Overcoming the Crypto Downturn, and the Road to a Free New Data Economy
Bruce Pon, Founder of Ocean Protocol, comes back for Ocean’s latest release, the future of data ownership and crypto
In our 21st episode, we bring back Bruce Pon, Founder of Ocean Protocol Foundation, to discuss the future of Web3. During this episode, Bruce talks about overcoming crypto downturns, establishing a free, new data economy, and the future of data ownership. Here are edited excerpts from the podcast:
Why is Bruce optimistic about Web3 at present?
If you look back at 2014, Bitcoin was just a meme, an idea for a movement to own your money and be your own bank. By 2018, about 200 ICO projects were funded. The first tentative apps were coming, but nothing hit the Product-Market-fit except Ethereum. From that period, only 20 or 30 teams survived, and Ocean Protocol was one of them.
In 2022, dozens of unicorn projects and thousands of projects were funded, with countries opening up access to crypto and making Bitcoin and other cryptocurrencies legal tender. There is nothing but optimism. Don’t be like Paul Krugman, who mistook temporary setbacks as something that would kill innovation and adoption. All you need is time. So when there’s blood on the streets and everyone’s tapping out because it feels like it just cannot get any worse, that’s when you enter the ring. That’s when it takes conviction, courage, some adventure, and a lot of fortitude.
“Being through this two times already, I’ve seen how it happens. I am betting it all, personally, within this company because I have been there, and I know that anybody who sticks around will be rewarded. I have nothing but optimism for this space because if you look back to 2014 or 2018 and where we are now–it’s an exponential curve, and we’re still early.”
Keeping the Ocean Community motivated through 2022
Bruce points out that what’s good at Ocean is that there have not been a lot of unforced errors. While they tried out AMMs for pricing, minting, and more, he considers it more experimentation than unforced errors.
“I think we’ve done well by the community. We devote a lot of time to just cleaning up everything and preparing for the downturn, which will last another year or so. The ethos that carries us forward now is that we are very conservative.”
From the community perspective, it’s natural that there’s fatigue, frustration, and pain from losing money. There are so many ways that you could have lost money this year, and not a lot of ways that you could have made money. The same has been felt in the previous two downturns. What this moment does is take away the tourists and the dilettantes. It keeps the people who are really into crypto and have a long-term horizon. It’s not bad that people leave and find other things–this space moves so fast, and it’s so intense. Some people just need to pause and explore other things.
“We’re going to be there when the crypto winter ends because we’ve been trying to be as conservative as possible to make sure that we are successful as one of the next projects that come out of this phase kicking and screaming.”
FTX incident and Trust in the Crypto Community
The first thing that comes to mind is to take money off the table. Remember the feeling that you have right now and the gut-wrenching hole in your stomach because you didn’t take enough off at the peak. It’s important to keep that in mind because the next cycle is coming, and we are all going to have a shot again.
People outside have a hard time distinguishing between crypto and FTX. Still, FTX embodied the worst of the existing financial system: centralized control, opaqueness in the books, buying political influence in cover, outright fraud, lies, and virtue signaling while robbing people.
Crypto, on the other hand, has had complete transparency of the books, unwinding billions of dollars time and again, and the ability for people to withdraw to hard wallets when it got too hot and they felt insecure.
There’s a two-year run-up, and everything’s great. Then you have a two-year detox to eliminate the tourists and the scammers. Those who know, know. With every cycle, the curve becomes more compelling and unstoppable, and crypto will be adopted. What do we learn from this? Take money off, stay humble, keep building, and don’t lose sight. Tourists come and go, but in the end, the people who stay will be alright.
Is VC money good for Crypto?
Is VC industry’s foray into crypto good for Web3? Bruce tells us his point of view, having been on both sides of the table.
Unfortunately, VCs are former investment bankers, people who have high net worth or have very well connections to do their own type of signaling. They follow a pack, and they don’t necessarily do proper due diligence on projects–that’s good and bad. It means that some projects that should never have gotten funding to get funding in the hype, and frauds can continue to do their thing.
It also means that projects that don’t get to be looked at by more established VCs get funding to continue. If you look at something like Polygon, the founders asked for $5–6 million and got laughed out of Silicon Valley. In the end, they put together a friends-and-family round in India, and look at them now, they are one of the biggest successes out there, and that’s amazing.
You look in Romania, Elrond (the country’s first Bitcoin exchange platform), they got a little bit more backing, but nobody knows who they are. They have over and above delivered because of their network and the VCs who believed in them.
“So yes, VC money is good. Yes, VC money corrupts and lets many frauds and scams through the gate that should not be let through. But I would always err on destroying the capital of many VCs in order to get two or three gems that contribute to the world. When Ethereum came out in 2014, it was overwhelming, and most people said it was a scam–probably one of the worst bets you could have done from a financial perspective.”
VC money is money–we need money for innovation, and we need it for other things. There are dark sides to VCs and corrupting influences, but as a founder and a community member, VCs are your friends because they bring money. As long as we get 20 unicorns out of all the funding rounds, it pays for all the losses in aggregate.
A Free, New Data Economy on the Internet
Speech, money, data: there is no distinguishing factor between them. They’re all currencies; they’re all value. They’re all something that you can transport, own, and digitize that you were never able to before. We just learned that with Bitcoin where it was a fringe concept of owning your own money.
A free and open data economy has just free and open speech and free and open money–the ability for someone from Iran to communicate, share, and have commerce with anybody else on Earth. It’s for people to get agency in a world where there are a lot of shadowy powers that control large portions.
“I want individuals to have the ability to take control of their own data and to monetize it in whatever way. I want for data scientists to then access it in an ethical manner, where people opt-in, where we have the provenance of the data, so when AI is trained, we know where the biases lie, but also who owns that data.”
Global borderless micro-payments, monetizing IP, transferring value, all the things speech, money, and data–it’s the same thing. Ocean focuses mainly on the data side. The world that has been created in the structures that were designed to exclude more people than they protect. A free and open data economy is fully decentralized.
As a team, Ocean looks to make our stack more decentralized so that people don’t have to trust the Ocean team members; rather, they just have to look in the code and know that it’s decentralized.
Why Data Scientists should be interested in Web3
It is going to be a 10-year process to educate. We’re still early and it’s a blue ocean–the data economy is just starting. Just like Bitcoin was a fringe concept. Just 10 years later, people understand the value of Bitcoin as this uncensorable form of money. It’s the same with data. It’s a little bit different in that we have copyright laws and intellectual property laws–but there are hundreds of tools emerging for data and AI.
There are challenges in training the data: What’s the provenance? Where does it come from? What are the biases? Just as an example, pharmacological data from the past 50 years has been mainly biased toward the white European male around 40 years old. That ignores ethnic differences, genetic differences, and a host of other types of differences. Training data provenance through a data economy that is blockchain-secured helps to understand that we need to go back to those pharmacological studies and figure out what those biases are. Then, we may need to retest many of the drugs that are out there to identify the impacts on, say, a small woman at 45 kilograms versus a man at 60 kilograms.
Another thing is orchestrating data flows across multiple tools and platforms. If you are a data scientist, you work on multiple tools and platforms. Ideally, Ocean is designed well so that you can orchestrate between all of that. There’s a menu that allows you to do this transformation, process its analytics, and dump it somewhere else. It’s an orchestration that is:
- Managed through a decentralized manner so that there’s provenance and there’s a tracking process that’s never forgotten
- Owned completely by you: that intellectual property of a process of 25 steps through multiple tools, you can actually sell that as an industrial process.
Everything blockchain does nowadays is not geographically bound–that’s the Web2 world. The world we operate in is borderless. If I have to use Visa or Mastercard, I have to enter my address for whatever reason.
“That’s not the world I want to live in. I want to create a world, where if I’m a data scientist and somebody needs to use my data, they have filters on who can use the data or how they can use it, or at least the choice to do that.”
Monetizing intellectual property, transferring value–there are many things where Ocean as an orchestration layer helps to solve problems, which we have not really thought of because we just assumed it was not possible until now.
Ocean for Data Scientists
We spoke to Bruce about the stakeholders that Ocean will focus on in 2023. Moving forward, Ocean is focusing on data scientists, AI researchers, as well as users. It will be use-case driven. It will be what a data scientist needs to set up a data orchestration pipeline. What does a user need in order for them to have a privacy-preserving computation for their algorithm? How do they load the algorithm? How do they get an indicator that their algorithm is completely safe? There’s some sort of cryptographic bond that tells them what has happened and is provable–that’s the angle Ocean is going for.
“I just want to focus on use cases that really simplify and make Web3 more natural and organic, and integrate with the existing tools in the Web2 space. I think we will just focus on the narrow case of data scientists and AI researchers. If we can do that and execute that plan, Ocean will be successful and that will make all the crypto enthusiasts happy.”
How far are we from having a dream data economy?
Crypto blockchain is a general-purpose technology. There are 30 technologies that have driven humanity, and from these 30, you can develop thousands of innovations that build on each other. Blockchain crypto is one of them. Rolling out a general-purpose technology takes about 30 years–it takes one generation.
So money, speech, data–we are going to be talking about this for a long time, we are still early. Somebody else is going to pick up the baton, but the power of what we are doing is immense. We are going to give agency to people–not everybody will take it, and only a small fraction are actually going to take control over their data, speech, and money. We are building toward the ability for people to have that option when they realize it’s important and there’s a utility to it.
Has General Data Protection Regulation (GDPR) worked?
We asked Bruce whether the European Union’s GDPR has worked in protecting internet consumers. He says, “Yes and no.”
Putting a stake in the ground and saying people should own their data and have the right to have some sort of control is good. In terms of implementation, the GDPR leaves a lot to be desired. Take website cookies, for example.
What is better is that when your data is generated, it goes into your data vault. In that data vault, there are different segmentations–freely shareable, partially shareable, and under certain conditions, not shareable at all. If we go to a world like that, you don’t need GDPR, because, by default, when you have a smart contract that matches up with an opposing smart contract, you have cryptographic certainty on the tracking of your data.
Ocean is trying to go for an implementation of GDPR that was not as prescribed as what the EU tried to do, but rather something more organic and gives people true control. It will not be just clicking a button to accept or reject cookies. Whatever you click does not help you. It shows how little control you have over what it essentially exposes you to what people were already doing before. Do you have more power? No, you don’t.
Message on Data Ownership
“It’s a long journey–we have decades ahead of us, and it is unknown how it all looks. We are in an experimentation phase, and as long as the community has the patience for us to experiment and experiment with us, we will move forward. We are going to make a data economy happen one way or another. The only question is, how good is it going to be? How empowering is it going to be for people, or how dystopian is it going to be? That’s why my hat is in the ring, so I can fight for the one that gives the most people the most opportunity and control.”
Here is a list of the selected time stamps on the different topics discussed during the podcast:
1:43 to 2:43 — About Ocean Protocol
3:00 to 6:03 — Ocean Protocol’s achievements in the past few years
6:05 to 9:34 — Getting through the crypto winter of 2022
9:41 to 12:10 — What makes you optimistic about Web3?
12:20 to 15:41 — What the Web3 community needs to do for trust in the aftermath of the FTX incident?
15:42 to 19:15 — On the VC industry putting money into Web3
22:15 to 25:06 — Vision for a new, free data economy in Web3
25:07 to 29:31 — Why data scientists should invest in learning about blockchain and Web3?
29:43 to 32:15 — Who are the stakeholders that can come on board Ocean?
32:18 to 34:09 — How far is the new, free data economy?
34:13 to 37:09 — Has GDPR worked?
37:10 to 40:15 — What kind of projects does Ocean look at for giving grants
