Decentralized Maps, Digital Provenance and State of Blockchain
Off the Blocks | Vol 109, April 7, 2020
The COVID-19 pandemic is creating a lot of turbulence worldwide and is bigger than anything that I can think about. Most industries are shutting down and companies will see a sharp fall in their business as both supply and demand are disrupted. I am taking this time to help startups tide over the challenges.
Let us know about your top challenges. Our network remains strong and with access to 25+ countries, we are in a unique position to create collaborations and unlock value in these turbulent times. Interesting things are still happening, and resilient entrepreneurs will come out stronger on the other side.
The State of Blockchain
CBInsights, the gold standard in market intelligence recently published their 2020 Blockchain report. The report featured a Proteum portfolio company, Proxicoin, amongst the top 5 global blockchain funding deals in 2019. Other companies that made the list: Ripple, Figure, Fnality, and Layer1. Check out the report here.
In a sign that the crypto industry may be maturing, custody and insurance are beginning to be seen as central to any crypto project. Consolidation between wallets, exchanges, insurance and custody providers is a welcome shift from the piecemeal solutions that every crypto project had to think about, build and derisk from a scratch and at the same time, it is a capital intensive business with low margins for the service providers.
Below is a summary of some other findings from the report:
Deals are moving from West to East. Four years ago, 51% of deals were for US-based companies while only 2% went to China-based companies. In 2019, the US’ share of deals fell to 31% and China’s rose to 22%.
“Crypto-corporate” VCs were the most active investors in 2019. NEO Global Capital and Coinbase Ventures were the two most active by deal count in 2019, demonstrating crypto companies’ commitment to funding their own ecosystem.
Enterprise blockchain funding has lagged. Efforts to reduce back-office costs and improve business processes are still ongoing. However, funding to other applications has been nearly 7x higher than to enterprise blockchain over the past 5 years.
Bitcoin was on top until the coronavirus hit. Bitcoin’s price nearly doubled in 2019 despite dampened media coverage. Goldman Sachs named it the best-performing asset in 2019.
Lending and stablecoins have driven the growth of decentralized finance (DeFi). There are over $1B in assets on DeFi platforms, up from ~$300M in January 2019. ~60% of assets are on the Maker platform, a stablecoin project collateralized with cryptocurrencies.
Central banks are serious about fiat digital currencies. The future of programmable money could come out of a central bank, not a startup. Central banks across the globe, such as in China and England, are exploring central bank digital currencies (CBDCs).
At Proteum, we continue to think that the on ramps to crypto and blockchain will keep gaining investor attention and interoperability at both the protocol level as well as the application level will be a key driver for growth. Another portfolio company, Vottun, is already setting a high bar and gaining early attention.
Additionally, we anticipate that as Governments become more serious about launching Central Bank Digital Currencies (CBDCs), they will provide a huge impetus for mass adoption. If central banks go down that path, it will also provide an opportunity for digital custodians, insurance providers, and exchanges to sharpen their product offerings and continually innovate on the use cases.
Now some significant news from the world this week:
Healthcare | WHO, IBM, Microsoft Launch Blockchain Hub to Track Coronavirus: The World Health Organization has teamed up with tech giants IBM, Oracle, and Microsoft, as well as decentralized platform Hacera, to create an open-data blockchain hub that lets people check whether they have been near anyone who’s been infected with COVID-19. The project, called MiPasa, is based on enterprise-grade blockchain Hyperledger Fabric. It comprises various analytics tools and data sources that help citizens and public health officials detect coronavirus infection hotspots. Public health officials and individuals using the system can “upload data about the time and exact location of different infections.” [… Read More on DeCrypt]
Retail | Blockchain Finds New Home In Retail Food Supply: Food retailers need to embrace a new term: digital traceability. It describes a new process that shows the importance consumers are placing on the origins of their food in the throes of the current coronavirus pandemic. And it could be one of the killer apps for blockchain. That will be possible due to two features of blockchain. One is smart contracts. Because it is essentially a digital ledger, every element of an agreement between a food supplier and vendor is captured on blockchain and cannot be amended without the express consent of both parties. If a shipment of palm oil from Organic Farm A has to list the harvesting and labor law process, that can be done. The second feature is proof of provenance. Simply put, it traces the journey of goods. If a shipment of avocados says it is fresh until May 1, the retailer can check its proof of provenance, and doesn’t have to take the word of the supplier as that company promises fresh goods to its consumers. [… Read More on PYMNTS]
We will be tracing everything around food production, and what we do in terms of managing animals because this (coronavirus) came from animals. That’s just me thinking from the perspective of consumers. As markets open, they’ll want to know exactly how that piece of cheese was produced, as an example.
- Julia Jones, NZX Head of Analytics
Automotive | GM Applies For Decentralized Blockchain Map Patent: The vehicle manufacturing sector is no stranger to blockchain technology and its many applications within the space. Now, General Motors — GM — has put forward an application to the US Patent and Trademark Office for a “Decentralized Distributed Map Using Blockchain.” current mapping systems are difficult to keep dynamic without incurring large costs. This is where GM believes blockchain technology can step in and help. Sensors will be used to evaluate and characterize the area around the motor vehicle, and a discrepancy detector will be used to identify differences in the surroundings compared to a known navigation map based on information received from one or more sensors. The differences will then be transmitted to a blockchain map network. [… Read More on Forbes]
Fintech | SoftBank-Backed Fintech Firm Joins Chinese Conglomerate to Build Blockchain Platform: OneConnect Financial Technology, which is the fintech arm of China’s largest insurance company, Ping An Insurance, has entered into a joint program with the China Merchants Port Group (CMPort) to build a logistics system based on blockchain for the Guangdong-Hong Kong-Macao Greater Bay Area. The platform will include information from Chinese custom services, port operators, logistics companies, financial institutions and export and import firms in one single system via shared databases on chain. One of its goals is to offer a more efficient tracking system at a lower cost. Financial services will also be more accessible to the trade companies. [… Read More on Coindesk]
Since the central government’s directive to develop blockchain technology from last year, Shenzhen customs, China Merchants Group and Ping An have started to work together to study blockchain applications in cross-border logistics.
- Xiaoying Chen, director of Shenzhen Customs
Gaming | Ubisoft and MakerDAO to Sponsor Blockchain Gaming Alliance: The Blockchain Gaming Alliance (BGA) — a coalition of 90 game and blockchain companies advocating for blockchain technology within the gaming industry — will seek to strengthen blockchain adoption to expand player capabilities without any barriers. Founded in 2019, the Alliance also hopes to represent blockchain gaming and major game industry events with the sponsorship of the returning leading technology companies. [… Read More on CoinTelegraph]
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Proteum is a global blockchain investment and 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 ecosystem and unique capabilities so that they can own and control their future. Velocity, our innovation hub, invests in and accelerates the time to market for startups and emerging ideas.