Blockchain For The Masses – ConsenSys and Andrew Keys Work On The Next Generation

Blockchain, FinTech, Innovation, Investing, News | January 17, 2018 By:

Andrew Keys drives strategic partnerships, business development, and enterprise strategy for development studio ConsenSys and co-founded ConsenSys Enterprise, a division that seeks to create Fortune 500 ethereum blockchain solutions.

He co-created the first ethereum blockchain-as-a-service offering with Microsoft and was a catalyst to the creation of the Enterprise Ethereum Alliance,  an open-source cross-industry initiative focused on permeating ethereum technology through enterprise. Previously, he worked for UBS investment bank in equities analysis, and was responsible for creation and distribution of life settlement products for Goldman Sachs’ life settlement fund, Longmore Capital.

He talked with Block Tribune earlier in January about the state of the industry at that point and the outlook for 2018 in blockchain.

BLOCK TRIBUNE:  Your title used to be head of business development at ConsenSys. I understand that it’s changed recently.

ANDREW KEYS:  My title now is the co-founder of ConsenSys Capital, which is kind of the pillar of financial services for ConsenSys. So it’s a constellation of three companies and business lines that I support. The first one is ConsenSys Ventures, which is a vanilla venture capital fund where we deploy capital in the decentralized technologies space. Specifically, equity and key stage investments up to $1m, and basically we can also invest in digital tokens, as businesses tokenize themselves.

Next we have an asset manager, where institutional institutions like pension funds are able to acquire digital assets like bitcoin or ethereum. And we also provide software like institutional custodian services where, as this technology permeates, we create a safeguard for custodianship. And we’re also helping to create derivative products.

And lastly is Token Foundry, which is, in my opinion, the evolution of what crowdfunding and investment banking will evolve to. Where we take a project through the theoretical design of their business and basically help them create a white paper and market them to the world and eventually they raise money.

BLOCK TRIBUNE: How do you determine what companies you’ll work with?

ANDREW KEYS: We determine what companies we’ll work with by very heavy technical and financial due diligence. We have a team. ConsenSys is now over 550 employees and we can take that collective brain power and have subject matter experts in many verticals. As well as technical experts that we’ll essentially process and survey things like the repositories of potential companies, so we can basically do the due diligence on them internally. And I would say that we say no to probably 90% of the companies or opportunities. 

BLOCK TRIBUNE:  Your predictions for 2018? What do you see happening within the next six months?

ANDREW KEYS: Specifically to ethereum, I believe that what we’re seeing is the evolution of the next generation of the World Wide Web, to put it simply. And really, there are three key components to that, to the next generation of the World Wide Web. First is, we have to recognize that today’s web has been a medium of communication. I can send you an email and that’s fine if I send a carbon copy to somebody else. But as we evolve to the Internet of value, if I were to send you money, I wouldn’t want to be able to send a carbon copy of that money to somebody else who would have hyperinflation factors in Zimbabwe. And basically, the first aspect of this is that we’re going to have natively digital representations of assets and they’ve been called tokens. And you’re going to see the tokenization of everything from gold to fiat currencies like US Dollar, British Pound, Japanese Yen etc. to oil, to software licenses, to loyalty points for your credit cards, to poker chips.

And basically you’re going to be able to move these tokens around very quickly by the second important aspect, which are called smart contracts. And you’re going to have, instead of Microsoft Word documents that are written by lawyers, that are notarized, instead of that kind of legacy construct, our agreements are going to turn into code. Whereby we can now move assets that are these digital tokens, based upon if/then statements. So you could imagine I could have an employment agreement with you where you could get paid a digital token every hour, based upon your employment agreement, that’s an actual software program. And you would literally get paid on the hour, where you would have an oracle that would be a time function, you would have the agreements that would be the smart contracts and there would be counter party A and counter party B, and we could create this real time payment mechanism.

And the last piece that’s important to note is the notion of self sovereign identity. What kind of bitcoin showed us was the opening act where I could send you money without a bank in the middle. I could send you the bitcoin token and my consideration is that that was the opening act. But now we’re going to be able to basically do anything peer-to-peer. And we as society often times take for granted that when we log into the Internet, we’re essentially logging into an intermediary database. We log-in to Facebook, we log into Bank of America, we log into Amazon, eBay, Netflix, Uber. And then those intermediaries provide us identity, where we can log into be who we are and we have our digital assets about us. They provide us reputation and they essentially provide trust. And in the future what’s going happen is, because we’re not going to be logging into those intermediaries, those middlemen, we’re going to have our own self-sovereign identity.

And we’re going to have a repository so your browser in the future, instead of logging into Google Chrome or Safari, you’re going to log into the Bruce browser or the Andrew browser. And it’s going to be a cryptographically secured wallet where our identity will be there, it will also be our wallet, it will also be a repository for attributes about us. So opinions, so how we conduct ourselves in society, like the five stars in Uber or the rating that you get from Amazon or Airbnb. And then from that construct we’re going to have peer-to-peer communication and peer-to-peer transactions and peer-to-peer agreements. And essentially the cost and the value that the intermediaries of today’s modern internet extract is going to move from the intermediary to the counter parties. So you’re going see the shrinking of margins, or the pre-iterate content or of a service or a product may get more revenue, or it may be cheaper for the consumer of that product or service.

BLOCK TRIBUNE: What are the barriers to reaching that brave new world you just described?

ANDREW KEYS: Time and space. I think that it is imminent, and it is constantly evolving. We’re seeing this technology permeate probably faster than any technology that I’ve been around in my 40 years on earth, or 37. Basically, there’s at the protocol layer, with some inherent limitations right now. One is scalability, and the other one is privacy. So American Express does something like 40,000 transactions per second. If you add American Express, Visa and Mastercard, you’re over about 130,000 transactions per second. You add WeChat, WhatsApp, you’re at about 300,000 transactions per second. Which when WeChat, WhatsApp, Amex, Visa and Mastercard, the ethereum blockchain through an off-chain solution can scale to a couple thousand transactions per second.

And there’s a scalability road map where there is going to be improvements to the protocol so that they will be able to handle the transactional throughput of a Visa, or a Mastercard, or an American Express within a year. And then to be able to handle this type of bandwidth for all of those processors in maybe three or four years. The other one is aspects of privacy and confidentiality. And most recently ethereum added a form of cryptography called zero knowledge proofs, to secure and privatize transactions and that will continue to evolve.

BLOCK TRIBUNE: Should every business be on the blockchain?

ANDREW KEYS: No. There are some that make sense to be on the blockchain, there are other cases that don’t make sense to be on the blockchain. The lowest hanging fruit are business models that have intermediaries that are providing a layer of trust and are expensive. Unnecessary disintermediation is really what this targets as low hanging fruit. And as this kind of evolves the internet essentially commoditizes how we as humans communicate and this will commoditize how we agree. So we’ll just see just an evolution of our business agreements accordingly.

BLOCK TRIBUNE: We hear rumors about Goldman Sachs developing a cryptocurrency trading desk and even JP Morgan’s CEO came around a little bit on this. What affect will that have on the overall markets?

ANDREW KEYS: I think you can course this in two places. The evolution of the asset class of digital assets. I think that Wall Street being able to acquire these digital assets will only increase the price. Because basically up until very recently they have not been able to custody the assets. But now we’re seeing futuristic products like the CME and CBOE have created kind of the first instance of the first product, which was a bitcoin derivatives future. I believe continued evolution of the products will improve liquidity. Secondarily, who actually employ the technology we’re going to see to optimization of middle and back office functionality within banks. Banks are typically using 30 to 40 year old database architecture. And this is essentially the upgrade of the database and we’re seeing banks use it to essentially disrupt and or optimize themselves.

BLOCK TRIBUNE:: Will cryptocurrency always be wildly volatile, or will we see that calm down at some point?

ANDREW KEYS: I think as we have increased liquidity, we will see decreased volatility.  

BLOCK TRIBUNE: In your role, you have to be a bit of an evangelist for ethereum. What sort of questions are people asking you in your day-to-day?

ANDREW KEYS: I would say a lot of them are still at, “What the heck is the blockchain?” And as a society, we really kind of just saw the application layer of the Internet. People accessed AOL for Prodigy, America Online and then eventually accessed applications and we really didn’t know what was coming. But with blockchains people already have the internet and they’ve already started sharing about this next generation of the internet. And there’s so much information, they’re trying to really separate the noise from the signal and also trying to understand what is necessary for people that are not computer scientists to comprehend.

And I think that that’s kind of an interesting conversation because these protocols aren’t yet fully built and there’s so much information and a lot of it’s coming from computer scientists. And they’re talking about the equivalent of when you go to a website, http, when the majority of society really only understands after you get past www and then you put in Bank of America.com, or Facebook.com, or Amazon.com. No one … 99% of the world doesn’t understand http:www, what that functionality is. And really try to kind of dumb down and educate really what’s going to be pertinent to the masses.