But why do tech giants want your personal data?

To build the most powerful AI

The extent of powerfulness of AI depends on the intensity of data it is trained on

More personal the data, more powerful the AI

What if I tell you, there is a clone of you that exist in the digital world with all your data collected till now

But what’s scary is that these big tech giants can anytime have access to your digital clone which means they have got the access to “you”

New Age War: Data Wars

There has always been wars fought across the world between countries throughout the civilisation

Wars have been fought for politics, land, oil, region, prestige or people.

But for new age world, data is the new oil.

There is a war going on right now under current between tech giants for your data.

It is what we call “Data Wars“

Why people who built OpenAI are leaving it?

People who played a key role in building OpenAI from starting and company with such a bright future and breaking technology, why are they leaving OpenAI?

What did they see? Isn’t it concerning?

These are the people in chronological order recently leaving OpenAI:

2023

• Greg Brockman - President (on sabbatical)

• Ilya Sutskever - Chief Scientist at OpenAI

2024

• Andrej Karpathy - Co-founder

• Bob McGrew - Chief Research Officer

• Barret Zoph - Vice President of Research

• Peter Deng - Vice President of Consumer Product

• Greg Brockman - President (on sabbatical)

• Mira Murati - Chief Technology Officer (recently left)

But the question is these people were the key people of the team OpenAI and them leaving the company which is known to have lot of potential, made AI a household tool and is on the path of building the AGI.

Question is “What did they see?“

It is concerning to think about because it can be called that OpenAI with being a AI company is dealing with large amount of people’s personal data.

Did they see people’s privacy or data getting compromised in the race of building the world’s first AGI among all these tech giants?

We don’t know or we will never know. But this should ring a alarm bell in our head.

Personalised AI is coming and your personal data is at risk and you don’t want these companies to have access to your “digital you“ at all times.

75% of businesses have already banned ChatGPT.

Nillion

Nillion is the base layer where the computation of world’s highly sensitive data takes place securely.

Nillion’s technology has made it able to perform computations on that data securely and make sure nothing get compromised in the process.

This results in enabling various use-cases in industries like AI, medical, identity, DeFi which were hard to be enabled only through blockchain due to its weak confidentiality.

2008 → Decentralisation (Bitcoin)

2015 → Programmability (Ethereum)

2023+ → Secure Computation (Nillion)

Nillion = Secure storage and compute over highly sensitive data.

It solves the Classic Two Millionaire ProblemTwo Millionaires, they want to find out which one is richer but they don’t want to reveal their income to each other.So Nillion’s underlying philosophy lets them do that, it will run a computation which will find out who is richer but without revealing their income to each other.

Nillion → without nodes exchanging message with each other

Nillion follows the divide & conquer strategy i.e they use 2 primitives instead of 1.

Two primitives are:

• Shamir Secret Sharing

• 1-Time Masking

  They both need to be information theoretic security.

Blinding Factor → hide the secret

LSS (Linear Secret Sharing) → hide the blinding factor

Nodes = shares + particles

This paves the way toward decentralisation and blind computing at nearly centralised and blind computing at nearly centralised speed which is the NMC (Nil Message Compute) breakthrough.

NMC = Decentralisation + Centralised benefits (Speed + Working with Private Info)

Blind Computation

Nillion works on Blind Computation

Blind Computation enables the storage and computation of high-level data.

Running a cryptographic protocol by which nodes are able to jointly sign your transaction without having to reconstruct your key.

This is what we call Blind Compute.

Let’s distill it again:

Blind Computation = Performing computation on your secret data without actually seeing the secret itself.

To make this possible:

Blind Computation uses multiple privacy enhancing techniques (PETs) such as MPC (Multi-Party Compute), FHE (Fully Homomorphic Encryption) and ZKP (Zero-Knowledge Proofs).

Flow of Blind Computation by taking example of using ChatGPT:

Without Nillion:

Your data → ChatGPT Servers → Ran on ChatGPT → ChatGPT servers hold decryption keys of your data → Personal Data at risk

With Nillion:

Your Data → Secure Compute on Nillion → Ran on ChatGPT → Can’t recognise the information (secret) → Still produces results → No Risk of exposing your personal data

• Nodes holding data have no idea what they are holding but still can run the computation off your data which can be used by your personalised AI.

Why Blind Computation

Why is there a need of Blind Computation now?

Is all data equally valuable? Why haven’t we cared about it before?

Answer is No. Not all data is equal.

There are three levels of data:

• L1 → superficial data (instagram photos, tweets, reddit posts)

• L2 → digital footprints (IP address, search history, deleted content)

• L3 → high value data (private texts, personal photos, videos, healthcare data)

Private Inputs
Public Trust

Blockchains are just focused on enabling use-cases that includes transactions, tokens etc, but there is entire ocean of data floating in the world right now.

Blockchains gave us the smart contracts.

But what about the computation, storage and processing of people’s personal data?

That’s where Blind Computation comes in.

Blind Computation → opens up many fascinating use-cases that goes beyond blockchain

Nillion is enabling various use-cases across various industries such as:

• Personalised AI - Protecting the clone of you in digital world

• Global Identity - Managing your identity in global decentralised world

• Private DEX - Hiding the critical info and performing transactions without revealing the valuable information

• Healthcare Training Data - Securing the personal and private healthcare data

• Decentralised Private Storage - Acts as your digital fort-knox for storing your secret pins, keys and valuable information

All these use-cases indicates that world is going to witness a Data Renaissance.

Are you ready to guard your data?

What is High Value Data?

High Value Data = Data which is extremely valuable to an organisation or individuals due to its potential to significantly impact lives.

High Value Data is woven into the infrastructure of the society

Orchestration Layer

Nillion’s ability to utilise multiple privacy enhancing technologies (PETs) like MPC, FHE & ZKPs all at once is possible due to its Orchestration Layer.

Nillion has the orchestration layer as its base layer.

Orchestration Layer is a dynamic framework consisting of multiple privacy enhancing techniques such as MPC, FHE & ZKPs.

It makes sure that all the PETs works together, not just one to provide extra security.

Nillion Message Compute (NMC)

Secure Multi-Party Computation (SMPC)

Secure Multi-Party Computation (SMPC) is the standard protocol in which you know what algorithm you’re running but you don’t know the data that the algorithm is running on.

How SMPC Works?

But the problem with SMPC is that its speed is very low due to nodes exchanging message with each other during computation.

It can take hours if not days to complete the computation using SMPC.

But Nillion came up with a new SMPC Protocol called NMC which solves this speed issue of SMPC.

NMC (Nil Message Compute)

It is the protocol in which nodes do not need to exchange message with each other to run computation which results in increased speed.

NMC thoeretically solves the classic blockchain trilemma of security, scaling and decentralisation.

It works on leveraging the Information Theoretic Security (ITS)

Information Theoretic Security (ITS) is known to be more secure than classical encryption

Why? Because ITS destroys the information (no further trace of secret can be found)

Why NMC is so fast?

SMPC leverages only 1 cryptographic primitive whereas NMC leverages 2 cryptographic primitives.

SMPC → Shamir Secret Sharing

NMC → Shamir Secret Sharing + 1-Time Masking

• Blinding Factor → Masking Operation which hides the secret information

• Shamir Secret Sharing → hides the blinding factor and leverage ITS

• 1-Time Masking → brings the correctness which does not require the exchange of message between the nodes

NMC using 2 cryptographic primitives have the edge over traditional SMPC:

• 100000000x faster than SMPC

• Zero Messages Per Multiplication (Faster Speed)

• 1 Broadcast Message per node for each multiplication

Closing Thoughts

Nillion is revolutionising the way high value data has been computed and processed

It will encourage multiple industries to come and use this platform for safe processing of their high value data

Nillion encourages Web2 users to trust its decentralized infrastructure, addressing one of the most pressing challenges in the industry:
mainstream adoption of decentralization

With industries, individuals, and blockchains relying on Nillion, it will foster an interconnected ecosystem, making Nillion the meta layer for all blockchains and a trust layer for humanity.

Write anything - from your smallest paragraph to your grandest masterpiece - and publish it online or send it as email newsletters directly to your readers.

Your Paragraph publication is blazing-fast, SEO optimized, and combines the best parts of both web2 and web3 to help you create content and grow your community better than ever.

Getting started

What you're looking at right now is the Paragraph editor. We support markdown, callouts, code, and rich media embeds like Twitter and YouTube.

paragraph.xyz

@paragraph_xyz

On paragraph.xyz, all posts are stored on @ArweaveTeam. This means they're immutable, uncensorable, permanent, and composable

paragraph.xyz

Paragraph | all-in-one publishing & newsletter platform

Create, publish and share web3-native blogs & newsletters.

16

7:12 PM • Aug 18, 2022

When you publish a post, you'll have the option of sending it as a newsletter or storing it in the permanent & uncensorable Arweave.

Helpful links

Here's a few helpful pointers to customize your publication & get the most out of Paragraph:

• Theming & customization. Change your publication's font & colors; truly make this space your own.

• Set up a welcome email. This is the email your readers receive when they subscribe to your newsletter.

• Configure your publication's settings. Add links to your homepage, set up a custom domain, configure Google Analytics & more.

Need help or have feedback?

We've put together some documentation here, but if you still have questions you'd like answered we’d love to hear from you.

You can reach us via email at hello@paragraph.xyz or subscribe to our newsletter here. We're also pretty active on Discord.

Learning how to utilize a wallet and safeguard its security is essential, as the responsibility for your wallet's safety ultimately lies with you.

Unlike centralized financial systems where control rests with a central authority, in the realm of cryptocurrencies, you have full ownership and control over your assets.

To truly own your assets, mastering their security is imperative, especially given the prevalence of scams due to limited awareness surrounding wallet operational security (Opsec).

This article serves as a straightforward pathway to mastering Wallet Opsec, enabling you to take control of your assets and shield them from potential hacks.

Firstly, let's explore the different types of wallets available and discern which one best suits your needs based on factors such as price, user comfort, complexity, user interface/experience, and ownership

Hot Wallet vs Cold Wallet

First let’s see how many types of wallets are there and which one you should choose on various basis (price, comfort, complexity, ui/ux, ownership) to ensure maximum safety.

• Cold Wallet

• Hot Wallet

Cold Wallet

Cold wallets are the physical (hardware) wallets used to store cryptocurrency offline.

Offline → Not connected to the internet.

Highly secure → Impossible to hack due to its offline nature.

Complex UI/UX → Less convenient for tech-savvy people.

Good for → holding large amount of crypto for long period of time.

Costly → Expensive than Hot Wallets

Example: Ledger Nano X, Trezor

Hot Wallet

Hot wallets are the software wallets used to store cryptocurrency online.

Online → connected to the internet (exists as browser extension)

Less secure → Susceptible to various online hacks and phishing scams

Easy UI/UX → Very convenient to use even for normal people

Good for → holding small amount of crypto and everyday use to access DApps online.

Cheap → Less costlier (mostly free) than Cold Wallets

Example: Phantom, Metamask, Rainbow

Which one should you choose?

You should consider leveraging the benefits of both hot and cold wallet.

Use hot wallet for managing small funds’ frequent use of connecting wallets to DApps and it is also free in most cases.

For storing large amount of funds or long time holdings, you should consider more secure option which is cold wallet.

Use the combination of both wallets to get the best of both worlds.

What is Seedphrase?

Seedphrase is the “master key” to your digital asset in set of 12 or 24 random words.

It is the analogous to your private key, as private key being too complex, precise and risky to store, this seedphrase comes in handy.

But remember, keep it safe with you offline.
Don’t share it with anybody or online, loss of seedphrase means complete loss of funds.

Do’s

• Write it on paper and hide it in secure private location which only you can access.

• Memorize it (risky but optional)

• Engrave your seed phrase onto fire and water-resistant metal plates.

• Keep multiple copies in multiple secure location (to avoid single point of failure)

  Consider using Shamir's Secret Sharing for advanced security, splitting your seed phrase into multiple parts and requiring several parts for recovery.

BE TRANSACTION VILIGANT

It means being careful doing any transaction and to identify any suspicious activity.

To be Transaction Vigilant, you should be able to:

• Recognize Phishing Scams

• Verify Addresses Before Sending

• Recognise Insecure Platforms and DApps

• Maintain Transaction Privacy

Recognize Phishing Scams

Phishing scams are online scams aimed to trick victims into revealing sensitive information such as seedphrase, personal details, credit card details etc which gives scammer access to your funds.

Some ways to recognise phishing scams and be alert when you spot any of them while browsing:

• Suspicious Links and Attachment

• Urgent and Scarcity

• Generic Greetings & Poor Grammar

• Requesting Personal Information

Some actions you can take when you encounter any of these scams:

• Verfiy the sender info

• Don’t respond to that suspicious email or message

• Keep your software and browser updated to the latest security patch

Verify Address Before Sending

Another important measure you can take to avoid falling victim to these scams.

Use Blockchain Explorers like Etherscan or Blockchchain.com to verify the existence and validity of sender’s address.

Double Check the address to avoid typing error. (Addresses are case sensitive)

Exchange Wallets like Coinbase/Binance warns the user if the format is incorrect which also helps avoiding the error.

Avoid Insecure Platforms and DApps

To avoid getting scammed you should be able to spot these insecure platforms and Dapps when visiting them. Following factors to look for:

• Reputation & Review: Go through the reviews of that Dapp and research its reputation among the crypto-landscape before connecting your wallet.

• Transparent and Open Source: Always a good sign.

• Active Community: Look at their activity level of discord and twitter accounts, if active then asking for support would be easy once things gone wrong.

• Audited: Check ff the Dapp’ Smart Contracts are audited by the reputable audit firms or not.

Maintain Transaction Privacy

Many blockchain platforms are tranparent with all the transactions publicly viewable on the ledger.

For maintaining Privacy → Use Privacy Focused Blockchains like Monero or ZCash

Also, you can use Decentralized Exchanges like Uniswap.

Extra tip would be to use multiple wallets to avoid single point of funds’ loss and privacy in general.

MALWARE MAYHEM

Malware → malicious software designed to harm or exploit any device, service or network for purpose to extract data for financial gain.

Phishing → type of cyber attack that targets victims through email, text messages, phone calls, and other forms of communication. It aims to trick into falling for the revealing sensitive information for financial gain.

Anti Malware Software

It protects the system from malicious software like viruses, trojan horses etc by regularly scanning your device.

Can prevent data breaches and financial loss by eliminating the unexpected viruses in the device.

Examples: Kaspersky, McAfee

Phishing Software

It protects the user from phishing scams by identifiying the suspicious emails, alerting the user and blocking the suspicious links and website.

It prevents identity theft and potential financial loss which could be caused by the scammer once you take action on any phishing hook.

• My tip would be to use both software combined and keep them updated.

Browser Security Essentials

The easiest and most used doorway by the scammer to get into victims’ system is through their “BROWSER“.

It becomes super important to keep your browser in check and consider these options for better security:

• Block Popups and Redirects

• Do not track cookies

• Carefully review permissions

• Double Check URLs → Most Phishing Occurs through this

• Only download from trusted sources

• Use public wifi with caution

• Clear Browsing Data Frequently

• Use Security Focused Browsers like Brave

Keep your Software Updated

This is very important as the outdated sotfware often contains vulnerablitites that hacker can exploit to gain access to your device.

Do’s

• Enable auto updates

• Check for new updates and bug fixes

USING “CRYPTO SOCIAL MEDIA” CAUTIOUSLY

Maintain Anonymity

Always try to avoid online bragging about your overnight crypto bull gains.

This could make you a potential target of hackers.

You can share the non financial aspect of your portfolio and experience but try to minimise the personal information exposure.

Some hacks to use:

• Use Psuedonyms and Avatars: Choose a memorable username and unique avatar to maintain anonymity

• Avoid sharing your personal information and linking real life social media accounts

• Use VPN to stay anonymous on the web server

Minimize the Wallet Exposure

• Use Multiple Wallets

• Use Hardware Wallet (Cold Wallet)

• Avoid sharing your public wallet address on social media

BEYOND THE BASICS

Multisig Wallet

Multi-Signature Wallets requires multiple private keys to authorise a transaction

Even if one key is compromised, then the funds remains safe.

Provides Extra Security:

• Difficult for scammer to find multiple keys to access funds

Shamir Secret Sharing

This mechanism splits the private key into multiple shares.

To reconstruct the key, a certain number of shares are required ( n of m ).

Also a reliable way to store the funds and to avoid single point of failure.

Offline Signing Tools

These Tools allows you to sign the transaction without your private key touching the internet.

It reduces the risk of key compromise as it is unexposed to the internet.

Examples:

• Hardware Wallet: Physical Device to store private keys and sign transaction

• Air Gapped Wallet: Software Wallets where private key signing happen on computer isolated from the internet.

• Paper Wallet: Private key printed on piece of paper using BIP38 Encrypt

• Multisig Wallet with offline signing

To summarize, key points of safeguarding your wallets’ assets :

• Use both hot and cold wallet for your specific needs based on fund size, frequency of usage and security level.

• Write your seedphrase offline on paper or metal plate, store it in multiple secure location and never ever share it with anyone.

• Never click or respond to suspicious mails or websites (case of phishing scam)

• Verify the address before making any transaction

• Keep your software and browser updated

• Research the reputation of the Dapp before connecting your wallet

• Install Anti-Malware Software on your system to avoid virus

• Try to be psuedo-anonymous and don’t brag about your crypto bull profits

By following these guidelines and staying committed to security best practices, you can confidently navigate the exciting world of cryptocurrency with peace of mind.

Balaji S. Srinivasan is an American entrepreneur and investor. He was the former CTO of Coinbase, and former general partner at the venture capital firm a16z.

In the latest book, The Anthology Of Balaji, he has shared his thoughts on Decentralization, Crypto and its future and how no one can stop this technology. It can be said that he is a “Decentralization Maxi” and holds Bitcoin in great regards.

He believes that these technologies have the potential to revolutionize not only finance but also tech, media, governance, social interaction, and many other aspects of human society.

Ideas

Let’s cover all the ideas on Decentralization, Crypto & Their Future mentioned in his book.

1) Society goes through cycles of centralization & decentralization

2) 20th century was the centralized century

One of the most interesting things I’ve learned is how much the 20th century was the product of centralizing technologies: centralized broadcast media (movies, news, radio) as well as centralized production (factories) of centralized armies (tanks, aircraft, nukes), which were all run by extremely powerful centralized states. It can be said the 20th century was the centralized century.

3) Computer, Internet, Bitcoin

Technology started enabling decentralization with the personal computer in the late ’70s, then with the internet in 1991, and now with Bitcoin.

4) The year 1950 was peak centralization. Everybody was watching the same shows on television

The year 1950 was peak centralization. In 1950, you had one telephone company, two superpowers, and three television stations: AT&T; the US and USSR; and ABC, CBS, and NBC.Everything was super, super, super centralized. There were just a few choke points in everything, with very little choice. Everything was homogenized. Everybody was watching the same shows on television. Society was all flattened out and smoothed out.

5) As you go backward to forward, things start getting more decentralized

As you go backward to forward, things start getting more decentralized. Moving forward, you get cable television, the internet, blogs, social media, and cryptocurrency. One of the really fascinating things is, when going backward in time, it’s as if we’re rewinding the tape with certain events from the past, now appearing in the future, but out of order.

This is just one interesting theory: our future is our past.

6) centralized → decentralized → recentralized

It’s not so much that decentralization is a panacea. It’s that when you are over-centralized, you decentralize. And then, if people over-decentralize, they recentralize—but around new hubs each time. So it’s bundling, unbundling, then rebundling.

7) Decentralization doesn’t mean an absence of leadership. It means a choice of many leaders.

8) Why does decentralization win in the long run? It’s hard to stop these decentralizing technologies.

With millions of developers and billions of phones, the internet is now essential for daily life, and crypto is built to be international, private, and monetizable without a central entity. It’s hard to stop these decentralizing technologies.

9) You can summon the CEO of Facebook to Congress. You can’t summon the “CEO of email” to Congress. There is no CEO. That’s where this is all going.

10) The state today has a lot less control over kids as they’re growing up.

An interesting thing is happening when kids are plugged into a different network, not the state-approved network, during their nascent years. They’re plugged into their own communities and subcultures. The state today has a lot less control over kids as they’re growing up.

11) Censorship incentivizes decentralization.

12) Crypto will disrupt tech

Crypto will disrupt tech, just like tech disrupted everything else. There is overlap, but crypto is really a different sector down to the base level of how organizations are formed, monetized, and exited. Like the cloud and mobile transitions, it will take decades to fully play out.

13) The terms “emoney” and “digital currency” are vastly better than “cryptocurrency” for quickly conveying what crypto is about. Just as email took the stamp away from mail, emoney holds the promise of eliminating the transaction fee.

14) If the internet was programmable communication, crypto is programmable money.

15) History repeats with crypto.

Crypto is more than an asset class because it transforms the custody, trading, issuance, governance, and programmability of anything scarce. It’s a new financial system, not just some ticker symbols.

The internet subsumed TV, radio, newspapers, movies, and created new kinds of media. Crypto likewise will subsume stocks, bonds, commodities, and create new kinds of assets.

16) People will go from being internet influencers to crypto creators.

Crypto is about digital property rights. By default, you should own your social media account. A platform that can seize it without due process is like a bank that can seize your money at will. Blockchains today protect you against the banks and tomorrow will protect you against social media platforms.

Blockchains provide the technical foundation for a new digital theory of property rights.

People will go from being internet influencers to crypto creators. The difference is crypto creators have property rights on their content. If you don’t own private keys to something, you don’t really own it. Like your social media account, you have conditional access to something that could get taken away.

This is a huge unlock for billions of people on social media. Three billion people are on Facebook, yet nobody controls any digital property rights. Your social media is not just your tweets or your posts—it is your relationship to your friends and followers. It is your ability to earn money without YouTube taking a big cut of the revenue, or just turning it off. Why should this gigantic corporation be able to silence you or seize your assets at will?

17) Every centralized service can become a decentralized protocol

It might take 10 to 20 twenty years, but as blockchains scale, every centralized service can become a decentralized protocol. Times have changed, and the economic terms of the agreement are changing. People are realizing they’re not in control and they’re not getting a cut.

18) Crypto is a spinal transplant for tech industry.

19) On disk → Online → On-chain.

On-chain is like the third level of deployment. Files that only you care about stay on your local disk. Files that are important to others get put online. And files that are really important to others will get put on the blockchain.

When you put information online, you get distribution, sharing, collaboration, etc.

When you put it on-chain, you get immutability, verifiability, monetization, etc. On-chain is not suitable for everything, just like you don’t put everything online. Putting something on-chain is a stronger version of putting it online. It lessens the impacts of link rot, stealth editing, downtime, format obsolescence, firewalls, and many related issues.

20) Financiers and Engineers will use on-chain data more and more

Over the next decade, financiers and engineers will use on-chain data more and more, because it’s the input to every smart contract which is the basis for every investment decision in the cryptoeconomy...which becomes an ever larger share of the global economy. Because all value becomes digital, the entire economy will eventually become the cryptoeconomy.

21) big data → verifiable data

22) One thing people don’t get yet is that crypto is not just the next Wall Street. It’s also the next Silicon Valley.

23) Crypto allows free markets without corporations.

24) Why trust Bitcoin?

You can find out who wrote every line of the codebase and when, where, and why. This is significantly more transparent than many other finance systems we work with on a daily basis.

25) crypto vs financial-services is similar to internet vs telecom

It will take decades to play out, but the economic logic of crypto- versus-financial-services is similar to internet-versus-telecom.

26) Long-term case for replacement

27) The blockchain is the most important development in history since the advent of writing itself.

28) The blockchain contains a cryptographically verifiable, replicated, unfalsifiable, and provably complete digital record of a system. It’s the ultimate triumph of the technological truth

Cryptocurrency has taken truths that were purely political and started to anchor them in technical truths.

29) The technologist builds the decentralized solution.

A shared issue for legacy media and social media is that their content is not open source. Since the content is proprietary, restricted by copyright and API access, the public can’t create its own arbitrary views of the data. What’s the alternative? Decentralized media.

30) Future of media involves oracles and advocates.

Oracles and advocates are two key ideas in decentralized media—factoring things into either pure facts (oracles) or pure narratives (advocates).

Each media outlet could have a version-controlled public list of keywords for which they are clear, unapologetic advocates.

Subscribers and donors could fund the outlet on the basis of their fidelity to the cause. This is using technology for values alignment.

The ledger of record is the combination of all feeds of on-chain data. It subsumes social media feeds, data APIs, event streams, newsletters, and RSS. It’ll take years to build but will ultimately become the decentralized layer of facts that underpins all narratives.

Think of the ledger of record as a decentralized wire service. Every person and organization slowly moves from posting on centralized social media platforms to posting on decentralized protocols like Mirror. Decentralized media will have monetization, permissions, distribution, and programmability built in.

31) “News” isn’t an article; it’s a graph. A graph of posts, images, and videos from many parties.

32) We need to decentralize media.

Just like the open-source culture transformed closed-source software corporations into something more ethical, more open, and more commercially viable, decentralized media would strive to do the same.

Twitter was version 1 of decentralized media and Substack is version 2. Mirror is version 3. We’re moving toward individual citizen journalists and away from media corporations. Perhaps we will see “full stack writers” who go from writing articles to producing movies themselves, like the full stack developer.

After reading this book, my views on Decentralization & Crypto got more optimism for the future and the world we are building.

All the text & ideas as it is from Anthology Of Balaji : A Guide to Technology, Truth, and Building the Future.

https://www.amazon.in/Anthology-Balaji-Technology-Building-Future-ebook/dp/B0CKJ8TXT8

Cryptography is the technique of hiding information (encryption) so that only a person person who is meant to see the information can read it (decryption).

It involves the secure transmission of information.

Cryptography = Crypt (Secret) + Graphy (Writing)

It converts the message into CipherText using encryption key and that CipherText is reverted back to original message using decryption key.

There are mainly 3 types of Cryptography:

• Symmetric Cryptography (Private Key Cryptography)

• Asymmetric Cryptography (Public Key Cryptography)

• Hash

Etheruem uses Public Key Cryptography to generate key pair (public + private) & addresses which gives ownership of funds.

Let’s Understand Each Type Simply:

Symmetric Cryptography (Private Key Cryptography)

The Sender and the Receiver use the same shared secret key to encrypt and decrypt messages.

Encryption: PlainText combined with Secret Key produce CipherText (unreadable).

Decryption: CipherText combined with the same Secret Key revert back to PlainText (message).

Asymmetric Cryptography (Public Key Cryptography)

Public key cryptography is a core part of modern-day information security.

Used by Ethereum, in which keys come in pairs consisting of a private key and a public key.

Ownership of accounts is established through digital private keys, ethereum addresses, and digital signatures.

Public key is as similar to a bank account number,

Private key is as similar to the secret PIN.

Private Key → provides control over the accountPublic Key → identifies account to others

In the payment portion of an Ethereum transaction,

Public address → derived from public key, used same as the beneficiary account details of a bank transfer.

How Key Pair is Generated?

We will take example of Ethereum Ecosystem.

Generating Private Key

The first and most important step in generating keys is to find a secure source of entropy or randomness.

Creating an Ethereum private key essentially involves picking a number between 1 and 2^256.

A private key can be any nonzero number up to a very large number slightly less than 2^256 — a huge 78-digit number.

The exact number shares the first 38 digits with 2^256 and is defined as the order of the Elliptic curve used in Ethereum.

To create a private key, we randomly pick a 256-bit number and check that it is within the valid range.

In programming terms, this is usually achieved by feeding an even larger string of random bits (collected from a cryptographically secure source of randomness) into a 256-bit hash algorithm such as Keccak-256 or SHA-256.

Both of which will conveniently produce a 256-bit number.

If the result is within the valid range, we have a suitable private key.

Otherwise, we simply try again with another random number.

Generating Public Key

An Ethereum public key is a point on an elliptic curve, meaning it is a set of x and y coordinates that satisfy the elliptic curve equation.

The public key is calculated from the private key using elliptic curve multiplication, which is practically irreversible: K = k * G,

where k is the private key,

G is a constant point called the generator point,

K is the resulting public key, and

* is the special elliptic curve “multiplication” operator.

The relationship between k and K is fixed, but can only be calculated in one direction, from k to K.

That’s why an Ethereum address (derived from K) can be shared with anyone and does not reveal the user’s private key (k).

The Magic Of Public Key Cryptography.

Generating Public Address

Ethereum addresses are unique identifiers that are derived from public keys using the Keccak-256 one-way hash function.

Private key k:

k = f8f8a2f43c8376ccb0871305060d7b27b0554d2cc72bccf41b2705608452f315 

Public key K:

K = 6e145ccef1033dea239875dd00dfb4fee6e3348b84985c92f103444683bae…….

We use Keccak-256 to calculate the hash of this public key:

Keccak256(K) = 2a5bc342ed616b5ba5732269001d3f1ef827552ae1114027bd3ecf1f086ba0f9 

Then we keep only the last 20 bytes (least significant bytes),

which is our Ethereum address:

Most often you will see Ethereum addresses with the prefix 0x that indicates they are hexadecimal-encoded,

Watch this video to have fun & visualise key pair:

https://www.youtube.com/watch?v=9LtBDy67Tho&list=PLJz1HruEnenCXH7KW7wBCEBnBLOVkiqIi&index=4&t=19s

Hash Function

A Hash function is “a one way function that can be used to convert data of any size to data of fixed size.”

The input to a hash function is called the input or the message.

The output is called the hash.

The “one-way” nature means that it is computationally infeasible to recreate the input data if one only knows the output hash.

Let’s take a closer look at the main properties of cryptographic hash functions.

These include:

• Determinism

A given input message always produces the same hash output.

• Noncorrelation

A small change to the message (e.g., a 1-bit change) should change the hash output so extensively that it cannot be correlated to the hash of the original message.

• Irreversibility

Computing the message from its hash is infeasible.

• Collision protection

It should be infeasible to calculate two different messages that produce the same hash output.

Resistance to hash collisions is particularly important for avoiding digital signature forgery.

Hash Functions used by popular Blockchains:

1. Bitcoin (BTC):

   Hash Function: SHA-256 (Secure Hash Algorithm 256-bit)

2. Ethereum (ETH):

   Hash Function: Keccak-256 (an Ethereum-specific variant of Keccak)

3. Litecoin (LTC):

   Hash Function: Scrypt

4. Bitcoin Cash (BCH):

   Hash Function: SHA-256 (similar to Bitcoin)

5. Ripple (XRP):

   Hash Function: SHA-512

Watch this video to visualise hash function:

https://www.youtube.com/watch?v=QJ010l-pBpE&list=PLJz1HruEnenCXH7KW7wBCEBnBLOVkiqIi&index=3&t=1s

In Ethereum, communications between nodes (including transaction data) are unencrypted and can be read by anyone. This is so everyone can verify the correctness of state updates and consensus can be reached.

Advanced cryptographic tools, such as zero knowledge proofs (next article) are getting implemented which will allow for encrypted calculations to be recorded on the blockchain while still enabling consensus (game changing!).

These types of cryptographic proofs are mathematical tools critical to the operation of the Ethereum platform.

That’s all for now.
Thanks for reading.

As name suggests, blockchain,

“Blocks” containing information which are “chained“ together through special mechanism of “cryptography“ forming a decentralised database in which data can’t be changed (immutable) once updated.

This information in blocks can vary in different blockchains:

In case of Bitcoin: Record of Transactions

In Case Of Ethereum: Code (Smart Contracts)

Understanding Block

Block is divided into 3 parts (for better understanding)

Block = Block Hash + Block Header + Transactions (Data)

Let’s Understand Each Section:

Hash (Block Hash)

Hashing is the cryptographic algorithm which takes any input and converts into a fixed length of string ( 64-digit encrypted hexadecimal number)

Block Hash is the value obtained by “hashing” of all the contents in the block by “SHA-256 Cryptographic Hashing Algorithm”.

Watch this video for visualising Hash Function:

Block Header

Block Header = Previous Block Hash + Nonce + Merkle Root + Time Stamp

• Previous Block Hash

  It is the block hash of previous block.

• Merkle Root

  The Hashing of the transactions in data section forms a tree like structure called “Merkle Tree“.

• The final hashed value in the top of the tree is known as Merkle Root.

• Nonce

  Nonce (Number Used Once) is a value that miners adjust as they try to find a hash value that fulfils the specific difficulty requirements of the Proof of Work consensus mechanism.

  They continue this process iteratively until they find a hash that satisfies the “difficulty criteria”.

• Time Stamp

  A timestamp refers to a small piece of data stored in every block in a Blockchain as a unique serial.

Data

• It contains the record of transactions (or verified data initiated)

How Blocks are created?

Blocks in a blockchain are created through a specific process involving multiple steps:

• When transactions are initiated from users by sending data to another’s user’s address.

• Then these transactions gets verified by nodes (computers) in the network by verifying users details (address, balance & signature).

• Then these verified txs gets in the “mempool” or “transaction pool“ & then miners comes in picture.

• Miners work to create the block header which contains: (which we have already discussed)

  • Previous Block Hash: A reference to the cryptographic hash of the previous block in the blockchain.

  • Merkle Root: A cryptographic hash of all the selected transactions, creating a unique identifier for the transaction data in the block.

    Then, miners work on finding the nonce.

  • Nonce: Miners adjust the nonce which combines with other contents of block header produces a block hash. (process also known as PoW)

  • This process involves repeatedly adjusting the nonce and hashing the block header until the desired hash is found.

  • The miner who found the nonce, gets rewarded.

  After finding the nonce, block hash is created, then:

  • Block Number (Height): A unique identifier for the block within the blockchain.

  • Timestamp: The timestamp records when the block is being created.

Block Header & Block Hash is now created.

Now, Miners add the selected transactions to the block. These transactions are constitutes the block's transaction data section.

The Block is now created and successfully mined on the blockchain.

The newly created block is replicated across the network, ensuring that all participating nodes have a copy of the blockchain which creates trust, transparency and decentralisation of data.

How Blocks are chained together?

For a block to be considered valid and accepted by the network, it must have the correct "Previous Block Hash" that matches the header of the last block in the existing blockchain.

It continues to form an “immutable” chain in which the block information once updated in the chain can’t be changed.

Remember we talked about miners satisfying something Proof Of Work Consensus Mechanism.

Let’s talk about it, in easy understanding.

Proof Of Work (PoW) [ Mining ]

Proof of Work (PoW) is a consensus mechanism used in many blockchain networks to achieve agreement on the validity of transactions and the order in which they are added to the blockchain.

Miners compete to find a specific number called a nonce that, when combined with the block header, produces a hash (known as the block hash) that meets a certain predefined “difficulty target”.Difficulty Target: It is set by the network and is adjusted periodically to control the rate at which new blocks are added to the blockchain.

It ensures that miners must invest in significant computational power (in the form of mining hardware and electricity) to have a chance of mining a block and earning the associated rewards.

As it is computationally expensive which has led to environmental concerns and efforts to develop more energy-efficient consensus mechanisms, such as Proof of Stake (PoS). (more on this in next one)

Life-cycle of Block in PoW Blockchain

Now that block is created & added to the network forming a immutable chain.

Let’s max out the process.

That’s all for now.

Thanks for reading.

Understanding the hero's journey can provide insights into building compelling consumer products and engaging user experiences.

Hero's Journey: Introduction

The Hero's Journey is an archetype found in great stories, books, movies & TV shows.

Consumer products also follow the hero's journey structure, involving a protagonist (the product) facing challenges, undergoing transformation, and achieving a goal.

Hero's Journey: Phases

Hero’s Journey goes through 4 phases:

• The Call to Adventure

• Crossing the Threshold

• Road of Trials

• Climax

The Call to Adventure

This phase is about showing the people at first what they are getting into, just like the opening scene of any movie.

Facebook Opening Page

• Tells what you are getting into like posting photos, updates and making friends.

• This Page removes every mental barrier to use the product.

• Asking simple credentials - Name, Phone Number Or Email, Password (No Confirm Password).

Flaw in Twitter's Opening Screen

• Username field made people think, demanding them to be funny, unique and choosy (barrier) —> Less Conversion.

Crossing the Threshold

When the hero can no longer stay in his previous world and sets off for an adventure after getting the calling.

The same dynamic works in Consumer Products where the Users are onboarded to the adventure by making them experiencing “aha” or “magic”moments.

These moments make users hooked and retained to the product.

How Facebook did it?

• Setting goal to get 10 friends in 14 days.

Great consumer companies uses every single lever to get you to that magic moment.

So Facebook did it by suggesting you friends/ people you may know/ mutual friends to let you figure out how they know you.

Possibility is that other person might not know you as well but this is done to get them both to 10 friends and experience aha moment.

Companies prioritise users who haven’t experienced aha moments over their existing users.

This is a way to get new users hooked to the product, which obviously comes with a trade-off with bad experience for existing users.

The Road of Trials

Now you have crossed the threshold, and you’re now in business with your users.

Then comes the road of trials.

First one is:

Tangibles Vs Intangibles

There is the challenge of building systems to capture and understand human behavior within large tech companies like Facebook, Snapchat, and Twitter.

These systems often rely on metrics and numbers but struggle to encompass the complexity and messiness of human behavior.

Product Companies holds two types of meetings:

Meeting 1 → discussion around measurable and quantifiable aspects.

• Companies can assess the impact of their actions, such as introducing new features or running ad campaigns, by observing changes in these metrics.

• The measurable aspects, such as active wallets and metrics, offer advantages as they allow for immediate feedback on experiments.

Meeting 2 → discussion regarding the intricate nature of human behaviour, which is more challenging to capture.

• discussion like do people trust us, do they think we are cool.

• exist in the realm of emotion feeling perception

• much harder to track as you can't run an experiment on them

But the real flaw is when you don't know which bucket you are in.

Are you're in the realm of math and metrics or dealing with perceptively emotion related.

Making Things Easy vs Difficult

• Making certain actions in a consumer product harder can increase investment and commitment from users.

• Injecting difficulty in a product can convey the message that it will be hard but ultimately rewarding.

• The game Elden Ring deliberately starts with a challenging enemy that is unbeatable, creating a sense of difficulty and crushing the player's spirit.

• Snapchat's original lens feature was intentionally made difficult to use, creating a sense of exclusivity and encouraging users to figure it out with friends, leading to a moment of mastery and ownership.

Scarcity vs Abundance

Scarcity representing value always attracts and generates the stronger emotion in users which keeps them hooked to the product.

• Crypto and NFTs: Scarcity and rarity: Exploring the concept of scarcity and rarity in the context of NFTs (non-fungible tokens) and crypto, where limited quantities and uniqueness add value.

• LinkedIn: Endorsements: Lack of scarcity in giving endorsements on LinkedIn, where anyone can endorse others freely, diminishing the value and meaning of the endorsements.

• Status and changes:

  • Twitter's blue checks: Twitter faced backlash when they made blue checks paid, as it changed the status associated with the verification badge.

There are two methods to find the product related answers.

• OODA Loop

• Availability Cascades

OODA Loop

The loop stages: observe → orient → decide → act

• Gathering info from data, metrics and users.

• Interpreting and processing the info

• Make a decision regarding next course of action

• Execute the plan

  Then go on again gathering info from now available metrics to quickly make iterations to the product and follow the next steps as usual, this is never ending loop for the great consumer companies.

  The faster the iterations → more ahead the competitors.

Availability Cascades

Availability cascades refer to creating a strong core community of supporters.

The concept is also known as "1000 true fans," popularized by Kevin Kelly. The goal is to find a dedicated group of fans who genuinely love the product.

You can read the renowned research article on the subject here.

• Importance of a Core Community:

  • A core community acts as a shelling point and focus for the product.

  • Discussions and feedback from the core community can guide product development.

• Starting with a Core Community:

  • Encouragement to start by finding a thousand people who love the product.

  • Building a core community allows for the identification of adjacent markets and use cases.

• Leveraging Core Community for Growth:

  • Engaging and obtaining feedback from the core community helps iterate and improve the product.

  • Feedback from the core community is valuable for making informed decisions.

• Importance of Core Engagement:

  • A core community of 1000 true fans is more valuable than having millions of indifferent users.

  • Startups are advised to focus on creating a dedicated base of supporters early on.

Climax

The significance of these scenes lies in the hero's internal transformation rather than their victory over the enemy.

Both scenes emphasise the heroes embracing their true selves and overcoming their inner struggles.

That’s the same case with consumer product companies, after all these trials and iterations, they find their soul purpose and turned into what the people would love to invest in both by time and money.

• Discovering the soul of a company is often the key to becoming a great consumer company.

Twitter Redemption Arc

• Twitter experienced a decline in users from approximately 2016 to 2018.

• This decline is particularly concerning for a consumer company, as the internet user base generally grows over time.

• One of the main challenges was Twitter's lack of clarity regarding its identity and purpose.

• Twitter struggled with deciding whether it should compete with Facebook, focus on teens like Snapchat, or define its own unique niche.

Rediscovering Twitter's Soul

• Twitter's fortunes started to turn around with the arrival of new leadership in 2017-2018.

  1. The company realized it needed to define itself in two fundamental ways:

  2. Emphasizing real-time events: Twitter aimed to be the go-to platform for discussing events as they happened.

  3. Fostering conversations: Twitter sought to provide a space for meaningful conversations and interactions.

• This newfound clarity of purpose and direction helped Twitter redefine its focus and led to its subsequent growth.

• The parallel is drawn between Twitter's realization of its identity and Neo's discovery of his true purpose in The Matrix.

Extra Last Step: Denouncement

Denouement refers to the part of a story where all the pieces come together and find meaning.

• It is an essential element in great storytelling.

This talk was not solely about consumer products but rather about life and building companies.

Interested individuals in the space should embarked on their own adventure by starting their own company.

Let’s conclude this article. Happy Building and go on to your hero’s journey.

Let’s start off by asking the right question.

Why Decentralisation is Important?

• It’s a way to build trust

Web2 companies follow a predictable pattern where they do everything they can to recruit users, developers and businesses to join the platform because each of these community members forms the basis of a multi-sided network effect that makes the platform more valuable and defensible.

But as they grow they move up this adoption curve and follow a predictable pattern where they slowly start to change their behaviour instead of cooperating with their community they start to extract value from them.

For example:

Twitter had more traffic going through third-party clients than through their official app. However, to capture more of the value, Twitter changed rules to make it harder for other apps to work with Twitter which made their official app more popular.

For users and developers, these rich ecosystems that started out cooperative ended up getting killed off and the Innovation emerging from them was stifled

• In contrast, crypto networks offer a new model for building internet platforms, unlike corporate own networks. It aspires towards being decentralized meaning they strive to be community owned and operated.

• Crypto tokens are an exciting new innovation which enables value to flow at the cost of information at zero marginal cost.

• Crypto Network routes value directly to those who contributed and that in turn means that they can be much like earlier internet protocols in which they can grow to much larger scales of adoption while enabling innovative ecosystems on top.

  So that's why decentralization is so important.

Playbook For Crypto Founders

A three-step process that serves as a guide for how to run the process of progressive decentralization.

1. building a product that people want

2. building a community around that product

3. giving ownership of the product to the community

Crypto projects will need to execute three objectives in this sequential order.

Let’s dive into each step in detail.

1) building a product that people want

The earliest stage of building a crypto application is all about finding Product Market Fit.

This requires a lot of the same ingredients as a normal startup you need

• great team

• lean development

• tight execution

• quick learning

At this stage, there should be no show of decentralization since the core team is driving all product decisions by necessity.

Also, launching a token at this stage probably isn't advisable because the product is dependent on the core team's efforts not the community.

Dependence on the efforts of others is one way you might fail the Howey test which is an SEC regulatory framework.

Securities regulation is a huge distraction from product market fit.

At early signs of product traction which could include a growing user base, developer ecosystem or some network effects starting to take shape, then go to the next step.

2) building a community around that product

This is going to look different for different types of communities.

For developer-facing products, community building might involve investing more heavily in the best practices for running open-source communities which can include

• good documentation

• building a developer evangelism program

• issuing bounties and grants and other incentives for third-party development

Going even further start thinking about how to eliminate dependency on the core team in order to build more trust with the community.

Limiting control over the product is one way that you can start to invite Community Participation.

Crypto applications are multi-sided marketplaces and their defensibility comes from Network effects.

Those Network effects create switching costs which allow for the possibility of charging a fee as long as the fee that's charged is less than the cost of switching to a new platform then the model is sustainable.

The concept of charging a fee for a service is nothing new but with crypto tokens, it's easier to move value, which means economic value can be given directly to the community.

It is important to think about how to design an effective incentive and Token distribution plan.

3) giving ownership of the product to the community

Crypto tokens are a new instrument for distributing value including a fee stream to a community of stakeholders.

What it means:

Imagine there's a smart contract that mints and distributes tokens as per the distribution schedule defined prior at the moment then the smart contract is triggered and those tokens are minted and distributed.

A number of exciting things will happen:

• The core team will have given control of the application from the company to the community so the product is now governed and owned by its users and that mitigates the risk of the platform changing against the rules, against the wishes of the community, they can now sort of make changes to the product that they agree on.

• The company will have found a sustainable business model by having retained enough tokens to benefit from the fee stream of the product and its growth in the future and similarly community members who are now part owners of the product will also start to be rewarded economically for their contributions and hopefully they will see increasing returns to scale as the cooperative economics of the service allow for continued growth.

• Finally, because the product is no longer dependent on the core team, it's possible that the token may not be considered a security which eliminates some of the regulatory overhead that comes with SEC Securities regulation.

So, the spirit of this objective is all about marking a specific moment when you call this smart contract where a crypto product completes its journey from a traditional product company to a sustainable community-owned and operated network.

Conclusion

If you're a crypto founder and you're ready to exit the community that means you've done objectives one and two and are on number three.

So you've:

• built a product that people want

• built a robust community around that product

• figured out a way to incentivise community participation to give them ownership

We haven't seen a crypto application execute on all three of these yet but there are a few that are well on their way.

That’s the playbook. Happy Learning!

Learnings from a16z lecture: Deep Dive Decentralisation by Robert Leshner & Jesse Walden.

"IN 5-10YEARS EVERY STARTUP WILL HAVE INTERNET, AI AND CRYPTOCURRENCY SOMEWHERE IN THEIR PRODUCT"

HISTORY

ANALOGY WITH 90s DOTCOM STARTUP

• back in the late 90s, people got really excited about a new thing the dot-com startups

• today we're at the precipice of a new trend it's very similar and just gonna be just as impactful if not more - the crypto startup Image

ANALYZING 90s DOTCOM BOOM

• look back at the late 90s when the internet was just booming

• there was this surge of investment activity which resulted in this big dot-com boom and eventually, busted.

• Over the coming 20 years, many of the top most valuable companies in the world today came out of that era like Amazon Facebook and Google.

• Now, we're at the very beginning of a similar phase for a new type of startup called a crypto startup.

  BASED ON DECENTRALISATION

• instead of being based on another global centralized protocol ( tcp/ip ) which was good for sharing information globally.

• it's going to be based on a new decentralized global protocol for sharing value instead of information. 2017 PHASE

• In 2017 we saw a similar bubble just like the dot-com in 2001.

• We're now at the very beginning of that phase of these really big most valuable companies in the world

-they're gonna be built on this new decentralized protocol.

WHAT IS CRYPTO STARTUP?

Any startup that uses crypto to -

• Raise Money

• Acquire Customers

• Expand Internationally

  ADVANTAGES

  RAISING MONEY

• It's hard to raise money even in silicon valley for startups which are based early in technology or are contrarian in nature

• but crypto globalizes and democratizes the fundraising

  ACQUIRING CUSTOMERS

• give incentives to early adopters (not just employees)

• give a part of ownership in the company

• participation incentives —> seed network effects

  EXPAND INTERNATIONALLY

• Avoid costly and difficult payment integrations one country at a time

• Crypto enables a global user base from day one

  DISADVANTAGES

• LACK OF LEGAL CLARITY

• NASCENT DEVELOPER TOOLS

• LACK OF LEGAL CLARITY IN UNDERSTANDING:

• ICOs (Initial Coin Offering): A method of raising capital wherein companies sell investors a new digital token or cryptocurrency.

• IEOs (Initial Exchange Offering): Fundraising event that is administered by an exchange platform.

• Users can purchase tokens with funds directly from their own exchange wallet.

• SAFT (Simple Agreement for Future Tokens): It is a document issued for the future transfer of digital tokens from cryptocurrency developers to investors in exchange for raising funds now.

• The most important regulatory hurdle that a new crypto venture must pass is the Howey Test.

Howey Test:

an investment contract exists if there is an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."

Crypto Rating Council

A framework to objectively assess whether any given crypto asset has characteristics that make it more or less likely to be classified as a security under the U.S. federal securities laws.

The analytical framework results in a score between 1 and 5 for each asset they review.

Score 1: Less/No Secure. Not a security under the U.S. federal securities laws.

Score 5: Highly Secure. Strongly consistent with treatment as a security.

7 STEP FRAMEWORK TO CREATE A CRYPTO STARTUP:

1. INCORPORATE using Stripe Atlas: Helps entrepreneurs set up their company in a reliable, safe, and fast way, from anywhere in the world.

2. Do FUNDRRAISE by understanding your business model and type of security it offers (SAFT, IEOs, Reg A, Reg D).

3) BUILD A PRODUCT that the market really wants.

4) ISSUE A TOKEN using ARAGON by creating ERC20 and then submitting it to CRCs for security scores.

5) INTEGRATE TOKEN into your app/platform to incentivise the early customers of your startup by giving them ownership.

6) LAUNCH

Once the product is delivering the value it promised to the market and people are earning off your token, then.

LIST the token on the exchange platform like Coinbase etc. making it available to the people/traders to buy and take part in the success of the company.

Running a startup is like running in a maze.

For eg: You're creating a social app and then realise no one likes this and then you're going to try different things.

Then every once in a while a new part of the maze just kind of opens up.

Blockchain is a very rich new modern maze.

There are very few people running around that maze right now.

Pros: Computers can make commitments.

What's exciting is that there's just a ton of cool projects problems to solve here and there's a lot of opportunity for improvement

You're gonna see many kinds of improvements in the next years in all sorts of dimensions.

The most interesting part is DAO it's an organization that is owned by the token holders.

This is the way that 10 years from now a social network should be instead of having an opaque mysterious product management group at one of these large companies.

The community that uses that network should decide.

There should be a vote on Twitter or Facebook as to what are the rules or who are the people that represent the rules.

And what are the rules around the privacy of the data what are your what are your protections as a user?

The click-through agreements, no one reads that's in theory how you're protected on those networks it's a preposterous system

The right way to do it is to let users control the data to have encryption to have proper governance built-in.

Also, the right way to do it is to let the users own a piece of the network, why shouldn't the early Uber and Lyft drivers have been rewarded along with the entrepreneurs and employees and founders and everything else as part of that network.

In decentralization: “don't be evil” becomes “can't be evil”

You don't have to understand each level to do stuff in the space.

In the next couple of years, you'll be able to build applications on top of these systems without understanding all the stuff.

The way crypto is today like you want to build a killer app unfortunately today you got to understand nodes, defense mechanism all this other stuff that won't always be true.

We're like couple years away from the point at which where all you had to know was how to write some swift code and how to use the abstractions that apple provided in ios.

And that's it and you can just focus on what you're good at which is business logic or application logic.

That'll be a very important point when these two things kind of divide and people can just think about kind of the layer that they're good at.

There will be the infrastructure folks who will do the infrastructure but then there'll be people building just applications.

People talk about how these systems are too slow, they don't scale and the user experience is bad. But if you've lived through different computing cycles you remember that like the early iPhone in 2007 and for two years its connectivity was so bad, it was hard to type.

It took it usually takes once you have the right killer platform, three to five years for application-level entrepreneurs to fully explore the design space and figure out what is the best thing to do with it.

A lot of smart people are trying a lot of things, this is the reality

"We're really early for like having like a winner yet, we don't know where the winner is."

That’s it for today, thank you for reading.

🔸 BUILDING PRODUCTS IN TRADITIONAL CENTRALISED VS BLOCKCHAIN SPACE

To build with a new paradigm one thing that doesn't change is what is the "need" and for "who". In the blockchain space there are really two types of users: If building a wallet, the end user is a Consumer. If building a decentralized lending protocol, the user is Developer. Traditionally building for the end user, you have your own

• database

• back-end service

• front-end

• application layer

Basically all the layers of the stack.

If you want to implement different features, you can change every layer of the stack to meet that need to build new use cases and find better product market fit. But in blockchain space, you may build a Dapp on top of already existing infrastructure so you can't make as many changes to your back end (blockchain ) so it becomes really important to think about the idea of flexibility and control. Avoid the mentality "build and they will come"

The idea of understanding on a rigorous level what is bringing people to the product that you're building.

🔸 USER-FOCUSED VS DEVELOPER FOCUSED PROTOCOLS

Bitcoin initially started as a peer-to-peer money monetary system over time it's evolved into a store of value.

Bitcoin today: Native asset gets value from their utility and from their degree of widespread acceptance. Protocol value comes from the degree of security and decentralization that exists so there's a huge community around Bitcoin.

On the other hand, Ethereum started as a generalized computer and from the start has been really appealing to developers.

In 2017 with the ICO craze, it became a really great place for crowdfunding.

Ethereum has a ton of value today derived from this Rich developer ecosystem.

🔸 HOW IS CRYPTO DOING?

The future looks like there is a huge amount of open space in terms of building a great product.

this just shows the market cap of all crypto assets and how they compare to other kinds of markets that exist, there is about 4X between crypto and apple.

🔸 CELO: CASE STUDY

CELO's goal is to build a more open and accessible Financial system. Over 1.7 billion people worldwide have no banking access but over two-thirds of that group has access to a mobile phone.

That market size where over a billion people globally have access to everything on the internet but can't send ten dollars to a family member overseas. CELO started out as a fork of Ethereum, it's a layer one as well as a set of smart contracts and an application layer built on top of blockchain which is proof of stake based.

As a fork of Ethereum, analogue to ETH is CELO Gold (native asset). On top of it there's a set of native smart contracts encoding CELO Dollar which is a stable value asset pegged to the US dollar and a lightweight identity system and then a set of applications on the CELO wallet as well as a developer SDK. Users Vs Developers and how they two play together:

From the start, CELO was focused on a wallet and end users and building to that need as a result what's come to be a broader sense of what those users might need. Then as a result definition of what a developer ecosystem might want to set out to build the initial approach being building for an end user and then becoming the first consumers of an SDK and then building that SDK to meet a range of different use cases.

🔸 HOW CELO IMPROVED USER EXPERIENCE:

Sending money and then seeing a loading screen that took forever so they put focused effort on reducing the time of that sink. Now CELO wallet runs a light client that syncs blockchain state and this allows for a user to both sign transactions as well as send them from their device itself, now the experience is really fast.

🔸 ELIMINATING RISKY GAS CURRENCIES

In Ethereum, no matter what asset you're transacting you need that asset as well as some ETH to have a transaction go through so if I'm sending someone 20 DAI I need DAI as well as a little bit of ETH to make that transaction go through one. CELO noticed that they have to give people both CELO Dollars as well as CELO Gold in order to perform transactions like say even buying a sandwich. For Mainstream usability, having people use two different assets just to transact in one as a comparable to cash or even like a debit type system it seems like a bit of a regression in user experience. So one innovation that came out of that was allowing for gas to be paid in a stable asset CELO dollar.

🔸 WHAT SHOULD NEW FOUNDERS DO?

While building products, think about ways to get these learnings higher up in the stack as quickly as possible so that you can make changes lower down because changes at the most fundamental and lower levels are a lot harder to make.

🔸 TWO KEY TAKEAWAYS

1. Start with the biggest need rather than technology, think about what is the biggest possible problem that you can solve and how might you use the toolkit that you have at your disposal with blockchain to solve that problem best.

2. Think about how at every single layer of the stack you can build a bit more full stack or at least think in a more full-stack way in order to build something that meets a more cohesive need of USER.

   User-Need Focused approach Build in a way that controls the whole stack to meet that user's need and builds with one core purpose in mind.

That’s it for today, thank you for reading!

This lesson covers alot of topics:

• Layer Stack of Blockchain

• Business Models of Layers 1 & 2

• Value Capture in Crypto

• Network Flywheel

• COMPOUND Business Model

Layer 0 -> includes miners and validators communicating through peer-to-peer networking

Layer 1 --> then after P2P networking, they agree with the truth of the network i.e. Consensus

Layer 1.5 --> then they compute that state through game theoretical mechanics

Layer (0 + 1 + 1.5) combines to form a "blockchain computer".

On top of this, we can deploy programs.

Now comes,

Layer 2 (Smart Contracts)

• computational foundation written by developers which runs on "blockchain computer"

• fundamental building block for everything built on blockchain

Layer 3 (Client and UI) :

• code that runs on user side (phone, browser) like wallet, apps etc.

• connects the world of protocols to the world of people

Let's talk about Business Models:

Layer 0 and Layer 3 are called "The Periphery Of Crypto"

• both follow the same traditional business model like web2

Layer (1 + 2) is also called "The Core Of Crypto"

• both layers follow the same business model i.e. Multi-Sided Platform.

What is a Multi-Sided Platform?

A common ground that creates value by enabling direct interaction b/w diff kinds of participants.

Eg:

Bazaar --> which connects merchants and buyers Lyft --> connects drivers and riders

LAYER 1 BUSINESS MODEL (FLYWHEEL)

PROTOCOL itself is a multi-sided platform which connects every participant

TOKEN is a key mechanism for value capture

How it captures value?

This Value Capture Paradox is solved by defensibility.

Defensibility is the ability to maintain a positive rate of return over a period of time for a network

It comes by having Network Effects in a system.

Two types of Network Effects: a) Same Sided

More existing users --> More trusted by new user Value of a network to a new user increases if there are already large number of users.

• Cross-Sided

Eg: In case of Lyft If a driver joins ---> More riders will ride

More financial capital by investors --> Greater Token Value --> More attractive to miners

Also called Cross-Sided Network Flywheel (another thread)

So that's how token value is fabricated in so many layers, so it can't be just copied whether it is open-sourced.

Network Effects are so powerful, you can't just open a new token or join one.

LAYER 2 BUSINESS MODEL

LAYER 1 --> Community Owned + Controllable by Autonomous Programs called Smart Contracts.

Smart Contracts are multi sided platforms that themselves are built on layer which is also a multi sided platform.

COMPOUND CASE STUDY

• COMPOUND is a decentralised money market (lending platform)

• Built on Ethereum

• Includes 4 diff participants

LENDERS - Provide Money KEEPERS - Financial Support to network BORROWERS - Borrow Money by providing collateral COMP HOLDERS -> Risk Management

This is a core template for the business model for Layer 2

It is also replicable.

But what makes it un-replicable?

Defensibility for Layer 2 --> Network Effects

Activity in protocol increases --> its Assets increase ---> Cost and Risk for users decrease --> Defensibility increases

In summary,

Value Capture in Crypto --> Multi-Sided Platform + Network Effects