MVPs for Crypto and Bitcoin

Crypto is a huge topic, and this format is too short to share comprehensive thoughts, but I want to dive into crypto MVPs, integrity, and the gap between the promise of crypto and its current reality.

Bitcoin has been in operation since 2009. The promise was cheap, easy transfer of a government-free digital currency. 13 years later, it is not cheap, easy or government free. We've made progress, but the promise is still just that. I don't think it's failed, though I think a lot of crypto enthusiasts fall into a trap of the promise of technology. There was a breakthrough in record keeping called the distributed ledger, enforced by proof of work of a divided workforce. Optimists think this technology is the solution to every finance problem and any technical challenge of the day (you can see the explosion in ICOs or NFT drops). In reality, it is an interesting application that has a narrow area of effect. Additionally, the system is distributed but it is not trustless. I think humans long have tried to find some God or System or Technology that exists outside of the realm of human influence. If only the system could operate without trusting another human or entity. Bitcoin helps with this, but it is not foolproof. In most cases, you as a operator in the system are not important enough to be colluded against, but rest assured, if enough people don't like you, and you are transacting large enough amounts, the ledger will be forked and you'll be cut out. This is a fifty percent attack, or merely a hard fork. So much for 100% trustless.

Lots of operators in the system, specifically those creating small pockets of centralization (coinbase, exchanges, ftx, mt gox, celcius, nft pump and dump, stable coins, digital real estate) are unscrupulous. We see the results and crashes of these exposures over and over again. Mt. Gox, Celcius, FTX the most recent. But for crypto to be useful, there has to be someone trusted and moral to create something. Many thousands of engineers have examined the bitcoin protocol, so we as a society are confident there are no backdoors or unexpected leaks. For each new system, it has to be vetted, and the creator has to have the best interests of the consumers at heart to create a valuable product. This sounds a lot like a successful business outside of crypto, and that's exactly right. You can't deceive for long. Additionally, you can't get married to a tech, and build your product based on your being enamored with that tech. It's likely a distributed ledger is not the best solution to real estate contracts. Instead, take the positives from the digital currencies, and build something valuable from first principals.

This means there are tons of companies that are inappropriately using blockchain, ethereum smart contracts, and nfts for applications that don't warrant it. You might be able to get an inflated valuation because investors can be just as irrational as those building these tools. But remember you will be just as exposed to the busts of the market as the booms. If you instead build a sound MVP based on the needs of customers, and use crypto principles when they are called for, you can create a profitable business.

An area I've long been excited about is integrating with oracles to create smart contracts for insurance, betting, or futures. The best simple example is a farmer who wants to hedge against his crops dying. He buys a contract on the blockchain that says if the temperature on August 15 is 45 degrees F, it's too cold to make money on the harvest, so he placed an insurance contract and gets a payout to cover those costs. A smart contract can take the ambiguity out of the system, and smaller insurance agents and farmers can interact in a more trusted way. Not perfect, but a great application of these technologies.

If you have a blockchain based idea or a business idea that might benefit from crypto tech, reach out, and let's scope it out together. I've been in the space since I was offered a job at Coinbase in 2013, but instead worked at Google. I'm excited to see what the future brings for crypto.

Original article posted at https://mvpengineer.com/mvps-for-crypto-and-bitcoin