Cryptocurrenices: The Native Business Model of Attention

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There has been lots of attention this week on cryptocurrencies and blockchains, what with Consensus conf and the Token Summit and lots of related announcements.

And with like lots of new things (thinking back to Twitter circa 2010) I find myself spending a lot of time explaining to people what blockchains and cryptocurrencies are, and why we think they’re interesting.

It has taken us years to peel away layers of understanding around Bitcoin and blockchains — see “Bitcoin as Protocol” (2013), “The blockchain as verified public timestamps” (2015), “The Golden Age of Open Protocols” (2016), “Fat Protocols” (2016).  We’ve been chewing on this idea that cryptocurrencies aren’t just digital money, they’re something else — they’re a new way of storing and verifying data, a new way of building tech platforms, and a new way of monetizing activity on the web.

One way I’ve been thinking about it recently is that cryptocurrencies are the native business model for open source and open data.  I come from a background working in open data, open source, and open standards — mostly in the context of cities and governments.  I spent the better part of 2008-2011 working to advance standards like GTFS and Open311, and searching for the super-forces that would drive adoption (see Where Do Web Standards Come From?).  The big takeaway from that time was that standards don’t propagate themselves — you need some sort of major driver to pull them into market (in the case of GTFS it was Google Maps).

What we have now learned from cryptocurrencies and blockchains is that they can provide that driver.  By creating an economic incentive — the cryptocurrency or token — to create a shared open data asset, we now have powerful driver for open data, interoperable through open standards.   This is the point of Joel’s Fat Protocols piece — that with cryptocurrencies and blockchains, we can now monetize the underlying token and let the data be open, rather than controlling the data and monetizing access.  This is a really big deal.

Take that a step further, we can now re-think how we build “platforms”. Think social networks like Twitter, who have historically been forced to close down their APIs in order to keep attention within their own ecosystem, rather than let it “leak” to third parties. Blockchains and cryptocurrencies offer an alternative here as well — by monetizing through an underlying cryptocurrency, we can now afford to be “open” when it comes to platform interoperability.  As much as I dislike the Rare Pepe project because of its racist roots, one thing stands out: the way it’s open and interoperable by default. From this article describing the project:

Interoperability

Finally, the potential of rarepepe model doesn’t end with simple digital asset collection and trading. What’s even more remarkable about this token model is that third party developers or projects can bring external value and use cases to pepe tokens thanks to their open and permissionless nature.

Interoperability and permissionless nature is what differentiates tokens on the blockchain from closed proprietary systems or private blockchains whose essences are control and permissioned. Whether you like it or not, as long as it’s on an open and public blockchain people will create unexpected use cases and synergies that even token issuers cannot imagine sometimes. In my opinion, this is the biggest advantage of using tokens on a public blockchain and this type of cross collaboration has started to emerge already with Pepe.

For example. the Rarepepeparty project is developing a trading card game with some RPG element utilizing rarepepe tokens and user created memes. If you own those cards in your wallet and prove its ownership, you will be able to play your dank pepecards within the game.”

So what we have here is now a new business model for platforms.  Whereas in the past, you had to lock down your platform in order to control the flow of eyeballs, either for transactional revenue or ad dollars, now the incentives are flipped — the more people who use it and build on it, the better, so let it be open.

So really, what we have now is a new business model for attention.  One where we can be open to share attention with others, as long as we are bound by an underlying cryptocurrency or token.  This is relevant to any platform or network with an advertising-based business model.  As everyone knows, it’s hard to make money in the ad business if you’re not Facebook or Google, so it’s exciting to think that maybe you don’t need to be in the ad business to build a successful and sustainable social platform.  This is what Kik is pioneering today with the launch of the Kin token, and if this works I suspect it will be a model that many ad-supported networks follow.

The Service Recovery Paradox

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I’m writing this from a plane.  I’ve been in the air for an hour and everything is fine, but for a few minutes before the flight, things weren’t fine.  At roughly the time we were supposed to board (on an already late in the evening flight), the gate attendant came over the mic to announce… Read more »

Complicity

I had an interesting experience today.  As I was in the air on my way to San Francisco, I got a text from my Airbnb host saying that they had made a mistake and accidentally double-booked my room.  I ended up taking their offer to cancel and booked a hotel room (at a steep increase… Read more »

Flexing the platform for good

Over the past few weeks, I’ve been touching base with many companies and individuals in the tech sector to understand how they are reacting to the current political environment. Every company and community (of users, customers) is different, with its own sensitivities, priorities, and goals.  So it’s been really interesting to understand the very wide… Read more »

Cycles

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It’s clear that right now we are in a moment of upheaval and turbulence, that seems to have come upon us very quickly.  Pretty much everyone I know has been wrestling to unpack this for the past several months. I’ve been trying my best to understand the worldview of Steve Bannon, who is clearly an… Read more »

The Public Data Layer

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I have been thinking a lot lately about the increasing importance of the “public data layer” — meaning, data that we will need (“we” applied broadly, meaning the general public, NGOs, government, scientists, journalists) to make sense of what’s going on in and increasingly busy, but increasingly quantifiable world. First, some of the drivers here…. Read more »

Experience ↔ Design ↔ Policy

People often ask me how I ended up working in venture capital, and more specifically in a role that deals with policy issues (“policy” broadly speaking, including public policy, legal, “trust & safety”, content & community policy, etc.).  Coming from a background as a hacker / entrepreneur with an urban planning degree, how I ended… Read more »

Unintended Consequences

I’ve been struck recently by the power and surprise of unintended consequences. For example, a recent Slate article digs into flip side of the life-saving potential of automated vehicles: our reliance on car crash deaths for organ donors: “An estimated 94 percent of motor-vehicle accidents involve some kind of a driver error. As the number of… Read more »

Going after it

I’m in SF this week with the USV team – once a year we all come out here together, do a bunch of meetings and social events w our portfolio. Yesterday struck me — and it’s amazing how much of a surprise this is to me, after doing this nearly 5 years — with just… Read more »

The new normal

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The week before last, my in-laws were hit by a truck while crossing the street after dinner. The time since has been a disorienting whirlwind of sadness, fear, hope and thankfulness.  My mother-in-law suffered a very serious brain injury, and while she has cleared the first hurdle of basic survival, the outlook won’t be clear for… Read more »

Getting out the vote

Yesterday, a fabulous new tool launched — HelloVote: HelloVote makes it easy easy easy to register to vote.  Sign up w your phone number and do the whole thing over text. This is great for a lots of reasons — from its immediate practicality, to its more general lesson that it’s possible to build new,… Read more »

Alternative Compliance

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Summary To better support small businesses operating in regulated sectors, we should develop “alternative compliance” mechanisms — parallel regulatory regimes that achieve the goals of existing regulations but take an alternative, data-oriented approach to achieving them.  Such an approach would be especially friendly to the smallest of small businesses, and would take advantage of available… Read more »

Regulating with Data

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At this year’s Personal Democracy Forum, the theme was “the tech we need“. One of the areas I’ve been focused on here is the need for “regulatory tech”.  In other words, tools & services to help broker the individual / government & corporation / regulator relationship. In a nutshell: we are entering the information age, and… Read more »

Cable boxes, ridesharing and the right to be represented by a bot

Here are two tech policy issues that don’t seem related but are: the FCC’s current push to open up the set-top-box, and the lawsuits challenging Uber’s and Lyft’s classification of drivers as independent contractors rather than employees. The way to see the connection is through the lens of control vs. competition.  More specifically, they are… Read more »

Crypto debate: separating Security from Control

For the past few weeks, I’ve been following the FBI / Apple phone unlocking case, and digging deep into the debate around encryption, security and privacy. This debate is as old as the sun, and the exact same arguments we’re going through now were fought through 20 years ago during the first crypto wars and… Read more »

The Freedom to Innovate and the Freedom to Investigate

Earlier this week, I was at SXSW for CTA‘s annual Innovation Policy Day. My session, on Labor and the Gig/Sharing Economy, was a lively discussion including Sarah Leberstein from the National Employment Law Project, Michael Hayes from CTA’s policy group (which reps companies from their membership including Uber and Handy), and Arun Sundararajan from NYU, who… Read more »

Internet meets world: rules go boom

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Since 2006, I’ve been writing here about cities, the internet, and the ongoing collision between the two. Along the way, I’ve also loved using Tumblr to clip quotes off the web, building on the idea of “the slow hunch” (the title of this blog) and the “open commonplace book” as a tool for tracking the… Read more »

Big innovation and small innovation

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Yesterday at one of our bi-monthly team deep dives at USV, we got into the conversation of essentially “Big Innovation” vs. “Small Innovation”.  Those who have followed USV for some time know that at the core of the investment thesis is a belief in “decentralized”, “bottom-up” innovation — the kind that really became possible with… Read more »

Beam should have a hardware API

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We’ve got a few Beam telepresence robots at USV, and use them all the time.  Fred has written about them here.  We had a team meeting today, and we had two beams going at once — Fred and I were the first to arrive, and we were chatting beam-to-beam — he in LAUtah, me in Boston,… Read more »

Learning to skate

For the past few winters, I’ve been teaching my kids to ice skate.  Above is my son Theo at hockey practice a few weeks ago. At a certain point along the way, I got the bug and realized that skating was awesome and hockey was a beautiful sport.  So for the past year or so,… Read more »