Trust and fairness

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I was at an event last night, where the moderator, Preeti Varathan from QZ observed that there seemed to be a lot of cynicism in the blockchain / crypto space — in other words, that the whole thing was essentially premised on a distrust of existing systems (fiat currencies, large internet companies, etc).

It’s an interesting and I would say correct observation, but it’s also not the whole story.  In addition to the distrust angle, there is also an innovation angle (though it is related to the distrust angle), which I’ll get to at the end.

But to focus on this question of distrust: a few weeks ago, I was in Amsterdam for the TNW conference, doing a number of things on their “hard fork” track for crypto/blockchain projects.  Two conversations stood out:

First was David Schwartz from Ripple, who gave what I thought was a fantastic and clear introduction to cryptosystems — David’s main point was that cryptonetworks are about fairness.  You set the rules (in code) and once they are set, everyone plays by them on even footing.  No one has the ability to rig the system once it is up and running.

If this sounds a lot like a description of democracy and the rule of law, I think that’s intentional.  The framers of the United States had very similar goals — escaping a system that felt “rigged” and set up a rules-based system that had decentralization (3 branches of government, federal vs states, house vs senate, etc) and checks and balances built in.

So why is there a pressing need for fairness (in money, in tech platforms) today?  The original bitcoiners were escaping what they saw as unfair depreciation of fiat currency due to inflation — they were digital gold bugs who wanted a real store of value.  Beyond that, there is a generation of application developers who don’t trust the platforms they are building on — developers have a keen appreciation of power dynamics and know when they are getting screwed.  And beyond that, there is an even larger macro distrust and erosion of institutions brewing — for example I hope that the US can hold on to its own (relatively) fair, rules-based system of governance, but that seems as threatened as ever.  So there are plenty of reasons to be cynical and distrusting, both of traditional finance, technology and government.

On to the second conversation was that same day, at dinner with a number of Dutch citizens.  One gentleman made the point that “life is pretty good here, and we like our centralized institutions”.  Anyone who’s been to Amsterdam can probably relate.  Here is a picture from near where we were staying:

It’s ridiculously beautiful and every time I’m there I am struck by how happy the Dutch seem to be — cruising canals by boat, riding bikes everywhere, healthy chubby babies in tow.  Even their teenagers are happy.  I am obviously being flip here, but the point is — when things are good, or seem to be good, there’s little perceived need to change the system.

To the last point about innovation: the thing that I am most excited about here (and I think I speak for most of us at USV) is what a decentralized asset/contract/data layer means for innovation. Because cryptosystems are open source, extensible and forkable by default, and because they operate on rules-based systems without arbitrary centralized control, we now have a wide open environment for innovation, both at the infrastructure and the application layers.  We are still so early in seeing what that will actually mean in terms of services that business and consumers can actually use, but we are building a very exciting foundation.

Compound interest goes in both directions

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There is no shortage of writing and punditry about the power of compound interest. As usual Naval has a pithy tweet about it: Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest. — Naval (@naval) May 31, 2018 I have been thinking about this a lot… Read more »

just_work = true

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One of my former colleagues, Rob Marianski, and I used to have a running joke — we would be building and debugging something, and he’d finally say, “Oh, so you just want me to set just_work = true?”.  That was over 10 years ago, but it still gets me every time for some reason.  (as… Read more »

Focus

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Ryan Caldbeck is on fire on Twitter right now.  Ryan is the CEO of our portfolio company CircleUp, and he just joined Twitter for the first time earlier this year and is, I may say, feeling very comfortable in the medium.  Over the weekend he put up a great diagram-oriented tweetstorm with a bunch of gems… Read more »

Digital scarcity

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As readers of this blog can tell, I’ve been spending a lot of my time recently focused on cryptonetworks and blockchains, and in particular, working through the complex legal and regulatory issues involved. Explaining what cryptocurrencies, cryptonetworks and blockchains are is hard to do.  As Naval recently said on twitter: It is the mark of… Read more »

Zombies eating kitties

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On Tuesday we announced our investment in Cryptokitties, and, as you might expect, received a combination of enthusiasm and skepticism in response.  Bitcoin and cryptocurrencies already sound ridiculous to most people, and virtual “real” kittens made out of cryptocurrency take it a step further. But, as with many new technologies, these first use cases just… Read more »

A bigger container

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An idea I like from Zen Buddhism is becoming a Bigger Container.  My understanding of the idea is this: There are a lot of difficult/bad/sad/scary things going on in the world, ranging from serious global issues, war, famine, terrorism, etc; to things in your city like homelessness or joblessnes; to things in your family, like… Read more »

Cryptonetworks and why tokens are fundamental

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“Cryptonetworks” can help us build a more competitive, innovative, secure and decentralized Internet.  “Tokens” (also known as cryptocurrencies or cryptoassets) are integral to the operation of cryptonetworks.  As we design new laws and regulations in this emerging space, we should keep these concepts in mind, beyond the financial aspects that are today’s primary focus. In… Read more »

Teaching kids to invest

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I’ve written a bunch about why it’s expensive to be poor, why we need better tools for managing money, and how to move from a labor mindset to a capital mindset.  A big takeaway for me is that accumulating wealth isn’t just a functional activity, it’s a mindset that needs to be learned, and taught…. Read more »

How to make big problems small and small problems big

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Avoidance is to be avoided. — Nick Grossman (@nickgrossman) February 22, 2018 I’m on a plane right now.  I always find plane/train rides to be some of the best times to focus and get work done.  On this trip, I managed to get two “monkeys” off my back — little tasks that have been lingering… Read more »

You need a budget

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I’ve written for a long time about my desire to re-build personal finance infrastructure in ways that benefit people with the least money.  We see new personal financial products all the time targeting high value customers, but it still feels like they are ignoring a huge, and important part of the market: people scraping by… Read more »

The weakest link

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We have spent a fair bit of time over the past year working on security at USV and across the USV portfolio.  Anyone who has spent time working on personal or corporate security — and in particular information security, knows that there are a million ways in, and you’re never “finished”. Fred wrote a bit… Read more »

From a labor mindset to a capital mindset

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I’ve been quiet on the blog lately — writing is one of those things that’s hard to build a habit for, but always pays big dividends when you do it.  Every time I’ve gotten into a good blogging rhythm I am undoubtedly surprised by the feedback I get (good and bad!), but more importantly, by… Read more »

Service

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The week before last, we lost a dear friend to cancer.  Deb was an incredibly sweet, caring and giving person.  The memorial service last weekend was held at the elementary school where she taught first grade for the past 15 years.  The room was decorated — to the hilt — with hearts, butterflies, and ribbons,… Read more »

Changing seasons

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Today is the last day of September, and I’m happy and relieved to see it go. I’ve been holding my breath. September is a violent month.  That may seem like a ridiculous thing to say, but I think there’s some truth in it.  Something about the end of the summer and the abrupt change to… Read more »

Labor Day: Project Repat

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Yesterday, in the process of cleaning out my closet and donating a bunch of old clothes, I did something I’ve wanted to do for a long time: got going creating a t-shirt quilt for my old “sentimental” t-shirts.  I’m a bit of a t-shirt hoarder, especially when it comes to shirts that memorialize some special… Read more »

Optimizing for energy

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In the world of startups and investing and ideas, things are always chaotic and fluid, and as such a key skill is to somehow cut through the noise and find focus.  That’s on a micro level, like what do I do for the next five minutes, and on the macro level, like am I (or… Read more »

On the blockchain: platform first or app first?

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I was emailing with a friend recently, who asked: “On the web, in order to build a platform you first need a hit app. Do you think this dynamic is different in blockchain?” It’s a great question, and one I have been thinking about a lot lately.  First, let’s unpack the idea that the way… Read more »