The crypto ecosystem has come a long way from its humble beginnings in Bitcoin.
One testament to the revolution that blockchain represents can be seen in the multitude of large, established companies that have adopted and adapted blockchain. Immediately, the cryptocurrency foundation Libra jumps to mind of course, but parts and pieces of blockchain have also been adopted for IBM to offer Blockchain as a Service (BaaS), for PayPal to improve their own internal security, and for Alibaba to branch into new use cases.
For startups in the blockchain space, carefully analysing the directions these larger companies have chosen can inform the opportunities that smaller companies leverage. In this article, we will examine what tech giants are doing in the blockchain and crypto space to understand potential opportunities for blockchain startups.
Paypal is well known for having taken the first steps in the world of secure digital payments. It’s not hard to see why their interest in blockchain is strategic. By the end of 2018, PayPal’s innovation lab had launched an internal blockchain-based employee incentive program for innovative ideas. One could see this as a way for PayPal to trial blockchain in a low-risk situation.
Most recently, blockchain has become a focus of PayPal’s research teams. Currently, they’re interested in making use of the blockchain for streamlining the Know Your Customer (KYC) processes and eliminating the hassle currently involved with onboarding. 2019 also saw PayPal join the Series A funding for the blockchain startup Cambridge Blockchain, that helps financial institutions and other companies manage sensitive data using shared ledgers.
Alibaba Pushes Blockchain into the Cloud
Alibaba has found itself exploring multiple use cases, from using blockchain directly, to deploying BaaS for its own customers. The Sina Finance Report in March of this year confirmed that Alibaba’s consumers have the opportunity to leverage the Koala blockchain to trace logistical details regarding their purchased goods. By linking with local governments, Alibaba is able to provide details on goods even as they move cross-border.
Furthermore, in 2019, Sohu reported that Alibaba planned to expand its blockchain capabilities to include digital copyright protection. The blockchain-based Ali Intellectual Property Protection Platform will keep records, giving Internet-related cases a basis for litigation rights protection.
Alibaba Cloud also offers a BaaS platform, with support for the Ant Blockchain, IBM Hyperledger Fabric, and Quorum. By focusing on infrastructure, they’ve optimized their ability to be integrated by other enterprises. Today, they offer plenty of blockchain related products, including enterprise-level BaaS, private deployments, and blockchain service solutions for cloud container deployments.
This focus has allowed Alibaba Cloud BaaS to be currently supporting several projects live in production, from commodity traceability to financial services, to data asset transaction management. The fruitful partnership between Alibaba Cloud and AliPay in Aug 2018 has resulted in blockchain infrastructure supporting government, retail, manufacturing, finance, Internet, media and healthcare use cases.
Their first medical care blockchain solution was actually implemented as an electronic prescription management of the Central Hospital of Wuhan, allowing automatic management of the full prescription lifecycle. Most recently, April saw Alibaba’s NeatEase Cloud Music patenting a blockchain-based platform that vets the originality of songs.
Increasingly, many of the larger tech companies have also found it valuable to not only invest in a deeper understanding of blockchain, but also partner directly with startups that are working on interesting technology.
IBM has made their interest in blockchain clear from the beginning. From hosting industry forums, to driving several consortiums, IBM has powered use cases in food traceability, cross-border trade auditability, liquidity and trade finance, cross-border payments and decentralized trusted identities.
Of the Big Five, Google has partnered with Chainlink (previously SmartContract.com) to offer blockchain cloud offerings that are integrated with traditional computing tools — similar to what Alibaba Cloud offers. Google is one example of a company investing heavily in partnerships; with startups like Blockchain.com, Cypherium, Hedera Hashgraph and Digital Asset, Google is positioning itself to build and support blockchain-based apps.
Similarly, the Amazon Managed Blockchain allows you to create and manage scalable blockchain networks, with support for Hyperledger Fabric and Ethereum, and has already seen case studies with companies like Nestle trial supply chain logistics tracking. Through partnerships with blockchain startups and platforms like Kaleido, R3’s Corda, Consensys and Farmobile, Amazon has also been able to support a range of use cases.
Facebook, while developing the Calibra digital wallet and the Libra token, will also support government-backed currencies, and potentially other cryptocurrencies as well.
Apple has been collecting patents that make use of certifying timestamps in the blockchain
Microsoft Azure offers support to deploy a consortium/permissioned network.
Decentralized Finance, or DeFi, has certainly been on the minds of many in the blockchain ecosystem, and we can see that larger, established payments giants have also shown significant interest. But from the angle of usability and accessibility, blockchain has always proven difficult.
It’s no secret that while many of blockchain’s properties are desirable, thus far many of the implementations aren’t faster, or more secure, or more stable. Startups are in a position to be more agile than larger companies, and more honest about their implementations’ shortcomings. They’re able to pivot more easily, and incorporate new revelations in the latest technological developments as they arise. That’s also where academia plays a role to solve those currently unsolved problems.
Across the board, while the larger tech companies have invested in a range of different blockchain platforms, and have expressed interest in an even wider range, one thing is clear.
It’s even more important to those large tech companies to find a convincing use case for blockchain — one that is a valued asset from an enterprise-level software perspective. Tech startups find themselves in a unique position because blockchain is still a nascent field. Even while these large companies are amassing research groups and investing in consortiums, they also turn to investing in and partnering with smaller blockchain startups that understand some aspect of the technology (for example, privacy), or who understand how to cater to a particular use case. That’s why this survey of industry today leaves us with the conclusion: One possible path to success could be mastering a niche, and enjoying the network effects from partnership.