Welcome back to B10 Digital Jazz, if the above title hasn’t made it obvious, this is the second part of a longer conversation on where I believe the web is headed. In future newsletters, I will do my best to keep topics to one post, but this will not make much sense without reading part 1.
My first post will also prove valuable for setting the stage, but in the likelihood that you skip over that one, it is worth mentioning that this newsletter is not “How Tron explains our world”. Rather, I want to explore technology through my interests and experiences, so future posts will have a lot of references to video games, science fiction, contemporary art, living abroad, and my friends.
Before I pick up where I left off last YEAR, I absolutely have to shout out an exceptional substack that I discovered in starting my own. You’ll be doing yourself a favor to subscribe to “the lightness of being” it is an elegant subversion of the newsletter format from one of my very talented colleagues from my time at JLL.
Now back to The Grid.
In our hands now
(circa 2013-2022)
In keeping with this framing of the web in 10-year cycles, this last decade has been defined by the maturation of mobile browsing through the rollout of 4G networks, the rise of cloud computing, native apps, super apps, and gig economy on-demand platforms.
At the same time, a new web innovation was crawling into its infancy in Layer-1 blockchain solutions. Bitcoin was already well known to techies, but its utility at the time was questionable. The headline “Florida Man Bought 2 Pizzas for 10,000 BTC” was a passing bit of trivia in tech blogs that pointed out that those pizzas were purchased for the equivalent of US$220,000…how quaint.
But the real evolution of blockchain started as an idea in February 2013 and, by the end of the year, was a reality: the Ethereum blockchain had enabled more utility than bitcoin. These protocol-connected applets are known as “smart contracts,” They create a cryptographic system that was, at the time, decentralized, secure, and scalable.
The delicate nature of balancing these three traits makes up what Ethereum founder Vitalik Buterin coined: “the blockchain trilemma.” As the years marched on, Ethereum has had problems with each aspect of the trilemma. As with most new technologies, the early issues were around the security aspects of the chain, most notably in the form of the resulting hard fork of the chain following a huge hack.
Fast forward to today, Ethereum (the network, not necessarily the apps built on the chain) is largely secure but mired in scale issues. Its proof-of-work consensus mechanisms and resource-intensive and, as a result, expensive. Many other chains have emerged that claim to be able to address this scaling issue. Still, often, that issue comes at the expense of decentralization, so again, the delicate balance of the trilemma rears its ugly head.
As I write this in February of 2023, the entire cryptocurrency market has been taking a beating for the past 15 months with many of the “Ethereum killers” like Solana, Algorand, Cardano, Hadera, Fantom, Avalanche, Luna, and Binance Smart Chain all sitting around at least 30% of their all-time high prices. This price action wasn’t the bloodbath of the previous “crypto winter” in 2018, when many coins faded into obscurity, but it’s pretty bad.
I believe we have not yet seen the bubble burst, even with controversies like the FTX and Celcius scandals, but we are nearing this winter's end. That is not hate. In the truest sense, I am a crypto convert, and with that little bit of digestible history, I can finally start to get to my point.
LFG
(circa 2023-2031)
We are still a long way off from solving the blockchain trilemma. Most of the Layer-1 solutions I mentioned earlier have not come close to the scale of Ethereum to provide real evidence that they have solved it. That is to say, with the same transaction volume of Ethereum could they live up to their efficiency claims? These networks are also extremely centralized, though most of them use much more efficient consensus protocols, typically proof-of-stake, and the number of validators is usually numbered in the dozens.
The other big issue blockchain still struggles with is actual utility, a real-world application. So much of the current state of blockchain application is an incestuous collection of use cases all centered around the flow of cryptocurrency tokens.
DeFi (Decentralized Finance) is the most obvious, and it is a great tool for crypto investors to learn kinesthetically how the financial instruments of TradFi (Traditional Finance) function. But in the current state, it is still a zero-sum game and leaves too many people out there rekt (as is the crypto parlance).
As many of you already know, I have recently left my role at JLL to pursue the creation of my own blockchain start-up full-time. That project is called deploy, and part of our thesis is that the transparency and finality of each action that happens on-chain can vastly improve how value creation is tracked and subsequently rewarded in early-stage venture capital deal flow.
In addition, to my commitment to deploy, I am also advising FleaMint, a super app that is leveraging the inherent utility of NFTs to innovate in asset classes ranging from Real Estate to Wine!
Raging for the Machines
A question that keeps coming up in the short 26 days I have been on this journey is some variation: “Why blockchain? Why aren’t you doing something with AI?!?” The armchair experts of the business social media world are far too quick to make these domains mutually exclusive.
The fact of the matter is the current state of AI, in my view, is this: These models are impressive in their ability to create variants of existing content in a very general way. Their command of active voice, lost on so many of us, gives us a false sense of confidence.
If you ask any LLM model to give you ideas on a subject matter, you are well versed in; you will likely hate the answers.
When I ask ChatGPT to brainstorm ways technology can improve various aspects of the property industry, it spits out the same tired, unimaginative observations I have seen for a decade…Why? Because it learns from the same armchair experts that use the current social media megaphone to inundate us with these lifeless “disruptions” ad-nauseam.
Author Michael Crichton coined the term “Gell-Mann Amnesia” to describe a similar phenomenon perfectly in discussing mass media:
“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”
Swap out the word journalist for AI in the passage above, and you understand exactly where I am going with this.
All of these self-proclaimed AI experts fail to understand how shallow the rabbit hole actually is right now. But we need to save that for another post. The key takeaway here is that AI is going to need the kind of data that can only be sanitized by sunlight (read: through transparency) to provide useful outputs, especially if it is to be used for matters of deep subject matter expertise and blockchain technology can speed up the availability of those deeper strata of data…(sorry)
Prepare for Take-Off
The possibilities are endless; in keeping with the theme of not knowing what we had ten years ago, the 2nd highest-grossing film of 2022 was Top Gun: Maverick, directed by none other than Joseph Kosinski. Trained as an architect, he only had directed just three films in the ten years before Top Gun: Maverick: Only the Brave (2017), the very underrated Oblivion (2013), and freaking TRON: Legacy!!!
Like any industry, entertainment runs into its own innovator’s dilemma, and often times the best remedy to the said dilemma is fresh thinking. So whether it is an architect directing films or a recovering workplace strategist and real estate technologist rethinking venture capital, the fresh ideas that will emerge in the coming years should fill you with excitement.
So what can we do with 10 years? ME? I hope to publish more than the 10 newsletters that I would at my current output. My personal goal is to put out one every Sunday (Hong Kong time), but I might miss that from time to time. This will stay free, so please consider subscribing.