For the first time, a leading venture capital firm, Union Square Ventures, invested in a blockchain token-trading fund—an unprecedented and ringing endorsement of perhaps the most dynamic and least understood alternative asset class today. Yet blockchain technology has more uses than simple sales and trading.
Blockchain has been described as a digital ledger that chronologically and publicly records transactions made in cryptocurrency, managing access to realtime self-populating financial records and self-enforcing contracts. Its underlying protocol is the basis behind bitcoin, the notorious and ubiquitous digital currency that began the digital currency revolution.
“Bitcoin is a powerful and highly valuable alternative asset, but its basis—blockchain—is even more valuable because of its seemingly unlimited derivative potential. And that brings us to Ethereum.”
– Peter Borovykh, Finance Blockchain Expert
Enter Consensys, a startup foundry that creates decentralized applications based on Ethereum, an open-source, public, blockchain-based decentralized computing platform. The technology provides a virtual machine that self-executes scripts using an international network of public nodes, and is cornering the American market on Ethereum.
We at Silicon Tech News NYC sat down with the founder and CEO of Consensys, Joseph Lubin who is also the co-founder of Ethereum, to figure out just what they’re doing, and what makes Ethereum so powerful in their hands.
Silicon NYC: We know what ConsenSys is, and what your company does, so I first want to ask—why develop on Ethereum and not bitcoin?
Lubin: Vitalik Buterin and the other co-founders of Ethereum, including me, were all bitcoiners, and never intended to replace bitcoin. Bitcoin began as an experiment in monetary theory, and continues to mainly serve as a transfer and store of value.
Ethereum is a software platform built to serve as the foundation of the next generation of the Internet, which will be decentralized and run using blockchain technology. We call this the Web 3.0. The Web 3.0 can offer the same services as the Web 2.0 — what we currently use — but improved, from the perspective of the user.
These decentralized applications (DApps) restore the user to a position of power, allowing us to control our identity, data, and interactions, instead of centralized services. We are building these tools using Ethereum’s peer to peer architecture and smart contract capabilities.
Silicon NYC: What makes you say that?
Lubin: Ethereum makes me say that. Its strength in enabling decentralized computing allows anyone to create apps which themselves are decentralized to strengthen financial transactions and support compliance standards by self-enforcing contracts without high investment into development. The tools are there for any developer to use.
It really is such a versatile piece of technology; you can build practically anything with it.
Most of what we’re doing, though, is focused on strengthening the blockchain ecosystem. The best part is that the investment and technology is there—people and companies are excited.
Silicon NYC: The Union Square Ventures investment certainly seems to say so. What do you think lies in the Ethereum’s future, from your company’s point of view?
Lubin: In terms of enterprise, Ethereum has become the de facto blockchain of choice. We recently helped launch the Enterprise Ethereum Alliance, whose members include Microsoft, Intel, Banco Santander, J. P. Morgan (which publicly open-sourced its Quorum platform developed around the Go Ethereum client), BHP Billiton, BNY Mellon, and 30 or so other enterprises, startups, and academic groups — with many more on the waitlist, soon to be added. EEA is defining enterprise-grade Ethereum-based software in a private, permissioned context that is compatible with the Ethereum mainnet.
If we imagine Ethereum as enabling the next generation of the internet, then private, permissioned blockchains are like intranets, and the future of blockchain for business is moving to the public Ethereum mainnet in order to harness the full benefits of the blockchain.
In terms of DApps, the use cases for decentralized technologies that we are incubating in our venture studio are maturing. One example is our self-sovereign identity solution, uPort, which is currently in public alpha release. Blockchain and decentralization are transforming governance with tools like Boardroom, crowdfunding with platforms like WeiFund, music and rights management with ujo, price-stable tokens with StabL and wisdom/prediction markets with Gnosis — there are quite a few others.
Ethereum is only as strong as the group of enterprises and developers collaborating to build on it. We hope to serve this open source community and help it grow, with developer tools such as Truffle, EthPM, Metamask, BlockApps, and Infura.
Silicon NYC: Can you give us an example?
Lubin: Well compliance and transactions, for example, are going to be two large areas where banks can save money. Santander bank predicts that blockchain technologies could reduce banks infrastructural costs by $15-20 billion a year by 2022 , and Ethereum is a natural fit for that kind of environment.
I touched on it before, how the technology enables self-enforcing smart contracts, and what it means is that Ethereum automates compliance, which will allow banks to spend less money on that aspect of business while achieving better results. There are thousands of jobs in compliance that will become obsolete as blockchain technology adaption grows.
A great use case for smart contracts is an app we developed called Uport, which puts people in control of their own identity on block chain. So we think there’s great built-in support for technology like Uport in many of the industries— Blockchain adaption will take time. As more investment money and development talent is flowing into Ethereum, we are seeing a natural cycle, more money, more talent, more apps, more value to everyone.
Silicon NYC: How are your competitors doing?
Lubin: Blockchain is a technology that inherently drives cooperation, so often groups that could be considered competitors turn out to become fruitful partners and collaborators. If the competition is centralization in general, then the increasingly pervasive fraud, hacks, manipulation, and errors in centralized systems — combined with narrative around decentralization and blockchain which is now mainstream enough to appear on HBO’s “Silicon Valley” — are quickly changing the conversation.
Silicon NYC: So what’s next for Consensys?
Lubin: ConsenSys will continue to lead a shift in the way we use the Internet from an Internet of information to an Internet of value, trust, and agreements where we frictionlessly exchange and communicate without intermediaries. We will do this by launching DApps that provide value to users, building the best blockchain based tools for enterprise, and continuing to work on the security and scalability of the Ethereum mainnet.
Silicon NYC: Thank you very much for enlightening us.
Lubin: My pleasure.
For this interview with Joseph Lubin we met with him at the Consensys building in Bushwick, not your typical office building. Surrounded by creativity, art galleries, coffee shops, and hip rebellious graffiti, the building appeared to be more art loft than ultra modern tech development. We traversed the artsy space, the numerous trendy levels, of which we still can’t count, and finally found our way to Joseph’s trendy and creative work space.
Definitely an exciting adventure, full of mind expanding facts, future tidbits, sneak peaks at what’s to come, and insightful information about the possibilities and future of blockchain. We’re holding our breath to see how various industries adopt this powerful new tool. The expectation is high as are the capabilities and it seems everyone’s looking to get in on the action.
Stay tuned for more on blockchain tech in New York!