People run around claiming that the blockchain will solve everything. I'm here to tell you that it won't. That architecture has VERY few use cases, and it's currently be over-used, mis-used and completely misunderstood. "Blockchain's" are on the verge of their own AOL moment. Why? Read on & you'll see. Me presenting at the BlockConscious Summit: https://youtu.be/bAG32xDVjVI

1. BLOCKCHAIN’S
MOMENT

2. BLOCKCHAIN’S
MOMENT

3. WHAT?
• A little history / anthropology lesson.
• Why most “Blockchains” are Bullshit
• Why most Tokens & ICOs are bad
Investments
• 3 Key fallacies
• Where most of the value will accrue in this
space
• What types of business will capitalize the
most

4. • Co Founder @ Amber Labs
• Involved in:
• Financial markets since 2006
• Tech since 2010
• Singularity University in 2011
• First bought Bitcoin in 2012
• Left the space for “other” things in 201
• Returned in 2016
@AleksSvetski
BACKGROUND

5. FUNDAMENTALS
• Back to Basics
• Primitives
• First Principles
• Foundations
• History & Anthropology

7. HOMO SAPIENS

9. COMMUNICATION
Top of the Food Chain, via:
1. Complex Language
2. Shared Fictions:
• Coordination / Cooperation
• Complex Social Constructs
• Trust

11. Caste’s
Laws Nations
Gods
Corporatio
ns
Kings
Religion
s
Races
SHARED FICTIONS

12. MONEY

13. MONEY
• The ultimate shared fiction & Social construct
• Earliest recorded language
• Money is the “ultimate” convergent network
• Inherently has no value
• Broadly accepted, objective representation of
Value
• Requires Trust.

17. A NEW FORM OF MONEY
In 2009, a very effective “new” form of Money was born:
• It is the first system to achieve maximum abstraction
for all money attributes, including trust.
• The chain of events over the last 10yrs were a fluke.
• Network effect + momentum = grass roots
• Built like the internet (not like AOL)

18. THE NEW FORMULA
Networks
Game Theory &
Mechanism Design
Cryptography
Proof of Work /
Byzantine Fault Tolerance
Social Engineering /
Psychology
Computer Science
Decentralization
Economics
Incentive & Disincentives
Data Structure
(Blocks of data,
cryptographically linked - like
a chain)

19. ATTRIBUTES
• Technically & Socially
Secure
• Decentralized
• Censorship Resistant
• Unstoppable (cost /
benefit)
• Slow
• Expensive
• Cumbersome

20. A technological solution, to a societal problem, with
far reaching political implications

21. FEW USE-CASES
• Digital Reserve-Type Assets
• Scarce Digital Collectibles
• Digital Store of Value (SoV)
• Digital Medium of Exchange
(MoE)
• Identity
• Governance
• Unstoppable /
Uncensorable Programs &
Networks

22. THE NEW FORMULA
Networks
Game Theory &
Mechanism Design
Cryptography
Proof of Work /
Byzantine Fault Tolerance
Social Engineering /
Psychology
Computer Science
Decentralization
Economics
Incentive & Disincentives
Data Structure
(Block-chain)

23. “BLOCKCHAIN”
• Not even mentioned in the original white paper
• Popularized in 2015
• Basically a sequential database
• Completely useless without the economics, game
theory, decentralized consensus and proof of work.
• Complete overkill for 99% of applications in the real
world

24. BLOCKCHAIN
FULL
PARTIA
L
USELE
SS
RUBE-
GOLDBERG
MACHINE

25. “SELF OPERATING NAPKIN”

26. BITCOIN IS A RECIPE
• Proof of Work
• Decentralization of data
• Trustless consensus
• Blocks of data, cryptographically hashed & chained together
following the consensus of a network of nodes, on that “block"
of data.
• Game Theory
• Economics (Incentive /
Disincentive)
• Cryptography

28. BLOCKCHAINS ARE AN
INGREDIENT
• You take the other ingredients out, what
remains is meaningless
• The security and “trust” as a primitive ONLY
happens because of the unique mix of factors
in the system, and has only succeeded
because of the environment it was allowed to
grow & develop in.

29. SO….
WHERE ARE
BLOCKCHAINS
USEFUL?

30. 1. MARKETING
Nirvana Theorem.
• Sprinkle on some “Blockchain”, and we’ll
make everything better.

32. 2. CAPITAL RAISING
TOKENS & ICO’S
(this is where things get ugly)

33. “IN THE GOOD OL’ DAYS”
• Start ups would raise capital via the sale of
equity
• Company would share value capture with
Investors
• Investors would share risk with Company

34. “IN THE NEW WILD WILD
WEST”
• Start ups raise capital via the sale of a token
• Company shares NO value capture with
Investors
• Investors carry ALL the risk of the investment
• Tokens behave like Money, detached from
the equity in the underlying operational entity.

35. MONEY != EQUITY
Money & Tokens Equity
NO inherent value
NOT a productive asset.
Inherent value
Ownership of a productive asset.
• Velocity
• Supply & Demand
• Inflation / Deflation
• MV = PQ
• PE Ratios
• EBITDA
• Revenue Multiples
• CAC & CPA
• ARR
• Users

36. The value of the token has VERY LITTLE to do with
the user metrics, adoption or revenue of the business

39. VALUE
CAPTURE
WHERE WILL THE MONEY BE MADE?

41. WHERE WILL VALUE
ACCRUE?
ENABLERS
ON-RAMPS
UTILITIES
ACCESS POINTS
WALLETS & STORAGE
COLLECTIBLES
DIGITAL ASSETS
EXCHANGES

42. KEY
TAKE-AWAYS
Time to take some notes

43. Money != Equity
treating cryptocurrencies & tokens like equity,
when in reality they are like money.
FUNDAMENTAL FALLACY
#1

44. Nirvana Fallacy.
“Blockchains” or “Dot Com” or “The Uber For”
will make everything better.
FUNDAMENTAL FALLACY
#2

45. Precision Fallacy.
Applying “mathematical” primitives & mental
models to things we don’t understand give us
illusions of certainty but will only lead us to
catastrophic errors in judgement
FUNDAMENTAL FALLACY
#3

46. DO I NEED A TOKEN?
NO

47. DO I NEED A BLOCKCHAIN?
NO

48. • Most Blockchains are Bullshit
• Businesses and Tokens do NOT mix well
• You should RUN from a company that says we’re doing
an ICO, or we have a Blockchain solution for ‘x’.
• Value will be captured by businesses that enable the USE
of digital assets, digital currencies & the like
• Blockchains will go down in history with “Information
Superhighway” and AOL
• ICO’s will go down in history as the Dot Com stupidities of
the late 90s

49. FOLLOW - CONNECT
@AleksSvetski
@AleksandarSvetski
@AleksSvetski