This is the web version of our new newsletter, Distributed Economy Update.
Distributed Economy Update is a multi-author newsletter with recurring sections. Each contributor regularly covers one or several topics that s/he is concerned with in her daily life. The topics are particular aspects of the crypto/blockchain/web3 world. The categories will either focus on specific industries, markets or sub-topics of the broader ecosystem. What ties all of them together is the focus on business-relevant subjects. So, if you are professionally concerned with crypto/blockchain/web3, either at a startup/decentralized project or at an established company, Distributed Economy Update is for you.
Some of you might also be happy that we also publish a German version which you can find here.
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China on Chain
EU vs US? – China is the real Blockchain Champion
by Simon Schaber | LinkedIn
Regularly experiencing advancements in AI, Blockchain, and IoT both in Taiwan and Mainland China first hand myself, I find it quite important to take a step back from the Western hemisphere and have a look at what is going on in China every once in a while. It helps to clear one’s perception and puts things into perspective. The following quote from this article illustrates why watching China closely is very instructive (emphasize added):
In Deloitte’s 2018 global blockchain survey, nearly 50 percent of respondents in China said the technology was already being used in their organization, compared with only 14 percent in the United States.
Paul Sin, leader of the Asia Pacific Blockchain Lab at global advisory company Deloitte, said, “Whenever there is a need to synchronize data, especially sensitive information, across companies, industries and geographical boundaries, blockchain can offer a great solution due to its cryptographic protection of data.”
Take Qulian, for example. On an accounts receivable platform it developed with China Zheshang Bank, the scale of financing has reached hundreds of billions of yuan since its launch in August 2017.
Qulian, in Hangzhou, capital of Zhejiang province, launched Hyperchain, which focuses on enterprise-level network solutions for companies, government agencies and industry alliances.
In June, the company said it had raised a series B round of financing of 1.5 billion yuan ($222 million) – the largest amount in the domestic blockchain industry at the time.
Qulian is just one of 615 blockchain companies in China, with 82 percent of them founded between 2016 and last year, according to a report in December by Beijing think tank EO Intelligence.
Having skipped most of the hype we have experienced in the western world due to regulators reacting quickly and reasonably, Blockchain technology is now a very well researched subject. Both public and private institutions in China work with it regularly. Institutes and R&D centers are popping up all over the country, while promising companies with real traction go the established way of raising money from professional state- and privately-owned investors instead of the general public.
Not being seen as a panacea and having experienced fewer high-profile scams with lots of media attention helped the middle kingdom get a head start in the actual application of this emerging technology.
NBA and CryptoKitties Makers bet on Blockchain Collectibles & Gaming
Instead of a physical card, what fans will own is a clip of video that’s been converted into a unique digital token and inscribed on a blockchain. There will be a limited number of each highlight for sale, and those in the same batch will differentiated by a distinct digital marker. Owning the tokens will also allow fans to participate in an upcoming fantasy league of sorts-pitting their collection of digital players against other teams.
According to a Dapper Labs marketing executive Caty Tedman, certain iconic collectibles-like the winning Leonard basket-will likely be sold at auction, while other moments will be sold at a fixed price. She added that NBA Top Shot may also offer a number of free collectibles to let fans try out the experience. There will also be a secondary marketplace where fans can buy “used” collectibles or sell their existing ones.
Digital collectibles are one of the more exciting applications of blockchain technology. People like to collect, even in the digital realm. The future size of the market can only be speculated about. Optimists are predicting up to US$ 200 billion. But even more conservative projections, which are based on the current 22 billion US$ market of video game in-app purchases, underline the potential.
What makes blockchain-based collectibles stand out is that they are demonstrably scarce or even unique. This distinguishes them from currently popular digital collectibles such as skins in computer games a la Fortnite. Today’s players spend cash on digital objects – even though these are owned by the publisher, who can freely determine how many times an object exists – and even change the number at will any time. With blockchain solutions, the buyer would actually become the true owner. The emergence of genuine, transparent markets would become possible.
Blockchain and collectibles are, in sum, an excellent fit. As are collectibles and sports. Many fans are passionate collectors – just think of the Panini collectible stickers or baseball trading cards. A year ago, Major League Baseball ventured into blockchain as the first major sports league globally (with moderate success so far).
But the NBA has several advantages on its side: the league’s fanbase is skewed towards are young and digital audience. Its product is probably the sport best adapted to the social media world. Already today, highlight clips are enjoying great popularity on Twitter and other platforms (it certainly helps that the NBA has long renounced old school copyright-enforcement-thinking and granted fans a lot of freedom to use their content).
Of course, the success of NBA Top Shot is by no means a foregone conclusion. Will the implementation be so simple and intuitive that regular NBA fans – i.e. users without prior crypto experience – can cope with it? Is the gamification approach fun? Will the buyer of a clip truly become its owner, with all the consequences? I.e. will I get royalties from ESPN if the TV station shows the LeBron James Highlight Dunk on TV, for which I paid thousands of dollars? All these answers will be a long time coming. But the project has potential. It might well end up being a significant step towards broader adoption of blockchain technology.
Telco x Blockchain
Blockchain, Telecoms, Smartphones: Do they match on tinder?
On the weekend, I wrote a piece on crypto smartphones. Read it in full or find a summary below.
If it comes to blockchain and distributed ledger technology, you might first think of Bitcoin, crypto-currencies and the banking industry. Most probably you won’t think about telecommunications companies. So, wouldn’t crypto and telcos match on tinder?
Hold on. In this segment of the newsletter, I’m going to shed some light on the dark. Today I want to give you an overview of what’s happening in the devices segment, primarily with so-called crypto- or blockchain smartphones. In further newsletters, we will also touch upon the latest developments in telecom services, how blockchain can improve internal process efficiency as well as customer rights and privacy protection, which are closely related to what telecom regulatory bodies can do with this technology.
But first, crypto- or blockchain-enabled phones. Devices and blockchain only recently started to tinder shyly. It’s a fairly young market, in the very early phases of its development. One of the pioneers in this field is Sirin Labs. They launched their Finney smartphone at the end of last year, quickly followed by HTC with the Exodus as well as this year by Samsung with the blockchain wallet-enabled Galaxy S10.
What edge do these blockchain or crypto phones have over other smartphones? First of all, they provide additional security through their built-in hardware wallets. The so-called cold-storage is safer than holding cryptocurrency keys online on cloud servers or on personal computers. Although storing private crypto-currency keys is the most straightforward application, any private key, token, and digital asset can be safely stored on the blockchain phones. Furthermore, these wallets enable users to securely access decentralized applications or DApps.
But despite all the excitement about blockchain, it is worth asking the question, who is willing to pay up to $999 for a crypto-phone. And the answer is crystal clear: At the moment the mass market is not ready for these phones, particularly in Europe. In this part of the world, the devices only appeal to a very niche segment, the crypto- and blockchain community. A slightly different perspective can be taken with regards to Asian markets, where people are more crypto-enthusiastic and open to trying new technologies. Samsung’s announcement to make its digital wallet available to lower-cost models and the recent release of new DApps, can both enable a deeper market penetration in the future. Samsung sold more than 71m devices in Q1 alone. It is the world market leader with a 23% share and, as such, can set industry trends. At the same time, Facebook’s Libra makes the market moving, and will eventually increase demand for storage solutions and wallets on smartphones.
The full version of this article can be found here.
Real Estate Tokenization
Fundament Token Sale: €250 Million for German Real Estate
Hamburg based Fundament Group regards itself as the future of asset management. The startup received BaFin approval for an Ethereum based token sale with effect on July 18. These tokens account for the shareholder structure of €250 million debt securities in German real estate.
Florian Glatz, one of Fundament’s founders, explains:
Holding a token enshrines a legal claim of the holder against the issuer of the bond to pay them an annual dividend of around 4-8 percent, and obviously once the run time of the fund is over and there is an exit, then the token holders get the complete value that was within this fund.
Investors can choose between fiat currencies, bitcoin and ether when purchasing tokens. The same choice exists with regard to their dividend payouts. Forbes reports that citizens of Australia, Iran and the USA are restricted to partake in the token sale. Any other investor only needs to pass a regular KYC audit. There is no minimum investment size.
Now, here is the twist: once Fundament has sold the tokens, investors can send their tokens (incl. economic claims) to any address on the Ethereum network. For example, as a German investor, I could send my Fundament tokens to the public key of an American, Australian, or Iranian. And, in theory, even to the mafia or terrorists. There is no third party KYC/AML process stopping me. Ultimately, judiciaries can only identify Fundament tokens’ initial investors with certainty. Will lawmakers and regulators tolerate this degree of decentralization and lack of oversight in the long run? It will be interesting to observe!
Week Month on Twitter
Twitter is the fastest social medium, and this holds especially true when looking at the blockchain, cryptocurrency and tech space. For this edition of The Week on Twitter, I will go further back in time than in the future: I’ll recap the last month, not only one week. There have been some very interesting tweets in July so let’s get into it.
With Facebook announcing it’s digital currency Libra, a new wave of attention hit the cryptocurrency space. I am using the terms digital currency and cryptocurrency deliberately here. The former is – as its name suggests – a digital representation of a state-issued currency (or a basket of them) which is centrally managed. The latter is a decentralized, unpegged form of money, permissionless and censorship-resistant.
Thanks to the broad attention, some of the highest-ranking officials in the US made public comments on Libra and/or cryptocurrency.
The Chairman of United States central bank when asked about Bitcoin:
“They use it as a store of value…like Gold….that’s not to say we won’t see it & if we do see it yes you could see a return to an era in the US when we had many different currencies…”
— Luke Martin (@VentureCoinist) July 11, 2019
First, on the 11th of July, the Chairman of the Federal Reserve Jerome H. Powell spoke in front of the Senate Banking Committee. When asked if a cryptocurrency could remove the need for a reserve currency, he said “[…]we haven’t seen it, but that’s not to say we won’t see it […]”. He also compared Bitcoin to gold and acknowledged its function as a (speculative) store of value. The clip is only a minute long, go ahead a see for yourself.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
One day later, on the 12th of July, US President Donald Trump said he is “not a fan of Bitcoin and other Cryptocurrencies” and underlined the role of the US Dollar as “the most dominant currency anywhere in the World” in a series of three tweets.
This is something worth thinking about! The sitting President of the United States deems it necessary to comment on Bitcoin – something that was considered magical internet money only a few years ago. It marks a milestone for the level of presence Bitcoin occupies in the public conversation. Two additional tweets are worth mentioning in this context.
“I like bitcoin … The real thing I like when it comes to bitcoin is I like blockchain because I like the security. I want the government to start using blockchain,” House Minority Leader Kevin McCarthy @GOPLeader tells @JoeSquawk #bitcoin #btc pic.twitter.com/LeCi3Gg7Ro
— Squawk Box (@SquawkCNBC) July 16, 2019
On the 16th of July the House Minority Leader Kevin McCarthy said that he “like[s] Bitcoin” and blockchain for its security in an Interview with CNBC.
— Squawk Box (@SquawkCNBC) July 24, 2019
Last but not least, Secretary of the Treasury Steven Mnuchin confidently claimed that he won’t be talking about Bitcoin in six or ten years’ time. Mark the 24th of July 2029 in your calendar so we can find out how well this statement aged.
This series of tweets from high ranking US politicians shows that cryptocurrency – and not just blockchain technology – is being taken increasingly serious. I am quite confident in stating that there are many more discussions than we see behind closed doors. People in the highest positions of power start to realize that the genie is out of the bottle.
News from Untitled INC
Libra Deep Dive
Our Fellow Andrea Bianconi wrote two pieces in which he goes deep into Facebook’s Libra. He shines a light on the project’s hidden implications. Is Libra a stablecoin or a cryptocurrency? What could it mean for security tokens? These are only some of the questions Andrea tackles. Read part I and part II.
A study on Blockchain in Real Estate
An Untitled INC team is currently looking into the potential of blockchain generally and asset tokenization specifically in the real estate industry. We are currently completing a study that looks into specific use cases and, to that end, talks to RE professionals, startups and other stakeholders. If you want to learn more or are even interested in contributing, drop us a line at email@example.com.
A venture at the intersection of sports & crypto
Another project that we are currently working on is still in stealth mode. In broad strokes, we are working on a service that brings the possibilities of digital assets to the sports industry. If you happen to be curious and would like to learn more, let us know. And in case you are a capable developer who loves sports, most definitely drop us a line.