The US-based startup is using blockchain to authenticate and track the luxury drinks traded on its platform.
Photo courtesy of FreePik
Investing in fine wines and spirits has been a popular alternative investment for some time, alongside other luxury investments such as cars, luxury clothes and art. But the alcohol investment market can be tricky to navigate and rife with scams.
The City of London Police reported that in 2023, 89 reports were made to Action Fraud about alcohol investment scams with losses totaling more than $3.8m. Cask fraud in the whisky market is enough of a growing problem that it was raised in the Scottish parliament earlier this year.
Could a blockchain-based trading platform be one way around this? Baxus, a US-based startup, has created a trading platform that offers people access to luxury spirits and alcohol with the aim of eliminating the fear of buying a counterfeit product.
The company uses a blockchain-based protocol for storing, authenticating, and tokenising luxury spirits and wines.
Finian Sedgwick, Baxus chief operating officer, says that the company incorporates blockchain technology, AI learning and data analysts to provide users with up-to-date pricing analysis.
“Built on Solana, the Baxus Marketplace harnesses open Web3 payment infrastructure to reduce costs, increase transparency, and infuse liquidity into what has historically been a fragmented, offline market,” says Sedgewick.
Baxus allows users to make transactions through credit cards, direct wire and cryptocurrency.
The bottles are authenticated with an radio-frequency identification (RFID) tag and given a unique non-fungible token. The token is entered into the seller’s digital portfolio, which includes the bottle’s pricing data history. The owner can decide when to list a bottle on the platform’s market.
Baxus stores all its bottles in a climate-controlled environment to ensure uniformity in its products and protect consumers from scams. In addition, the operators claim buyers are free from hidden fees when purchasing spirits.
Tzvi Wiesel, chief executive, cofounded Baxus in 2021. An experienced whiskey trader and collector, he was head of old and rare bottles at Dalkeith Brokerage, a malt scotch bottling company.
Sedgwick says that Baxus addresses the issue of investment scams and other global issues of supply chain transparency, sustainability, and efficient trading platforms. “By providing a transparent and traceable ecosystem including vaulting for collectible spirits, we contribute to reducing waste, combating counterfeit products, and promoting fair trade practices,” he says.
“Our platform aligns with broader efforts to digitise and optimise supply chains, which are increasingly important in a rapidly changing global market,” says Sedgwick.
Baxus isn’t the only online wine and spirit marketplace to tap into blockchain. Panama-based BlockBar has a similar idea and reported sales of $7m in 2022.
Growing investment interest
Baxus has raised $5m in a seed funding round this year led by Multicoin Capital. Other investors include Solana Ventures, the corporate venture arm of blockchain platform Solana, as well as FJ Labs and Narwhal Ventures.
Having corporate backers has been vital in growing the startup, says Sedgwick. “Working with big our investors has provided us with invaluable strategic guidance, industry insights, and access to resources that have accelerated our growth trajectory.”
“They have offered incredible support in areas such as product development, market expansion, strategy, and networking, enhancing our credibility and opening doors to new opportunities for collaboration and innovation,” he says.
The new funding will be used to further build the platform. “This capital will be used to expand globally, scale our pioneering technologies, and continue to innovate to meet the evolving needs of the collectible spirits market,” he says.
