Interview with Kyle Kemper of Blockchain Canada – C2 Montreal #C2M18

Kyle Kemper is executive director of the nonprofit Blockchain Association of Canada (BAC). Kyle shows leaders and influencers the potential of Blockchain technology in an effort to supercharge the blockchain ecosystem and turn Canada into a global hub of fintech excellence.

Kyle says he’s looking forward to blockchain reducing the influence of centralized monetary policy and the subsequent amplification of the power of individual people. He is excited about blockchain applications in healthcare, supply chain management, voting, digital ID, certifications, gaming and media.

Kyle has accumulated over 15,000 hours of blockchain experience and is a Certified Bitcoin Professional (CBP).

Global Blockchain is an investment company that provides investors access to a mixture of assets in the blockchain space, strategically chosen to balance stability and growth. Blue chip holdings such as Ethereum and Bitcoin are complemented by best-of-breed “smaller cap” crypto holdings, many of which are not yet available to other investors.

Kyle advises Datawallet, U.CASH, ChangeTip and numerous other digital currency projects.

Interview highlights

Kyle passionately describes a usecase where blockchain is used to provide instant verification and validation of resume work history, education and work profiles.

Kyle created a cryptocurrency training site called Cryptokitty.space NOTE: Cryptokitties.space is a phishing site.

He is an advisor to datawallet.com Datawallet is your digital wallet for your online data. It allows you to take your data from platforms such as Facebook, Amazon, Uber, Spotify and unify it in one place. You control who gets access to your data, learn what your data says about you, and get paid when you share your data.

Kyle sees a lot of potential in the development and expansion of the data wallet.

Many cryptowallets are currently just money clips.
He sees the need for storage of all receipts and for the digital fulfillment materials (warranties etc…) to be transferred with transactions.

There needs to be fine control of layers and compartments for the different wallet uses.
Only expose exactly what is required for privacy and other matters.

There needs to be a lot of work for automatic association and ease of use. However, blockchain is a key enabler for a transformed richer automated experience.

All of the control and privacy is needed while still having one tap ease of use, security and integration.

He sees the application of Aggregation theory. Aggregation Theory provides a framework to understand the impact of the Internet on nearly all industries.

Blockchain supercharges the internet disintermediation trends and the pre-internet disintermediation trends.

Several articles on Stratechery formed Aggregation theory:

* Airbnb and the Internet Revolution described how Airbnb and the sharing economy have commoditized trust, enabling a new business model based on aggregating resources and managing the customer relationship
* Netflix and the Conservation of Attractive Profits placed this commodification/aggregation concept into Clay Christensen’s Conservation of Attractive Profits framework, which states that profits are earned by the integrated provider in a value chain, and that profits shift when another company successfully modularizes the incumbent and integrates another part of the value chain
* Why Web Pages Suck was primarily about the effect of programmatic advertising on web page performance, but in the conclusion I noted that the way in which ad networks were commoditizing publishers also fit the “Conservation of Attractive Profits” framework

In retrospect, there is a clear thread which is Aggregation Theory.

1. the Internet has made distribution (of digital goods) free, neutralizing the advantage that pre-Internet distributors leveraged to integrate with suppliers.

2. the Internet has made transaction costs zero, making it viable for a distributor to integrate forward with end users/consumers at scale.

his has fundamentally changed the plane of competition: no longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Instead, suppliers can be aggregated at scale leaving consumers/users as a first order priority. By extension, this means that the most important factor determining success is the user experience: the best distributors/aggregators/market-makers win by providing the best experience, which earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle.

Aggregation Theory will be the proper framework to both understand opportunities for startups as well as threats for incumbents:

* What is the critical differentiator for incumbents, and can some aspect of that differentiator be digitized?

* If that differentiator is digitized, competition shifts to the user experience, which gives a significant advantage to new entrants built around the proper incentives

* Companies that win the user experience can generate a virtuous cycle where their ownership of consumers/users attracts suppliers which improves the user experience

Aggregation Theory describes how platforms (i.e. aggregators) come to dominate the industries in which they compete in a systematic and predictable way. Aggregation Theory should serve as a guidebook for aspiring platform companies, a warning for industries predicated on controlling distribution, and a primer for regulators addressing the inevitable antitrust concerns that are the endgame of Aggregation Theory.

Classifying Aggregators
Aggregation is fundamentally about owning the user relationship and being able to scale that relationship; that said, there are different levels of aggregation based on the aggregator’s relationship to suppliers:

Level 1 Aggregators: Supply Acquisition

Level 1 Aggregators acquire their supply; their market power springs from their relationship with users, but is primarily manifested through superior buying power. That means these aggregators take longer to build and are more precarious in the short-term. The best example of a Level 1 Aggregator is Netflix.

Level 2 Aggregators: Supply Transaction Costs

Level 2 Aggregators do not own their supply; however, they do incur transaction costs in bringing suppliers onto their platform. That limits the growth rate of Level 2 aggregators absent the incursion of significant supplier acquisition costs.

Uber is a Level 2 Aggregator (and Airbnb in some jurisdictions due to local regulations).

Level 3 Aggregators: Zero Supply Costs

Level 3 Aggregators do not own their supply and incur no supplier acquisition costs (either in terms of attracting suppliers or on-boarding them).

Google is the prototypical Level 3 Aggregator: suppliers (that is, websites) are not only accessible by Google by default, but in fact actively make themselves more easily searchable and discoverable (indeed, there is an entire industry — search engine optimization (SEO) — that is predicated on suppliers paying to get themselves onto Google more effectively).

Social networks are also Level 3 Aggregators: initial supply is provided by users (who are both users and suppliers); over time, as more and more attention is given to the social networks, professional content creators add their content to the social network for free.

The Super-Aggregators

Super-Aggregators operate multi-sided markets with at least three sides — users, suppliers, and advertisers — and have zero marginal costs on all of them. The only two examples are Facebook and Google, which in addition to attracting users and suppliers for free, also have self-serve advertising models that generate revenue without corresponding variable costs (other social networks like Twitter and Snapchat rely to a much greater degree on sales-force driven ad sales).

Kyle believes blockchain will transform civilization.

In 2017, Canada ranked third in the world in the number of blockchain startups after the USA and UK. The Canadian Security Administrators (CSA) launched a “Regulatory Sandbox Initiative” to mentor and work with new startups in a relatively regulation-free environment. The Ontario Securities Commission (OSC) was the first provincial agency to create a “safe space” for blockchain startups with its OSC LaunchPad program.

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