This Revolution Will Be Tokenized
Vinay Gupta has followed cryptocurrency on its journey to the mainstream, aiding in disaster relief, working at the Pentagon, picking up a meditation practice, and going to one too many Burning Mans on the way. This post was written in collaboration with Richard Muirhead of OpenOcean.
“Let’s see, I’m 45, and this is probably career number five.”
Vinay Gupta has not raised $257 million in an ICO. He is not yet a Bitcoin billionaire. He is not a Thiel Fellow, nor a Thiel Lad (to translate to his native Scottish vernacular). With Bitcoin reaching new highs monthly, the dominating headlines often miss the point of cryptocurrency because it was never about the money or the brand. It’s about interesting people doing interesting things, and Gupta has quietly impacted the world in his own way, doing a lot of thinking over the years (136,000 tweets worth).
Gupta helped coordinate Ethereum’s 2015 release, working as a project manager on strategy and communications. He worked as the strategic architect of Consensys, the leading crypto venture studio, and as the designer of Dubai’s National Blockchain strategy. In addition to being the Blockchain Fellow for Digital Catapult, a UK government-funded initiative to increase the amount of innovation in the country, he has two current projects.
The first is Hexayurt Capital, a fund designed to invest in the Internet of Agreements, which is defined as the world enabled by smart contracts. It hopes to invest in companies that tackle real world problems like logistics and global trade. His second project is called Mattereum, billed as a court that understands the nature of cryptocurrencies, making physical property and intellectual property transactable on a blockchain. In a case where you buy a physical table using a fraction of a Bitcoin and the seller does not follow through, it is difficult to explain this to a judge in a small claims court. This is where Mattereum comes in, enabling technically competent arbitrators to make rulings in these cases instead of a judge. Gupta’s path to get here has been unconventional, to say the least.
Before the dawn of crypto hedge funds and ethtraders, before the blockchain technology existed, before 23-year-old Ethereum founder Vitalik Buterin was born, Gupta was witnessing the ideological foundations of cryptocurrencies brewing and marinating. The interdisciplinary nature of cryptocurrencies means it has drawn from a variety of schools of thought: game theory, cryptography, hacker culture, the open source movement and libertarian ideology to name a few.
Unlike many of the ambitious young founders that dominate the future of the space “running around with their hair on fire,” as he says, Gupta is part of the older guard. He was born in 1972 in Scotland, growing up as he describes it in a very average Scottish household. His father came from India in the late 60’s but later settled in Scotland as a doctor. His mother was a Scottish nurse. When he was 13, he started getting into Computer Science and doing a ton of academic reading. By the time he was in university he hit the ground running majoring in Graphics. It was there that Gupta heard his first whispers of this idea called the World Wide Web.
“I was in university, you know,” Gupta said. “Software was kicking around, I installed it, set up. Just like everyone else. Look, there’s the web! It started with academics and military, and government. And slowly people began to learn how to use this new thing. In those days there was no search, there was only discovery, so you’d have to try and click around until you found something that you wanted to know. Credit card processing hadn’t been invented, so you couldn’t make any money online. There were no ads because no one could buy anything. I remember getting the first piece of spam. Some elite lawyer spammed half the Internet with some kind of green card thing. And like the whole Internet got the same piece of spam.”
It was from the Internet that Gupta first heard about a festival called Burning Man. “In those days, more or less everyone knew more or less everything that was happening on the Internet all at the same time,” Gupta said. “There was no sense that the Internet was too big to understand. There just wasn’t that much stuff there.” In 1996, Gupta went to his first Burn. There were 8000 people in attendance, with no street signs and a theme of corporate takeover. It was very wild and very weird to the kid from rural Scotland, but he liked it. Gupta kept coming back for ten years. “It was Burning Man. It was just the staggering, the amazing, the Burning Man. The Burn!”
During this time, Gupta was an early adopter of the first popular digital currency: E-Gold. E-gold, brought down in 2009 by regulators, shared many similarities to Bitcoin ideologically. Oncologist Douglas Jackson founded E-Gold in 1996, convinced of the fact that gold was superior to paper money and frustrated with the United States’ dismissal of the gold standard in 1971. He envisioned a new monetary system that was not so reliant on banks, a private currency backed by gold that could cross borders. Despite being plagued by scams, blackmarket adopters, copycats, and problems of scale much like many cryptocurrencies today, E-Gold reached a peak of being backed by $85 million worth of gold reserves.
Despite its failure, E-Gold offered a glimpse to anti-establishment individuals of a decentralized future. “For me, it was a civil liberties thing,” Gupta said. “I’m very well known for having strong political opinions. Unfortunately, they change over time. So in those days I was probably in the early stages of being a naive libertarian, and this idea of free trade, everyone can decide what they want, la la la la, all of that stuff made perfect sense to me at the time, because I was 25, and I didn’t know any better.”
While E-Gold was rising and falling, cryptography, open source, and hacker culture were also rapidly evolving. PGP (Pretty Good Privacy) was released in 1991 by Phil Zimmerman, providing increased encryption through the use of hashing, public and private keys, and data compression. Zimmerman released PGP in violation of patent law, wanting it to be open and for the people. “It was a huge topic of discourse on the Internet at the time, because it was this thing that people said would change the world one day,” Gupta said. “We expected it to be done in 5 years; 20 years later we’re still waiting.” In 1997, Eric Raymond’s The Cathedral and the Bazaar was published, with 19 lessons for good open source development. In 1998 on April Fool’s Day, hackers rejoiced as the MIT homepage was replaced with a new page that announced Disney’s acquisition of the university.
Of particular importance to cryptocurrency was the Cypherpunk mailing list, which Gupta was a part of. Founded in 1992, the list hosted futuristic technology discussion about a wide range of subjects, and had nearly 2000 members in 1997 with an average of 30 messages sent every day. “There’s this genre of literary fiction, called cyberpunk. Cypherpunks came along, looked at cyberpunk, and basically took that science fiction as a manifesto,” Gupta said. “The cyberpunk future was this kind of doom laden, corporate takeover, bad governance, environmentally polluting future. Which turns out to be more or less exactly where we are now. It’s really predictive. You see people who have been into war in Iraq and Afghanistan with these very high tech artificial limbs, and it’s kind of like that’s sort of what they were talking about 40 years ago. We really are headed into a world that resembles that fiction.”
The Cypherpunks were a crypto Fight Club of sorts. In the Andreessen Horowitz podcast, “Why Crypto Tokens Matter”, a16z partner Chris Dixon and Fred Ehrsam of Coinbase compare crypto to “the side of the nights and weekends.” They believe that what employees read about after 9-5, what smart people tinker with on the weekend, what researchers are pushing the boundaries of, is what everyone else will be working on in ten years. The Cypherpunks spread local chapters in London, Boston, and Washington. In addition to notorious figures like Julian Assange of WikiLeaks, many of the precursors to Bitcoin were created by Cypherpunks: Nick Szabo of Bit Gold, Adam Back of Hashcash, Wei Dai of B Money, Hal Finney of RPow, and more loosely David Chaum of Digicash (Banking on Bitcoin). However, they were all a little too ahead of their time, unable to translate their ideology into a usable, scalable technology.
Then, in 2008, the Bitcoin white paper was sent out on The Cryptography Mailing List by an anonymous Cypherpunk under the pseudonym Satoshi Nakamato. Gupta saw Bitcoin in its early years but completely ignored it. “I was not interested in speculating or making money through speculating,” Gupta said. “I told all my friends if you want to make a lot of money buy some Bitcoin. I don’t think anybody did, but god damn it I told them. And I didn’t really get interested in it because I knew from the E-Gold community that payments weren’t enough. E-gold had payments and it didn’t create any kind of new social structure.”
Even now, compared to E-gold, Bitcoin has more volatility and higher transaction fees. It is unclear if Bitcoin can scale to the number of transactions that a network like Visa has. Yet at over $5000 a pop today, it is crazy to think that even extremely knowledgeable cryptography insiders did not benefit as much from Bitcoin as later players to the game. Though there are thousands of Bitcoin millionaires, there are millions of people who had every opportunity to invest but did not.
“So in that sense I’m a bit of heretic inside the space in that I’m not sure that all of this stuff is actually progress,” Gupta said. “I think some projects are workarounds and maybe we just don’t need those.” Gupta pivoted away from the Cypherpunks, immersing himself in other fields. He had careers in volume rendering and flight simulators, as well as defense. He picked up a heavy meditation practice after buying a book on the Internet written by an Australian named Paul Wilson called The Calm Technique. And soon he found himself involved in an unlikely field: disaster relief. Gupta’s biggest accomplishment to date is the design of the Hexayurt, a disaster relief tent that can be folded and transported. “A bunch of hippies asked me if I could figure out how to build a geodesic dome without waste. After I invented it I felt obligated to do something.”
In 1995, a year before his first Burn, Gupta went to a hippie establishment called Gaskin’s Farm in Tennesse, which housed an assortment of environmental doomsayers. The hippies were building geodesic domes, hemisphere like structures, for disaster relief. However, when cutting complicated shapes out of 4’ by 8’ rectangular sheets, they were left with a ton of waste. Given his background in graphics, Gupta took a stab at the problem, but after 6 months of work, he had no results.
Years later, in 2001, Gupta was at the Rocky Mountain Institute in Colorado, an environmental think tank. He was helping edit Small is Profitable, a well-regarded book about renewable energy economics that was one of The Economist‘s Books of the Year in 2002. “One day they said we’ve got this disaster relief gathering, and we came back with a request,” Gupta said. “Can someone design a shelter which can be packed flat, transported, and put back up again? So refugees can be given a reusable house. A tent that can be folded. And I sat down, with the back of the envelope, and 15 minutes later I had the Hexayurt.”
The first model was built in 2003 at Burning Man, 6 feet high, 7 feet long, and 8 feet wide. Gupta tried for years to get the Hexayurt to be widely adopted for disaster relief, but was unable to get past the bureaucracy of NGO’s. Gupta then moved further into the resilience field, improbably winding up at the Pentagon advising them on large scale disaster management, as well as on how to use cryptography to protect civil rights. He continued this work at the UCL Institute for Security and Resilience Studies in the UK, working for the former UK Secretary of Defense, John Reid. Then, he jumped back into crypto fully, coordinating Ethereum’s release in 2015.
The biggest difference between Bitcoin and Ethereum is that Ethereum is not only a digital currency, but also a blockchain based platform. It has a Turing complete internal code, meaning that with enough time and computing power, anything can be built on top of it. This means it better supports this idea of smart contracts, introduced by Cypherpunk Nick Szabo in 1995, which are self executing pieces of code that can be used to build more complex applications on the blockchain beyond just payments, like exchanges of property or shares.
Ethereum is younger, moves faster, and is friendlier to developers than Bitcoin. “All of the Bitcoiners were political first,” Gupta said. “And then they became technical. Whereas the Ethereum guys were very much technical first, and then became political. They got led in by the concept of smart contracts and all the decentralized politics built in around that. But I think that that emphasis, whether political first or technical first, is a huge driver. Because the Ethereum community generally speaking is pretty typical for nerds. It’s much like a Linux user group. The Bitcoin stuff on the other hand is a very typical space for hard core libertarians.”
The fact that Bitcoin was first an ideology has been huge driver of its success. With the mysterious nature of Bitcoin’s creator Satoshi Nakamoto and the hard core evangelists it has given rise to, Bitcoin resembles a religion. This is why it has stood the test of time and has been able to shake off events like the Mt. Gox hack. Yet this ideology first mentality is also crippling the community by causing so much division. The Bitcoin Cash fork, where a developer created a clone of Bitcoin’s source code with bigger block sizes is an example of this.
In some ways, Bitcoin and Ethereum are competitors. Though Bitcoin appears to be taking more of a store of value role like digital gold, and Ethereum a platform role with a variety of applications built on top of it, the two communities clash at times. “Bitcoin’s competition was always the successor to Bitcoin,” Gupta said. “Not pressure from regulators. Ethereum’s competition is pressure from the next system. But my gut thinking about this is I don’t think that we are going to see extremely expensive tokens as a standard feature in the long run. The smart contracts on the other hand I think are going to be an increasingly huge deal. I think they are going to be immensely important.”
Gupta is the earliest of adopters, motivated by intellectual curiosity rather than monetary gain. He is an example of a person who has been on the bleeding edge, part of a group of futurists and forward thinkers ahead of their time. “Cryptocurrency is a frontier, and it’s a frontier that requires an enormous technical complexity to survive,” Gupta said. “As a result, what you get is very very smart, very forward looking, very risk hungry technical people in huge numbers. And that’s genuinely a unique environment, that doesn’t happen very often, and when it does happen, you tend to get explosive breakthroughs in technology.” These futurists will one day be right; it is just a matter of when.