Blockchain technology has paved the way for various innovations, including decentralized finance, exchanges, smart contracts, and NFTs. Today, thanks to robust community support, there are thousands of cryptocurrencies, hundreds of blockchain platforms, millions of smart contracts, and billions of transactions. However, this rapid growth has also attracted scammers who exploit blockchain's complexity to manipulate trading volumes and prices, deceiving unsuspecting investors. Despite these fraudulent activities being recorded on the blockchain, identifying patterns and gaining clear insights remain challenging for users.
A project aiming to combat these fraudulent activities is Morningstar Ventures’ portfolio company bitsCrunch. This AI-enhanced decentralized NFT data network aims to develop comprehensive data analysis and metadata tools to combat fraud and ensure the accurate valuation of digital assets.
This month's review will cover everything from the founding team behind bitsCrunch to the $BCUT tokenomics, its product use cases, and the upcoming roadmap. The review will end with an analysis of what we like about bitsCrunch and where we see potential challenges for the project.
What is bitsCrunch
bitsCrunch is an advanced data analysis platform within the blockchain and cryptocurrency realm, employing artificial intelligence and machine learning to detect fraud and data anomalies, particularly within the domain of NFTs. The bitsCrunch decentralized network tackles NFT sales analysis challenges through advanced computations and AI/ML algorithms, utilizing both on-chain and off-chain sources. It's a community-driven platform where developers can contribute algorithms, enhancing reliability. Users can make informed choices by offering precise statistics, valuations, and fraud detection. Users can navigate various features on the bitsCrunch app. The features include:
- High-quality NFT analytics
- Forensic data
- Seamless API integration
- Community-driven ecosystem
- Cross-platform compatibility
- Trustless and scalable system
Another feature is UnleashNFTs, a specialized product utilizing AI for comprehensive NFT data analysis. This includes detecting NFT forgery, identifying wash trading, and estimating prices.
As mentioned in CoinTelegraph, the project is taking a progressive approach, as UnleashNFTs promotes trustless and permissionless data access. This network features a layered architecture encompassing data query, processing, acquisition, and storage. The platform's goal is to ensure trust while upholding decentralization. Participants can contribute data and algorithms, enriching the ecosystem and safeguarding Web3 from fraud. As the network expands and accumulates data, its value in areas like fraud detection and NFT valuation will increase, enhancing community decision-making. bitsCrunch anticipates that by leveraging precise and enriched data, its decentralized network will set a new standard in data analysis, fostering well-informed decisions. The network's full decentralization is expected over several years through planned multiphase progress.
Founding Team, Fundraising, and Partnerships
bitsCrunch was founded in 2021 by experienced professionals with a background in data analytics, artificial intelligence, and blockchain technology. The team comprises Vijay Pravin as Founder and CEO, co-founders Gopi Kannappan as CPO, Ashok Varadharajan as CTO. The project has raised over $6.5 million in funding from investors such as Coinbase Ventures, Animoca Brands, Morningstar Ventures, Chainlink, and Polygon.
bitsCrunch has also gained significant media coverage and recently partnered with another Morningstar Ventures portfolio company, Unstoppable Domains, a leading provider of Web3 domains. The strategic partnership enables the integration of bitsCrunch's AI and cross-chain forensics tools for owners of 3.7 million Web3 domains. The partnership includes integrating Unstoppable's Reverse Resolution tools and transforming wallets into user-friendly domain names. bitsCrunch, featured in the Unstoppable Marketplace, utilizes AI to enhance user experiences, offering services such as accurate NFT valuation, IP infringement detection, and fraud pattern identification.
Another notable partnership is with the NFT marketplace and dApp store, DaapRadar. Together the projects aim to build more transparency in Web3 and seamless user experience. This partnership offers Web3 users access to NFT price estimations on platforms like Ethereum, Polygon, and Avalanche, allowing them to make well-informed decisions regarding NFT projects.
The collaboration between DappRadar and bitsCrunch aligns with their shared goal of providing high-quality tools to the Web3 community. They aim to establish the World’s Dapp Store, fostering active participation and mutual benefits for everyone involved.
More Network Features and Use Cases
The bitsCrunch platform leverages advanced computations, AI algorithms, and data from both on-chain and off-chain sources, including IPFS metadata. Its decentralization allows community developers to contribute algorithms, refine data, and explore new applications. It provides reliable statistics on NFT marketplaces, preventing fraudulent activities and offering accurate valuations through ML algorithms, promoting NFTs in DeFi. The platform streamlines NFT sales analysis, improving accessibility and insights for users. Beyond NFTs, it tracks cryptocurrency prices, analyzes social media sentiment, and predicts market trends. With ongoing developer contributions, it becomes more robust, versatile, and valuable across various applications.
bitsCrunch offers a variety of features and data that have proved valuable to various industries and projects; these use cases include:
- Centralized/Decentralized NFT DeFi: Using data from the bitsCrunch network, DeFi projects can gain access to real-time market trends, trading volumes, and relevant metrics. This data enables the creation of advanced trading strategies, predictions of market movements, and identification of potential investment opportunities.
- Fraud detection and alerting: The bitsCrunch network offers built-in fraud detection and alerts, allowing projects to receive real-time data and respond promptly. Projects can establish alerts and notifications and implement preventive measures, such as educating users, enforcing rigorous verification processes, and enhancing transparency in NFT marketplaces, to mitigate the risk of NFT fraud.
- Compliance and AML: The large amount of data on the bitsCrunch network benefits projects, users, financial institutions, and regulatory bodies by ensuring a secure and compliant NFT ecosystem. This data can be employed to produce detailed Anti-Money Laundering (AML) and compliance reports, promoting transparency and regulatory compliance.
- NFT Analytics Platform: Community contributions provide real-time data, allowing analytics projects to offer valuable insights amid industry changes. Utilizing this data ensures competitive advantages, enabling adaptability in the dynamic blockchain and NFT markets. This fosters collaboration, shared knowledge, and continuous learning within the ecosystem.
- NFT Lending Protocol: The network offers real-time, precise, and thorough data on NFT values, trends, and risks, aiding protocols in overcoming these hurdles.
Tokenomics - $BCUT
The bitsCrunch utility token (BCUT) is the network's backbone, granting access to NFT data within the bitsCrunch ecosystem. Its core purpose lies in streamlining operations within the network, functioning solely as a utility token. To ensure the secure operation of bitsCrunch, cryptographic techniques, and economic incentives are employed, encouraging adoption and upholding network security.
The value of the BCUT token stems from its utility rather than speculative or investment aspects. The objective is to establish a sustainable ecosystem that encourages the token's use for its intended purpose. This involves carefully managing the token's distribution, supply and demand dynamics, and governance mechanisms.
Our Analysis:
Strengths:
- The project has a strong token economy, and successful token economics boosts adoption and network usage and fosters a positive feedback loop, augmenting the token's value. The token supply totals 1 billion, and the initial network rewards are sourced from the staking allocation detailed in the tokenomics section. This allocation also rewards node operators, LP mining, and other activities. During the bootstrapping phase, the staking allocation covers network rewards. Subsequently, rewards will primarily stem from network-generated revenue, with rates determined by the network smart contract.
- bitsCrunch showcases versatile applications in various sectors. In the financial industry, it excels at detecting credit card fraud, cryptocurrency scams, and financial crimes. In the IT sector, it proves invaluable against phishing attacks, software intrusions, and other cyber threats. Additionally, regarding security, bitsCrunch adeptly identifies misinformation, propaganda, and other security threats. With over 27,000 users on the Incentivized Testnet, the platform's real-world testing highlights its effectiveness, allowing developers to refine its functionality. Engaging users through social media fosters trust and keeps the project attuned to market demands, ensuring users receive timely updates on the platform's capabilities and applications. Finally, bitsCrunch technology is not only Web3 compatible but also applicable to Web2 projects – proven by the fact that the team is already working with a couple of corporates. With the UnleashNFT model, bitsCrunch can potentially use both B2C and B2B models, providing different insights into digital assets.
Challenges:
- User adoption and ease of use: The main challenge lies in their limited revenue from a few B2B contracts, around $100K annually. To be successful, they need compelling use cases explored by clients like Deloitte and KPMG, but finding these cases is tricky. They're exploring auditing solutions because customers struggle to prove the legitimacy of their crypto/NFT sales money when depositing it in traditional bank accounts due to KYC and anti-money laundering standards. bitsCrunch addresses this by cross-checking transactions with OFAC-sanctioned addresses and verifying token origins. On the consumer side, the challenge is retaining users in a market where NFTs are vastly down and their utility isn't unclear. Their solution is considering a paid platform version, offering in-depth insights to more experienced users.
- High market saturation with big players to compete against: Dune Analytics and Chain Analysis already have most of the market share in data and analytics in the web3 space. Competing against these giants means creating a strong and unique enough product with other capabilities that don’t exist in the market. Currently, the team has a very ambitious roadmap that, if executed, promises to show a compelling model. It will be interesting to see how the roadmap develops and how bitsCrunch differentiates itself from the competition.
What’s Next for bitsCrunch
bitsCrunch plans to expand its product offerings, services, and market reach. Future products and services will focus on regulatory compliance, risk management, and fraud prevention. The team also plans to progressively reach full decentralization in the next three years, allowing the data to be enriched and the community to grow stronger. bitsCrunch is also already expanding the offerings into the Defi segment with upcoming products and services around Wallet Reputation Score, Token Reputation Score, Address Interaction Visualization, Historic Token Price and more.
Learn more about bitsCrunch:
🌐 Official website: https://bitscrunch.com/
🐦 Official Twitter: https://twitter.com/bitscrunch/
🕹️ Discord channel: discord.gg/bitsCrunch-official
📡 Telegram Community: https://t.me/bitsCrunch/
📜 Blog: https://unleashnfts.com/blogs/
