Issue 1: Paying for Attention

DCG Connect — Week of May 1, 2017

DCG Connect

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DCG Connect

5 min readJun 21, 2017

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Blockchain Applied: Digital Advertising & Marketing

There’s an estimate out there from blockchain AdTech company, MadHive, that for every $1 an advertiser spends on digital, they receive $0.44 of value. Just like merchants at the end of a consumer transaction, there are a number of intermediaries each taking a cut as that $1 flows through the digital ad ecosystem. On top of that, ads and trackers eat up ~50% of the average cellphone user’s mobile data every month, equating to ~$23 of data usage! MadHive, Brave, and AdChain are some of the companies applying blockchain to this issue.

Brave for example has introduced an open source browser specifically designed to combat malvertisments and respect consumer privacy, and will soon be launching the Basic Attention Token (BAT) which is a ERC20 token build on top of Ethereum for a decentralized ad exchange. The browser itself has micropayments functionality built-in (to pay publishers for content) using PIA, BitGo and Coinbase services. The long-term vision here is to more accurately measure user attention to ads while also protecting their privacy and improving the browsing experience. Blockchain/bitcoin technology is an enabler of this goal and useful in particular for micropayments which are uneconomical on the incumbent payment networks.

Blockchain Misunderstood: Automotive Payments on the Blockchain?

City infrastructure + blockchain solutions are assumed to be a bit pie-in-the-sky thinking, and for the time being, this may be true. However, here’s a story about a large German energy and gas provider, RWE, launching electronic vehicle charging stations throughout Germany that are connected to ethereum’s public blockchain. Basically, the system works with an app called Share&Charge that uses ethereum’s blockchain to manage and record the payment and charging data (“with no middleman created”). Eventually, when cars neither need nor want humans around anymore, automotive payments could be managed through a public blockchain. Starting with charging stations seems like a useful start, or as the founder of Slock.it said on twitter, it’s “clear, pragmatic, real-life usage of #ethereum!”

Partnerships & Projects

DCG portfolio company Mediachain acquired by Spotify! | Mediachain, a company backed by DCG, Union Square Ventures, and Andreesen Horowitz, has spent the last 2 years focused on building a content attribution and management platform. The team will join Spotify to continue solving the thorny problem of song royalties, which cost Spotify $30M in legal fees in 2016 alone.

All eyes on Japan as it pilots blockchain-based banks payment system using Ripple | People were pretty surprised last year when Ripple partnered with SBI to build a Japanese subsidiary. Looks like that strategy paid off, since Ripple Japan consortium is now piloting the use of cryptocurrencies like Ripple to create a 24/7 fund transfer system at a lower cost. This continues to confirm our investment thesis — when we first invested in Ripple in 2013 — that this technology will compete with, and eventually replace, SWIFT.

Elliptic partners with Silvergate Bank to develop program for monitoring fraudulent activity on the bitcoin blockchain | One of the ongoing challenges of digital currency companies is analyzing suspsicious activity on the blockchain, and one of our companies, Elliptic, is working with Silvergate Bank to help businesses utilize blockchain-based payment networks, like the bitcoin network, while remaining compliant with existing KYC / AML processes. We’ll be working with both Elliptic and Silvergate on our digital currency infrastructure workshops at Consensus, starting at 9 am on Wednesday, May 24.

Chinese conglomerate Tencent to build a blockchain platform | Tencent, the parent company of the massively popular WeChat messaging app, is working on a new platform called TrustSQL. Much like our vision for blockchain architecture, the Tencent platform will have a core protocol, a services layer, and an application later. More details here, if you read Mandarin. Let’s see where Baidu comes up — they’re the only ones missing the (blockchain) party.

B3i insurance consortium focuses on deploying re-insurance use case | Not surprisingly, one of the first steps of the project is to create data standards for standard insurance contracts into smart contract language. While the project is currently focused on leveraging fiat currencies, the consortium has not dismissed using cryptocurrencies at some point in the future. DCG first hosted an insurance working group in the spring of 2016, and its exciting to see some of the partners from that discussion moving forward to implement blockchain!

Jiangsu Blockchain Initiative building China’s largest blockchain research effort | The government of the Chinese province of Jiangsu is backing a new research effort aimed at offering unbiased information to businesses coming up to speed on blockchain. We met with the JBI team several weeks ago on their visit to New York and identified several exciting collaboration opportunities.

Grayscale (subsidiary of Digital Currency Group) launches Ethereum Classic Investment Trust | Our sister company, Grayscale, announced its investment vehicle launched with an initial $10M in capital from DCG, our founder Barry Silbert, and our board member Glenn Hutchins, founder of the private equity firm Silver Lake.

Company Spotlight: Token

Token announced last week that it raised $16M to continue building its banking platform, in a Series A that DCG participated in alongside leading European investors. Token is focused on a very specific problem — enabling large banks in Europe to comply with the European Union’s Payment Services Directive, or PSD2, which will require banks and financial services to open up data to approved third parties to improve services by January 2018. The company is using digital tokens (tokenization) to authenticate online transactions, and brings in a programability layer to enable account holders to add terms and conditions to how their data can be used.

We’re excited to see Token take the concept of programmable money introduced by digital currencies to the enterprise and use the “burning platform” of PSD2 compliance to introduce innovate new technology to banks.

Regulation & Policy

Seven different United Nations agencies are exploring blockchain technology | There are already several projects under way, including a pilot with the UN World Food Program to send financial aid to 10,000 recipients. The UN issued an RFI for 13 different projects, and DCG Connect plans to apply for several — we hope you’ll join us!

Around the world, national banks continue to eye digital currencies and distributed ledger technology | In a speech by Governor Carney, The Bank of England gave a shout out to both digital currencies and distributed ledger technology for clearing and settlement as part of their new financial services infrastructure plans, and announced they joined Hyperledger. The Bank of Korea is exploring the impact of digital currencies on the use of government issued fiat, and their preliminary assessment is that digital currency and fiat will likely co-exist.

Some people are wondering if a lack of regulation is hurting Bitcoin’s growth | Assuming you desire Bitcoin to achieve mainstream adoption, it seems like joining hands with regulators (and sacrificing ideological purity) is a practical reality? But again, that’s just one vision for the future of Bitcoin.

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