Bitcoin-Powered Internet Advances With $4 Million Blockstack Funding
A bitcoin blockchain-based Internet is a step closer to reality thanks to this $5.3m investment in Blockstack led by Union Square Ventures.
A new version of the Internet built on the bitcoin blockchain is another step closer to reality thanks to a $4m investment in Blockstack revealed in SEC documents earlier this week.
The three-year old project leverages the bitcoin blockchain to build a new Internet free of centralized servers and with a browser that enables users to control their own identities.
Based in New York, the company behind the effort is already building a browser for this new Internet, and the four-person team plans to use the funds to finalize a single, unified platform with which developers can build a new network of sites.
But in conversation with CoinDesk, Blockstack's co-founders emphasized the investment won't just help build their own platform.
According to the team, the money is an investment in every other company already using the technology and those in the future looking to help build this new Internet.
Blockstack co-founder Ryan Shea told CoinDesk:
Firms already building with the company's technology include a wide range of bootstrapped projects, venture-backed startups and global software providers.
Among a total of about a dozen firms publicized so far are decentralized marketplace, OpenBazaar, blockchain-based record startup Tierion, and as of last May, software giant Microsoft, which partnered with ConsenSys to build a decentralized identity platform capable of running across blockchains.
The investment led by returning investor Union Square Ventures will be used to grow the team's size from four full-time employees to as many as 10, continue work on a single unified development platform, and in the coming months, launch a new kind of web browser.
Other investors are Lux Capital, which participated as a secondary lead investor, Naval Ravikant, Digital Currency Group, Compound, Version One, Kal Vepuri and Rising Tide.
In total, the startup has raised $5.3m to date.
What's in the stack?
For those new to the company, Blockstack launched in 2013 as OneName, an identity platform that in its early days logged verified identities directly in the bitcoin blockchain.
The technology in its current incarnation is designed to be blockchain agnostic, but it is largely comprised of work the startup had done with the bitcoin blockchain.
In addition to learning that the method of logging directly in the bitcoin blockchain didn't scale well, Shea and his co-founder Muneeb Ali discovered that giving users an identity to own was only as useful as the places it could be used.
So in May 2016, the duo rebranded as Blockstack, an homage to the layer of services they were now working to build, which they say, amounts to a new Internet.
The foundational layer of the Blockstack is the bitcoin blockchain itself, which Ali calls the "base layer of discovery". On top of that is a naming protocol that functions in place of the '.com' and '.org' designations on the traditional internet.
In their place are domains such as '.id' for a personal user identity and '.iot' for the internet of things.
A six-letter, alphabetic-only namespace costs 0.001 BTC and a bitcoin deposit is required before some tasks can be completed.
On top of the ID layer is an authentication layer that automatically verifies users without websites needing to keep a database of their users' personal information.
On top of that is a storage layer where users connect to their own storage from Dropbox, Google Drive, or iCloud, enabling a complete browsing experience where the sites know only what the users want and those same users are empowered to collect and store their own data.
So far, 67,000 people have gone through the free process of verifying their identities on Blockstack, a required step before browsing can occur. Last year, Tim Berners Lee, who is credited for inventing the World Wide Web, created his own Blockstack ID, and days later, expressed his personal interest in the work.
"We are really trying to enable this new world where users and developers have this direct relationship and users are in direct control of their identities," said Shea.
Before any meaningful revenue can be generated from the concept, however, Blockstack needs focus on continuing to build out its community and release more software, according to Albert Wenger, lead investor in the round at Union Square Ventures and a long time student of identity protection.
In conversation with CoinDesk, Wenger said that as more and more people build on and use Blockstack, value propositions will present themselves organically.
The decision not to focus on revenue now is part of a bigger strategy Wenger says his firm built through its work with previous, high profile portfolio members.
"We’re not spending a lot of time thinking about that right now," said Wenger, adding:
The power of the browser
Crucial to Blockstack’s push to grow users and release new software is the Blockstack browser itself.
Once it goes live in the coming months, according to Muneeb, users will be able to download the software. This will automatically change their DNS settings across all their preferred browsers, making them instantly compatible with the new Internet.
Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Blockstack.
Stacked-block image via Shutterstock
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