ready to deal with your partners.

Some people say the word blockchain is obscure and we need a better, friendlier word. But I don’t necessarily agree, unless you’d like to replace it by “exchanging assets without central intermediaries”, or “programmable trust language”, or “distributed ledger”, but each one of these verbose options offers a limited definition. The Blockchain is a good choice of words, and we will soon get used to it, just as we did with the Web, the Internet, http, TCP/IP and other new technological innovations that keep entering our vocabulary.

Like the Internet and the early websites, you need to get on the blockchain first, before you can uncover new and unique use cases where innovation can thrive, and where new services, opportunities and markets will be created.

Place the blockchain on your agenda now; strategically, tactically, operationally and educationally.

The blockchain is on its way. It is destined to become the new website.


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