Computation, Data & BWS

a massively asymmetric bet on the future of cloud, blockchain, and data.

Data is a commodity.

Computation is the processing of a commodity into a finished product.

Data = digital crude oil.

Computation = digital refineries.

The next multi-Trillion dollar company will be built around the framework of refinery-as-a-service.

That company is Valdi Labs PBC, which has built Blockchain Web Services (BWS).

Data is just a set of information.

Blockchains are a way to store information.

Information and knowledge is important because eventually it is used to inform decisions and those decisions can generate revenue, identify a criminal, verify identity, or properly diagnose an illness.

Every use case for data comes back to inform a decision.

But life is just a set of decisions and businesses, governments, and even families are just sets of humans making decisions.

When abstracted out, there is data that can reinforce or diminish the accuracy of a decision.

The problem with data is that there is infinite data, but not all data is useful.

The amount of useful data in the world is a much smaller set of available data.

How many ducks are in the pond at the park is a data point, but is not useful for a decision on a car loan.

So when people say that data is digital oil, I agree.

It is crude.

And crude oil didn't have many use cases until we figured out all the cool stuff we could do with it once processed. Gasoline, diesel, petroleum jelly, jet fuel, etc.

We then built massive, complex refineries to process that crude.

Computation is a digital refining process.

It refines raw data into useful data that can inform decisions.

The world's largest companies are building these complex refineries:

Amazon - AWS

Microsoft - Azure

Google - Google Cloud Platform

IBM - IBM Cloud

The most interesting difference between oil refineries and digital refineries is precisely the digital part.

Digital Refineries can be built anywhere; Texas, Arizona, Canada, and even subsea.

Unlike Oil refineries which need to be interconnected via physical pipeline - both to upstream producers and downstream to off-takers like power plants or shipping infrastructure - Digital Refineries are connected via an internet connection, abstracting out much of the geographic preconditions that determine where a refinery can be built.

With computation being a standardized resource, we can abstract the refinery model more completely outside the physical.

We can build a global refinery completely untethered from physical constraints.

Currently AWS, Azure, and Google Cloud all “hyperscale” their data centers. Meaning they just build big refineries in single locations.

That hyperscaling of physical centers creates bottlenecks in overall computation efficiency and throughput efficiency, and that flows down to costs for users of these refineries.

By abstracting the physical constraints into a global refinery we can outcompete others.

And this is what BWS has done.

Built a refinery that exists in an abstract sense, with no geophysical constraints on who, when, or where someone can refine the product - in this case, compute data.

It's a refinery that can utilize global compute without the hassle of building many 100MW data centers.

In tech terms, it is a platform of platforms.

The best part is that it can utilize anything from Azure servers to your gaming rig, your laptops and even your mobile phones in exchange for an appropriate reward back to the computer’s owner.

By creating a platform for true cloud (decentralized) computing, anyone from a middle-school student to an AWS data center can contribute their computation into an open market and users can pull from that pool to compute.

This creates a fundamentally global, open refinery.

The economics are staggering.

Cloud computing is an industry growing at 16% YoY with a market spend of $445B annually.

This growth rate will continue as more and more decisions and businesses are driven to automate or augment knowledge work with data.

BWS is a company built off a decentralized backend. It was built piggybacking off of Bitcoin's decentralized Proof-of-Work protocol.

It did this not because crypto = price go up;

BWS was based on Bitcoin because Bitcoin as a protocol has proven data provenance, allocation of computation is efficient, transaction settlement can be scaled, and it fundamentally created a way to onboard and operate computation globally and automatically.

BWS has created a global standardized refinery from which anyone can contribute computation and be rewarded equally,

and everyone can pull computation equally.

Downstream, building computation derivatives and forwards becomes possible.

By standardizing the commodity, we will create computation derivatives that allow for forward purchase of computation, and further financial instruments to smooth the cost curve.

Derivatives get a bad rap, but fundamentally derivatives are a way to abstract pricing away from instant spot rates, and smooth supply/demand curves.

They are essential to a well-functioning commodity-based ecosystem...

BTC Hash rate forwards

ML-instance forwards

BTC/ETH-staking swaps (ex. swapping n-TH/s of BTC hash rate over x hours for n-ETH staking rewards over y hours)

the quantity of different derivatives that could be built when computation becomes standardized is massive.

It goes on.

At the end of the day, data is fundamentally a commodity, and computation is the refining process of that commodity..

And when putting it within that framework, we see a transcendental requirement for growth, that BWS satisfies and builds moats around.

And that's why BWS is the only non-BTC crypto I'm long on.