In the world of blockchain and cryptocurrencies, choosing who to invest is an art. With over 1,000 projects that fail to appear or be scammers outright (according to data from sites like Coinopsy and DeadCoin), choosing the potential winner in each vertical is essential.
This was the subject of many discussions at the Crypto Finance Conference in Half Moon Bay, California this week, and I got to speak with the investor Daniel Gutenberg about the problem.
An investor angel, venture capitalist and unicorn hunter, Gutenberg has invested in over 100 start-ups. Of these, 10 of them became unicorns. He has been in the industry for over 20 years, as a member of the board of directors of several companies. Along the way, Gutenberg received numerous awards and was elected "angel of business of the year" in 2010/2011.
Daniel Gutenberg began his career as CEO of Gutenberg Communication Systems AG, a company founded in 1991. After selling his he became an active business angel.
I asked him what's different about the blockchain technology market compared to startups and traditional organizations.
"There are no differences," said Gutenberg. "There are only cases of use where transparency and work without an intermediary make sense."
This, of course, is the great advantage of the blockchain technology space. The ability to cut intermediaries is a common theme and the use of a distributed transparent ledger has led to interesting projects, including Proxeus, SingularityNET and FaceMetrics.
But choosing the right projects can be difficult. Even many seemingly legitimate projects turn out to be vaporware, or worse, scams that attract money.
The tools seem to help sort the grain from the straw, including the collaboration between WatermelonBlock and IBM Watson, which could help people avoid some of the most nefarious cryptographic schemes, such as the now famous Prodeum project.
In the end, however, good old-fashioned due diligence comes into play.
"For me there is no difference," said Gutenberg. "The decision to invest, after having validated both the market and the business model, depends on 90% of my team's prognosis and on whether the CEO will be able to supply or not."
I like ICOHub, who collaborated with Crunchbase at the start of this year, are helping to quickly ratify founders and consultants, which will certainly make this process faster and easier for all stakeholders. But there seems to be a long way to go when it comes to identifying which blockchain technologies are likely to succeed or even exist.
That said, there are many good projects right now, with many others on the horizon. And while Gutenberg can not name any specific exciting projects right now, to maintain a level of pre-launch confidence, he has indicated the particular areas that interest him.
"In general, the most exciting projects are still Bitcoin and Ethereum, followed by some real estate and pharmaceutical applications," he said.
Ultimately, one of the most exciting aspects of the decentralized world of blockchain technologies is that it has the potential to create consolidation in every industry, rather than what we have right now: Thousands of competing products that coexist.
So, for example, there are over 700 mobile analysis products in the ecosystem of traditional marketing technology, we just need an accepted blockchain-based solution on which everyone agrees. Having more than one is mostly redundant.
But while a project monopoly may exist, it is important to remember that blockchain is about decentralized data, processes and transactions. And things are not slowing down in this market. Gutenberg sees a bright future for blockchain technologies.
"Blockchain is here to stay and grow significantly in the next few years," he said. "It will destroy data monopolists in different sectors over the next 30 years and I expect the peak to last for seven years from now."