There’s a new way to raise money for blockchain projects. It’s called the initial coin offering, or ICO, a form of crowdfunding using cryptocurrencies. So, what’s that got to do with J.R. Willett, the man who launched the first ICO in 2013? Well, because he’s still got a day job.
More than a decade ago, back in July 2004, an unknown programmer from Southern California with the handle “nanotube” proposed an open source protocol called Bitcointalk. At that time, the concept of a cryptocurrency had never been done before, and the idea was so alien that it took months for the community to warm to the concept. But at the end of January this year, someone with the handle “J. R. Willett” made a proposal on a similar forum, Ethereum, that would alter the course of cryptocurrency forever. Unlike Bitcointalk, the community embraced the idea, and many people who had once considered cryptocurrency to be the “magic internet money” were now convinced that it was a viable concept, and
ICO ? He held the first one. Stable parts ? He dreamed it by accident. Vitalik Buterin tried to hire him to help launch Ethereum, but he was too busy. This is J. R. Willett, one of the most charming men in the business.
In 2012, Willett, now 41, thought he could improve bitcoin by allowing anyone to create compatible tokens based on the protocol. He published a white paper describing the new model and a way to fund the project by selling tokens. For 18 months he kept the business going, hoping someone else would step in. He eventually gave up and announced an IPO of Mastercoin, which inspired Ethereum and all subsequent ICOs.
I thought I was just articulating what was clearly going to happen – people were already talking about it, I thought: Why hasn’t anyone formalized it yet, even a little? I’m just tired of waiting for someone else.
Early on, he feared that cryptocurrencies would lead to an anti-utopia in which either late developers of cryptocurrencies would be left penniless or a one-world government would be formed to regulate all transactions. He’s still worried, but he’s doing better than he feared.
In a sea of exceptional and charismatic people rising to the top of the cryptocurrency world, Willett stands out head and shoulders. Not in his absolute conviction to stick to a set of principles, not in his journey from rags to riches, not in his maniacal determination to stick to the project, not in his excessive charity, and not even in his creative efforts or grandiose visions of the future. No. Willett excels at being a humble family man who never forgets the basics, despite his incredible accomplishments.
When the world started in 2012, bitcoin was pretty much the only game in town. Bitcoin, blockchain and cryptocurrency are all one and the same, with the exception of the recent spin-off Litecoin, which is less than three months old (LTC was created by mining, just like Bitcoin). Then Willett began to stir up tempers and published what he called the second bitcoin white paper.
Mastercoin’s prospectus is wonderful. it was the first ICO, and as far as white papers go, it’s really good. it even has a risk disclosure! it describes many ideas that will be implemented in the coming years – DEXes, stablecoin, tokenization, onchain govhttps://t.co/noFt1PKzUD.
– nick carter (@nic__carter) December 8, 2020
We argue that the existing bitcoin network can be used as a protocol layer on which new layers of currency with new rules can be built without changing the foundation, he wrote. The idea was to create new functional tokens on Bitcoin so that smart contracts could govern their interactions. Mastercoin supports the creation of property tokens that can be used for securities, documents, custom currencies and even company shares, the white paper explains.
It looks a lot like Ethereum today, with ERC-20 tokens and compatible smart contracts. This is no coincidence, as Ethereum was partly inspired by Willett’s ideas.
Vitalik came to us first with his ideas, and we told him: We have a few other things to do first. He didn’t want to wait, and it’s good for him that he didn’t. Ethereum is the result of this development.
Willett even brought up the idea of stable rooms, writing: If you think bitcoin already has a reputation for money laundering, just wait until you can store USDCoins on the blockchain! It was a new idea. He had developed the concept.
The sale of mastercoins and tokens was announced in July 2013. This was the very first ICO and coins could be purchased at a rate of 100 MSC for 1 BTC. These early coins came from an Exodus address that served as a Genesis block equivalent for Mastercoin – while Bitcoin was the beginning, Mastercoin was touted as the next era.
When Willett announced Mastercoin on the Bitcointalk forum, he saw it as a unique opportunity to find the right way to raise money. At the time, it didn’t seem like much of an innovation, he says.
I thought I had found a shortcut – I just didn’t have time to fly to California, prepare a presentation and talk to venture capitalists, most of whom had never heard of bitcoin.
Eventually, Mastercoin became the Mastercoin Foundation, which in turn became the Omni Foundation, which Willett founded and of which he is still the chief architect. Willett says transparency was very important to him when he founded the nonprofit and that he used an open spreadsheet to keep track of all expenses.
The problem was that when our money ran out, everyone noticed, which kind of took the wind out of our sails, he recalls laughing. Today, Omni Layer is a fully decentralized, open source asset platform that enables the creation and exchange of custom digital assets and currencies.
When asked if he regrets not becoming a billionaire CEO, he bursts out laughing. I’m sure there are nice things in there, he says airily, but goes on to explain that he is a minimalist, he has almost nothing that his children don’t need. What’s the point of being super rich if you have some sort of minimalist mentality? They just get into a lot of trouble, he reflected. Maybe there’s a hint of regret in all this?
Maybe it’s unfortunate that I could have done a lot of good – but I hope that people who become billionaires do a lot of good.
Mr. Willett spent what he calls an idyllic childhood with his father, who always knew a lot about money and investments and taught him to program on the family’s Apple II-GS computer when Mr. Willett was only 10 years old.
When Willett was still in high school in Oregon, he worked summers as a salesman, doing mundane things like sweeping and cleaning toilets. He once wrote a fake virus and made his employers believe they had been hacked. They had an old IBM computer – I think I wrote it at home and brought it on a floppy disk, he recalls laughing.
Later, when Willett discovered he could make a living doing what I did for fun, he earned a degree in computer science from Seattle Pacific University. He graduated in 2002.
After two years as a software developer at Alerio, a dot-com start-up in Oregon, he joined Dynon Avionics, where he rose to a management position. During his 11-year career, he developed software for flight planning and instrument calibration that was later used in exotic applications such as SpaceShipOne, which performed the first private manned space flight in 2004.
In 2012, he joined his current employer, Cozi, as a senior software developer, where he develops mobile calendar apps that help families stay organized. It seems to be a good match. Says he: I have always considered myself a family man, even before I had children.
That’s right – Willett, the inventor of the ICO and algorithmic stackablecoin, still works at his day job. You can’t put all your money into cryptocurrencies, he said, referring to parental responsibilities.
Refers to crypto-currencies
Around 2010, while working at Dynon Avionics, Willett fell into the hole [of cryptocurrencies] and couldn’t get out. He has seen the price of bitcoin rise to $0.25 and remembers setting up a beige computer tower that allowed him to mine a 50 BTC block in a few weeks with a single CPU (Central Processing Unit).
Mining on CPUs soon became impossible, as GPUs (graphics processors) and later ASIC-mainers (specialized mining software chips) connected to mining pools began to dominate the market. Even then, it was unusual to get a block of a CPU, but it wasn’t unheard of, Willett recalls.
Unlike others of his time, Willett does not see cryptocurrencies as the universal savior or liberator of humanity. Instead, he envisioned a dystopian future that greatly troubled him. He never had the metaphorical intention of burning down the banks or overthrowing the system, because that can only hurt the very many people who depend on the existing structures.
It seemed to me that this was something that, if it grew, could damage the entire global financial system. I thought I’d rather have something like that to protect me, like an insurance policy.
Willett admits that the idea that bitcoin could damage the world’s financial infrastructure seemed pretty crazy in 2010-2011, when few people had heard of bitcoin, but I’ve always been of the opinion that government-issued money is far more vulnerable than it seems. He adds that there could be a run on the banks if people lose faith in fiat money, and there is now a decent alternative to that.
For Willett, money is a general hallucination that works well when everyone is playing the game, but can quickly fall apart when people decide to withdraw.
This is not necessarily what Willett wants, as such a situation would leave those without cryptocurrencies in limbo. Not everyone knows about cryptocurrencies, and not everyone has the money to invest or the confidence to risk their capital. It would be tragic if they stayed behind. But when you think about this possible outcome, it would be foolish not to own at least some of the cryptocurrencies, he concluded.
If we reach a tipping point where everyone is trying to switch from public money to cryptocurrencies… the amount of human suffering would be comparable to a world war.
Willett admits to vastly overestimating the adoption rate of cryptocurrencies in 2012. Some of his work at the time was dystopian in nature, for example he predicted that governments would attempt to destroy all decentralized computer networks (including the Internet) to create a single, strong, centralized [blockchain-based] world government that would derive its revenue from severely restricting free trade in order to collect taxes.
When I wrote this script, I assumed it would be a year or two later, he recalls. He doesn’t look like a prophet of doom anymore. The longer it takes, the less disruptive the process will be, he says, arguing that greater ownership of cryptos will lead to a less turbulent transition to cryptocurrencies.
Willett is confident that there will only be more crypto billionaires to come, as he expects the bull market to continue for some time. Normally there is an increase of about 100 times, followed by a decrease of about 10 times. This happens for a few months or even a few years, and then it happens again. He thinks Ether is the best bet so far and recently predicted that ETH’s peak this cycle will be around $9,500.
I am optimistic that our crypto billionaires, whoever they are, will eventually become crypto philanthropists, especially if this world we are building ends up causing a lot of pain and suffering to the people who accepted it too late.
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