Notes from the Road
Tags: Bitcoin, Blockchain Week, Blockchain

Over the last 18 months, we’ve joined the world traveling crypto caravan of digital nomads convening at summits, roundtables, meetups, mountain tops, conferences, dinners, and cocktails. The Siglo team has visited 6 continents and dozens of countries. We’ve heard from visionaries, builders, regulators, and scammers and met the gambit of serious and curious crypto characters. In just the last six weeks, we were at Blockchain Week in Korea, summits in LA, Monaco, and London, and in meetings in Seattle, Zurich, London, NYC, Bordeaux, Madrid, Mexico City, and Kigali. In fact, in the last 40 days, I was only in my Mexico City apartment 4 nights.

For some people on the crypto caravan, this is an exercise in luxury, but entrepreneur class includes cheap airline middle seats, sofas of advisors, and stuffing ourselves with free conference food. It’s been the experience of a lifetime, and I wanted to share a few conclusions after my last trip around the world.

Joel and I started working on a digital currency that is backed by airtime (prepaid cell phone credit) more than 4 years ago. While our vision has become clearer, our mission of increasing digital and financial inclusion through decentralization has remained constant.

A lot has changed in 4 years, including the technology and the markets. Before Joel and I launched the first prototype of Pig.gi — the first app to use the Siglo Protocol — we wanted to integrate blockchain and Bitcoin. At the time, there was no way to put micro-transactions on the blockchain. This still remains a serious challenge today, but I believe within the next year we’ll see significant improvements.

On the market side, consumers have become much more aware of data sovereignty: how their data is used and monetized. Traditional tech investors are also paying more attention and investing in data wallets and decentralization. But last year, it became very clear that blockchain — specifically Ethereum — was a great platform for raising capital.

For me, this was the second use case of blockchain that has been repeatedly proven in the market. But before we go there, let me explain in broad strokes how I see the history of blockchain.

First Use Case: Store & Transfer Value

After Bitcoin emerged in 2009, it demonstrated the first use case of blockchain: allowing people to store and transfer value digitally. Tokens, which are nothing more than units of value, can be stored safely and securely, and they can be transferred to anyone around the world for a relatively small transaction fee.

For the first few years, Bitcoin was mostly experimental. But then people started using it for real transactions. Whether it was a purchase of illicit materials on the Silk Road or a donation to a platform like Wikileaks or moving capital in markets with restrictive capital flows like Argentina, it was real transactions that proved this use case of blockchain actually worked.

With the success of Bitcoin, other units of value that can be transferred and stored have emerged. Litecoin, Ripple, Dogecoin, Tether, and many other tokens have been released. They seek to improve on Bitcoin, but the use cases are generally similar: you can safely store coins (like cash in a wallet), and spend them on products and services.

Now, even this use case isn’t perfect. The main issues are the higher transaction fees for Bitcoin and the volatility and price fluctuation.

Second Use Case: Raise Capital

One of my mentors told me once that no matter what you do, you need 3 ingredients. The same applies to starting a company, a protocol, a religion, a political party, or even an art project.

First: you need an idea. What are you gonna do?

Second: you need people. Who’s gonna do it? (This is probably the most important because it lasts longest!)

Third: you need capital. Who’s gonna fund it?

Ethereum, as a protocol, can theoretically allow many use cases with smart contracts; however, the main use case that has had a real impact is raising capital. A simple smart contract allows investors or contributors to send tokens to a wallet and receive back new tokens. In 2017, this went mainstream and we saw 100’s of protocols and companies do an initial token offering, and billions of dollars of investment poured into ICOs.

Many Ethereum killers have emerged that claim to offer a better solution. But none of them have been used significantly for any use cases other than raising capital. This use case is far from perfect too. Mismanagement, scams, and a lack of governance come to mind, but it’s clear that the use case works and has changed fundraising fundamentally.

Lots of Show, but So Much to Show

While there are many great ideas about other applications and use cases for blockchain, few (if any) have been implemented in a real market. Some of them have been prototyped and have launched to small audiences, but none at scale.

In 2017 and 2018, we’ve seen many white papers describing ideas that are disruptive to every industry. Some of these used the ICO to raise massive amounts of capital. Most of these have yet to launch a product and mainnet, and even if their mainnets have gone live, not much has been built on them yet.

Some see this as deeply problematic. How can an industry raise billions of dollars for new products, and yet a year later so few products have been launched?

Despite raising more than $10B as an industry, the biggest DApp on July 27 only has less than 2000 DAU.

I felt this way at Blockchain Week in May in NYC. Some incredible ideas that raised a lot of capital with great teams, didn’t have much to show for it. I was disappointed: hype and FOMO were more about dinners and parties than about products and traction. And we saw some projects without a product were spending on billboards, extravagant parties, and vast amounts of money on laughable marketing attempts.

However, I’ve come to realize that this is just a stage. 2017–2018 are about proving the second use case: raising capital. The high valuations and crypto mania that ensued served to bring attention from traditional financial institutions and increased interest significantly on behalf of young job seekers. Yes, many market caps were too high. And yes, too many raised more money than they can efficiently manage. But that’s okay. This was stress testing the boundaries of the use case, and I think we’ve learned a lot from it.

So where do we go now?

Traction & Transactions

Now is the time for building. Now is the time for deploying wallets. Now is the time for real transaction volume. This is the year we will begin to see traction in blockchain apps, distributed apps, and having a real impact on consumers and institutions.

In the world today, crypto and blockchain is viewed as illegitimate and as synonymous with scam, ponzi scheme, and a bubble.

We have to change our reputation. This is our chance as an industry. We have the capital available and the underlying technology is scaling. Now is the time to build. I don’t want to hear new pitches about vaporchains, I want to see traction and real use cases having any impact on people. I want to see downloads and DApp usage.

Looking forward, I’m optimistic. For me, it’s not about the price of BTC or ETH today or even Siglo’s price next January. It’s about building long-term value and making an impact. Siglo is focused on impacting real people. Next month we’ll start giving crypto wallets to our registered Pig.gi users. Most of them don’t have a bank account today, and they’ll be accessing a global financial system through cryptocurrency.

Easy money comes, and easy money goes. The sustainable growth, real transactions, and vibrant communities are what will drive long-term value.