Most individuals over the age of 30 witnessed one of the most profound changes in the history of mankind: ubiquitous adoption of the internet. The internet has fundamentally changed the ways that humans interact, communicate, and work. It has broken down cultural barriers and eliminated geographic friction with instantaneous transfer of information around the world. The ability to freely communicate has enhanced human rights, helped maintain democratic societies, and created incalculable value through increased efficiency and creation of new businesses. Although the internet has seemingly taken over and enhanced almost every aspect of our lives, the initial adoption of this ground-breaking technology was very slow.

In 1993, the HyTelNet command line tool (pictured above) was the most popular way for the average person to connect to the internet. This tool represents a state-of-the-art user experience after 24 years of continuous development of the internet, which traces its roots back to the Arpanet of 1969. Because the HyTelNet client presented a technological challenge to the average user, the early internet had relatively few users, and only 130 websites in 1993.

Between 1993 and 1995 a number of enabling technologies became available including faster modems (14.4k) and graphics-based operating systems such as Windows 3.1 and Windows 95. These tools enabled the development of a user interface and user experience that was much more palatable for the average person, which helped enable widespread adoption.

At this point, America Online (AOL) did something that was likely one of the greatest marketing strategies of all time, positioning AOL to be a dominant force in the internet service provider (ISP) race. AOL started producing and mailing, to literally everyone, the AOL installation CD. It is estimated that at one point, half of all CDs produced on the planet bore the AOL logo.

The AOL CD didn’t just represent a free trial. This wasn’t just an easy way to install AOL and get online. Holistically, the AOL CD provided a semi-curated experience that facilitated an easy transition to using the internet.

It can be seen from the above graph that the usage of the internet really began to take off around 1995. Most information available doesn’t track internet usage prior to 1993 because it was so insignificant. In 1995, AOL had already increased its user base to 2.5 million and there were more than 100k publicly viewable websites. By the turn of the century, when AOL announced its merger with Time Warner, it boasted around 25 million subscribers representing a 10x growth in 5 years. Today the internet has become so ubiquitous that the average American adult spends over 11 hours looking at a screen each day. In less than 20 years the internet has gone from a technology that was only used by a very small number of technically adept “nerds” to something that the average person uses for almost half of their day.

Adoption of Cryptocurrency

Like with all nascent technologies, cryptocurrency has suffered its share of setbacks from large incidents of theft, such as MtGox, to the association with illegal online black markets such as Silk Road. The original, and still dominant, cryptocurrency Bitcoin has also made tremendous strides in technology development, user adoption, and has even gained acceptance by regulators in a number of jurisdictions including Japan, India, China, and the United States.

Unlike the internet, Bitcoin was able to quickly move from esoteric command line interfaces, like the one below, to more user friendly interfaces such as the Bitcoin GUI wallet and now things such as the Coinbase wallet. The hardest part of development of the protocol actual seemed to be legal challenges and integration with the existing financial systems. In addition to the many reputable and regulated cryptocurrency exchanges, there are now multiple exchange traded products such as the Bitcoin Tracker One ETN, as well as the Grayscale Bitcoin Investment Trust. The acceptance of cryptocurrencies have continued to evolve further with the creation of new blockchain based assets used for both business and finance. Even these more complex products are beginning to see acceptance with regulatory oversight of crypto derivative exchanges as well as oversight of tokenized securities.

The success of Bitcoin specifically, but also cryptocurrencies and blockchain more generally, can be easily seen by both the number of daily transactions, shown below, as well as the total cryptocurrency market cap which is around $90 billion. Even with all of this success, we are still nowhere near widespread adoption. Considering that cryptocurrencies could replace many prolific financial instruments such as gold, stocks, bonds, and fiat money, why aren’t cryptocurrencies worth a lot more? Where is the AOL CD for cryptocurrencies and blockchain?

The challenges that remain for cryptocurrencies are two-fold. The first one is educational, and the second one is security. If solutions to these problems can be developed, I think that cryptocurrencies will hit an inflection point and end up eating the world faster than anyone can imagine.

Blockchain : Internet :: Value : Information

The crypto community has got much better at answering the question of what blockchain (as well as cryptocurrency) is. However, these descriptions still remain too technical and verbose which prevents the audience from understanding the main point. So here is the one sentence answer to “What is blockchain?”: Blockchain is a technology that allows natively digital transfer of value. That’s it. Full-stop.

Many people get lost or confused trying to explain the technology, or the how, but ultimately miss the point. Additionally, I think that many people in the community may even find that statement controversial. However, I think that may be because even blockchain’s most educated proponents often lack technical consensus. People may, for example, suggest immutability and trustlessness are inherent, technical characteristics. I contend that immutability is not inherently specific to blockchains and that trustlessness can ultimately be collapsed into the exchange of value. This debate has led to confusion about what blockchains should be used for, and has created a debate of private vs. public chains (see our blog post on this one — No Country for Private Blockchains).

It is helpful in understanding what blockchain is, and who needs to use it, by first getting an accurate understanding of where Blockchain falls in the technology stack. Below is a typical diagram of the internet’s protocol stack. This low-level protocol stack could be appended with blockchain, which sits above the TCP/IP stack. The average person is not meant to interact directly with the blockchain. The average user should interact with an application that uses a blockchain to accomplish a goal more efficiently than could be done otherwise. Similar to the fact that people browse the internet and leverage the HTTP protocol, or send email and take advantage of the SMTP protocol, properly designed Blockchain applications will provide the user with functionality without having to understand the protocol.

So, if blockchain sits on the low-level internet protocol stack, why do we find ourselves explaining it to everyone? Is it because it is valuable, therefore we must explain it? Not really. Consider that everyone uses some form of digital money everyday. The value of transactions which are made electronically far outweigh the value of transactions made with cash. Although there is prolific use of electronic transactions, very few people understand how any of these systems work. Most people use credit cards, however they don’t have the slightest clue how the Visa network operates under-the-hood. Most people get their paycheck via electronic direct deposit, but may not even know what ACH stands for, let alone how it works (I will leave the Federal Reserve for another day). So why is blockchain different? It is different for two reasons.

First, Bitcoin and blockchain tokens are bearer assets. They belong to the person who has possession of the private key. Second, the current system architectures which we have built to ensure private key security are complex, insecure, and brittle. This is why we feel we must explain things. If I introduce someone to Bitcoin or Ethereum, I feel obliged to give them a run-down on risks and best security practices. This is the problem. It is creates both a problem with education, as well as onboarding new cryptocurrency users. Bitcoin/Cryptocurrencies/Blockchain need the AOL CD moment, where friction is eliminated and new users can be safely and easily introduced to this new technology.

Robust Abstract Security

I will not get into the nitty gritty technical details of how to create robust abstracted security for blockchains (for those who are interested, please see the Grid+ whitepaper and watch out for upcoming blogs). Rather, here I will only go into high level details and propose what the likely implications of having better, more secure systems for dealing with cryptocurrency are. As stated previously, there are three issues with current cryptocurrency systems. First is complexity, and by this I mean complexity for the user. Second, is security, and finally brittleness.

If we look at the security of current systems for storing cryptocurrencies, which are NOT inherently custodian accounts, such as online wallets or exchanges, the systems are not very secure. They suffer from the problem of having single-point failures. Offline storage systems such as the Ledger Nano or Trezor suffer from storing the private key in one location. This refers to both the device itself as well as the plain text backup key. If the physical device is compromised the pin is still in place to prevent immediate exposure of private keys. However, the paper backup is much more vulnerable to compromise than the key on the device.

The natural progression from here is to consider using multi-signature accounts, such that 2 of 3 private key signatures are needed to release funds. These private keys could than be stored in different locations, potentially on different hardware devices, with the backup keys stored in separate secure locations as well (that would be 6 different secure locations). This is definitely an option, however, we have now introduced a significant degree of complexity to the system, especially for a single user. This complexity is not only overwhelming for most users, but also creates a significant degree of friction in actually using cryptocurrency.

So what solution do we have? We propose a system that utilizes a multi-signature topology as well as account permissioning and whitelisting in three separate hardware enclaves of internet connected devices. This will be done in such a way that the user retains custody of their private keys, while also having a high degree of security, with minimal interaction or forethought by the user. The proposed system will consist of a smartphone app, a smart agent (internet connected appliance), as well as Grid+ web servers. That is where I will leave the technical detail for now.

Grid+ Smart Energy Agent — Cryptocurrencies’ AOL CD?

I would like to address what this means from a user standpoint. A Grid+ user will plug in their agent and connect it to wifi. The user can then make small payments from their mobile app which the agent will automatically cosign if it is below a certain amount. If the user wants to transfer larger amounts of money they can initiate a transaction on their mobile device and the Grid+ agent will require the user to enter their pin on the agent before the agent provides a second signature. In this system the user gets the benefits of multi signature hardware enclaved security by default.

I propose that Grid+ or an alternate system that enables strong security will be the AOL CD for cryptocurrencies. The AOL CD is a robust system architecture that would allow me to feel comfortable telling my mom about this new-fangled magic internet money, Bitcoin and Ethereum, and encouraging her to buy tens of thousands of dollars worth. No caveats, no explanations, and most importantly no lost or stolen funds.

It is only when as developers, technologists, and cryptocurrency enthusiasts, that we can build sufficiently robust secure systems, that are seamless and transparent to the average user, will the adoption of cryptocurrencies and blockchain become mainstream.

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