Wednesday, July 13, 2016
Interview with Justin and Dawn Newton, Netki
A lot of consumers have heard of Bitcoin and blockchain, but haven't actually used it, in part because the cybercurrency can be complex and difficult to use. One of the largest areas of complexity is the use of the Bitcoin address--a long, complex string which is used to uniquely identify your Bitcoin wallet. Los Angeles-based Netki (www.netki.com) is addressing that complexity, with a product called WalletNames, which replaces those long, complex, easy to confuse strings with easy to remember, domain-like text strings. Justin and Dawn Newton, the co-founders of Netki, spoke to us about the company and its solution.
What is Netki's product all about?
Justin Newton: At a high level, what we are doing, is building open source, open standards-based products to help make blockchain both easier to use, as well as assist with some regulatory compliance issues.
Dawn Newton: As an example, when you go to Google.com, it is actually routing to an IP address. Behind the scenes, DNS technology is translating that Url to an IP address, so you don't have to worry about it. What Justin figured out, was that same, DNS technology can be used to route to blockchain wallet addresses. Right now, wallet addresses are 32-bit, alphanumeric, case sensitive strings. The only problem, aside from remembering them, is a simple typo could transfer money to the wrong person, irrevocably—with no way to get it back. So, it's critical to get that right. Right now, it's too easy to type the wrong thing, and you have a big problem and untenable situation. We figured out that by using DNS, youcan have a name—for example, I am dawn.newton.bit – and that name I can give to everybody, and if someone puts it in, they know it is going to the right wallet. That name resolves back to my wallet address automatically, just like when you type in google.com.
What are your backgrounds?
Justin Newton: Both Dawn and myself had separately gone into the Internet space a little over 20 years ago. In my case, I had a mentor at the time who helped me understand how there was a parallel between the printing press and the Renaissance, and the Internet as the next step in information and communications. Plus, we were seeing things like the Arab Spring and things like that, where the free flow of information was countering tyranny. I found that was something, frankly, that I wanted to work on, to move the world in the direction I wanted it to go in. I spent about 20 years in that space, starting with some East Coast companies, including Digital Gateway Systems, which you might was where one of our users first posted the Scientology documents to the Internet, and we ended up getting sued by the Scientologists to protect our user. On moving out here to the West Coast, I was involved in three different, billion dollar IPOs in a row, including serving at AboveNet as Director of Networking, responsible for their international data center oepration.
I later came down here, and Dawn joined me, and we both were at NetZero when they went public. I was SVP of Technology, and Dawn ran support and operations, and later billing and marketing. From NetZero, I went to Demand Media, where I was EVP of IT. I was primarily responsible for getting the technology side pulled together when they went public. After that, I was CTO of Blackline Systems, and was responsible for behind-the-firewall.
A lot of the last companies were about building big companies, but I wanted to do something transformational, so I wanted to take a little time off and figure out what the next thing would be for us. Originally, I thought that would be in clean technology, and looked at joining InVision, which is now EverCar. But, I found that area just didn't catch fire for me. Then, two years ago, I went to my first Bitcoin event and conference, and frankly—sorry, Dawn—that I had found my first love again. Here was another technology, which was not about democratizing information, but about democratizing finance.
So how did you decide that the Bitcoin area was for you?
Justin Newton; I had done lots of standards work in the past, and I looked at the problems that needed to be solved in the ecosystem, rather than at point solutions like a wallet or exchange. We ended up here for a number of reasons, including my core background in infrastructure, plus we saw that providing services at the base layer of blockchain, the more likely we were to be successful as a company in the long term. We also came up with an open source standard, which helps address the problem with blockchain that you don't know who you are transacting with, which is great from a privacy perspective, but is not so good when you want to know who you are transacting with. Basically, we came up with a way for counter parties to privately exchange and validate information, but off blockchain, and privately. Combining that with the other work we are doing, which is providing a unique address for every transaction, lets people know who they are dealing with but hardware for people outside to see who that is.
Dawn, what was your background?
Dawn Newton: I also started on the Internet before it went mainstream, and worked at a company called Interaccess, which was based out of Chicago. It was a regional ISP, and got bough tout by Allegiance Telecom. From there, I hooked up with Justin and NetZero, and was responsible for scaling the support and operations teams. When I walked in there, there were only five and a half people answering phones, and when I left, we had over 100 people in-house and over 1,000 people at a call center. That's where my background is, scaling things. I actually dropped out of college to work on that, because I saw that this was something that was going to change the world. I also had worked earlier at Microcom, which was a big modem manufacturer in the day, building telecommunications software. That was actually the days when you would use a phone, dial the phone, and put that into a coupler to let computers talk to each other. They made a product called Carbon Copy and Relay Gold, which was mainframe to mainframe software, which was used by UPS and the Bank of America, and other massive companies, all pre-Internet.
Given you are in the blockchain area, there must be some significant security implications. How have you handled those issues?
Justin Newton: There are different people working on different pieces of the puzzle, on how you deal with and protect a user's private keys, and other issues about using private keys. I think it's a matter for anyone really starting up in this space, whether they're directly touching currency or not, to understand that you have to design a product where you assume you are in a hostile environment. There are people who are looking for ways to be able to get to someone else's funds. So, from that perspective, you have to have a little tighter process in place than you might have in a typical startup doing a social media site. First, is you really have to make sure your security is really, really tightly locked down. Rather than handling that as a later step in the process, you have to do that first. We also, very intentionally, diced we would not touch or hold user funds. Our wallet name is only used to route funds. From a design philosophy, the most important thing, is to design a system where a user won't lose funds, and won't send those funds to the wrong place. That's one of the reasons why we don't just use standard DNS, we are using DNSSEC. That's like a signed chain of custody on their records, that ensures that DNS record hasn't been modified in flight, and all the information you are getting is correct and true. Likewise, we built to the new BIP75 standard, rather than the existing BIP70, which adds additional encryption and security around messaging, to ensure that the protocol could stand up in a hostile environment, even where you can't trust your network to be encrypted.
Let's talk a bit about your recent funding. How did that go?
Justin Newton: In our case, we fit into a pretty small niche, as a blockchain company. But, we're more a n enterprise, service company than a consumer company. In some ways, that meant we had to be more focused on who we were looking at and talking to. One of the things, as we looked to choose investors, was we were not so focused on the people who have primarily been blockchain ecosystem investors, but to actually look outside the ecosystem. One of the reasons, was lots of the funds in the blockchain space don't have the capacity to provide follow-on rounds at any scale, and as we started to plan out future funding, we needed to find a partner who could follow along and be part of our future journey. The second thing, frankly, is it was great to talk to new investors who hadn't necessarily been looking at blockchain, and have them look at it more closely. I think that actually makes more investors available to everyone in the ecosystem. The more growth we have in this ecosystem, the more value we can have as an ecosystem provider.
What's the next step for your startup?
Justin Newton: We have just started working with our first, enterprise customers, with our certificate and identity product. For us, over the next six to 12 months, we'll be doing some additional proof-of-concept, and getting that out into product with live customer usage. We'll also be taking our customer from the domestic, U.S. market today, to a more international footprint covering over countries. With Wallet Names getting accelerating traction, and growing, we'll see people using it both on the Bitcoin blockchain, but also people wanting to use this for their own, private blockchains and for other Bitcoin applications.