You don’t have to look very hard in any direction to find an expert who’ll tell you that cryptocurrencies are radioactive or, conversely, that they’re an entirely new asset class. Taking the pulse of the moment is complicated. There is a lot of promise, but there are also real uncertainties. As governments begin to pay more and more attention to cryptocurrencies, and the blockchain technology underpinning them, the methodologies for understanding how to evaluate crypto-economic fundamentals will hopefully become more refined.
This broad legal and financial uncertainty has always been a part of the emerging world of cryptocurrencies. Those looking on from afar can rationalize staying away from cryptos by highlighting concerns over their risk, legality, and true underlying value. While those on the inside point to supposed similarities with the dot-com bubble and reference the historic gains associated with emerging industries and markets. If the specter of trepidation is ever going to be lifted from cryptocurrencies, it will require government action. Until then, large companies will proxy for governments as a suitable metric for measuring development, implementation, and the overall trajectory of cryptocurrency technologies. This is why one of the best ways to understand whether things are moving in the right direction is to look at what incumbent power players are doing and saying about the emerging ecosystem.
Understanding the criteria by which big business valuate Ethereum starts with the moment blockchain technology separated itself from bitcoin and began being used for other things. Most people in the ecosystem know about Vitalik Buterin’s inspiration for creating a programmable blockchain, or about the yellow paper by Gavin Wood, or about how The DAO changed everything. Some people might be surprised, however, that there is another story of how Ethereum was catapulted forward by big business and how one of the world’s paramount corporations embraced a technology potentially poised to disrupt them.
How Marley Gray Bootstrapped Ethereum and Blockchain Technology at Microsoft
It was November 2015 and the Ethereum network had been functioning for a little over 100 days. After having played with the previous summer’s Frontier release from his office at Microsoft’s Innovation Centers in New York City, Marley Gray was in London attending the Ethereum developer conference DevCon1. Gray was at DevCon to talk about Microsoft’s Ethereum Blockchain as a Service (EBaaS), offered through the tech giant’s proprietary cloud platform, Azure. Getting to London hadn’t been easy for Microsoft’s director of US financial services, however. There had been a lot of convincing needed, even with the development of EBaaS underway. Gray told ETHNews, “Once I got there, on a shoe string budget, and made my announcement, it hit the press huge. Reuters, Bloomberg – everybody had articles.”
Gray was a seasoned blockchain enthusiast and experienced bitcoin user at this point, and had cut his teeth as a developer building client-server technology for web apps. He knew enough already to understand he was in the right place at the right time, and this was the start of something special. Gray sat at Level39, a section of London’s Canary Wharf that’s designated for tech startups, eating his lunch with friends while his phone sat on the table. There was an open email on it addressed to the new Microsoft CEO, Satya Nadella.
“We were the new Microsoft at this point,” Gray told ETHNews, “Satya Nadella had taken over and our culture was changing. We were so used to the old Microsoft where you wouldn’t just email the CEO. Everyone at the table is saying ‘don’t do that, don’t send that,’ and normally I would never do something like that. I thought to myself, this is so important, I’m going to email Satya and send him an article and say, ‘I know you don’t know who I am, but this is hugely important.’ I was going to test the waters. Never in the past had some rogue employee in New York, not tied to anybody in the product groups, done something like this. I’m sitting there and we’re all debating it and debating it and the next thing I know, this email comes across on my phone and it’s a forward from Satya. He had read one of those articles and from that point on, Satya got it and he latched onto it.”
Before leaving for London, Gray had been bombarding the Microsoft product groups with queries about blockchain technology and Ethereum. Aside from the XBOX team, who knew about bitcoin payments for video games, “nobody even knew what I was talking about,” said Gray. After DevCon1 in London, Nadella placed Gray in contact with Microsoft’s new business development lead, Peggy Johnson, who capitalized on Gray’s efforts and pulled him to company headquarters in Redmond, Washington. “The London stuff was easy by comparison,” explained Gray, “once they moved me to Redmond and said, ‘Okay, you need to point this aircraft carrier in the right direction. Here’s a paddle. Knock yourself out.’ That was painful, but it was a tremendous success and very intelligent people helped. There was lots of noise and tons and tons of conversations. The good news was I wasn’t explaining this to Microsoft in a vacuum. Our customers – the ones that were coming to the briefing centers – not the technologists, but the CEOs, the CIOs, the lines of business heads were coming and wanting to talk about blockchain. So at first, I was spending half my time in briefings explaining what we’re doing and what our vision is and what is blockchain.”
According to Gray, the top level managers at Microsoft grasped Ethereum conceptually right away. “But I had to convince everyone in between to get to that point. At the new Microsoft, where we’re really built to drive an initiative like this – where it’s open, where no body owns it – you just lead and push things forward. I like the cliché ‘a rising tide lifts all boats.’ That’s essentially what it is. We’re going to do this knowing that we’re going to give most of it away, but the return on the investment from an efficiency standpoint – just the opportunities it opens up for us especially the cloud providers – I made the connection almost immediately. The cloud is this huge distributed thing as well. It’s actually a perfect compromise for enterprise. You have this sort of discrete cloud where counterparties can get together in trusted computing environments that share an underlying data structure.”
Why Microsoft Views Public Ethereum As The Backbone Of The Emerging Collaborative Economy
While still in New York, Gray had formed a key relationship with ConsenSys’ head of global business development, Andrew Keys. “I just said, ‘I’m going to hop on the 2 train and come see you guys in Brooklyn.’ So I went downtown and Andrew and I were finishing each other’s sentences. We got together again at DevCon2 and pulled Vitalik aside and said, ‘Hey, we want to do this, but we don’t want to do anything to hurt public Ethereum.’ We wanted to reinforce the whole design scheme.”
According to Gray, Ethereum is well designed to define data structures, functions, and when data is appended to the ledger. Gray told ETHNews: “Those are what we call ‘store procedures’ in relational databases. You can write some logic to access the data, which it does very well. So asset issuance, tracking ownership lineage, doing transactions at the data tier, all are present. You then have the smart contract language, this Turing-complete thing, which you can write anything with.”
As Ethereum architects continue to develop novel solutions to scaling the public chain, Microsoft has already implemented its own solution: cryptlets. Microsoft’s cryptlet fabric is essentially a cloud environment where pooled resources, which use enclaving technology and specialized compute environments, do cryptographic functions very rapidly. The fabric is in the cloud and utilizes Microsoft’s extensive datacenter network to function. Gray elaborated for ETHNews: “We have all these things in the cloud. We have datacenters in 39 separate regions. These are enterprise grade, government grade, and industrial strength datacenters. We can essentially create this fabric where we run these cryptlets in the cryptlet framework anywhere on the globe, and anyone can spin them up as they need.”
One of the more common uses for this technology is to have a private network running that uses Ethereum to communicate with another blockchain network across the world, using the public Ethereum network as a bridge or backbone. People subscribe for this service from Microsoft, not buy, because with blockchain, you only pay for what you use. “You have then the economic benefit of being able to split the check with your counterparties,” said Gray. “If a transaction costs a dollar, we can know that each party gets fifty cents and away you go. I think you’re going to have huge value in public blockchain. Public Ethereum is the core backbone, a common place for things to be exchanged. You can move assets between disconnected consortium blockchains using the public chain as a conduit. You can really get to this collaborative economy that we are all talking about.”
Gray concluded his thoughts with an overarching sentiment about this moment in the history. “It doesn’t take long to start following the breadcrumbs and come to the realization that this technology is going to fundamentally rewire the DNA of commerce, at all levels.”