It’s no secret that Overstock.com founder Patrick Byrneis a big fan of cryptos and blockchain technology. Now Overstock’s venture capital arm, Medici Ventures, has picked up 20% of Israeli wine tracking company VinX. The model that VinX is seeking to globalize is based on the wine sales system used by the Bordeaux Futures Model.
Instead of buying wine after it has entered the marketplace, the token system that VinX created lets buyers have a crack at a bottle of wine while it is still in the barrels. This wine futures system will help buyers to ensure that the wine they purchase is authentic, and could also help producers gain working capital from wine before it is ready to be bottled.
Future wine production would be registered as tokens on a blockchain, and then could be purchased by interested parties. Much like other kinds of futures, prices could rise or fall before the physical commodity is delivered, which could engender another layer of financial speculation in the wine market. Regardless of how the market develops, this platform does have some potential advantages for consumers.
Medici Moves in on the Vine
Medici Ventures president Jonathan Johnson told CoinDesk that, “There are a lot of middlemen in the wine industry that can be eliminated with blockchain, there is a lot of problems with counterfeits. We also think this technology is democratizing the purchase of wine.”
It is likely that the ability to buy and trade wine in a tokenized form will ultimately add to prices paid by consumers. At the moment it is nearly impossible to speculate digitally on wine that is still sitting in barrels across the planet. If VinX is successful in popularizing their wine tokens, seemingly anyone would be able to speculate in wine, widening the market to a previously unknown degree.
Jacob Ner-David, the founder of VinX, said that by, “Bringing consumers in direct contact with producers early in the wine-making cycle,” everyone involved will benefit. He went on to say that, “We are riding the wave of direct-to-consumer, which Overstock has been a leader of for almost 20 years,” via a statement.
An Enormous, Complex Market
The global wine market is valued at more than $300 billion USD annually. Of that market, it is thought that there is at least $3 billion USD worth of counterfeit wine sold every year. The press release that announced the investment by Medici also claimed that up to 20% of the wine that is sold globally carries incorrect labeling.
Patrick M. Byrne expanded on the challenges that wine buyers face in a press release, “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.”
Like other markets that are regulated, but still subject to graft, the wine industry may benefit from this new platform, especially on the high end.
Secure Supplies are a Benefit
VeChain, a Chinese blockchain company, is working on a similar platform to VinX. They claimed that, “At least half of the Chateau Lafite-Rothschild consumed in China is fake,” which hurts trust in the marketplace. When a person is paying a hefty price for a unique product, they want to make sure they get what they pay for. Blockchain could be a big part of ensuring the quality of highly sought after, and often counterfeited items.
ReportLinker recently predicted predicted that over the next five years, blockchain applications in the food and agriculture industry could be worth as much as $400 million USD. The recent tie-up between Walmart and IBM for a blockchain-based veggie platform would lend credence to this position, which may be representative of much bigger things for blockchain technology.