With cryptocurrency craze for now, blockchain startups have to dig a little deeper to attract attention. Their last secret weapon: the Nobel prizes.
Covee Network is the latest venture to announce a partnership with a leading economist: Alvin Roth, gaming and market theory expert, who shared the Nobel economy in 2012. Prysm Group is borrowing the brain and the name of Oliver Hart from Harvard University, a co-graduate of 2016; and Cryptic Labs LLC collaborated with Eric Maskin – who shared the award in 2007 – and Christopher Pissarides – a 2010 co-winner.
A year ago, just saying the word "blockchain" was enough to arouse interest. The photography pioneer Eastman Kodak Co. last year had a brief return to fame and a 272% share price increase after a cryptocurrency license announced its name. The Long Island soft drink company Ice Tea Corp. was renamed Long Blockchain Corp., with similar results, only to be accused of deceptive investors.
But the magic has vanished. In August, according to data from Autonomous Research, the financing of the first offers of coins, which are used as an alternative to public offers by companies in the cryptocurrency business, fell to the lowest level in 16 months. Bitcoin, the oldest in space, has fallen by more than half this year to $ 6.655.
The question is: do the winners simply provide their name and reputation, or are they fully involved in the projects?
"When I first came together to join, I spent a lot of time thinking about whether I would just be a decoration or if I would be able to contribute," Roth said on the phone. What persuaded him was how he could bring his unique skills to support the project. "They are embracing game theory as a way to encourage participation".
Roth will help Covee, based in Zurich, to establish a strategy in regular phone calls and to have direct access to the team because it works in the same building as one of its members. Options to become a partial owner of the company remain open, although neither he nor Covee have disclosed any payment agreements. Like the partners of Cryptic Labs and Prysm, he is described as a consultant.
"It was the seriousness of the team, and our existing relationships that distinguished us," allowing the company to pack Roth, the CEO of Covee, Marcel Dietsch, a student at the University of Oxford, said on the phone . The interest shown by serious thinkers "shows that the blockchain sector is growing," he added.
Of course, not all the winners of the Nobel Memorial Prize in Economics agree on the advantages of cryptocurrencies.
"Bitcoin is evil," wrote Paul Krugman, a 2008 winner, in his New York Times column in December 2013. Even Roth says that much of what Covee aims to do initially can be achieved without blockchain.
The Covee white paper – with its discussion of game theory, including payoff charts – seems tailor-made to win over an economist. He is the author of six research doctorates, among other schools, Harvard and Imperial College of London, one of whom studied under Roth. The project is expected to be launched in November. At the moment it is not going to raise funds through an ICO.
Dietsch's goal is ambitious: he wants to destroy the company itself.
Using the Ethereum network, it aims to create a market for skills that will allow ad hoc teams to form around business projects. For example, a scientist who developed a new drug might look for a regulatory expert and someone with experience in marketing. Once the project is completed and the drug brought to market, it may melt. Dietsch states that the blockchains will replace the brokerage function of the company. Value tokens will be used to strengthen participation and solve the free rider problem, while smart contracts will address coordination problems.
"Why is most of the labor force remaining within the confines of centralized intermediaries like the centuries-old society?" Dietsch and his team ask in the white paper. "Both trust and traditional organizations are limited in terms of scale".