The hype around Crypto reached critical mass around five years ago with the price of Bitcoin reaching new heights. In parallel crypto exchanges are bidding aggressively for mindshare in the digital space:
In the UK alone there are over 14,200 searches for crypto exchange-related queries, and a top-of-page bid in the Google AdWords auction would cost £11.79. The market is clearly aggressive, and therefore we could assume lucrative, for Crypto Exchanges, though these kind of figures are hardly surprising given that Business Insider valued the Crypto Market at $700 billion in January 2018. But, is there a way to invest in Blockchain beyond the prism of Crypto?
The Power of Smart Contracts
Blockchain, the engine behind Crypto and, indeed, what makes the currency so attractive (anonymous, decentralised) can, and will, be used across verticals. Imagine a future where third-world governments can no longer be corrupt. Or, imagine what would happen to the market capitalisation of a record label if their content can no longer be downloaded from file sharing networks. Blockchain technology can, and will, make this a reality.
Investing directly in a Blockchain means you don’t have to pay a middleman. The Crypto Exchanges predicate their business model on fees per transaction. If, as the figures suggest, up to $700 billion is potentially being traded, even a 1% slice of this market is significant. The Exchanges are pocketing a handsome fee purely for facilitation.
The Digital Wild West
Given this recent news, are the Crypto Exchanges really that safe? For a more risk-averse, or ‘serious’ (i.e. significant) investor, the volatility in the market is surely a huge concern. The lack of regulation can be attractive to the bedroom or more risk-tolerant investor, but for high-net-worth individuals who want attractive returns as well as security, the exchanges are less attractive.
Investment for the long term rather than a quick buck (or coin)
Investing in a Tech Company obviously comes with its own risks. However, investing in a company that has potentially solved a fundamental problem just makes sense. Two of the top Blockchain companies in the market right now that are utilising smart contracts to solve problems in extremely innovative ways.
The BTL Group, are a Vancouver-based company who offer Blockchain-based solutions across multiple verticals from banks to energy companies, and even fantasy sports. In January, they announced a deal with four oil and gas companies and five energy traders who will use their platform to deliver trading reconciliation through their platform.
Next, another Vancouver-based company called BLOK Technologies, known previously as Aida Minerals, invests in the development of new blockchain-based technologies in order to provide business solutions to niche and unusual industries. One of its projects, called Greenstream, is a blockchain-enabled supply chain management platform for the legal Canadian cannabis industry. Though legal cannabis is very niche-y, the underlying technology could solve issues around supply chain management in other industries too.
Industries that blockchain can affect
The companies above have developed blockchain technology mainly based on proof of provenance and reconciliation. However, this is just the start. One of the key benefits of a Distributed Ledger is that there is an irrefutable digital truth. This truth can be applied across vertical industries to prove multiple truths.
In the UK, for instance, contracts have to be signed on paper, in wet ink. These paper-based contracts are often filed away and forgotten about by both parties. In an HR context, if the scope of a job of work changes, this often can make the contract null and void. In a commercial context, if a start-up licenses a piece of technology, but has to pivot for viability reasons, the tech vendor could close the start-up down. Contracts built on Blockchain could be updated (with mutual consent) and updated ‘on the fly’ without the need to incur expensive legal fees from either side.
In a pharmaceutical context, especially in the developing world, illegal drugs are a huge problem. Much like BLOK has done with legal cannabis; pharmaceutical drugs can be endowed with a ‘digital truth’. From a factory floor to the point of the prescription provenance of drugs could be proved at every step along the chain. The list of potential uses could go on.
Hedging your investment bet
The old adage about putting all your eggs in one basket is probably a cliché for a reason — in an investment context, it is often true. Any new investment, especially in technology, is high risk. Hence, why pension companies invest in ‘buckets’ of companies to deliver blended returns — risks are spread. Given this fact, doesn’t it make more sense to invest in blockchain technology that isn’t solely predicated on currency? Not being tied to one sector opens up many more potential doors.
The views expressed in this article are the opinion of the author alone and do not constitute investment advice. Investments can go down as well as up. Seek independent financial advice before making any investment decision.
Gary Spence is CEO of Yotta Laboratories. He is a Chief Architect of Distributed Ledger Technology (DLT) and a Digital Technology Specialist. Spence’s ambition is to take business technology to its next level, therefore, creating efficient savings of time and expenditure.
Spence has an extensive and unique skillset with experience in Blockchain protocol details, transactions, mining, and consensus. He also has smart contract developmental experience with Eris/Ethereum/Blockapps and experience with Distributed Storage Technology, Misys TI+/TradePortal Java, JEE Twisted Python, DB2, MS SQL, Oracle, XML, CSS, JSP, HTML, web development frameworks, JMS, Web Services and Tomcat Java Web Start, IBM, WebSphere, log4j.
Spence’s vision is to build reusable modular core libraries for use across a multiple product line creating a full ecosystem.