Why the Blockchain Revolution Doesn’t Need A Leader

blockchain revolution
Why the Blockchain Revolution Doesn’t Need A Leader, By Tony Perkins

Article written by Tony Perkins, Silicon Valley OG. Founder & Editor of Cryptonite. Previously Founder of AlwaysOn, Red Herring, Churchill Club, Cofounder, SVB Tech Group.

Roger McNamee, a billionaire tech investor, psychedelic rock star, and author of the forthcoming book, Zucked—Waking Up to the Facebook Catastrophe, gave me some very simple yet sage editorial advice a couple dozen years ago. “In the end, consumers always get what they want,” Mr. McNamee says. Translation—If you want to pick winning companies, bet on the ones who are giving people what they want. Sequoia Capital founder and original VC gangster Don Valentine puts it even more simply, “There is only one question that really matters when looking at a new company—Who cares?”


“In the end, consumers always get what they want,” Roger McNamee, billionaire tech investor


A Bust In Institutional Trust

The question that needs to be answered, however, is: What do consumers want today? The biggest consumer trend in the West is a broad-based and precipitous fall in confidence in our oldest and most trust-based institutions — government, media, academia, and finance. A recent Gallup poll asked Americans about their confidence levels in 15 societal institutions. Only three—the military, small business and police—earned a majority-level of trust.

The institutions Americans trust the most and least
The institutions Americans trust the most and least

Consumer trust in banks and mass media, in particular, is collapsing. The financial crisis in the late 2000’s certainly took the wind out of much of the trust we had in big banks, and these institutions have failed to win our confidence back since, as can be seen in the inset graph. Ironically, the inspiration to create bitcoin was a response to the failure of the banks to protect the common man.

The mass media has also been marginalized by an onslaught of online and social media content. It’s hard to imagine today, but upon his retirement in 1981, legendary CBS Evening News anchor Walter Cronkite commanded a whopping 50 million nightly viewers for his half-hour evening news broadcast from 6:30 and 7:00. His competitors at ABC’s and NBC’s were logging in similar results. Today, although the U.S. population has grown 35 percent over the last 30 years, those same news programs now command between 6 and 8 million nightly viewers. Even when you add in the top three cable TV news shows (Fox 3.8M, MSNBC 2.8M, and CNN 1.1M), the numbers are still anemic compared to the old days. A new study from the Pew Research Center shows that over two thirds of U.S. adults (68 percent) get their news on social media, but out of that population, over half (57 ) of these consumers say they expect the news they see on social media to be largely inaccurate.

populisms today
Populism and the Blockchain Revolution

Populism and the Blockchain Revolution

Our growing mistrust in institutions and central power is now manifesting itself in the global political scene. The Brexit movement, the Trump and Bernie Sanders campaigns, recent populist victories in places like Italy, Mexico, Brazil, and France’s growing ‘Yellow Vests’ movement are all examples of people frustrated by static wage growth and a lack of faith in the centralized powers who promised to do something about it. Increasingly, people have also been willing to take some pretty big risks to rock the powers at be. A prime example was the election of Donald Trump — a person who neither served in the military or held a public office. It would have been unfathomable for anyone of his background to have been elected President prior to the 2016 election. To achieve this triumph, Trump and his populist followers beat out the Republican establishment, the Democratic Party, the Clinton machine, Hollywood, academia, and mainstream media. As liberal journalist John Heilemann observed on elections night 2016, “It’s like working Americans were so frustrated that they decided to roll a stick of dynamite into Washington DC and blow it up!”

One thing I have learned as a Silicon Valley OG, innovation never ceases to surprise. While consumer mistrust for institutions has been exploding, a growing set of entrepreneurs have also been hard at work developing a new security infrastructure for the Internet that just might protect us from the Goliaths we now despise. It all started in October 2009, when the unknown author under a pseudonym name Satoshi Nakamoto published the whitepaper titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.’ Satoshi’s single mission was to be the first to solve the double-spending problem for digital currency using a peer-to-peer network, and in doing so, the first blockchain application powered by a smart contract was born.

bitcoin creator
It all started in October 2009

Little did Satoshi know, but by creating a security infrastructure so digital currency could be trusted without the need for government backing and verification, he was also providing an approach to solve even bigger societal problems. As an example, consumers have been taken advantage of for years by Google which has been notorious for collecting personal information on their users without letting them know the extent of what they were gathering and selling this data like commodities to any advertiser who would pay. Compounding such consumer intrusions is a constant stream of security breaches, including the violation just announced on the 53 million people who had signed up for the failed Google Plus social media experiment.

Another example of consumer abuse is Facebook’s model which is based upon ‘customer-as-product,’ a tactic very publicly and resoundingly denounced by Apple CEO Tim Cook. “We could make a ton of money if we monetized our customers, if our customers were our product, but we’ve elected not to do that. We’re not going to traffic in our customers’ personal life. Privacy to us is a human right, a civil liberty,” observesCook. People’s time is valuable. If companies like Google and Facebook care about their customers, they should protect their time with the same kind of rigor as they strive to protect their privacy and other digital rights. There is now a huge popular rebellion against(a.k.a. #DeleteFacebook campaign) and the Congress authorities are on the company like white on rice.

The Bitcoin project demonstrated that a suite of technologies can enable a new kind of trustless decentralized economic network, where consumers will increasingly take back control of their personal data, and hand it out selectively when they want to conduct specific, even anonymous, transactions, but otherwise keep to themselves. We will eventually be able to unimpeachably share our transactions and behavior to the IRS, a prosecutor, the DMV, or anyone who might want to see the purchase and maintenance history of any asset we might want to sell.

Just when we all thought the centralization of computing in the hands of big ‘walled gardens’ like Google was unstoppable, entrepreneurs have once again felt our pain and created solutions to counter this presumed inevitability.

from decentralized to distributed
The evolution from centralized to decentralized to distributed computing is a metaphor for the populists ideals and movements breaking out all over the globe

As Silicon Valley VC and libertarian activist, Patri Friedman (grandson of Nobel Laureate Milton ‘Freedom to Choose’ Friedman) has observed, “We believe the agoric potential of crypto goes far beyond the initial use case of hard money, and will steadily bring the world’s illiquid, opaque, paper-based assets online, a thesis we call ‘Markets Eating The World.’”

The bottom line is decentralization of data storage and ownership promises to dramatically upend the status quo, cutting out intermediaries and centralized platforms and replacing them with peer-to-peer transactions executed via ‘smart contracts.’ Within the next few years, a dramatic portion of the money and resources that currently fund large centralized systems will be distributed out on the blockchain and often maintained by a global ring of independen computer workers (We call the ‘d-workers’—the ‘d’ is for ‘distributed) from India and Brazil and other developing nations at a fraction of the cost.

Recognizing the the global blockchain infrastructure and performance is still in ‘alpha’, over time, literally millions of independent blockchain applications will also suck the power out of current economic centers such as those in the US. Coinbase CTO Balaji Srinivasan calls the these regions collectively ‘The Paper Belt’—the four metropolitan areas where the most important industries and political infrastructures converged during the post-war era: Boston (education), New York City (publishing, finance), Los Angeles (media, Hollywood) and Washington DC (politics, law). This trend bodes well for developing nations, in particular. The nations will finally be able to afford the costs of joining the modern economy, transfer money across borders at a small fraction of the current cost (think Ripple), take out micro loans, and even buy insurance. A recent Oxfam report stated that 82 percent of all wealth created in 2017 went to the global top 1 percent. Perhaps this is a bold statement, but I believe that the Blockchain Revolution will even out this concentration of wealth over the next 20 years mainly by building the economic power and average wage levels in developing nations.

wef davos
The Death of the Davos Man (and a French President)

The Death of the Davos Man (and a French President)

For ten years (1996 to 2006) I gleefully participated in the annual meeting of the World Economic Forum in Davos, Switzerland, and hobnobbed with private jet flying, helicopter landing, Dom Perignon swiggling, titans of industry and politics. As its mission states, the Davos Man is “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas.”

Far from owning my own private jet, my role at Davos was as a ‘media leader,’ which meant I helped moderate programs, covered the event, and gratefully didn’t have to pay the $35,000 ticket to get in. The highlight of my Davos life was joining forces with Accel Partners cofounder and global power broker Joe Schoendorf, and holding our annual ‘Davos meets Silicon Valley’ cocktail reception at the Kirchner Museum in the center of the village. Armed with dozen of cases of California’s finest red wines and the best French champagne, those parties where epic. Over the years, our winefests matched the likes of Peter Gabriel, Israeli President Shimon Peres (RIP), and Bill Gates, with the best and brightest young entrepreneurs spinning out of Silicon Valley, including Google founders Larry Page and Sergey Brin, Skype’s Niklas Zennström, YouTube founder Chad Hurley, and a 21 year old Mark Zuckerberg.

“Popular frustration and apprehension about the future simultaneously have reached new heights. We are seeing the paradox of high returns and high anxiety. Low wage growth, dimming retirement prospects and other financial pressures are squeezing too many across the globe. I believe that these trends are a major source of the anxiety and polarization that we see across the world today.” Larry Fink, the CEO of the $6 trillion-plus asset management firm BlackRock

Upon reflection, and as the Forum’s mission statement above reflects, Davos was the annual calling of the once and future masters of the universe to ‘shape’ the world agenda with the globe as their chess board. I admit, in addition to drinking lots of Joe’s red wine, I drank the Davos Kool-Aid as well. For 10 years I felt like one of the Masters of the Universe. But as long as this show has been going on, a populist earthquake has been brewing. Davos regular Larry Fink, the CEO of the $6 trillion-plus asset management firm BlackRock, nailed it prior to last year’s gathering. “Popular frustration and apprehension about the future simultaneously have reached new heights. We are seeing the paradox of high returns and high anxiety. Low wage growth, dimming retirement prospects and other financial pressures are squeezing too many across the globe,” he said, “I believe that these trends are a major source of the anxiety and polarization that we see across the world today.”

Bingo!

macron davos
The French President Emmanuel Macron at Davos

It also may be the elephant in the room that many people do not want to talk about, but open borders and huge influxes of new and often undocumented immigrants into mainly developing countries is also causing societal anxiety and providing further fodder for the populist movements. The dissatisfaction with immigration is not fueled by racism and xenophobia, as the global elite want us to believe, but by a sense of people feeling overwhelmed by the shear numbers of immigrants flocking into their respective countries. The US, as and example, harbors close to 25 percent of the world immigrant population, totaling somewhere between 45 million to 60 million people.

While the average American still believes in the ‘melting pot’ ideal, it has become impossible for such an enormous infusion of new people and cultures to successfully assimilate and secure gainful employment. US citizens are not the only ones with these concerns. A recent Pew Research surveyed people from 27 countries, including Mexico, South Africa, and Sweden — found a majority of people in each country surveyed did not want more immigration into their country.

This all begs the question: If these massive influxes are so unpopular, and people didn’t vote for them, why does this continue? One of the starting 5 (in my opinion) on the cultural thought leader team of our time, Victor Davis Hansen from the Hoover Institute, who also runs an almond farm in central California and employs dozens of legal immigrants says, “Whether in California, Nevada, Paris or London, the administrative progressive elite are willing to take the short term hit on popularity, for the long-term ability to change the demography. Their goal is to create reasons for more government subsidies, entitlements and gain fealty with newcomers who they hope will keep them in power.”

Meanwhile, the elite live in gated communities and send their kids to private schools where everyone speaks the native language, and are completely insulated from the ramifications and downside of their own ideologies. These folks largely believe that most people are ignorant and need an anointed elite to guide them. They have become the pigs in Orwell’s Animal Farm. They also ignore the existential questions. Why are 250 million people on the planet trying to move primarily from non-westernized countries to westernized countries? Why are the countries busy spreading their citizens all over the world, such as China, India, Mexico and Turkey, the least likely to allow immigrants into their own nation.

“The elites that oversee this process never seem to consider that immigrants are attracted to countries with constitutional governments, and promote rationalism, tolerance, and free-market economics. If they just advocated this menu of ideals outside the western world, people could stay in their home countries, which is usually always their preference.”  Victor Davis Hansen from the Hoover Institute

My perhaps hopeful premise is that as these anxieties have grown, blockchain and AI entrepreneurs have been hard at work in the background developing the technologies to sooth our global discontent. We are entering that third wave of the commercialization of the Internet, and the goal is to finally deliver on the original promise to distribute economic and political power, not centralize it. If I were dictator, the first public crypto project I would initiate would be putting the global immigration process on an independent blockchain. The goal would be to provide security and privacy and leverage the d-workers to help verify the good pilgrims from the bad.

Unlike the Davos Man, the role of the blockchain revolutionary is not to rule the world, but champion a plan that makes sure that no one rules the world.
It is safe to bet that the Davos Man and the institutions they represent won’t go down easy. As Mr. Srinivasan warns, ‘Even if the Paper Belt is vulnerable, it still wields incredible power. These are the industries that literally control the world’s armies, information, knowledge, and economic systems. Like all incumbents, these industries will use their power for self-protection.’

Due to popular unrest in his country, France President Emmanuel Macron has emerged as the poster figure for the Davos Man. As Marcron battles the Yellow Vests over energy taxes, his approval rating has plummeted to 23 percent in an Elabe survey. Bernard Sananes, head of the Paris-based pollster explained the new findings, “Macron doesn’t listen to the people, doesn’t know the people, and doesn’t understand the people.” I predict that the inevitable downfall of Macron will be a shot heard around the world that will send his fellow globalists running for cover.

crypto winter
Surviving the Crypto Winter and Still Getting What We Want

Surviving the Crypto Winter and Still Getting What We Want

Bitcoin billionaire Tim Draper remains bullish on the potential of the blockchain revolution despite having to navigate the ‘Crypto Winter’ for the last several months. “Bitcoin is a metaphor for the societal change we are going through right now,’ says Mr. Draper. ‘If you want to win, you need to be a part of this change, you need get in front of it. The only alternative is to be a Luddite, and they died out, didn’t they?” Mr. Draper thinks that government-backed currencies — especially those that come from countries with a history of corruption, wild currency volatility and manipulation — will eventually go away and be replaced by crypto currencies. “Japan has more or less declared that Bitcoin as their national currency and have welcomed crypto entrepreneurs from all over the world, and they are better off for it. The got a big boost after China basically outlawed all things crypto.”

In the end, as Messieurs McNamee and Valentine have rightfully assured us, crafty entrepreneurs will make sure we eventually experience a more accessible, self-empowered, private, secure and economically distributed online world—because that’s what we want. In the meantime, we can expect mainstream media talking heads to get more shrill, Wall Street’s money-changers continue to dog Bitcoin and token offerings, and politicians desperately trying to reboot socialism, all in their vain attempt to hold onto the power slipping through their claws. Like I said up top, it’s ‘power to the people’ time all over again, and it’s the blockchain entrepreneur who is working hard to give us our power back.

This is an extracted piece of an article first published on medium by Tony Perkins, Silicon Valley OG. Founder & Editor of Cryptonite. Previously Founder of AlwaysOn, Red Herring, Churchill Club, Cofounder, SVB Tech Group.