So far most Bitcoin and Blockchain ventures are at the infrastructure layer such as wallets, exchanges, mining, payment processing and development tools.
We are now starting to see ventures at the application layer. We have already covered Augur (using Ethereum to create a decentralized Prediction Market).
While most Fintech ventures are unbundling Banks, this new generation of decentralized, permission-less systems are unbundling the sharing economy ventures that emerged to become behemoths in the last few years.
Do you remember when Diaspora was going to create a decentralized user controlled Facebook? If you missed that news blip, don’t feel bad because most people missed it.
So will decentralized sharing economy disrupters face the same fate? Will they be worthy but ignored?
I think Lighthouse has a good chance.
“Lighthouse provides you with your own Kickstarter, on your own desktop.”
Only time will tell, but I think that decentralized sharing economy disrupters such as Lighthouse and Augur will do well for one simple reason compared to Facebook alternatives:
“We talk about privacy being important, but don’t do anything about it. When it comes to money it is the other way around. We don’t talk about it so much, but we do take action”.
The sharing economy moniker is misleading marketing gloss. This is the “squeeze cash out of spare resources economy”. The spare resources can be:
- my time and my car (Uber)
- my spare bedroom (AirBnB)
- my time, passion and talent (Kickstarter)
Why are these businesses worth gazillions? The simple answer is a commission around 15%. For the millions “squeezing cash out of spare resources” that is a ton of money. Would they switch to one charging 1.5%? Probably yes.
Would a VC back a venture with a 1.5% commission? Probably not, but then these ventures will probably eat their own dog food and use crowdfunding. So, who cares what VCs think? Think of Craigslist. Much as we may rail against it’s old-fashioned UI, it has huge impact while charging a minimal fee (enough to comfortably pay for all the people who work there but not enough for massive returns for investors). The next generation of decentralized sharing economy ventures maybe more like Craigslist (profitable and game-changing while leaving a ton of money on the table).
Lighthouse gets attention because of the track record of it’s creator – Mike Hearn. When you put “Bitcoin core developer” and “ex-Google” in the same sentence, people pay attention
Lighthouse is using smart contracts to manage pledges (assurance contracts). That is a perfect use case for smart contracts.
It is the unbundling that is significant. These sharing economy ventures are really payment processing engines with a domain-specific layer. We use Uber and AirBnB and Kickstarter as sellers because:
- The transaction processing works and the money flows.
- We have a way to showcase what we are selling.
Lighthouse unbundles 1 & 2. They don’t even try to offer the showcase. They suggest that what they call “project galleries” should remain decentralized on your own machines. Lighthouse is only about moving money and because Lighthouse moves money using Bitcoin they can do that very cheaply.
That kind of proposition is not mainstream today, but smart ventures don’t start with mainstream, they start with passionate and committed users who will instantly get it and then later move to mainstream. In the case of Lighthouse, that means developers who already use Bitcoin. In other words, the kind of people who recognize the name Mike Hearn who states:
“It’s not a tool that I want or intend for only bitcoin developers to use. Even though that may be where it starts.”
It makes sense that this would happen first in crowdfunding. It may happen later in other sharing economy domains such as transportation and housing, but in crowdfunding you get an early adopter community of Bitcoin enthusiasts who will make sure that it gets traction.