Blockchain-Enabled Convergence

Humans often use the past as a guide for the future; this mistake often makes it impossible to adapt to our rapidly changing world. Technological progress is not linear, it’s exponential in nature, making it much harder to grasp. This means we constantly underestimate the pace of change and as software eats more industries, improvements compound as traditionally human-centric industries like healthcare, logistics and agriculture digitise. As these industries come online and capture, process and automate data; ownership of this data will define the state, market and nation over the next half a century. Blockchains are therefore one of the most significant technological innovations since The Internet and fundamental to Web 3.0. Blockchains, distributed ledgers, smart contracts and other decentralisation innovations provide the foundation for a scalable and secure data and asset management layer for the new Web 3.0. It acts as a platform to support individual rights while benefiting from the aggregation of vast amounts of data from the Internet of Things. They also ensure the benefits of artificial intelligence are shared broadly across society and do not aggregate to a few AI owners, or the 0.00001% of the population. The Internet of Things, artificial intelligence, autonomous robotics, 3D printing, as well as virtual & augmented reality

Blockchains are therefore one of the most significant technological innovations since The Internet and fundamental to Web 3.0. Blockchains, distributed ledgers, smart contracts and other decentralisation innovations provide the foundation for a scalable and secure data and asset management layer for the new Web 3.0. It acts as a platform to support individual rights while benefiting from the aggregation of vast amounts of data from the Internet of Things. They also ensure the benefits of artificial intelligence are shared broadly across society and do not aggregate to a few AI owners, or the 0.00001% of the population. The Internet of Things, artificial intelligence, autonomous robotics, 3D printing, as well as virtual & augmented reality are all converging in new and exciting ways. Blockchains will become the decentralised data and asset management layer that links the data and value from these technologies, ushering in the era of blockchain-enabled convergence.

Convergence is not a process that will happen immediately, nor be a simple and linear progression. Trends will combine at different speeds based on technical limitations, political and social barriers, as well as commercial considerations. The market dynamics will vary with industrial manufacturers and telecommunications providers leading the charge in the Internet of Things, while consumer Internet companies like Google and Facebook innovate in artificial intelligence. It is important to grasp the nuances of each market, but in doing so, it’s easy to miss broader macro-trends. The development of blockchains is a good example, as exceptionally talented developers push the boundaries of cryptography with zero-knowledge proofs and smart contracts but fail to see the implications on broader governance structures and political philosophies. These are the kind of things we have been trying to figure out since the dawn of civilisation. It is just as important in technological progress to study Plato and Hume as it is to study Von Neumann and Shannon.

As the rate of change increases, it is critical to understand these technology trends as part of a wider collective rather than as separate developments. Blockchain-enabled convergence is our attempt to capture this wide collective. The first part of the white paper explores blockchains, artificial intelligence, the Internet of Things, autonomous robotics, 3D printing, and virtual & augmented reality to understand the drivers and barriers to adoption. Part two investigates how blockchain-enabled convergence changes the trade value chain from manufacturing and design through logistics and distribution to retail and commerce, and even more profoundly changing the very governance structure of the organisation.

5 Key Themes

The white paper explores an extremely broad range of technologies and markets, yet despite this breadth, we found 5 key themes that kept coming up time and time again. These themes are not technological in nature but rather trends that will reshape markets, society and excitingly, the relationship between humans and machines.

1. Web 3.0 — The Global Trust Network

Web 3.0 underpinned by blockchains and decentralized technologies provide global trust. The core design of The Internet was enable the sharing of information. The core design of Bitcoin, and other open permissionless blockchains, is a network of trust for exchanging value and asset ownership. Web 3.0 provides trust and chain-of-ownership; the missing link with the existing Internet infrastructure.

2. The ‘Real’ Sharing Economy

New digital intermediaries have sprung up so individuals can ‘share’ unproductive assets; spare rooms on Airbnb, spare seats on Uber and spare time on TaskRabbit. These ‘sharing economy’ companies are nothing more than a new middleman sitting between a buyer and seller capturing outsized value. Blockchain-enabled convergence allows seamless peer-to-peer exchange of assets and value reducing the need for trust brokers in the middle of a market extracting economic rent.

3. The Killer Business Model: The Decentralized Data Marketplace

A blockchain-based data marketplace helps solve two major problems in artificial intelligence today, the access to data for those that need it, and monetizing unused data for those that have it. A decentralized data marketplace creates an economic mechanism for individuals and organisations to buy and sell data, reducing the incentive to hoard valuable unused data and remunerating the creators of data not just the processors.

4. The Commoditization of Logistics & Production

Blockchain-enabled convergence transforms the trade value chain. Autonomous robotics, AI, IoT and blockchains will digitise logistics and distribution reducing its importance and therefore ability for companies at this point in the value chain to capture profit. Producers can capture more of the value they create and consumers can pay less. In the long-term, technical deflation will hit the knee of the exponential curve as much of production gets commoditized by 3D printing, and virtual and augmented reality make it cheap to design and print products at home.

5. The Rise of the Decentralised Organisation

The global multinational corporation that developed to coordinate global trade is under threat as the dominant form of governing structure. New decentralised processes for business financing with Initial Coin Offerings (ICOs), incorporation, voting, payments and talent and project coordination are enabling start-ups to choose processes that are suitable for smaller, more agile start-ups rather than using an expensive corporate structure designed for large companies.

Special Thanks to Anish Mohammed, Trent McConaghy, @edcafenet, Vijay Michalik, Creative Barcode, @API_economics, David J Klein, and Ethan Gilmore of VarCrypt for conversations and contributions.

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Blockchain-Enabled Convergence

The DAO — An MVP of a Political System

New Technologies Require Fresh Thinking

Much has already been written about The DAO and what it means for the #future. We’ve had accounting, legal and corporate structure #hottakes — and those guys will have to start figuring this out first. But what has been less discussed about The DAO is the potential political implications. This ‘investment’ club has raised just over $152 million at time of writing and technically allows anybody in the world to invest regardless of wealth, geography or connections. That reduces the friction of becoming a capital owner to almost zero. The DAO isn’t ready for the mainstream public yet, the technical barriers are too high. But The DAO importantly breaks down some assumptions around business structures and capital ownership which could lead to genuine political change. I stress could because The DAO could fail. It could fall foul of financial regulation rendering it impossible to hire contractors. Or it may be forced to only accept digital projects to reduce legal complexities. Such compromises would severely limit the impact of DAOs and prevent the technology from reaching even early adopters, let alone the early majority.

Left versus Right. Market versus State. Adversarial politics makes politics seem pretty clear cut. But politics is played in the middle. Markets and businesses are more nuanced than state ownership versus market ownership. There is always a balance between state involvement, incentivising decisions for the collective good, and market participation, driving competition and economic growth. However, with global inequality, climate change, and the growth of digital globally mobile meta-corporates like Facebook and Google that are more powerful than nation states, there’s a strong argument that the balance has swung too far towards the market, at the expense of everything else.

I’m not here to argue that we need more state intervention because the market is inherently evil, rather that the arrival of new technologies allows us to challenge previous assumptions. Technologies like the Internet, blockchains, smart contracts, artificial intelligence and DAOs force us to examine the premise that the corporation with owners, management and employees is the best organising principle for capital and labour. Automation technologies such as artificial intelligence, smart contracts and oracles or networks of oracles, can automate much of what constitutes management today. With DAOs, employees and owners can be the same.

A New Form of Community Ownership

A DAO 2.0 can provide a third way between state ownership and market ownership of production — community ownership. A communal model is not a new idea, cooperatives, mutuals, building societies and credit unions have been around for some time. But these organisations were limited in their scale and so were organised around job or location. The Internet, blockchain, smart contracts and DAOs mean cooperatives can have members from anywhere in the world who can communicate, lend, borrow, and vote on how to allocate shared resources. These resources can extend beyond funds to include intellectual resources which could make a DAO 2.0 into a sort of community-owned business. Colony, a start-up, is already building something like this. We could see hundreds of Colony’s based on collective shared interests and values. Like Facebook Groups or subreddits with a structure that allows for shared ownership and labour.

A DAO 2.0 as a global cooperative organised around values would stand in contrast to a nation-state organised around where you happened to be born, or a trade union organised around a specific job. Platform cooperatives can take advantage of the global scale of the Internet and blockchains. There could be Digital Nomad DAO, or a Minecraft DAO, or a Greenpeace DAO. They can be as big or small as the community needs. Members lend, borrow, and collaborate fluidly with projects and businesses. Individuals are both owners and labour. The owners, management, and employee divisions can be broken down to better serve society as a whole. If there is no work for a particular worker one week, then they still receive a dividend from the DAO.

The current structure of a DAO is unlikely to be viable and is certainly not a panacea for all of our social and economic issues. But instead of persisting with corporate structures and divisions of labour that worked in the past, why don’t we take a step back and see if there is a better way. Digital platform cooperatives and DAOs have the potential to be a new organising principle for economic and social activity. We should at the very least be treating this opportunity seriously.

The First and Second Industrial Revolutions ushered in new intellectual and political paradigms centred around capitalism and socialism. It would be arrogant of us to believe that today is different and that we live in the final intellectual and political paradigm. The decentralisation trends of the Internet, blockchains, the internet of things and artificial intelligence will result in new social, political and economic structures. At the moment, we lack a framework through which to see all of these trends. I think The DAO is the first experiment in testing a new organising principle. It is unclear if we can Lean Startup our way to a new organising structure, the stakes may be too high to MVP a political system. But it’s not as if any of the previous revolutions were adopted willingly by everyone with a nice and neat handover. They were called revolutions for a reason.

The DAO — An MVP of a Political System

Why I am dedicating my career to Blockchains

Blockchains are not just the next growth market or investment opportunity; they represent the most important democratising force since the Internet. With this is mind, I am joining Outlier Ventures to head up research and partnerships. I will split my time between providing research to our portfolio companies and exploring new investment opportunities and venture partnerships on behalf of our fund, Outlier Capital LLP.

I will work with our existing portfolio companies to help them build sustainable and profitable businesses. MoneyCircles.com is building social banking platform on the Blockchain. Buyco.io is exploring decentralised collective procurement. BlockStars.io offers blockchain consultancy and AssetCha.in is securing valuables on the blockchain.

I leave Frost & Sullivan, a global research and consulting company, after three years as a strategy consultant in the digital transformation team. I helped companies like Amadeus, Shell, Huawei, and Intel to assess the impact of emerging technologies, validate opportunities in current and adjacent markets and create marketing strategies.

After working across many industries, it became increasingly clear that the macro decentralisation trend is reshaping every company and industry.Decentralisation is the framework I use to explore seemingly disparate trends such as the Internet of Things (IoT), 3D Printing, Drones, Deep learning, reinforcement learning and, most fundamentally, blockchains. I published numerous reports at Frost & Sullivan investigating all of these technologies and their impact on industries including agriculture, healthcare, and financial services.

My thesis is that blockchains will be the data management layer in the technology stack that secures and enables IoT to scale, and provides the platform for artificial intelligence to be accessible and to benefit society broadly. Without blockchains, IoT will be insecure and data will be owned, controlled and ultimately locked down by the companies that own the platforms. With tech platforms moving into connected cars, healthcare and education, this just isn’t a case of having all your emails with one provider. A company will know your genomic data, health records, sleeping habits and educational attainment. We must make sure we as a society don’t allow all of that data to be owned and controlled by a single company.

Even more dangerously, the benefits of artificial intelligence will accrue to those Internet-scale companies such as Google, Facebook and Baidu that have the most data to feed their deep learning models. As data network effects kick in, these companies will collect, retain and leverage proprietary data into ever greater economic and social power through their AIs.Blockchains, as an open-source shared data management tool, has the potential to provide a global incredibly large free-to-access data source for everybody in the world to build AI.

Without blockchains, the era of connected devices and artificial intelligence will further erode privacy and exacerbate societal and economic inequality. I believe blockchains are the single most significant technological development since the Internet, and together with artificial intelligence, will shape our society and economy over the next 25 years.

Why I am dedicating my career to Blockchains