Afternoon cryptocurrency enthusiasts, today we will review a technology that has been gaining attention over the last couple of months; the Golem Project. It describes itself as a “accessible-to-everyone, distributed, supercomputer” that could reduce the cost of any process that uses a huge amount of computer process power. How does it do this? What is the market it is hoping to disrupt and what should we do about it?

Well firstly, what is it? The Golem network will connect computers across its network, which could be located in any part of the world. It will utilise their spare processing power to complete calculations for those who need it. Now, this is not actually a new idea. Science nerds would be aware of a service that has existed for nearly 20 years, I actually ran myself about 10 years ago; Seti@Home. This is a good portrait of the Golem Project, as Seti@Home uses the spare processing power of computers to look for aliens; yes as in little green men! SETI – the Search for Extraterrestrial Intelligence – uses receives huge amounts of data in the form of radio waves from space, which needs processing to see if there are any alien signals. This is often intermittently, as they only get limited time on the world’s radio telescopes. A traditional approach to this is to buy a load of hardware, which is hugely expensive and may sit idle half the time. A more contemporary approach would be to connect someone else’s hardware; usually large, expensive server farms located in colder parts of the world. SETI realised that the enthusiasm behind their project meant there were 100,000s willing volunteers that would download Seti@Home and offer their spare processing power of home computers to process this data. No signals as of yet…well maybe not…but you get the concept. A final note about aliens; Paddy Power actually offers betting on us finding aliens and I got in at 100/1.

The Golem network is basically the Seti@Home network in a world in which we have blockchain and distributed ledger technology. In fact, the CEO Julian Zawistowski actually mentioned Seti@Home in a recent presentation that you can watch here. The Golem Project will encourage individuals to download the open source Golem network on to their personal computers to become “Providers” of processing power. It is speculated that the provision of unused computers will allow the network to provide processing power at a fraction of the cost of current cloud processing solutions. “Authors” will create applications that require high levels of processing power and draw this cheaply from the Providers. Finally, “Requesters” can use these applications, or their own, to draw on the processing power for whatever needs they have. The Golem Project and verified “Validators” will ensure the applications don’t contain any nasty viruses. Blockchain technology comes into play as it provides the basis for an incentive and payment structure. Providers and Authors will be paid by Requesters in the networks native cryptocurrency; “Golem” (Poloniex: GNT). This token actually transacts on the Ethereum network due to its ability to the coordinate smart contracts between the different parties. So an example given by Mr. Zawistowski are companies that require processing power for the rendering of graphics. This uses a lot of processing power which they could in theory buy “pay as you go” off the Golem Network. Simple enough, right? Here’s a diagram from the Golem Project’s White Paper:

So the Golem Project has identified that there is a huge demand for processing power, often needed intermittently. It’s not hard to see how they have drawn this conclusion. Morgan Stanley estimated that last year the Infrastructure as a Service (IaaS) and Platform as a Service (Paas) markets to be worth around $38billion, with Amazon Web Services (AWS) alone taking home $7.8billion. There is a breakdown of the kinds of current applications in a list of their AWS top ten customer list here. These are big corporate clients needing intermittent processing power from monitoring oil pipelines to delivering the latest season of House of Cards. Potentially this is merely the tip of the iceberg. The current demand is driven by large clients able to pay for the current high-cost business model. There are also risks to this model, as much as it appears decentralised, it is not. It is becoming painfully aware through continuous data breaches that cloud computing is a centralised model, with one potentially weak point of a attack. The Golem team identify that there is a huge amount of potential new applications, especially if the costs of providing the service were cheaper. The ones that they initially discuss are mainly research based, that are usually grant financed and therefore may not be able to meet the current high costs. Think things like climate modelling, DNA profiling, monitoring the spread of diseases in the developing world, anything that needs a huge amount of processing power to run complicated computer models. Then there is the disruption of the current model and delivering services within growth areas highlighted by Morgan Stanley; retail consumer modelling, the Internet-of-Things, big data applications, economic and financial market modelling. Finally, the Golem network being based across a network of decentralised computers and using well understood and deployed cryptography, significantly reduces the risk of attack.

So, what should we do about it? Well personally I want in on the action. Unfortunately I missed the successful crowdsale that raised $8.6million (in ETH) that lasted 19 minutes back in November. That level made it third largest platform Initial Coin Offering (ICO) ever and the CEO stated it would have lasted 2 minutes if it wasn’t for the failure of centralised computer systems…love the irony. As of today it is trading for $0.0822 per Golem, although the only pairs that are available are BTC/GNT and ETH/GNT. There is 820 million in circulation of a fixed 1 billion total supply, so there is not a huge amount of possible price deflation due to supply. However, I think this coin, as well as cryptocurrencies more generally, are wildly overpriced at the moment. Its price means the network has a valuation of $67million, which is eye-wateringly high for a project that is in Alpha, has crucial milestones stretching out over the next four years and no revenues. It gained the majority of its value in the weeks after the Bitcoin ETF rejection, which saw a huge increase in value across all cryptocurrencies, likely due to investors fleeing BTC. So although there have been some recent intraday swings of 11% which may entice short-term traders. I will be watching it the project over the coming months with the hope to find a long term position. That said, if it is successful and is able to capture a mere 1% of the predicted $173 billion market for IaaS and PaaS in 2023, that would make each Golem worth around $1.73, a increase of about 2500%. But this type of wild unhinged speculation is best left to the forums. Finally, in answer to the question, can cryptocurrency find aliens, possibly not. Nerdy alien-hunting enthusiastics like me run Seti@Home for free, we don’t need cryptocurrency as a financial incentive, we just want to get drunk with Han Solo in Mos Eisley Cantina. But the model currently used to search for aliens, combined with cryptocurrency, could meet the needs of researchers and businesses in ways we cannot even yet imagine is possible. Then hopefully we can also make a little cryptocurrency along the way.