the old. the cars. the bad | newsletter week #18
this week: companies that are innovating the new with the older (hipster much?), a look at blockchain in the automotive industry, and the charge against Ripple. But first, some research.
While categorizing crypto projects for Researchly, I have come across a range of interesting observations in regards to crypto projects. One observation is the prevalence of environmental-friendly cryptocurrencies (cryptocurrencies that take some kind of environmental-friendly actions), ecological cryptocurrencies (cryptocurrencies that try to be environmental-friendly through operational effectiveness), and donating coins (cryptocurrencies that donate a certain amount of their tokens to charities) and projects.
Regardless of how serious these projects are and whether they will succeed they lead to a few conclusions.
Again, while categorizing crypto projects for Researchly, I came to understand that FAQs of cryptocurrencies are very insightful for a couple of reasons. Besides educating users, they can also raise awareness for certain issues and give insights into a token’s target market, maturity, and motivation.
Spoiler: I have now idea what’s the secret to a token’s success.
Looks at some blockchain- and crypto companies with significant user bases and concludes that most of those companies – part of a decentralized future – are not really decentralized.
Living in the old world.
Tangem, headquartered in Hong Kong and Switzerland has announced their „bitcoin smart banknotes“. Each tangem banknote comes donated in bitcoin (ranging from 0.01 to 0.05 BTC) and is spent like paper money by handing it over. To verify the banknote, it comes embedded with an NFC tag that upon scanning with an app reveals the banknote’s balance.
As argued in Blockchain and socio-technical systems — diffusion through hybridization tangem’s banknotes are an example of hybridization where blockchain solutions (solutions from the „new world“) are incorporated into existing „normal“ products. Through that integration, those „normal“ products can be enhanced with features that — in the best case — are only achievable using blockchain technology.
In this case, the „normal“ products are banknotes, and the solution from the „new world“ is bitcoin. As argued in the last issue there are three advantages to this hybrid approach:
- Companies which are enhancing existing products are not positioning themselves as competitors and thus aren’t a threat to incumbents. Because incumbents are very powerful, this strategy allows Blockchain startups to work without having to worry that much about competition. This leads to the second advantage.
- Because startups must not fight incumbents they have enough time to study the industry and work on bigger products which will eventually end up being direct competitors. Until then, however, those startups are operating under the „competition radar“.
- Accustom people slowly to the new „world“: By not confronting users directly with something completely new, startups can slowly accustom people to the new paradigm and incrementally lead them towards the new world.
Besides this, it is ironic to see a digital technology, relying on an analog technology. Nevertheless, such a cascading approach towards crypto payments (first accepting digital cash per se and then paying with digital cash) makes a lot of sense as argued in Two mental steps towards cryptoasset diffusion in the context of cryptocurrencies per se. However, the question remains whether paper money is the best mean to drive diffusion. An alternative are payment cards (debit and credit cards). Companies like TenX, Monaco, and Centra (which received legal attention recently) are working on debit and credit cards that can be used to pay with cryptocurrencies.
Chainium, a blockchain startup that finished its token sale in April is following a similar hybrid strategy. Chainium is building a blockchain-based platform to issue equities. In this case, the “old world” are equities, and the “new world“ is blockchain. In contrast, a fully „new world“ solution, wouldn’t deal with equities in the first place, but rely fully on blockchain-based financing methods such as ICOs or AirDrops. Examples from this category include crowdfunding platforms such as Zilla or AirDrop platforms such as Earn which recently got acquired by Coinbase.
Chainium is part of Researchly’s Global ICO Report April 2018 — sign-up here to receive the full report when its out.
blockchain and cars
MOBI, the Mobility Open Blockchain Initiative, announced their formation as of May 2. MOBI is a nonprofit foundation consisting of various players associated with the world of automotive and mobility aiming at promoting the adoption of Blockchain, DLT, and Co. in the automotive and mobility industry. Among others, members include the IOTA Foundation (the foundation behind IOTA), The Ocean Protocol (one of the protocols working on decentralized exchanges), and VeChain (VeChain is part of Researchly’s Global ICO Report April 2018 — sign-up here to receive the full report when its out.)
Afte questions arose whether Ethereum is a security (the SEC is discussing it on Monday, May 7), now Ryan Coffey has filed a securities class action against Ripple arguing that Ripple raised “hundreds of millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws.“ Ripple has recently received „questionable“ medial attention when it became public that they wanted to pay to get listed on Gemini and Coinbase.
Regardless of the nature of the outcome of Ethereum’s and Ripple’s cases, they actions themselves are interesting because they will serve as a reference case for future projects.