This interview is part of our new Blockchain In The Cannabis Industry series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and the cannabis industry.
In this interview we speak with Dan Reitzik, CEO of DMG Blockchain, to understand how his company is using blockchain to transform the cannabis business, and what the future of the industry holds.
1. What’s the story behind DMG Blockchain? Why and how did you begin?
In 2016, I was approached by Bitmasters, a Japanese bitcoin buying group, to help them with industrial scale crypto-mining in Canada. We then co-founded DMG with Sheldon Bennett, previously GM Canada for Bitfury, one of the largest bitcoin mining companies in the world. We started with a small 1MW facility, and have recently completed what I believe is the largest facility in Canada with 85MW potential (60MW currently). DMG currently provides hosting for clients in Japan, Canada, and the United States and are managing more than 10,000 individual miners.
When we started DMG we wanted to create a diversified blockchain company — not just industrial scale mining, but also forensics and data analytics, as well as enterprise platforms. We acquired Datient Inc (Blockseer) early last year.
Blockseer is a Silicon Valley-based data analytics company led by Danny Yang, a Stanford PhD in Artificial Intelligence, and the creators of Blockseer — a law enforcement tool built over the past five years with collaboration from up to 8,000 individuals primarily in law enforcement, and Walletscore, an AML (anti-money laundering) software used by exchanges and financial institutions. We have recently been engaged by multiple audit firms to assist them with auditing their crypto and blockchain clients, and our Japanese joint venture (DMG Blockseer Japan Corp) are negotiating contracts with Japanese law enforcement agencies to use our software products to investigate thefts and money laundering.
On the enterprise platform front, we teamed up with IBM to develop and deploy Wazabi, which is a platform connecting the entire global cannabis supply chain, using Blockchain, as well as Artificial Intelligence and Machine Learning.
2. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
DR: Let's discuss a forensics application. In early 2018 Coincheck, a Japanese exchange, was hacked, and about $500M was stolen in XEM currency. Using our Blockseer technology and expertise, we were able to identify where the majority of the money is being held (now in bitcoin). The benefit of blockchain technology is that every transaction is immutable and transparent. The hackers in the NEM case used tumblers and mixers and other anonymizing tactics, but our team was able to unravel these.
3. What other blockchain use cases in the cannabis industry are you excited about?
DR: Just like there is one blockchain that manages bitcoin globally, there should be a single blockchain that manages cannabis globally. Blockchain is an inclusive, not exclusive, technology. The more stakeholders that participate, the better the product. Wazabi is the backbone that connects the supply chain, but it's also the foundation onto which other applications can be built. We've had interest from cannabis marketplaces that want to connect to Wazabi to ensure that the products in their marketplace are tracked, traced, etc. We've had inquiries from companies with a specific use case such as logging genetic information using blockchain. That, again, should simply be an application on top of Wazabi.
Something else we are excited about is using Wazabi for transactions. Using smart contracts, payments can be perfectly accurate and efficient (from retailer to LP, from LP to regulators, etc.).
4. Where will DMG Blockchain be in five years?
DR:This industry is moving so quickly and in many different directions. This is why we positioned DMG to be diversified, because no one knows what the space will look like in 5 years. Will it be mining that's the most profitable, or forensics and data analytics, or enterprise applications such as Wazabi? I don't know the answer to that question, but I will say that DMG as a company is positioning itself to benefit regardless of which of these becomes the most successful blockchain applications.