There’s a lot of speculative investment happening in the blockchain space, but not a lot of real use. This will now change, when reality kicks in and new players get involved.
Jilles van Gurp
November 14, 2019
“I don't sell hype. I sell my skills as a craftsman, answering mundane questions like: What are we building? How will this work? How do we stay safe?” I see myself as a glorified plumber. You have a lot of people specialized in machine learning or deep kind of algorithms. I'm not that kind of person. But I know how to use stuff, and how to fit stuff together.
What is a blockchain? It's very simple, it's a shared bookkeeping system that is tamperproof through cryptographic means. What blockchains do is essentially to revolutionize the core business of what a bank does. Banks maintain ledgers. And a ledger is just an account of what's in their bank and what's going in and out for each of their customers.
What is a blockchain? It's a ledger. So basically it decentralize the ownership and management of ledgers. So a large part of what a bank does, as in updating and keeping of that ledger now is no longer in their hands. So there are going to be a lot of questions about the value of a bank.
So there is a couple of variants of blockchains. You might have heard of a thing called mining. It's one variant. Mining is super expensive, and not very environmentally friendly because it involves burning a lot of energy to implement in something known as proof of work. It's not really practical to transact in bitcoin. Because it's super tedious. It's very slow. It takes like minutes, or hours before you are really sure that the transaction happened. So it's not something you’re going to use when you pay for coffee. But as a holder of value, it's potentially interesting. People historically consider gold valuable. And yes, it has some practical use, but mostly it's valuable because it's rare and shiny. So it's nice to look at. And bitcoin, of course, is not very shiny. But it’s artificially rare.
What’s the hype about? The hype is partly utopian thinking. So there are people that are dreaming about a different world where the evil banks are no longer in control. Then, of course, now reality is kicking in and other people get involved. So we now see Facebook jumping into blockchains. But they are not necessarily doing it in a way that is compatible with the world view of those early adopter utopians.
What’s up with Facebook and Libra? So Libra is the first case of serious group of companies sort of collaborating to take blockchain and build a platform that they can use to build financial instruments. And of course, Facebook’s intention is to integrate that into the chat. And offer a payment solution that is very similar to solutions like WeChat in China, where users basically chat with each other and can send money to each other in a very straightforward way. Or pay for things in a very straightforward way.
From a user point of view, not much changes. But what is disruptive here is that this stuff happens outside of the traditional financial system. And potentially evolves into a new currency. So what happens when a company starts pricing their goods in Libra instead of euros? If you are buying stuff with Libra it also means that you can also earn Libra. There is potential for a whole economy to emerge around this stuff.
What future do you see for Libra? My suspicion is that what Facebook announced probably already led to a little “oh fuck-moment” in several of their competitors, who are probably also planning similar things. And maybe accelerating those plans already. I expect a reaction in the industry where more people start to announce stuff like this. So I think they might be successful, but I don't think they will be alone.
And the future for blockchain? Short term a lot more experimentation. I think there will be a big consolidation face at some point. Right now there are so many things out there and they are not all going to make it. In fact, most of them are not going to make it. But some of them will. If you now look at the blockchain space there is a lot of hype. There is a lot of speculative investment happening. There is not a lot of real use happening. That is something I think will change in the next five years.
Where do you find yourself in this space? In the end, I don't sell hype. I sell my skills as a craftsman. Answering the mundane questions like, what are we building, how is this going to work? How do we stay safe? How do I keep myself and my CEO out of jail. I don't want to be doing dodgy shit. My view as a technologist in this space is very simple. This stuff is happening, it's happening in a lot of different ways. Via a lot of different platforms. It takes to be up to speed on what those things are and how they work. And then selling your skill doing productive stuff with that. That's what I do. And when I'm not working on Inbot, I’m actually freelancing. So if you want your own coin, talk to me.