The easier you make it for the enterprise to use blockchain technology the better chance you have of allowing it to reach its full potential, Casper Labs cofounder and CEO Mrinal Manohar said.
And Mr. Manohar knows what the enterprise needs because he worked in the field on Wall Street with Bain and a large hedge fund. He is also well-versed in tech, as he was an early contributor to BitTorrent and backer of Ethereum.
While in graduate school Mr. Manohar got his first exposure to Bitcoin through a friend who was a large miner. That friend explained the supporting technology but it really clicked when he said it was the best form of copy protection he had seen.
“Then something clicked in my head,” Mr. Manohar recalled thinking. “Oh man we’ve tried to protect music, we’ve tried to copy protect videos, we’ve tried to protect all sorts of things and it’s never worked. You’ve always been able to pirate it and create a copy.”
His vision crystallized in 2017-18. Seeing where the industry was headed, Mr. Manohar wanted to build links between the cliquish world of blockchain, which by then had spawned its own community and dialect, with the rest of the world that would have to accept it if it was to have maximum impact.
“We needed to bring the rest of the world along rather than being this insular system,” Mr. Manohar said.
In a decade covering new financial technologies I have often heard that people were going to replace the old with the new and change the world. After a few years they realize the change is much more likely to come about by developing that technology in such a way that the establishment sees clear benefit but also a short road to adoption through integration with their current tech.
Many mistake form and functionality, Mr. Manohar said. In order to facilitate adoption, you do not need to revert to centralized control or change blockchain in some fundamental way. It can still be perfectly leaderless and permissionless, he said. Wall Street and the enterprise have no problem with that.
Their problem is they worry over exposure to risk with developers because there’s a proprietary programming language, Mr. Manohar explained. Corporations are not comfortable with having to use new tools that don’t cleanly fit with their IT stack. Who do they call for support if something goes wrong? Is their proper insurance to protect them from risk?
There are two ways to address this, Mr. Manohar said. One is to make blockchains more permissioned like companies are used to. That is no good, for he said blockchain is pointless unless it is permissionless or leaderless. The better approach is to make it look like what enterprises are used to, complete with tools, language support and ongoing assistance.
“That’s the approach we’ve taken, which is don’t go change the product, keep the product pure, what Web 3.0 wants,” Mr. Manohar said. “But let’s make its consumption significantly easier.”
Casper Labs has also taken a unique approach to its governance development. Between the company and a related nonprofit association they raised just over $80 million in a Series A pure equity play without issuing tokens. For its first months the sole focus was to launch the network and complete the software. Going forward the two main tasks are being a core contributor to the software, which is completely open source and available to anyone to work on. The second task is to provide consulting and professional services to those wanting to build on the network.
“We think this is really important,” Mr. Manohar said. “The reason why enterprise adoption has been so limited is because there is no phone number people can call. A phone number to help them build, help them train internal staff.
“It doesn’t change the underlying network which is still permissionless and open source.”
One clear success case is Casper Labs work with IBM and an international body to create a worldwide patent registry where people can transfer the underlying asset as an NFT. The groups are working together to create an organization where intellectual property can be tracked and transferred.
“You couldn’t do that before without blockchain technology but you can now,” Mr. Manohar said. “It was impossible to have a chain of custody that everyone trusted. You needed to find a public blockchain that everyone trusts.”
Another strong area is payments. The only way for a blockchain-based transaction to be completed is for the sender to pay and that brings problems, Mr. Manohar said. Take for example a credential system where companies ask universities to confirm education and degrees and get THEM to pay for the transaction. What if you could front the cost and also reward the university for its time? That is coming by the end of this year, Mr. Manohar said. Look for flexible payment codes where either party could pay or they could even split a tab, one with a fluid UX not bogged down by forcing users to get tokens.
Casper Labs technology is also attractive in our ESG era, Mr. Manohar said. Its energy consumption is far lower than Bitcoin’s or Ethereum’s because they don’t require proof of work and random number generation.
There has been plenty of recent buzz around the negativity of leading voices in American regulation when it comes to cryptocurrency. Will it drive innovation away from the United States?
That’s already happening, Mr. Manohar said. Casper Labs has key staff in Switzerland where they have some certainty, for example.
“Everyone wants to follow the rules and the issue in the United Staes is we don’t know what the rules are,” Mr. Manohar explained. “I’m not one of those people who says regulation is a bad thing. I think clarity would be nice.”
This is a global industry and people can contribute to projects based anywhere from anywhere. Just because a project is based in Switzerland doesn’t mean the Swiss control it because most networks aren’t owned by any one entity. The Casper Network is run by hundreds of people around the world. Its utility token sale attracted 35,000.
But the transparency would be nice. Given the USA’s many advantages and friendliness to business, it could draw many projects back. They can still be strict, Mr. Manohar said, citing Switzerland and Senegal as examples of tough, but clear, jurisdictions.
The Highway Protocol is another example of Casper Labs’ different approach to building technologies, Mr. Manohar said. What they do not do is tweak the security or decentralization to make it faster; those two features need to be as good or better than Ethereum or Bitcoin. Highway Protocol has attracted top minds in the space such as Dr. Daniel Kane, who is working on consensus algorithms.
“You get efficiency by core engineering, not sacrificing,” Mr. Manohar said.
That quality is important because if the enterprise is going to use it they will audit it, he added. Casper Labs tells their clients to always conduct thorough audits.
“The blockchain industry needs the equivalent of that. I think the smart contract audit is a great first step but I do think as the industry gets bigger a good quality assurance program is a must, he added.
Mr. Manohar’s final point is don’t create noise by throwing everything on the blockchain, focus on the areas where it offers the most upside. Use it to tackle fraud and verification in your supply chain but do not put your whole inventory management system on there. Use it as a complement to your IT stack, not as a replacement.
