Blockchain beyond finance

I recently read an article on how digitalization affects the energy sector. The article was written by Fabian Reetz at the Stiftung Neue Verantwortung, a Berlin-based think tank “at the intersection of technology and society”. Not very surprisingly, given the topic, the article talks about blockchain a lot. Now, I was quite surprised when I saw this screenshot in the article (“Suchergebnisse” means “search results”):

The screenshot shows the results of a search for “blockchain” in the website (including their publications) of the German Federal Ministry for Economic Affairs and Energy, BMWi. Zero results! Hmmm… By the way, the colleagues at the German Federal Ministry of Finance do not fare much better, delivering just two results (and these only look at FinTech, nothing outside finance such as energy; yes, I know it is the Finance Ministry, but still…):

Here is what I think might have happened:

  1. Nobody at the BMWi is doing anything about blockchain, therefore they have no publications.
  2. They do something about blockchain, but their publications on the topic are not publicly available.
  3. Their site search is broken (it says that it is still “beta”, after all).
  4. Somebody’s dog ate their publications on blockchain.

I really hope it is not (1). I guess (2) and (3) are both possible; (4) would really be lame.

Prompted by this zero-results-disappointment, I did a quick check on blockchain. I used Mergeflow to find out more about…

  • …companies receiving VC investments, and what these companies do
  • …public R&D funding
  • …relevant markets
  • …the patenting landscape
  • …science
  • …industry

I only used one search term for all of this: blockchain* (= including variations of the word “blockchain”, such as “blockchains”, “blockchain-based”, etc.). Of course, this means that I might have missed something (i.e. things that are relevant but that do not call it “blockchain”). But I deliberately wanted to keep things simple. Plus, I am no expert on blockchain (cf. the section below “How I researched ‘blockchain’ for this blog post”), so making things more complex might have hurt more than it might have helped.

 

Which companies get funded, and what do they do?

I first looked at VC-funded blockchain companies that Mergeflow identified (more than 60 funding rounds since August 2014). I exported everything to Excel; then I looked at the latest funding rounds (i.e. since beginning 2017), and at the biggest rounds since August 2014. I manually categorized each company based on my understanding of what they do. Here are the results:

Latest VC fundings (since January 2017):

Biggest VC funding rounds (since August 2014):

(KnCMiner declared bancruptcy, so I shaded their row in the table)

By the way, Ripple counts Karl-Theodor zu Guttenberg among their advisors. Mr. zu Guttenberg once served as German Minister of Economics. I wonder if they know this at the BMWi.

What I found particularly interesting is that there are at least five companies on my short lists that either do decentralized contracting (think energy market) or distributed storage and computing (think many, many things beyond finance…).

Also interesting, I think, is that the top investors do not seem to be banks. Rather, Mergeflow finds names such as Draper Associates, RRE Ventures, Khosla Ventures or Google Ventures.

 

What about publicly funded R&D?

Mergeflow continuously collects and analyzes public funding updates from EU CORDIS, SBIR, NSF, Innovate UK, and the BMBF Foerderkatalog (a German federal R&D funding program). Compared to many other topics, blockchain R&D funding seems not very big. Across all the mentioned funding agencies, the total is about $17,7 Mio (Mergeflow converts all fundings to USD at the daily exchange rate). The two biggest projects are EU CORDIS projects (they usually fund big consortia, unlike e.g. SBIR, who fund individual SMEs). Project DECODE (Decentralised Citizens Owned Data Ecosystem; $5,3 Mio funding) aims at developing a decentralized and open architecture for managing data; project MH-MD (My Health – My Data, $4,3 Mio funding) aims at developing a biomedical information network connecting individuals (e.g. patients) and organizations (e.g. hospitals).

However, one of my personal favorites is a project named “Glass Houses” in the UK ($1,4 Mio in funding). One of its project partners is the Robin Hood Asset Management Cooperative. What a name for someone participating in a UK blockchain project!

 

What do market analysts say about blockchain?

Mergeflow extracts market information (segment names; market sizes; CAGRs) from news, press releases, and reports. For this blog post, I looked at the data where the market description explicitly mentions “blockchain”:

What I found particularly interesting here is that “internet of things” plays an important role. This reminds me of the VC-funded companies mentioned above that focus on decentralized computing or contracting. If I were at the BMWi, I would pay attention to this…

Also, market growth and size are almost inversely correlated. I am not sure whehther this is specific to blockchain though.

Note that some estimates for the same segment differ from each other (the two “global blockchain technology market” estimates).

 

Who holds the patents?

Mergeflow uses the European Patent Office database, which aggregates patents from around the world. Here is a tag cloud of companies with patents that explicitly mention “blockchain”; the bigger the font, the more patents a company holds:

I underlined some companies that, judging by their name, clearly do not seem to be in the finance sector (manufacturing, machinery, robotics, parking, bicycles, electric vehicles).

Then, of course, “EITC Holdings” sticks out. I had never heard of them before, so I looked them up. Apparently I am in good company; Financial Times Alphaville once asked the same question (see their article, In the name of Satoshi, who exactly are EITC Holdings?). What I found includes this:

Self-Proclaimed Inventor Of Bitcoin Reportedly Seeks Hundreds Of Patents On Blockchain Technology (from Benzinga)

…and…

Australian ‘bitcoin founder’ quietly bidding for patent empire (from Reuters)

According to these news, the Australian Craig Wright (he claims to have invented Bitcoin, according to the news) files for patents through EITC Holdings, which is registered in Antigua. Of their ca. 50 patents, I found one particularly interesting:

Operating system for blockchain IOT devices

Although the patent is listed in our EPO database, it is not even available on Espacenet yet (which is why the link above does not show a result yet). The patent number is GB20160007476, in case you would like to monitor the development of this.

IoT again…

 

What is happening in science?

Mergeflow collects and analyzes about 30,000 new science papers every week (this number is rising continuously). Of all these papers, the share of papers explicitly mentioning “blockchain” has been rising over the last few years (overall, the share is still small):

One of the sources responsible for the rise is arxiv.org, a computational sciences preprint server run out of Cornell University. Here are some examples of scientist co-author networks extracted by Mergeflow, along with an example paper each:

Application of Bitcoin Data-Structures & Design Principles to Supply Chain Management

Optimized Execution of Business Processes on Blockchain

Another source for blockchain papers is the Cryptology ePrint Archive. Here are two co-author network examples, with an example paper each:

Towards Shared Ownership in the Cloud

Town Crier: An Authenticated Data Feed for Smart Contracts

I admit that the selection is entirely based on what I found interesting. It is certainly not exhaustive or represenative.

 

What does industry do?

Of course, Mergeflow also collects and analyzes industry-related news, press releases, and other sources. I used these contents to find some non-finance examples of how bigger names in industry are involved with blockchain.

One example I found interesting involves Daimler, Toyota, and Volvo:

The news behind this: Hyperledger Gains Daimler AG as Premier Member.

Here is something from the area of travel, tourism, etc.:

All these companies are part of the “Plug and Play Travel and Hospitality Innovation Platform”.

Other blockchain applications addressed by industry include shipping (IBM, Maersk in blockchain tie-up for shipping industry), health care (Could Blockchain Technology Be the Answer to Health IT Interoperability?), and energy for electric vehicles, which involves the German energy company innogy, among others (California Startup Poised To Introduce Blockchain Payment Technology To United States).

 

How I researched ‘blockchain’ for this blog post

Full disclosure: I already said it above, I am no blockchain expert by any stretch of the imagination. I have no idea who Satoshi Nakamoto is. And for this blog post, I only considered documents that explicitly mentioned “blockchain” somewhere. So if somebody wrote about blockchain but used different terminology, I did not consider it in my little analysis here. Also, I limited myself to two hours of research, from start to finish (this did not include writing this post; formatting etc. always takes me longer). Still, I hope you can get something out of my post. And if you happen to know who Satoshi Nakamoto is, or what Craig Wright’s plans really are, please let me know!

 

 

 


Also published on Medium.