Team play is not only important in sport, but also within an industry. The ability to enter into meaningful cooperations with other companies can be decisive for success or failure. How the blockchain industry in Germany holds its own with cooperations and why association work in Germany can secure us a decisive competitive advantage over the USA and China. A commentary.
With the exception of the big blockchain projects that pioneered the sector, the German blockchain scene now has to pay a lot of attention to its budget. Products that generate income for the crypto start-ups are currently still in short supply.
The burn rate is correspondingly high, especially for projects that require many cost-intensive development or licenses. All the more it makes sense to look around for comrades-in-arms with whom you can bundle your skills. Not only to reach product maturity faster, but also to secure your international competitiveness.
With cooperations to market readiness
Every company should focus first and foremost on its core competence or core product. One blockchain start-up, for example, offers excellent payment solutions, but requires licenses, KYC processes, custody solutions, identity management solutions, and so on. Instead of developing or purchasing everything yourself at high cost, it may be advisable to join forces with the industry leader. For each of these areas there is at least one, but rather several start-ups, companies or banks in Germany that have developed suitable solutions.
From 2016 to 2018, the main thing was to "evolve" without looking left and right. Partly out of self-overestimation and partly out of focusing on the development of the actual product. In recent months, however, we have been reading more and more about cooperations that have arisen in the blockchain sector.
The puzzle pieces for the Big Picture come together
Polkadot, KILT and Finoa, for example, announced last week that they were working together on a custody solution. While the KILT protocol from BOTLabs allows users to manage data remotely and autonomously, Finoa offers a professional token custody service. The Web3Foundation's Polkadot protocol can in turn ensure interoperability between individual blockchains. Exactly such mergers are necessary to outgrow the beta stage in the blockchain ecosystem.
But above all on the licensing and compliance side, numerous service provider contracts have arisen in the German blockchain ecosystem. These include Fractal, which supplies numerous Blockchain companies with KYC solutions, solarisBank and WEG Bank, which provide the necessary license umbrella for numerous crypto companies. More and more traditional companies outside the blockchain scene are participating in the crypto adaptation. For example, the Stuttgart Stock Exchange is also cooperating with solarisBank. Conversely, new crypto players such as Bitwala or Brickblock also benefit from the tech finance house solarisBank. Especially young FinTechs are dependent on the licenses of the banks. After all, a bank's own licence is often too expensive and protracted at the beginning of an enterprise.
As the many press releases and cooperation logos on companies' websites show, the degree of integration has increased in recent months both among the crypto companies themselves and with companies outside the industry. No matter whether they are free cooperations or concluded service and license agreements.
Professionalization also at association level
In addition to the independent networking of industry companies, e.g. through meetings or conferences, the association's work becomes more and more important as an industry matures. This applies not only to the political representation of interests, but also to the networking of the industry among each other. Although many crypto start-ups within Berlin, Frankfurt or Hamburg are well networked, they are not always supra-regional. Here in particular, a nationwide association can ensure additional convergence within the industry.
In addition to the Blockchain Bundesverband Bundesblock and smaller Blockchain regional associations, Germany's largest digital association, Bitkom, is also becoming increasingly involved in the blockchain sector. Although blockchain technology is only one of many topics here, it is precisely here that the advantage lies. Bitkom can thus contribute to promoting blockchain technology together with related future technologies such as artificial intelligence and the Internet of Things. After all, the future and usability of the blockchain is closely linked to the further development of our digitization as a whole.
In addition to traditional associations, there are also ecosystem builders and accelerators from the start-up and venture capital sector, some of which also promote cooperation within the industry. Depending on their orientation, these can have an association or venture capital character. In contrast to associations, their orientation is rather vague and can contain very different focal points. In Germany, for example, Blockrocket could be mentioned here, which tries to bring the German Blockchain ecosystem together through joint Co-Workingspace areas.
The big difference between Germany and the USA
Precisely because venture capital in Europe is not as loose as in the USA or China, synergies between the individual companies are all the more important. The organisation of the German economy, from institutionalised associations to cartel-like mergers, has historically ensured a high level of international competitiveness.
Whether Germany will play a leading role in blockchain technology will therefore also depend on the willingness of start-ups to merge with other companies. The organisational ability of an industry coupled with the ability to effectively articulate its interests to politicians can be more valuable than large fundings from the USA and China.
Nevertheless, this should not lead to blockchain start-ups falling into regionalism. After all, it is part of the blockchain DNA that the new networks are global and decentralized and do not exclude anyone. The big challenge, especially through centralist blockchain initiatives from China, will be to maneuver between realpolitik and cosmopolitan blockchain idealism.