Blockchain at Berkeley is the first university-based eco-system for blockchain technology, specializing in educating the community, facilitating innovative projects and discussion, and helping companies benefit from blockchain technology by identifying use cases, building out prototypes, and integrating solutions.
Oftentimes the evolution of the blockchain industry is compared to the evolution of the Internet. This comparison is apt, and provides a guideline for the adoption curve of a transformational technology. However, the Internet is not the only industry that can provide a guideline for the pace and shape of development in the blockchain industry.
Below we take a look at a wide range of industries and the ways in which they developed to draw parallels to the blockchain industry that extend beyond the often cited comparison with the Internet.
The Pace of Industry Development
Many people believe that the blockchain industry is at a stage similar to that of the Internet in the early-to-mid nineties. This causes them to stand waiting for the development and release of a “killer app” akin to the Mosiac Browser. Some are frustrated that after ten years of existence this “killer app” for blockchain technology hasn’t yet been developed. This frustration may be mitigated by looking beyond the traditional comparison with the Internet, to the development of other transformational technologies.
Let’s look at Artificial Intelligence. As explained in the book Machine, Platform, Crowd, the industry has been evolving since the early 1960’s. Early on, the AI community split into two camps, those that believed “symbolic” or rules based AI would prevail and those that aimed to build statistical pattern recognition systems. However, repeated failures of both approaches caused an “AI winter” to all but stop the development of the technology in the 1970’s. Even still, some researchers continued to work on the problem throughout the 1980’s, building systems with back-propagation capabilities. Despite these advancements, wide spread applicability was still constrained by limited computing power and limited data.
In other words, AI wasn’t held back by lack of a “killer app”, its progression was constrained by the pace of development of complementary technologies. The popularity of video games resulted in wide spread usage / production of GPU units, which are well suited to the parallel processing required by machine learning, in the late 1990’s. The cost of computing was then driven down by Moore’s Law and the proliferation of cloud computing (AWS launched in 2006.) The proliferation of Big Data (Hadoop was created in 2005) was equally important in the development of the AI industry. It was only after these developments that AI applications became truly viable on a large scale.
Avoiding a debate about the directionality of the infrastructure — app cycle, let’s consider the possibility that, scalability and other technical issues aside, the constraints on the blockchain industry are more akin to the constraints on the AI industry prior to the progression of complimentary, emerging technologies. Many of the specific use cases blockchain is well suited to address rely on integration with other technologies. Supply chain use cases, for example, require IoT integration, M2M communications, and in many cases 3D-printing technologies. Stable coins and tokenized assets require technologies that allow us to better bridge the physical and digital worlds without relying on a third party. The use cases of the future may require technologies or inputs that we haven’t yet heard of or capabilities that have not yet been developed. AI lay in wait for decades before complementary technologies were able to support it.
Increasingly, as the pace of technological innovation accelerates, what seems to be needed in order for any / all of these technologies to succeed is their convergence.
While some lament the pace at which the industry is evolving, whether you consider it to be progressing quickly or slowly is directly related to your frame (industry) of reference. However, there are elements of the blockchain industry that are not comparable with the industries that have developed thus far. The instances in which blockchain technology makes sense are by definition the use cases in which there is a low level of trust and coordination and a high level of fragmentation.
Therefore, unlike other technologies which merely require an MVP (minimum viable product), blockchain technology requires an MVE (minimum viable ecosystem), which is clearly a much higher hurdle to clear.
Blockchain technology also enables interaction to occur in such a fundamentally different way that enterprise adoption may require a mindset shift. This could mean that enterprise adoption occurs more “generationally” than other technologies, constrained until those in decision making positions are ready to embrace an entirely new way of thinking. In other words, this transition will take time. The industry will develop gradually. The development of similarly transformational technologies indicates that it will be worth it.
The Shape of Industry Development
Now let’s look across industries to assess whether or not the industry will develop “vertically”, where value and usage accrue to a select few blockchain platforms, or “horizontally”, where value and usage accrue to many unique blockchains which are used for specific use cases. Many prominent industry figures have opined on this topic. Let’s look beyond the blockchain — specific arguments that can be made for one path versus another and instead draw insights from parallels with other industries.
We will look at specific industry examples in more detail below, but at a high level, the evolution of many industries can be divided into three stages: platform fragmentation, product proliferation, and aggregation.
Platform Fragmentation: Once broad product-market fit is established and core market adoption is achieved, industries tend to fragment as they target more users via specialization. Example: Cable Networks — MTV.
Product Proliferation: As the industry fragments, barriers to consumption are typically reduced which causes supply to increase to accommodate this incremental demand. Example: OTT Content — Netflix.
Aggregation: This oftentimes generates a need for an industry player that can provide cohesion to the fragmented system as user search costs and or / friction increases along with fragmentation. Example: Different OTT Content Platforms Become “Apps” on Entertainment Operating Systems — X fininty1.
In the past, these players have been “aggregators”, aggregating the fragmented ecosystem onto one platform through which users can compare / contrast / access all the disparate offerings within an industry. In our current world, where the trend is towards decentralization (proliferation of edge / mesh networks, popularity of crowdfunding, visions of Web 3.0, etc.), the “aggregation” stage would be better described as the creation of an interoperability or connectivity mechanism.
An “aggregator”establishes relationships between fragmented product offerings while allowing them to exist independently and to thrive. This is in stark contrast to “consolidators,” which by definition centralize power. Whereas industry value tends to accrue to “aggregators,” consolidation usually results in a “conglomerate discount” to valuation.
In the Media industry, fragmentation occurs down to the smallest unit that can be consumed in a process referred to as “unbundling.” Generally, as content “unbundles”, it is enabled to reach a wider audience as monetary barriers to consumption are reduced. Supply increases to meet the increased demand as more participants enter the market. Let’s look at some specific examples:
News: Newspapers began as a bundle of print content. Digital news platforms such as Yahoo or CNN.com increased distribution and also allowed for the consumption of smaller units of content (a single article, for example.) This in turn led to a proliferation of specialized digital news sources (TechCrunch, Bloomberg, etc.) This became overwhelming to consumers, which turned to aggregation platforms such as Google or Twitter to organize all this content, lower search costs, and, in some cases, to create a more personalized “newspaper” (ie. newsfeed)
Music: Albums began as a bundle of songs. As music became digitized, platforms began to emerge to digitally distribute songs (Napster, LimeWire, iTunes, etc.) which reduced the minimum unit size of consumption. Increased distribution channels also lowered the barriers to entry for musical artists. This caused a proliferation of content and overwhelmed consumers. Aggregation platforms such as Spotify emerged to organize all this content, lower search costs, and create personalized playlists (re-bundling.)
TV: Media began with broadcast networks which aimed to reach large swaths of viewers. Networks naturally developed to allow for more segmented targeting by appealing to sub-segments of viewers. The production of digital content (OTT) began to proliferate, which lowered minimum consumption costs to ~$10 / month. As demand increased with lower barriers to consumption, an explosion in content creation followed. Platforms such as Netflix and Hulu, themselves aggregators in a way, began to provide personalized viewing experiences. As the number of these OTT content platforms also proliferated, it required an “aggregator of aggregators” (Amazon, Xfinity1) to allow viewers to organize, search, and access all of this digital content from one place.
While the main parallel relates to fragmentation and re-aggregation, another important component of the media industry’s evolution is the impact that “unbundling” has on consumer economics. “Unbundling” increases accessibility for consumers by lowering monetary barriers to consumption (i.e torrenting is free, the price of an OTT subscription is less than a cable subscription, etc.)
The consumer economics of “unbundling” are not dissimilar from those that can be achieved by applying blockchain technology to inefficient or rigid processes.
Blockchain technology can reduce the cost of entry and enable broader participation in activities such as fundraising, access to credit and /or social services, and international payments. If the above model holds, the first step will be that the blockchain industry fragments (more on this below.) Then as it “unbundles” more services, enabling broader participation in these activities, supply should also increase in order to meet this incremental demand.
The parallel does not hold on the economics of production, however, as one of the main enablers of the unbundling / fragmentation of the above mentioned media industries is the zero-marginal cost of digital distribution. This property does not extend to the blockchain industry where the initial costs of developing a new protocol are currently high.
*** Many of the ideas expressed above rely on and expand upon the ideas of my former colleagues at Barclays Capital, particularly Kannan Venkateshwar, Head of U.S. Media, Cable, and Satellite Equity Research.***
Parallels to the Blockchain Industry
Whilenone of these industries are directly comparable, if the development of these industries serves as any indication of the way in which the blockchain industry will develop, the industry will fragment into use case specific blockchains. As explained in greater detail below, meaningful value will accrue to the companies that can create a way for fragmented blockchains to communicate and connect (ie. “aggregators”.)
Phase 0: The blockchain industry began withtwo dominant platforms, Bitcoin and then Ethereum.
Phase 1: We are now seeing a fragmentation of the ecosystem to meet the needs of specialized use cases, which should continue at least until the trade-off between decentralization, privacy, and scalability is no longer required. Given the constraints imposed by this trilemma, it makes sense that different protocols would be needed to accommodate different use cases. It also probably doesn’t make much sense to expect the same platform to support a country’s digital identity system while also supporting applications such as CryptoKitties. The reasoning extends beyond scalability issues. As highlighted by Cosmos, “ Much like communities, companies and nation-states, each existing cryptocurrency is born with the seed of some cultural ideal.” In order for these companies to express those ideals, they will create protocols that grant them the flexibility to do so. From all lenses, it looks unlikely that there will be “one blockchain to rule them all.”
Phase 2: As rigid processes and closed systems are “unbundled”, wider spread usage and adoption will occur across these multiple blockchains. This will increase friction and transaction costs for consumers. As the number of blockchains increases, so does the complexity of managing a number of different tokens and assets siloed within disparate ecosystems that have no way to communicate or connect.
Phase 3: Companies that can create common standards or mechanisms for interoperability and / or connectivity between blockchains will occupy a central role in industry development (more below.) There are many projects currently working on becoming this “aggregator” or “Internet of Blockchains” including Cosmos , Polkadot, and FourthState Labs.
The idea of interoperability in the blockchain industry is not new. However, looking at other industry evolutions makes it seem clear that the blockchain industry will continue to fragment into specialized blockchains and that as this happens, value will accrue to the platforms that facilitate interoperability, communication, and connectivity between chains.
As the blockchain industry fragments, new entrants will need to offer defensibly differentiated value propositions if they are to disrupt established network effects. An “aggregator” or connectivity mechanism will be crucial to further development of the industry. Let’s now look at several industries where multiple networks have had to compete and co-exist side by side.
E-commerce and Social Networks
While Amazon and Google are perhaps the two platforms which best exemplify network effects, they have also both failed at incentivizing users to join new networks at one time or another. Amazon was not initially successful in its attempts (Amazon Auctions, zShops) to compete with eBay. Amazon failed at competing with eBay (selling used goods) until it realized that it couldn’t compete by trying to be “ a better eBay.” With the introduction of the Single Detail Page, which gave Amazon customers the option to view new or used versions of a product, the company began targeting Amazon’s own customers instead of eBay’s. This then offered eBay sellers a more compelling value proposition to join Amazon’s network as it opened up a new market to them (Amazon’s customers.) This was enough to start the flywheel needed to develop a network of both buyers and sellers.
Prior attempts failed because they tried to create a marginally better, copy-cat network. This requires all network participants (buyers and sellers) to overcome the “gravitational inertia”of their current network and move to a new network together as the value of an incremental feature will never offset the magnitude of switching costs for an individual user.
Google+ also failed with its attempt at a “me too” social network. Again, this effort failed because it wasn’t defensibly different from other, more established social networks (Facebook.) It’s much easier for an established network to copy a competitor’s new feature than for a new entrant to create network effects from scratch.
While there are valid reasons for creating specialized protocols to accommodate differing use cases, blockchain platforms that focus on making marginal improvements over existing networks are unlikely to succeed. Instead, new networks must offer a value proposition compelling enough to justify switching and unique enough that competitors can’t easily replicate it.
One exception to this rule is if a player is willing to add a feature that the incumbent is not willing to add. This is how TaoBao beat the already established eBay in China. TaoBao introduced direct messaging between buyers and sellers, which eBay wanted to avoid since side channel communication between buyers and sellers increased the likelihood that transactions would be conducted outside the eBay platform. eBay would then forego the associated transaction fees.
Blockchain networks are doing exactly this, adding features (trust, transparency, immutability, and direct P2P interaction) that the incumbent platforms are unwilling to add.
While new blockchain networks will have to offer strong value propositions in order to compete with established blockchains, blockchain networks in general should be able to beat out traditional networks.
***This section summarizes and expands upon the ideas of former Amazon and Google engineer, Steve Yegge.***
Once the industry has fragmented, these disparate networks will need to communicate with each other. The telecom industry is a prime example of an industry that requires the bridging of networks.
Due to capital and regulatory constraints, it is not feasible to build a global telecommunications network. Therefore, cross-country communication often requires cooperation among carriers. Sometimes this occurs in the form of roaming agreements. Other times it has required agreement upon global standards. Pre- 4G LTE, Europe operated according to GSM standards while some U.S. carriers (Verizon and Sprint) operated according to non-compatible CDMA standards. Without compatibility, a Verizon customer traveling in Europe wasn’t able to use their phone while overseas. This obviously created a high level of friction for consumers. Telco companies again realized that they had to work together to develop a mechanism to allow consumers to hop from one network to another more seamlessly while moving outside a given carrier’s coverage zone. The 4G-LTE global standards were designed and excepted by all major carriers with this in mind.
Issues with compatibility across geographic networks can be compared to managing multiple native tokens across multiple blockchain ecosystems that can’t easily communicate with each other. This currently requires conversion into other currencies via an exchange (sometimes multiple times) before being able to use assets in another ecosystem.
Like the telecom industry, the blockchain industry is a network of networks and will need to continue to set standards aimed at facilitating more seamless communication between these networks.
Telecom is also a highly regulated industry and differences in regional regulations have caused the industry to develop very differently in different geographies. For example, the European Telecom industry is much more competitive (harsher anti-trust enforcement) than its U.S. counterpart, with +10 different major carriers relative to ~3–4 in the U.S. In the U.S., operators tend to lease cell towers from third-parties while a higher percentage of European operators still own their tower infrastructure. In other words, regulatory and regional differences have created a less restrictive operating environment for U.S. telcos relative to their European counterparts. As the blockchain industry fragments, regional regulations and adoption patterns may heavily influence which projects succeed.
60 different stablecoins are currently under development across geographies. Source: https://www.blockchain.com/research
The mechanism by which these networks connect to and communicate with each other is of central importance to an industry. Comparison with the networking infrastructure industry illustrates this point clearly.
With the advent of cloud computing, enterprises have shifted from on-premise data centers to third-party colocation facilities. These third-party facilities have traditionally been divided into two models: wholesale, custom built dedicated facilities also called “server farms,” and retail facilities that focus on interconnection via direct fiber cross connections between customers. These retail focused companies have created a neutral, third-party location for companies to directly connect to each other, to peer or exchange traffic and /or data securely and rapidly.
The infrastructure providers that have built their business on being a facilitator of connectivity between disparate enterprises, ISPs, and telcos have accrued the most industry value, historically..
One of Blockchain at Berkeley’s main goals is to actively provide education and resources for those interested in the Blockchain space. By providing Blockchain resources, we hope to help bridge the gap between the vast number of industry and community members interested in learning about Blockchain and the subject of Blockchain.
As part of this effort, we have decided to move from a public Slack to a public Discord. The reasons for this change can be broken down into two issues: reliability and scalability. Through our discord, we hope to provide an open platform that is multifaceted in nature so that community members are able to come together and discuss various seasonal research topics managed by Blockchain at Berkeley members, daily trivia questions, limitless resources, and a central location for Blockchain events.
In terms of reliability, one of the biggest issues with Slack was the inability for members to search previous messages. This is an issue as Slack begins to archive messages after ten thousand messages have been sent including direct messages. We felt that discussions were not as meaningful as they would be quickly lost and unsearchable after a short period of time. Searching for a potential solution, we quickly found Discord to be our top potential solution since all messages are kept. Similar to Slack, Discord is a free service with premium add-ons which do not have a direct impact on discussion within a server.
While looking for a potential solution to our issue of reliability, we also began to look for solutions that could accommodate our future goal of providing Blockchain resources to as many people as possible. The transparency and active communication from Discord developers led us to be quite confident that a Discord server could have upwards of forty-five thousand members online concurrently. While Slack may have scaled, the limitation of ten thousand messages leads us to believe that moving platforms would be worth the hassle to ensure that we meet our goals of becoming a center of learning and communication.
In the coming months, Blockchain at Berkeley hopes to transition to Discord by discontinuing the public Slack. We hope that the Discord platform can serve as a basis for those who are interested in connecting with the Blockchain space but also members of Blockchain at Berkeley. The primary goal, however, is to simply provide a means of communication between multiple communities including industries, and students not limited to Berkeley. To do so, we hope to provide community members with limitless Blockchain content and are so excited to add yet another channel for Blockchain growth and knowledge.
Can crypto solve all the problems with fiat? Will consumer products soon have traceable histories and fair trade certificates on a blockchain? Can we use distributed ledger technology to bank the unbanked, democratize elections, take ownership of our personal data, and reverse the tide of climate change?
In the past few years, I’ve seen dozens of blockchain use cases, some promising high ROIs and some painting beautiful pictures of Blockchain Utopia. My favorites are always the ones that harness the technology for social good; however, I often experience an internal struggle between the humanitarian Berkeleian who loves social impact projects and the skeptical blockchain academic who is aware of the technology’s limitations that render most use cases infeasible.
Here, I present five social impact blockchain use cases and the obstacles we — and not just blockchain developers and researchers — must overcome in our quest to build Blockchain Utopia.
Financial Inclusion and Donation Tracking
Finance is the most intuitive use case for blockchains. Bitcoin was introduced as a digital currency offering the extra features of “anonymity” which allows for greater privacy, fewer transaction fees which allows for high volume and microtransactions, and removal of barriers which allows for cross-border payments. Typical financial use cases include IoT micropayments, remittances, claims management, and securities trading. But while most of us who are able to access Medium live in a country with a reliable currency system and access to financial services, there are billions of people whose financial opportunities can be dramatically improved with cryptocurrency technology.
Let’s say a woman in India discovers she can apply her skills to start a small business. However, she does not have the initial capital to get started, and she is one of 2 billion people in the world with no access to banking/financial services so loan options in her community are scarce; debt bondage is also unfortunately prevalent in India. We can envision cryptocurrencies — frictionless digital money that transcends large financial institutions and international borders — helping those that banks have failed to reach.
Perhaps, in the future, everybody will transact with digital currencies. You and I, sitting across the world from the woman in India, will be able to easily loan money via smart contract and track exactly where the money goes; she will be able to build her credit through a reputation tracker built into the application. Retailers and CPG companies who participate in charities can set up “5% of all sales” donations as smart contracts such that consumers purchasing those products will be able to verify and see the impact of their donations. Note that this particular vision excludes the anonymity capabilities of cryptocurrencies, and perhaps even requires centralized identity services.
Because finance is the simplest blockchain use case, it also reveals the technology’s most fundamental problems. Cryptocurrency will only become mainstream if it exceeds what consumers expect from traditional applications: it needs to be faster, cheaper, and more accessible — none of which are really true today.
I’ll talk about accessibility first: assuming we can get financial services to everyone with smartphone access, we’ve helped a laughably small portion of the unbanked.
But say some benevolent donor generously paid for everyone to have some kind of electronic wallet and everyone can transact with cryptocurrencies. To maintain the system, we also have to pay for people to host nodes and validate transactions — a nontrivial cost increase if you want true decentralization.
Further, we have the problem that Bitcoin can barely handle a dozen transactions per second, and most other cryptocurrencies don’t do much better (for context, Visa is expected to handle tens of thousands). The main bottleneck is the demand for trustless consensus (observe the Scalability Trilemma) and redundant data storage. Fortunately, blockchain’s Scalability problem is its most heavily researched topic: short-term solutions include setting up permissioned ledgers with faster consensus or Not Using Blockchain; long-term solutions include Proof of Stake implementations, sharding, side chains, and state channels.
Supply Chain for Fair Trade, Sustainability, and Ethical Consumerism
The first use case that came to mind when I initially read about blockchain was supply chain; at the time I thought it was an original idea (ha). It’s also quite intuitive: we have a ledger containing the ownership history pertaining to a particular asset. If bitcoins are trackable, why can’t everything else be?
Perhaps one day we’ll be able to scan the barcode of any product bought at the supermarket and see its entire history from the machine it was manufactured in to the temperature of the grocery store cooler it was stored in. Enabled by the data integrity of a blockchain, supply chain transparency becomes the norm. With pressure from their customers who will make educated buying decisions based on provenance, companies are held accountable for their production and labor practices. All chocolate bars and lattes will be fair trade, fishing and aquaculture will be sustainable, counterfeit drugs will be eliminated, and workers producing textiles and electronics will be fairly compensated. Those of us who have sworn off meat but still yearn for the taste of a medium rare steak will be able to purchase a pound of tenderloin from a cow that was sustainably and humanely raised, painlessly killed, and whose methane emissions were offset. What a beautiful vision.
However, all the traceability hinges on the supposed data integrity of the blockchain, which we consider immutable, transparent, and trustless. But it’s really just a data structure with hash pointers. Still remains is the integrity of the data input process: if the warehouse worker decides to swap a bottle of oral chemotherapy drugs with sugar pills and nobody records that on the blockchain (and who would?), we have immutable, transparent, trustless… garbage.
Secure data entry — without introducing a trusted third party — is a nontrivial task: most theoretical implementations boil down to reliance on a tamper-evident device for data collection. Examples include hardware oracles and encrypted, tamper-evident RFID tags. But even then, we have what I like to call the Grapes Problem: suppose you have a cost-effective RFID tag whose proximity to a hardware oracle will automatically trigger updates to the blockchain. Where would you put the tag to make sure it collects all the information? One per crate of grapes? One per bunch of grapes? One for each individual grape? Until we solve these problems, blockchain adds little value to supply chain transparency.
Identity and Ownership of Personal Information
Private and public key cryptography introduced the ability to authenticate messages consistently without having to reveal any information about your identity. With the addition of blockchains and consensus, we can trustlessly come to agreement on transactions and state data without having to reveal that information either. These technologies enable privacy as the Cypherpunks envisioned it: the ability to selectively reveal personal information to others.
What should identity be tied to, and what information are we talking about? While I know exactly where my birth certificate, passport, and diploma are — or at least my mother knows — not everyone has their identity instruments and certifications on hand. It poses real complications in trying to get financial assistance, housing and property ownership, employment, and medical services. We have also heard much about problems with data management in healthcare and other services such as social media platforms: inaccessibility due to data silos, misuse of personal data, and security failures. There is increasing interest in regaining control of our own personal data.
The concept of a self-sovereign ID and personal privacy mesh well together: the vision is for everyone to possess a digital identity verifiable anywhere, and all the data associated with that identity belong solely to the owner. Granting permission to access specific bits of data is also within the person’s control. There are blockchain companies offering digital wallets and lending platforms that use biometric information to tie digital identities to the real world — something that cannot be lost or destroyed. Other companies offer services which securely handle personal data and act as a third-party authenticator.
We will all benefit from a system in which we hold the keys to our personal data and selectively transfer access rights to various entities. For example, when you see a medical specialist, you grant her access to the relevant health records and she can access them instantaneously. You may also decide to provide non-identifying information to researchers investigating genetic predispositions to a condition you were diagnosed with and pharmacy companies developing drugs to treat said condition. You may be compensated for providing data, and the vast availability of data greatly accelerates medical advancements and healthcare providers’ ability to provide specialized treatment.
Note that there are debates as to whether this issue would be solved with blockchain or mere coordination and cryptography; I’d argue that blockchain can play a role in access management and incentive structure.
Here’s a spooky acronym: HIPAA. Any application handling sensitive data that cannot guarantee privacy and security is unacceptable. Many of us like to tout blockchain’s absence of a “central point of failure” due to its decentralized structure. However, blockchain is a highly adversarial environment and, if we uphold the “Code is Law” ideology, any hacker who successfully finds a vulnerability has a right to any and all prizes she can extract from it. Bitcoin, of course, is vulnerable to a 51% attack that could be happening under our noses due to Bitcoin’s pseudonymity.
Developers must obviously be vigilant and rigorously test applications; at this stage where security is still a predominant concern, keeping projects open source is important for productivity.
Voting, Freedom of Speech, and Censorship Resistance
Given cryptocurrencies’ anonymous nature, it has been widely lauded as a censorship-resistant tool. Various journalism services are looking to use blockchain to support and compensate and incentivize newsmakers in local communities and politically unstable areas. Through an anonymous cryptocurrency, we have freedom of expression with not just our words but our dollars as well.
I’d like to focus on the blockchain for voting use case: a decentralized voting platform that is incorruptible by the government and preserves democracy while enabling voter anonymity. A voter could register using some kind of identity verification like what I described above, cast a vote anonymously, and later verify that their vote was included in the computation of election results. Ideally the whole process is decentralized (if possible) and unable to be influenced by the voters’ government — or a foreign one. These benefits are in addition to the accessibility, ease of absentee ballots, and minimization of human error and fraud offered by the simple digitization of the voting process.
There are many problems with the voting use case. Part of the issue with voting systems specifically is also security: the decentralized voting platform (data entrypoints included) must be strictly more trustworthy than existing voting process for it to be acceptable to voters. But there’s another, simpler problem with consumer adoption. I’ve heard many times that a voting system built on a blockchain will be more accessible to voters and increase voter turnout. It’s a good thought, but I always respectfully ask them to show me a blockchain-based application that is strictly more user-friendly than its traditional counterpart. It isn’t easy.
When blockchain startups ask me for advice, I say: hire designers. The UIUX of many blockchain applications is typically subpar for no good reason, and I’m don’t just mean a pretty website with animated buttons. The blockchain space needs more individuals who understand how to create a user experience in which the blockchain becomes irrelevant. What do I mean by that? Right now, there seems to be a collection of magic words you can tack on to things to make their value double: “distributed ledger,” “byzantine fault-tolerant consensus,” and “advanced cryptographic protocol.” Nobody uses the names of communication protocols and data structures to sell their web products. When the buzzwords are abstracted away and all we see is a better user experience, we’ll know we have transitioned from hype to meaningful technological advancement.
Energy and Environment
I’m not going to talk about how Bitcoin uses more electricity than Chile. And I’m not going to talk about how many mining pools in China are powered by coal. But I am aware of those issues. Perhaps blockchain can redeem itself by contributing to energy concerns relevant today: incentivizing the production and usage of renewable energy and disincentivizing carbon emissions.
A small scale application that is feasible today is installation of microgrids such as independent rooftop solar panels that are available to supply energy locally, which are especially beneficial during natural disasters. Such power generators can directly transact with consumers using cryptocurrencies (one of many sensible IoT blockchain use cases).
A larger scale application includes a large network of power suppliers supplying data on the amount and type of energy they provide and power consumers supplying data on their energy demands throughout the day, week, month, and year. This data can be used to design an incentive structure for mediating the carbon intensity of energy usage at different times: charge your electric vehicle during the hours 1–4pm and receive rewards for utilizing more solar energy at a low-demand time of the day, or wait until 10pm (when demand is typically high and much of the power is generated with fossil fuels) and pay more.
Carbon credits already provide an incentive structure for reducing the emission of greenhouse gases, taking responsibility for negative environmental impact, and beginning to halt the progression of climate change. The tokenization of carbon credits and carbon offsets can increase transparency, ease of transfer, and integrity of the system. Since every purchase has some environmental impact or another, consumers may one day be able to track the footprint left by their actions and take actions to counteract them. Carbon offsets can be directly embedded into products so consumers can automatically participate in the efforts to pay back Mother Earth for the environmental cost of producing their products.
But here’s a final problem of integration: most blockchain applications only work if everybody uses it. Interoperability is one part of it. Adoption is difficult with many incompatible platforms, and locked up ecosystems hinder productivity and innovation. There are also various integration barriers which include slow-moving industries due to a prioritization of safety over innovation, conservative law-makers and law-abiders bound by regulations that do or don’t exist, and consumers hesitant to buy into a technology best known for Silk Road and Mt. Gox scandals. All very reasonable, I’d say, but solvable. Possible solutions include education, peer pressure from consortia, more education, mandate by government, and even more education.
There’s a point in the blockchain learning curve in which we become hopelessly disheartened by the current limitations of the technology — are there ANY feasible use cases? Perhaps you felt that these peachy visions of a blockchain-enabled future are all impossible. Or perhaps you envisioned Blockchain Utopia as I did, but were unsure how to build it. Hopefully I have convinced you that it is indeed possible, but that there are obstacles to overcome before we get there.
Blockchain’s challenges generally fall into one of three categories: technical shortcomings resulting from the nascent nature of the technology, non-blockchain challenges that significantly influence the efficacy of a blockchain use case, and hurdles to integration.
What does this mean? You don’t have to be a blockchainer or even a developer to help us tackle these challenges. Envision your own Blockchain Utopia and build it.
Gloria Zhao is President of Blockchain at Berkeley and a UC Berkeley student majoring in Computer Science and Psychology. She teaches Blockchain Fundamentals, an undergraduate Berkeley EECS course.
Background: Four days ago Coindesk published an article speaking to the “stalling” of the Plasma scaling solution. This article, written by plasma implementation team, FourthState Labs, reflects upon Coindesk’s claims from an implementors perspective.
What is Plasma?
With confusion arising over the multitude of plasma implementations present in the Ethereum ecosystem today, we believe it is first important to step back and redefine Plasma for the uninformed reader.
Root Chain → Infrastructure → Plasma
Plasma is a scalability solution that allows decentralized applications to move transactions off of a root blockchain. These transactions are migrated onto other blockchains, called “sidechains” or “plasma chains”, that are operated by individuals or small validator sets (rather than the entire underlying network).
What is unique about Plasma’s construction is that it allows for secure operation of sidechains, even in the presence of malicious activity. This is done through the use of unique exit mechanisms and crypto-economic protocols, which allow users to move their money even in the face of operator censorship or tampering.
As a simple example of Plasma’s application, imagine a scenario where decentralized exchanges provide their order matching on their own sidechains. These chains can possess 100x scalability over the Ethereum network.
Plasma’s Misconceptions1. Plasma Chains are Centralized (and subject to regulation)
The first misconception that most have regarding Plasma is the association of independently managed sidechains as “centralized entities”.
As Gnosis CTO Stefan George states in the above Coindesk article:
“You have this operator, it is trustless not decentralized. It’s pretty centralized, it is prone to regulation and so on.”
It is true that most Plasma implementations only provide single operators, however, we have shown that there are ways to bring multiple validators to a single Plasma chain.
By using the Cosmos SDK, we are able to decentralize the validation process on Plasma chains, instead creating Proof-of-Stake based sidechains operated by a network of validators. These validators can use any stake-based consensus mechanism and reward validators according to pre-defined criteria.
2) Nobody is Building this Infrastructure
In the above article, CoinDesk states: “within multiple [Plasma] iterations, there’s evidence that work isn’t proceeding as originally hoped, with little actionable code being put together well over a year since its inception”.
This claim represents the view that pushed code and progress are directly correlated with one another. This is a naive thought. Any missed attack vector on a Plasma implementation will lead to catastrophic financial consequences. The correct focus should not be to quickly ship production ready code or be first to market, but to release a well designed and secure solution.
Here are just a few references that illustrate the research and thought that we have put into a secure Plasma implementation:
FourthState Labs and Kyokan (Plasma implementers) have also partnered to standardize the Plasma smart contract interface that can be used by different Plasma sidechain implementations. This contract is looking to be audited and production ready by Jan 1, 2019.
Remaining Issues1. Mass exit scenarios
In the presence of malicious activity, the flooding of transactions associated with Plasma Chain exits on the main network at on once is an area of concern. While there have been no fool-proof solutions proposed to date, there are several approaches proposed to mitigate this risk:
1) A multi-validator set for a decentralized Plasma chain which reduces the probability of a malicious block from being submitted. At least ⅔ of the validator set would have to sign off on a malicious block for the submission to be approved on the main chain.
2) Batched exits triggered by incentivized watchtowers. With the right economic incentives, users can delegate the ability to exit on their behalf to a validator for some reward in the presence of malicious activity. With slight modifications in the smart contract spec, the validator can batch these exits into 1 transaction.
3) Addition to the Plasma chain to continually merge UTXOs of the same address. This greatly reduces the number of UTXO’s each user would have to exit in the case of malicious validating.
4) Scaling on the layer 1 level. Techniques like sharding and casper are currently being worked on for the Ethereum blockchain. With the Ethereum 2.0 release, the throughput increase at the layer 1 level in combination with the above tactics should be sufficient enough to facilitate a mass exit successfully.
2. “Plasma terminology is confusing”
This is true. The community has not done a good job in this regard. Rather than optimally coordinating research we have instead seen arguments as to which Plasma “flavor” is the best.
That being said, there is no win-all Plasma.
Plasma MVP and Plasma Cash have their own respective use cases, and should be treated as such. The only common thing in these flavors is our core definition of Plasma above.
dApps should spend time understanding both implementations, and how these solutions can plug into problems they are solving.
SNARKs as an Alternative
To be realistic, Plasma is not and should not be the only solution that solves the blockchain scalability problem.
As CoinDesk states in its article, there are merits in exploring the use of tools like SNARKs and STARKs, which can provide scalability benefits associated with verifiable off-chain computation.
In the future SNARKs can be coupled nicely with Plasma MVP to minimize sidechain storage requirements, enable fast syncs, and improve light client infrastructure (providing security benefits to sidechain users).
That being said, it is important to note that both technologies are still in their experimental phase, and should strongly be treated as such. By no means are crypto-economic or cryptographic assumptions encompassing of all real-world attack vectors, meaning that we still need to see demonstration of validity before committing to any solution.
Additionally, with SNARKs, it is unclear whether the cost of generating and verifying proofs on-chain make SNARK-based scaling solutions infeasible.
Do your research. Play with the tech. And work collaboratively rather than dismissing each other’s approaches :)
As we continue to advance the development of plasma sidechains, we believe more applications will begin to leverage this infrastructure on decentralized networks.
This discussion serves as a starting point for a deeper discussion on plasma’s role in this space, and will be amended as better definitions and implementations make their way into the mainstream. We at FourthState have thought deeply about Plasma-enabled business models, and have a number of ideas for decentralized applications looking to create new opportunities.
If you are looking for more outlook from plasma implementers check out Hamdiand Wesley’s medium blogs and the FourthState Twitter Page — and, as always, if you like what you read be sure to clap it below!
Blockchain at Berkeley recently celebrated its 2nd anniversary, and we would like to look back at what we have done over the past year. Thanks to the endless effort from our members and the support from our community, Blockchain at Berkeley has quickly evolved into the largest and most impactful collegiate blockchain organization in the world.
Through the passion and dedication of team members from Blockchain at Berkeley, the organization has gone a long way in defining a new industry standard for blockchain education, research, and consulting.
This article is an overview of Blockchain at Berkeley, the highlights from the past year, and our vision for 2019. To see how much we’ve grown, take a look at our State of the Ledger from 2017.
Who Are We?
Blockchain at Berkeley (B@B) is a student-run organization at UC Berkeley dedicated to serving the crypto and blockchain communities. Our members are comprised of 100+ undergraduate and graduate students from Berkeley Engineering, Haas, and Boalt Law, and a wealth of advisors from both industry and academia.
Table of Contents
Below are some of B@B’s highlights from 2018. — Continue reading below for more details about each of these categories:
UC Berkeley Courses and Online Educational Offerings
Berkeley Bitcoin Meetup
Research & Development
Conferences and Hackathons
Jobs and Career Development
UC Berkeley Courses and Online Educational Offerings
In 2018, B@B designed and taught for-credit courses about blockchain and cryptocurrencies at UC Berkeley. Our courses are some of the most in-demand student-run offerings on campus. They are completely free and open source with a goal to educate the public about blockchain:
Blockchain Technology and Bitcoin and Cryptocurrencies on edX: these courses are developed by Blockchain at Berkeley and faculty from UC Berkeley’s Computer Science department. With 58,000 students attending online from 192 countries, these courses, which can also be found on YouTube, teach students about the basic properties, intents, and mechanisms of blockchain, distributed consensus, and various enterprise-level blockchain implementations. Course produced by Rustie Lin and others.
Blockchain Fundamentals: A comprehensive survey course of interdisciplinary topics bridging the technical and non-technical spheres of the industry. Topics range from game theory, economics, and finance to cryptography and distributed systems. The course has been translated into Korean, Chinese, and Spanish by various organizations. This course is taught by Gloria Zhao, Gillian Chu, Brian Ho, and Alan Lai.
Blockchain for Developers: A course targeted to students with a programming background. It focuses on getting individuals up to speed with developing technical solutions; ramping up from prototyping to the testing and deployment stages at a break-neck pace. Lectures by Akash Khosla and Nick Zoghb.
Berkeley Bitcoin Meetup
Organized by Anthony DiPrinzio and Ronen Kirsh, the Meetup program is a place for B@B members and the community to engage in hands-on technical workshops and openly discuss advanced topics relating to blockchain technology and decentralized systems. These insightful and comprehensive technical workshops are primarily geared toward developers.
Past guest speakers include Stefan Thomas and Ben Sharafian from Coil, Alex Skidanov from Near Protocol, Dawn Song from Oasis Labs, Elaine Shi from Thunder Token, and many more. Join our Meetup page for more information on past and future events.
Our Research & Development department hosted a total of 30 community meetups in 2018, revolving around innovative topics in crypto and blockchain.
Research & Development
Besides our initiatives in education, we have also put in a lot of effort in conducting original academic research on various topics in the field. Here are some of the highlights of our accomplishments of the past year:
FourthState: A company working on Plasma, a layer two solution to reduce transaction fees and increase scalability of blockchains. The implementation of Plasma promises the necessary speed for mass blockchain adoption with the flexibility for multitudes of applications.
Drect.ly: A new infrastructure for sending roaming records without relying on third parties. Drect.ly was started by Christian Keil, Saroj Chintakrindi, and Ravi Jotwani last winter. This project won the ConsenSys MBA Venture competition, the Top Tech award, and the Frontier Innovation award.
Partial f: A startup that is building tokenized derivatives on how to hedge against Bitcoin price risk. Research conducted by Sebastian Isaacs, Joseph Plaza, Kochise Bennett, Luke Strgar, and Andrew Tu.
Research and Development with Berkeley professors: Our top developers conduct research work with UC Berkeley professors, Alessandro Chiesa (co-founder of ZCash) and Dawn Song (a MacArthur Fellow involved with the IC3, Initiative For Cryptocurrencies & Contracts).
Blockchain and Energy: Scott Moura helped develop a proposal for “Blockchain for Smart Energy” with UC Berkeley PhD candidates Jonathan Mather and Eric Munsing. This project was awarded for Excellence in Power Access & Exchange by the Chinese manufacturing giant, Wanxiang Group Corporation.
Zexe: A ledger-based system where users can execute offline computations and subsequently produce transactions, attesting to the correctness of these computations, that satisfy two main properties. Research conducted by Howard Wu, Alessandro Chiesa and more.
Interledger Protocol: Akash Khosla, Nicolas Zoghb, Nishaad Navkal, Wesley Graham, and Anthony DiPrinzio are working to improve the existing implementation of the Interledger Protocol. With it, they will be designing projects related to onion routing, fee markets, optimizing packet routing, and network effects.
MOBI: Co-founded by B@B member Ashley Lannquist, MOBI is a nonprofit organization working with forward-thinking companies, governments, and NGOs to make mobility services more efficient, more affordable, greener, safer, and less congested by setting standards and accelerating adoption of blockchain, distributed ledger, and related technologies.
Internal research projects in progress by members of our education department:
Cryptosystems: An investigation into the math behind various cryptographic protocols, and implementation — available on the Blockchain at Berkeley GitHub.
Financial Instrumentation: Looking at the benefits of putting the bond derivatives market onto the blockchain, with a thorough analysis of current market research.
Cosmos/Tendermint Course: Designing a course to help someone in the blockchain industry understand the building blocks of Cosmos and Tendermint and how to develop using the Cosmos SDK.
B@B’s consulting division provides consulting services to Fortune 500 organizations and established blockchain projects. Offerings range from technical Proof of Concepts to advisory and consultation. We work closely with clients who are seeking to better understand and implement blockchain-based solutions, and provide clients with a full suite of resources, education, and access to our qualified consultant and developer pool.
Each semester, select members are presented with the opportunity to build internal consulting projects to be showcased to B@B’s greater community. Below is a snippet of present projects:
Blockchain and Energy — LCFS issue and trade: Building on a previous B@B research project, this project focuses on the specific challenges of provenance and privacy facing the implementation of blockchain within the energy sector.
Blockchain Interoperability and Finance: Focusing on trying to bridge the gap between the unbanked and crypto holders, this project is trying to provide a quick and easy way to send crypto to local social enterprise organizations.
Blockchain for Social Impact — Digital Identity: This project is exploring ways in which Blockchain can be used to create a persistent digital identity for the homeless population, in order to create an easier path out of chronic homelessness.
Blockchain for Housing Agreements: This project is designed to address the issue of task completions in housing situations, making it easier to keep track of task history and payment reliability.
Design team photoDesign
Noticing the rising demand for UI/UX designers in the Blockchain space, we started our Design department in Fall 2018, projected to function as both an internal department and a stand-alone consultancy.
For this semester, the Design department has two main projects:
Collaboration with B@B Education Department: Teams are working on creating cohesive branding and revitalizing document templates, icons, and existing course material for the Blockchain Fundamentals DeCal.
UI/UX Research: Our design team is currently conducting interviews and extensive research into the main points of adopting blockchain tech from the user’s perspective.
One of our many offshoot organizationsOffshoot Organizations
With the ceaseless effort to make an impact in the decentralized community, our members have founded various organizations this past year to offer additional blockchain and crypto-related services.
Dekrypt Capital: A blockchain advising firm founded by Blockchain at Berkeley Co-Heads of Consultancy Jon Allen and Ronen Kirsh, and graduate student developer Howard Wu. Their goal is to promote blockchain startups and entrepreneurs graduating from Blockchain at Berkeley.
She(256): A nonprofit that is breaking down entry barriers and increasing diversity in the blockchain space. Started in February of 2018 by four B@B members (Alexis Gauba, Medha Kothari, Sara Reynolds, and Mashiat Mutmainnah), She(256) held their inaugural conference last Spring, recently launched a mentorship program (she256.io/mentorship) with 400+ people, started the #HowDoYouShape campaign, and lots more exciting initiatives coming soon!
Mechanism Labs: A set of open source research experiments currently focused on distributed consensus and scaling founded by Alexis Gauba, Zubin Koticha, Maaz Uddin, and Aparna Krishnan.
Autocomm I/O: Griffin Haskins and Eric Hou are building a secure IoT execution platform that allows companies to deploy their IoT applications directly to their edge devices instead of to the cloud. This platform ultimately saves companies with edge deployments up to 80% of their recurring costs per year in network, cloud, and infrastructure fees.
The Blockchain Campus: A global academic network of blockchain organizations founded by Blockchain at Berkeley members, Annie Yi Chen and Anthony DiPrinzio. The initiative currently seeks to provide educational resources as well as professional advisory programs to entities ranging from student organizations to well-established blockchain labs. Ultimately, TBC aspires to gather the best university research institutions in blockchain and drive forth innovation in this cutting-edge industry.
Argus: An ICO and Smart Contract Auditing service by developers Collin Chin, Ali Mousa, Raymond Chu, Howard Wu, and Pranav Gaddamadugu.
Conferences and Hackathons
We members helped organize major blockchain conferences, hosting speakers from cutting-edge blockchain and governmental organizations:
SFBW: San Francisco Blockchain Week was a week-long event including ETHSF, Epicenter, and Cryptoeconomics Security Conference (CESC) that brought the world’s blockchain community together for educational events focused on consumer adoption, technical innovation, and insight from blockchain leaders in academics and industry.
She256 at UC Berkeley: This conference highlights existing diversity and opportunity by breaking down the entry barriers in the blockchain space. It featured women at the forefront of blockchain academia, industry, ground-breaking research, protocols, and specific applications of blockchain, especially in projects that are led by women in the space.
BuildETH: An Ethereum Developer Conference for Building Decentralized Applications. The goal of BuildETH is simple — inspire developers to build decentralized applications by bringing together the best speakers and sponsors for a single day of talks, introductory workshops, and expert sessions. Organized by Wesley Graham, Cliff Ahn, and Maggie Valentine.
In 2018, our members were invited to speak at blockchain conferences near and far, sharing the stage with industry figureheads like Vitalik Buterin, Joseph Poon, and Brian Behlendorf:
SFBW: B@B members Anthony DiPrinzio, Wesley Graham, Alexis Gauba, Akash Khosla, Aparna Krishnan, Howard Wu, Ronen Kirsh, Jon Allen, and Sunny Agarwal were speakers, panel moderators, and workshop presenters at San Francisco Blockchain Week.
Many of our members took their blockchain development skills to hackathons in the blockchain and general tech community.
ETHDenver: The largest Ethereum based #buidlathon in the world for Ethereum enthusiasts and developers. Gillian Chu and Brian Ho built a chrome extension plugin that would allow people to submit bounties in cryptocurrency for answers to their Stack Overflow questions and posts.
unBlock Hackathon:Alan Lai and Leland Lee built a smart contract that allows individuals with only DAI in their wallets to transact on the Ethereum network. The project, Pay-with-Dai, won third place at the hackathon.
YouTube: Our YouTube Channel features notable videos from our conferences, meetups, whitepaper circles, deep dives, and lectures.
Discord: In an effort to further grow our community, we have decided to move forward with a switch to Discord. We hope to be a center of blockchain discussion for anyone and everyone! Expect resources on relevant topics, direct connection to Blockchain at Berkeley members, daily trivia questions, information on upcoming events, and more! Join here.
UC Berkeley Students: Our Spring 2019 recruitment cycle and course enrollment offerings are coming up soon! Stay updated about application deadlines for both on our Facebook page and Twitter.