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Yat thinks emoji ‘identities’ can be a thing, and it has $20M in sales to back it up

By Amanda Silberling

I learned about Yat in April, when a friend sent our group chat a link to a story about how the key emoji sold as an “internet identity” for $425,000. “I hate the universe,” she texted.

Sure, the universe would be better if people with a spare $425,000 spent it on mutual aid or something, but minutes later, we were trying to figure out what this whole Yat thing was all about. And few more minutes later, I spent $5 (in USD, not crypto) to buy ☕👉💩❗, an emoji string that I think tells a moving story about my caffeine dependency and sensitive stomach. I didn’t think I would be writing about this when I made that choice.

Kesha’s Yat URL on Twitter

On the surface, Yat is a platform that lets you buy a URL with emojis in it — even Kesha (y.at/🌈🚀👽), Lil Wayne (y.at/👽🎵), and Disclosure (y.at/😎🎵😎) are using them in their Twitter bios. Like any URL on the internet, Yats can redirect to another website, or they can function like a more eye-catching Linktree. While users could purchase their own domain name that supports emojis and use it instead of a Yat, many people don’t have the technical expertise or time to do so. Instead, they can make one-time purchase from Yat, which owns the Y.at domain, and the company will provide your with your own y.at subdomain for you.

This convenience, however, comes at a premium. Yat uses an algorithm to determine your Yat’s “rhythm score,” its metric for determining how to price your emoji combo based on its rarity. Yats with one or two emojis are so expensive that you have to contact the company directly to buy them, but you can easily find a four- or five-emoji identity that’ll only put you out $4.

Beyond that, CEO Naveen Jain — a Y Combinator alumnus, founder of digital marketing company Sparkart, and angel investor — thinks that Yat is ultimately an internet privacy product. Jain wants people to be able to use their Yats in any way they’re able to use an online identity now, whether that’s to make payments, send messages, host a website, or login to a platform.

“Objectively, it’s a strange norm. You go on the internet, you register accounts with ad-supported platforms, and your username isn’t universal. You have many accounts, many usernames,” Jain said. “And you don’t control them. If an account wants to shut you down, they shut you down. How many stories are there of people trying to email some social network, and they don’t respond because they don’t have to?”

Yat doesn’t plan to fuel itself with ad money, since users pay for the product when they purchase their Yat, whether they get it for $4 or $400,000.

In the long run, Yat’s CEO says the company plans to use blockchain technology as a way to become self-sovereign. Yats would become assets issued on decentralized, distributed databases. Today, there are several projects working to create a decentralized alternative to the current domain name system (DNS), which is managed by internet regulatory authority ICANN.  DNS is how you find things on the internet, but uses a centralized, hierarchical system. A blockchain domain name system would have no central authority, and some believe this could be the foundation of a next-gen web, or “Web 3.0.”

Today, words like “blockchain” and “cryptocurrency” don’t appear on the Yat website. Jain doesn’t think that’s compelling to average consumers — he believes in progressive decentralization, which explains why Yats are currently purchased with dollars, not ethereum.

“Something we think is really funny about the cryptocurrency world is that anyone who’s a part of it spends a lot of time talking about databases,” Jain said. “People don’t care about databases. When’s the last time you went to a website and it said ‘powered by MySQL’?”

Y.at, however, was registered at a traditional internet registrar, not on the blockchain.

“We agree that this is early stage, there’s no debate about that,” said Jain. “This is laying the foundation — there are certain elements of the vision that are certainly more of a social contract than actual implementation at this point in time. But this is the vision that we’ve set forth, and we’re working continuously towards that goal.”

Still, until Yat becomes more decentralized, it can’t yet give users the complete control it aspires to. At present, the Terms & Conditions give Yat the authority to terminate or suspend users at its discretion, but the company claims it hasn’t yet booted anyone from the system.

As Yat becomes more decentralized, our terms and conditions won’t be important,” Jain said. “This is the nature of pursuing a progressive decentralization strategy.”

In its “generation zero” phase (an open beta), Yat has sold almost $20 million worth of emoji identities. Now, as the waitlist to get a Yat ends, Yat is posting some rare emoji identities on OpenSea, the NFT marketplace that recently reached a valuation of $1.5 billion.

A still image of a Yat visualizer creation

“For the first time ever, we’re going to be auctioning some Yats on OpenSea, and we’re going to be launching minting of Yats on Ethereum,” Jain said. Before minting Yats as NFTs, users can create a digital art landscape for their Yats through a Visualizer. These features, as well as new emojis in the Yat emoji set, will launch this evening at a virtual event called Yat Horizon.

Yat Creators will now have more rights,” Jain said about the new ability to mint Yats as NFTs. “We are going to continue to pursue progressive decentralization until we achieve our ultimate goal: making Yat the best self-directed, self-sovereign identity system for all.”

Consumers have a demonstrated interest in retaining greater privacy on the internet — data shows that in iOS 14.5, 96% of users opted out of ad tracking. But the decentralization movement hasn’t yet been able to market its privacy advantages to the mainstream. Yat helps solve this problem because even if you don’t understand what blockchain means, you understand that having a personal string of emojis is pretty fun. But, before you spend $425,000 on a single-emoji username, keep in mind that Yat’s vision will only completely materialize with the advent of Web 3.0, and we don’t yet know when or if that will happen.

Horizon Blockchain Games raises $4.5M for its NFT trading card game and wallet

By Greg Kumparak

Horizon Blockchain Games is — as the name implies — a company building games on the blockchain, along with tools to help others do the same.

The company announced today that it has raised another $4.5M, bringing its total raised to a little over $13M.

Horizon’s first game is Skyweaver, a competitive digital trading card game which taps the blockchain to give players more realistic ownership of their virtual cards. Once earned through competition with other players, cards can be sold, traded, or taken out of the system and put in storage.

As I previously wrote about Horizon here:

Horizon is working down two paths in parallel here: On one path, they’re building an Ethereum-powered platform called Arcadeum for handling in-game items — establishing who owns any specific instance of an item, and allowing that item to be verifiably traded, sold or given from player to player. Once an item is in a player’s possession, it’s theirs to use, trade or sell as they please; Horizon can’t just take it away. In time, they’ll open up this platform for other developers to build upon.

On the other path, the company is building out its own game — a digital trading card game called SkyWeaver — meant to thrive in its own right while simultaneously showcasing the platform.

“Arcadeum” mentioned above has now been rebranded as “Sequence“, an easy-to-integrate wallet system that aims to hand-wave away the complexities of the blockchain. They want to let users buy and store their digital goods on the blockchain without either the user or an app’s developer really having to think about the blockchain. Horizon co-founder Michael Sanders tells me the rebranding comes with an overall broadening of its focus; the ‘Arcade’ in ‘Arcadeum’ suggested it was all about gaming, whereas the aim is to help manage all kinds of digital items, from virtual gaming goods to NFT art and beyond.

The Horizon team often mentions being built to support “Web3”, a term I’ve been hearing more and more lately. In short (or, at least, as best I understand it), Web3 is a category of online-but-decentralized apps, services, and games built around the blockchain (Ethereum, in this case) to give individual users more control of their data. The Ethereum foundation has a breakdown of the concept here.

A match in Skyweaver Image Credits: Horizon Blockchain Games

Horizon originally intended to open Skyweaver up more broadly in 2020; as of this morning it’s still in private beta, with plans to open widely later this year. Sanders tells me they’ve let in over 66,000 players so far.

The company says that investors in this round (a “pre-Series A round SAFE”) include CMT Digital, The Xchange Company, BITKRAFT Ventures, Khaled Verjee, and Zyshan Kaba.

Tenderly raises $15.3M to help Ethereum developers ship decentralized apps faster

By Lucas Matney

Blockchain infrastructure startups are heating up as industry fervor brings more developers and users to a space that still feels extremely young despite a heavy institutional embrace of the crypto space in 2021.

The latest crypto startup to court the attention of venture capitalists is Tenderly, which builds a developer platform for Ethereum devs to monitor and test the smart contracts that power their decentralized apps. Tenderly CEO Andrej Bencic tells TechCrunch his startup has closed a $15.3 million Series A funding round led by Accel with additional participation from existing investors. The Belgrade startup already raised a $3.3 million seed round earlier this year led by Point Nine Capital.

The startup’s aim to date has been ensuring fledgling blockchain developers aren’t left finding out about contract errors when users discover issues and complain, instead allowing users to discover these bugs proactively. While the company’s Visual Debugger is already used by “tens of thousands” of Ethereum developers, Tenderly hopes to continue building out its toolset to help more developers build on Ethereum networks without dealing with the headaches and irregularities that they’ve had to.

“Tenderly, from its inception, has been a solution to one of our own problems,” Bencic tells TechCrunch. “We wanted to make it as easy as possible to observe and extract information from Ethereum and the adjacent networks.”

Bencic hopes the company’s product can help developers get their products out more quickly without compromising on usability.

To date, the majority of Tenderly’s customers have been relatively small startup efforts aiming to tap into the exciting world of blockchain-based computing with a particular focus on decentralized finance. Tenderly itself is a small company with its team of 14 based in Serbia. Bencic says this funding will help the company expand its global footprint and build out engineering and business hires in other geographies.

Climbing cryptocurrency prices have historically aligned pretty closely with developer uptake in the blockchain world so there is some concern that bitcoin and Ethereum’s downward-trending price corrections will lead to less stability in the pipeline of new developers embracing blockchain. That said, volatility is far from unusual to the crypto world and many developers have learned that riding its ebbs and flows is just part of the experience.

“We built most of Tenderly in the bear market, and one thing we saw is that even though you get these concerning prices, people that are excited about the tech are excited about the tech whether the coins are up or down,” Bencic says.

European Investment Fund puts $30M in Fabric Ventures’ new $130M digital assets fund

By Mike Butcher

Despite their rich engineering talent, Blockchain entrepreneurs in the EU often struggle to find backing due to the dearth of large funds and investment expertise in the space. But a big move takes place at an EU level today, as the European Investment Fund makes a significant investment into a blockchain and digital assets venture fund.

Fabric Ventures, a Luxembourg-based VC billed as backing the “Open Economy” has closed $130 million for its 2021 fund, $30 million of which is coming from the European Investment Fund (EIF). Other backers of the new fund include 33 founders, partners, and executives from Ethereum, (Transfer)Wise, PayPal, Square, Google, PayU, Ledger, Raisin, Ebury, PPRO, NEAR, Felix Capital, LocalGlobe, Earlybird, Accelerator Ventures, Aztec Protocol, Raisin, Aragon, Orchid, MySQL, Verifone, OpenOcean, Claret Capital, and more. 

This makes it the first EIF-backed fund mandated to invest in digital assets and blockchain technology.

EIF Chief Executive Alain Godard said:  “We are very pleased to be partnering with Fabric Ventures to bring to the European market this fund specializing in Blockchain technologies… This partnership seeks to address the need [in Europe] and unlock financing opportunities for entrepreneurs active in the field of blockchain technologies – a field of particular strategic importance for the EU and our competitiveness on the global stage.”

The subtext here is that the EIF wants some exposure to these new, decentralized platforms, potentially as a bulwark against the centralized platforms coming out of the US and China.

And yes, while the price of Bitcoin has yo-yo’d, there is now $100 billion invested in the decentralized finance sector and $1.5 billion market in the NFT market. This technology is going nowhere.

Fabric hasn’t just come from nowhere, either. Various Fabric Ventures team members have been involved in Orchestream, the Honeycomb Project at Sun Microsystems, Tideway, RPX, Automic, Yoyo Wallet, and Orchid.

Richard Muirhead is Managing Partner, and is joined by partners Max Mersch and Anil Hansjee. Hansjee becomes General Partner after leaving PayPal’s Venture Fund, which he led for EMEA. The team has experience in token design, market infrastructure, and community governance.

The same team started the Firestartr fund in 2012, backing Tray.io, Verse, Railsbank, Wagestream, Bitstamp, and others.

Muirhead said: “It is now well acknowledged that there is a need for a web that is user-owned and, consequently, more human-centric. There are astonishing people crafting this digital fabric for the benefit of all. We are excited to support those people with our latest fund.”

On a call with TechCrunch Muirhead added: “The thing to note here is that there’s a recognition at European Commission level, that this area is one of geopolitical significance for the EU bloc. On the one hand, you have the ‘wild west’ approach of North America, and, arguably, on the other is the surveillance state of the Chinese Communist Party.”

He said: “The European Commission, I think, believes that there is a third way for the individual, and to use this new wave of technology for the individual. Also for businesses. So we can have networks and marketplaces of individuals sharing their data for their own benefit, and businesses in supply chains sharing data for their own mutual benefits. So that’s the driving view.”

Paystand banks $50M to make B2B payments cashless and with no fees

By Christine Hall

It’s pretty easy for individuals to send money back and forth, and there are lots of cash apps from which to choose. On the commercial side, however, one business trying to send $100,000 the same way is not as easy.

Paystand wants to change that. The Scotts Valley, California-based company is using cloud technology and the Ethereum blockchain as the engine for its Paystand Bank Network that enables business-to-business payments with zero fees.

The company raised $50 million Series C funding led by NewView Capital, with participation from SoftBank’s SB Opportunity Fund and King River Capital. This brings the company’s total funding to $85 million, Paystand co-founder and CEO Jeremy Almond told TechCrunch.

During the 2008 economic downturn, Almond’s family lost their home. He decided to go back to graduate school and did his thesis on how commercial banking could be better and how digital transformation would be the answer. Gleaning his company vision from the enterprise side, Almond said what Venmo does for consumers, Paystand does for commercial transactions between mid-market and enterprise customers.

“Revenue is the lifeblood of a business, and money has become software, yet everything is in the cloud except for revenue,” he added.

He estimates that almost half of enterprise payments still involve a paper check, while fintech bets heavily on cards that come with 2% to 3% transaction fees, which Almond said is untenable when a business is routinely sending $100,000 invoices. Paystand is charging a flat monthly rate rather than a fee per transaction.

Paystand’s platform. Image Credits: Paystand

On the consumer side, companies like Square and Stripe were among the first wave of companies predominantly focused on accounts payable and then building business process software on top of an existing infrastructure.

Paystand’s view of the world is that the accounts receivables side is harder and why there aren’t many competitors. This is why Paystand is surfing the next wave of fintech, driven by blockchain and decentralized finance, to transform the $125 trillion B2B payment industry by offering an autonomous, cashless and feeless payment network that will be an alternative to cards, Almond said.

Customers using Paystand over a three-year period are able to yield average benefits like 50% savings on the cost of receivables and $850,000 savings on transaction fees. The company is seeing a 200% increase in monthly network payment value and customers grew two-fold in the past year.

The company said it will use the new funding to continue to grow the business by investing in open infrastructure. Specifically, Almond would like to reboot digital finance, starting with B2B payments, and reimagine the entire CFO stack.

“I’ve wanted something like this to exist for 20 years,” Almond said. “Sometimes it is the unsexy areas that can have the biggest impacts.”

As part of the investment, Jazmin Medina, principal at NewView Capital, will join Paystand’s board. She told TechCrunch that while the venture firm is a generalist, it is rooted in fintech and fintech infrastructure.

She also agrees with Almond that the B2B payments space is lagging in terms of innovation and has “strong conviction” in what Almond is doing to help mid-market companies proactively manage their cash needs.

“There is a wide blue ocean of the payment industry, and all of these companies have to be entirely digital to stay competitive,” Medina added. “There is a glaring hole if your revenue is holding you back because you are not digital. That is why the time is now.”

 

Jack Dorsey says bitcoin will be a big part of Twitter’s future

By Sarah Perez

Twitter CEO Jack Dorsey confirmed to investors that bitcoin will be a “big part” of the company’s future, as he sees opportunities to integrate the cryptocurrency into existing Twitter products and services, including commerce, subscriptions and other new additions like the Twitter Tip Jar and Super Follows.

Dorsey has been a staunch bitcoin advocate for years, but how it would be put into action on Twitter’s platform had not yet been spelled out in detail. However, Dorsey has often publicly touted the cryptocurrency, saying it reminds him of the “early days of the internet” and that there wasn’t “anything more important” in his lifetime for him to work on.

More recently, Dorsey launched a $23.6 million bitcoin fund with Jay Z and announced plans to lead his other company Square into the decentralized financial services market by way of bitcoin. Square also this year acquired a majority stake in Jay-Z’s TIDAL music service with an eye toward how blockchain technologies and cryptocurrencies could change the music business.

Today, Dorsey also dubbed bitcoin one of three key trends for Twitter’s future, along with AI and decentralization — the latter which Twitter is pursuing through its “Bluesky” initiative.

He touted bitcoin to investors on Twitter’s second quarter earnings call, saying it could help the company move faster in terms of its product expansions, while explaining that it was the “best candidate” to become the “native currency” of the internet. (Incidentally, Square’s $50 million in bitcoin purchased in 2020 was worth $253 million by February 2021, and it purchased $170 million more earlier this year.)

Oh man, Jack Dorsey says he thinks Bitcoin is key to Twitter's future. Says it will "ensure people and companies can freely trade goods and services anywhere on the planet"

— Alex Weprin (@alexweprin) July 22, 2021

“If the internet has a native currency, a global currency, we are able to able to move so much faster with products such as Super Follows, Commerce, Subscriptions, Tip Jar, and we can reach every single person on the planet because of that instead of going down a market-by-market-by-market approach,” Dorsey explained. “I think this is a big part of our future. I think there is a lot of innovation above just currency to be had, especially as we think about decentralizing social media more and providing more economic incentive. So I think it’s hugely important to Twitter and to Twitter shareholders that we continue to look at the space and invest aggressively in it,” he added.

A Twitter rep confirmed this is the first time that Dorsey has spoken publicly about how Twitter could integrate bitcoin into its product lineup.

Dorsey also pointed out Twitter would not be alone in pursuing a crypto strategy, noting that Facebook was backing the digital currency Diem.

“There’s an obvious need for this, and appreciation for it. And I think that an open standard that’s native to the internet is the right way to go, which is why my focus and our focus eventually will be on bitcoin,” he noted.

Overall, Twitter delivered strong earnings in a pandemic rebound, which saw the company posting its fastest revenue growth since 2014, according to CNBC, which drove Twitter shares 9% higher in extended trading. The company pulled in Q2 revenue of $1.19 billion versus the $1.07 billion Wall Street expected, a majority ($1.05 billion) from its advertising business. It also saw earnings per share of 20 cents versus the 7 cents expected.

However, monetizable daily active users (mDAUs) — Twitter’s own invented metric meant to fluff up often flat monthly user growth — were only at 206 million, an 11% year-over-year increase, while analysts were counting on 206.2 million. The company blamed the decline on a slower news cycle and end of shelter-in-place in many U.S. communities, which may have impacted Twitter usage during the quarter.

 

 

DraftKings shares plans for launch of NFT collectibles marketplace

By Lucas Matney

DraftKings is charging into the NFT game, announcing a marketplace aimed at curating sports and entertainment-themed digital collectibles for its audience of enthusiasts. The platform is “debuting later this summer,” and showcases another potentially lucrative expansion for the fantasy sports betting company.

DraftKings is entering a market that is both crowded and sparse — with plenty of NFT marketplace options for today’s niche group of collectors though offerings are still light when considering the billions that have flowed through the space in the first several months of the year. This week, investors gave NFT marketplace OpenSea a $1.5 billion valuation. Dapper Labs, which makes NBA Top Shot, recently raised at a reported $7.5 billion valuation.

Dapper’s existing sway in the space will leave DraftKings pursuing opportunities outside exclusive league partnerships. NBA Top Shot allows players to buy “Moments” from NBA history, clips of actual game and player footage which it has access to via league and players association partnerships. In addition to the NBA, Dapper has already partnered with other leagues.

DraftKings foothold in the space will come from an exclusive partnership with Autograph, a newly-launched NFT startup co-founded by quarterback Tom Brady. The company has inked exclusive NFT deals with some top athletes including Tiger Woods, Wayne Gretzky, Derek Jeter, Naomi Osaka and Tony Hawk, hoping to build out its platform as the hub for sports personality collectibles.

Aside from the partnerships, DraftKings is hoping to get a leg up in the space by further simplifying the user onboarding process, allowing users to buy NFTs without loading a wallet with cryptocurrency, instead purchasing with USD. When the platform launches users will be able to purchase NFTs from DraftKings and resell or trade them through the platform.

For DraftKings, which has raised some $720 million in funding since launch in 2012, the NFT expansion could offer an opportunity of funneling their existing audience into the new vertical. Few existing tech startups have made noteworthy expansions into the NFT world despite plenty of hype and investor interest. DraftKings co-founder Matt Kalish tells TechCrunch that the startup’s devoted community is its biggest asset to winning in the rising space.

“DraftKings has millions of people in our community who show up to out platform every day and every week,” Kalish says. “We think our biggest advantage is the strength and size of our community… [We] will bring a lot of eyeballs to the table.”

NFT market OpenSea hits $1.5 billion valuation

By Lucas Matney

It’s been a wild 2021 for NFT auction marketplace OpenSea. The startup was exceedingly well-positioned in a niche space when NFTs exploded earlier this year seemingly out of nowhere. Since then, the startup has found its user base expanding, the total volume of sales skyrocketing and more investor dollars being thrown at them.

The startup announced in March, it had closed a $23 million Series A, and now some four months later, the company tells TechCrunch it has raised another $100 million in a Series B round led by Andreessen Horowitz at a $1.5 billion valuation. Other investors in the round include Coatue, CAA, Michael Ovitz, Kevin Hartz, Kevin Durant and Ashton Kutcher.

Despite a fall from stratospheric heights in the early summer, the broader NFT market has still been chugging along and OpenSea is continuing to see plenty of action. The startup saw $160 million in sales last month and is on track to blow past that figure this month, CEO Devin Finzer tells TechCrunch.

One of the company’s clearer growth roadblocks has been infrastructure issues native to the Ethereum blockchain that its marketplace has been built around. The Ethereum blockchain, which has a number of network upgrades outstanding, has struggled to keep up with the NFT boom at times, leaving users footing the bill with occasionally pricey “gas” fees needed to mint an item or make a transaction. Though these fees have largely cooled down in recent weeks, OpenSea is aiming to make a move towards long-term scalability by announcing that they plan to bring support for several more blockchains to its platform.

They’re starting with Polygon, a popular Layer 2 Ethereum blockchain which boasts a more energy-efficient structure that will allow OpenSea to entirely eliminate gas fees for creators, buyers and sellers on that blockchain. Losing these fees may give OpenSea a better shot at expanding its ambitions, which include finding a future for NFTs in the gaming world and in the events space, Finzer says.

Beyond Polygon, OpenSea has plans to integrate with Dapper Labs’ Flow blockchain as well as Tezos down the road, the company says.

Operating across multiple blockchains could create some headaches for consumers operating across platforms with differing levels of support for each network. Some NFT investors are also more hesitant to buy items on blockchains they see as less time-tested than Ethereum, worrying that newer chains may lose support over time. But overall, the user-friendly changes will likely be well-received by the wider NFT community which has seen the explosion in new interest stress-test its systems and highlight need for user interface and user experience improvements.

What we learned from selling a blockchain service to African governments

By Annie Siebert
Mohammed Ibrahim Jega Contributor
Mohammed Ibrahim Jega is the co-founder of Domineum Blockchain Solutions, a serial tech entrepreneur, startup adviser, fintech expert and blockchain advocate.

A major attraction of Africa is its large population of 1.2 billion, which hints at a sizable addressable market. But what happens when your target audience is the governments of 54 countries?

In our situation, that was the case. We started Domineum Blockchain Solutions with the intention to help African governments solve problems with shipping and keeping records.

We knew it’d be hard work, but didn’t anticipate that getting our first customer would be the most difficult part.

It’s typical when entering Africa to want to focus on the big and popular markets like Nigeria, South Africa and Kenya. But what we’ve learned so far is that there’s a high probability that these countries might not be your first entry point.

Our first product was a cargo service that tracks shipment origin and movement and determines the contents of goods being imported or exported in any country. We built this to solve the problem of lost revenue due to shipments being passed through informal backdoor channels.

With our focus on sub-Saharan Africa, we approached four countries in 2019: our home country of Nigeria, plus Kenya, Gambia and Guinea-Conakry.

We started this conversation and didn’t get a substantial response from the four countries’ governments. They weren’t open to trying out our solution — it was new and they weren’t familiar with blockchain technology. Distraught, we decided to add a smaller country to our list: Sierra Leone.

The Freetown seaport, located in the country’s capital, is the main gateway for trade in and out of Sierra Leone, with 80% of trade passing through this port. The port has a long history as a trading hub and benefits from the country’s strategically important location midway between Europe and the Americas.

But Freetown isn’t one of the top ports in Africa or even sub-Saharan Africa; a fraction of a percentage point of the world’s trade shipment flows through its ports. The small African country, with about 0.1% of the world’s population, exports diamonds, cocoa and coffee and imports food, machinery and chemicals.

Notably, it faced big challenges in shipping these products in and out of the country. A Sierra Leonean supply chain manager described this situation, “We used to face big challenges during the export process. There would be long delays at the port. Our trucks would arrive before midnight and could be stuck in queue for hours, even days. The documentation process was so complicated.”

According to the World Bank, Sierra Leone’s “trade challenges can be attributed to several factors: lack of access to trade information; high levels of physical inspections; multiple fees, licenses, permits and certificates; manual processes; and the lack of coordination among agencies.” Domineum set out to solve this.

Our initial conversations with the Sierra Leone government went well. Fortunately, Sierra had developed a five-year plan (2018-2023), supported by the World Bank Group, to reduce the time and costs needed to move goods across its borders. The goal is to reduce trade costs by 10%. After three months of discussion, our cargo tracking system was implemented.

In late 2019, we started this partnership, and so far we’ve been able to capture $2 million in revenue that would have been lost. The business model is simple: We get a 40% commission out of extra revenue we’re able to capture for the Sierra Leone government via our cargo tracking system.

It’s typical when entering Africa to want to focus on the big and popular markets like Nigeria, South Africa and Kenya. But what we’ve learned so far is that there’s a high probability that these countries might not be your first entry point. A business-to-government model is a difficult one. There’s a lot of politicking that goes into working with the government.

What we’ve seen work is to approach other countries and gain a foothold, then use that as validation that the concept works. With the success of Sierra Leone, we’re hoping to return to other countries and get a better reception.

The success of Sierra Leone got us rethinking the services we were offering. The initial conversation started with a cargo tracking service, but then we wondered if we should offer a different service to countries that said no at first.

We identified that land registration was a common problem in Africa. More than 90% of rural land in Africa is undocumented and therefore vulnerable to land-grabbing. This hampers the growth of agriculture and other sectors because land is lost to other parties or taken forcefully by the government during times of conflict.

We returned to these countries, offering other services like land ownership registration via blockchain. We got a positive response from a state government in Nigeria to carry out a pilot program. We’re optimistic that once this pilot phase is over, we’ll be able to seal the next business deal.

What’s it like working with African governments? It’s a smaller addressable market. If you’re looking to pitch a product or service to governments in Africa, it’d be helpful to keep in mind that your first customer might be from a smaller country.

To seize other opportunities, we’ll keep looking to expand to other African countries with this mindset.

Dapper Labs CEO Roham Gharegozlou is coming to Disrupt

By Lucas Matney

If you spent any time this year desperately trying to figure out what the heck NFTs are, you probably have Dapper Labs CEO Roham Gharegozlou to thank for that.

His startup’s crypto trading card marketplace NBA Top Shot went viral earlier this year with users dropping hundreds of millions of dollars on digital NBA collectibles. At the end of last year, the Top Shot platform was averaging around $20K-30K in digital collectibles sales volume per day. By late February, the platform hit an all-time-high, moving more than $45 million in trading volume, according to analytics site Cryptoslam, as a wave of crypto newbies descended on the platform.

Within months, Gharegozlou’s company went from a niche crypto gaming startup largely known to industry insiders to locking in a hulking reported $7.5 billion valuation as venture capitalists chased the opportunity to get a piece of it.

Top Shot’s sudden popularity triggered a massive moment for NFTs, with billions of dollars moving through an asset class that few had heard of months prior. We’re thrilled to have Gharegozlou joining us at Disrupt this September 21-23, to discuss the future of NFTs, crypto gaming and the decentralized internet.

NBA Top Shot was an industry anomaly, but it wasn’t even Dapper’s first industry-shaking hit. In 2017, CryptoKitties — another trading game where users could swap digital cats — caught on among early adopters and brought the nascent Ethereum network to a crawl, inspiring the developers of the popular blockchain to make a number of key changes over time. Gharegozlou has his own vision for the future of the crypto web; Dapper’s big bet of late is on the proprietary Flow blockchain that underpins Top Shot. The company is gunning to bring more gaming platforms onboard to take advantage of the faster, more energy-efficient blockchain network, and investors are betting hundreds of millions of dollars on their ability to capture the market.

With the larger NFT market’s sales volume sliding significantly in recent months, can it make a comeback? Will developers move away from the popular Ethereum blockchain to embrace Dapper’s more centralized network? Could NFTs reshape the entire online economy? We’re excited to dig into some of these questions with Gharegozlou onstage at Disrupt — it’s a session you won’t want to miss.

Join him and more than 10,000 of the startup world’s most influential people at Disrupt 2021 online this September 21-23Get your pass to attend now for less than $99 for a limited time!

 

Cryptocurrency company Circle to go public in SPAC deal

By Romain Dillet

Circle has announced that it plans to become a public company. The cryptocurrency company will merge with Concord Acquisition Corp, a SPAC. Circle is better known as one of the founding members of the Centre consortium with Coinbase. Along with other crypto partners, they have issued USD Coin (USDC), a popular stablecoin.

A SPAC is a publicly traded blank-check company. Merging with a SPAC has become a popular way to become a publicly listed company for tech companies.

According to Circle, the deal should value the company at $4.5 billion. Investors involved in the merger have committed $415 million in PIPE financing. The company also recently raised $440 million in capital. In other words, Circle will have plenty of capital on its hands if the merger goes through.

Created in 2013, the company originally wanted to create a mainstream bitcoin payment platform. But the company later pivoted to create a social payments app. Circle became a sort of Venmo clone with some blockchain technology under the hood. At some point, Circle even removed the ability to send and receive bitcoins.

“We never thought of ourselves as a bitcoin startup. The media certainly classified us that way because we were involved with the technology. From the day we founded the company three years ago we’ve focused on trying to build a new consumer finance company. And one that makes money work the way the Internet works,” Circle co-founder and CEO Jeremy Allaire told TechCrunch’s Natasha Lomas in 2016.

While that consumer play didn’t take off, it’s interesting to see that Allaire was already thinking about being able to programmatically move money. In 2017 and 2018, the company pivoted once again to focus on cryptocurrencies. It launched an over-the-counter trading desk for big cryptocurrency investors.

It acquired Poloniex, one of the largest cryptocurrency exchanges in the U.S. at the time. It also launched Circle Invest, a really simple mobile app that let you buy and sell a handful of crypto assets.

But Circle’s most promising product has been its stablecoin — USD Coin, or USDC for short. As the name suggests, 1 USDC is always worth 1 USD. Unlike traditional cryptocurrencies, you can be sure that the value of USDC isn’t going to fluctuate like crazy. Auditing firms regularly check that issuers always keep as many USD in bank accounts as USDC in circulation.

With USDC, moving money from one wallet to another becomes as easy as using standard API calls. The company has then added various infrastructure products around USDC, such as Circle Accounts. Circle has also built ramps to bridge the gap between fiat currencies and cryptocurrencies.

There are currently $25 billion USDC in circulation and the company believes there will $190 billion USDC in circulation by the end of 2023. And Circle plans to leverage the popularity of USDC to build financial services that take advantage of USDC.

Mercuryo raises $7.5M for crypto-focused, cross-border payments after crossing $50M in ARR

By Mary Ann Azevedo

Mercuryo, a startup that has built a cross-border payments network, has raised $7.5 million in a Series A round of funding.

The London-based company describes itself as “a crypto infrastructure company” that aims to make blockchain useful for businesses via its “digital asset payment gateway.” Specifically, it aggregates various payment solutions and provides fiat and crypto payments and payouts for businesses. 

Put more simply, Mercuryo aims to use cryptocurrencies as a tool for putting in motion next-gen, cross-border transfers or, as it puts it, “to allow any business to become a fintech company without the need to keep up with its complications.”

“The need for fast and efficient international payments, especially for businesses, is as relevant as ever,” said Petr Kozyakov, Mercuryo’s co-founder and CEO. While there is no shortage of companies enabling cross-border payments, the startup’s emphasis on crypto is a differentiator.

“Our team has a clear plan on making crypto universally available by enabling cheap and straightforward transactions,” Kozyakov said. “Cryptocurrency assets can then be used to process global money transfers, mass payouts and facilitate acquiring services, among other things.” 

Image Credits: Left to right: Alexander Vasiliev, Greg Waisman, Petr Kozyakov / MercuryO

Mercuryo began onboarding customers at the beginning of 2019, and has seen impressive growth since with annual recurring revenue (ARR) in April surpassing over $50 million. Its customer base is approaching 1 million, and the company has partnerships with a number of large crypto players including Binance, Bitfinex, Trezor, Trust Wallet, Bithumb and Bybit. In 2020, the company said its turnover spiked by 50 times while run-rate turnover crossed $2.5 billion in April 2021.

To build on that momentum, Mercuryo has begun expanding to new markets, including the United States, where it launched its crypto payments offering for B2B customers in all states earlier this year. It also plans to “gradually” expand to Africa, South America and Southeast Asia.

Target Global led Mercuryo’s Series A, which also included participation from a group of angel investors and brings the startup’s total raised since its 2018 inception to over $10 million.

The company plans to use its new capital to launch a cryptocurrency debit card (spending globally directly from the crypto balance in the wallet) and continuing to expand to new markets, such as Latin America and Asia-Pacific.

Mercuryo’s various products include a multicurrency wallet with a built-in crypto exchange and digital asset purchasing functionality, a widget and high-volume cryptocurrency acquiring and OTC services.

Kozyakov says the company doesn’t charge for currency conversion and has no other “hidden fees.”

“We enable instant and easy cross-border transactions for our partners and their customers,” he said. “Also, the money transfer services lack intermediaries and require no additional steps to finalize transactions. Instead, the process narrows down to only two operations: a fiat-to-crypto exchange when sending a transfer and a crypto-to-fiat conversion when receiving funds.”

Mercuryo also offers crypto SaaS products, giving customers a way to buy crypto via their fiat accounts while delegating digital asset management to the company. 

“Whether it be virtual accounts or third-party customer wallets, the company handles most cryptocurrency-related processes for banks, so they can focus more on their core operations,” Kozyakov said.

Mike Lobanov, Target Global’s co-founder, said that as an experiment, his firm tested numerous solutions to buy Bitcoin.

“Doing our diligence, we measured ‘time to crypto’ – how long it takes from going to the App Store and downloading the app until the digital assets arrive in the wallet,” he said.

Mercuryo came first with 6 minutes, including everything from KYC and funding to getting the cryptocurrency, according to Lobanov.

“The second-best result was 20 minutes, while some apps took forever to process our transaction,” he added. “This company is a game-changer in the field, and we are delighted to have been their supporters since the early days.”

Looking ahead, the startup plans to release a product that will give businesses a way to send instant mass payments to multiple customers and gig workers simultaneously, no matter where the receiver is located.

 

Circle wants to help companies access DeFi lending markets with new API

By Romain Dillet

Cryptocurrency company Circle has announced that it plans to launch a new API for companies using Circle accounts to manage crypto assets — and in particular USDC stablecoins. The new API will let companies access decentralized finance (DeFi) protocols starting with Compound lending pools.

Circle is better known as one of the founding members of the Centre consortium with Coinbase. Along with other crypto partners, they have issued USD Coin (USDC), a popular stablecoin.

As the name suggests, stablecoins are cryptocurrencies with a fixed price. One USDC is always worth one USD. Auditing firms regularly check that issuers always keep as many USD in bank accounts as USDC in circulation.

The idea behind USDC is that you can manipulate money more easily. According to USDC backers, moving money from one person to another should be as easy as sending bitcoin from one wallet to another. Circle has its own solution with Circle accounts. Account holders can programmatically send, receive and hold USDC using standard API calls.

In particular, Circle has built ramps to bridge the gap between fiat currencies and cryptocurrencies. With Payments, you can accept card payments, bank transfers and USDC transactions. Everything arrives in your Circle account as USDC. Similarly with Payouts, you can send bank transfers from your Circle account.

Now, Circle also wants to help you access more features with your USDC currently in your Circle account. With the upcoming DeFi API, you’ll be able to access DeFi protocols without having to manually send USDC tokens to another wallet. Circle will start with the Compound protocol.

Compound manages crypto-based lending markets. Some users provide crypto assets and contribute to liquidity pools. Others borrow crypto assets — they first need to provide another type of crypto as collateral.

Users who lend money on Compound are rewarded with interest rates. For instance, when you supply USDC using the Compound protocol, you get 1.74% in annual percentage yield (APY). As USDC is a popular collateral for the Compound protocol, it makes sense that Circle is embracing the protocol with its business accounts. It’s an interesting addition to Circle’s treasury infrastructure.

3/ We've created a new API service that allows companies to automate fiat flows, USDC account flows and direct integration with and custody of yield and governance tokens. Our first protocol launch is Compound Protocol. More to come.

— Jeremy Allaire (@jerallaire) June 24, 2021

Andreessen Horowitz triples down on blockchain startups with massive $2.2 billion Crypto Fund III

By Lucas Matney

While the cryptocurrency market’s most recent hype wave seems to be dying down after a spectacular rise, Andreessen Horowitz’s crypto arm is reaffirming its commitment to startups building blockchain projects with a hulking new $2.2 billion crypto fund.

It’s the firm’s largest vertical-specific fund ever — by quite a bit.

Andreessen Horowitz’s 2018 crypto fund ushered in $300 million of LP commitments and its second fund, which it closed in April of last year, clocked in at $515 million. The new multi-billion dollar fund not only showcases how institutional backers are growing more comfortable with cryptocurrencies, but also how Andreessen Horowitz’s assets under management have been quickly swelling to compete with other deep-pocketed firms including the ever-prolific Tiger Global.

With this announcement, Andreessen now has some $18.8 billion assets under management.

LPs are likely far less wary to take a chance on crypto after Andreessen Horowitz’s stake in Coinbase equated to some $11.2 billion at the time of the direct listing’s first trades, though the stock has slid back some 30% in recent months as the crypto market has shrunk.

Some of the firm’s other major crypto bets include NBA Top Shot maker Dapper Labs which hit a $7.5 billion valuation this spring. Blockchain infrastructure startup Dfinity raised at a $9.5 billion valuation this past September. Last year, the firm led the Series A of Uniswap, which is poised to be a major player in the Ethereum ecosystem. In addition to equity investments, a16z has also made major bets on the currencies themselves.

An earlier report from Newcomer last month reported a16z was targeting a $2 billion crypto fund and that they had already unloaded some of their crypto holdings before most cryptocurrencies took a major dive in recent weeks.

Crypto Fund III will continue to be managed by GPs Chris Dixon and Katie Haun, but the firm has also begun spinning out a more robust management team around the crypto vertical.

Anthony Albanese, who joined the firm last year from the NYSE, has been appointed COO of the division. Tomicah Tillemann, who previously served as a senior advisor to now-President Joe Biden and as chairman of the Global Blockchain Business Council, will be a16z Crypto’s Global Head of Policy. Rachael Horwitz is also coming aboard as an Operating Partner leading marketing and communications for a16z crypto; leaving Google after a stint as Coinbase’s first VP of Communications as well.

A couple other folks are also coming on in advisory capacity, including entrepreneur Alex Price and a couple others who will likely be a tad helpful in regulatory maneuverings including Bill Hinman, formerly of the SEC, and Brent McIntosh, who recently served as Under Secretary of the Treasury for International Affairs.

NFT marketplace startup Rarible closes $14.2 million Series A

By Lucas Matney

You’ve likely seen the headlines surrounding the pretty major decline in NFT sales from the market’s recent peak, with some reports indicating as much as a 90 percent decline in recent weeks. And while plenty of crypto speculators are on the losing end of that rapid decline, others see a future where digital collectible and digital goods take over the internet.

NFT marketplace Rarible announced Wednesday that they’ve closed a $14.2 million Series A from Venrock Capital, CoinFund and 01 Advisors. The startup allows users to buy and auction off digital art. The firm also has its own Rarible governance token which allows users to make and vote on proposals around the platform’s features and fees.

The startup says it has reached $150 million in sales on the platform since launching 18 months ago.

NFT startups have raised major sums in recent months as investors coalesced around backing early players in the digital collectibles space. OpenSea, one of the most popular NFT hubs, raised a $23 million funding round in early spring from Andreessen Horowitz and Naval Ravikant. In March, invite-only NFT marketplace SuperRare raised a $9 million Series A. Last month, Bitski raised $19 million in bid to become the “Shopify of NFTs.”

Alongside the funding announcement, Rarible shared that they’ve officially partnered with NBA Top Shot maker Dapper Labs to bring their NFT marketplace to Dapper’s Flow blockchain. Dapper Labs has begun building out a wider coalition of NFT platforms on its proprietary blockchain which is more energy efficient and less costly than transactions on the Ethereum network, though it is also much more centralized. Rarible says they will make this transition in the “next couple of months.”

The startup has broad goals for making the NFT space more approachable to everyday web users, saying in a a blog post that they hope to use this funding to explore more user-friendly developments like accepting credit card payments. “We need a world where an indie creator can effortlessly create an NFT and sell it for $5 to his community of supporters, as well as where a pop icon can use NFTs to establish close contact with her multi-million audience in a sustainable way,” the post reads.

Internxt gets $1M to be ‘the Coinbase of decentralized storage’

By Natasha Lomas

Valencia-based startup Internxt has been quietly working on an ambitious plan to make decentralized cloud storage massively accessible to anyone with an Internet connection.

It’s just bagged $1M in seed funding led by Angels Capital, a European VC fund owned by Juan Roig (aka Spain’s richest grocer and second wealthiest billionaire), and Miami-based The Venture City. It had previously raised around half a million dollars via a token sale to help fund early development.

The seed funds will be put towards its next phase of growth — its month-to-month growth rate is 30% and it tells us it’s confident it can at least sustain that — including planning a big boost to headcount so it can accelerate product development.

The Spanish startup has spent most of its short life to date developing a decentralized infrastructure that it argues is both inherently more secure and more private than mainstream cloud-based apps (such as those offered by tech giants like Google).

This is because files are not only encrypted in a way that means it cannot access your data but information is also stored in a highly decentralized way, split into tiny shards which are then distributed across multiple storage locations, with users of the network contributing storage space (and being recompensed for providing that capacity with — you guessed it — crypto).

“It’s a distributed architecture, we’ve got servers all over the world,” explains founder and CEO Fran Villalba Segarra. “We leverage and use the space provided by professionals and individuals. So they connect to our infrastructure and start hosting data shards and we pay them for the data they host — which is also more affordable because we are not going through the traditional route of just renting out a data center and paying them for a fixed amount of space.

“It’s like the Airbnb model or Uber model. We’ve kind of democratized storage.”

Internxt clocked up three years of R&D, beginning in 2017, before launching its first cloud-based apps: Drive (file storage), a year ago — and now Photos (a Google Photos rival).

So far it’s attracting around a million active users without paying any attention to marketing, per Villalba Segarra.

Internxt Mail is the next product in its pipeline — to compete with Gmail and also ProtonMail, a pro-privacy alternative to Google’s freemium webmail client (and for more on why it believes it can offer an edge there read on).

Internxt Send (file transfer) is another product billed as coming soon.

“We’re working on a G-Suite alternative to make sure we’re at the level of Google when it comes to competing with them,” he adds.

The issue Internxt’s architecture is designed to solve is that files which are stored in just one place are vulnerable to being accessed by others. Whether that’s the storage provider itself (who may, like Google, have a privacy-hostile business model based on mining users’ data); or hackers/third parties who manage to break the provider’s security — and can thus grab and/or otherwise interfere with your files.

Security risks when networks are compromised can include ransomeware attacks — which have been on an uptick in recent years — whereby attackers that have penetrated a network and gained access to stored files then hold the information to ransom by walling off the rightful owner’s access (typically by applying their own layer of encryption and demanding payment to unlock the data).

The core conviction driving Internxt’s decentralization push is that files sitting whole on a server or hard drive are sitting ducks.

Its answer to that problem is an alternative file storage infrastructure that combines zero access encryption and decentralization — meaning files are sharded, distributed and mirrored across multiple storage locations, making them highly resilient against storage failures or indeed hack attacks and snooping.

The approach ameliorates cloud service provider-based privacy concerns because Internxt itself cannot access user data.

To make money its business model is simple, tiered subscriptions: With (currently) one plan covering all its existing and planned services — based on how much data you need. (It is also freemium, with the first 10GB being free.)

Internxt is by no means the first to see key user value in rethinking core Internet architecture.

Scotland’s MaidSafe has been trying to build an alternative decentralized Internet for well over a decade at this point — only starting alpha testing its alt network (aka, the Safe Network) back in 2016, after ten years of testing. Its long term mission to reinvent the Internet continues.

Another (slightly less veteran) competitor in the decentralized cloud storage space is Storj, which is targeting enterprise users. There’s also Filecoin and Sia — both also part of the newer wave of blockchain startups that sprung up after Bitcoin sparked entrepreneurial interest in cryptocurrencies and blockchain/decentralization.

How, then, is what Internxt’s doing different to these rival decentralized storage plays — all of which have been at this complex coal face for longer?

“We’re the only European based startup that’s doing this [except for MaidSafe],” says Villalba Segarra, arguing that the European Union’s legal regime around data protection and privacy lends it an advantage vs U.S. competitors. “All the others, Storj, plus Sia, Filecoin… they’re all US-based companies as far as I’m aware.”

The other major differentiating factor he highlights is usability — arguing that the aforementioned competitors have been “built by developers for developers”. Whereas he says Internxt’s goal is be the equivalent of ‘Coinbase for decentralized storage’; aka, it wants to make a very complex technology highly accessible to non-technical Internet users.

“It’s a huge technology but in the blockchain space we see this all the time — where there’s huge potential but it’s very hard to use,” he tells TechCrunch. “That’s essentially what Coinbase is also trying to do — bringing blockchain to users, making it easier to use, easier to invest in cryptocurrency etc. So that’s what we’re trying to do at Internxt as well, bringing blockchain for cloud storage to the people. Making it easy to use with a very easy to use interface and so forth.

“It’s the only service in the distributed cloud space that’s actually usable — that’s kind of our main differentiating factor from Storj and all these other companies.”

“In terms of infrastructure it’s actually pretty similar to that of Sia or Storj,” he goes on — further likening Internxt’s ‘zero access’ encryption to Proton Drive’s architecture (aka, the file storage product from the makers of end-to-end encrypted email service ProtonMail) — which also relies on client side encryption to give users a robust technical guarantee that the service provider can’t snoop on your stuff. (So you don’t have to just trust the company not to violate your privacy.)

But while it’s also touting zero access encryption (it seems to be using off-the-shelf AES-256 encryption; it says it uses “military grade”, client-side, open source encryption that’s been audited by Spain’s S2 Grupo, a major local cybersecurity firm), Internxt takes the further step of decentralizing the encrypted bits of data too. And that means it can tout added security benefits, per Villalba Segarra.

“On top of that what we do is we fragment data and then distribute it around the world. So essentially what servers host are encrypted data shards — which is much more secure because if a hacker was ever to access one of these servers what they would find is encrypted data shards which are essentially useless. Not even we can access that data.

“So that adds a huge layer of security against hackers or third party [access] in terms of data. And then on top of that we build very nice interfaces with which the user is very used to using — pretty much similar to those of Google… and that also makes us very different from Storj and Sia.”

Storage space for Internxt users’ files is provided by users who are incentivized to offer up their unused capacity to host data shards with micropayments of crypto for doing so. This means capacity could be coming from an individual user connecting to Internxt with just their laptop — or a datacenter company with large amounts of unused storage capacity. (And Villalba Segarra notes that it has a number of data center companies, such as OVH, are connected to its network.)

“We don’t have any direct contracts [for storage provision]… Anyone can connect to our network — so datacenters with available storage space, if they want to make some money on that they can connect to our network. We don’t pay them as much as we would pay them if we went to them through the traditional route,” he says, likening this portion of the approach to how Airbnb has both hosts and guests (or Uber needs drivers and riders).

“We are the platform that connects both parties but we don’t host any data ourselves.”

Internxt uses a reputation system to manage storage providers — to ensure network uptime and quality of service — and also applies blockchain ‘proof of work’ challenges to node operators to make sure they’re actually storing the data they claim.

“Because of the decentralized nature of our architecture we really need to make sure that it hits a certain level of reliability,” he says. “So for that we use blockchain technology… When you’re storing data in your own data center it’s easier in terms of making sure it’s reliable but when you’re storing it in a decentralized architecture it brings a lot of benefits — such as more privacy or it’s also more affordable — but the downside is you need to make sure that for example they’re actually storing data.”

Payments to storage capacity providers are also made via blockchain tech — which Villalba Segarra says is the only way to scale and automate so many micropayments to ~10,000 node operators all over the world.

Discussing the issue of energy costs — given that ‘proof of work’ blockchain-based technologies are facing increased scrutiny over the energy consumption involved in carrying out the calculations — he suggests that Internxt’s decentralized architecture can be more energy efficient than traditional data centers because data shards are more likely to be located nearer to the requesting user — shrinking the energy required to retrieve packets vs always having to do so from a few centralized global locations.

“What we’ve seen in terms of energy consumption is that we’re actually much more energy efficient than a traditional cloud storage service. Why? Think about it, we mirror files and we store them all over the world… It’s actually impossible to access a file from Dropbox that is sent out from [a specific location]. Essentially when you access Dropbox or Google Drive and you download a file they’re going to be sending it out from their data center in Texas or wherever. So there’s a huge data transfer energy consumption there — and people don’t think about it,” he argues.

“Data center energy consumption is already 2%* of the whole world’s energy consumption if I’m not mistaken. So being able to use latency and being able to send your files from [somewhere near the user] — which is also going to be faster, which is all factored into our reputation system — so our algorithms are going to be sending you the files that are closer to you so that we save a lot of energy from that. So if you multiple that by millions of users and millions of terabytes that actually saves a lot of energy consumption and also costs for us.”

What about latency from the user’s point of view? Is there a noticeable lag when they try to upload or retrieve and access files stored on Internxt vs — for example — Google Drive?

Villalba Segarra says being able to store file fragments closer to the user also helps compensate for any lag. But he also confirms there is a bit of a speed difference vs mainstream cloud storage services.

“In terms of upload and download speed we’re pretty close to Google Drive and Dropbox,” he suggests. “Again these companies have been around for over ten years and their services are very well optimized and they’ve got a traditional cloud architecture which is also relatively simpler, easier to build and they’ve got thousands of [employees] so their services are obviously much better than our service in terms of speed and all that. But we’re getting really close to them and we’re working really fast towards bringing our speed [to that level] and also as many features as possible to our architecture and to our services.”

“Essentially how we see it is we’re at the level of Proton Drive or Tresorit in terms of usability,” he adds on the latency point. “And we’re getting really close to Google Drive. But an average user shouldn’t really see much of a difference and, as I said, we’re literally working as hard as possible to make our services as useable as those of Google. But we’re ages ahead of Storj, Sia, MaidSafe and so forth — that’s for sure.”

Internxt is doing all this complex networking with a team of just 20 people currently. But with the new seed funding tucked in its back pocket the plan now is to ramp up hiring over the next few months — so that it can accelerate product development, sustain its growth and keep pushing its competitive edge.

“By the time we do a Series A we should be around 100 people at Internxt,” says Villalba Segarra. “We are already preparing our Series A. We just closed our seed round but because of how fast we’re growing we are already being reached out to by a few other lead VC funds from the US and London.

“It will be a pretty big Series A. Potentially the biggest in Spain… We plan on growing until the Series A at at least a 30% month-to-month rate which is what we’ve been growing up until now.”

He also tells TechCrunch that the intention for the Series A is to do the funding at a $50M valuation.

“We were planning on doing it a year from now because we literally just closed our [seed] round but because of how many VCs are reaching out to us we may actually do it by the end of this year,” he says, adding: “But timeframe isn’t an issue for us. What matters most is being able to reach that minimum valuation.”

*Per the IEA, data centres and data transmission networks each accounted for around 1% of global electricity use in 2019

No, NFTs aren’t copyrights

By Annie Siebert
Harrison Jordan Contributor
Harrison Jordan is the founder and CEO of HUP.LIFE

For contemporary artists, attaching work to the blockchain in the form of a non-fungible token (NFT) may seem like a secure and verifiable way to sell art online.

In some ways, it is. Blockchain inherently records time-stamped data on all transactions, with a permanent indication of ownership across a distributed ledger. A look inside a blockchain’s transactions will provide all the information needed about when an NFT was traded, who was involved in the transaction and how much was spent.

But the reality of NFT ownership is much more complicated than one might imagine. As a new crypto asset class, NFTs appear to exist almost unbound by current regulatory systems. But when combined with art, there are overlaps to consider. Understanding the legal pitfalls of the contemporary NFT ecosystem is the first step in unlocking its potential.

Does copyright exist on the blockchain?

High hopes abound for the potential of NFTs to serve as copyright alternatives, with many believing them to be copyrights themselves. When viewed at face value, it’s easy to understand the confusion.

The NFT purchaser owns nothing more than a unique hash on the blockchain with a transactional record and a hyperlink to the file of the artwork.

The truth is, NFTs are just tokens that represent an asset, completely separate from the assets themselves. Because every NFT represents a unique asset, a single NFT can’t be duplicated while maintaining the same value as the original. Many equate this exclusive form of ownership with ownership of the work itself, but the distinction must be emphasized.

This misconception goes further. The range of possibilities for what can be an NFT coincides surprisingly well with works eligible for copyright. While every jurisdiction defines “works” in different ways, none stray too far from the essentials. In Canada, for example, copyright protection extends to literary, artistic, dramatic or musical works in addition to performances, recordings and other related works. Creators need not apply for these protections — the state provides them inherently upon the creation of the work.

Naturally, this protection is guaranteed for the original work that an NFT represents. When artwork is created and auctioned on an NFT marketplace, the copyright functions almost exactly as it would in an in-person scenario, with the copyright retained by the artist. But a lack of copyright trading infrastructure that complies with international law makes the exchange of NFT copyrights impossible on current platforms.

So unless an external agreement is made between the artist and the buyer, the bundle of copyrights to an NFT still belong to the original artist. The NFT purchaser owns nothing more than a unique hash on the blockchain with a transactional record and a hyperlink to the file of the artwork.

Without legal parameters, fraud is inevitable

The issue of NFT copyright tracking gets even trickier when considering the potential for theft and fraud. In order to be added to the blockchain, NFTs must be “signed” by the uploader in a process known as “minting.” Similar to a painter’s signature on their painting, this feature is intended to link the NFT to its creator. Things can go wrong when minters lie about their identity, which is not uncommon across many NFT platforms.

The issue stems from the lack of a strong legal framework in the NFT market. One can mint a tweet, art piece or even a gif of Nyan Cat without being the actual creator on some platforms. As a result, many artists have reported seeing their art being stolen and sold in NFT form without their consent in what would clearly be a copyright violation in the traditional art marketplace.

This issue is particularly pervasive among NFT tweet exchanges. A Twitter bot known as @tokenizedtweets went on a minting spree earlier this year, sending shockwaves throughout Twitter and the NFT community. Its policy of creating NFTs from viral tweets without the author’s consent or even notification caused an outcry from several actors, artists and other creators, provoking responses from names as big as William Shatner, who expressed concern about “these @tokenizedtweets stealing content, images I upload and my tweets which are all under my copyright being tokenized and sold without permission.”

Theft and fraud are natural results of platforms that lack a strong legal infrastructure. The actions of @tokenizedtweets, now banned from Twitter, demonstrates this issue well.

What’s missing? International compliance

So far, no NFT platforms have ventured into internationally compliant territory for the copyright of art that an NFT sale represents. Doing so would be a tremendous leap for the NFT ecosystem. In addition to minimizing fraud through stronger copyright enforcement, international compliance would allow for tokenized copyright exchange within the blockchain itself.

The groundwork has already been laid thanks to the 1886 Berne Convention, an international agreement that guarantees standardized copyright protection at the moment a work is created in any of its 179 signatory countries. The treaty was tested in 2014, for example, when Tom Petty sued Sam Smith for copyright infringement over Smith’s hit song, “Stay With Me,” which is almost melodically identical to Petty’s “I Won’t Back Down.” The suit and settlement, which includes royalties to Petty’s estate, demonstrated the continuing functionality of the Berne Convention.

The 1996 WIPO Copyright Treaty formally brought Berne principles into the digital art realm, but many Berne Convention signatories didn’t sign it. With no new treaties on the horizon, the private sector may have to pick up the slack left behind by world governments.

The NFT world still fails to comply with the diversity of copyright law around the world despite the uniformity imposed by international treaties. To move the industry away from speculation and into global functionality, international copyright compliance must be incorporated into this emerging ecosystem.

Art app SketchAR to allow artists to list their artworks on NFT marketplaces directly

By Mike Butcher

An update to an existing art app that allows artists to access NFT marketplaces directly, could have the potential to democratize access to the NFT world for artists not currently in crypto. SketchAR, is an existing mobile app that allows artists to turn photos into illustrations using its AI-based computer vision. It is now is launching a new feature that allows users to turn their art into NFTs directly inside the app, and then sell it. Content produced on the app can also include a public community feed and digital learning courses.

The app, which boasts it has almost a million users already, will start off selecting a single ‘Creator of the Week’ from its community for their art to be NFT’d on the OpenSea marketplace. But a new feature will shortly enable any artist using the platform to create and auction an NFT on-demand.

However, there a catch. The artwork will have to be created directly in the SketchAR app in order to prove the artist is the legitimate rights holder, says the startup. This is, however, an advantage, says the startup, since very few marketplaces monitor the derivation and authenticity of artworks uploaded proactively.

And for now, it looks like there is no real equivalent app on the market, although there are of course plenty of ways to create an artwork and then upload it to an NFT marketplace in a separate process.

Andrey Drobitko, CEO and founder told me: “It’s a unique offer since it allows even amateur designers to create an art piece and turn it into an NFT without diving deep into the ecosystem, connecting their wallet to their OpenSea account and paying significant gas fees to minting.”

He said: “Since the art piece comes from the app SketchAR, it also ensures it’s authentic and wasn’t stolen – something that happened quite a few times with NFTs.”

SketchAR said it also built its own infrastructure that allows it to use Ethereum and other 2-layer solutions like Flow, Immutable, or Binance Smart Chain, to reduce costs.

“Basically it competes with artists and designers learning a lot about blockchain, how to work with it, and working directly with marketplaces like OpenSea or Rarible” added Drobitko.

“15 years ago I realized I couldn’t make much money as an artist and only continued to make art for pleasure. It’s different now and we’re excited to support artists, help them develop creative skills, and successfully monetize their artworks,” he said.

It’s estimated there are roughly 50 million artists globally, but fewer than 10% are able to make it their primary source of income.

According to NonFungible.com more than $2 billion was spent on NFTs during the first quarter of 2021 representing an increase of about 2,100% from Q4 2020.

China Has Triggered a Bitcoin Mining Exodus

By Gian Volpicelli, Wired UK
The promise of a crackdown is sending the country's crypterati scrambling for the exit.

In search of a new crypto deity

By Lucas Matney

Hello friends, and welcome back to Week in Review!

Last week, I wrote about tech taking on Disney. This week, I’m talking about the search for a new crypto messiah.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.


The Big Thing

Elon has worn out his welcome among the crypto illuminati, and the acolytes of Bitcoin are searching out a new emperor god king.

This weekend, thousands of crypto acolytes and investors have descended on a Bitcoin-themed conference in Miami, a very real, very heavily-produced conference sporting crypto celebrities and actual celebrities all on a mission to make waves.

Even though I am not at the conference in person (panels from its main stage were live-streamed online), I have plenty of invites in my email for afterparties featuring celebrities, open bars and endless conversations on the perils of fiat. The cryptocurrency community has never been larger or richer thanks to its most fervent bull run yet, and despite a pretty noteworthy correction in the past few weeks, people believe the best is yet to come.

Despite having so much, what they still seem to be lacking is a patron saint.

For the longest bout, that was SpaceX and Tesla CEO Elon Musk who bolstered the currency by pushing Tesla to invest cash on its balance sheet into bitcoin, while also pushing for Tesla to accept bitcoin payments for its vehicles. As I’ve noted in this newsletter in the past, Musk had a tough time reconciling the sheer energy use of bitcoin’s global network with his eco warrior bravado which has seemed to lead to his mild and uneven excommunication (though I’m sure he’s welcome back at any time).

Goods & services are the real economy, any form of money is simply the accounting thereof

— Elon Musk (@elonmusk) June 5, 2021

There are plenty of celebrities looking to fill his shoes — a recent endorsement gone wrong by Soulja Boy was one of the more comical instances.

Crypto has been no stranger to grift — of that even the most hardcore crypto grifters can likely agree — and I think there’s been some agreement that the only leader who can truly preach the gospel is someone who is already so rich they don’t even need more money. It’s one reason the community has offered up so much respect for Ethereum founder Vitalik Buterin who truly doesn’t seem to care too much about getting any wealthier — he donated about $1 billion worth of crypto to Covid relief efforts in India. A Musk-like cheerleader serves a different purpose though, and so the community is in search of a Good Billionaire.

The best runner-up at the moment appears to be one Jack Dorsey, and while — like Musk — he is also another double-CEO, he is quite a bit different from him in demeanor and desire for the spotlight. He was, however, a headline speaker at Miami’s Bitcoin conference.

Dorsey gathers the most headlines for his work at Twitter but it’s Square where he is pushing most of his crypto enthusiasm. Users can already use Square’s Cash App to buy Bitcoin. Minutes before going onstage Friday, Dorsey tweeted out a thread detailing that Square was interested in building its own hardware wallet that users could store cryptocurrency like bitcoin on outside of the confines of an exchange.

Square is considering making a hardware wallet for #bitcoin. If we do it, we would build it entirely in the open, from software to hardware design, and in collaboration with the community. We want to kick off this thinking the right way: by sharing some of our guiding principles.

— jack (@jack) June 4, 2021

“Bitcoin changes absolutely everything,” Dorsey said onstage. “I don’t think there is anything more important in my lifetime to work on.”

And while the billionaire Dorsey seems like a good choice on paper — he tweets about bitcoin often, but only good tweets. He defends its environmental effects. He shows up to House misinformation hearings with a bitcoin tracker clearly visible in the background. He is also unfortunately the CEO of Twitter, a company that’s desire to reign in its more troublesome users — including one very troublesome user — has caused a rift between him and the crypto community’s very vocal libertarian sect.

Dorsey didn’t make it very far into his speech before a heckler made a scene calling him a hypocrite because of all this with a few others piping in, but like any good potential crypto king would know to do, he just waited quietly for the noise to die down.


(Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

Other things 

Here are the TechCrunch news stories that especially caught my eye this week:

Facebook’s Trump ban will last at least 2 years
In response to the Facebook Oversight Board’s recommendations that the company offer more specificity around its ban of former President Trump, the company announced Friday that it will be banning Trump from its platforms through January 2023 at least, though the company has basically given itself the ability to extend that deadline if it so desires…

Nigeria suspends Twitter
Nigeria is shutting down access to Twitter inside the country with a government official citing the “use of the platform for activities that are capable of undermining Nigeria’s corporate existence.” Twitter called the shutdown “deeply concerning.”

Stack Overflow gets acquired for $1.8 billion
Stack Overflow, one of the most-visited sites of developers across the technology industry, was acquired by Prosus. The heavy hitter investment firm is best known for owning a huge chunk of Tencent. Stack Overflow’s founders say the site will continue to operate independently under the new management.

Spotify ups its personalization
Music service Spotify launched a dedicated section this week called Only You which aims to capture some of the personalization it has been serving up in its annual Spotify Wrapped review. Highlights of the new feature include blended playlists with friends and mid-year reviews.

Supreme Court limits US hacking law in landmark case
Justices from the conservative and liberal wings joined together in a landmark ruling that put limits on what kind of conduct can be prosecuted under the controversial Computer Fraud and Abuse Act.

This one email explains Apple
Here’s a fun one, the email exchange that birthed the App Store between the late Steve Jobs and SVP of Software Engineering, Bertrand Serlet as annotated by my boss Matthew Panzarino.


illustration of money raining down

Image Credits: Bryce Durbin / TechCrunch

Extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

For SaaS startups, differentiation is an iterative process
“The more you know about your target customers’ pain points with current solutions, the easier it will be to stand out. Take every opportunity to learn about the people you are aiming to serve, and which problems they want to solve the most. Analyst reports about specific sectors may be useful, but there is no better source of information than the people who, hopefully, will pay to use your solution..”

3 lessons we learned after raising $6 million from 50 investors
“…being pre-product at the time, we had to lean on our experience and our vision to drive conviction and urgency among investors. Unfortunately, it just wasn’t enough. Investors either felt that our experience was a bad fit for the space we were entering (productivity/scheduling) or that our vision wasn’t compelling enough to merit investment on the terms we wanted.

The existential cost of decelerated growth
“Just because a technology startup has a hot start, that doesn’t mean it will grow quickly forever. Most will wind up somewhere in the middle — or worse. Put simply, there is a larger number of tech companies that do fine or a little bit worse after they reach scale.”

 

Again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.

❌