5 things to know about Blockchain in Latvia

Jūlija Gifford takes a look at what's happening with blockchain - the buzzword that's been flying around the internet - in a Baltic and Latvian context.

Everyone and their grandmother has at least heard about Bitcoin. Though you may not be sure about the longevity of Bitcoin, what's more important is the technology that made it possible - blockchain. We're seeing increasing amounts of diverse uses for blockchain that are being increasingly implemented in the world around us. This shows us that this is one technology that's here to stay.

But what's going on in the realm of blockchain in Latvia? Do we have anything to show for it?

In this article we'll understand where Latvia stands in the world of blockchain, as well as 5 interesting tidbits that have gone unnoticed in the shadow of our Baltic neighbours, but are nonetheless worth our attention.

But first - what is blockchain?

Blockchain is a distributed ledger technology.

Essentially, it's a way of providing an unchangeable, incorruptible and permanent log of transactions, where the history is available to everyone who has downloaded the ledger. Every time a new transaction is made, the ledger is automatically updated, meaning that each transaction is logged and visible to everyone.

The blockchain technology was originally created for the distribution of Bitcoin. It has also been widely used to create and distribute new cryptocurrencies. Some create new cryptocurrencies as a means to raise funding for ventures - ICOs (Initial Coin Offerings, similar to IPO - Initial Public Offerings, when a company goes public).

But blockchain technology is not limited to financial or currency transactions.

The attraction is; that blockchain technology makes any transaction:

  • Secure

  • Transparent

  • Incontestable

As a result, it can have a wide array of possible uses that have major implications: from trading, to smart contracts, to remote voter authentication.

 

What's going on with blockchain in the Baltics?

The Baltics have made a mark in the global blockchain front. Notably:

Estonia has established itself as a technologically advanced and open community, and blockchain is no exception. In 2017, it was the Baltic leader in terms of raised funds via ICOs (though has now been overtaken by Lithuania). The e-residency initiative is based on blockchain technology, allowing the citizens to have access to safe, digitized data that can be securely used online.

Estonia has also announced their intention to launch their own national cryptocurrency, the “Estcoin”, becoming the first country to consider its own cryptocurrency. Unfortunately it doesn't look like this will soon become a reality - the Estocoin initiative was denounced by the European Central Bank, stating:

“No member state can introduce its own currency; the currency of the Eurozone is the euro.”

Lithuania, however, has become a hotbed for ICOs.

Lithuanian ICOs have raised over $500M in ICOs within the past 18 months, thereby putting the unlikely country in the 3rd place in regard to finance amount. Lithuania is surpassed only by China and the United States, and closely followed by Switzerland, the country that has been deemed the “Silicon Valley of crypto”.

The government has understood the economic benefit of supporting the blockchain industry, and has put into place several initiatives aimed to support them further. The financial regulatory board is in the midst of developing a blockchain sandbox, which lets blockchain initiatives test their solutions before filing for the necessary licences. Alternative banking licences can also be easily obtained - taking as little as three months.

 

What's the situation in Latvia?

This begs the question - as the county in the middle, what's going on in the realm of blockchain in Latvia?

From a legislative perspective, the country has signed a Memorandum of Understanding with the ther two Baltic states, agreeing to support blockchain initiatives. The Financial and Capital Market Commission (FKTK) is open to consulting blockchain initiatives on the different sorts of licences that may be necessary. The typical licence required for an ICO that intends to hold investors' money, for example, would be the Investment Management Company Licence, which requires initial capital of 125,000 EUR. Similar to Lithuania, a licence can be issued within three months time.

Even though Latvia is not as outwardly visible in the global blockchain community, there are several underrated initiatives that you should know about. Here are some:

  1. Latvia hosted one of the most important blockchain conferences in Europe

In November of 2017, Hodlhodl organized the adorably named “Baltic Honeybadger” bitcoin conference, referencing the popular Honey Badger bitcoin meme.

The event was star studded, and included speakers such as Elizabeth Stark who is leading up the Lightning Network initiative, Andreas Antonopolous - a foundational contributor to blockchain education, and Pavol Rusnak, the creator of Trezor, the most secure crypto hardware wallet.

The conference generated rave reviews, and some are already looking forward to the following year. You can watch the live recordings here.

  1. Latvian ICOs have raised over 28 million euros

Though the data is not readily available, an in-depth search reveals that Latvian startups, in fact, have been quite diligent in regards to organizing ICOs.

Here's what Latvians have been up to:

  • Digipulse (0.85M EUR) - the digital assets inheritance platform

  • HashRush (1.55M EUR) - a computer game that lets you mine cryptocurrencies as you play

  • Aeternum (3.05M EUR) - a platform where you can invest in scientists' intellectual property rights

  • Forty Seven Bank (10.84M EUR) - a digital bank

  • Globitex (9.7M EUR) - the global Bitcoin exchange platform

  • Cryder (29.6K EUR) - the decentralized taxi service

  • Live Stars (2.12M EUR) - the adult movie streaming platform

 

All tallied up for a grand total of 28,650,000 EUR.

Compare that to last year's amount of traditional funding for startups, which was 37M EUR for the entirety of 2017.

Some Latvian startups are in the process of an ICO, or are seriously gearing up:

  • FICNetwork that was hyped in the crypto community and have already raised $4.8M in their private and public presales

  • ICO Pass (Notakey) (aiming for 490,000)

  • SafeCrypt,

  • Monetizr who have already raised an undisclosed amount in their private presale (where minimum investment is $10K).

  • Zeew - the on-demand delivery platform, have raised 243K EUR in their presale

 

  1. One Latvian company builds crypto mining farms out of shipping containers, and exports them around the world

PowerMining, lead by Kristaps Mors and Janis Grinbergs, has taken advantage of the mining hype, and has started to build and sell mining hardware en-masse. They fills containers with mining computers that are set up and configured to mine a specific cryptocurrency, such as Bitcoin or Litecoin. The buyer of the container, then, becomes the owner of a mobile crypto mining farm.

Within one container, they can fit up to 160 ASIC mining units. If they are Bitcoin mining units, the amount of mining power is 2.24Ph/s, which at the current difficulty can mine 4.315 Bitcoin within a month.

Their crates have been shipped as far as the United States, and they're working on their next shipment to Switzerland. One container costs from 19,999 EUR, and serious interest has come from traditionally wealthy countries, such as the USA, Canada, the UK, Switzerland, and Japan.

 

  1. Some major global blockchain players are Latvian

Valerijs Vavilovs - cofounder and CEO of BitFury is from Latvia. His startup, a full-service hardware and software Bitcoin center, has raised over 106M EUR in funding, making it the highest funded Bitcoin startup at the time.

Though the startup is registered in the USA and technically can't be counted as a Latvian startup achievement, Valerijs spends time in Riga, and is an active member of the blockchain community, participating and sharing his knowledge where possible in different community events.

Matthew Mezinskis - the host of the Crypto Voices podcast. Matthew is knowledgeable about crypto currency, and is a player in the global movement of education around blockchain.

He lives in the US and is proudly of Latvian descent, and was also a speaker at the Baltic HoneyBadger conference.

 

5. AirBaltic was the first airline to accept Bitcoin

The majority state-owned airBaltic earned international media coverage in 2014 for announcing that it would accept Bitcoin payments - thereby making it the first airline to do so.

Though the stunt worked from a PR perspective, representatives have stated that airBaltic will retain the Bitcoin payment solution. They also mentioned that though interest in paying with Bitcoin initially wasn't very high, they have recently observed a trend where there is increasing interest in payment with the cryptocurrency.

 

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