Bakkt Raises $182.5M, Atari goes Blockchain & Joycoins for 2019

Off the Blocks, Vol 48

This newsletter is our weekly roundup of some of the significant blockchain news, that provides an overview of the rapidly changing blockchain landscape to help you map your blockchain strategy and be aware of regulatory announcements globally.

New Year, New Format

Here is wishing all the readers a fantastic new year 2019 ahead.

If 2017 was drenched in cryptocurrency euphoria, 2018 provided a much needed respite from the speculative models and a sober quantification of business fundamentals. As of Q3, 2018, more than 380 “blockchain first” companies raised $3.9B from venture funds, doubling in number from 2017. More than 2000 investors have invested in at least one blockchain company and the average deal size was north of $3M.

Looking ahead at 2019, we remain excited about a number of areas in which crypto assets and decentralized technology will play a significant role.

Global financial institutions control all major economic systems and yet, almost 2B people worldwide are unbanked. High transaction costs and proximity to services have traditionally been barriers to financial inclusion. Blockchain is already democratizing payments and remittance markets - apps like Abra allow users to transfer money for free without the need for a banking system.

Decoupling payments from the banking system sets the stage for the gradual unbundling of many other services that banks provide today and creating new services that reduce the friction of transactions in foreign exchange, insurance, investment, remittance and other financial derivatives. One of our clients is well underway to develop a marketplace for same day foreign exchange trading and settlement.

On the other side, payment technologies are also being disrupted by smartphones and the burgeoning mobile ecosystem. Moreover, payments are intrinsically tied to identity solutions and regulators around the globe insist on solutions to prevent fraudulent transactions and money laundering activities. The opportunity is not lost on heavyweights such as Samsung (Nexledger) and mobile operators who are rapidly moving to dominate this attractive market. Cashless payments and transactions interoperable between fiat and digital currencies and assets will increasingly permeate through e-commerce marketplaces. Another of our clients is developing a mobile first payment solution for both local money movement with cashier and digital checks as well as global remittances.

Finally, the token market is maturing towards a “security token offering” where digital tokens are backed by some sort of assets, equity, cash flow, licensing agreements etc. thereby providing an intrinsic value to the token itself and incentivizing all participants in the ecosystem to work towards adoption. While these offerings are today heavily regulated by the jurisdictions where the companies are incorporated, signs of a thaw are emerging. Malta has become a front runner to provide a legislative framework to regulate such offerings and in a nod to decentralization, US regulators recently filed the Token Taxonomy law to exempt cryptocurrencies from securities laws. Another one of our clients is transforming investment in large scale media, film and television assets by creating equity tokens.

All these will undoubtedly require more innovation to create wallets and exchanges that are interoperable (at least in the short to medium term) with existing financial processes. In that respect, NYSE’s crypto platform Bakkt announced a $182.5M funding round yesterday. This can only be good news for the industry to jump start 2019.

And now for some significant news form the past week

  1. Global Pulse: Chinese Survey Finds Nearly 40 Percent of Respondents Would Invest in Crypto: A Chinese survey of 4,200 respondents has shown that 40 percent are willing to invest in crypto in the future. As Cointelegraph reported in mid-November, a Twitter survey conducted by former United States congressman Ron Paul — which counted 94,894 votes — favor Bitcoin over more traditional forms of money as a long-term investment. Also, a more recent survey conducted by the German Federal Association for Information Technology, Telecommunications and New Media (Bitkom) revealed that over-one third of big German businesses consider blockchain as revolutionary as the internet.

  2. Investment Sentiment: Analysts See Institutional Investors Wading into Crypto: “The fact that David Swensen [Yale’s chief investment officer] put an investment into bitcoin — with his reputation on the line, his endowment on the line — tells you something,” Novogratz said. “Some of the smartest people in the investing world think it’s a store of value.” As Wall Street appears poised for more turbulence, analysts say crypto assets could be buoyed because they are not correlated to the regular stock market — making them a good investment during volatile periods.

  3. Journalism: Popula stores news on Ethereum’s blockchain: Subscription-based news platform Popula has made history by providing the very first fully stored news article on a blockchain platform. The article was stored in full on the Ethereum blockchain, and its hash was stored on the IPFS protocol. With these, it is expected that the article will stay on the blockchain forever. Or for as long as the Ethereum blockchain and IFPS protocol continue to exist.

  4. Gaming: 2019 will bring more mobile games, blockchain, and a new console: Atari, the iconic gaming company recently entered into a blockchain partnership with Animoca Brands, which will partner on blockchain versions of RollerCoaster Tycoon Touch and Goon Squad. “Inside games, we’ll see that as networks grow, we’ll have more opportunities to play with things we’ve never before understood. What we’re doing with Animoca, we’re creating a game using blockchain not only to have fun and try to make money but also to try to understand and find new ways of how blockchain will impact our business and how we can use it to have more fun — and also more protection. It’s about those two uses of blockchain.”

  5. Enterprise: Betting on Blockchain -the evolution of networks for trade finance: As part of its series on blockchain in commodities, this article takes a closer look at the evolution of blockchain networks for trade finance. Marco Polo, Voltron, Finacle are all powered by R3 while is powered by Hyperledger Fabric. In a field fast becoming crowded, komgo, powered by Ethereum is focused on commodities and energy markets.

The Final Word: Beauty, wellness and pet grooming - all on the blockchain:

“The Joy” is here to make taking care of yourself seamless. Whether you need some routine maintenance like a haircut or hair removal, or on the other hand if you are looking to treat yourself with a hot shave, a massage or getting your nails done, it can be done quickly with an app on your phone. The Joy will use their cryptocurrency, Joycoins, as a liquid form of rewarding users for their loyalty and activity on the platform. Joycoins are only tied to the success of the platform and not to any other cryptocurrencies. Once a user had accumulated a few Joycoins, they can even trade them in for cheaper treatments. Joycoins can also be cashed out via third parties.

About Proteum
Proteum is a global blockchain advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their capabilities so that they can own and control their future. Let's put blockchains to work for your business. |  | Twitter: @proteumio | Telegram