Big data is booming. With the dual endorsement of "blockchain" and "big data" concepts, an increasing number of startups are entering this race, and the capital market is also optimistic about it. According to statistics from PAData earlier this year, blockchain big data companies raised a total of $41.4 million in funding in the first half of the year, ranking second only to DApps, digital asset management, protocols, public chains, and exchanges.
However, the well-known Bitcoin data analysis company Chainalysis recently announced the dismissal of 39 employees in an effort to turn losses into profits. It's worth noting that earlier this year, Chainalysis secured nearly $10 million in procurement orders from U.S. government agencies. According to Crunchbase, the company also received two Series B funding rounds in February and April this year, totaling $36 million.
The layoffs at Chainalysis seem to have cast a shadow over blockchain big data companies. If even industry leaders with government contracts struggle to be profitable, what does the future hold for other companies? Is there still value in the blockchain big data race?
Industry Landscape of Blockchain Big Data Companies
Combining the segmentation of the blockchain industry and the business scope of current blockchain big data companies, PAData believes that the blockchain big data race can be broadly divided into three sub-races:
First is on-chain data tracking, mainly including blockchain browsers and DApp data monitoring;
Second is transaction data monitoring, mainly including digital currency transaction data monitoring and derivative trading data monitoring;
Third is mining data monitoring, where mining data is essentially on-chain data. However, due to the decade-long development of mining forming a relatively complete subdivision industry ecosystem from mining machines, mining pools to staking, the subdivision data has also formed a relatively independent system, mainly including hashrate monitoring and node data tracking.
Although blockchain data is always on-chain and accessible, the rapid development of the blockchain big data race has occurred after the rise of big data concepts post-2014. For instance, the most well-known digital currency exchange data monitoring website CoinMarketCap was established in 2014, providing users with market data such as digital currency prices, circulation, volatility, exchange trading volumes, and digital assets.After these years of development, top big data companies have emerged in various sub-races. Apart from CoinMarketCap, other well-known data providers in the digital currency exchange data field include CoinGekco, Messari, and CoinMetrics. In the derivative trading data monitoring category, there are fewer companies, with skew being one of the more commonly used platforms. Additionally, MarketstackD provides EOS RAM resource trading data, while FRINTRUN_ME offers Ethereum gas transaction data.Well-known browser projects in the on-chain data tracking field include Ethereum browser Etherscan, comprehensive browser BitInfoCharts, on-chain asset tracking website Chainalysis, on-chain large transaction monitoring website Chain.Info, and WhaleAlert. In the DApp field, notable data providers are DappRadar, Dapp Review, LoanScan, along with tools monitoring individual DApp data such as MKR Tools, Uniswap ROI By Token, etc.In mining data monitoring, BTC.com and f2pool are well-known mining pool hashrate and mining machine hashrate data providers, while EOS Beijing, Staking Reward, BITNODES are node data providers.To B or To C: That is the QuestionBlockchain data is rich, big data companies are emerging, but are users interested in this data? Will they actually use this data?"We often discuss this question internally and ask ourselves whether the data we provide is of interest to users and whether they will continue to view it. But from our observations, the current situation is that ordinary users are not concerned about on-chain data, and they find it difficult to understand the value of this data," said Yu Bibo, product manager of Chain.info, a blockchain one-stop data service platform, in an interview with PAData. While the value of blockchain data itself is evident, there is currently a lack of effective ways for users to understand the data.The To C market not only lacks user demand, but even if there is demand, it is largely influenced by market conditions.BTC.com CEO Zhuang Zhong mentioned in an interview with PAData, "During the peak of the bull market last year, the number of users was relatively large, but afterwards, as the market continued to decline, the overall user count also significantly decreased." According to Zhuang Zhong's observations, the impact of market conditions on C-end user activity is widespread and significant. "We have compared with other browsers in the industry, and everyone is experiencing a similar trend. The current number of users may have decreased to about one-third of the active period last year."Even though the domestic C-end market has not yet matured, skipping the C-end and directly developing the B-end seems impractical."B-end demand is often more customized. If you don't target the masses at the beginning and instead invest more manpower and time to develop something specific, you need a business model to sustain continuous development," Yu Bibo believes this is a significant difference between the domestic and foreign markets. "We have also researched many foreign big data companies. If they do things in-depth and professionally, they will start with solutions to sell, and foreign companies are willing to pay for these services, but it's challenging to do this in China." Therefore, he revealed that Chain.Info will continue to be open to the public for free, and after establishing brand influence, with improved data accuracy and breadth, they will consider B-end business.Aside from the lack of willingness to pay among domestic B-end companies, Zhuang Zhong believes that currently, whether individuals or companies, there are still few users with clear demands. "More users have not yet realized the helpfulness of on-chain data analysis for various industries or certain analyses they want to conduct."To address the current issue of insufficient user demand, both companies have taken some measures. Chain.Info hopes to focus on market trading signals that interest users, such as large transfers between exchanges, to attract continued user attention. BTC.com may consider opening the data warehouse directly to professional users, providing more professional and complex query functions.Actual Revenue is Still Minimal, Prepared for Long-Term Non-ProfitabilityIn the traditional big data industry, some make money, some go public, some lose money, and some end up in prison. However, in the competitive landscape of blockchain big data service providers, the fate of many companies shares a common trait - very few are profitable, and even those that are profitable can only earn a minimal amount, with many companies preparing for long-term non-profitability."To be honest, actual revenue in the data business is still minimal, whether it's To B or To C," Zhuang Zhong revealed during the interview. Due to the bleak profit outlook, blockchain big data service companies are in a predicament where providing blockchain big data services is a thankless task.This dilemma is even more apparent in foundational blockchain browser projects."Browsers are infrastructure projects, meaning they are essential, but it seems no one is willing to invest a significant amount to really do such things," Zhuang Zhong further explained, "Moreover, if you want the browser to be more meaningful, you must inevitably cover more coins. From equipment to human resources, from development to maintenance, this investment grows linearly."Why are people willing to invest significant costs in something that doesn't make money?Yu Bibo, who was a product manager at the internet giant Alibaba, believes in the unquestionable value of big data. Giants like Alibaba and Tencent use data for many commercial and valuable purposes. By analogy, he believes the value of blockchain data itself is evident and can create substantial value in the future.However, for blockchain big data service companies, it's still early days, and there is much to be done and needs to be done. After all, seeing the cake doesn't necessarily mean you can eat it.For Chain.Info, Yu Bibo hopes to gradually expand the mining of other cryptocurrencies within the Bitcoin ecosystem, such as BCH, BSV, USDT, LTC, etc., and later consider mining Ethereum and other public chains. "In the early stages, we hope to delve deeply into the blockchain data mining of the Bitcoin network. Currently, it includes basic on-chain indicators, exchange deposits and withdrawals, and in the future, we hope to visualize every transaction on the Bitcoin network in a comprehensive manner."For BTC.com, which was established earlier, they had already expanded to Ethereum in October last year. The Ethereum browser they launched can satisfy users' data query needs for Ethereum tokens and contracts. This year, Zhuang Zhong stated that BTC.com's main goal is to "strive to optimize the structure and cover more coins as much as possible while reducing costs."Structured and Standardized Data Processing will be a Competitive FocusWhen observing the profit strategies of big data companies, they can generally be summarized as "Data-Tool-Service." Acquiring data is the first competitive barrier, and in many fields, whether the business lives or dies depends on whether they can acquire data, such as relying on weather data, civil aviation data, etc., in high data acquisition barrier fields.However, in the blockchain industry, due to the nature of the technology itself, big data companies have virtually no barriers in the data acquisition segment, as everyone can access on-chain data. Therefore, data is not the focus of competition; rather, the focus is on how to process the data. That is, who can provide more accurate and valuable tools is crucial to winning in the blockchain big data arena.Regarding current blockchain data, data from different data providers in the same dimension usually cannot be cross-referenced on two or more different data suppliers, indicating that the quality of current blockchain big data is still not high."The data from various browsers may differ, and this difference may be more significant on BTC-type coins, but it may be greater on Ethereum. We have indeed encountered this problem in developing the Ethereum browser," Zhuang Zhong admitted. He acknowledged that data on Ethereum is richer, and data processing is more challenging. Therefore, different data companies will have differences in structuring and standardizing this data.Yu Bibo explained that Chain.Info primarily relies on algorithms to ensure data accuracy. "Data accuracy mainly relates to two aspects: the accuracy of transaction amounts and the accuracy of address labels. For the former, we mainly improve our identification algorithm through mathematical derivation. For the latter, we also have a set of machine learning algorithms that further complement real deposits and withdrawals and account openings. Currently, our transaction identification accuracy should be above 99.9%, and our coverage rate is already at a leading level in the industry."The structured and standardized processing of blockchain data relies on a deep understanding of the industry. This is not only an essential factor in internal competition among blockchain big data companies but also a barrier against traditional cloud service and big data service providers entering the blockchain big data analysis field.Zhuang Zhong believes that from a cost perspective, especially in terms of underlying hardware costs, these traditional cloud service and big data service providers have incomparable advantages. "For example, Google has been offering BigQuery services since two years ago, covering various digital currency data in a database. Sometimes I also go up to use it for some viewing purposes." Therefore, he believes that blockchain big data companies urgently need to find a clear business model; otherwise, they will face external survival threats.However, Yu Bibo believes that native blockchain big data companies, although not cost-competitive, have an advantage in understanding the specific nature of blockchain data structures. "We have a deeper understanding of the data and behaviors of the entire blockchain and exchanges, so in long-term competition, I believe we will definitely have an absolute advantage."
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