XYO: A million keychain trackers could become a blockchain location network

Ashton Addison: What does XYO Network do?▶ 00:23

Erick Saberski: XYO Network is connecting blockchain with the real world. Typically, smart contracts on Ethereum or any other smart contract platform need some piece of data to activate, and that data is usually something online, something that's not tangible. We're changing that, so smart contracts can be initiated by real-world events, things you can tangibly see or do, and have that automatically verified online. That gives you trustless real-world interactions that automatically create exchanges on blockchains. On top of that, we're using the technology for geolocation and proof of interaction in the real world, and putting that on the blockchain too.

Ashton: Is this about games like Pokémon Go, or does it go well beyond games?▶ 01:33

Erick: We're using games as our proof of concept. The world is going to be controlled more and more by smart contracts, so you want a really robust and secure system. Instead of going straight for something mission-critical, like airplane or supply chain logistics, we thought a game might be a safer place to start. This past weekend over a hundred people at our conference played our Pokémon Go-style game, walking around and checking in at different places to earn a non-fungible token. We're pretty sure it may be the first time that over a hundred people have done physical work in the real world to earn a non-fungible token. A big advantage is verifiable location. The reason you couldn't really monetize something like Pokémon Go is that it was easy to spoof your location and catch Pokémon on the other side of the world from your couch. Built on our network, you couldn't lie about your location. It's verifiably provable, at least the general area, so you can't have hacking like that.

Ashton: Blockchains are supposed to be trustless, but games have to trust that players aren't spoofing their location. How do you build that trust in?▶ 02:56

Erick: Trust is inherent in the way the network verifies origin. Every device keeps track of its own history, and then does what we call a bound witness, a handshake, with every other device it comes across. The more handshakes a device has, the higher the probability that it is where it says it is. We're not acting as a trusted authority; we're setting up mechanisms where people are most incentivized to behave truthfully. The bound witness protocol is exactly what it sounds like. No one simply states a fact, like 'I am at this location,' and asks people to trust it. Other people witness you at that location, and everyone seeing it agrees that it's true. It's less a statement and more witnesses confirming what you're doing.

Ashton: You also use hardware beacons. How do they help, and are they necessary?▶ 04:49

Erick: XYO has existed as a company since 2012. Our main product has been a little hexagon-shaped device you attach to your keychain, and through our app it tells you where your keys are and whether they're far away. We've sold a million of those devices. With a quick firmware update, once the XYO network is officially launched, they can all become Sentinels in our network and mine cryptocurrency through Bluetooth interactions with everything around them, verifying their own location and everyone else's. We hope to keep selling that hardware and really introduce hardware into this whole blockchain of things.

Ashton: Does XYO need its own blockchain, and do you need a token to run the network?▶ 05:53

Erick: XYO Network is positioned as what's called a middleware protocol. It's a service that any smart contract platform or chain can use when it needs to verify location data. The public network uses a token. Devices are out there shaking hands and showing where they were, and that data gets stored. If a smart contract wants to access it, for example to ask whether a person went somewhere or a package was delivered, it has to pay for that request. The network then compensates the people who helped gather, store and transmit that data. So yes, there's a token involved, and yes, it's a public network.

Ashton: How far along is the blockchain side of the project?▶ 07:09

Erick: We started working on the blockchain early this year, around January, really started getting things together in March, April and May, and picked up this summer. This past weekend at our first annual conference, Spatial, we gave our first demonstration of the live network from start to finish. We put one Sentinel beacon on a drone and another on stage with our CEO, then flew the drone over the audience. Once the drone interacted with the beacon on stage, the interaction was recorded and stored on our network, and a smart contract accessed it to initiate a transfer of Ethereum from one account to another. Everyone saw the transfer happen right as the drone got to the stage. It was the first live action of our network.

Ashton: What are your plans for the next six months to a year, and for 2019?▶ 08:37

Erick: From the developer side, our focus over the next year is getting in front of more developers and getting them playing with the scavenger hunt game and other use cases we can make really easy for them. At the conference, attendees had great ideas. One guy is part of a club that runs cross-country motorcycle races, riding upwards of a thousand miles a day, and they currently use antiquated ways to check that riders reached every point. They're excited to use XYO and our app. Our big goal for 2019 is getting these beacons everywhere across the world, because they're almost useless without other beacons around them. We also just announced a partnership with a satellite company called Global Star, to launch a network of beacons that can communicate with its satellites, which should also improve our geolocation features. So the two big things are getting our Sentinels everywhere on the surface of the Earth and everywhere in space.

Ashton: What limitations do you expect along the way?▶ 11:20

Erick: The biggest hurdle we have to overcome is mass adoption. We need beacons in as many places as possible and as many people using them as possible, otherwise there's no point. We need businesses and delivery people and pretty much every reasonable application to use them. Otherwise all this tech we're building isn't going to get used the way it should.

Ashton: Is the hardware being distributed only in America, or worldwide?▶ 11:42

Erick: It's very much a worldwide effort. Right now we're focused on finding existing channels that already have compatible devices in the field and seeing how we can add value. For example, there are electronic logging devices on commercial trucks, where people pay for services that log data about where they travel. That's a perfect use case for XYO to lower that cost while adding more value. We're looking for high-value opportunities to include our software in existing devices, because deploying our own devices is one strategy, but co-opting existing networks is a much faster way to gain mass adoption.

Ashton: What is the profit model for XYO Network as you expand?▶ 12:47

Erick: Think of it more like an open source company. The public network is meant to serve as a public utility, an open system that open contracts and networks can call. But many companies won't want to participate in the public network, so we'll focus on helping internal corporations, maybe even governments, set up their own private networks, and there will be an enterprise charge for that. That looks a lot like the Red Hat model, which the recent IBM acquisition has proven to be a pretty solid idea.