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The Birth of A New Asset Class: Blockchain Tokens & The Decentralized Web

How bitcoin birthed a new internet and why it matters

· smart contracts,bitcoin,cryptocurrency,blockchain,defi

“You can’t connect the dots looking forward; you can only connect them looking backwards.” — Steve Jobs

The rise of ethereum and broader blockchain ecosystem share many attributes with the early days of the internet.

In 1995, the World Wide Web was a vast, bare and open platform. It was weird, of little utility and used for illicit things. In fact, very smart people were very convinced it would fail.

Fast forward twenty years, it has fundamentally changed our lives in unimaginable ways. The same pattern is unfolding with blockchain assets and the decentralized web with one major difference.


You should see the above URL in your browser. HTTP & SSL are used here to access

Most people can’t tell you what these acronyms stand for nor what they are used for. Yet, all of us use them every day, multiple times a day. We rely on them to keep our bank info private and work remotely. They allow us to facetime our loved ones, get us home when we’re lost and read this post on our phones. These open source internet protocols are critical pieces of our internet lives and yet we don’t evenrealize they exist. Why? Because we don’t need to understand them, in order to use them.

The internet we know and love today — Facebook, Gmail, WhatsApp, online banking, Airbnb and Uber are built on top of these protocols. The modern web is made up of a stack of technologies that work together to support the applications we use every day. We call this the modern web stack. It looks like this:

As consumers we only interact with the top layer. Yet, we use the entire stack. The invention of Blockchain technology underlying bitcoin and ethereum has created a new type of internet and with it, a new web stack:

The best investments during the early internet were technology companies that used the internet to (1) create new business models (Adwords/Google), (2) dis-intermediate incumbent service providers (Netflix & Uber), (3) enable new applications (Facebook), and (4) drastically lower cost through mass scale & centralization (Amazon).

Facebook, Google, Amazon, Netflix and Uber were some of the best investments of the internet era. Ironically, the HTTP, TCP/IP & SMTP protocols that these businesses were built on captured none of the value that was created. These web infrastructure protocols resulted in a 0% ROI for the developers, stakeholders and investors that worked on them while the founders of the applications built on top became multi billionaires. However, I would argue if the HTTP, TCP/IP & SMTP protocols had issued a crypto token via an Initial Coin Offering at the onset of their development, they would have been the best technology investments from the internet era, outperforming even Amazon, Facebook and Google.

Fast forward to 2017 and we have a new class of HTTP, SMTP and TCP/IP like protocols being developed but with one major difference. They can be bought and sold like stock in Amazon, Facebook or Google.

These new protocols take the form of open-source blockchain networks. The leading blockchains today are Bitcoin and Ethereum. They have, for the first time, created a way to monetize open source networks and software. This is a really really big deal.

Personally, I am most excited about Ethereum and the token networks being built on top of ethereum.

Like the early internet companies, blockchain assets and token based networks are (1) creating entirely new business models, (2) enabling new applications, (3) dis-intermediating current service providers and (4) lowering the cost of existing products and services.

This is the next stage of the internet — the decentralized web

Why it Matters — The Stock Market of the Decentralized Web.

Ethereum birthed the Initial Coin Offering also known as the ICO. An ICO is a way for startups to raise money and align incentives between investors, developers and users in an open-source network. The startup issues a coin or token in exchange for an investment in ether or bitcoin. It’s easiest to compare this to buying a share of Apple stock on the Nasdaq. However, unlike Apple stock, these tokens have utility beyond their financial value. The tokens are used for many different things, each with their own use cases, game theory, economic incentives and features. (More on tokens here).

In addition to unprecedented technological development, we are witnessing a new type of capital market forming. A token market with no borders, trustless exchanges and instant settlement times. If one were to build a stock market from the ground up using first principles, it would look a lot like an Ethereum ERC20 token. (although with clear regulations).

The market is already showing there is massive demand for a token instrument. The total market cap for digital assets & tokens excluding bitcoin is currently around $50 billion.

Unlike a traditional capital raise through a venture firm or the public markets, tokens open up a new type of fundraising mechanism.

To get an allocation in Uber’s seed round, one had to be a tech insider, likely living in San Francisco and have mutual friends with Travis Kalanick. To get an allocation in 95% of new tokens, you need an internet connection and a computer.


With all the excitement around crypto assets, it is critically important we maintain s0me perspective. We are clearly in the first layer of the decentralized web stack — core infrastructure & underlying protocols. Like the early internet, the most interesting applications are likely to emerge in unpredictable ways. Although we may not be able to predict which projects will become the Facebook, Google and Amazon of the decentralized web, the infrastructure layers that power these future applications will end up capturing more of the value in the long run.

Unlike the early web, the financial rewards will not be concentrated in the hands of large corporations. It will be shared by the early users, developers and investors that build these protocols from the ground up.

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