Ethereum Watch

“From a network perspective, Ethereum is very mature,” Microsoft’s Marley Gray told ETHNews, “and I’d also say pragmatic.”

As a founding member of the Ethereum Enterprise Alliance, Gray’s confidence in the world’s second largest cryptocurrency by market capitalization is admittedly biased, but that doesn’t make his insights any less adept. On the contrary, as principal engineering architect and program manager for Azure, Microsoft’s blockchain-enabled cloud computing service, Gray’s interests in Ethereum aren’t monetary; they’re technical and social. 

Gray sold Microsoft’s new CEO, Satya Nadella, on Ethereum’s advantageous deliverables long ago (relatively speaking), and has been building the tech powerhouse’s custom blockchain products and services around the Ethereum ecosystem ever since.

“It’s important to have the long view. Of any platform out there, Ethereum has got that spirit at its core,” explained Marley.

An Ecosystem, Not An Economy

ETHNews: How do you feel about the behavior surrounding the cryptocurrency market right now?

MG: The DAO [fork], which seems like ages ago, was an adult thing to do. That’s kind of my standard for responsibility. I think [with] the ICOs, there’s going to be a huge crash on that stuff. To me, I think those people are basically trading their 401ks. It’s like day-trading your retirement: when you’re not going to use or need it for thirty years, it’s stupid. Don’t do it. We need to keep reinforcing our core beliefs, because there are about to be a lot of newcomers looking at this stuff from a greed-bucket perspective.

 “If you’re in it for the price of Ether, you’re in it for the wrong reasons. It was never designed to be a currency. It was designed to be a fuel. Now, it trades like a currency, and that’s great. But it’s that wild diversion of greed that throws us off track.”

Unlike some companies who’ve taken the open-source Ethereum blockchain, cloned it, tweaked it, and repackaged it for profit as a permissioned chain, Microsoft has taken a much more cultural approach to the technology. “There’s enough energy in the space already,” says Gray. “We just want to harness that and help guide and develop it and see it flourish. If we came up with our own blockchain, great, but that’s the old Microsoft. There’s no need to compete like that when business has already shifted. We understand that. On public Ethereum a whole new level of scale and skill transfer are possible. I think that’s really powerful for our ecosystem.”

2018 And The Paradigm Shift

ETHNews: You spent a lot of time in 2017 evangelizing blockchain technology to large corporations. Can you describe what the attitude of adoption is like moving into 2018?

MG: There’s still a lot of friction. Most of the momentum behind adoption is coming from … business people, non-technology people, looking at their core business. Everyone likes to talk about the humanitarian aspects of Ethereum, and that’s truly great, but it’s going to be the businesses that go out and make money, or reduce their operating costs, which will really change things.

“I don’t think the true value for financial services is going to come until they can sell into other contractual markets like supply chain, where you’re selling the insurance contract on a shipping container, or you’re selling credit to somebody who is borrowing it for receivables factoring, or something like that.

“You quickly come to the realization that everything is a supply chain, especially in distributed systems where you’re trading value [with] somebody that you don’t fully trust. From that standpoint, reconciling the new business models with the technology is fundamentally about behaviors. When the barter economy switched over to cash, it changed our behavior, there was a disruption for the greater good. If nobody wanted the chickens you brought to market, you didn’t have to worry about trading them or not, you could still buy what you needed. This moment is kind of like that. There’s a whole new universe of possibility and our behavior is going to change accordingly.”

A Universal Gaming Token?

ETHNews: As our behavior changes and we move closer to a collaborative economy, are there any verticals within Microsoft where you can see the changes starting to manifest?

MG: We … see it starting to emerge on the entertainment side. So for us, that’s Xbox. We have loyalty points systems, and game systems. Everything about tokens is they have to be unique, [and] they have to have some sort of underlying value. What is that value? Is it redeemable for in-game content, like weapons or vehicles or whatever? It would be really cool if I could take that same credit or token, and then go over to another game and buy tires for a race car, and have that develop markets and virtual worlds. How does currency in a virtual world [translate] over into the physical world? It’s just a digital barrier instrument.

“So how do we create a substrate for that to emerge? A tokenization platform with an exchange, where you can establish value, and then have a trading market where people can trade. I think this will happen. This should be a part of the substrate. But how do we build the new infrastructure? I think blockchains are the place where that’s happening.”

Kids Today

ETHNews: You integrate with Ethereum, but also with other blockchain platforms used by different companies around the world. Do you have any ideas for interoperability between the chains?

MG: People have done huge projects about how to do that. I often laugh to myself about what they come up with … If you introduce a middle tier where you can talk to both [chains], you can bridge and route easily. This is “101” level stuff, that many people have apparently forgotten. Things have advanced so much that nobody knows this stuff anymore. Everyone is always asking me how I come up with solutions … and I tell them, ‘I learned this in school. I had to know this stuff.’ Why doesn’t everyone introduce a middle tier?

ETHNews: You’re still pretty young to be describing an age gap in the blockchain developer community. Are things really moving that fast? Do you think younger developers need the same technical fundamentals as the old guard?

MG: I think the friction [is that the] whole generation of people coding blockchains is younger. They didn’t go through the pain that we did when we went from client/server to three-tier architecture. They don’t understand the problem because they haven’t bumped up against it yet, but they will. They come back with these intractable problems that the data tier just can’t handle, and I tell them again, and they go, ‘Oh my gosh! That’s exactly what I need to do. That’s exactly what I want.’

The Revolution Will Not Be Tokenized

ETHNews: You’ve been able to watch the ecosystem develop since its inception. You also have exclusive knowledge about industry adoption. Where do you see all this going in 2018?

MG: The real revolution isn’t cryptocurrency. It’s blockchain and smart contracts. The next thing is futures contracts. Now we’re really starting to get into behavior again … for example, your counterparty might have contracts that you don’t know about; or you might know about them, but they’re not transparent. They might have contracts all the way down the chain … The endgame of all of this is to get to a point where I can tweak my behavior based on something that happens downstream, without knowing what downstream actually is. How do we trust that, and build your business around that?

“Eventually there will be this hierarchy of contracts. Each contract is also its own hierarchy, and below it there are subcontracts, which are themselves also hierarchies. So this all becomes a very interesting view of the world: once we get to that level, contracts become like rudimentary AIs working on your behalf, [and] we begin to enter into the collaborative economy where true peer-to-peer nature can emerge. People will trade and exchange value directly. That’s the value of everything we’ve all learned since bitcoin.”

To The Moon

MG: I think once we get there, when efficiencies and specialization start to drive the peer-to-peer collaborative economy, then things will truly change. If you think about it on an evolutionary plane, once people started specializing, we got agriculture; then, other people made plows, [and] not everybody had to work 24 hours a day just to feed themselves.

“Then we got artists, and bridges, and roads, and all kinds of stuff. Once we get to that, we get even finer specialization. That’s when we can really start to accelerate things like space exploration, and go back to the moon and Mars, and then it might start all over again … with a new technology that takes us to even greater heights.”