It is certainly unlikely that a country such as France would have remained indifferent to a new technological paradigm as exciting as the blockchain and the idea of decentralisation. But is the level of development and maturity of France’s blockchain space in agreement with the expectations that we may have for a country of its stature? In this article, I’ll present my view regarding the overall state of the blockchain ecosystem in France, after more than a year working on the subject in the country.
Disclaimer: This is an opinionated article. I’m not intending to provide an exhaustive, data-backed discussion on the subject, but rather to expose my own personal view.
The French Blockchain Startup Landscape
There are various relevant blockchain companies with international recognition. The two more important are, in my opinion, Ledger and iExec. Ledger has quickly positioned as the leading company in crypto-security and cold storage. Ledger’s nano is probably the most popular hardware wallet out there in the market. On the other hand, iExec is among the leaders in decentralised cloud computing (together with Golem and SONM). Note that this is a particularly appealing blockchain use-case, as decentralised computing is expected to disrupt an already mature and competitive market. For this reason, projects such as iExec are being closely followed by many blockchain enthusiasts and crypto-investors. Perhaps we may also mention Tezos, one of the biggest blockchain projects (at least in terms of funds raised), who counts several French collaborators among its core team.
What might be surprising is that, apart from these, I don’t see other comparable projects in terms of notoriety. Of course, after the 2017 ICO craze and all the blockchain hype, there has been a growing number of French blockchain startups, though of limited relevance. While this may just be a global tendency, the fact is that the number of prominent blockchain projects and startups in France is pretty low in absolute terms — we’ll dive more into the reasons behind this issue later on.
The general startup ecosystem looks less dynamic compared to that of the United States, but also compared to other European countries such as Germany or the UK. There is consensus about the fact that, historically, it has never been easy to start a business in France. This situation, however, has been changing radically over the last years. Moreover, boosting entrepreneurship was one of the main axes of Macron’s presidential campaign. Hence my surprise about the low number of startups in the space.
No doubt, there is a lack of blockchain/smart-contract developers in France. I’ve personally confirmed this when we were looking for collaborators for Legacy. I’ve also seen other projects struggling to find developers. Of course, this doesn’t prevent us from seeing several French devs collaborating in cutting-edge projects. France doesn’t lack software developers, engineers or talent in tech in general — actually, not at all. So, is it that devs do not feel attracted by the blockchain space? My guess is that the apparent lack of blockchain devs is directly linked to the size, culture and dynamism of the overall tech startup ecosystem. But who comes first? A rich environment is the consequence of an intrepid, highly-qualified tech workforce or is it the other way around? In times where innovation is lead by geeks, traditional businessmen and their managerial skills have been pushed into the background, so we may safely bet on the former thesis.
What I think is that we haven’t seen too many devs embarking on the blockchain because it’s just too soon for this culture. The French do not value early stage technology as much as Anglo-Saxon countries (so I suppose a modified version of Amara’s law takes place here). They are rather critical and sceptical. So, the talent is out there, but the conditions aren’t. Yet.
In addition, France is still a highly industrialised economy. I anticipate that most successful companies will focus on private/consortium blockchains and will start working with the local industry before expanding to the global economy. For this reason, it is not surprising to see a good deal of blockchain experts now appearing in big tech companies — who are in a safer position to dive into the technology — , and fewer in the start-up world, for which there is less incentive to join. (As a side note, this reasoning inspire us to start chainimpact.io).
This is certainly a subject in which France has been in advance with respect to other important economies. The AMF, the French equivalent of the SEC, has taken a very proactive role. A public consultation regarding ICOs was launched by the end of 2017, resulting in the recent announcement of a new, ICO-friendly legislation. Additionally, a modification of the tax rate for cryptocurrency gains has been introduced this year, reducing it by about 50% in most cases.
While some may argue that measures such as the new legal framework for ICOs arrived too late because the scenario has drastically changed this year, it is extremely difficult to anticipate the exact way the crypto space will evolve. Even so, I believe these are highly valuable efforts that point to the right direction. In fact, the current scenario looks promising and it would appear that there are already sufficient conditions to encourage offshore French crypto companies to repatriate some of their business.
Let’s now look into some interesting numbers. Perhaps we may use the number of Ethereum nodes to give us an idea about the degree of implication and adoption of the technology. Table 1 shows a comparison including several relevant European economies. We observe that France has the least number of nodes, even compared to the Netherlands, which has 22% more nodes for a population equivalent to the 26% of France and slightly lower electricity prices. The UK, with almost equal population and electricity prices, has 63% more nodes than France. Of course, there might be other factors in play (such as cryptocurrency tax rates), but this data already shows a tendency.
Country Population Elect. Prices ETH nodes
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France 1 1 1
UK 0.998 1.06 1.63
Germany 1.265 1.74 2.42
Netherlands 0.262 0.89 1.22Table 1. Population, electricity prices and number of Ethereum nodes (source consulted on July 10) in France, the UK, Germany and the Netherlands. All quantities are normalised with respect to the absolute numbers observed in France.
In terms of funds raised through ICOs, France occupies a somewhat intermediate position regarding its neighbours. According to the data provided by ICOWatchlist (see Table 2), 1.94% of all the projects tracked by the platform were located or originated in France. Note that this is very close to the percentage obtained by Germany, but still far from that of the UK. By contrast, the amounts raised are surprisingly high, in particular with respect to Germany, which is probably due by the fact that many German companies are located offshore. Even so, these are rather positive numbers for France.
Country Percentage of projects Total raised
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France 1.94% $78,050,000
UK 10.36% $131,041,953
Germany 2.10% $6,350,000
Netherlands 0.65% (no data available)Table 2. Percentage of ICO projects and total funds raised (USD) for France, the UK, Germany and the Netherlands (source: ICOWatchlist)
Another interesting observation is that there are not many French thought-leaders of international recognition in the space (for instance, check here or here). This shouldn’t be a surprise: The French have never been known by their openness vis-à-vis the rest of the world. But also because there aren’t many high-profile blockchain devs (yet) and, as we discussed above, this is a world lead by devs and engineers. There are, however, several names that are quite influential within the local blockchain ecosystem and that are starting to resound abroad.
While France is undoubtedly flooded with tech talent, it’s still apparent that the country struggles to take a leading role in incubating innovation around a novel and disruptive technology such as the blockchain. There are many historical and well-known reasons behind this issue and the French are well aware of them. I observe a genuine willingness to converge towards a more open, forward-looking startup ecosystem, which is already giving positive results.
France is a highly industrialised country recognised by its tradition and by the quality of its products. At the same time, its economy has historically suffered from a significant degree of inertia (that is, a resistance to incorporate novel, disruptive technologies). As other similar economies, the country is now gradually shifting to the service sector, while its industrial core is shrinking. As a consequence, there is raising awareness about the need to boost innovation. In the blockchain space, in particular, there is clear interest in creating the appropriate conditions to encourage entrepreneurship. In the meanwhile, I expect that the country will continue to take advantage of its well-developed industry and consumer market in order to bootstrap innovation, so most successful projects will first consolidate locally (you may observe this pattern in companies such as blablacar). As a corollary, I also expect to see a fair share of the successful global companies coming from France in the long run.
France has probably been late in many sectors, but in the blockchain space, it’s getting on board quickly. Forming and attracting high-profile developers and engineers won’t be difficult. A perhaps more critical aspect will be to integrate in their startup culture a number of soft-skills such as a global business reasoning. The French don’t like to get out of their comfort zone and sooner or later they’ll need to change that. This also involves a non-negligible task: Improving their communication and English-speaking capabilities. All these aspects are fundamental to achieve the degree of dynamism, openness and reactiveness that the French startup ecosystem lacks.