BlockCypher plans to become the Amazon Web Services (AWS) of the blockchain industry

Rage Review : BlockCypher is a blockchain network service company that provides Bitcoin wallets and other services to large institutions. The author of this article had an in-depth conversation with the company's CEO. Regarding the development of enterprise blockchain applications, they showed their ambitions and said they wanted to become the AWS (Amazon Cloud Computing Platform) of the blockchain industry. BlockCypher completed a large seed round of fundraising in January 2015, and its platform has been put into use. Let us wait and see how it will develop in the future and whether it can live up to its expectations.

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BlockCypher plans to become the AWS of blockchain

If blockchain technology becomes a force in the enterprise, the onus will fall on those who can integrate blockchain technology with the scale and recognition of the enterprise. That’s where BlockCypher comes in. At a dinner at Coindesk’s 2016 Consensus conference, BlockCypher CEO and co-founder Catheryne Nicholson told me that she became aware of the importance of enterprise blockchain after being exposed to Bitcoin technology.

With her team ending up creating cloud architecture, it was a logical move to build what she calls "the only blockchain technology layer optimized for cloud technology." I know you're thinking: Is this the AWS of blockchain? This gimmick is simply delusional. But I just like startups that want to do big things. And BlockCypher's idea is not a dream, their platform has been put into use in real life. Currently, they handle 5 million requests per day.

BlockCypher was born out of Bitcoin performance issues

The homepage of BlockCypher's official website is covered with customer logos, some of which are related to cryptocurrency, while their platform has nothing to do with blockchain. Deloitte is one of BlockCypher's main partners, and they value BlockCypher's ambition. I asked Nicholson how it all started. She said it can be traced back to 2009, when she was working with BlockCypher co-founder and CTO Matthieu Riou on a previous mobile application: "We were developing a mobile web software, and during the period we were constantly asked what the alternatives to cash and checks were. But we don't have any alternatives. The Internet is designed to share information on a large scale, not for value exchange."

Then the question forced them to start evaluating Bitcoin: "My partner mined Bitcoin. He gave me some and I tried all the wallets. They were all terrible. None of them worked. But it was fun to tinker with them."

She was impressed by the "quadratic payment" problem solved by Bitcoin: "Bitcoin has done something that has never been achieved before. It has reached a consensus on a large scale and has the ability to trade value. Why don't I take a photo of a dollar or a check and send it to you as an email attachment? Because you can't prove whether I sent the same photo to millions of people at the same time... Blockchain technology fundamentally solves the problem of quadratic payment."

Nicholson tried to make a corporate connection: “We knew this technology was going to be a phenomenal breakthrough, but we didn’t know where it was going to go from there.”

Perhaps they can find a niche where they can leverage their strengths: "We have more than 30 years of experience in creating and marketing enterprise applications. But we are still wondering which field is perfect for us. We are not a payment processor, nor are we deeply involved in the financial field. Our core function is the core infrastructure of the enterprise."

A test of Bitcoin on a laptop confirmed this scaling problem: “In late 2013, we looked at what was then Bitcoind, now Bitcoin Core, the standard Bitcoin-focused client. I tried to run Bitcoind on my laptop and it was completely unusable.”

For Nicholson, the clunky software was a revelation: “What it enables is a transformation that enterprises haven’t been able to do until now, and even large startups haven’t been able to do. They don’t have the underlying infrastructure to build on.”

Supporting blockchain for enterprises

Therefore, BlockCypher was born in 2014. They rebuilt the infrastructure of Bitcoin, but it had nothing to do with blockchain: "We rebuilt it from the bottom up and implemented the entire Bitcoin protocol, but our infrastructure has nothing to do with blockchain. We saw its potential for development. We believe that this is by no means a single chain, it can develop into a chain group. This is also taken into consideration when we designed the infrastructure."

Ethereum enterprise blockchain stole the show at Consensus 2016, so I asked Nicholson about Ethereum and Hyperledger, which are of interest to several of my readers. She said: "Of course we support Ethereum. If Hyperledger goes into production, any blockchain will need to operate at scale. There are thousands of blockchains to choose from, and we support the ones that get the most attention."

BlockCypher had previously struggled with cloud architecture issues, so they built their platform on the cloud.

“We know that cloud infrastructure and blockchain technology will develop together and interact with each other. When building infrastructure, we will fully adopt cloud computing to achieve optimization.”

BlockCypher’s platform has been running for over two years. When I spoke to Nicholson, they were celebrating the one-year anniversary of their first customer. So far, they’ve been reliable, with an uptime of 99.999%.

So how did they prove their use case? The answer was to show the solution directly to developers: "We talked to people who were developing applications and asked them how they were running Bitcoind and if they would like to try our API (application programming interface). The reason why April 25th was marked as a commemoration date was because Adam Draper participated in the hackathon that weekend to promote the development of Bitcoin computers. In the competition, the winner and the third place team used our API."

And that was their first proof point: "Adam asked them how they built this in 24 and 36 hours. They said it was because they used our API. That was the first proof point, you don't have to spend 3 to 6 months to build an infrastructure that can only run some basic functions. If you use BlockCypher, you can get out of the mystery in a few hours."

Question about AWS - What tools do blockchain developers need?

"AWS can provide a range of services to developers, just like they do, we also have a range of web services, application programming interfaces, web connections, web information interfaces that developers can use as well."

I also asked about the security issue that everyone is concerned about. BlockCypher will provide a multi-party signature application programming interface (API) that can perform joint signatures. There is also a secondary use notification protection function to prevent theft and avoid losses. In this regard, Nicholson stated: "It is difficult to create multi-party signature security from scratch." Since I am not a developer, I can't guarantee this, but it sounds quite difficult. Nicholson said, "Now you can also use our API alone to set up multi-party signatures for wallets or software. This is just one of our many services."

Is enterprise blockchain gaining momentum?

Catheryne Nicholson

There is a misconception about the “AWS for blockchain” tagline: BlockCypher itself currently runs primarily on AWS. I asked Nicholson what the advantages of BlockCypher are compared to other blockchain service providers. To this question, she bluntly said:

“We are the only company that can publish these reliable numbers. No one else has the breadth and depth of services that we offer. We offer everything from an open gateway API to a transaction wallet API.”

It’s all well and good to have such ambitions, but BlockCypher is also really dependent on enterprise blockchain adoption to succeed. Nicolson pointed to the announcement of BlockCypher partner Deloitte as an example of enterprise momentum – including five partners and 20 blockchain technology prototypes. “What we have with Deloitte is a team and partnership agreement where they provide industry expertise and serve as advisors. We provide pure technology. Deloitte is all about risk-taking, not entrepreneurial start-ups,” Nicholson said.

Nicholson pointed to the absence of IBM and Microsoft at the 2016 Consensus conference as another example of corporate momentum. She was not concerned about the absence of these financial services companies, “who prefer to hold their own conferences.”

Authentication and other use cases

We also looked at the use case question: Are most of the use cases concentrated in the financial services space?

“Yes and no. We found a variety of use cases early on. In a way, it was a bit of an early warning, because startups are a combination of constant modification and experimentation. Our customers range from ATM vendors to gaming companies. Everyone is our consumer. And these are the points that companies focus on for longer-term development.”

I raised the question of identity several times during my interview at the 2016 Consensus conference. Nicholson expressed his interest directly:

"Identity is a big problem. ShoCard is a big customer of ours. The founders were doing identity management at Yahoo. Their core function is digital identity. They want to use blockchain to manage physical and digital identity. Every business, every bank, every insurance or energy company, they have a customer database. They all want to solve the problem of whether you are the real person or whether you have a fake identity to hack into the system. This applies to almost every business."

It’s too early for BlockCypher to “unify the blockchain world”, and we will continue to pay attention to its progress. They completed a large seed round of fundraising in January 2015, including some well-known technology investors. I told them that now is the time to show their skills and do practical things, and Nicholson agreed with this.