Sam Bankman-Fried was a cryptocurrency darling and then became its black sheep. In November of this year, the cryptocurrency company he founded, Futures Exchange (popularly known as FTX), went bankrupt spectacularly.
The exchange, a digital platform that allows users to buy and sell cryptocurrencies, has filed for bankruptcy after it was accused of mishandling customer funds.Bankman-Fried has previously received positive reviews from investors and the media. and praised him for his generous donations to charity and for calling out the industry’s unethical practices. Bankruptcy destroyed that image. The collapse also followed a major crash in cryptocurrency prices and the bankruptcies of some of the industry’s biggest players.
Behind this crash and fraud claim is that companies remain surprisingly optimistic about blockchain’s potential.
One of them is Motoblockchain, a small startup in Malaga, Spain. They created a system that allows all relevant information about motorcycles (parts, usage, repairs) to be stored on the blockchain. Anyone from mechanics to riders looking to buy a used bike can access the records in this system to see the motorcycle’s origins and history.
“Having a reliable way of indicating the origin of a product or its parts is very important in many industries,” said Bright Pixel Capital, a Portuguese investment fund that has supported MotoBlockchain through an EU-funded project. analyst Joao Fernandez said. block start. “That’s also what blockchain is good at. It makes the information more trustworthy within the ecosystem.”
This trust is one of the many benefits blockchain technology could bring to the European economy. Despite crypto boom-bust cycles, startups like Motoblockchain remain hopeful about blockchain. Stimulating their growth and persuading European companies to use the technology may be critical to the long-term success of blockchain.
“The full impact of blockchain will only be realized if we convince small businesses to use blockchain,” Fernandez said. companies could really benefit from using blockchain-based technology.”
Blockchain allows cryptocurrencies to digitally register transactions without one party controlling the currency. In general he is decentralized as opposed to a regular database controlled by one party.
Most importantly, blockchain technology (distributed ledger) can be used to record not only financial transactions but also anything of value without an intermediary.
This is a concept that has applications far beyond cryptocurrencies. For example, it would be useful to track motorcycle history like Motoblockchain does. A motorcycle can go through dozens of inspections, mechanic visits and sales throughout its lifetime. Various parties, such as users, motorcycle companies, and repair shops, need to communicate this information. Using a centralized system is difficult. Motorcycle companies may not want to use centralized tracking systems owned by competing motorcycle manufacturers. Decentralized, neutral blockchains offer an alternative here.
“Blockchain shines when there are several different stakeholders who need to access the same system and share information in a decentralized way,” says the Frankfurt School of Finance and Management. Robert Richter, who coordinated the EU-funded Blockpool project, said: “We create a system that doesn’t require a middleman.”
As such, blockchain could underlie software that ordinary people will unknowingly rely on in the future.
“Look at the Internet,” said Richter. “Today everyone uses it without understanding how it works. But until now, it was something new that had to be developed.
To do so, startups will need to develop blockchain applications that allow regular companies, such as SMEs, to access complex technologies. A problem that BlockStart and Blockpool have been working on for several years. Both projects have set up programs to select interesting blockchain startups, provide funding and mentoring, and connect them with potential clients. Besides, they educated existing companies on the potential of blockchain.
“We have found that one of the main obstacles to the success of blockchain is that executives are not sufficiently knowledgeable about the technology’s potential,” said Richter. It is very important to educate other companies as well.”
BlockStart supported 60 startups, connected them with 67 SMEs, and provided €20 000 to startup finalists. Blockpool did something similar. 25 start-ups have implemented the program, during which they each received equity his free investment of up to 30 000 euros.
One of the SMEs participating in BlockStart is AlBicchiere, an Italian company that offers its customers a “Nespresso for wine” device. The company wants to be able to chart the wine journey from the grower to the customer, and a blockchain system was built for this purpose by one of his Blockstart startups, Datarella. I was.
Surviving the crypto winter will not be easy. Most of these startups now have to deal with the turbulent technology market. Big companies like Meta, Amazon, and Spotify have announced mass layoffs, and even regular tech companies are in trouble. This could dampen the growth of startups supported by BlockStart and Blockpool.
“I believe the current crypto winter will slow down blockchain implementation,” Fernandez said. ”
But for the wider blockchain and cryptocurrency space, the crash could be a boon, according to Richter and Fernandez. For example, you can prioritize companies with the greatest potential and filter out the weaker ones.
“There are some blockchain projects and cryptocurrencies that don’t really serve a purpose,” said Richter. “That’s always the first question I ask: Do you have a use case?”
Fernandez agrees. “The blockchain space used to be too crowded. Now only the best projects survive. Whoever survives this winter will be the one to spearhead the future. From 5 to 10 years he , they will be the winners.
The research in this article was funded by the EU.This article was originally published horizonEU Research and Innovation Magazine.