its own infrastructure around managing users, transactions, and data, and to reconcile with the systems of other companies every time it needs to interact. Consolidation around a single market leader would, in fact, make these industries more efficient. But neither the competitors of the likely leader nor antitrust regulators are willing to accept that outcome, leading to a stalemate. Until now. With the advent of decentralized databases that can technologically replicate the network effect gains of a single monopoly, everyone can join and align for their benefit, without actually creating a monopoly with all the negative consequences that it brings.
This is the story that arguably drives the interest in consortium chains in finance, blockchain applications in the supply chain industry, and blockchain-based identity systems. They all use decentralized databases to replicate the gains of everyone being on one platform without the costs of having to agree on who gets to control that platform and then put up with them if they choose to try to abuse their monopoly position.
In the first four years after Satoshi's launch of Bitcoin in January 2009, much attention focused on the currency, including its payment aspects and its function as an alternative store of value. In 2013, attention started to shift to the “blockchain 2.0” applications: uses of the same technology that underlies Bitcoin's decentralization and security to other applications, ranging from domain name registration to financial contracts to crowdfunding and even games. The core insight behind my own platform, Ethereum, was that a Turing-complete programming language, embedded into the protocol at the base layer, could be used as the ultimate abstraction, allowing developers to build applications with any kind of business logic or purpose while benefiting from the blockchain's core properties. Around the same time, systems such as the decentralized storage platform InterPlanetary File System (IPFS) began to emerge, and cryptographers came out with powerful new tools that could be used in combination with blockchain technology to add privacy, particularly zk-SNARKs, or zero-knowledge Succinct Non-Interactive ARgument Knowledge. The combination of Turing-complete blockchain computing, non-blockchain decentralized networks using similar cryptographic technologies, and the integration of blockchains with advanced cryptography was what I chose to call “crypto 2.0” – a title that may be ambitious, but which I feel best captures the spirit of the movement in its widest form.
What is crypto 3.0? In part, the continuation of some of the trends in crypto 2.0, and particularly generalized protocols that provide both computational abstraction and privacy. But equally important is the current technological elephant in the room in the blockchain sphere: scalability. Currently, all existing blockchain protocols have the property that every computer in the network must process every transaction – a property that provides extreme degrees of fault tolerance and security, but at the cost of ensuring that the network's processing power is effectively bounded by the processing power of a single node.
Crypto 3.0 – at least in my mind – consists of approaches that move beyond this limitation, in one of various ways to create systems that break through this limitation and actually achieve the scale needed to support mainstream adoption (technically astute readers may have heard of “lightning networks,” “state channels,” and “sharding”).
And then, there is also the question of adoption. Aside from the simple currency use case, “crypto 2.0” in 2015 saw a lot of people talking about it, developers releasing base platforms, but not yet any substantial applications. In 2016, we are seeing both startups and institutional players develop proof of concepts. Of course, the vast majority of these will never get anywhere and slowly wither away and die. That is inevitable in any field. It is a truism of entrepreneurship generally that 90 % of all new businesses fail. But the 10 % that succeed will likely at some point be scaled up into full-on products that reach millions of people – and that's where the fun really begins.
Perhaps William's book will inspire you to understand and, perhaps, join in refining the business blockchain.
ACKNOWLEDGMENTS
SOME SAY WRITING A BOOK is a labor of love, and they are right. For me, it felt like assembling a puzzle on a canvas, then framing it.
Book writing is like an act of gift exchanging. The author spends an enormous amount of time to organize and concentrate their thoughts in writing. In return, readers donate their valuable time. Sometimes, a relationship develops between the author and readers. In my case, I welcome any reader who wishes to email me at [email protected].
The moment I became involved in the blockchain industry, several people contributed to the shaping of my thinking and insights, but no single person had more influence on my education than Vitalik Buterin, creator and Chief Scientist at Ethereum. I am forever indebted to his time and knowledge, which he shared generously.
To all the creators, innovators, pioneers, leaders, entrepreneurs, startups, enterprise executives and practitioners who are living at the leading edges of this technological revolution, thank you for helping me connect the dots. You are the ones shining the lights ahead, despite some early pockets of darkness. My interactions with you have been invaluable. Thank you for allowing me a front seat, or backstage access to your wonderful acts.
At the risk of leaving some unnamed individuals in my professional circles, I would like to extend a very special gratitude to Muneeb Ali, Ian Allison,* Juan Benet, Pascal Bouvier,* Chris Allen, Jerry Brito, Anthony Di lorio, Leda Glyptis, Brian Hoffman,* Andrew Keys, Juan Llanos, Joseph Lubin, Adam Ludwin, Joel Monegro, Chris Owen, Sam Patterson, Denis Nazarov, Rodolfo Novak, Michael Perklin, Robert Sams,* Washington Sanchez, Amber Scott, Ryan Selkis, Barry Silbert, Ryan Shea, Ageesen Sri, Nick Sullivan, Nick Szabo, Tim Swanson, Simon Taylor,* Wayne Vaughan, Jesse Walden, Albert Wenger, Jeffrey Wilcke, Fred Wilson, and Gavin Wood. They all contributed, in different ways, to my understanding of Bitcoin, cryptocurrencies, blockchains, and their (decentralized) applications, either by teaching me, showing me, debating me, or allowing me into a piece of their world where I learned.
Special thanks to Wiley executive editor Bill Falloon, who believed we could do this faster than humanly possible, and to Kevin Barrett Kane at The Frontispiece who designed and produced the book in the nick of time.
Finally, much appreciation to the group of friends who helped support this book's Kickstarter campaign in February 2016, which made its production feasible. I could not have done this without you, and without the support of Margot Atwell and John Dimatos from Kickstarter.
One of a kind, Most Generous Supporter: Brad Feld (Foundry Group).
Really GENEROUS Supporters: Jim Orlando (OMERS Ventures), Ryan Selkis (DCG), Matthew Spoke (Deloitte).
Super SPECIAL Supporters: Kevin Magee, Piet Van Overbeke, Christian Gheorghe, Jon Bradford.
Super BIG Supporters: David Cohen (Techstars), Matthew Roszak (Bloq), Mark Templeton, Duncan Logan (RocketSpace), Michael Dalesandro.
BIG Supporters: Ahmed Alshaia, Floyd DCosta, Heino D⊘ssing, Larry Erlich, Felix Frei, Jay Grieves, Emiel van der Hoek, Fergus Lemon, Amir Moulavi, Daniel A Greenspun, Michael O'Loughlin, Narry Singh, Amar Varma, Donna Brewington White, Neil Warren, Albert Wenger.
Those indicated by asterisk (*) were kind enough to review portions of the final manuscript
A PERSONAL PREFACE
I HAVE NOT ALWAYS BEEN SO LUCKY IN MANY things, but one thing I lucked out on was my initial encounter with Vitalik Buterin, Ethereum's principal inventor who happened to be living in the same city as I did: Toronto.
On a cold early January 2014 evening,
