This is the fourth and final episode in AIKON’s Mighty Capital-sponsored podcast series on building blockchain products. Here, AIKON Co-Founder and CEO Mark Blinder talks with AIKON Co-Founder and CTO Tray Lewin. The main idea is the potential of blockchain in product. Their conversation begins with a discussion about how blockchain can be used to validate the provenance of important documents. Next they talk about how to make blockchain more user-friendly – which also happens to be AIKON’s main mission. A third key topic is about key considerations for PMs when choosing a blockchain for their products.
On how blockchain proves provenance
Because of the transparency of blockchains, Tray cautions that people need to be careful about what information they store there. But while you shouldn’t use a blockchain to store private information like a birth certificate, you can use a feature called a hash. A hash is a cryptographic primitive that blockchains have built into them. It serves a useful function as a kind of signature of the data.
Tray says, “That's a key use case for blockchain: proving that the data hasn't been altered. It doesn't all have to be on the blockchain, just the hash.”
A great real world example of how blockchain could be used to prove provenance is getting title insurance for a house. As Tray explains, “If you've ever bought a house, you know you have to spend hundreds of dollars to a title insurance company. And what they do is just investigate that nobody else has a claim against that house. So every single time you buy the house, you could go through the same process and pay title insurance companies, even if you sell the same house three times in a row.”
Tray continues, “It would be so much better to have that title hashed and stuck on the blockchain. And then when someone needed to prove who owned it, it would be very clear. This entity owned it. This entity sold it.
“So this is a good example of how you can reduce the layers of overhead. You don't need a trusted party. And you don't need an intermediary. You could just have a single button to click and see the exact history of that title and all its transfers. So completely collapsing this whole cost structure. And to me that's a canonical use case of a blockchain – proving provenance of whatever content, in this case a house.”
On making blockchain more user friendly
A major problem with blockchain is usability. The potential of the technology is enormous, but right now the friction for users is quite high.
That is exactly what AIKON is working on. As Mark explains, “We have a product called ORE ID. And that basically connects your existing users with the existing login they're used to, and gives them a wallet, puts tokens in their wallet, and gets them up and running.” In this way, users don’t actually need to know anything about tokens or wallets – they are just able to use the technology.
This kind of friction reduction is key because, as Tray says, “the average person needs to be comfortable doing it. Everybody's now comfortable using applications on their phone because it's so frictionless. Blockchain puts lots of friction up in front of you.”
Huge ramifications in product
For product people, the ramifications are huge. Tray explains, “If, as a product person, you want to add blockchain to your app, then the user has to have a blockchain account. In order for that to work, you have to have an account created for that user. And then different blockchains are really hard to create accounts. And sometimes they cost tokens. So you have to have tokens for this new user to pay for an account. Well, who's paying for that? How does that work? And so really, there's just a lot of things that you have to do to just get the basic sort of plumbing in place for users, like getting an account on the blockchain for them.”
The goal for blockchain products is that they will eventually become as easy to use as smartphone apps. But, Tray says, “We're definitely in the early days. So making a decision now around blockchain and what blockchain to use and what technology to use and how it's going to be used in your app? You do have to understand the technology today. You don't have to be an expert on it. But you need to have at least partners that understand that.”
On how PMs can choose the right blockchain
Another problem with blockchain is that there are so many. How should product managers go about choosing the right one for their products? There are certain trade offs to consider, mostly around features vs. trust.
Tray says, “it starts with knowing why you're using blockchain. What are you going to do with the blockchain? So let's say you're building an app to do titles for your mortgage company or something. Well, how many transactions you're going to have per action? You can have one transaction every 10 years for property or something. So you're gonna have very few transactions. But you want it to be very trusted. You want to know that if you're putting it on this blockchain, you don’t want anyone to say, Oh, that's a new blockchain that's not trustworthy.
“Usually for blockchains, the longer the blockchain is running, the more trust you can place in it, because it's harder to recreate that from the beginning. So the longer it runs, the more trust you can place in it. So the OGs, like Bitcoin and Etherium, have a huge trust factor with them."
Choosing the right chain
“But some of the newer blockchains are designed to be faster and cheaper, they have a better fee structure, a different fee structure. So for let's say, like micro payments, doing small payments infrequently. I would say pick a blockchain that is designed for high volume transactions.
“There's a number of them out there. One’s called Algorand, which is really well suited. They want to make it easy for you to send transactions back and forth, like a point system, and have fixed fees that are very low. So I would look for something like that, where you know what your fee structure is, your fee structure is fixed.
“Whereas other chains, the fee depends on how popular the chain is at that moment. That's a hard thing to figure out when you're modeling your cost of doing business for the customer. So getting a predictable fee is really important. And picking a chain that's optimized for what you need, either high trust, or high frequency transactions, or low fees, is very important.”