Why exactly did ESA provide a grant funding blockchain in space? Which program was used for the funding? What will this do?

Question

Despite all of the negative authoritative answers to How would blockchain be integrated into spaceflight? Have any methods been proposed yet? stating that it wouldn't happen, Coin Telegraph's Blockchain Startup SpaceChain Sends Wallet Tech to International Space Station reports the information cited below.

Question: Why exactly did ESA provide a grant funding blockchain in space? Which program was used for the funding? What will this actually do?

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As part of the CRS-19 commercial resupply service mission, a SpaceX Falcon 9 rocket is delivering SpaceChain’s hardware wallet technology to the ISS, according to a Dec. 6 press release. The move purportedly marks the first tech demonstration of blockchain hardware on the ISS and the third blockchain payload by SpaceChain over the past two years.

The technology will then be installed on the commercial platform on Station provided by commercial utilization of space firm Nanoracks. The initiative is set to demonstrate the receipt, authorization and retransmission of blockchain-based transactions, creating multi-signature transactions.

The company believes that “by adding space-based payloads to established networks, businesses will be able to enhance the security of the transmission of digital assets that can be vulnerable to cyberattacks and hacking when hosted exclusively in centralized terrestrial servers.”

[...]

Satellite-powered multi-sig wallet

For the commercial development of its multi-sig wallet, SpaceChain received a 60,000 ($66,400) grant from the European Space Agency, in mid-September. The company explained at the time, the solution is designed to bolster transaction security by requiring two of three private keys to sign and complete transactions.

One of the three signatures is provided by a satellite-based node — although, in the case of connectivity failure, two ground-based signatures can be used to complete the transaction.

In January, blockchain technology company Blockstream announced plans to launch the beta version of its Blockstream Satellite API, designed to help developers broadcast data via the company’s satellite network.

Blockstream’s Bitcoin (BTC) space initiative reportedly aims to free the cryptocurrency’s network from depending on land-based Internet connection and thus increase its robustness.

In an email to Cointelegraph, SpaceChain confirmed that it is expecting the payload to reach the ISS by Sunday, Dec. 8. After that, the company will begin testing a number of applications including multi-sig authorization of cryptocurrency transactions through the payload. SpaceChain further explained:

“This will be specifically for Bitcoin, however we are planning for this to be extended to other blockchains in the near future as part of our expected roadmap that will see several new launches over the next 18 months. The technology tested on the ISS will be applicable to crypto exchanges, wallets and custodial services that benefit from additional security to their transaction validation process, and we are already working with some of these stakeholders to implement this type of use-case.”

Answer 1

SpaceChain is part of the ESA Space Solutions program. This is a business incubator program that enables start-ups to leverage the ESA network for the development of their business idea. From their application page:

We’re looking for teams that have identified a market opportunity that’s attractive and has real potential for engaging customers. Motivation, business experience and industry domain expertise are key.

But most importantly of all, we want to hear business ideas that are commercially viable, technically possible and involve either space tech or data.

And:

WHAT WE OFFER

• Zero-equity funding (from €60k to €2M+ per activity).
• A personalised ESA consultant.
• Technical & commercial guidance.
• Access to our network of partners.
• Credibility of the ESA brand.

Typically, ESA evaluations are only shared with the applicant, so we'll never know what exactly the motivation for ESA was to fund SpaceChain's proposal, but with €60k they are at the bottom of the funding range, and evaluation criteria tend to scale with the amount of money requested/granted. Make of that what you will.

ESA has a lot of these small-scale funding programmes for business ideas, technology proof of concepts, etc. "Georeturn", i.e. funding companies in the the member countries that fund ESA, is an important part in ESA's existence, and these small-scale programmes are an relatively easy, low-risk way of bootstrapping space industry in member countries.

Answer 2

Ludo's answer gives a great response to the funding part of the question.

To address question of why ESA are funding this in spite of the consensus from your linked question, your previous question asks about utilising blockchain for space applications, whereas SpaceChain are utilising space for blockchain applications, which is something entirely different.

As for the clarification "how ESA decided that it's mission to explore space is furthered by funding a blockchain company" in your comment, from the "about ESA" section of their website:

The European Space Agency (ESA) is Europe’s gateway to space. Its mission is to shape the development of Europe’s space capability and ensure that investment in space continues to deliver benefits to the citizens of Europe and the world.

Their mission is much broader than simply exploring space - it includes supporting the European space industry and encouraging the exploitation of space to deliver services/value etc. Therefore, by supporting a company that hopes to utilise space to deliver some sort of service (blockchain or whatever), they not only help in (potentially) improving or creating a new service for people on Earth, but if it is successful then it will create more demand for satellites to support the service, further driving the space industry.