You may not have heard the name Balaji Srinivasan, but in 2016 his name could very well come to be synonymous with another more infamous 'b' word – bitcoin.
Since mid-2015, Srinivasan has been the acting CEO of bitcoin’s best funded startup, 21 Inc, a $116m technology firm that is in the midst of radically reinventing itself as a platform for developers and consumer services.
While the company has inarguably struggled to communicate its larger vision, the idea is perhaps more simplistic than is suggested by the grand and technical terminology that often accompanies the company’s sparse messages.
Though it’s sure to be debated, 21, it seems, is seeking to do nothing less than reimagine how the Internet works, effectively using the ability of the bitcoin network to convert electrical energy into money as a way to monetize online attention.
Its signature product, the 21 Bitcoin Computer, is perhaps best considered a prototype of what’s to come. A mining chip with a Raspberry Pi attached (and some other bells and whistles), it invites developers to build products and services that make use of its ability to provide a steady stream of bitcoin to owners, and demand bitcoin from others.
It’s easy to conceive how such a product could be powerful at scale should consumer devices come to be embedded with bitcoin, as common as other protocols like Bluetooth and near-field communication (NFC).
Rather than monetize through advertising, in a world where devices are constantly generating money, a media platform like CoinDesk could instead allow users to pay for access by opening a browser and directing the proceeds of the power expenditure on their computer or smartphone to our accounts.
That's a truly compelling idea. So, why aren't the merits of this more widely publicized and debated?
That answer is perhaps more complicated, and if the industry is to succeed on its original vision, it’s safe to say this will need to change in the months ahead.
This op-ed is at once a prediction and a challenge. Less a firm conviction than an attempt to showcase what could be at stake if it doesn’t come to pass.
Blockchain over bitcoin
Even those casually familiar with the bitcoin industry will be aware that public interest has shifted from digital currency to distributed ledgers, from bitcoin to the blockchain.
Rather than a currency, the latest wave of proponents of the technology see bitcoin not as a coming Internet for financial services, but as a platform that serves as an example of how distributed digital networks could be constructed with similar building blocks.
The change is being led by enterprise financial firms who, seeking to cut costs and stay competitive, view the bitcoin blockchain as a prototype, the first distributed ledger to operate at scale.
As articulated by a UBS executive at a recent industry event, a distributed ledger, even one operating on a somewhat closed basis, could allow an enterprise financial company to unite its tens or hundreds of ledgers across subsidiaries into one consolidated platform.
How this affects the bitcoin industry is that venture capital now appears to be allocating more resources to these firms, creating a climate where new digital currency companies are being started up less frequently and being less enthusiastically capitalized than in 2014.
In short, the bitcoin vision of a democratized financial system is being partly deprived of its ability to grow due to the increasing cost of starting a business. While commentators and industry proponents tout $1bn invested in the industry, as put forth by careful observers like R3’s Tim Swanson, it’s clear that the money in the space isn’t moving in one direction.
21, in this context, appears more than a bitcoin company, but rather one of the few startups with the concept and the resources to restore the original vision of many of the ecosystem’s earlier generations of entrepreneurs sought to build – an open platform for a new generation of consumer financial products that was not solely an asset class or bookkeeping system.
An overlooked loophole is that bitcoin regulation to date has largely ignored bitcoin mining, meaning 21, and by extension its users, don’t face the stringent costs inherent in more familiar business models, as of yet.
In this light, 21 could come to be the preferred platform for developer entrepreneurs.
Momentum over definition
Still, much of the criticism against 21 seems to focus on two fair points: that the company is overambitious or lacks a clear idea of what it’s trying to achieve. Others just don’t think bitcoin will ever grow beyond what it is today or will simply fail entirely – and there’s merit to those arguments as well.
However, those close to the company have justified their uncertain vision by focusing on how they hope to empower other creators.
In interviews earlier this year with The Wall Street Journal, 21 compared its Bitcoin Computer to Netscape, the earliest Internet browser, and key investors sought to stress one theme – that it wasn’t clear back then what exactly people would build with the now everyday technology.
In this context, it’s clear why 21 deserves the spotlight that, if they have until now avoided, they will most likely be thrust into over the course of this year.
The fact of the matter is that, many current bitcoin products are effectively weaker versions of existing financial products built with a new technology. It’s challenging to conceive, for example, why someone would use a bitcoin debit card or online account, if they already have existing debit cards and bank accounts that work well enough to meet their needs.
A revolutionary technology not only demands revolutionary new products, it’s a novelty without them. 21 may lack definition, but that’s precisely why it holds so much potential.
Even I have trouble conceiving what will be built with the 21 Bitcoin Computer. But, I do know that if there’s a chance to build a truly unique new consumer product, it increasingly appears that the only platform where it can built is 21’s.
Stepping up to the plate
One of the more frustrating aspects of covering the industry to date, has been that, for all its vision, 21 has so far seemed unwilling to take the reins as the leader in the industry.
Srinivasan, in particular, while often verbose on Twitter, seems more comfortable revealing his ideas to a small subset of followers than on investing in refining this message and communicating it to the masses.
And to be sure, Srinivasan has some truly interesting theses on the technology.
At one of his first public appearances, for example, he argued that the “price of bitcoin” is one of the most misunderstood metrics, because quite simply, the very idea is flawed.
One bitcoin, or 1 BTC, is no more a solid unit than $1 is one hundred pennies. Therefore, the true worth of $1 is not in the dollar itself, but in how much each penny is worth. Raise the value of a penny, he seemed to argue, and in tandem, the price of any larger unit will rise.
In this context, the company’s approach to reworking the essential contract of bitcoin mining, effectively controlling supply by partitioning small amounts of bitcoin, seemingly at its own discretion to device users, takes on new power. Controlling or even managing supply can be a dangerous thing, especially when that bitcoin is meant to subsidize smartphones in Africa.
As for what I’ve just written, however, it could all be dismissed as mere conjecture, precisely because these ideas have not been allowed to be discussed in a public forum.
Today, bitcoin is mired in debates and the path forward seems unclear. 21 certainly doesn’t and won’t have all the answers.
But, what the industry does need is a charismatic young visionary who can bring the tech to its full potential and help consumers see its utility.
There has been, and will always be, a relationship between technology and individuals. When we think computers, we think Bill Gates, we think Michael Dell, we think Steve Jobs. Bitcoin has no such face to its name.
If the Internet comparison is to be believed, bitcoin, in short, needs its visionary. And right now, it seems, there’s only one man with enough money and vision to fill that role.
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