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Introducing the Programmable Economy, the Value Graph and Other Elements of a Post-Bitcoin World

by Ray Valdes  |  October 15, 2014  |  Comments Off on Introducing the Programmable Economy, the Value Graph and Other Elements of a Post-Bitcoin World

Having been heads-down in a number of projects for a long while, finally surfacing for air, I wanted to share with you some of what has transpired recently. This past week I was at Gartner Symposium in Orlando presenting on peer-to-peer digital currencies and meta-coin platforms.

One of the benefits of being at Gartner is getting the chance to do what are called “Maverick” projects. These are projects that seek a perspective that is unconventional, contrarian or new. Often an outsider’s view is needed when looking at well-established categories such as security, application development, supply chain, or data management. In the case of a new field such as metacoin platforms, almost all perspectives are new, by definition.

When I started digging into this 12 months ago, the topic of digital currency was completely new to me (and perhaps to many of you as well). Over the past few months, I’ve come up with some observations that I presented at Symposium and will covering in more detail in upcoming research notes.

Here are the highlights:

  • The Bitcoin system is a great start on enabling what some call “the Internet of Money”, but in my opinion, Bitcoin has some fundamental flaws which cannot fully be addressed by layering on top of it. Therefore it will likely fail to meet the expectations of those hoping it will engender a revolutionary transformation of digital commerce.
  • Nevertheless, there are many converging trend lines in digital world (the “sharing economy”, the social graph, evolving digital platforms, mobile adoption, etc) that mandate a programmable platform for distributed value exchange — a next-generation digital currency platform.
  • In my presentation I called this a “metacoin platform”, with an emphasis on platform. Some use the term “Bitcoin 2.0”, but that I think the future platform is going to be substantially different than Bitcoin 1.0.
  • There are many in the industry that also see the limitations of Bitcoin, and have been exploring different approaches. Some of these approaches are layers on top of Bitcoin (some use the metacoin term to refer to these layers), while other approaches are wholesale from-the-ground-up replacements for Bitcoin. Examples are Ethereum, Ripple, NXT, Counterparty, and Colored Coins. It is too early to pick a winner. Each system has its strengths and weaknesses.
  • But although the immediate future may not be clear, I think the eventual outcome is not in doubt: a platform for distributed value exchange that enables a range of use cases, including non-monetary exchanges of value.

In looking at the post-Bitcoin era, I introduced the following concepts and terms:

  • the Programmable Economy: the aggregate of solutions built on a digital currency platform that enables entities to incorporate full-strength programming constructs, including smart property, self-enforcing contracts and decentralized autonomous corporations.
  • the Value Graph: the data model that captures value-related interactions. It is akin to the Social Graph, but with a value dimension.
  • the notion of “markets as products”: the notion of designing markets in the way that one would design products, which is possible if you have a platform to build upon.
  • the “minimum viable market”: analogous to the minimum-viable product (MVP) concept, taking a lean and agile approach to market design and market cultivation.
  • “thinking outside the bucks”: to look at exchanges of value that are not directly tied to monetary transactions, but can have a beneficial effect on digital business.

These are exciting times. There is a wave of innovation going, with some very talented people chasing down some powerful ideas and new platform designs. I plan on sharing some of my observations on this wave in coming weeks and months. Stay tuned!

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Category: programmable-economy  

Ray Valdes
Research VP
9 years at Gartner
30 years IT industry

Ray Valdes is research director in Gartner Research, where he is part of the Internet Platforms and Web Services team. Read Full Bio

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