ichthyoid

In the second episode of Block Stars, David Schwartz interviews AIKON's CEO, Mark Blinder. Now, forgive my ignorance, but I had no idea who Mark Blinder was before the podcast. So listening to this podcast was quite enlightening!

In this episode, they discuss the current barriers to mass adoption of blockchain, including usability and environmental sustainability, and how they may be overcome for the benefit of people around the world.

Episode Summary

The introduction was made for people just like me who had no idea what AIKON is. In Mark Blinder's own words:

“AIKON is a company that was founded with the vision of helping to spread mass adoption of blockchain.”

AIKON's main product is ORE ID (Open Rights Exchange ID), which connects online accounts (e.g. Facebook, email, etc.) to various blockchain solutions such as Ethereum or EOS. ORE ID acts as a simple blockchain for holding identities and allowing those identities to be able access certain things. In this way, it cannot be programmed the way Ethereum can (with Turing Complete smart contracts, DAPPs, etc.).

The focus for AIKON right now, according to Blinder, is to help connect businesses to blockchain solutions. These businesses already serve a set demographic of customers, and so AIKON simply takes the data stored for those customers and attaches them to unique IDs which are unencumbered by constraints of centralized server systems (due to the blockchain nature of ORE ID).

From here the interview shifts to the main focus of the topic for the podcast: how environmental sustainability is a key component in mass adoption of blockchain.

Blinder's interest in the subject revolves around a personal conviction of moral responsibility for taking better care of the environment. His conviction has led him to frequently look for ways that his businesses can do better, as well as encourage other businesses to do the same. Since he works with blockchain companies, this has led to him scrutinizing the impact that the technology can have on the environment.

Specifically, he points out that proof-of-work systems, such as Bitcoin and the current stage of the Ethereum blockchain, are fundamentally just exchanging energy for money. In a proof-of-work system, as the value of the coin goes up, the cost of maintaining that network also goes higher. As an example, in order for Bitcoin to continue operating currently, its network requires as much electricity as a city like Las Vegas. But back in 2017, when Bitcoin hit its all-time high, it drew as much power as entire countries.

There are a couple solutions to the problem. First would be using a different protocol, such as consensus or proof-of-stake, rather than proof-of-work. But this doesn't solve everything, as different protocols have their own vulnerabilities. For example, in the proof-of-stake model, if a person or group obtains a majority share of the coins (51%), they can essentially attack the network.

Instead, Blinder argues that the tech industry as a whole, as well as blockchain companies, need to switch to renewable sources of energy, as Genesis Mining does in Iceland. This is because, even if there are companies out there that tout their use of renewable energy sources, if others don't, it renders the whole point moot. And so if the entire industry can move over to renewable sources, then the incentive to not use renewables would not really be there.

According to the energy companies he's dealt with, the best way to move the world into renewables may be to give people the ability to sell their privately generated power. Ironically, this kind of system would be most effective with a decentralized solution like blockchain. In this way, blockchain could actually be part of the solution for the current energy crisis.

The technology for renewables currently exists. From cheap solar rooftops to electric vehicle charging, especially in the United States, a society that runs primarily on renewables seems to be within reach. It's only the innovation in both distribution and usability that is lagging behind.

Because of the energy consumption, there seems to be little need for a proof-of-work blockchain outside of Bitcoin. After all, these systems are basically created to be as inefficient as possible, so as to create value. And because of the value of Bitcoin in the space currently, there is already incentive to move away from proof-of-work. After all, why have an inefficient system that can't generate much value when you can have a much more efficient system that could actually be worth something?

But what if technology innovation in energy exponentially grows as in other sectors? Could a future exist where the energy required for proof-of-work is so negligible (in comparison to other sources of consumption) that this whole point becomes obsolete? Blinder answers this by suggesting that, if the electricity is free, and the value of proof-of-work systems is dependent on electricity being spent, then the value at that point may also be worthless.

In a world that runs on cheap, environmentally sustainable energy, Blinder believes that a representative governance system, similar to the United States political system, would be the best way to run a blockchain. In a system like this, validators would be chosen by users based on their expertise, performance, and ability to run the chain well. He acknowledges the XRP's consensus system is similar to this, where consensus is done based on how well each validator does to promote the system.

Blinder also believes that mass adoption will come for blockchain when user experience improves dramatically. The question for many companies, including AIKON, is how to serve both the consumers who want to have all the control (i.e. private keys) and those who don't. They desire to have a user experience that is just as easy and simple as the major parts of the Internet today (e.g. Netflix, Facebook, etc.), while also being environmentally beneficial. Elon Musk's Tesla company is a good example of this, where they not only have a car that has less of a carbon footprint, but also one which is familiar to drive as well as aesthetically pleasing.

After all, the theoretical ideology behind blockchain is sound. It offers a way for people to participate in a global financial system that doesn't need 'gatekeepers' or 'authorities' to mediate between transactions, and also doesn't treat various people in an unfair or unequal way. And so it's easy to see that, if any individual were to be given this ability, and it has a familiar and friendly user interface, then the natural response would be to use it with no questions asked.

Certainly, there is blockchain's shady history to consider. From Bitcoin's use in black markets to the plethora of ICO scams in 2017, some are certainly right to approach blockchain cautiously.

But in the end, blockchain seems is revolutionary by nature. Just as the Internet took over smaller local networks, public blockchains have the appeal and ability to cross borders for people who really need them. While it may take a long time, even multiple decades, for the technology to become ubiquitous, even today, we can see the benefits. A woman in Afghanistan once told Mark Blinder,

I love Bitcoin. It's the first time women in my country could have money that the men in their family didn't know about.

Thus, crypto can touch lives that even the best intentioned governments and businesses cannot be bothered to help. From Afghanistan to Argentina to Zimbabwe as well as to the Western World, the hints of how blockchain is changing the world is already here. Thus, though the road may be long, adoption looks all but inevitable.

From AIKON's perspective, the next step in adoption is not to try to force users to fully understand tech, but instead to help users get a foot in the door first. After all, most people or even businesses that rely on third-party databases for their needs don't need to know that those databases are now hosted on a blockchain. But once those customers do realize it, then they can begin to take control of their own data, and how it interacts with others, if they so desire.

Theoretically, the roadmap to mass adoption may look something like this: The first phase of the “hype cycle”, in which speculation is what drives the tech, has mostly passed. Instead, the current phase is 'laying down the pipes' of how blockchain functions interoperate with both each other and other current technologies. Then, when all the fundamentals are set, a third wave that produces real change can begin to materialize in the wider world.

This would be similar to how the Internet grew from hype in the dot-com era to now, where a large percentage of the world, even in developing countries, is using it. Even now, blockchain may parallel the Internet in that a lot of current blockchain companies will fail, just as a lot of Internet companies failed in the early 2000s. Even companies that have great ideas might fail, only for those ideas to be taken up by another company later at a more opportune time and become a dominant force with it.

Winding down the interview, Schwartz asks Mark Blinder to give listeners suggestions for switching to renewables. In addition to finding sources for renewables in daily life (e.g. switch car to electric, get solar panels) as well as letting us know some benefits in doing so, he once again stresses pushing for an industry-wide change for tech companies to go to renewables, including cloud and server hosts running on 100% renewables and blockchain companies leaving proof-of-work, as well as talking to politicians to push these agendas as well.

My Thoughts
Like the previous episode, there's a bit of fluff at the end where Mark Blinder talks about some of his favorite books (they're definitely interesting suggestions). But it didn't have much to do with the topic at hand.

But WOW, is there a lot of stuff here. Some of the topics mentioned, such as the suggestion for blockchain to look at representational political systems for guidance on governance or the idea that adoption of blockchain will come when user experience dramatically improves, I've explored before in previous posts, so I won't repeat myself here. Instead, here are a couple things that I want to look at that I haven't written about before.

Blockchain and the Environment
While I've realized awhile ago that proof-of-work was an energy-wasting danger, I never thought the scale of Bitcoin had such a footprint until Mark Blinder mentions it in the interview. The idea that, at one point, the cost of running the Bitcoin network rivaled that of the entire energy grid of Ecuador is insane to me. It really puts into perspective the current need to reduce this dependency on such a resource-destroying system.

I find the point Blinder makes about cheap energy making the value of proof-of-work coins worthless interesting. It seems to me that the inherent value of blockchain is in its ability to transfer value without the need for an intermediary. And, while the value of such a tool can go up or down, this function of 'trust-less' transfer should give any blockchain coin some value, provided there aren't competitors that are just uniformly better. Like proof-of-stake. Or consensus systems.

So while any proof-of-work system can be obsolesced by better protocols, where individuals can transfer value far better, faster, and as frictionless as possible, if those systems do not become a revelation in better user experience, then the proof-of-work system will have value even in an environment of cheap energy. Because the value placed on a coin isn't just the energy used to create it, though it's certainly a factor. But the value of the coin is also in its utility, as well as scarcity, things which are natural in the world of economics.

And if one can always transfer some amount of value around the world without needing to go through a bank, many would choose to do so. Thus giving the network value.

A Rant Against Bitcoin
Something that I find puzzling is how Mark, as well as others in the space, still vouch for Bitcoin. Despite its now antiquated nature, despite is power-hungry cost, and despite the actual centralization of the whole system, it seems like both still espouse the view that Bitcoin is like digital gold, and it will continue to run and be an important system in the future. This is the first and only time I've ever heard of people saying a technology that was the advent of an innovative invention will never become obsolete!

It would be like someone telling me that the Ford Model T, because it was the first car and revolutionized transportation, would never become obsolete because it's “transportation gold” (whatever the heck that means). Or that we're always going to be using vacuum tubes for power, because even though there are far more efficient and consistent transistors for power, the vacuum tube was first, and therefore, it's “transistor gold”. It's a really weird analogy that I can't get behind, has no historical precedence, and I'll probably never really understand.

Of course, I'll try to keep an open mind, for anyone that wants to help me understand.

Giving Value to Individuals
The quote from the Afghan woman Blinder mentioned gave me pause. I've always thought that humanitarian efforts and other similar projects would be the forefront beneficiaries of blockchain technologies. But to have it made so real while listening to the interview really gave me a lot of hope and optimism about this whole enterprise.

When I think about the technology behind blockchain, it really does seem like a very simple idea (in hindsight, obviously). It's a system that acts like a ledger, in which each entry must include all previous entries. Thus, the ledger becomes basically immutable. And the evolution of this tech has given rise to security that is very difficult to break.

And such systems will eventually allow all people from every part of the world to not only voice their own thoughts, like the Internet has, but finally freely do whatever they damn well please.