Strategies for Outsized Success in the Cryptoeconomy

2019-02-25

This is the beginning of a set of new posts.

My overarching goal at the moment is to devise a strategy which will lead to outsized success for myself as the cryptoeconomy emerges.

I'll be using the writing process here to guide and document my progress.

Hopefully this will also lead to insight for others that are developing their own strategies.

First things first, why crypto?

There are plenty of other interesting things happening in the world of emerging and established tech.

For example, you have the burgeoning impact of Artifical Intelligence bringing down the cost of cognitive processing tasks. You have VR and AR which are bringing the cost of human contact down to zero.

There are also enormous opportunities in the encumbent spaces – anything touching the Google/Facebook ecosystems will be profitable for years to come. And that's not to mention enterprise SaaS.

Neither of those are particularly interesting to me though.

Why not?

In the case of the encumbents I suspect it's simply down to my temperament. I tend to be quite future-focused and idealistic. There's just nothing romantic about the incremental tail-end of innovation.

Last year I found myself part-way through the Facebook interview process and opted not to continue for precisely this reason. The thought of stacking the last tiny chips on an enormous pile just doesn't get me jazzed. That was part of the reason – I also couldn't bear the thought of another full-time job with minimal automony and psychologically-devastating boredom.

In the case of other emerging technologies, there is a more pragmatic reason why I'm not interested in being involved as my main focus. That reason is that I just don't think the likes of AI and VR are as valuable as crypto. Here's why.

New technologies are a force for change. They alter how we interact, work, think etc. The most important thing that they change though, and the thing that is at the root of all the other changes, is power.

Specifically, technology changes the means by which power is exerted. They do this by changing and making cheaper the means of production in the existing, dominant technology paradigm.

There are countless examples of this. The web & Linux upending the dominance of Microsoft in the software business, microprocessors upending the dominance of IBM in the hardware business etc. I'm yet to research it, but I suspect this pattern extends beyond the realm of internet technology too, to various revolutions in weaponry, communications and industry.

This is all relevant today because I believe we are in the midsts of another revolution in information technology. This time, the revolution will be disruptive to the likes of Facebook and Google who have built monopolies around their data supplies and internal data expertise since the advent of the web.

And I don't think the technology at the heart of that revolution will be AI or VR – it'll be crypto. AI doesn't have the means to be disruptive – it depends on data that is owned by the very companies defending their monopolies – the Ubers and Teslas.

So there's a hint of why I'm investing my resources progressively into crypto.

The next step is to ask myself how to invest my resources. That's the focus of this blog now and I hope to write in such a way that it helps others process their own cryptoeconomic strategies.

I want to emphasise that I'm looking for outsized returns at this stage. If I was interested in ordinary returns I expect my strategy would be fairly simple. I would continue with the work I have done for the past decade doing UI design for the interface layer.

Instead I feel fortunate enough to have time to examine the space in its infancy, experiment with different approaches and place bets according to what I learn.

To be clear, my focus is not so much on financial investments. Although the deployment of financial capital into cryptonetworks is likely to prove very effective for acquiring cryptonetwork capital, I regrettably have access neither to an enormous supply myself, nor a network of potential LPs to build a fund with.*

So really, I'm researching the most effective models for acquiring cryptonetwork capital which—

  • don't involve directly deploying financial capital
  • acquire that capital more cheaply than simply purchasing tokens

I suspect this will initially lead me on a research project through the main existing networks to analyse—

  • the potential value of the underlying work of each network

    • e.g. Golem – what is the market cap for computation? Will that grow if it's delivered at lower cost via a cryptonetwork? etc
  • the cryptoeconomic model

    • unit of work, token supply, miner compensation, user purchase model etc
  • governance model

    • means by which the cryptoeconomic model is changed

As I think it through now, I suspect this is going to leave me with 2 options.

Either build a cryptonetwork myself – most likely a middleware protocol – or become a worker – miner, keeper, staker etc – on an existing network.

We'll see though! That's what this series is supposed to be about. Till next time.

* Having said that, I have committed some financial capital to deploy progressively over the next 2 years, so this blog will likely go through phases of being more focused on particular projects as simple fiat for token exchanges.


Copyright 2019 Jay Bowles Product Development Ltd.