Data analytics — the next breakout area of the crypto space
The purpose of this article is to explore current Data Analytics capabilities and upcoming opportunities within the cryptocurrency ecosystem. The widespread development of crypto brought to private and public institutions both benefits and challenges.
One of the main challenges that modern organizations are facing regarding the crypto space is the possibility to analyze the data that their assets and transactions are producing, gather valuable financial, tax and legal information for reporting and compliance purposes and most importantly — obtain insights for business decisions.
Unlike the traditional Data Analytics set up, where organizations maintain their corporate datalake, fed by the variety of sources and back-end-structured by the readily available, commercial datalake formation software and infrastructure (like these offered by hyperscale cloud providers), crypto is much more challenging.
The main challenges lie in the variety and novelty of the platforms that are being developed in the crypto space. Develop an API that would source the data from all of them is virtually impossible for small and medium organizations. Such development would require prohibitive up-front investment in a non-core business. Something that makes no sense in the fast-paced crypto environment where small and agile organizations should focus on their main area of expertise.
Big organizations on the other hand face different challenges. While such an API development may be externalized to some third-party partner (again, with an important up-front investment), maintaining such setup over time will significantly reduce the Return Over Investment (ROI) of the crypto project. The maintenance of an API is a must.
We all know how fast crypto environment is evolving, technical specifications of existing crypto projects may change over short periods of time, not to speak about any new developments. Keeping the pace of such change is not cost effective if this is not your core business.
As proved with many other aspects of the IT, the best way to tackle such complexity is through API->Partners->End Customer model.
The first ingredient of the equation is the expert organization that is building the API. This organization is completely focused on building and maintaining a very specific API that serves a very narrow subset of purposes. Specializing on a specific problem allows many organization to benefit from economies of scale, inherent to any set up of this kind.
Partners are builders and are the crucial part of the ecosystem. Although some customers may consider to build some ad-hoc, in house solutions by themselves, in many cases crypto is only a small part of their overall operation thus it make no sense for them to go through this avenue. What most customers do (especially big organizations) is to hire a systems integrator or a ready-made independent software vendor (ISV) solution.
And finally, the third (and most important) part of the equation — the customer. The customer defines the outcome they are seeking to achieve. The CIO, on behalf of the Board (as in many cases the crypto projects are transformational and involve more than one department) creates with the partner the stack architecture and establish priorities.
Data Analytics of the crypto assets and contract transactions should definitely embrace such model. And the main ingredient of the model — the holistic crypto API, is already here. Covalent API allows developers and partners around the world to build their applications using a single API that is covering a complete index of the main chains in the market.
Now builders can focus on the things they know the best — build the best final solution for the customer or the next Software as a Service (SaaS) product, without the headaches of building and maintaining an API for the variety of frequently changing crypto projects.
In this example below, you can find a high-level stack architecture for the crypto transactions data analytics. As you can clearly see, it perfectly depicts previously described model.
The customer has a need to incorporate in their existing business details of crypto transaction. The data from crypto should be seamlessly integrated so the final users can keep utilizing their standards tools.
The use cases include ETL and data visualization software for in-house data/BI analysts, reporting capabilities for external tax and compliance institutions, notification service for any kind of alerts of threshold trespassing and finally Machine Learning (ML) training data injection endpoints. So far, customer was using standard financial data from their current financial provider.
But with emergence of crypto, customer asks the financial provider (in this diagram shown as a Partner) to also incorporate in the data stream their crypto assets. Partner maintains their highly secure database that ingest, process and transform vast amounts of data to then serve it as a SaaS product together with other financial services. Partner were struggling to keep the pace of the crypto development, until they partnered with Covalent.
Now, they can retrieve the data their customer need through a simple-to-use API that gives access to a complete index of many crypto environments. Covalent, by the other hand, using economies of scales due to multi-customer setup and specialized team of developers can offer such holistic API to a broad stakeholder community.
