Jack Saba explains why building on existing blockchains beats creating new ones, how tokenized loyalty points could work for services like Uber, and why smart contracts function as escrow. He advises reading Bitcoin and Ethereum whitepapers to understand incentive economics, and recommends partnering with local entities when launching blockchain products in emerging markets.
Chapters
So do you guys have any questions?
Hi. About the use case, so how can you define a use case? Let's say Uber, they offered a token, and the use case is supposed to be that you'll use it for taking Uber, or how Uber driver will use it?
So you would use it to ride with Uber. So if I'm coming into San Francisco, I would be like, OK, I've got to buy some tokens, and then I'm going to get a ride, and you'd pay in it. But it gets interesting because these tokens are very tradable. And so there's a loyalty point company right now that is working on making them very transferable. So if I flew from Boston to New York— or Boston to San Francisco and accrued all these miles, I could turn those miles into a token and that token into an Uber token and then get a free ride to where I'm going. So these tokens are access to the network, whatever that network may be.
So you can't even convert them?
You can convert it to Bitcoin or Ethereum or US dollar, wherever you want to go. And so if you found Uber at the point that they were coming out to San Francisco initially, and then all of a sudden they blew up, that value that you were holding, since it's a fixed supply, would increase significantly. So you incentivize early adoption.
Initial thoughts or where can we learn about 2 things. First, is it better to build your blockchain or build it over like a cloud?
I think it's a fool's errand to build a blockchain.
Sorry?
It's a fool's errand. It's a waste of time to go build a blockchain. Yeah, build on a network because the security is inherent in the length of the chain and the amount of users on it, so.
Okay, and second, about incentive economics, what can you learn about that?
Read white papers. Yeah, so if you really— if this stuff fascinates you and you're thinking about using this and I can't go 6 questions deep on why you're doing what you're doing and why network you're working on, you don't know it well enough. And so what you should do is read the Bitcoin white paper. It's only 9 pages. It's technical, but it's 9 pages. Read the Ethereum white paper, and read Hyperledger's white paper, 'cause those are 3 different uses in very quality companies, and so that'll give you a strong foundation for you to understand which one you should be building on top of. Yes, I got 2 minutes here, rapid. Is there a platform where we could learn all of this?
Yeah, yeah, yeah.
So it's Google. So what you can do is like once you build a little bit of an understanding of this, if you're interested in say supply chain management, Google blockchain supply chain management solution and you'll get 3 or 4 companies and you can understand, you can read about them, they'll put that white paper out there, and so you can start to see how they're doing things differently. So pick what you're interested in, try to find a blockchain solution for it, and then understand what they're doing and why. Yes, I'll come to you.
You said there's only about 10 projects that you actually find interesting or that you like. Can you quickly name them?
I'll chat with you offline. Yeah.
Okay, you mentioned that the ICOs, for example, $9 million in 15 minutes.
Yeah.
But wasn't there actually work to reach out to the community, to bring people on board, to advertise this?
Yeah, yeah, but that, that is marketing. That's the equivalent of a few months of work and a couple emails. That's not— I one time while I was fundraising for our fund, I took a 5-hour bus ride to New York for a 45-minute meeting to find out 5 minutes in they no longer invest in funds to take a 5-hour bus ride back. I would do that 100 times again to possibly get an investment. But you don't need to now. With these initial coin offerings, you put some work into the marketing, you reach out to the community, you find people that are interested in what they're doing, And it's much easier. So it's still, it's not easy, but it's easier. And if you're not willing to put in that effort, I don't know that you should be an entrepreneur.
How are smart contracts and tokens related? Is this the value that you transfer, the token?
It could be. So within a smart contract, say on Ethereum, say you put a smart contract on Ethereum, you could put Ether into an escrow, and it could be transferred. So the smart contract says execute and transfer, and you can send Ethereum out. You can also do it with other asset classes.
Yeah. So how do you introduce these concepts in communities similar to what Dave started to mention, but in communities that don't even have electricity or knowledge of any of these things, like infrastructure-wise, knowledge-wise, culture-wise? Like, how do you tackle that?
So me building a product in San Francisco and trying to bring it into an emerging market, it's not going to work. You've got to find partnerships on the ground. You've got to find people that the end consumer trusts. So if I wanted to create, say, peer-to-peer lending, a solution to bring you know, capital from United States into Brazil or some other market, right? I would find out who they work with, who the end consumer works with, and partner with them to then facilitate the capital transfer. So you need local knowledge, you need local connections. The technology is not a solve-all. You've got to be able to deliver. But on top of that, you do not need to describe the blockchain to everyone you're talking to. The only thing that matters is you're just a company. So initially, early on, people were blockchain companies, and I think we have another speaker, so I'm gonna wrap up really quickly. Companies were blockchain companies, were blockchain this, blockchain that. What you need to be is a company, and you just happen to be using the blockchain to do it faster, better, safer, more secure. So figure out how to work with the locals on the ground and the people that can help bring you into those markets. Work with them, bring it in, but you don't necessarily need to dive into the intricacies of consensus mechanisms and all that. Thank you guys very much. Really appreciate it.
