Welcome to the Mclowd Newsletter
Give someone a dollar, and they will help you for a day. Give them tokenised ownership, and they will be on your side for a lifetime.
Julien Thevenard, Fabric Ventures, June 2020
Introduction
Across a handful of towns in northern Victoria a quiet revolution is underway.
While for now it is passing largely unnoticed, it is a revolution that has profound implications for many (if not all) investors.
Under the auspices of the Energy Market Operator, Project EDGE (Energy Demand and Generation Exchange) is taking shape.
The purpose of the project is to provide grid operators (in particular) with visibility to Distributed Energy Resources (DER), including rooftop solar, EV’s and batteries (to which they are currently ‘blind’).
The end game is to create a ‘network’ (a virtual power plant if you will) that can support the rapid decarbonisation of the electricity grid.
However the implications of the project come not from those goals (since most of the value in the incumbent generators has already been destroyed).
The implications stem from the fact that when deciding on the governance model for this complex collective endeavour, the participants chose the blockchain – and specifically the Energy Web – as the ‘glue’ which will align the interests of thousands (and eventually millions) of stakeholders.
Dozens of similar energy-related projects are popping up around the world because the blockchain supports effective governance outcomes on a scale that would be otherwise unthinkable.
Sharing Value
The Web in its 2.0 guise allowed us all to share. We shared messages via email and WhatsApp, we shared photos and stories on social media, and we shared ‘stuff’ on Ebay and similar marketplaces.
What is about to happen is far more fundamental – and will be far more disruptive.
What the blockchain is allowing us to do is share value (or more specifically to define how the available value is to be shared).
As I explain in this blog post, the result will be a Cambrian explosion of innovation which will drive a stake into the very heart of countless incumbent Web 2.0 businesses.
Entities that make up a large chunk of what we think of as the public and private capital markets.
The Data Economy
The foundation of the $100 billion online advertising industry (on which the likes of Facebook and Google are dependent) is control of data. Eye-watering valuations are attributed to these companies because they control centralised databases of information on users and their behaviour.
Last week Facebook announced that it’s annual revenue will take a $10 billion hit due to changes to the privacy settings within the iPhone operating system.
That announcement was part of the trigger for a quarter of a trillion dollar ‘faceplant’ for the company’s valuation.
It is also a precursor to what blockchain will do to Web 2.0 asset values (and given the scale of the impact, it can be expected to infect all asset classes in due course).
Because in Web 3.0 it is users who control their data, and it is the users who will decide:
- Who they share it with
- And on what terms
(Jack Dorsey is funding the Blue-Sky Project, an open-source blockchain protocol for social media for this express purpose).
The most likely outcome is that companies like Facebook will not survive this transition. But even if they do, their business models will break because they will be forced to share the value on the table with their users.
Web 3.0 Webinar Series
Such is the inevitable impact of Web 3.0 that I will be running a series of webinars on the socio-economic consequences of blockchain over the next few weeks.
Attendees will benefit from both:
- An understanding of the underlying technology, and
- More importantly a grasp of the economic implications
Conclusion
Across Silicon Valley key executives from household names such as Amazon are defecting to join blockchain startups, and the key to understanding how and when this will play out is embedded in the above quote from Julien Thevenard.
The most recent implied valuation of Aussie success story Canva was $50 billion.
That transaction implies that the VC’s involved believe that in the future the shareholders of Canva will lay claim to (at least) $50 billion of the available value.
Under those circumstances a developer hired by Canva today can expect little more than crumbs (measured in fiat currency that is almost worthless because policymakers have spent the last 20 years pumping up asset prices to such ridiculous levels).
It is only a matter of time before those same developers – and countless others – realise they will be far better off building distributed apps in return for tokenised ownership.
And the more Web 2.0 value they can ‘reassign’ – and the earlier their participation in the process – the better off they will be.
Regards
Ashley Porter
Managing Director
Mclowd Group Pty Ltd