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ConsenSys’ Kavita Gupta: Regulation Leads to Decentralization

As the head of ConsenSys Ventures, Kavita Gupta started to invest in next generation technology long before she join blockchain industry. ConsenSys Ventures now focuses on investing in ethereum blockchain based startups.


We at the “World Blockchain Conference”, which was held in Wuzhen, talked with Kavita about their investment status, blockchain use cases, bitcoin and ethereum tech, crypto prices and also regulation. For Kavita, she thinks that we can only achieve decentralization when we get regulation to be sorted out.

Below are the detailed conversation between 8btc and Kavita:

8btc:Could you tell us about what is your role in ConsenSys?

Kavita: I lead ConsenSys Ventures, which is ConsenSys’ external investment arm to invest in pre-seed and seed stages companies in ethereum blockchain. ConsenSys Ventures launched officially on September, 2017.

8btc:About how many projects do you invest in? Which use cases do these startups focus on?

Kavita: We officially invested in 10 projects. For example, DADA, it’s an art collectable platform. So you can use non-fungible tokens to create records for your art pieces and anybody can come and do a verified check on who is the real artist. We have a mobile wallet known as Vault created by some really amazing genius from Facebook. We have Quantstamp, which is automated smart contract auditing.

8btc:What did you do before you join blockchain industry? Why do you choose blockchain for your career?

Kavita: I was a traditional investor. I’ve always invested in next generation technology through my career. And it was very evident that in 2016 and 2017 that blockchain is what’s gonna be web 3.0. But it has been more about tokens and speculative market than the technology. And then a friend of mine Vanessa, when she joined ConsenSys and I’ve got to know more about ConsenSys and got the opportunity to meet Joe. I know this is the place where I have to start to invest in.

8btc:Speaking of web 3.0, what is ethereum powered web 3.0?

Kavita: We think blockchain world is web 3.0. You had a very basic Internet which came in 1990s, which was all about you have an Internet connection, you can send an email, you can have pretty much like a one-way digital conversations. And then companies like Google and Facebook on the board and created web 2.0. It’s all about market places. It’s a communication around the world, basically bring them together, and also it’s easily searches and easily connected and that’s what become the way of communication and connecting with people. Web 3.0 is gonna take it to the next level with blockchain which owning your own data, crossing the borders that even with the faster speed, that’s how we define it.

8btc:Which blockchain use cases are you most interested in?

Kavita: ConsenSys has incubated over 50 products over last 3 years. And there are a couple of projects which I’m a huge fan of. There is a sovereign identity solution usport, I think it’s so important that I don’t have to carry my license or my passport, which has everything about me and give it to places like renting a car or check in to a hotel. So having a solution like sovereign identity where it could be a fragmented identity solution, and it takes way more stages for hackers to get all the information together. It’s very important for me.

Similarly solutions like supply chain (Viant). Having supply chains on blockchain makes so much sense for me because you can go into a deep social space to trace human capital or payment or labors’ conditions. When you just scan your food, you can see how many hands your food has actually changed, what are the labors’ conditions every places, and how much has it processed, or you can put it to UPS and FedEx of the world and just create a way better supply chain solution. That’s web 3.0 for me.

8btc:When do you think we can see a real blockchain use case in everyday life?

Kavita: I think a lot of applications will start in queue for 2018, but the real realization I’m aiming at 2020, when all these applications which have been built the logic, the structuring would have a very seamless integration with web 2.0. People like my mom and dad won’t have to think that they are actually using an application on blockchain. It would be just they are using an application which I give them more data protection, more security and fluidity over the system.

8btc:How do ConsenSys distinguish high quality projects from bad ones?

Kavita: For us, it’s always about is this a product that’s gonna push the envelope for ethereum community first of all. And then if it is a technology that can change the whole ConsenSys ecosystem.

I think 90% of the bad projects get we doubt that if they are using blockchain only for tokens. There’s really no usage of technology out there.

When you start to read their tech, it might get we doubt that is nothing really new or their thought process is not really sorted out. We have team which gets on this part, you know, being in the space, learning every day. You’ll get a very good intention about what is really happening.

8btc:What do you think about Chinese blockchain community? What is the difference between Chinses community and the others?

Kavita: We are slowly learning it. This is our second trip. I think the big difference between them is that in China, most of the projects we’ve seen so far just want to build their own blockchain. So it becomes difficult to find out a project that is based on ethereum for us to go into.

Secondly, there has been a thought process creating a project which is just for Chinese community. There is nothing wrong with it because the user adoption in China is so high, they can sustain. But (the thought of) having a public chain pretty much doesn’t exist in China, and even they are using ethereum for private blockchain solutions.

But definitely China is the head for the respect to technical incubation in this community than the other places.

8btc:What main factors do you think can drive a blockchain startup to success?

Kavita: Don’t think about tokens. Think about products. Think about technology.

And ultimately when you have to deliver a product, combine the best wisdom from the traditional world of product, user experience (UX), UI, focus on the customer.

How you can take those learnings to the next level by having the bubble of blockchain? If I would be an entrepreneur today, and if I’m building a product, that would keep me up at night.

8btc:SEC talks about blockchain tokens a lot lately. SEC believes most ICO tokens are securities. What is your opinion about crypto regulation?

Kavita: First of all, I’m very excited that ether is now by SEC is not considered as a security. That’s actually very heartwarming. I think it’s good that SEC is paying so much attention. We need to get the rules and regulations sorted out, so that the community just focus on building and have the right space to invest without keep on being in the middle space to worry about whether it’s legal or illegal.

So I’m a big supporter of SEC to figure the regulation out as soon as possible. I’m pretty sure they can tell us what are the tax implications of utility tokens verses security tokens verses non- fungible tokens or thousands of other tokens which are gonna come into the market.

Even when they do, what is the right way of treating them and what is the wrong way? A lot of people who just want to a speculative market, but there’s no further lines to be drawn.

8btc:Do you think centralized regulation is contrary to cryptocurrency’s decentralized design?

Kavita: Yes, the whole ether when it started is decentralized. But the world is not decentralized yet. First we have to create the base, first we have to get the right to exist, and then slowly and slowly show the value of being 100% decentralized.

We don’t live in an ideal world, I wish we did, but we don’t. I want to focus on the positivity of it, and the positive part is this is one technology, which in the existence of 3 years having so many issues around how to cross borders, rules and regulations and taxes, everything is gonna come in the picture. It’s still the technology which every government want to adopt, which every government sector, private sector, public sector wants to work with and has created every next generation entrepreneur to think about using it.

So if we have such a strong movement, give it another 2 years and remember we don’t really have applications which we can use freely, which is decentralized application today. So we still have to push the technology out, make use cases of it, get all those tokens start to circulating in the market and then the government will figure it out as they did with the cryptocurrency.

8btc:Any disadvantages ethereum have now?

Kavita: Yeah. Like in blockchain world we need scalability solutions. We need Proof of Stake, which is decentralized mining. We also need to make sure that there is a better way of preventing hacking of the tokens or coins, because with the ease of the usage, more multisig wallets more security.

8btc:We talked a lot about ether and its tech, but are you familiar with bitcoin tech?

Kavita: I don’t think I’m an expert at bitcoin tech, because my transitions to this world are through ethereum. My deep trust in ethereum for two reasons: first, you can really build all the applications apart from just financial side, which I’m very interested in; and secondly, the algorithm, Proof of Stake which is going and having that community of developers supporting it, it is very important.

But bitcoin technology is also taking scalabilities, state channels and in site solutions, and putting the financial transactions to happen in the cross border transmission. Ultimately, we are all going in that direction, so whatever technology can take it better and faster, that’s good for us.

I’m a big supporter of ethereum, but at the end of the day, we all want users to get that technology in a safest manner.

8btc:Recently the crypto market is not in a good condition, will you feel nervous when the prices going down?

Kavita: No. I just feel like at the end of the day everything will connect to the tech, if you believe in tech, you believe in the currency. That’s why I’m a big believer of ethereum, because ether is a gas. As long as the ethereum tech sustains, you can’t delete ether out of it. So I’m long term bullish on ether.


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