Our leading thesis is this: the most valuable companies being built in this space will use block chains as a deliberate architectural choice in their stack, but in a way that’s invisible to end consumers. As far as consumers are concerned, these will be services that are cheaper, faster, and more secure than ever before.
The most promising signal for us is the strong, consistently growing developer activity in the block chain technology space that we’ve seen over the last year. Despite the steep decline in USD/BTC exchange rate, developer activity in cryptocurrency has been stronger than ever:
Graphs generated by querying the Github Archive for repository creation events with blockchain-related keywords in the repository name.
The potential implications of the block chain for distributed computing, combined with rapid developer adoption, have given us conviction that this is an area where significant value will be created in coming years.
Historically, the combination of a new platform’s capabilities and rapid developer adoption has produced significant value for users. Take the case, for example, of the mobile stack between 2008–2015. Incredible value was created with each new capability developers could access on mobile: CoreLocation* and android.location powered real-time location information in Uber and Waze, APNS and Android Notifications enabled truly engaging messaging services like WhatsApp, and UIImagePickerController and android.hardware.Camera allowed Instagram and Snapchat to create new kinds of photo/video sharing experiences.
We’re already seeing signs of this convergence of rapid developer adoption with fundamentally new capabilities enabled by block chains. One clear example is the Bitcoin scripting interface, which gives developers the ability to program distributed contracts on top of the Bitcoin network. We believe programmable contracts, which allow developers to programmatically manage value exchange with an unprecedented level of control, will simplify and minimize the trust required in many common transactions done today. Many interesting use cases have emerged around standardized contract types, such as micropayment channels, and we look forward to seeing what developers will build with these new standardized types.
We haven’t made an investment into a block chain technology company yet, but we’re actively searching for companies building groundbreaking technology and meaningful products in the space. We believe enough groundwork has been laid for block chain technology to be used in ways that deliver faster, cheaper, and more secure services to end users. If you’re a founder of a block chain technology company, or know someone who is building a product in the areas we talked about, let us know!