This week, Overstock CEO and Founder Patrick Byrne announced that his new blockchain firm, Medici Ventures, would be making a significant investment in a company called VinX. VinX is a blockchain startup that is hoping to integrate this new technology with the wine industry. The wine industry has long suffered from a host of problems such as fraud and counterfeiting, which the new venture hopes can be solved by blockchain technology.
Among the problems facing the global wine industry - counterfeiting is a serious issue: up to 20% of the world’s most expensive wines could in fact be cheap knock-offs that are mislabeled and misrepresented. The industry also has problems with lost and stolen shipments, as there is such a high incentive for embezzlement and a low risk of getting caught.
In addition to providing increased security and guaranteed authenticity, VinX will also allow for the trading of wine futures. In an interview with Forbes, Byrne explains:
Like any economy, the wine industry has difficulty scaling its middlemen-heavy systems in parallel with the growing demands of an increasing global market. 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.
VinX CEO and co-founder, Jacob Ner-David says that the company’s goal is to “democratize the capital structure of the wine industry.” Ner-David explained:
“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. 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.”
Medici Ventures president Jonathan Johnson, pointed out that the peer-to-peer nature of blockchain technology can eliminate the need for potentially dishonest middle men.
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.
Medici Ventures’ Plans
This is just one of many blockchain investments that Byrne has planned for Medici Ventures, in fact, the firm has been supporting various projects in the industry for over four years.
Johnson told Forbes that regardless of how prices look for crypto, the firm is very bullish on blockchain. Johnson detailed:
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...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.
Last month, Byrne sold 774,303 shares of Overstock.com for over $20 million dollars. Sources close to the matter have told CryptoGlobe that Byrne is planning to invest a large portion of this money in the blockchain industry, specifically through Medici Ventures.