Hi Everyone,
I'm psyched to be here! My name is Eric Tang. I'm a New York based software developer and entrepreneur. I've been working in early stage startups for the past 8 years, and have been spending a lot of time on the blockchain lately. Like many people here, I am excited about what Steemit and many other projects in the space. I am also excited about the profound implications of what Steem means as an example of our decentralized future.
The blockchain have been in the tech headlines lately. Unlike many of the altcoins and colorcoins that came out a year ago, these new blockchains (sometimes referred to as appcoins (https://medium.com/the-coinbase-blog/app-coins-and-the-dawn-of-the-decentralized-business-model-8b8c951e734f)) all contain new capabilities. I think a big group of them will replace / consume existing market sectors. For the purpose of this post, let's call them SectorCoins.
Definition
The good folks at USV (https://www.usv.com/blog/fat-protocols) have written extensively about blockchain-enabled protocol innovation (http://avc.com/2016/07/the-golden-age-of-open-protocols/). But with recent experiments like Steem, the distance between the protocol and the user is starting to shrink. Every new blockchain is a new platform. Since platforms compete for market share (or network size), the ideal position should allow you to bring users on board through many different channels. Leveraging developers is one way, tapping into specific sectors is another.
A SectorCoin is a blockchain that powers a decentralized economy in a functional sector. It could be transportation, hospitality, or any other sector that involves multiple roles exchanging value. Grouping the blockchain by sectors is powerful because common building blocks and application-specific networks can be leveraged horizontally. To a consumer, it is a service network with options, scale, and privacy. To a developer, it is a protocol-level innovation that makes application development simple. To a business or entrepreneur, it is an opportunity to create new businesses on top of an open platform with a vibrant ecosystem. The decentralized nature means every participant gets to share the direct benefits as the network grows in size. If we take the transportation sector as an example, the SectorCoin can support taxi, limo services, school pickup, commuting, or any other transportation-based application.
Benefits
For builders, the efficiency of SectorCoin come in two forms - common building blocks on an open platform, and network effect that benefits the whole economy. Every transportation business needs navigation, vetting / reputation management, safety management, crisis responding service, fleet management, and many more services. The blockchain enables these roles to be filled in a decentralized manner, and applications can leverage these common building blocks instead of building everything from scratch. The scale of these services can range from small mom and pops to large corporations.
Any customer brought onto the network by any application can discover other applications on the platform. The person that rides in the taxi also needs her child be picked up from school. The same person may also use a commuting service going to/from work. The right incentive structure can even convince existing off-chain businesses to move onto the blockchain - taxi companies may be more willing to work with an open, decentralized technology platform than a proprietary company like Uber.
For consumers, SectorCoins may be treated as a virtual currency (https://en.wikipedia.org/wiki/Virtual_currency), similar to reward points or airline miles. Service providers can build loyalty programs with more transparency and accountability because SectorCoins is openly traded. Some services may simply choose to hide the tokens, take fiat currencies, and do the exchange behind the scenes in realtime.
Creating a SectorCoin
For early SectorCoin developers, an interesting entry point to the market could be through contracting. Consensys (https://consensys.net/) is as an interesting example within the Ethereum world. It has a portfolio of applications on the Ethereum blockchain but also provides consulting services to anyone interested in building Ethereum. Entrepreneurs come to Consensys with industry expertise, and Consensys helps them create applications on top of Ethereum. This benefits the entire network in the long run.
Some of the SectorCoins can even be built on top of existing blockchains. For example, Augur is a prediction market platform built completely on top of Ethereum. The Ethereum platform provides many benefits like platform security, a simple programming language for smart contracts, and an active developer community. However, it's still early days for cryptocurrency, and it's not crazy to bootstrap your own blockchain, especially for projects with specific technical requirements outside the scopes of existing blockchains. (like Zcach or Synereo)
Conclusion
It's important not to lose perspective in the progression of cryptocurrencies. David Chaum's Digicash (https://en.wikipedia.org/wiki/DigiCash) and the cyberpunks brought the idea to the world. Citigroup's e-cash (http://www.computerworld.com/article/2588719/financial-it/citigroup-launches-new-e-cash-service.html) almost succeeded in bringing digital money to the general public, only to be foiled by the Traveler's Group merger. Bitcoin was the first project since the 90s to get any critical adoption. Ethereum improved on Bitcoin by adding a VM on the blockchain to support basic on-chain smart contracts. Zcash is improving on Bitcoin to address privacy concerns with zero-knowledge proof. Steem is creating an application-specific blockchain with incentives baked in. Companies like R3 and Chain are creating private blockchains for the financial services sector. The pace of experimentation will only get faster, and SectorCoins can play a major role in bringing the blockchain to everyday consumers.
Thanks to Jordan Cooper, Doug Petkanics and Arthur Falls for reading drafts to this post