Overstock.com, and their CEO and founder Patrick Byrne, have been long time Bitcoin believers. The company was famously an early adopter of Bitcoin payments on their site, as well as strong investor in the digital currency as a money-making asset.
Now, through their blockchain accelerator and subsidiary Medici Ventures, Byrne is looking to invest further in the underlying technology and see what it can do in terms of streamlining wine futures trading while reducing fraud through secure supply-chain tracking from product provenance.
Medici Ventures has announced a strategic investment in a blockchain company called VinX which plans to create a token-based digital wine futures platform based on the Bordeaux futures model. This will allow for the selling and trading of wine futures on a transparent and secure blockchain. The spin off of this is that the supply-chain tracking on said blockchain will also aid in reducing fraud in high-end wines.
It is estimated that 20 percent of all wine in the world has counterfeit labeling, so what a consumer believes is a high-end bottle of wine could have a decidedly more local origin.
“Like any economy, the wine industry has difficulty scaling its middlemen-heavy systems in parallel with the growing demands of an increasing global market,” said Byrne. “VinX’s steps in tokenizing wine futures while allowing wine enthusiasts to know without a doubt that the bottles they purchase are filled with authentic wines will position the entire industry as a model of a new global economy that replaces old boys’ networks with frictionless trust through technology.”
A classic disruption model
On the face of it, especially when it comes to intermediary-heavy industries, there is a lot of potential for blockchain disruption. The wine distribution network is just another such industry that is starting to embrace the potential of blockchain’s transparent and immutable nature. This distributed ledger technology is thus an ideal ledger for such supply-chain information to be stored on – especially where fraud and corruption is evident.
To this end, VinX’s mandate, as described by their co-founder and CEO, Jacob Ner-David, is to ‘democratize the capital structure of the wine industry.
“We are democratizing the capital structure of the wine industry by bringing consumers in direct contact with producers early in the wine-making cycle. We are riding the wave of direct-to-consumer, which Overstock has been a leader of for almost 20 years,” Ner-David said.
“In addition, because we are registering all wine futures as tokens on a blockchain, we are bringing a powerful validating force that will go a long way toward reducing fraud.”
Bullish on blockchain
While Overstock.com’s own bitcoin investments may have waned, or at least shrunk, in the 2018 bear market, there is no doubting the progress that blockchain is feeling this year. Medici Ventures, headed up by president Jonathan Johnson, explains that this blockchain accelerator and subsidiary of Overstock.com has been ‘bullish on blockchain’ for over four years now.
“Medici Ventures has been focused on advancing blockchain technology for nearly four years. We have more than 15 portfolio companies that are doing that. This investment is not a comment on the cryptocurrency market at all; it reflects our continued bullishness on the disruptive and revolutionary impact we expect from blockchain technology,” Johnson said.
“Our goal is to change the world by advancing blockchain technology. We believe that by advancing blockchain technology we can bring the people of the world closer together. By eliminating the need for trust institutions to stand between us, blockchain offers humanity the chance to re-engage and connect once again as people,” the president said in explaining Medici Ventures’ goals.
Johnson also explained not only the importance of disrupting the wine market, but also how VinX proved themselves to be a worthy strategic investment partner in an ecosystem that has many projects that are all bark and no bite.
“It is often difficult for even the most seasoned collector to identify fake wine,” Johnson explained. “Consider the experiences explained in the documentary Sour Grapes. To combat this growing concern, VinX plans to use blockchain to connect wine lovers directly with wineries, eliminating fraudulent middlemen within the industry and providing customers with a direct line to the source of the products.
“Medici Ventures has been looking for a good supply chain investment in the blockchain space. With the VinX team’s industry experience in the wine industry and in software development, we’ve found an opportunity we really like.”