A poker-faced, middle-aged investor sat cross-legged at a convention in the Orlando World Center Marriott in mid-October, and through his questions answered many of my own about the reality and future of the Web. Across the roundtable sat James Drake – CEO of Embermine (a blockchain startup attempting to create new monetization and distribution methods for content creators). They went round and round for near an hour and in the process stumbled upon the overwhelming need and interesting use case for blockchain that Embermine presents. Everything below is verbatim and brought to you by Silence Throughput.
Investor: “Walk me through that, how she [a theoretical customer] types in my name, and how does it get to me?” He was cut off, “like if she’s in gmail-”
James: “Well…there’s the first stop…she’s in gmail, she’s in the old system, it’s a system that’s going to run off the old rails unless of course we make it so gmail can be applicable to multiple systems.”
Around this time a steady stream of people began filing in, presumably from other roundtable sessions or panels that had ended. Most of the roundtable groups were wrapping up their discussions, but one overcrowded table in the back of a convention room near Disney World was just getting started. The discussion had already began to heat up, so the original group sat awkwardly while people adjusted and the newcomers got seated. Greetings and introductions were had, and James couldn’t resist bragging about his assistant, Kami, whose specialty is in archaeology. I won’t lie, it’s a great conversation piece and nobody wins that pissing contest anyway.
Investor: “Oh, you dig up dinosaurs?” He smiled, clearly intended as a lighthearted comment.
“Well no,” Kami replied with a stern face. She fidgeted like a dancer who’s been called a cheerleader and then she made a clarification, “I would never dig dinosaurs, because that’s paleontologists.”
More characters from the conversation were in the mix, they arrived and took their seats. Garrison Breckenridge, co-founder and Director of R & D for Embermine joined the conversation along with Kami and Diana, the PR Managers. Once everyone found their seats the conversation returned to the gauntlet without much pause.
James: “So what I’m hearing – what it is you’re asking, from a topology standpoint, is ‘How is this Domain Token going to work?”
James: “Ok, so there’s two different parts to it, Domain Token isn’t a separate application, it’s part of the Embermine platform.”
Investor: “Ok. So what makes this different than Google? What makes it different from something that already exists?”
JAMES: “What if you were your own storage network?” James asks, eliciting a clear response. Nearly everyone in the room fidgeted at the bold assertion. “What if you were containing all of your personal information or content?”
Investor: “So what’s your first practical real world example outside of yourselves?”
“…there is none,” James shrugs, knowing that he’s basically admitting that there is no project or company to compare his to, so he used a car as an analogy.
James: “We’re gonna have four tires, an engine, and some sort of steering column, but the rest of the car has never been built before so what it looks like will depend entirely on how we design it.”
Investor: “What’s your timeline?”
James: “We should be able to have beta versions of all of these products (list products) up by spring.”
Investor: “Are you going to be able to connect all of these historical things? Like the email and Facebook,” The investor’s look changed from ‘what is it’ to ‘is it worth investing.’
James: “The Domain Token can also access things outside of the application sphere, so if you create a relationship inside the Domain Token to, say, like a Facebook or Amazon location, it’s going to resolve inside there and take you to that external address.”
Garrison: “–and that external connection is really important if someone wants to utilize the Project Compact and how it gives you more granular control of how value is distributed in a collaborative relationship.”
“So if you’re a writer, and you’ve decided on an artist to do your book cover, and you decided on a 50-50 split… that payment can be routed to the project compact and split.”
Investor: “What do you mean routed through the compact? Like it’s a physical check from Amazon right? So it goes through an ACH.”
An ACH (Automated Clearing House) handles the traffic for automatic credit and debit transactions, essentially it makes automatic credit and debit purchases possible.
The group of around 20 people crowded around this particular roundtable watched, and listened like fans watching a tennis match, heads turning back and forth with every volley.
James: “Well we’d have to have a functionality within these systems, so when you’re paying out, it can be captured by payment capture technology, just like it already happens now. There has to be a place to send the check, we’re just securing that address to an identity on the blockchain,”
James didn’t seem to hesitate or struggle in explaining concepts that don’t currently exist or are at early development stages at best.
Investor: “But what stops me as the author from going into Amazon’s system and not using the compact address and using my own bank account?” The investor knew how people operate, and a bad actor can upset any established order.
James: “There isn’t anything from stopping an author from doing that, there isn’t.” He continued, “If you create a project on Embermine, that’s the only location I can take it from. If I took the digital copy of that and put it on Amazon and started selling that I’m going to do two things: first of all, I’m cutting my own throat because I’m literally going outside of the thing that’s going to make the network successful.”
“From that point I’m going to go blind trying to do the paperwork trying to figure out how to get the royalties to the contributors,” James spoke as if from experience. “Amazon is going to take more money and I’m having to do more work,”
Investor: “I’d rather have 70% of a pie that works than 100% of one that has zero distribution.”
James: “That’s true, but that’s not what Embermine is for.”
Investor: “But now I can’t have it on my Nook.”
James: “The token provides access to the file, which is recorded on the blockchain.”
Investor: “What if Amazon doesn’t support the DRM that you’re supporting. I have to just have a plain file right? Everyone’s going to have to work with you if you’re going to have your own DRM.” (DRM = digital rights management)
James: “There is no DRM, per se, the file itself is encrypted into the blockchain, so the only way to get access to it is to have to token that provides it, there’s no other way to do it.”
Investor: “Yeah but at some point the software on the tablet needs to read the unencrypted file.”
James: “No, what it does is it uses the file, we’re talking about creating an application sphere. Think of iTunes or Amazon, when they provide the video access that you’re streaming, that data is being stored on my computer but no matter how hard I try if I’m not inside the Amazon application environment, I can’t break that.”
Investor: “So are you going for a trillion dollar company value or a zero dollar company value, because you’re talking about creating something-”
James: “That hasn’t been done before,”
Investor: “…that’s massive on scale, otherwise nobody’s going to be able to work with you. It’s either going to be huge or be nothing, right?”
Investor: “You think you can be …that big? Like are you on target for that? If you could explain to me, technically, how I shop on the platform, buy the book and read it on my Fire tablet…Assuming I have access to the Embermine platform and all of that, how do I read the book?”
James: “In some way, shape, or form you have to be logged in to the Embermine platform. The first thing it’s going to do is it’s going to go through the IPFS network and it’s going to grab that file. It’ll say this person is accessing this file-”
Investor: “You have to mount another process in there.”
Garrison: “It’s really important to note that there is no file storage on the blockchain. ”
Investor: “An Amazon Fire tablet is probably not going to be very open to this.”
James, in a stroke of Jeffersonian politics: “My question is, why do we let them have that power?”
Investor: “We don’t give them that power…”
James: “Everytime you buy something that’s only available on one set of devices you’re giving someone the power to control your usage of that product.”
Unbeknownst to me at the time, another block(chain)head in the crowd was Patrick Maguire, Director of Marketing and Community Development at Rchain. An enthusiastic blockchain fanboy like myself, he hesitated not to step into the conversation.
“But aren’t you just trading powers?” Patrick asks, aware of the digital institutions that have already developed in companies like Google, Facebook, and Amazon.
James: “But it’s decentralized, so I’m not controlling your access.”
Patrick: “You’re controlling the unique namespace, like each name points to a product, who controls that?”
James: “The individual who controls the token, they have administrative rights by owning the private key that’s accessed through that-”
Patrick had a knack for finishing people’s sentences: “…and that’s stored on the blockchain?”
James: “The access, the actual access data is stored on the blockchain, correct.”
Investor: “Which blockchain?”
James: “Our blockchain.”
Patrick and the investor exchange a look of mutual skepticism.
Investor: “And who controls your blockchain?”
James: “The network.”
Investor: “And where are the servers running your blockchain?”
James: “It’s being developed as we speak.”
Investor: “Well, you’re only as strong as the blockchain that powers you. And assuming if it’s a normal blockchain 51% of the servers can outvote you?”
James: “If that’s the protocol you’re using for consensus, and we’re still developing that. But we’re not using a proof of work or proof of stake consensus, it’s kind of a hybrid”
Investor: “So it’s not really open-source if you’re the dictator of this blockchain.”
James: “I’m not the dictator of the blockchain, I’m more just saying ‘we need to build this’, we’re gonna put it out there and then we’ll give it to the network.”
Long live the Republic?
Investor: “How’s your voting structure arranged then?”
James: “Every blockchain is only as powerful as the number of members that are associated with it, and those individual members choose, depending on your consensus methodology, what transactions are valid and which ones are not. It all starts with the Project Compact. If we all agree on a certain set of true-false statements, something exists or it does not exist, or we agree that this is going to be 5% or that is 10%, when we do those consensus models and we all agree on that, every transaction or activity that follows that same pattern or same template gets automatic approval. There’s no need to burn computational cycles if we’ve already determined the set rules by which those transactions have to follow.”
Garrison steps in for the left hook, “If you generate the contract in a template format, right? Right now in Ethereum you and I could make a contract that has bad intentions, you know, diverting funds from some project. In a sense it’s a completely open network and we could just put that code on there. But if you have a smart contract system where there’s specific defined parameters that you can change but the boilerplate code stays the same then once the code is live and the transactions are done and people are buying the book it’s just business as usual.”
Investor: “This is too abstract for me, where do I go to buy the book?”
James: “We’re not just talking about a protocol-”
Investor: “Right, we have protocols and everything talks together. My computer can’t talk to a web server unless it knows the protocol, and protocols are very sophisticated. Everybody that built that software has an open spec on how the communication works and it’s very straightforward. It’s seems like you’re kind of reinventing all this stuff.”
James: “We have to.”
Investor: “But why would you reinvent such…I mean it’s got thousands and thousands of hours built into how to transport and image or how to talk to a secure server…”
James: “You start off by building all your different pillars at the smallest level, then build them all together and put the cap on.”
James: “The thing is, is that most of the systems that are built currently right now, the basic fundamentals of what the DNS is based off of the old telegraph system.”
Investor: “That’s not true anymore, ever since number portability that notion is completely off the board”
James: “And what year was that?”
Investor: “Probably 2011.”
James: “Yes, all the systems that fundamentally set that up were all based on that, we had to hold on to that for so long because there were so many legacy systems that were dependent on it, that to change it overnight or actually modify it at all would cost – “
Investor: “But what you’re talking about is rewriting the universe.”
James: “What we’re talking about is providing a stable protocol from the very beginning that as it grows and as it develops, its mere adoption is going to scale automatically.”
Investor: “This seems really out there it really does.”
Patrick: “Let me ask you a question, what do you think of Ethereum?”
Investor: “I love it.”
Patrick: “What about it?”
Investor: “The fact that there’s smart contracts in there, I can have code executed and I can have actual things done based on business logic and everybody can validate it.”
Patrick: “But not including the reading of digital content like an ebook?”
Investor: “I think it just needs to be built into the actual software. If you wanna read this, go to the blockchain and validate a certain contract and come back with a signature key, boom, now I know you paid, right? But it’s going to be highly specific to one set of software interfacing with that contract and coming back. But it doesn’t revolve around the entire universe changing it just means Apple or Amazon has to change one piece of software and interact with Ethereum for that, that’s really simple.”
James: “Talking about changing the universe, or changing the universal structure of how things happen. Look at the ones that control the industry now, Amazon, Apple, Facebook, whatever, most of those companies and most of the things they’re doing right now have been developed in the last 10-15 years, they were built upon the rails that existed at the time when they were built, they didn’t have the ideas of digital certainty and digital scarcity to be able to guide the philosophical structures that had to be built in order to take advantage of them. That’s why Amazon will never go to the blockchain. Their system is so embedded into the existing infrastructure networks that for them to even consider going that step, all they would be doing is putting a blockchain overtop of their own protocol, and that would provide almost zero benefits to anyone but them.”
Investor: “Well I mean…blockchain is not an all or nothing. Amazon will definitely use blockchain, period. It’s not like a car being replaced with an airplane, it’s like I’m gonna get some new tires. I’m gonna put the car on a new blockchain and drive around on that, but the rest of the car is the same car that you got from the dealership.”
James: “Right, but the problem is you’re still running on gas. That’s how the incremental change starts, you start with changing the wheels, change the gas, change the engine and everything else will slowly develop to take advantage of the new features that are available to it”
Investor: “What I hear you saying is, I’m going to get rid of the entire car and we’re going to have something called an airplane, it’s going to be a whole new way to travel around the universe and you gotta know those rules and you gotta how to make those parts and-”
James: “That’s a perfect example of how the airline industry started. They had this new technology that few people were able to use, few people were able to conceive and it started small. You build it and you build a use case around it.”
Patrick: “As long as it’s valuable enough for the user to adopt it.”
James: “As long as it’s valuable for the people actually using it adoption will grow organically. For example, when is the last time you drove cross country,” reference to Shannon Ewing from Presearch, “when you could’ve flown for half the price?”
Investor: “What’s your killer use case?”
James: “The one we’re starting off with, which is collaborative environments. Another example, if you’re an independent writer it’s going to cost you between 3 to 5 thousand dollars to publish a book, because you have to pay in advance for the artist, editor, and publicist. If I instead say I’m going to give one of these collaborators through a smart contract a delegated share of all the sales that happen on this particular project.”
Investor: “Why not just use a regular contract? When the check comes in, I simply write a check for 10% of that and-”
James: “You start small with the least common denominator, the least common denominator is the biggest amount of friction that exists in every potential person to person contract is that contract (like the contract itself?). I don’t know if I can trust you, but if I put it in a smart contract and I put it in an enclosed system, the second that person makes a payment that money instantly transferred to you-”
Investor: “I one hundred percent agree with you. But now you have to make people use your system.”
“So why not just create a smart contract on Ethereum and have these people have wallets that you can send to, then you don’t even have to read what the contract says anymore, you just deposit the money onto the address and then you’re done.”
Diana: “But then it’s on the ethereum blockchain, you have to follow their rules, and if they change something that we can’t be in control of-”
Investor: “It’s open source you can fork it if you hate them.”
James: “You can, but this is the key, Ethereum in and of itself doesn’t scale to the degree that it needs to.”
Investor: “That’s what I’m saying, you’re reinventing everything.”
James: “Because it’s more than just being able to write a smart contract, there’s identity, there’s privacy controls-”
Investor: “You’re trying to solve A LOT of stuff.”
James: “I know, that’s why we start small, develop the individual pillars of this project. Doing the individual elements is not hard when you’re starting small.”
James followed with an analogy about bowling, you don’t aim for the pins you aim at the boards.
Investor: “I feel like you should go work for Google and be one of their 26 Alphabet companies.”
“I just don’t see how, with your limited budget, like I’m not sure if you have access to $100 million but I don’t think you couldn’t accomplishment it even with $100 million.”
James: “Some of that is because I’m not the one writing the blockchain code, we have people sitting in Argentina, Bulgaria and somewhere in Texas writing this code, people who are way more qualified to write that code than me.”
I’ve never seen a table full of people who like to pause for so long, everyone seemed to be lost in thought, in the realm of possibility.
Patrick: “I do want to say, I wanna give you guys a compliment because I think there is a use case and application that you guys are gunning for that’s going to be really disruptive, and that’s owning the content. For example, if I’m in my reader and I own one of the original copies of content I would like to be able to rent that through my own smart contract, so there’s a secondary market that opens up and that’s huge.”
James: (to investor) “You’re not making wrong points. I’ve had to look everyone working for me in the eye and answer the same questions you’re asking right now. Like I said, the least common denominator here is that the individual owns all their data, they supply access to that data through the use of tokens, and they can create smart contracts with any individual without having to know how to code.”
Patrick: “That’s the key, making it easier for everyday users to-”
Investor: “I understand what you’re trying to do but, I mean-”
James: “If I keep it on Ethereum I can actually create a proper Ethereum smart contract, there’s probably 300 people in the world right now that can do that-”
Investors: “Your storefront where customers actually purchase it, why would you take on that software? Because now you’re the Apple, you have your software, you’ve written it, and it interfaces with the back-end systems just fine. Instead of just being the Android and saying we’ll just give you an open source SDK, everyone builds a shop and here’s how you interact with the smart contracts. Why reinvent the shopping experience for a book? I’ve got distribution with Amazon and Apple and Barnes & Noble, you know, digital books.”
Patrick: “Correct me if i’m wrong, but I believe it’s because of these new peer to peer ways of distributing. It allows me to rent a book or sample music.”
James: “If I was to send you a copy of the book and I give it to you free, on the Ethereum network if I were to give away something for free there is still a transaction cost. Instead we incentivize people to properly authorize transactions by using the transaction fees as a way to reimburse the original content creators for creating that content. So now you’re monetizing the secondary market as well, you’re only able to do that because of the digital certainty and digital scarcity.
Kami: “We’re circumventing these companies that are creating monopolies on these product communities and returning agency.”
James: “This is the thing that makes it huge. Right now there are 600 people that own 50 million MBRS, as the network grows more people holding them it’s more exposure for each of the individual projects on it, the reason is because all of the projects on Embermine will have tokenized releases, to be released on the rails within the Embermine platform.
“So let’s just give the easiest example I’m going to give one copy of my digital book to every MBR holder, for every holder that exists, you’re going to get one digital copy will be created…and distributed, for free…to those 600 members. So let’s make it easy math, there’s 1,000 holders, there’s 50 million MBRS, that means there’s 50k MBRS on average per holder. That means some guy who holds 50k MBRS is going to get 50k digital copies of this book, but because the network is going to continue to grow, say, a year down the road there’s 10k people on the network now, that means there’s 10x as many people who don’t have that Token. They either would have gotten it from somebody who was already on the system when they got it, or they have to purchase it through the secondary market or borrow it or whatever, so you have these assets. It’s like a community co-op type thing everybody shares the tokens and they take those tokens and they can trade them. Some person could decide, let’s say I’m going to have a digital store that’s going to vet all the mystery books and I’ll create my own mystery store, that could be part of the Project Compact. I could do that with several people, and I can make deals, so if i say to you ‘I’m going to offer you a smart contract to get your tokens, it’s going to limit the supply that’s publicly available out there and I’m gonna have a large inventory, so you can actually have inventory of digital goods and you can sell them on the open market or in the secondary market, if you’re a used bookstore you can, you know”
Then James trailed off to a far future use case for blockchain, after we all geeked out for a minute there was an unspoken agreement that speculating was bad for business, even if it was fun.
James: “The biggest problem I see in the value networks that are out there like Bitcoin and Ethereum, is the ease at which value is just lost…forever.”
Patrick: “Yea, but that’s a different problem, right?”
James: “It is a different problem, but it’s part and parcel.”
“If you are right now an author and you’ve written books, there could be a digital file that you own, with certainty and security-”
Patrick: “With an economic incentive to secure it.”
“If I can handle everything with a smart contract, that even if something were to happen to me (author’s note: he’s talking about death), my digital assets could be moved to this user, automatically, it happens automatically. “
“It’s a huge,” patrick with a long drawn out yuuuge, “market, and it’s awesome, whoever can do it right it’s gonna be amazing.”
“So…to sum it all up in a couple sentences, right, I currently can’t do what I want with the content that I bought, right? You are making an attempt to make it so you can do whatever you want with the content.”
James: “It’s about monetizing you own personal value and your own personal capabilities…it’s more about unchaining us from being able to – like right now in order for me to be able to listen to a song that I bought on iTunes, I have to use iTunes.”
Investor:“That’s because the publishers apply DRM on it so they can’t go anywhere else with that.”
At that moment a very happy Jothan Frakes – the organizer of the conference – walked in and announced that all four of the people to make up the next major panel were, in fact, sitting around the table. James and Patrick had demonstrated their knowledge of the blockchain and hosted a great panel following the above conversation; however I believe the conversation from all of MERGE! that explored Embermine and the blockchain world was witnessed by the 20-or-so of us around that roundtable in the back of an otherwise empty convention room. Of the other three panelists besides James, all of them at one point over the weekend pledged approval and support, and the rest opened the investing conversation. Big money is already in the crypto industry, but it will take more than money to decentralize the web. Embermine isn’t asking for money, it’s trying to help reinvent commerce between individuals, and all it needs is participation. The Embermine community is a fluffy bunch with welcoming vibes.