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Blockchain and Alchemy
Some personal news: This week, I joined Alchemy, a blockchain startup, to help build out its developer community and experience. Alchemy is an incredibly interesting company, and I’m excited to join the family, but what is Alchemy, and why is it their time?
One of the recurring themes of this newsletter is that emerging technologies create paradigm shifts in how we experience the world and are one of the primary drivers of growth in societal welfare. In my opinion, blockchain is one of these emerging technologies. When most people hear about blockchain, though, they think of the crypto bubble of 2017, when Bitcoin reached $20k and hundreds of people were attaching a blockchain to every application under the sun, getting rich off “Initial Coin Offerings.” But three years later, we still don’t really see a “killer” application for blockchain. What’s with all the blockchain hype?
The core of blockchain is decentralization. I won’t re-hash in-depth all the great pieces written about blockchain and decentralization — It can all be summed up like this: In a fully decentralized world, whenever I want to make any sort of agreement (e.g., to transfer money, to perform work, to share content, etc.,) with anyone else, I don’t need a centralized institution (e.g., banks, courts, companies, etc.,) sitting in the middle to facilitate the agreement. I can just transact with the other person directly, regardless of whether I actually trust that person. The blockchain will cryptographically ensure that the transaction is fulfilled without fraud or piracy. If I don’t like the rules of a system of transactions, I can re-write the rules, and others can join me in my world of new rules. This is hugely important because centralized institutions write their own rules and inevitably extract value from the transaction, but users have no say in that extraction. For example, Facebook facilitates transactions (i.e., connecting, viewing posts, etc.,) but extracts user data to power its ads machine and utilizes an opaque ranking algorithm to get more eyeballs on its ads.
Moreover, from decentralization flow all the other subsidiary properties and benefits of blockchain. For instance, to verify that transactions were fulfilled without fraud, blockchains fundamentally require a level of transparency and auditability. To ensure that no bad actors can retroactively undo a transaction, blockchains fundamentally require that transactions are immutable. That is, once a transaction has been recorded, it is forever baked into the transaction history. To ensure that I am who I say I am when I participate in a transaction or make an agreement, blockchains fundamentally require robust identity authorization and verification. So, given all these inherent properties of blockchain, you might imagine that one great application (among many!) would be supply chain management, to ensure that a product is documented correctly as it moves from its origin through all its touch points. And indeed, olive oil producers are beginning to use blockchain specifically to track olive oil across the supply chain and assure food safety and quality.
Given all this, blockchain is an emerging technology that presents a fundamental change from how we currently experience the world. And although we haven’t seen an explosion in killer blockchain applications, blockchain is still in its nascent stages and will hit the inflection point in the S-Curve of innovation only in a matter of time.
Alchemy and the power of platforms
So blockchain is a matter of when, not if. That said, one of the limiting factors right now is that, well, blockchain development is intimidating and not so easy to get started. Sure, there are a bunch of tutorials for writing your first dummy blockchain application, but what about actually deploying your applications to a blockchain and running, scaling, and monitoring your apps? Alchemy’s mission is to be the go-to platform for blockchain development, to be the entrypoint for new blockchain developers. In other words, Alchemy is reducing the friction for blockchain development, thereby accelerating blockchain’s inevitable trend.
We’ve actually seen these types of businesses before, but in other contexts. For instance, Amazon AWS provides developers with the building blocks for deploying and growing their web applications. Without AWS, new software companies would need to build their own servers and data centers and worry constantly about maintenance / uptime / speed. Instead, AWS provides these services “on the cloud,” and the complexity of having to do things yourself become “abstracted away.” You just plug in and play, and Amazon takes care of the rest. Thanks to AWS, we’ve seen a massive decrease in start-up costs. Whereas previously, entrepreneurs would come to VCs with an idea and seek funding to purchase their servers, today, entrepreneurs go to VCs with a prototype and seek funding to iterate and scale their app.
Another example is this website right here, Substack. Substack provides writers with a fully-functional, out-of-the-box newsletter / blog. Without it, writers would need to work with a myriad of different software providers. For instance, perhaps they’d need to use Mailchimp to configure a mailing list; Stripe to integrate payments; Wordpress to handle the layout of the blog; etc. Thanks to Substack, though, we’ve seen an explosion in the number of newsletters. People previously didn’t have the time or the knowhow to setup blogs, but now, the activation energy is so low that Substack has turned individuals into writers.
The reason I’m so passionate about these types of businesses is that they’re platforms. Bill Gates once said that “a platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it.” This explains Microsoft's rabid focus on developers, developers, developers. A platform’s entire existence depends on its ability to empower creative people to create new value. Another recurring theme of this newsletter is that entrepreneurialism is good. Innovation is good. And platforms reduce the barrier to innovation.
Of course, even though platforms like Alchemy reduce the barrier to innovation, innovation remains a barrier nonetheless, and developers still need to overcome some activation energy. So, my focus at Alchemy will be to help grow its developer community. Indeed, Alchemy started off as an enterprise-grade blockchain solution, but now we're expanding our scope to serve individual blockchain developers. Specifically, I’ll be focusing on how we can introduce new developers to the blockchain community and create the most seamless blockchain development experience in the world.
The story of innovation throughout the PC, Internet, and mobile eras has been the proverbial “letting a thousand flowers bloom:” Developers have the freedom to tinker with technology, taking risks and building new things. Sure, some of them fail, but others succeed wildly, bringing the rest of society up along with them. Blockchain will follow the same arc, and Alchemy is here to be the enabler underneath it all.
📚 4 articles
The U.S. Digital Service Academy. Ex-Google CEO Eric Schmidt is leading a federal initiative to launch a university that would train a new generation of tech workers for the government. I’m largely in support of this move for 4 reasons: (1) The government has traditionally played a large and important role in innovation, but over the past couple of decades, we’ve seen a huge brain drain from government to industry. The public sector is uniquely equipped to tackle certain problems. (2) This move recognizes that technologists are just as important to U.S. national security and welfare as the traditional military is. Compare, for instance, this U.S. Digital Service Academy with the U.S. Naval Academy. (3) This may inspire a higher sense of civic duty among technologists, even those who don’t attend the academy.
Microsoft acquiring TikTok? No concrete details yet, but keep your eyes peeled. The TikTok conversation has been heating up, not only in the U.S., but globally. To Western politicians, the danger of TikTok boils down to: TikTok is a Chinese company, and the Chinese Communist Party, at any moment’s notice, can, in the shadows, require that TikTok both fork over troves of user data (i.e., surveillance) and manipulate its algorithms (i.e., brainwashing). To be clear, I don’t think this is happening, but the fear is that it could happen. But then, why not also fear Facebook? After all, Facebook has control over even more user data than TikTok, and Facebook controls the eyeballs of literally billions more people. The reason: A government holds a monopoly over sanctioned violence and inevitably surpasses all other entities in its power to take away our civil liberties. Anyways, I’m not sure if Microsoft will end up acquiring TikTok. Some other things that could happen: The U.S. unwinds the Bytedance <> Musical.ly merger (Musical.ly turned into TikTok post-merger); The U.S. completely bans TikTok altogether.
The House Antitrust hearings. Okay, wait, let’s be clear about the bullet point above: Yes, Western politicians are relatively more afraid of TikTok, but they are nonetheless absolutely afraid of Facebook, Amazon, Google, and Apple. This past Wednesday, the CEOs of these four companies testified to the House Committee on the Judiciary about “antitrust” stuff. Interestingly enough, a non-negligible amount of the conversation wasn’t about market power and competition, but about things like relations with China and content moderation, which are tangential, at best. Anyways, in the past few years, big tech has become a punching bag for the American people, but if we want to have a productive conversation about tech regulation, we should be precise in what exactly we are asking tech companies to do and what exactly we want the outcome to be. I’ve previously written about “breaking up big tech” and a popular but intellectually dishonest position against Facebook.
Some scientists are taking a DIY coronavirus vaccine, and nobody knows if it’s legal or if it works. I love the headline to this article. It’s hilarious. Like, really, is this legal? I don’t know that much about the FDA, but I can come up with plausible arguments for both sides. Famous geneticist George Church is apparently a supporter of the DIY vaccine, saying that it’s “extremely safe” and that the worst possible downside is that it’s ineffective.