A recent post by Fred Wilson from AVC where he shared some of his thoughts on crypto struck a chord with me. It is a well-thought-out piece with some points made that I feel can also be applied to the development of innovation in energy. The full, original article can be found here.
I will quote parts of it and reflect on them piece by piece.
Bitcoin
“In some ways, Bitcoin is the one protocol that has found lasting product-market fit. In terms of a censorship proof digital store of wealth, there is nothing that comes close to Bitcoin. There are some protocols, like the privacy-focused ones, that offer similar and in some cases better use cases. But for the most part, Bitcoin is our digital gold.” - AVC
Bitcoin is still the king of the hill and indeed there are other protocols out there with some better technology under the hood. I feel that for example these privacy focussed ones are testing/proving grounds for those features and that the successful ones will be adopted by Bitcoin itself. See Lightning. See MimbleWimble. It is safe to test things on a protocol that doesn’t burn the entire house down in one fell swoop.
Joining a Platform or Building Your Own
“Ethereum, as many of you know, confounds me. It has shown the way to so many important things; smart contracts, programmable trust-free computing, potentially proof of stake, and a lot more. But it remains hard to build on, scaling issues abound, and many developers are looking elsewhere.” - AVC
This is part of the reason that EWF built their chain as a fork from Ethereum. They have changed a few things, for example, the consensus mechanism. But being free from the market dynamics of Ether for your network has its benefits. The drawback from looking elsewhere is that you have to set up your network, validators, etc. as well. In the case of EWF, with 100+ affiliates now, they have achieved that critical mass.
Legal Challenges
“Regulators and banks in many parts of the world are downright hostile to crypto and have pushed much of the liquidity to Asia and the innovation has followed it there. Many of the most interesting things in crypto right now have emanated from Asia.” - AVC
We all know some examples of a blockchain project that ‘only’ had to solve a legal issue to work. The successful projects I am aware of either were lucky enough to not break any laws, or had good legal support present from day one. The legal support allowed them to navigate around the legal issues, or work closely with regulators in some sort of sandboxed/innovation environment.
Decentralised Organisations
“And many of the most promising and best-funded projects are massively delayed in getting to market. Some of this is that building scalable secure and decentralized protocols is not easy. But it is also true that the decentralized development approach that many of these projects are taking is not well suited to deadlines and ship dates.” - AVC
Rome was not built in one day, that same holds for utopian projects aimed to change the world. The blockchain projects in energy that are ahead in development, usually have a smaller scope to start with. That still makes it hard to break through at scale;
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either you have to work hard at the start to get a big project going with all stakeholders upfront,
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or you will have to work hard to get those stakeholders on board of your smaller project later on and be very convincing.Fully agree that the decentralised development approach is not well suited to deadlines and ship dates. You would be equally hard-pressed to plot the development of an anthill or the growth of a forest using a classical Waterfall/Prince2 method.
Optimism
“I am an optimist. I am convinced that many of these disappointments will be overcome in the next few years. But it is easy to be bearish on crypto right now. The reality is well below the hype and challenges aboundI am long crypto and USV is long crypto. And we are putting more capital into the sector and will continue to do so. But it is not without risks and setbacks. Actually it is full of them.” - AVC
I share the optimism and see the challenges ahead. I look forward to what the future of innovation holds for the energy industry, this is all a game of patience, timing and grit.
