End of a Social Network and India's Blockchain Nod for Bills of Lading

Off The Blocks, Vol. 117, June 16, 2020

The COVID-19 pandemic is creating a lot of turbulence worldwide. These are challenging times for businesses and the key to survival is adaptability and agility. We are working with our partners, clients, and portfolio companies, creating strong ecosystems for their mutual growth. Simultaneously, we are trying to resolve some of the most complicated and challenging issues to create a trusted environment for people to go back to work and get the economy back on its feet. You can read about our efforts in a 4 part series here.


The Rise of WhatsApp and the End of The Social Network

Early this year, WhatsApp hit 2 Billion users worldwide. In comparison, Facebook, the mothership itself has about 2.5 billion users worldwide. In the last two years, WhatsApp has not only started to catch up with Facebook but in doing so, has opened a gap with the Facebook messenger (1.3 billion users, but somewhat stalling in growth).

However, for all its user base, WhatsApp contributes almost nothing to Facebook’s bottom line. Previously, the app launched WhatsApp business and enterprise editions of the platform to enable businesses to communicate with their customers through its ubiquitous interface. And there were several pilots and experimentations ranging from customer service to a P2P payments initiative in India. Way back in 2017, WhatsApp started working with the Unified Payments Interface (UPI), a real-time payments system that transacts over $1 B in daily volume. It is not surprising then that WhatsApp is moving more aggressively now launching WhatsApp Pay. What is somewhat surprising is that it did so in Brazil a distant second in terms of the user base (120 M MAUs) compared to India (400M MAUs).

Image Source: WhatsApp

To be sure, Facebook has been working on payments for a while now with two major programs in the works: Facebook Pay, relying on traditional payment rails, and its crypto counterpart, Libra. With Facebook Pay, the company sought to provide the rails for commerce over all of its properties including Instagram, Messenger, and WhatsApp. Libra, on the other hand, has run into significant regulatory hurdles and is engaged in a makeover process that is now focused on cross-border payments. Below is a Twitter exchange with David Marcus, head of the Libra initiative:

Facebook as a company has been evolving constantly, but this perhaps marks the biggest shift in the company’s future outlook. The core user base for Facebook has been declining steadily as users have shifted to alternative venues to connect based on narrower interests. The steady erosion of users and the average time spent on FB has long implied that the original social network needs to find alternate revenue streams before the advertising revenue starts to taper. Compounding the misery is a loss of trust and faith in the core social elements that made Facebook attractive to youth in the first place. The pivot to privacy first last year has been more of a marketing message than addressing the core user concerns. As demographics shift, the attractiveness of Facebook as a social network begins to wane for future generations.

What started off as a social network almost two decades ago, is now slowly but steadily evolving into a key infrastructural play across multiple domains. The initial value of connecting people across the world still holds, but the ways and means are very different. Arguably, two things connect us more than ever in an increasingly digital and global word order: the means of communications and the means of payments. Facebook understands this quite clearly providing for a family of apps that integrate ever more tightly into the base infrastructure across industries.

With a $5.7B investment for a 10% stake in Reliance Jio, one of India’s largest telecom operator, Facebook made a big push for the Indian market for

new ways for people and businesses to operate more effectively in the growing digital economy

One immediate beneficiary of this is an integration of JioMart, one of the largest retail establishments across India with the WhatsApp network. With a large pool of users, integrated payments, and access to goods and services all within a single user interface, Facebook is itself to be a dominant player in the space. An added infrastructural element comes from its homegrown Telecom Infra Project which aims to provide a new way of building and deploying telecom infrastructure for faster and cheaper connectivity. An aggressive push with Jio and other telecom operators in the developing world could create the ultimate walled garden of connecting people inside the largest social network. Payment methods, whether through WhatsApp Pay, Libra or any other rails will simply serve to reduce friction for all commercial activity engaged within the Facebook ecosystem, nationally or cross-border.

We’re making a financial investment, and more than that, we’re committing to work together on some major projects that will open up commerce opportunities for people across India.

- Mark Zuckerberg, CEO, Facebook

It is safe to assume that this vision is not restricted to India, but will eventually play out on a global scale and the launch of WhatsApp Pay in Brazil is just a precursor to the transformation of the original social network.

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Now for some news from the world this week:

  1. Kazakhstan Seeks to Attract $740 Million Crypto Investment in Three Years: The government of Kazakhstan has set a goal to attract $738 million from investments in cryptocurrency-related mining activities over the next three years. According to the Astana Times, Kazakhstan’s Minister of Digital Development, Innovation and Aerospace Industry, Askar Zhumagaliyev, revealed the plan in an address to the upper house of the Kazakh Parliament. … Read More on CoinTelegraph

  2. Vanguard Concludes First Phase of Blockchain Pilot: The investment manager with $5.7 trillion in global assets said it has successfully modeled the full lifecycle of an ABS settlement on a distributed ledger technology network by replicating end-to-end transaction flows. Through this pilot and by leveraging Symbiont's distributed ledger technology network, Vanguard is looking to "transform and automate the current capital markets infrastructure to deliver better outcomes and reduce costs for market participants". Pairing Symbiont's distributed ledger technology network with smart contracts — self-executing contracts that are triggered when an agreed-upon event occurs — offers increased information flow, will enhance price discovery and secondary market liquidity, and automate key corporate actions through the use of a common infrastructure that is open to all market participants. … Read More on Pensions & Investments

  3. India Gives the Green Light for use of Blockchain-based Bills of Lading: India is set to allow shipping bills of lading (B/Ls) to be filed over a blockchain platform, as part of the country’s efforts to digitise its maritime supply chains. These efforts have become increasingly urgent as the paper-based administrative processes that accompany container shipping have been severely hampered by the coronavirus pandemic, and the consequent lockdowns and social distancing, leading to major port congestion. In response, India’s ministry of shipping gave the go-ahead to run trial shipments with B/Ls submitted on CargoX’s blockchain technology through the country’s Port Community System, developed by Portall Infosystems. … Read More on The Load Star

  4. Innovators, Policymakers Can Harness Blockchain for Faster Recovery: New innovations—including those building on blockchain and distributed ledger technology—can move money and provide liquidity quickly, securely, and transparently. Kristin Smith, executive director of the Blockchain Association, says innovators and policymakers can work to use the technologies to speed payment distribution, provide real-time tracking of relief programs, and improve necessary oversight of multi-billion dollar programs, like those implemented under the pandemic. … Read More on Bloomberg Law

  5. Blockchain And Crypto Need To Copy Banks, And That Is A Good Thing: To get wider adoption, blockchain and crypto companies will need to resemble the banks they were intended to disrupt. Blockchain was initially envisioned as a tool and method to disrupt and disintermediate the established financial establishment, but in order to achieve wider adoption among individuals and merchants, blockchain and crypto will need to become more like those very institutions. Trends and developments in the space, from Libra, to Quorum, seem to indicate that this shift is already well underway. … Read More on Forbes

The Final Word | One Man’s Mission to Deploy Solar-Powered Bitcoin Nodes Across Africa

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Africa appears to have eight nodes in total. From this map, entrepreneur and IT guru Chimezie Chuta inferred that he is the only person in Nigeria known to be running a Lightning node. A crucial caveat is that many users might be running nodes without exposing them to the world. But, all told, Lightning activity looks sparse on the planet’s second-largest and second-most-populous continent.  Chuta wants to change this. Like many Bitcoiners, he believes running a network node is one of the best ways to become truly financially independent. A Lightning node in particular, while experimental and may be risky to use, allows Africans to earn a little cash by way of fees for relaying money across the network, he said.  … Read More on Coindesk


About Proteum
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.

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