Kansas City has been a haven for entrepreneurs since westward-bound pioneers jumped off prairie schooners to pursue their fortunes along the Missouri River. Now, some latter-day pioneers are at the forefront of the emerging blockchain and cryptocurrency industries.
The surge in Kansas City area blockchain projects and the increased use of cryptocurrency as a form of payment reflects the technology’s growing reach in regions outside better-known tech hubs and a growing acceptance of the industry nationwide. This trend in Kansas City and beyond is likely to continue as blockchain proves its worth.
Last year, a local cryptography blockchain project, CubeMonk, won first place in the DisruptiveTO: Blockchain ICO Pitch Competition in Toronto just two months after launching. The competition is a global showplace for fintech initiatives. There are other Kansas City-area projects in process focusing on banking, logistics and manufacturing, among other sectors. Two blockchain groups now meet regularly and hold events to share information and provide other support for blockchain entrepreneurs.
“Take any industry you want,” said Steven Brendtro. “If you think outside the box you will find problems can be solved more easily.”
The city has 10 to 20 facilities of mining equipment covering as much as 20,000 square feet, and roughly 1,200 ether (ETH) mining boxes. Kansas City residents can also now use bitcoin (BTC) to purchase a Tesla or $1 million condo in the upscale Country Club Plaza section of the city.
“The enthusiasts are definitely here,” said Matthew Marcus, an entrepreneur and senior team member for the the Kansas City Startup Foundation.
One Startup Launched, One in Process
CubeMonk’s cryptography technology joins blockchain with the internet to provide lower costs, as well as increased transparency, efficiency and profits for the shipping marketplace. Cryptography involves methods for securing communication online or otherwise.
Todd Haselhorst, CubeMonk’s co-founder and CEO, said that those organizations that can apply blockchain technology to business models through economics and game theory will be most likely to succeed. In a December interview with Startland News, a publication sponsored by the respected Kauffman Foundation, which focuses on entrepreneurship, Haselhorst said that Kansas City businesses needed “to leverage blockchain” to stay competitive. “It’s here to stay and the faster we adopt this technology, the better off Kansas City will be,” he said.
Meanwhile, Steven Brendtro, a fintech veteran, is developing a blockchain project to help banks and companies track direct debits faster and more efficiently. Brendtro is looking to finance the project through grants. He sees blockchain benefiting other sectors, as well. “Take any industry you want,” Brendtro said. “If you think outside the box you will find problems can be solved more easily.”
Two Blockchain Groups
Rising area interest in blockchain spawned the creation of the Kansas City Bitcoin Club, which in just four years has grown to 700 members. Co-founder Tim Lawrence said the group includes entrepreneurs, developers and miners. They discuss promising new projects in health care, government, education and manufacturing, and also consider other topics such as charting and trading techniques and technology innovation.
Another group, Overland Park: New Currency University, has grown to about 300 members and also holds monthly blockchain education and networking events. Bitcoin Club’s Lawrence said that there is a need for more formal university- or college-based blockchain curriculum.
Similar Challenges to Other Regions
To be sure, Kansas City’s blockchain entrepreneurs face the same challenges as those in other regions. They often arise with new technologies. Paramount among them:
- Many businesses and consumers are uncomfortable with change. They need to see evidence of a technology’s effectiveness before more widespread acceptance occurs, said Jeff Hornsby, director of the University of Missouri Kansas City Department of Global Entrepreneurship and Innovation at the Bloch School of Business.
- Regulatory issues may affect product development. That may be particularly relevant with cryptocurrencies that could at least partly replace traditional methods of payment.
- Hornsby said the U.S. government will get involved in regulation at some point, but that “they have never been too fond of any kind of currency replacing the dollar.”
- Many business leaders and investors still don’t grasp blockchain or cryptocurrency.
- “With the inflated value, there are a lot of people with wealth who could invest in a crowdfunding event,” he said. “But there remains a lot of misunderstanding and hesitation. There is no real data on startups and I haven’t seen a bitcoin funding in the area.”
Marcus is interested in government’s potential actions as policymakers familiarize themselves with the blockchain landscape. Last month, The House Financial Services Subcommittee on Capital Markets, Securities and Investment interviewed a panel of experts on cryptocurrency’s potential and possible pitfalls. The committee did not reach any significant conclusions or announce any legislative next steps.
“This is probably hello, not goodbye,” said Committee Chairman Bill Huizenga (R-Mich.).