Think Bigger. Aim Higher. Go Further.

Month: December 2014

Decentralized Integration of Complex Systems

ApolloThe recent Panel at The Future of Money and Technology Summit on Fueling the Decentralization Movement ended on a very interesting point: The Integration of Complex Systems.

The last comments from Chris Peel suggested that the iPhone program was more complex than Apollo and that we are a far way off from the ability to decentralize production to the degree that a space program or revolutionary consumer product would require. From my years in aviation, I am keenly aware that the complexities associated with an aircraft program would be extremely difficult and risky to manage with a series of autonomous agents and smart contracts – as we know them today.

Wisdom of Crowds

However, the proposition made by Joel Dietz at Swarm is significant. Swarm proposes to crowd-select, crowd-vet, and crowd-fund start-ups. Several efficiencies are cited:

1. The crowd knows best what is needed in a specific time and domain,

2. The same crowd is also the first user/customer/advocates of the product, and

3. The same crowd is the first to iterate the project.

Such diverse and comprehensive “single source” domain expertise is unlikely to be available from any Venture Capital Firm.  Instead, far too many start-ups are designed specifically for the Venture Capital process effectively inbred with the centralized DNA.  The VC formula is fairly simple, well documented, and contains suitably developed infrastructure. The VC process efficiently removes promising innovations from a decentralized ecosystem, repackages them, and injects them into the 20th century finance model of banks, brokers, and IPOs.

Today, the decentralization movement is portrayed in the media by silos like AirBnB and Uber, who may eventually expand into other markets (such as Amazon did from books), but from a relative monopoly position of acquisitions, scale, and market dominance – which is the antithesis of decentralization.

Fueling The Decentralization Movement

This Panel at Future of Money was selected in a very different manner.  The idea that I was trying to get at is that an ecosystem is like scaffolding being populated with individual applications. At first they are sparse, but soon they expand to depend upon each other. At first, each of the panelists seemed very different and related only by ideology. As the session progressed, we could see the each of the panelists were filling in the gaps between themselves soon appearing like a full stack.

Paige Peterson suggested that Maidsafe’s ideas and technology would solve specific problems in the crypto-space that the blockchain could not. Christian Peel suggested that Swarm and Maidsafe may reduce scale risk with what Ethereum has to offer. Sam Yilmaz at DApps Fund is betting on cryptoequity and a broad spectrum of “work proofs” as a means of holding these DApps together rather than letting them become disassembled by a single minded Venture Capital process. Of course, our interest at The Ingenesist Project is precisely on decentralizing both supply AND demand as a means of articulating intangible assets to society (ref: Coengineers.com and Curiosumé).

What is Cryptoequity?

“Cryptoequity,” as defined by Swarm (from this Source) is an umbrella term that covers various applications of cryptographic ledger offerings.

These can include:

(1) Product presales in which the token serves as a coupon redeemable for a real world good (i.e. the Comic Book sale done via Swarm)

(2) Product sales in which the token is redeemable for some service in a decentralized network (i.e. Storj or Ethereum)

(3) Product sales which serve as a “subscription” or membership to some decentralized network (i.e. Swarm)

(4) Token which serves as a license to use some type of intellectual property, potentially with an attached legal contract (i.e. sales being conducted in the Swarm 5th of November launch)

(5) “Shares” serving as stock equivalent for organizations that have no legal entity (i.e. BitShares)

(6) Shares serving as stock for legal entities (i.e. Overstock/Medici)

Efficiency in Zero Marginal Cost

The relative benefit of many of these is that it solves an interesting problem related to the near zero marginal cost of software distribution; the fixed scarcity of a good or service allows the market to determine the appropriate price point for a product rather than centralized forced scarcity or management selection.

Decentralized Integration of Complex Systems

If we are to ever reach a point where complex systems (such as space travel or consumer products – or even equitable governance, environmental stewardship, and fair wealth distribution)  can ever be achieved in a decentralized manner, we must start with the integration of decentralized applications among themselves in a decentralized way.  We should not exclusively extract and seal critical components off from an ecosystem and run them through the VC gamut – the disruption goes both ways.

 

Fueling The Decentralization Movement

I recently moderated a panel at The Future of Money and Technology Summit in San Francisco on December 2, 2014.  When I put this panel together, my intention was to make the distinction more intuitive between an economy based in tangible assets and an economy based in intangible assets.   Whether they realized it or not, this particular group of panelists provided early  characteristics of a “full stack” new economic architecture as we described in this early 2009 series: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7

Here is the video of the conference panel.  Below that, are the questions that I had prepared for the group – most of which I did not need to ask.  This panel, in my opinion not only represents some of the most forward thinking people in the crypto-space but also the extremely important integration of applications that are arising in crypto-space.  That is the landmark condition that I am looking for, where applications integrate with each other.

Fueling The Decentralization Movement

 

Below is my prep sheet for the panel;

 

Dan: Welcome to Fueling The Decentralization Movement

 

How many people know what bitcoin is?

Are you familiar with decentralized applications beyond currency?

Would you know how to issue your own currency?

How many people are familiar with Ethereum?

Open: 1-2 minute introduction from each panelist

Q1; Sam. Please define Decentralized Applications (ref: whitepaper) and what you look for in an “investment grade” DApp.

Q2; Paige: Please expand definition of DApp to include non-block chain applications and discuss the off-BCP ways of accomplishing similar results.

Q3: Chris: Where does Ethereum fit in the DApps movement (now and in the next revision) that would facilitate DApp formation and integration.

Q4: Joel: Traditional VC are looking for 1000% on money. Banks lend at 10%, so obviously, there must be a whole lot happening between 10-1000%. What does that look like to you? How could we all release this potential.

Open: Suppose there is a spectrum where on one side, traditional bankers are the ledger holders and adjudicators conjure new money into existence. And on the other side, Bitcoin is a fully decentralized ledger and algorithm that brings new coins into existence. At some point, aren’t we trading one master for another or isn’t their some hybrid model that solves the problems of each? The goal it seems is to be judged as somewhat better than the banking system rather than somewhat less perfect than bitcoin. Do we have priorities s traight?

Open: What are people talking about in the Bitcoin Meetups and the Ethereum Meetups? What is the range of discussion and how viable are the ideas that people are bringing forward? What is the size and demographic of the meet up communities? What do they want to achieve? What are the resentments and where is the optimism?

Open; Nothing economic happens until two or more people get together to build something useful. Virtual goods are cool but something eventually has to touch the earth – to make something real. What can DApps do to bridge the virtual and the real? Stated in another way; when can I buy groceries with my altcoin?

Open: Bitcoin cryptographic “proof of work” creates a new coin and establishes order. The Fiat Banker’s “Proof of future productivity (debt)” also creates a new coin and established ownership. Assuming this to be a trust spectrum; how would “mining” be defined along this spectrum? Can adjudicated smart contracts serve as proof of work to mine coin into existence?

Open: Please describe differences between proof of work, proof of stake, proof of incentive, proof of resource, proof of performance and any number of proofs types. How interchangeable are they, what individual purposes do they serve? Can they combine to serve additional purposes?

Open: Do you believe that decentralization can reach a point where people become their own coin mined by themselves as they accumulate knowledge asset, collaboration, innovation capacity, i.e., representing their own productivity?

Open: What happens when the output of one DApp becomes the input to another forming a fault tolerant network or DApps? Ultimately this has to do with the convertibility of each other’s coins and ultimately convertibility with Fiat currency. What will these exchanges look like?

Open; I like to draw the distinction between classical economics and the New Value Movement. Classical economics posits merchant class allocation of land, labor, and capital for the ideal production of the things that society needs. The New Value movement is describing a decentralized allocation of social capital, creative capital, and intellectual capital for the ideal production of the things that society needs. Where are we on that spectrum and when do you believe that a big flip will happen between the two (if any)? Will it be gradual or sudden? What externalities are involved? Does one hedge the other? What are the possible worldwide implications of this?

 

 

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