Interview with Andrew Keys of ConsenSys
Andrew Keys is the Head of Business Development for ConsenSys, a global ecosystem of developers and innovators building decentralized applications and infrastructure leveraging the Ethereum protocol. He is also the co-founder of ConsenSys Capital, the organization’s constellation of financial services which include ConsenSys Ventures, Token Foundry, and ConsenSys Capital Asset Management.
Laid-back yet abundantly knowledgeable and highly respected in the community, Andrew is the perfect conduit to unleash blockchain innovation upon humankind. His numerous speaking engagements at the industry’s prominent conferences have solidified his role as a preeminent authority on blockchain and Ethereum. There is little doubt his work with ConsenSys has played an essential role in establishing Ethereum as the second largest cryptocurrency by market cap and the most active blockchain ecosystem on the planet.
ConsenSys enacts a progressive, bottom-up management philosophy put on full display by his relaxed demeanor: unpretentious hierarchies and horizontal operations. This is exemplified by the fact that you will find Andrew at a shared desk working side-by-side with team members of all levels in the exuberant and open ConsenSys office space.
So without further ado, please enjoy this thought-provoking interview on the ConsenSys ecosystem and what our future looks like once blockchain is integrated into every facet of our daily interactions.
This interview was conducted next to the corporate offices in the neighborhood of Bushwick in Brooklyn, NY.
I saw a Medium post that said you’ve been traveling all over the world…while wearing flip-flops. Is this something that’s indicative of the industry’s culture, the ConsenSys way of life, or is this something that’s uniquely Andrew?
I just find flip-flops are comfortable and I’m actually wearing them now. I think that it’s just evolved into a joke because I just think they’re super comfortable. But to that point, we are a “come as you are” shop and there’s no dress code per se. When I don’t have to wear a suit for a central bank type entity, I find flip flops comfortable. We’re just easy breezy. Let the work do the talking, not the clothes.
You’ve met with prominent figures from around the world, often times in countries like China where business is conducted formally. Do you compromise for those encounters?
That’s the name of the game, to be a chameleon. You go to the places where you got to wear a suit and you wear a suit. You go to the places where it should be dressed down and you dress down…its adaptation.
What motivates you to get out of bed every morning? What’s the mission of ConsenSys that motivates you to come to work every day?
I would step back and really look at how Planet Earth is constructed right now, especially with our Gini coefficient where you have the 80 human beings that have the same amount of wealth as the bottom 3.5 billion. 80 and 3.5 billion just seems inefficient and unfair. I’d argue that many of those 80 people represent or own firms that serve as trusted intermediaries. Essentially, that’s what these technologies commoditize: trust and intimidation. I believe that if we do commoditize those add values, we will have a better distribution of wealth and prosperity in the world. I think that we’re on the verge of a golden age. This technology has the potential to fall liquidity in previously illiquid assets that should help Earth evolve. Full stop.
You’re alluding to the fact that if you can tokenize illiquid assets, like a venture capital or real estate, that should suffice to accomplish worldwide wealth redistribution?
Art as well. Or someone’s attention that may not have other assets, rather than imagine a Facebook where you get paid a dollar a day to look at advertising instead of Mark Zuckerberg. That dollar would go pretty far in Kenya.
While traveling in India, I learned to appreciate the fact that you can survive with $2, $3, $4 – you can find a bed and still have enough for a meal or two.
Let’s take a quick step back. What’s one thing you want the outside world to understand about ConsenSys?
ConsenSys is the largest software engineering shop in the world, solely focused on creating blockchain technologies. We are just over 900 people in over 30 countries, and we maintain four pillars of operating business.
The first is full stack engineering. We maintain three of the eight implementations of the Ethereum protocol. Above that, we maintain the most used developer tools in the whole ecosystem. So, in order to build out applications, you need tooling. We’ve open sourced and gifted that tooling to the world. Above that, we create a lot of the open source standards. The intermediaries that we know provide things like reputation, they offer things like wallets and to disintermediate them, we need to provide that type of functionality. The equivalent of five stars in an Uber, you can build that type of functionality in a decentralized application where people who have their own identity can get rated on how they conduct themselves in society, and you can create these types of open source standards. We do a lot of work and thinking about that. Then above that, we have an application layer, and we run the application layer in what’s called a venture studio model. A few of the companies that made that famous were Betaworks, TechStars, and 500 Startups where an entrepreneur can be somewhat of an intrapreneur and have a salary and health benefits and all that good stuff and incubate an idea into a project, a project into a product and then spin that product out into a company. We’ve done a lot of work in that regard. That’s the first pillar of ConsenSys.
The second one is enterprise and government consulting. Our clients include JP Morgan, British Petroleum, Procter and Gamble, Exxon Mobil, the Emirates of Dubai, the Monetary Authority of Singapore. We just won the European Union blockchain Laboratory, so all of the members of the EU go to Brussels in a laboratory setting where we build proofs of concepts and scale them into production environments. It’s a lot of education, which brings us to the third pillar.
That is ConsenSys Academy, which is our educational arm where we educate engineers, lawyers, product managers on what this technology is, what are the implications for their various verticals or subject matter expertise and then give them ways to attest that they’ve learned this formally. You’ve been graduating principles, and someone can be certified in their specific coding language.
Lastly, our capital activities. ConsenSys Capital is a constellation of a few different financial service businesses. The first is Token Foundry which I think to be the next generation of investment banking and crowdfunding. Next, we have ConsenSys Ventures, which has been driven by a woman named Cavita Guta, who previously ran Eric Schmidt, the former chairman of Google’s family office. Lastly, we’re in the process of incubating ConsenSys Capital Asset Management which could serve as creating a vetting process for managers that want to accept the risk in this space and manage risk. That’s the gist of how we operate.
Let’s get back to tokenization. Earlier, you mentioned tokenization as an effective means for wealth redistribution. It’s my understanding you’re supporting this movement via a relatively new addition to the ecosystem, Token Foundry. What exactly is Token Foundry? There has been some recent hype.
I believe Token Foundry to be the next generation of investment banking or crowdfunding whereby we can create behavioral economic incentives to induce users to a platform or sell equity in a company more efficiently. I really bifurcate those because one is a game theoretical consumer utility token and the other is actual equity that is a security. There is this world evolving and creating an ontology of tokens because now we can digitize assets. Not all assets are necessarily securities, but to keep it simple, on the consumer utility side, Ethereum is a great example of an event where people contributed money and that created behavioral and economic incentives to improve this protocol. That was one of the ways I got involved. I contributed to the initial token sale and I wanted to use it, I wanted to improve it, I want to make it better. Similarly, you can start to create these economic incentives in networks and Token Foundry does a lot of that.
What’s the biggest difference between a company like Polymath and Token Foundry?
Polymath is solely doing securities to my understanding. We are doing both conserving utilities and securities. They are similar in the sense that it’s an investment banking functionality where they’re bringing securities to market. I think that probably the core difference is our experience and our expertise. We sit pretty centrally to the technology where a lot of the other token launch platforms are just serving the financial aspects of it. We can add value in terms of actually building out the software and adding it to the operating system that we’ve created.
Are there any organizations deploying a similar model?
No, I don’t think so. I think that this type of business model is relatively new because we’re trying to evolve with how we see the architecture of how Earth operates. So, rather than a top-down, commanding control system, we try to operate horizontally, so we don’t really have any hierarchy in the organization. We try to incubate activities ground up. I think that it’s a new model for a new way of doing business that this technology enables.
Do you foresee any copycats in the near future?
I don’t know about copycats, but I think that people are noticing this model.
Correct me if I’m wrong, you’re the co-founder of ConsenSys Capital. You’re also the second employee as well.
I don’t think there was a number two. There was a handful of us came on at the same time. Long story short, I met Joe Lubin at the first ever Ethereum meetup in New York City. Basically, I understood the implications, maybe not as well as him, but I thought I had a pretty decent grasp. Once I went down that rabbit hole, I never went back. I actually told Joe that I would work for a little sliver of equity because he wasn’t ready then to operate on all cylinders. I volunteered for the first six months to help build out the business development. I drove a lot of the global business development activities and then about June of last year, we wanted to get serious about some of the architecture. Basically, we wanted to build out this new pillar of ConsenSys Capital and I said that I would help drive it. So, that was that and it’s been the most interesting part of my life professionally that I’ve ever been part of.
I’m sure that was a massive shift in compensation for your time in the capital markets. It’s my understanding that you also built a revenue cycle management company?
Basically, what that is was when you went to the doctor’s office and you get a physical, for example, you would have the physical and you would hand your insurance card to the secretary and basically that information would get sent through a computer system that we started, built, and sold throughout America to Chennai, India. Basically, the billers in India would fight with Blue Cross Blue Shield that was in India and eventually, the doctor would get paid three to six months later. I was the middleman. I was that intermediary that facilitated that whole revenue cycle management. I got paid a percentage of what we collected. Over that time, I learned everything that didn’t work about databases. And it was at the same time Bitcoin happened, which is essentially a database and a payments system. I thought Bitcoin was this cool, funky experiment in monetary policy, but you couldn’t program business logic which we now know to be smart contracts. I kept an eye on it, but I didn’t get involved professionally because I thought that the technology was too immature until I saw Ethereum where you could actually program this type of business logic, so you can have if, then, else.
The next question revolves around some of the specifics of the ecosystem. What are some of the projects or some of the applications or the departments in ConsenSys that you think about most often?
I would say one enabling factor to all of the applications is the notion of self-sovereign identity. Right now, when we go on the internet, we typically log into something like Facebook or Gmail. We log into our Bank of America account and from that, we either socialize or communicate or send value. But in the future, instead of having to log into those intermediaries, we’re going to have our own browser. I’m going to have the Andrew Browser. The Andrew Browser is going to be the house for my identity. It’s going to be a house for my assets. It’s going to be a house for my reputation, the five stars in the Uber. From that, I’m going to type in a Google search, “I want a car to pick me up from X and take me to Y.” Instead of paying Uber 35% of the ride, if I’m the driver, it’s going to be peer to peer without Uber in the middle. The other side in the Uber example, the driver, they’re going to log into their self-sovereign browser. I think that construct, whatever you’re going to do peer to peer, having that type of construct, this self-sovereign digital identity browser is probably the most fundamental enabling factor in building any kind of decentralized application. I think that is probably the key.
You mentioned the “Andrew Browser” hosting your five-star rating. Is that a social rating that people earn based on interactions with the outside world?
There will be different types of ratings. You’ll have your credit score. You’ll have your Airbnb life rating. You’ll have your Uber rating. One thing to note is if I’ve been a good passenger in Uber 10,000 times, I’m probably pretty likely to be a decent Airbnb guest. But today, that reputational asset that I’m well-behaved in my 10,000 Ubers isn’t transferable. You can create a more holistic understanding of one self’s reputation in these newer constructs where you could show that information granularly at your choosing. I think that’s an important idea for us to understand.
Self-sovereign identity is definitely intriguing, but you don’t think there will be any issues with the concept of social scoring? Have you seen that dystopian black mirror episode where status in society is based on a social rating?
That’s obviously is a science fiction show, but I think there is merit in discussing how do we behaviorally nudge using things like behavioral economics with people incentivizing them to act appropriately. Little things like the bank accounts that we have now don’t have any type of metric that if your checking account is low, they’d want you to get dinged that $35 fine, rather than having the functionality that knows that your checking account is low and then moving the money from savings to checking, as an example. I think that if we start designing systems that empower people to be healthier or happier, it will be a net positive. I believe that aspects of things like reputation have to be considered within this behavioral economic construct. I think that there has to be thought into what the implications of are having a reputation on everything.
It sounds like an incredible use case for blockchain, implementing behavioral economic concepts to incentivize people to live better, more ethical lives.
If everything goes right and ConsenSys achieves its mission, what would the world look like?
We would have a fully decentralized world wide web. That would probably have implications on our legal, financial and social-political operating systems. You would see bureaucracy float away. You would see an exponential increase in liquidity. You’d probably see a golden age of prosperity. You would see a more even distribution of wealth. You would see less minimum wage workers flipping burgers and more engaged people that choose to opt into a sharing economy whereby rather than a large percentage of that going to the intermediary, it would go into their pockets as a counterparty in a transaction.
Let’s hope ConsenSys achieves its goal. What is either one thing that you want people to understand about blockchain or something that people expound in the blockchain community that is just outright incorrect?
I think that the one thing that I would want people to understand is that right now, the prevailing narrative is indeed that of speculation on one digital token’s value, and that is Bitcoin. I think what I would want people to understand is that Bitcoin was the opening act, the gateway drug of this technology. What we’re talking about is the next generation of the Internet. The next generation of the Internet has three foundational principles. The first we already discussed, which is self-sovereign identity. The second is the digitization of assets, tokenization of assets. Not just Bitcoin, but you’re going to tokenize livestock, barrels of oil, Beyoncé concert tickets, electrons on a solar panel. You’re going to be able to move those as easily as you send an email today. The third foundational principle is the notion of smart contracts where if you and I are in a rock band, today we would pay Apple 35% if someone bought our $10 album on iTunes. We would get the remaining 65%. You and I would have to subsequently, through some manual process, then divide that money. In the future, if we create an asset like a song or an album, we can embed the business logic whereby we wouldn’t need iTunes, and we would have 99.9% percent of the revenue instead of 65%. More importantly, we could create a smart contract where you’re a better-looking singer, so you get 55%, and I’m the bass player, so I get 45%. We could even embed more that if a fan wanted to invest in us and we had a smart contract with them, they could get 10% of every song that was purchased through this agreement. You start to automate and optimize the way that we as humans trust and agree with each other. In doing so, you’re starting to blur the lines of what a fan is or what the band is, and you can extrapolate that out of music and into public policy or finance. You started blurring the lines of what’s an employee versus employer versus just a participant in the network. I think it’s self-sovereign identity, tokenization of assets, and smart contracts.
You’ve mentioned that iTunes and Uber might eventually cease to exist because all transactions will be peer-to-peer.
I want to caveat. I didn’t necessarily say that they would not be in existence because they do provide a great user experience. They already have a network. I think that they would probably have their margins squeezed a lot, but there are ways where they could potentially use this technology as well. I think the overall is that what we’re seeing here is the commoditization of trust and intermediation. If you are a product or a company that’s sole revenue is derived from providing trust and intermediation, I think you’re going to have to think of new value propositions of the staff.
They will evolve, or they will die. That’s the name of the game.
During the Blockchain Intensive and then on one of your blog posts earlier this year, you had talked about that you think we’re kind of in 1994 equivalent of the blockchain era. What are the ’94 equivalents of Bitcoin and Ethereum and then going off that, what will Bitcoin and Ethereum look like when the equivalent of the year 2000 hits the ecosystem?
To clarify, I think that if the Internet began its commercial production great use cases in 1996, I believe we are in the equivalent of 1994. We’re in ’94 of ’96. 2018 in blockchain years is the equivalent of 1994 when the Internet began in 1996. What I mean by that is that certain milestones have to be achieved to enable the world to use this technology in a massive production environment. A few things:
For the technology historians, Java became J2EE, Java 2 Enterprise Edition, and became the most famous and most widely used software language when there were standards around its syntax. There were clean web APIs and clean database APIs. Even though Java was initially just made for televisions, developers started using it because it was clean and there were standards.
First and foremost, there needs to be standards built. We’ve seen one standard to be wildly successful: the ERC20 token standard. We’re starting to see ERC721 for non-fungible tokens for collectibles. We’re starting to see identity standards, and we also need standards for particular verticals, so like the FIX standard for finance. You need to have the insurance code standards. CPT and ICD, the procedure codes and diagnosis codes for healthcare. Having all of those ontologies for approving smart contracts is one gating factor. That’s the first one.
Second, throughout history, technology has always bumped up against scalability. When you talk about the first cars went a certain speed, and then the engines got better. Dial-up to modem to fiber optics, net speed increased. Right now, the transactional throughput of these blockchains is relatively weak. Relatively low transactional throughput per second. We’re going to start to see the scalability upgrades come in place.
One of the main scalability upgrades for Ethereum particularly is transitioning from proof-of-work, which is mining, to proof-of-stake. Another one is what we call side channels. If I took you to the bar and put down my credit card, I essentially open a channel, and I buy us all a Shirley Temple, and then I buy us all a salad, and I buy us all an entree and then I buy us all dessert. Each one of those rounds could be done off chain but batched. Then at the end when we paid the bill, I close the channel. Basically, you can open it on chain, have thousands of micro-transactions off chain and you keep a tally of it and then close it back on chain. That’s another scalability solution that’s being created now.
Next one is called sharding. There are shards of the blockchain that have to form consensus and agree rather than the entire blockchain. Then lastly, there’s a technology called plasma or essentially a blockchain on top of blockchain. You can go crazy with these things and frankly, that one at least, is above my pay grade mentally, but your readers can look it up. You’ve got standards that need to be formed, you need to have the scalability upgrades. You’re starting to see a lot of the privacy upgrades as well.
Zooko Wilcox has championed ZCash and the notion of zero-knowledge proofs. We’re starting to see those zero-knowledge proofs implemented in Ethereum. You’re also going to see other types of security and privacy processes. You’re also going to see the improvement in formal verification. Being able to audit this code, because unlike the Internet of today where we’re using it as a means of communication, the Internet of tomorrow where we have this network of value, and you’re moving assets, that creates a whole new attack factor. I think there’s a lot that needs to go around that. Then, if you’ve got standards, you’ve got the scalability, you’ve got this behavioral economic incentive for people to use these networks already, the sky’s the limit.
Many of our readers care about cryptocurrencies as they pertain to investments. Which currently relevant coins will stand the test of time and be around in five to ten years?
86% of companies with a .com at the end of their name, from 1996 to 2006, went to zero. I think that we’ll have at least that similar trajectory, if not more.
I believe we need to bifurcate tokens into protocols, consumer utilities, and securities. I think that there are different aspects to all of those. The other aspect is some of these are just a more efficient way of representing an asset. Just having a parcel of land that now is tokenized, you lose the friction that you typically would have if you had to go through a real estate agent and then a trustee or an escrow account.
With all that said, I think that this is the first time that we’re able to monetize something like HTTP or TCP IP, if you will. If you look at what that stack probably will be, I think it’ll be a combination of decentralized peer to peer business logic. I think the strongest competitor in that space is Ethereum. I think that you’re going to have decentralized file storage. So, invoking the usability of something like Dropbox. I think the strongest player in that field, even though it’s yet to be released, is the Interplanetary File System and the token of that would be FileCoin.
I think you’re going to have decentralized messaging. I don’t necessarily know that we’ll need to be tokenized, but you’re going to need that peer to peer decentralized messaging and then a high group of computing resource. Something like Golem, what they’re trying to achieve. I think that’s the equivalent of HTTP, TCP IP. Whether you have a dog walking application or poker application or accounting application, all of those applications are going to need to use some version of that protocol.
I think that first and foremost regarding tokens, I think that people need to understand the bifurcation of what a protocol is versus what an application is. The addressable market about the entire protocol versus one specific application. On the application layer, I think that we’re in very, very early days and I think that there will probably be a decade worth of experimentation and evolution in how these tokens are used, whether they’re creating game theoretical economic incentives to participate in their network or if they’re used as a representation of equity in a company. I think it’s so early that I haven’t bought a single application layer token this year.
What will ultimately catalyze mass adoption of blockchain technology?
I think the catalyst will be evolving those standards, the scalability. I think that if the infrastructure is there, the implication of decentralization is such a no-brainer that if people have a sandbox plan, they’re going to play and they’re going to build. Creating that infrastructural element, I think will be enough of a match to light the fire.
What about an external event such as an enormous security violation or obvious inefficiency?
To your point, I think it may have already happened. We may have already seen those external issues where we saw the implosion of the capital markets. We’ve seen this inefficient or unequal dispersion of wealth. We’ve seen the thousands of hacks in the Snowden Era, etc. Maybe that’s already happened, and we’re just recognizing that our social political, financial operating systems shouldn’t be owned by one particular entity that operates as a bully. You go onto XYZ’s company’s database, and all of that information is now their’s. It should be on a level playing field. Maybe to your point, those external factors have already happened.
Thank you Andrew.
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