S3T Sun Feb 12 - Valentines Edition: Optimism, Lazy regulators, Ordinals, Prompters, ChainGPT, Web3's privacy problem, Semillas, Late Winter...
Alongside a State of the Union laced with optimism, the University of Michigan's Consumer Sentiment Survey rose to 66.4 up from 64.9 in January.
The debt ceiling theatre continues: GOP ok with Medicare & Social Security spend and Dems ok with biggest defense budget ever. Meanwhile the market continues to process the end of the easy cash era.
Crypto prices tumbled this week due to another wild-pitch enforcement action from the SEC Chair Gensler, drawing a sharp rebuke from SEC Commissioner Hester Pierce (official dissent statement here) who continues to hold the SEC leadership publically accountable for disingenuous behavior toward crypto.
In less contentious news, Forbes unveiled its 4th annual Forbes Blockchain 50 list of top companies using blockchain for operational efficiencies. Bitcoin Ordinals are injecting a new round of enthusiasm into the NFT space.
Big Ideas for 2023
Cathie Wood's ARK Invest team has released their Big Ideas for 2023. A few takeaways:
- Big Tech is being disrupted now, after years of disrupting legacy industries. For example, people aren't buying on Amazon as much anymore...they're buying off TikTok, Instagram and other social platforms.
- Search traffic on Google is collapsing. People are using ChatGPT instead.
- AI is inspiring businesses to look for new efficiency use cases.
Check out Wood's podcast and commentary here. Download the Big Ideas 2023 Report here.
Google Bard and other ChatGPT wannabees
Google announced this week its answer to ChatGPT, with a blog post promising a rollout of Bard a conversational AI bot apparently intended to compete with ChatGPT.
ChainGPT - promises to harness AI to write blockchain smart contracts. I tried it out - it's very early and does not write code (apparently), though it does give reasonably helpful prompting questions ("what is the total supply of tokens?") Remix directions, and general information about writing smart contracts.
Using ChatGPT to Code
I tested ChatGPT's code-writing abilities this week. Click here for a longer read with full details, bugs and code outputs here.
- Its not perfect, but its pretty good. I'd be interested in comparing its error rate to that of a human developer.
- It doesn't get tired or cranky, and it holds context surprisingly well (better than ChainGPT which completely forgot what we were working on about 5 minutes in).
- The way you write the prompts makes a big difference on the results you get back.
I can see a new kind of job emerging: Writing knowledgeable field or technology-specific prompts for specialized versions of ChatGPT to perform tasks or create required deliverables for specialized industries and contexts.
Design Gap in the Way Blockchain Handles Privacy
Identity Challenge for Web3
On a blockchain, you have control of your identity, your credentials, your assets, your media, content and data. You can direct who gets to access and use those things, and you can revoke that access at any time.
This is different from how it works today where your identity and your ability to access your data are controlled by companies. Your ability to direct who gets to access your data and your content, as well as your ability to move your data to another platform is limited. In today's platforms you are not allowed to fully own and control your digital identity: it is managed by a company - your employer, Facebook, Google, etc.
For more context:
- Dock.io's Blockchain Identity Management Complete Gide 2023
- Okta's Blockchain and Identity paper on the issues with today's identity management and blockchain's potential to provide better capabilities.
- Consensys's deep dive on Blockchain's role in Digital Identity compares today's identity capabilities with blockchain's.
Most innovators are focused on progressing and driving adoption of this directive ability of blockchain-based identity.
All true, and great. Blockchain can enable directive capabilities that allow us to own and control our digital identity, credentials, content and data. But there's another side to this that needs to be solved.
Directive vs Protective
Blockchain-based architectures also need to enable protective capabilities. Here's why:
In a blockchain architecture (as commonly conceived and implemented today) my wallet address is a publicly known element. Even if it masks my real name, all of my on-chain activities are traceable to that address.
This aspect of blockchains -if not resolved - allows governments, big tech firms and malicious actors to gather info on activities tied to a specific blockchain address, then connect these activities together and use them to easily identify the individual who owns that address. See Bradley legal perspective on the issue and Crypto.com's notes on anonymity and unlinkability.
This issue could be a privacy problem worse than what we have today. Today, Big Tech can track all your online movements and your credit score, but they can't look directly into your account and see your balance, nor can they use that view to see all the ways you're spending or investing your money.
So there needs to be a way to prevent just anyone from assembling your activity data and using it to identify you. The approach needs to walk the line between illegitimate methods that deliberately destroy or distort transaction histories (aka "coin mixing") vs. reliable privacy measures. It's tricky: you want to protect individual privacy, but you don't want to give criminals easy buttons for staying ahead of the law. Recommended reading: Concordium & IIS paper Balancing Privacy and Accountability in Blockchain Identity Management (PDF).
- Partitioning: Breaking the visibility up into chunks that you control. Some partitions can hold assets or information that is very sensitive and thus highly restricted while other partitions can be open for routine use and transactions.
- Aliases: can be set up for specific kinds of audiences or transactions.
- Addresses are visible and accessible for exchanges
- Approved transactions can check wallet balances to ensure that transactions can be completed.
- Law enforcement can request access to the wallet address and its balances with the appropriate warrants.
Options for visibility and sharing might look like the following:
- Publish Wallet Address
- Share Wallet Balances with Approved Transactions
- Share Wallet Balances with Credit Checks. (The protocol forces Credit or Background checks to gain your permission to access the balance)
- Always Ask me before sharing Wallet Balances
- Partition this Wallet
Digital Wallets like MetaMask and others already allow multiple accounts, which is a step toward enabling the partitioning and fine-grain control described above. But the user interface continues to be intimidating for most.
This presents a major challenge and innovation opportunity for Web3. Blockchain in healthcare is forecast to grow at a Compound Annual Growth Rate of 70% so it will be critical to address this and interesting to see who rises to this challenge in the year ahead!
New! The Network State Podcast
Long time S3T readers will remember Balaji Srinivasan's groundbreaking book, The Network State - where he describes the emerging successor to the Nation State. Now Balaji is launching a podcast on the same theme.
How to evaluate new technologies, products, and platforms for long-term viability
Ethereum, Chainlink, Uniswap...Emerging Tech rolls out new platforms and projects like gadgets on an endless conveyer belt, always with strange names and mysterious white papers. How do you determine which if any are worth paying attention to?
Whether you are thinking about investing, buying a product (or NFT) or selecting a blockchain-based vendor or platform, you want to know what criteria to use...and its a little different from traditional product/vendor selection. Here is a quick rundown:
- Correctness, specifically the "correctness" of their thesis. Does it match what we know or believe about inevitabilities in the market, the evolution of emerging tech and the likely timeframe for mass adoption of that emerging tech? Caveat: we tend to over-rely on this one, but it's probably one of the least valuable(!).
- Specificity. How specific or vague their offering is. I see a lot of whitepapers and pitch material that goes something like this: "(name of project) is a (blockchain token) that enables decentralized governance for a more intelligent economy on a mission to create improved financial services" Not specific, not unique. I like to see mission statements that name specific target users, what specifically the platform will allow them to do, and why its better than what those target users have today.
- Developer Adoption: the size and engagement of the developer base. This influences the quality, features and progression of the platform or product.
- User Adoption: the size of user base can signal the quality and usefulness /adoption of what they are developing (is it getting adopted and used?)
- Learning / Adoption Curve. Try out the product/app to see if it will require the target user to learn new things or change how they do tasks. As they say "If it doesn't alleviate pain, it won't get adopted." If it alleviates pain AND doesn't require the end user to make a significant changes, then it has a really good chance of being adopted. This is a major problem in most Web3/Crypto products right now. Weird concepts like wallet addresses and gas fees are too much for most consumers.
- Respect from outside of crypto. This one is tricky. Sometimes entites (like FTX) had tremendous respect from inside and outside of crypto. Look what got us. On balance though, this can be a reflection of adoption, ease of use, transparency, trustworthiness, or reliability.
One final note: we often over-rely on #1 Correctness and under-rely on these other criteria. Its easy to fall in love with something because it matches our biases or favorite technologies. Better to evaluate based on all the points above.
Highly recommended resources:
- The Digital Asset Classification Standard (DACS) provides a comprehensive listing of the top 500 Crypto/Web3 projects and platforms, categorized by their function and industry group. This helps you see where a specific project or platform fits in the next generation landscape, and which sectors have a lot of contenders vs very few.
- DappRadar - provides visibility into the actual usage and growth of blockchain platforms and the decentralized apps running on them.
🍱 Sensible Ideas
I am blessed to be part of a family that knows their way around the kitchen and the campfire. So each week I share what I call "sensible ideas" for good times and good food!
Salsa Semillas also called Salsa Macha is a Mexican salsa made with olive oil, dried chilies, nuts and seeds that brings a deep smoky spice to almost any dish you want to perfect. Shown below as the center topping on scallops and broccolini with fontina and parmesan.
Feasting at Home has more Salsa Macha info and a recipe. We picked up our jar at Dona Lalas in Baja (Google Map and Details here.) If you are ever down that way, you definitely should stop in for a meal or to pick up some of their gourmet food items.
Not related but intriguing: The largest archive of restaurant menus.
🌄 Nature Notes
How to increase your appreciation of the treasures of the natural world, and nurture its capabilities.
Its that time of year when the backyard Cardinal's song on some warmer mornings make you wish for spring. Out in woods things are still quiet, the warblers haven't arrived, but expectation is in the air. Here and there signs of hope and renewal appear along the trails. I spotted the first leaves and buds of a few Trout Lilies beside a stream this week. They won't be in bloom for another few weeks most likely, but it was nice preview of things to come.
💬 Final Note
Happy Valentine's week! Thanks again for reading and sharing. Its ok to forward or post articles or links from S3T! Hope you are all S3T to be kind to yourself and your loved ones this week!
Feel free to forward this to a friend and continue the conversation on Twitter or LinkedIn.
Opinions mine. Not financial advice. I may hold assets discussed.