Software ate the world. Now it’s Blockchain’s turn

Nuke Goldstein, CTO of Celsius Network, writes about blockchain’s potential to unseat traditional, centralised services

In 2011, Marc Andreessen published his famous “Why Software Is Eating the World” essay. Since then, venture-funded software companies have devoured our world, fulfilling Andreessen’s prophecy of massive economic growth. 

Unfortunately, this innovation has brought with it unintended negative consequences, creating technology monoliths that use people’s property and creations to maximize their profit. The “Silicon Valley effect” compounds the systemic unfairness in banking and financial services. Despite post-2008 reforms, large banks are more profitable than ever and continue to exploit their depositors: most U.S. consumers are saddled with debt and there are scant options for generating meaningful interest income.

Economic anxiety and discontent with business presents an enormous opportunity for blockchain-enabled disruption. With true decentralization, there is no prerequisite for a single entity to take users’ information, creations, assets or skills and sell them for a large cut. Consumer demand for such solutions is nascent but growing, and companies that build new operating models around the principles of decentralization will be best positioned for long-term success. 

Several Industries are Poised For Blockchain Adoption 

Weakening the stranglehold of banks and other centralized financial institutions has always been difficult for the lack of a viable alternative. Now, for the first time in human history, a workable substitute is finally emerging: blockchain and digital assets have the potential to fundamentally revolutionize financial services by empowering consumers and depositors through peer-to-peer lending networks. While banks and lenders are the most obvious candidates for blockchain disruption, financial services is hardly the only industry ripe for a distributed shakeup. 

READ MORE: Audoo: Revolutionising the music industry by embracing evolving technologies

In the music industry, blockchain can prevent labels and streaming providers from taking advantage of artists. From indie musicians to household names like Taylor Swift, artists of all types are demanding fair remuneration for their work. As we saw with iTunes, Spotify, and other streaming services, this market is nimble and can evolve quickly. Smart contracts and peer-to-peer payments on the blockchain are a natural remedy to this formerly intractable problem. Ventures like mycelia, Ujo, Audius, and musicoin are early attempts at this new wave of innovation across music.

Ridesharing platforms like Uber and Lyft are similarly poised for blockchain solutions. If drivers could connect, contract, and settle with passengers directly, companies like Uber and Lyft would be redundant. Blockchain-based tech can certainly facilitate riding services and can be seen in early projects like the community-driven La`Zooz, Chasyr, and as Arcade City. Chasyr is based on the Origin Protocol, a peer-to-peer marketplace protocol based on the ethereum blockchain that could similarly disrupt food delivery services like DoorDash, the housing juggernaut Airbnb, and the freelancer service Fiverr. 

Even e-commerce faces blockchain transformation. Many U.S. small businesses depend on Amazon to sell their goods, which results in lower profit margins for people whose livelihoods are dependent on the whims of Amazon’s corporate leadership. In response, developers are working to build peer-to-peer market eCommerce platforms, based on blockchain technology. Bartering and sales via digital smart contracts could offer the competitiveness consumers expect while removing platform fees, thus maximizing merchants’ profits.

In short, any online platform or marketplace that prioritizes shareholders and executives over users, workers and the general public is opening itself up to being disrupted by blockchain-based solutions. 

Blockchain Benefits from a Fundraising Environment in Crisis 

The rise of software giants is a direct result of the bloated venture capital ecosystem. The tectonic shifts in the VC landscape is promising for the future of blockchain. 

Today we’re seeing a sharp reaction to the status quo, in which vast sums of private capital subsidize new companies’ services, effectively buying customers and allowing companies to ignore profitability until going public. Uber is still bleeding cash as a public company and lost $1.8 billion in 2018 alone. The recent WeWork IPO debacle has shaken Silicon Valley to its core.

In response, venture capital is getting pickier about which companies they invest in, as exemplified by the largest VC investor of them all: Masayoshi Son, who is reportedly shifting SoftBank’s approach to investing with a new focus on whether a company has a clear path to profitability and a successful IPO or other liquidity event. 

The venture capital industry is also worried about its reputation. Beyond just WeWork’s failed IPO and the underperformance of recent technology IPOs, there is broadening discontent with the first generation of VC-backed Internet winners, particularly Facebook and Google, and the effect these giants have had on our economy, our politics, and the way we communicate. 

If the subsidised party does end, prices will go up and demand for cheaper alternatives will rise – making the industry ripe for an alternative type of Internet business that empowers and protects users. Blockchain companies are well-positioned to fulfil these needs, as evidenced by the $822 million in VC capital deployed across the crypto and blockchain sector in H1 2019. The next wave of venture investing will require a clear project ROI for investors and contributors, but also positive knock-on effects for users and stakeholders and insulation from traditional problems of over-centralization, making blockchain companies a prime candidate to receive more funding and support in the years to come.

Consumers Will Ultimately Drive Enterprise Blockchain Adoption

Almost a decade after Andreessen’s initial thesis was published, a new paradigm-shifting tech cycle is forming once again. But unlike previous cycles – the PC era, the internet, Web 2.0, and mobile – that were driven by speed, efficiency, and mass adoption, this cycle is about pain, despair, and demand for socially productive innovation that brings economic justice. 

Widespread civil unrest – from Hong Kong and Chile to Haiti, Lebanon and Barcelona – is a direct response to government corruption, bad politics and economic pressures on the lower and middle classes. In such a climate, companies that thrive will be those whose users don’t just see themselves as customers getting a product, but as part of a community on a mission to change society. 

Blockchain is the logical economic and philosophical response to an over-centralized, unequal economy. From cryptocurrency and smart contracts to tokenized assets and peer-to-peer networks, companies can find ways to incorporate blockchain into their business models. It is still unclear whether the new crop of winners will be startups that usurp market share, incumbents that decentralize their services, or some of both, but what’s certain is that it’s not too late for any company to begin exploring how blockchain could position their business for long-term success.

Andressen was right: software ate the world – and to devastating effect. Now, blockchain is getting ready to eat software. Businesses best be ready.

Nuke Goldstein

Nuke Goldstein is the Chief Technology Officer (CTO) of Celsius Network. He is a seasoned software developer, architect, innovator, and entrepreneur in cutting-edge technologies. His career ranges from image processing and AI to IoT and blockchain.

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