15 recent trends in the blockchain and token ecosystem you might have missedMay 2018
Government grants, SEC Scares, Federal Banks, MEW hacks and another consortium. Bumpy Month
By Joel John
Retail investor sentiment over the month was driven by the possibility of the SEC issuing a ruling over Ethereum and Ripple being securities. The markets may have remained suppressed over a number of weeks due to concerns around the same. However, governments have been rather proactive in issuing grants, research publications, guidance and partnering with startups over the course of the month. Speaking of startups — the month saw a number of them launching early prototypes and raising funds over the month. May also witnessed an increasing number of enterprises entering the ecosystem. They are no longer claiming “interest” in the space, but launching full-fledged teams focused on blockchains.
If the month has been an indicator of anything — it is that blockchains are now “mainstream”.
Remember the scene from Batman where the Joker says “what happens when an unstoppable force meets an immovable object”? That is a good description of what is going on with governments and blockchains currently. They understand the risks involved in attempting to “ban” a peer to peer, somewhat anonymous economy and have begun playing the protagonist in the story. Individuals at different levels of the government have now begun echoing about the need to regulate the ecosystem and create an environment where innovation is encouraged rather than curbed. Here are some of the key signals given by the government.
Mixed Reactions From The US Government
The SEC may have been in touch with prominent VCs about providing a framework for tokens that have been issued through ICOs. While much has not come from the discussion yet, the SEC chairman Jay Clayton had stated on April 6th that not all token sales are fraudulent in nature. Concerns of Ethereum being ruled a security drove token prices downwards for a good amount of time. Some entities within the US government have been far more forward thinking. The Federal Bank of St Louis published a long form research document on what blockchains are and the key use cases for them. The followed up with a comparison on how Bitcoin is similar to normal currencies. Interestingly enough, the arguments they make while comparing to normal, government issued currencies is that both have no intrinsic value, middle men and a limited supply. One can’t help but wonder if government issued notes truly have a “limited” supply.
Australian Government Issues Grant
The Australian Government seems to be taking things seriously with a government issued grant specific to blockchain applications. The money will be used to study areas where a blockchain could be used to offer value for government services. This is not the first time the AU government has issued such financial assistance. In 2017, the government had issued a grant of AU$8M in collaboration with partner organizations such as Cisco for exploring the use of a blockchain in the context of power.
Hong Kong Government’s Report Suggests No Threat From Token Economy
The Hong Kong Financial Services and Treasury Board published a report money laundering and terrorism financing in the region. With respect to virtual currencies, the document concluded that no major threat has been detected from the use of anonymous currencies in the region yet. However, it does point out to the fact that over 167 Bitcoin related police reports were made between 2013 to 2017 in the context of Bitcoin related crimes.
India Continues To Explore Blockchains. Without A Token Economy
Although India has been “hostile” to the token economy with exchanges in the region no longer having access to banking due to a Reserve Bank of India directive, the nation has not shunned the possibilities blockchains offer. To begin with a $5 million grant has been issued to a college in the region to explore the use of blockchains for e-governance. In addition, Assam — a state in the north eastern part of the country will be partnering with Nucleus vision to create public facing dApps. While the utility of a public facing dApp as a government utility remains questionable, it is a highly intriguing move. In similar news, blockchain research and development company IOHK has partnered with the Ethiopian government towards exploring blockchain applications in the region. The organization will offer free courses to 100 local developers in Haskell and the first group of students will be women. Another step towards empowering communities.
Binance Makes Moves In Bermuda
Token exchange behemoth Binance has signed a MoU with the government of Bermuda towards setting up a regulatory base for Binance in the region. It will create atleast 40 jobs of which 30 will Bermudians. In addition the Binance Charity foundation will put $10 million towards educational programs related to the tech in the region and an additional $5 million will be directly invested into startups. As we’d stated in our quarterly brief, this is another example of start-ups playing regulatory arbitrage and finding safe havens to operate from.
It has been a mixed month of mixed emotions for startups as they continued to be plagued by lack of regulatory clarity and hacks. VC funding for the ecosystem has however not diminished. Basis — a stable currency provider turned heads as they announced the raise of over $130 million from the likes of Bain Capital. A handful of startups have also started deploying their prototypes to the market.
Fears Of MEW Hack
Over $150,000 worth of ethereum was stolen recently during a DNS attack on MyEtherWallet. The incident was relatively sophisticated in nature and is currently “under investigation”. For more on the matter, read Quartz’s coverage of the matter here.
Telegram ICO May Not Be Open To Retail Investors
After much hype and excitement, news has emerged that Telegram might not raise an investment from retail investors. The project has raised over $1.7 billion to date from private investors. According to Recode, their current cap table involves marquee firms such as Sequoia and Benchmark Capital. The move comes at a a time when Russia has placed a ban on the product. Given that Telegram is well capitalised with their current raise, they may have avoided doing a token sale to avoid regulatory scrutiny. More on the matter in Wall Street Journal’s coverage here.
OpenSea Raises $2 million for Digital Collectibles Marketplace
Fundraising news! Well, there were many but this one’s notable. Digital asset market-place OpenSea has raised $2 million from investors including Founders Fund, Blockcstack, Stable Fund, Blockchain Capital and Coinbase Ventures. OpenSea claims to be the world’s largest marketplace for general user-owned digital items with over 20 categories.
Given the rise of cryptokitties and increasing interest in digital assets, one can’t help but wonder if digital asset marketplaces would become the new token exchange investment plays by 2020.
Blockchain Based Hardware Manufacturer Set To Ship In 2019
Sirin — the Blockchain based smartphone manufacturer has announced the specs of its flagship phone due later this year. It will be packed with 6GB of ram, 128 GB in storage and a 3000 mAh battery. It is currently up for pre-orders at around $999. The device is designed to have an in-build cold storage wallet. One can’t help but wonder whether people would truly want to spend so much on a cold storage device. Interesting to see token sales powering hardware providers at such scale nonetheless.
P.s — Sticking to my Note 8 and Ledger Nano S. What about you?
Livepeer Is Live
P2P streaming platform Livepeer has announced the launch of their protocol on Ethereum’s mainnet. Anyone with a minimum of 0.1 Ethereum in a wallet at block 5,264,265 will be able to generate a token to try their platform. The system is will allow anyone to create decentralized live streams. This will be exceptionally handy in regions where censorship resistance curb freedom of speech. In addition, an alternative mechanism to run live streams and seek payments would be a good alternative in regions where traditional forms of payments can take months to settle. Read more about the product here.
In case you thought FOMO is a sentiment felt only by investors, you are grossly mistaken.
Enterprises are fully onboard the blockchain bandwagon and this time around, it is not only for the sake of gains in stock prices.
The month has seen a wide variety of activities ranging from Facebook launching its own team oriented towards blockchains to Goldman Sachs launching their own trading desks specific to Bitcoin. We look at some of these in the brief.
BaaS Players Flex Muscles
Given the rising interest from developers with respect to blockchains, Amazon Web Services has announced the launch of Blockchain templates. It primarily allows users to have access to a pre-defined blockchain framework to enable faster deployment. Meanwhile, Microsoft is not far behind. They have launched a custom service focused on competing against AWS’s blockchain templates. It will allow businesses looking to create blockchain based apps to accelerate the process by automating infrastructure set up. Samsung meanwhile has been focusing on using blockchains to improve their core operations. According to Bloomberg, the electronics giant is in the process of using a blockchain to improve their supply chain process.
Financial Institutions Want In
Goldman Sachs hired its first employee to focus specifically on the trade of digital currencies on Wall Street. The individual will explore how Goldman could eventually create a trading desk specific to Bitcoins within the institution. Meanwhile, the parent company of NYSE — Intercontinental Exchange (ICE) has been developing an online Bitcoin trading platform focused on major investors looking to garner exposure to the space. Not bad for a month that Bill Gates suggesting he would short Bitcoin if he could.
Ford, Renault, GM, BMW and Start-ups join hands to create Mobi
Many of the world’s top automotive and software giants are teaming up in a new initiative dedicated to using blockchain technology. The new group, known as the Mobility Open Blockchain Initiative (MOBI) is actively working with companies accounting for over 70% of global vehicle production. Members include GM, BMW, Ford, Bosch, IOTA, Fetch amongst others. MOBI seeks to enable consumers to hold sovereignty over their driving data. They want to allow users to manage ride-shares, car-share transactions, and store vehicle identity usage data in an age where autonomous driving and ride-sharing are disrupting the automotive industry.
Centrica Tests Energy Trading On A Blockchain
Another industry where incumbents have detected potential deployed solutions and begun scaling. In its latest instance, British energy supplier Centrica has announced that they will launch a local energy market trial later this year. The firm has claimed that the trial will be the largest blockchain trial to date in Britain carried by one of the big energy providers. The trial run will see over 200 houses and independent businesses make energy-related transactions in a peer to peer format. The energy giant will be working with US Based startup LO3 energy which had earlier secured an undisclosed round of funding from Centrica’s innovation arm.
Facebook Launches Team Dedicated To Blockchains
Facebook is hopping onto the blockchain research train. David Marcus, Head of Messenger, is taking over the new internal team dedicated to exploring the blockchain technology. The group will be small and will also include two executives from Instagram. David Marcus is the former president of PayPal, where he gained a lot of payment expertise. In addition, he oversaw many significant changes in Messenger like the push into customer service bots, shopping and advertising. Marcus describes himself as a “cryptogeek” and is already on the board of Coinbase. Despite FinTech developments “on the chain” are extremely popular within the community and building a native cryptocurrency for Facebook would seem like a natural way to go for David Marcus.