Waltonchain is a China/Korea-based blockchain project named after Charlie Walton, the first patent holder (and thus considered the inventor) of the RFID device. RFID, as you probably already know, stands for Radio Frequency Identification Device.
The concept behind Waltonchain is to merge blockchain and RFID technology. Waltonchain is a decentralized ecosystem that would allow for the management of networks of various RFID devices (and the data contained within them). The company refers to this combination as the ‘Value Internet of Things’.
But who can benefit from this, and how will they receive those benefits?
Waltonchain’s Value Proposition
If you don’t know what IOT (Internet of Things) means, it basically refers to the network of increasingly varied physical devices that are connected to the internet. What started out as just computers now includes vehicles, appliances, and wearable devices. McKinsey calls this an industry that could generate $4 to $11 trillion by 2025.
The problem with the current state of things is that it consists of separate and disconnected networks. Your Amazon Alexa cannot connect to your Apple TV. Centralization tends to create greater efficiency, and in the IOT’s present condition, there’s plenty of room for efficiency increases. Waltonchain’s value proposition is to achieve this by centralizing these various IOT networks using blockchain. Centralization through decentralization.
Traditional centralization is not an effective solution because there are too many stakeholders involved. They would never give up their autonomy to any single party. Blockchain gets around that by offering the efficiencies of centralization without the loss of autonomy. Participants don’t even have to really trust each other that much. This is what Waltonchain is offering.
To start with, Waltonchain is targeting the clothing and apparel retail market. At this scale, it’s more about supply chain management efficiencies rather than any grand unified IOT network. Using Waltonchain, a company would be able to efficiently track its product at every stage of the supply chain. However, the company does intend to scale Waltonchain to the entire retail space and further, and we have elaborated on that in the later sections of this article.
The Waltonchain Ecosystem
Waltonchain isn’t just offering a software solution (blockchain) for the problem. It is offering a hardware component as well; its own RFID tags and readers that are completely integrated with the blockchain. This integrated hardware component is what sets it apart from most blockchain projects.
You can read Waltonchain’s official whitepaper here.
Waltonchain’s Software Component
The software component is of course the smart contract blockchain. In the Waltonchain ecosystem, there is a parent chain which is the main and public chain, plus a potentially unlimited number of child chains.
The parent chain is used for transaction management, smart contracts, account control, and child chain management. Child chains are used to store most of the ecosystem’s data, including proprietary information that participants don’t want on the public chain. By storing most of the data on child chains, the parent chain will be able to scale. This is Waltonchain’s solution to the scalability problem that is a major barrier in preventing mainstream blockchain adoption.
The main Waltonchain uses a combined Proof of Stake and Proof of Trust consensus mechanism, which it refers to a Proof of Stake and Trust (“PoST”). This adds an additional reputation evaluation layer on top of the traditional Proof of Stake consensus mechanism. The reputation system will evaluate each participant’s business reputation and take into account factors such as credit standing.
This mechanism gives more rewards to the ‘better’ and more senior nodes, creating an incentive for these high quality nodes to stay on the network. The effect of this will be to increase the overall security of the Waltonchain ecosystem.
One unique feature of Waltonchain is that child chains do not necessarily have to follow the PoST consensus mechanism of the parent chain. Waltonchain will make available customized templates that companies can choose from to suit their business and industry needs.
Waltonchain has already launched its first child chain, known as Freyrchain, in the middle of March 2018, even though the parent chain mainnet has yet to be launched. Note: the mainnet launch continues to be targeted by Mar 31, 2018. That’s two days away at the time of this writing and many are skeptical of whether Waltonchain will be able to make this date.
Freyrchain is described by the company as “the world’s first blockchain-based collectibles data authenticity platform”. Collectibles refers to art collectibles, and the idea is to bring improved tracking and authentication capability to the art collecting industry, where fraud and sourcing (e.g. was the artwork stolen?) are huge issues.
At the time of this writing, Waltonchain is currently conducting an airdrop for Freyrchain tokens, known as FREY. FREY tokens have already been listed on Coinegg and Coinnest.
Waltonchain’s Hardware Component
Waltonchain’s unique hardware component has two main devices:
- the RFID chip tag
- RFID chip reader
What is important to know is that these devices have the capability to write directly on the blockchain. This creates a fully integrated system that presents a distinct advantage over its software-only competitors such as VeChain, Wabi, and Ambrosus.
In a pure software-only blockchain RFID ecosystem, the data first has to pass through the participants’ own RFID hardware before being written on to the blockchain. Hence, a software-only ecosystem cannot be fully trustless as participants will have to trust the hardware and data being filtered through them.
In the Waltonchain ecosystem, each RFID scanner is a light node on the blockchain, enabling the information to be written directly on the blockchain. But the company doesn’t just want to make RFID devices that can write directly on the blockchain, but also improve them at the most basic level.
In its AMA on Reddit, the company claims that it has submitted at least four RFID-related patents. This doesn’t include the patents owned by its senior advisor and affiliate company, Silicon Electronic Technology Co (“Silictec”). Combined, the company claims to have spent $8 million on R&D for its RFID devices.
Here are the advantages that Waltonchain claims its RFID tags will have over what’s out there on the market at the moment.
- Higher transmission power and sensitivity. This higher sensitivity allows each reader to be able to scan up to 1,500 different tags simultaneously (depending on distance) with no interference.
- Higher durability thanks to a low voltage and power consumption design. Claimed to be able to last for over 20 years.
- The tag will be able to achieve both ultra-high frequency and high frequency functions, meaning better compatibility. It would allow end customers to read and enquire about product information through their smartphones.
- High security via advanced encryption algorithms. The company describes the chip as “integrating a proprietary, genuine random number generator and an asymmetric encryption logic and hardware signature circuit, all of which are patent-protected.”
- Low cost. Cost of production claimed to be below $0.05 per chip, which is about 30% of current comparable products. The estimated cost of the RFID reader has yet to be released.
Waltonchain will also make customizations to these RFID tags. For instance, for the food and beverage industry, the company will be placed at the package’s seal and designed to break under stress. This is an example of how the RFID tags will have to be modified to be tamper proof based on industry requirements.
Based on the current timeline, Waltonchain targets to begin mass production of its RFID chips by the first quarter of 2019. The company claims it has already tested its chips with clothing companies, retail stores, and warehouses.
Waltoncoin, the WTC Token
The Waltoncoin (“WTC”) token is the internal engine of the main parent chain, the Waltonchain. As in the example of its first child chain, the Freyrchain, each child chain can have its own token. However the WTC token is still necessary to participate in the Waltonchain ecosystem.
At present, the WTC token is your standard ERC20 token. But when the Waltonchain mainnet launches, token holders will be able to convert to the actual Waltoncoin at a 1:1 rate. They can opt to simply leave their current WTC on the exchange, which will handle this switch on their behalf.
WTC Token Supply
Total token supply is 100 million, however only 25 million are in circulation at the time of this writing, with the rest being held by the Walton Foundation. 30 million tokens will be held for mining.
WTC Token Mining
When the Waltonchain mainnet launches, it will be using a CPU mining model for at least a few months before transitioning to a GPU mining model. The reason for the initial CPU mining model is to minimize hardware requirements in the early stage to promote node growth. Eventually, the company expects that ASIC mining rigs will be used to mine WTC tokens.
At present, you can use Waltonchain’s official test miner and wallet in its present beta release. Just follow the instructions listed here.
WTC Token Incentives
What utility does the WTC token have? What incentives does it provide that will generate demand? When it comes to incentives, the more the merrier. Before we go into its various incentives/utility, a good analogy to think of the WTC token in the context of the Waltonchain ecosystem is ‘gas’.
Take the popular smart contract blockchain platform NEO. It hosts plenty of other applications, each with its own token. However, all transactions still require ‘gas’, which is always denominated in NEO. Same goes for Ethereum. The WTC token will play a similar role, thus maintaining its utility no matter how many child chains and their respective tokens it spawns.
On a more specific scale, there are six major functions of the WTC token that gives it its utility.
- Issuance of child chains: While any participant can create its own child chain, it costs WTC tokens to do so. Stakers of the accounting nodes will set a minimum transaction cost and when supply meets demand, the transaction will be recorded on the blockchain.
- Dividend interest: As above, stakers will be rewarded with WTC tokens with older and more reputable tokens getting a higher amount of tokens. These fees will be split between the accounting nodes of the child chain and the parent chain, with the child chain getting 90% of the fees.
- Credit and mortgage system: WTC tokens can be used as the ‘reserve currency’ of the Waltonchain ecosystem, similar to the role the US dollar plays in the fiat money system. Users will be able to stake WTC tokens in exchange for tokens on any child chain within the ecosystem. So if you need FREY tokens, for example, you can lock up a certain amount of WTC tokens and get FREY tokens. Once you repay those FREY tokens, your WTC tokens will be unlocked.
Your speed of repayment will also affect your reputation score in the ecosystem. The more your reputation and creditworthiness increase, the fewer WTC tokens you’ll have to stake to borrow other tokens, and vice versa.
- Distributed asset exchange: While it’s great that participants can create their own child chains, these child chains must also be able to communicate and transact with each other. Otherwise, it’ll be no different than the current silo structure. WTC tokens will be used to enable transactions across child chains e.g. if one company wanted to buy another company’s data stored on a separate child chain.
- Distributed governing and voting system: The WTC token will be used for voting purposes across the parent chain and all child chains. As it’s a Proof of Stake system, the more WTC tokens you have, the greater your voting power.
- Decentralized Exchange: All the tokens of the respective child chains can be traded on the parent chain. In such trades, the WTC token will be used as the medium of exchange.
One thing we like is that the incentives create a circular system. Because each RFID scanner is a light node, it can be awarded WTC tokens for uploading and authenticating data to its child chain. This awarded WTC tokens can then be used for paying transaction fees also denominated in WTC.
This would create a healthy ecosystem where WTC tokens remain in strong circulation plus have the added benefit of incentivizing the use of scanners, adding more nodes to the ecosystem and improving its security.
These are just the incentives for the WTC token that the company has released so far. As the project develops, it expects to add further utilities for the WTC token.
The Team behind Waltonchain
A good team has always been important to the success of any blockchain project. But with Waltonchain’s hardware component adding a significant layer of complexity, it is even more so. Let’s take a brief look at the project’s founders, engineering team, and senior advisors.
The founder of Waltonchain is Xu Fangcheng, a Chinese national with a background in business and supply chain management. He is the director of supply chain management at Septwolves Group Ltd., a publicly listed Chinese tobacco and clothing brand company with a market cap of over $1 billion.
The cofounder is Do Sanghyuk, a Korean national with various senior positions in Korean trade and business associations. The chief scientist, Kim Sukki is particularly impressive, being a professor at a top-rated Korean university with working experience at AT&T, Bell, Honeywell, and Samsung. He also founded his own semiconductor company and has published over 250 academic papers with over 60 patents.
The other three senior members are Chinese nationals with experience in blockchain and IoT. Two of them hold numerous patents and have held senior positions with top technology companies such as Samsung and Google.
The Engineering Team
Waltonchain has a 12 person all-Chinese engineering team with some impressive backgrounds. The majority of them have Masters’ degrees or higher with plenty of working experience at top notch companies.
The Senior Advisors
Waltonchain has nine members on its senior advisor roster, mostly consisting of university professors specializing in engineering and business. They also have senior advisors for the legal and accounting side. One senior advisor in particular stands out; here’s how he is described on Waltonchain’s official website.
“Professor of Harbin Institute of Technology, PhD Tutor, 973 chief expert. Member of the Expert Group on assembly of micro – nano technology, Member of the Expert Group on assembly of military electronic components spectrum series, Deputy Director of Force Sensitive Professional Committee of Sensitive Technology Branch of Chinese Institute of Electronics, Deputy Secretary – General of Chinese Northeast Micro-Electro-Mechanical System Technology Consortium.”
How Has Waltonchain Been Funded So Far?
Waltonchain has a big hardware component which it is both designing and manufacturing in-house through its affiliate company Silictec. This means high costs; as mentioned, the company has already spent $8 million in R&D alone. And thanks to the Chinese ICO ban, the company was unable to hold a token sale to raise funds.
In the beginning stages, the company won about $500,000 from the Straight Elite Talents Festival, organized by the Fujian Provincial Government. It also has five angel investors listed on its site, plus a growing list of business partnerships.
These angel investors and business partners are probably Waltonchain’s main source of funding, in addition to shareholders in Waltonchain’s holding company. While the shareholder information has not been publicly released, the following is Waltonchain’s organizational chart posted by the company to Reddit.
As you can see, Waltonchain is no small project, so it’s not that big of a surprise that it has been able to get the required funding so far.
Where and How Can You Buy WTC Tokens?
The WTC token launched in June 2017 and by the end of the year was quickly listed on several major exchanges. The first exchange to list Waltonchain was Binance, followed by HitBTC, Coinnest, OKEx, and Coinlink. According to Coingecko, the WTC token can be traded on 8 different exchanges at present, including KuCoin, LATOKEN, COSS, and EtherDelta.
Depending on your geographical location, you should be able to purchase WTC tokens from at least one of those exchanges. The way you could purchase them would again depend on each exchange’s own KYC process and requirements. However, you should know that Binance is by far the largest liquidity source at the moment, accounting for almost 85% of the total trading volume.
How Have WTC Tokens Been Performing?
Coinmarketcap, considered the authoritative source on cryptocurrency capitalizations, lists Waltonchain as #47 out of 1,594 cryptocurrencies with a market cap of about $290 million. Considering that the WTC token has only been circulating for less than a year, this is quite impressive.
As you can see, the WTC token has performed quite strongly, although its current market cap is far below its peak of $1.09 billion on Jan 28, 2018. However you have to take into consideration that the total cryptocurrency market capitalization as a whole declined by 50% over the same period.
That said, the fall in WTC tokens’ value since its peak has been significantly higher compared to the general crypto market. One of the main reasons for this is likely communication mistakes by the Waltonchain team.
One of their most prominent mistakes is known as the “$100 million tweet” because it cost Waltonchain about $100 million in market value. The gist of this saga was that Waltonchain announced a Valentine’s Day giveaway of about 565 WTC on Twitter. The company subsequently announced the list of winners.
You would expect that at least a few of the winners would then tweet congratulatory posts. This happened, except that one congratulatory post was made by Waltonchain’s official Twitter account! The implication of this was that the whole giveaway was rigged to generate hype for Waltonchain. The crypto community quickly jumped on this in outrage.
Said tweet was posted on Feb 28, when Waltoncoin had a market cap of $555 million. On March 1, its market cap was $450 million, a $105 million decline. Waltonchain was forced to post an Instagram video of its winner selection script to prove it was not rigged, plus a public apology statement. Personally, we doubt that the top management of Waltonchain rigged the giveaway; it may have been the independent actions of a low level employee. Nevertheless, Waltonchain took a definite hit to its reputation.
Waltonchain’s communication team made another faux pas in early March, announcing on its Medium blog that a Waltonchain subsidiary had signed a partnership agreement with Alibaba Cloud to work together in developing blockchain solutions for smart cities. An associated tweet announcing this partnership was subsequently deleted and replaced with a vague tweet saying that:
Of course, this did not bode well for investor confidence. Over the course of the next few days, Waltoncoin lost another couple hundred million in market value, which was about a third of its market value. By comparison, the overall crypto market declined by 20% over the same period.
This is even though the Alibaba Cloud partnership looks to still be valid. Speculation on Reddit was that since the Chinese government is cracking down on cryptocurrencies, they did not want to make their partnership with a major Chinese corporation too public.
So overall, Waltoncoin has performed very well for a relatively new token. However, a couple of communication mistakes over the past month or so have clearly shaken investor confidence and the coin’s market value has taken some definite hits. If Waltonchain can clean up its public relations, then its considerable long term potential should allow Waltoncoin its chance to really shine.
Can Waltonchain Succeed In The Chinese Clothing and Apparel Retail Market?
Whether or not Waltonchain will be able to succeed in the long run and expand its product to other industries may depend largely on how well it fares in its first market. Let’s take a brief look at some of the statistics and dynamics of this market.
The reason Waltonchain chose this market to start off with is likely the founder’s relationship with Septwolves. It has also signed agreements with various other clothing companies such as FUGUINIAO Clothing, Tianyu, SMEN, and KALTENDIN Clothing, all of which have a strong retail presence in China. Pilot projects using Waltonchain’s RFID devices have already been implemented throughout several stores.
So far, it seems that Waltonchain has a good chance of succeeding in this market. But is this a market worth succeeding in? Well, according to data from Euromonitor International, China’s retail apparel market was worth $272 billion in 2015 and is expected to grow at a steady rate to about $335 billion by 2020. For comparison purposes, the world’s largest retail apparel market was the USA, valued at $359 billion dollars in 2015.
So, China may not be the world’s largest retail apparel market, but it’s a huge player and may even surpass the USA in the future. If Waltonchain can succeed in this space, and so far indications that it can are good, it will augur well for the future of the company.
Where Does Waltonchain Go From Here?
Even though Waltonchain is currently focusing on the Chinese retail apparel market, it has already set in motion other industries to expand to. The company recently released its planned Q2 2018 roadmap, where it announces that it intends to expand to Brazil, followed by laying the groundwork in Japan and Russia.
In June, the company plans to bring its technology to the food and beverage industry. It will launch the first global blockchain catering project, a pilot store together with ISHIJAH.
Waltonchain also has strong links with Chinese provincial governments, some of which have already contracted Waltonchain for its services. The Fujian government has contracted it to build a Smart Oceans R&D base. The Fujian government has also contracted it to take the lead in a ‘cross strait’ blockchain incubator project between Taiwan and China. The idea is to make this project the Silicon Valley of blockchain technology in the region.
The Jinhu government wants it to build IOT-connected smart air purification solutions with smart monitoring. Further, the Chinese government also invited Waltonchain to present at CIFIT, an international trade and investment fair with many influential attendees, including multiple heads of state.
Conclusion: Waltonchain’s Risks and Potential
At its core, Waltonchain is an ambitious but well thought out project. Not only does it have a unique solution that solves a real problem in the industry, but it also has already begun real world implementation. Its combined hardware and software platform also sets it apart from its competitors. Waltonchain adds to that a highly qualified team with plenty of industry and government connections that have already led to numerous partnerships.
Finally, Waltonchain also has a set game plan in place on how it intends to expand moving forward. Combine all of these with a solid tokenomics model and you have yourself a project with huge potential, particularly over the long term.
That said, no business model is without risk. Because of Waltonchain’s hardware component, it will always have to grapple with the issues of increased costing plus the risk of technological obsolescence. Over the short term, Waltonchain has to deal with the fallout from its negative PR due to its aforementioned gaffes.
However, when balancing it all out, Waltonchain is definitely a project with huge potential. Keep a close eye on this one, because it could really go big.