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Over the last few years, investors had to get used to the cyclical nature of crypto markets. The latest of these cycles, decentralized finance, is still unfolding. DeFi tokens reached unprecedented valuations in record time just to quickly deflate, erasing tens or even hundreds of millions of dollars in market value.
The main reason why crypto and especially altcoins are this volatile is the lack of new money on the markets. Bitcoin and Ethereum can attract institutional investors, but altcoin traders still mostly play a game of musical chairs. The rise of DeFi, for instance, correlates with the lackluster performance of pre-2017 alts – it’s the same money chasing the next big pump. We clearly need new inflows, but from where?
“Adoption” is the obvious answer, but it’s worth clarifying what it means – real-world companies paying real money to blockchain projects that redistribute some of it to token-holders through creative tokenomics.
The perfect use case for an enormous market
One of a handful of industries where blockchain technology can make a real difference is big data. It is an enormous market that’s worth $138.9 billion in 2020 and will nearly double to $229.4 billion by 2025, according to Markets and Markets statistics.
While blockchain is generally a poor candidate to replace centralized databases, it is fantastic to ensure data provenance and authenticity. Even governments, typically slow in adopting new technologies, started running pilot projects. The Singapore Public Service is looking to adopt blockchain to verify vendors’ track records on GeBiz, thus tracking public officers’ career moves, and support or even replace auditing processes. Estonia is already using the technology to store public registries. The UK’s Land Registry has partnered with the Methods project to develop a platform storing land registration information and streamlining the process for buying or selling properties.
In the private sector, manufacturers are investing evergrowing amounts into research and development of integrated big data solutions. Suppliers are working to reduce equipment costs to achieve a competitive advantage, to optimize sales cycles, simplify customer service and better understand customer needs.
GoldsteinResearch states that leading industry players such as IBM, HP, Google, SAP, Cloudera and Oracle, are progressively investing in R&D for the development of unified big data solutions to provide improved analytics and integrated management of data. Companies are focusing on mergers and acquisition to diversify their product portfolio with big data and mainframe technologies. For instance, in 2015, Microsoft acquired Revolution Analytics to expand its business for cloud-based platforms. Similarly, IBM acquired Cloudant and Cleversafe to strengthen its cloud platform business.
In short, enterprise big data is an enormous market and blockchain technology can realistically capture a meaningful part of it. Projects developing these blockchain big data solutions will reach “true adoption” in the sense that they can attract new money to the crypto ecosystem.
Besides, big data is not just about the enterprise market. The DeFi cycle might be deflating right now, but the idea of decentralized finance is compelling and it is here to stay – and big data sits right at the heart of it.
From understanding behavioral patterns to KYC/AML compliance and trusted price feeds, big data is everywhere in DeFi. Oracles are an especially important use case with projects like Chainlink, Band Protocol, Tellor and Kylin Network – all of which have been on the market for a while and are growing.
A quantifiable investment
The size of the addressable market for big data blockchain projects is attractive, but what is even more appealing is that they can evolve into quantifiable businesses.
It is hard or even impossible to apply traditional financial metrics to most altcoins, as there is no revenue. The price reflects hope, not fundamentals. Projects with real economic activity, on the other hand, can be analyzed – you can calculate earnings-per-token or token-price-per-earnings just the way you would for publicly listed stocks.
This makes big data blockchain projects a more conservative and reliable investment than tokens riding the hype cycle. Some think this is a disadvantage, but they are perfect to build a diverse portfolio of moonshots and reliable winners. Industry resources, such as CoinGecko, have already noticed this trend and are monitoring big data projects as a niche that can possibly become the “next big thing” that will overshadow even DeFi.
Blockchain data projects to watch
The three most rapidly developing big data blockchain projects are Ocean Protocol, Quadrant and Streamr. All three have real-world applications and actual use cases.
Ocean Protocol helps developers build marketplaces and other apps to privately and securely publish, exchange and consume data. It also offers access control, data science and other products that developers can use in their applications.
Ocean Protocol had a troubled start with a controversial IEO and community shenanigans. However, mistakes have been rectified by the fact that the project has climbed to the top 100 on CoinMarketCap. The project currently boasts a market cap over $130 million.
The project’s roadmap hints at the development of a community marketplace in 2020, extensive improvements of the Ocean Protocol core, new applications and improved infrastructure and incentivizing data supply.
Quadrant Protocol is the blockchain arm of Quadrant Global, an enterprise location big data company that has been around since 2014. After conducting an ICO in October 2018, Quadrant Protocol was flying under the radar with little communication. Unfortunately, this is clearly reflected in the token price, as the project has a relatively low market cap and trading volumes. On the other hand, the company mentioned during their last AMA that the platform is already profitable. If they can find a better tokenomics model, the project might see more interest from investors.
Recently, Quadrant Protocol started communicating more. Their updated roadmap of the project includes four new initiatives with real-world applications. The earliest to launch is Cape Canaveral, a consent management platform introducing transparency into data supply chains by logging user consent on-chain. Project Baikonur also looks interesting, as it directly involves the community – they can collect and validate location data using a mobile app and get rewarded in the project’s native token.
Streamr is a distributed open-source software project with contributors around the globe. It is positioning itself as the missing link in creating a real-time data protocol for the decentralized web. Streamr is listed on Binance with a market cap of just above $30 million.
The project’s roadmap is ambitious and includes the refinement of their internal economics and scalability research, which is to prove that the network has low and predictable latency. Another milestone for them is creating data unions for redistribution of data ownership.
In light of the growing importance of big data in all industries, blockchain projects targeting this field may very well be among the best performing. They have the opportunity to capture parts of a multi-billion dollar market and attract new money to crypto.
Projects like Ocean and Streamr, both of which are listed on Binance and had solid performance, may attract existing traders in hopes of gaining profits on fluctuations. At the same time, Quadrant Protocol seems to be undervalued without listings on major exchanges.
As blockchain continues to mature, we expect market cycles to become a bit less volatile. There is always a “new shiny object” like ICOs or vegetable tokens, but ultimately, adoption and money talks.
I am a passionate Bitcoin fan from CA. I developed my own tools to track and predict changes in Bitcoin price after the fall of Mt. Gox. I am trading some stocks and digital currencies for experimental purposes and hunt the most interesting cutting edge technologies use cases in investing and finance.
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