If blockchain is going to power the “next generation of the internet,” as Centrality co-founder and CEO Aaron McDonald calls it, developers need to look past the “blockchain utopia” and focus on consumer needs, not just the technology, he says.

Centrality is creating an infrastructure and marketplace for decentralized apps, or dapps, by providing the building blocks to develop blockchain services and a consumer-friendly experience that emphasizes connections and sharing among different apps. As many as 30 different apps, ranging from employee engagement and travel to messaging and transportation, are currently under development, with roughly half in production. The New Zealand company’s network has more than 400,000 users generating more than $12 million in revenue, according to McDonald. A January public token sale reached Centrality’s hard cap of $100 million.

ThirtyK spoke with McDonald about breaking barriers for startups and the benefits of a central platform for decentralized apps. McDonald is also the chief technical officer of Blockhaus, a Swiss investment banking advisory, and has served as a founder and board member of more than 20 other blockchain companies.

Challenging Established Players

ThirtyK: Your white paper focuses on the concentrated power of technology giants. What about the blockchain provides opportunities for startups to challenge them?

“It’s not good enough to push code. You’ve got to think about customers and partners and niches and all the things that make an actual business work,” says McDonald.

McDonald: If you were to try to beat a Google or Amazon, your chances of beating them on pure technology or raising money or consumer insights are low. The blockchain allows you to create a different kind of economic model. Decentralized token economics provide more incentives for individuals to participate in that economy because they benefit in the long run.

The other thing is, if we look at the process for a small business to collaborate with another small business, there’s a lot of friction on the internet. If you can get two companies to trust the code or smart contract to share users and data, it might reduce that friction.

From the user’s perspective, if you can put them back in control of their virtual selves, they may be more willing to participate in the virtual economy and share information. They’re going to want to be protected, not by [Facebook founder] Mark Zuckerberg’s promise… but where the code is immutable.

There’s a lot of things out there that people say blockchain can improve, and maybe they’re wrong and maybe they’re right. But if you’re not creating decentralization of ownership, it’s not going to be successful.

ThirtyK: How does the Centrality platform work?

McDonald: We’re building the tools that applications will use and give them all the core capabilities: payment, messaging, communications, storage, the underlying blockchain infrastructure, smart contracts. There’s a blockchain framework we’ve developed to solve some of these problems around consumer adoption, optimized for app store environments. Different use cases will have their own blockchains, and these blockchains will be able to talk to each other. The network will have a staking and reward mechanism [driven by Centrality’s CENNZ token]. Even though some of these apps may require their own tokens, we can act as a customer interface… to reduce the consumer burden of managing different tokens in their wallets.

So first it’s a comprehensive, bottom-up approach to creating a consumer-friendly ecosystem, building services oriented towards interacting in the real world. Then we’re co-creating with entrepreneurs across a range of different use cases so we can see what’s useful, and getting people to come and innovate in our labs and build on top of the tool. The third phase is that the ecosystem starts to attract other developers. We’re between phase 1 and 2 at the moment and hoping to push to phase 3… then the opportunity and the model flips to people innovating without permission.

The Consumer Challenge

ThirtyK: You’ve stressed the benefits of different dapps on the Centrality platform sharing data and customers. What will that look like in practice?

McDonald: We’ve got an app called Belong, which is a way for employers to provide non-salary incentives to employees. [Another app] Skoot has expertise in tourism. With a common marketplace that both could draw from, when an employee is given [a reward], [the app] could suggest a meal at a restaurant and [a transport app] could offer a ride there. In that way, it could help introduce a customer to a new service or help improve the service of your application.

ThirtyK: How do you address privacy within this model?

McDonald: The real-use case that will make it possible to see the [benefits] is the minute an application does the wrong thing. In today’s scenario, when we all got outraged [about Facebook] there was no practical way to do anything because we were trapped inside the system, and there was no viable alternative. [On the blockchain], I’ve got a portable personal profile I own and can move if I’m not happy. If a developer forks the code, it costs you nothing and it takes no time to move.

ThirtyK: What needs to be done to improve the consumer experience?

McDonald: We need to create ways that are really low friction and high reliability for people to do simple things. It’s a nightmare if you lose your key in [blockchain] applications today.

Blockchain developers need to stop thinking so much about this utopian environment where everything’s on the chain. Like every application today, you make decisions about what’s the right infrastructure. Within a single dapp, maybe there are multiple chains, and maybe there are processes that don’t need to sit on the chain at all. It’s about the [user] experience.

Building on the Blockchain

ThirtyK: What lessons have you learned as the Centrality network has begun to grow?

McDonald: It’s not good enough to push code. You’ve got to think about customers and partners and niches and all the things that make an actual business work.

There’s work to be done in the space, and a lot of hard things to solve… Building the next generation of the internet is not going to go as fast as people imagine. We’re in there for the long haul to try to get the fundamentals right and build something sustainable.

Mark Toner
Mark Toner is a Washington, D.C., writer and editor. He has covered business, technology, media, education, and healthcare for a wide range of trade and industry publications.