In recent times, it’s Eastern Europe and Russia which have become a hot-bed of crytpocurrency development. But on a recent trip to Tel Aviv, Israel, I took part in what might well turn out to be a historic lunch.
The lunch took place just after well-known tech investor Moshe Hogeg announced he would invest in every Israeli blockchain that approached him. That investor group, called Alignment, consisted of the Singulariteam Technology Group, together with CoinTree Capital, and BlockchainIL.
Held at Alignment’s new blockchain Hub in Tel Aviv, we got to hear from an array of new companies.
Dubbed by many as “Startup Nation”, Tel Aviv has begun to produce a new breed of tech giants, but it’s now turning its hand to blockchain and crypto companies. In recent months, my mailbox has become inundated with pitches from companies claiming to be the next blockchain phenomenon, with plans to revolutionize the finance world, healthcare landscape, travel industry, you name it. The problem is, which one, if any, can deliver? However, after getting deep into the subject with the companies I met, I realized many were at least ‘on to something’. Whether they would survive or not…
Here’s a run-down of who I met with:
The idea of a blockchain network that works for the average person still seems far off. But Erachain wants to address that. Russian programmer Dmitrii Ermolaev, co-founder and CEO has grown it from a small operation to a distributed organization. Erachain is a decentralized blockchain platform that has incorporated European and World-Wide AML laws, potentially eliminating the need for traditional banks. It ties all coins with physical assets, reduces the cost of normal crypto transactions, and claims to eliminate anonymous transactions by verifying all users upon registration.
It’s been 4 years in development and is all about creating a Proof of Stake system where verified accounts are used as nodes. The use cases are enterprise and government, where using these technologies is often a huge barrier to entry. Right now it’s about document management and digital signatures.
In the future, most applications of large-scale are going to require some kind of verification platform.
This team has been involved in the Bitcoin space since 2011. After the DAO hack, founder Adam Perlow wanted to focus on making Bitcoin better, more usable and useful. He has spent the last year creating Zen Protocol, leveraging the blockchain technology and the popularity of Bitcoin to try to decentralize the financial system by building a new protocol purpose-built for finance. Zen’s pitch is that it allows anyone to create financial transactions, at any time, anywhere in the world using Bitcoin. Zen is designed to be open, frictionless, transparent, and completely decentralized across a Proof-of-Work Blockchain. Zen Core is implemented in the .Net stack and uses the F* functional programming language, built by Microsoft Research, to power contracts.
Perlow says: “Today it’s very hard to enforce agreements. You put funds with the exchange and enter an agreement with a broker. But on the blockchain you don’t need a trusted 3rd party. Banks have huge control and too much control over our lives.”
Zen wants to bring the entire financial world onto the blockchain, connecting digital and crypto assets with fiat stocks and commodities. “If we had a mechanism by which to enforce contractual obligations you wouldn’t need this trusted third-party,” he says.
Its global world and commerce is global but it doesn’t tap into the full potential because of trust. Trust is centralized and held by banks, Visa etc. These are centralized, high on fees and the approval rate is not good for rest of the world outside of the G10. Meanwhile, Ethereurm and ripple not designed for payments. So the solution is a system built from the ground up to be payment mechanism which is instant, zero fees, reversible, and has anti-fraud mechanisms.
Founder Nir Gazit says: “Bitcoin is not good for stuff, it’s not reversible, there’s no mediation.” So they are building a full stack, an exchange, a wallet, a credit card.
COTI aims to make the global economy truly global by providing instant, scalable, and secure transactions using the COTIcoin. COTI, which appropriately stands for Currency of the Internet, is aimed at incentivizing honest conduct between sellers and buyers by creating a ‘unique behavior scoring’ feature on the Bitcoin sidechain. Users who achieve an “honest” score, meaning those vendors who ship products on time, or buyers who pay when they’re supposed to, are rewarded. The system lets both buyers and sellers see the score of another user before he or she chooses to interact with them. COTI aims to reduce high checkout abandonment rates and eliminate uncertainty while shopping online.
There are currently over 1,000 digital currencies operating on a decentralized basis, however, none can provide the services leading centralized payment providers can. By combining a centralized mediation process and a decentralized payment process, COTI says it has created a technological solution for the consumer payments sector.
Jelurida is the development company behind Nxt and Ardor blockchain platforms. It creates customized commercial versions of these platforms while continuously supporting and maintaining the decentralized public Nxt blockchain. With the upcoming Ardor platform, Jelurida will be creating custom child chains for its clients and partners as well.
Whereas many blockchain companies are still in the fundraising stage, Nxt is fully operational and trading with a market cap of over a hundred million dollars. The company, which has in the past offered functions specifically designed for crypto developers, is turning its focus to use cases which have to do with everyday life, from introducing new voting mechanisms to offering transparent international bank transfers that consumers can enjoy. Ardor is the newest blockchain platform Jelurida has been working on, and functions as sort of a Nxt 2.0. Ardor features a unique parent-child chain structure, which helps combat blockchain bloat.
Investor Moshe Hogeg has created the Alignment investment vehicle to invested purely in Israeli blockchain and crypto startups.
CrowdWiz, which is a fully decentralized crypto investment platform that lets users ditch third-party fund managers, recently began its ICO on November 20th. The company has already raised over $5 million in a public pre-sale, and plans to use the money to develop their investment platform. CrowdWiz relies on the so-called ‘wisdom of the crowd’ to make funding decisions. The CEO Slavena Savcheva claims that a collective entity makes a better decision as a whole than the most intelligent person in the group alone.
CrowdWiz allows the crowd, not fund managers, banks or middlemen, to decide on how the general fund is spent. Users of CrowdWiz will use the company’s cryptocurrency, the OPX token, to vote on which asset they want funds to go to. The platform then distributes based on the majority opinion of the crowd. CrowdWiz solves some of the issues associated with traditional funds today, such as high entrance costs and large fees. Savcheva wants to make the trading process fun, easy, and completely transparent using the wisdom of the crowd to decide where the money goes.
Prior to founding CrowdWiz, Savcheva was the Business Development Manager for TRADOLOGIC, one of the world’s leading FinTech software providers, where she operated and steered the firm’s business in Asian markets.
Orbs sits under Cointree and is based on the “Spector” paper written by Hebrew university researchers. It takes the blockchain and turns it into a DAG, another database structure, so it can then process many more blocks in a second. The idea is that it puts the bottleneck at the communication layer not the not the consensus layer. Since the more forks in a blockchain the less secure and slower it become, Orbs claims to be able to process a transaction at whatever speed the network is.
Alignment came about because the VC firm Singulariteam partnered with two local Israeli firms, Blockchain IL and CoinTree Capital, to form a sort of blockchain and ICO consultancy which they dubbed “Alignment.” The company aims to groom and support the next blockchain unicorn coming out of Israel. The company consults, develops and funds Blockchain early-stage projects and existing companies, from inception through ICO, and later.
Startups will need to pay for the privilege, of course. Its listed clients to date include Bancor, messaging app Kik, and Stox. Of those, Bancor conducted a $153 million ICO, while Kik raised $98 million in its token sale earlier this year.
Since many people are skeptical of ICOs at the moment (especially in light of the Tezos controversy), Alignment supports blockchain companies, in a climate that’s at best lukewarm towards ICOs. Moshe Hogeg, VC, Founder & Chairman of the Singulariteam, pledged Alignment would “invest, without exception, in every Israeli blockchain company in 2017.”
If you’ve been following the blockchain revolution, you’ve probably heard about Bancor. This company made history when it held one of the most successful ICO’s (at the time it was a world record), raising over $153 million from over 10,000 participants in less than three hours. Bancor has created a market maker application that aims to facilitate trading with other digital coins. The Bancor protocol enables built-in price-discovery and a liquidity mechanism for tokens on smart contract blockchains. Bancor’s claims it allows anyone to create their own cryptocurrency and operate it independent of a third-party exchange. The Bancor Protocol allows for the creation of thousands of cryptocurrencies on the Ethereum blockchain, creating a interconnected asset exchange ecosystem which unlocks the long tail of user-generated tokens. Smart tokens are designed with additional functionality such as “delegated account recovery” and “vaults” to address security issues. The aim of these features is to make cryptocurrencies more accessible and to encourage mass adoption.
You may have heard the news about Stox’s ethereum based prediction market platform when Floyd Mayweather boasted he would “make a $hit t$n of money … on the Stox.com ICO.”
Following Mayweather’s bullish words, Stox raised $33 million in an ICO last August. Stox claims users can predict and trade the outcome of events in almost any imaginable category: Finance, sports, politics and even the weather, as they might in a traditional stock market.
Unlike a lot of crypto companies which tailor their services to blockchain experts, the Stox platform is designed to accommodate, and be intuitive for mainstream audiences.
As you can see, Israel, and specifically Tel Aviv, is creating a huge force in this new world. If they play their cards right, they could well start to rival the co-called ‘Crypto Valley’ in Switzerland.