Glitches that put Instagram, Medium and Gmail partially or completely out of commission for a few hours over the past several weeks impacted thousands of businesses that use the social media services to communicate with customers.
Those outages are perfect examples of the value of Pocket Network, said Patrick Maguire, director of marketing for the Tampa blockchain firm.
Blockchain is a digital information storage system. Pocket Network is a platform that makes it easy for any developer to access any blockchain, avoiding the issue that caused the social media service disruptions, Maguire said.
Pocket Network – or Pocket for short – has been in the spotlight in the past couple of months, after working quietly for more than three years on research and development. In April, the company released its first packaged product. On May 1, CEO Michael O’Rourke got to pitch to Steve Case, chairman and CEO, during the Rise of the Rest Tour in Tampa Bay.
The company is one of the first members of Embarc Collective and expects to move into the organization’s downtown Tampa office once it opens later this year. For now, Pocket Network has an office at Tampa Bay Wave, where about half of its core team of 13 works. The rest are in the Dominican Republic.
The company raised about $750,000 in seed funding in February, according to a Securities and Exchange Commission filing. It’s now in the process of a Series A funding round, Maguire said.
Pocket Network also has gotten grants from two large blockchain projects, but considers that funding as validating its ideas, not a revenue strategy, Maguire said.
Blockchain projects like Pocket are decentralized, meaning they are not reliant on any one single data center or any one single service provider. That’s in contrast to networks where all users connect to a central server.
“The reason [the social media sites] went down was there was some sort of failure in their servers or their data bases that stored all that information. That’s what we call a single point of failure,” Maguire said. “Large companies like Instagram will typically strike a deal with Amazon Web Services, for example, to host all of their data in Amazon servers. If and when some of those servers go down, then boom — the site shuts down. That’s a problem of what we call centralization. The centralization of all the data into one control leads to single points of failures.”
If Instagram were to be on top on Pocket Network and Amazon Web Services, or another data center were to go down, then the network would relay requests to the next available server or place in which data is stored, Maguire said.
“What Pocket does for these applications is create this network in which there is no single point of failure for them to share their data with. The databases they are connecting to in our case are blockchains,” he said.
The blockchains are stored on nodes and the nodes are stored on servers, he said. A node is any system or device connected to a network.
Pocket’s key value isn’t the blockchain per se, Maguire said. “Its key value is in relaying the data between the blockchain and the application so there’s no single point of failure.”
Pocket Network’s customers right now are what Maguire calls “hard core decentralists,” with cryptocurrency applications called DApps. They want to exist on decentralized infrastructure so there is no single point of failure.
“We have partnered with a few different cryptocurrency wallets,” he said. “That’s the actual customer, but because Pocket is a middle layer, it operates like a two-sided market place.”
Pocket also has targets and incentives for the nodes, or the people hosting the data and relaying requests to the applications.
“They are the supply side of the data of the demand and Pocket is the network in between,” Maguire said.
The more requests are sent through the network, the more value it creates.
There are a few revenue streams. One of them involves becoming a block producer in specific blockchain networks to which Pocket already is contributing. Block producers earn a reward for securing the network.
Another way to get revenue is to develop tools, such as dashboards and block explorers, for the blockchain.
“What we are focused on right now is growing the network, growing both sides of the marketplace — the supply side which is the nodes and the demand side which is the DApps – and we are actively pursuing the first revenue stream, which is the block producers,” Maguire said.
There’s growing demand for more block producers in blockchain. Pocket has identified at least 20 projects to actively pursue and expects more over time.
Overall, the cloud data infrastructure market tops $100 billion annually.
“These service providers do good, and they’re likely going to be monoliths for a long time, but there’s a growing market that’s very keen on having a decentralized option,” Maguire said.
The Tampa Bay area is well-positioned to take advantage of growth.
“If we can make Pocket successful then we can probably make Tampa one of the go-to block chain spaces in the U.S. ,” he said.