Last week, two data marketplaces finished their ICOs; Beat and Fysical.
Beat is a data marketplace for health and sports data and raised around $3 Mio. Fysical, one of Streamr’s partners (see below), raised around $3.4 Mio (PRE-ICO). Fysical is a data marketplace for location services where entities (e.g. apps, machines, or consumers) can submit and buy location data. At the same time a similar company, FOAM, a Proof of Location protocol for open source maps and verifiable/tamper-proof geospatial data has started their token sale on Token Foundry.
Data marketplaces are a common area for blockchain startups and a range of them already exists. Some like Streamr have been around for quite some time (Streamr raised $27.000.000 Mio. in their ICO in 2017). One use case for data marketplaces is decentralized machine learning for autonomous cars.
However, non-blockchain based data marketplaces are similarly not new and they have existed even longer, including ones by big corporations like Amazon with their Open Data. It would be naive to assume that these companies would not transit to blockchain-based versions if they suit them. As such, it should not come as a surprise that, for instance, Amazon has registered a patent for a data marketplace for cryptocurrency transaction data.
This established competition raises the question for the future of blockchain-based data marketplaces.
“Experimenting with blockchain” involves more than tech
First, it is important to keep in mind that “experimenting with blockchain” involves more than tech. As I have written in Decentralized applications – “experimenting with blockchain” is more than tech this includes competitive fights (with startups and incumbents), user education, and developing the auxiliary building blocks such as blockchain governance or token-curated registries, among other things.
Secondly, the incumbents’ reactions are crucial. Here we have two considerations. First, customer base. Incumbents might lack the innovation (i.e. blockchains), but have the customers. Startups have the innovation but lack the customers. Whether blockchain startups like Streamr will get the customers before the incumbents get the innovation is the million-dollar question.
Also, and this is what might prevent startups from getting the customers before incumbents get the innovation, there are all these ICO investors. Sure enough, ICOs have provided great financing but I think it is often overlooked that these investors must be managed. Such shareholder-management costs time and brings many risks (e.g. arbitrary FUD).
Finally, it is essential that blockchain-based data marketplaces prioritize their product roadmap. Many incorporate all the bells and whistles blockchains offers (governance models, stablecoins, token-curated registries…). However, I believe that down the line they will realize that they can only scale if they innovate incrementally because else they are spreading them too thin.