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Bitcoin & Blockchain, custody, enterprise blockchain, liquidity

Eeyore and Tigger debate the great Institutional wall of money into Blockchain meme

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“May you live in interesting times” applies to today’s era which is turbulent on every plane –  financial, technical, social, political. If Blockchain is real and can deliver value it has plenty of problems to solve. That much I am sure about. 

Deep in a bear market, capitulation means most people are giving up on Blockchain, Bitcoin & Cryptocurrencies. The Tigger optimists often talk about the great Institutional wall of money moving into Blockchain as evidence that the next bull market is coming.

As an entrepreneur I tend to be a Tigger type of optimist. However there are many things I am not sure about and as an entrepreneur I also know that hope is not a strategy and it is valuable to listen the Eeyore type pessimists; dealing with their objections defines your action list. In this post, I outline:

  • What I am sure about aka strong opinions.
  • What I think is likely aka weak opinions.
  • What I am not sure about aka what I want to learn.

Note: When I say Blockchain I mean Blockchain AND Bitcoin AND other stateless, permissionless Cryptocurrencies. It is very easy for even the most conservative Eeyore types to laud the value of Blockchain without the addition of a stateless, permissionless currency like Bitcoin that is so disruptive. That would be an easy way to embrace and bury disruptive change. Pretty quickly we would move to permissioned Distributed Ledger Technology (DLT) from an enterprise software company that is totally controlled by Institutions. That would be as disruptive as the latest version release of an ERP system.

What I am sure about

  • The Blockchain wave of change is unstoppable. Call this an opinion not an irrefutable fact, but it is a strongly held opinion based on two observations in the real world:
      • Blockchain does work technically. After 10 years, there is very little doubt about this.
      • The current Legacy Finance system is broken. Just ask anybody who went through the Global Financial Crisis 10 years ago if you doubt this.
  • I am also sure that the strongly held opinions about this wave of change from both the Tigger and Eeyore types are almost entirely based on how that person’s financial interests are impacted. If you have done well in Legacy Finance, you take the Eeyore side of the debate; Bitcoin will not be good for business. If you bought early into Blockchain, Bitcoin & Cryptocurrencies, you take the Tigger side of the debate; your investments will do very, very well. This leaves the vast majority of the world, who have not done well in either case, unsure about who is right.
  • I am also sure that the market will decide whether Eeyore or Tigger is right. For Pooh Bear fans, this humble “bear of little brain” is the market. 

What I think is likely.

  • Institutions will invest in Blockchain, Bitcoin & Cryptocurrencies.  I think the great Institutional wall of money into Blockchain meme is for real. Those Institutions are reading the same market signals and see opportunity and know that “disrupt before you are disrupted” favors the early movers. These Institutions compete with each other. They don’t want to be the Blockbuster/Kodak of this era.  All those conservative Legacy Finance Institutions will make some careful, hedged bets that will in aggregate ensure that the next bull market happens.

 

  • There will be another bull market. I have no clue when it will start, or how big it will be; actually I know for a fact that BTCUSD will hit $1.3 million on 15 January 2025 at 11am CET!  I simply think another bull market will happen because that is what always happens with disruptive waves of change. There is no certainty on this, but investing is a statistical probability game and the statistical odds favour another bull market.

 

  • The retail speculators who got burned in the last boom and bust won’t do anything in the next bull market. This is not because they don’t want to, simply because they have no money left to invest. Sadly most who invested during the great 2017 meltup got wiped out during the 2018 bear market.

 

  • There are few techie early adopters who will invest in the next bull market. That game was what got Bitcoin into the market in 2010 to 2012 and Ethereum into the market in 2014 to 2015. Those were dirt cheap bets on crazy high risk deals. Why not take a risk if the cost is not much more than the cost of a couple of pizzas? Prices today, even in this bear market are still too high for that game. These techie early adopters will Hodl no matter how low we go, because their cost base is so low, but that does not mean they will lead the next bull run.
  • So the market needs a new breed of investor. That is why the great Institutional wall of money moving into Blockchain meme is so appealing to the Tiggers of the world.
  • Institutional Investors will come into the market. When they come in and in what volume is unknown, but I believe that the raft of PR announcements by the biggest Legacy Finance Institutions means that they will enter the market. Reputation is as valuable as cash and they have already put their reputation on the line.

What I am not sure about

The mantra of any good investor or any good journalist and of the Experts who write on the Daily Fintech platform is to aim to be a “learn it all, not a know it all”. The more you know, the more it becomes apparent what you don’t know; the search for what is true is never-ending. The best role of an Advisor is often simply asking good questions. Here are my questions about the great Institutional wall of money moving into Blockchain:

  • When will it happen? I cannot put a date on it, but I am confident that price is not the major issue. Institutional Investors know the Wall Street mantra that “bulls and bears have their day, but pigs always get slaughtered”. This translates into knowing that it is silly to try and enter or exit at precisely the bottom or the top; near the bottom or near the top is good enough. What I am am not sure about is when the market will deliver the two features that institutions demand:
      • Custody. Asset security is a major issue with bearer bonds. This is particularly  true if hundreds of traders have access to the keys of the safe. The Private Key security of Blockchain is OK for nerdy individual investors, but less so for big Institutions or for mainstream retail investors. That is why Institutional grade Custody is such a big opportunity.
      • Liquidity/price discovery. Liquidity/price discovery is a tough problem to solve in a decentralised network; and Institutions understand that this market will evolve quickly into a decentralised network.

From PR announcements you might think both are close, but the devil/god is in the details. We know this from our Advisory Services,where we are known for combining big picture  vision with  pragmatic execution. Institutions won’t commit in volume until the details are resolved.

  • Will the Institutional  phase be short lived like the Intranet phase of the Centralised Internet? Disruptive change often goes through a Corporate phase. Before companies like Amazon, Google and Facebook brought the Internet to the mainstream consumer, we had the Intranet era (closed, permissioned versions of the Internet). That was short-lived. Will the the great Institutional wall of money moving into Blockchain follow the same trajectory?
  • What sort Institutions will invest in Blockchain and why? There are three types of Institutions moving into Blockchain and they have fundamentally different strategies and objectives
      • Type 1:  Buy Side Direct. Those retail investors (derided as “muppets” by the Institutional smart money) are Buy Side Direct. The problem is they invest tiny sums. Family Offices, controlling about $2.6 trillion of global assets, are like retail investors on steroids; they invest their own money. Whether you call them Institutional or not is language issue only; they invest like Institutions and with Institutions.
      • Type 2: Buy Side Intermediaries. These include hedge funds, sovereign wealth funds, pension funds etc. They tend to be more conservative than Buy Side Direct because they have “explanation risk”. If they take a contrarian bet and it goes wrong they have a lot of explaining to do
      • Type 3: Sell Side. These include brokers, exchanges, Investment Banks ie classic “Wall Street”. They want business from Types 1 and 2. If the Sell Side see evidence that Types 1 and 2 want to get into Blockchain, they will invest to service that demand.

What I think is that the great Institutional wall of money moving into Blockchain will start with Family Offices. If they allocate 1% of that $2.6 trillion they control it will a) bring $26 billion into the market and b) that will bring the much bigger capital pools from Type 2 into the market

If you work in a big Institution and need some help figuring this out from a learning coach (somebody who knows Blockchain from all angles and is good at explaining it), check out our Book An Expert For An Hour service.

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

Check out our advisory services (how we pay for this free original research). To schedule an hour of Bernard’s time please click here to send an email

Bitcoin & Blockchain

Blockchain Weekly Front Page: Legacy Finance, Big Tech and Government move into Blockchain

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Last week our theme was “Silvergate Bank Plans to go Public.”

Our theme for this week is “Legacy Finance, Big Tech and Government move into Blockchain,“

For more about the Front Page Weekly CXO Briefing, please click here.

Bitcoin and every cryptocurrency has dropped like a sack of potatoes, hitting lows they haven’t seen in over a year. The Bitcoin Cash fork war, the U.S. Justice Department probe into price manipulation by Tether and the Mt. Gox trustee that takes a big Bitcoin dump every now and then, are hard to ignore and have been causing tremors.

The market cap of all crypto is just $121.5 billion, and the entire ecosystem is hurting. Ripple overtook Ethereum in the number two spot, as ETH looks like it could drop below $100, something we haven’t in a while. This dip is hurting blockchain startups. Altcoins have difficulty showing product market fit, that would allow them to build the momentum they need to truly succeed.

Depending on the country they operate in, most miners have been drained by the continuous price decline on 2018. With the dropping prices, mining crypto has become an expensive proposition.

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Has the market bottomed out yet? I have no idea, I am not in the speculation business.

Yet, some are even claiming crypto funerals are coming in 2019. Well, that just ain’t true. In the long-term, Bitcoin’s declining price could actually be a good thing for the market. It could rid us of all the shitcoins that are obsolete and don’t serve a real purpose.

The recent price drops have exposed for one more time, the delicate nature of cryptocurrencies and their perceived values. Personally, I think they show a complete lack of investor understanding of what is going on in the market. Last year we saw an irrational bull market, that’s been followed by this year’s irrational bear. Its crazy, considering all the market developments and positive sentiment in 2018.

Amazon sees a lot of opportunity with blockchain technology. Amazon introduced two new blockchain products for its AWS customers. It will offer Quantum Ledger Database and Amazon Managed Blockchain for developers, using its cloud-computing services. Customers will be able to deploy a blockchain network with a few clicks, that can scale to support thousands of applications running millions of transactions.

Switzerland’s national railway completed a proof of concept (PoC) digital identity pilot, to ensure railway construction workers had the appropriate qualifications to work on the railways. A year ago the City of Zug introduced a digital ID, that uses similar technology. In conjunction with Lucerne University, they used the IDs in a voting test at the end of June.

Today, December 2nd, marks the 10th anniversary of Satoshi Nakamoto’s whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System. This is a unique point in the history of money. Over the last decade. we have build a way where a few people no longer can control the wealth of people.

Crypto markets are undeniably down right now, and prices will always go up and down. What is important now, beyond any price, is to lay the foundation for more widespread adoption.

Bitcoin’s original vision is largely dependent upon the integration and adoption of new technologies that are still being built and tested. Solutions for decentralized exchange protocols, scaling and privacy, as well as better user interfaces, are all critical for overcoming Bitcoin’s current price volatility and gaining mainstream trust.

I think its not the time to give up on the market, be scared or let crypto critics that lack any sort of objectivity, influence your decision making. Do your research, understand what crypto is where it going and I think you’ll be able to make the right choices.

It might take another decade to get there, but in its first ten years, Bitcoin has become a potential alternative currency, and the game has only just begun.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Bitcoin & Blockchain, code is law, global governance, regulation, tezos

From Treaty of Westphalia (start of national sovereignty) to global Blockchain governance to a more practical outcome =  arbitration clauses

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People who geek out on code is law and law is code (I plead “guilty as charged your honour”), will love this. Busy entrepreneurs and executives may want to jump to the practical takeaway about international arbitration clauses.

The problem today is summed in the old schoolyard dialogue:

“I am right and you are wrong”

“Yea, who says?”

“I say”

“Yea, you and whose army?”

Law has to be backed up by credible force. Which is an issue when there are 195 countries, each claiming national sovereignty.

The Blockchain borderless alternative is not yet working, as we explore in the chapter of the Blockchain Economy book entitled why non state governance for bitcoin, ethereum and other cryptocurrencies is so hard. Irony aficionados enjoy the fact that about a year later after raising what at the time was record amount for an ICO to solve governance by code, Tezos collapsed into ye olde courtroom battles.

TL:DR. the legacy system is broken and the replacement system is not ready. Fortunately there is a practical hack which is international arbitration.

Treaty of Westphalia.

For historians and international jurisdiction lawyers, the Treaty of Westphalia in 1648 is the seminal event that led to the rise of the Nation State with the principle of Westphalian sovereignty. This is the principle in international law, enshrined in the United Nations Charter, that each nation state has exclusive sovereignty over its territory.

When I used to run an enterprise software company I recall the sometimes heated negotiation about which jurisdiction  was used in the contract. This was not an academic debate. In a dispute, you want to be on your home turf in a language and legal system that you are familiar with. That is a tough enough conversation  between two parties. What on earth do you do when the participants in a Blockchain contract maybe from hundreds of countries and the issuer maybe from an offshore jurisdiction (where there are simply not enough lawyers and judges to cope)?

Binding Arbitration

Our Advisory Services are known for their combination of big picture thinking with pragmatic execution. So, enough of the big picture thinking, lets move onto the pragmatic execution. If the legacy system is broken and the replacement system is not ready, what is the practical hack? The answer is a Binding Arbitration clause. 

Binding Arbitration is is a clause in a contract that requires the parties to resolve their disputes through an arbitration process, outside the courts.

It must be binding. All parties must accept the conclusion of the abitrators. If not, lawyers for one side will find a way to drive the dispute to the courts, making arbitration useless.

That means that the location for arbitration is critical.

Location for Arbitration

The location for Arbitration must meet these criteria:

  1. Big enough economy to have enough lawyers and expert witnesses. The disputes will be at the intersection of Blockchain technology and law and how many people understand enough of both to be part of a credible arbitration process?  Offshore jurisdictions usually fail on this score. The issuer jurisdiction does NOT need to be the same as the Arbitration Location.
  2. A rule of law that is globally respected.
  3. Good airports and plenty of flights (usually goes with 1).
  4. English language. It is the closest we have to a global language of business (much as we may not like the cultural erosion from less use of local languages).
  5. A time zone that works well globally.

Switzerland, where Tezos was adjudicated, met 1,2 & 3 bit not not 4 (although, as a Brit living in Switzerland, I can attest to the fact that English is widely used for global business done within Swiss borders). The Swiss brand around neutrality does help build confidence.

5 is where UK is better than USA, Canada or Australia, but it is a less critical criterium. I am seeing more arbitration clauses set in UK, which will be a boon for UK lawyers and expert witnesses (a smidgeon of good news among all the Brexit turmoil).

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

Check out our advisory services (how we pay for this free original research). To schedule an hour of Bernard’s time please click here to send an email

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Bitcoin & Blockchain, WealthTech

Can HODL5 help the SEC reverse the 9 denials of BTC ETFs?

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Last week was the launch party of HODL5 at the Swiss SIX exchange. Deborah Fuhr, CEO of ETFGI, a leading independent research and consultancy firm on trends in the global ETF/ETP ecosystem, flew over from London and top management of the Amun Group, was on stage.

We will all be watching how HODL5 trades, as it has the potential to become a retail darling and or an institutional darling. The first day of trading – Friday 23rd of November – saw 27,244shares ($400k) of volume. Flow Traders is the official market maker and a leading liquidity provider of ETPs.

#HODL5 is NOT an ETF – Exchange Traded Fund. It is a kind of ETP – Exchange Traded Product. With over $5 trillion in assets in ETF/ETP markets, we don’t pay attention anymore to details, do we?

Highlights ETFGI reports assets invested in ETFs and ETPs listed globally reached a new high of $5.12 trillion at the end of July 2018

  • Total Assets in ETFs and ETPs listed globally reached a record $5.12 Tn at the end of July
  • Net new assets gathered by ETFs/ETPs listed globally were $41.1 Bn in July
  • 4 ½ years or 54 consecutive months of net inflows into ETFs/ETPs listed globally  

Warning, ETFs are ETPs but not the other way around. I am sure you don’t confuse IPOs with ICOs. No need to highlight the differences between those.

ETPs are not ETFs and the reason you should care is that even a very successful #HODL5 exchange-listed product, won’t budge the SEC to approve any of the Crypto ETFs that have been rejected nine times already.

HODL5 is an exchange-listed product. It is a tracker which derives its value from an underlying basket of cryptocurrencies, the Top 5 by market capitalization, which is actively rebalanced on a monthly basis. These digital assets are held in custody (so HODL5 buyers don’t have to deal with that) and every time HODL5 shares are bought or sold, the underlying basket is adjusted.

The Amun Cryptobasket (HODL5 ticker) tracks five major cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC). Amun AG, is a Swiss startup and Amun Crypto Index is managed by VanEck, the German index unit of investment management firm. VanEck is also involved in the new Bitcoin OTC Index called as MVIS Bitcoin US OTC Spot Index.

“The new index is called the MVIS Bitcoin US OTC Spot Index (MVBTCO) and leverages price inputs from OTC desks at Genesis Trading, Cumberland, and Circle Trade. MVBTCO gives institutions a reputable benchmark to reference, rather than having to individually ping each OTC desk to receive price information before deciding which counterparty to transact with.” Excerpt from my subscription of Anthony Pompliano’s OffTheChain.

HODL5 is the 4th tracker listed on a traditional exchange. The first two are Grayscale Investment’s crypto-indices and Coinshares’ Bitcoin and Ether trackers, both of which rely on different legal structures. HODL5 is the first “Crypto-ETP” fully backed by digital assets. Despite the fact that HODL5 gives broader exposure to the crypto market, since it is a basket, and is fully backed by the underlying assets; I don’t think it will help alleviate the SEC reservations about Bitcoin ETFs.

After nine iterations and public feedback, which has now been closed, the SEC’s refusal to approve any Bitcoin ETF is based on the fact that the crypto market is plagued by fraudulent practices and price manipulation and investor protection is tricky.

ETFs have proven to be great financial structures and have become so ubiquitous that we forget what is happening behind the scenes in order to for these products to work their wonders. Two years ago, I wrote a post around this topic – which was not at all triggered by crypto asset trackers – Are ETFs Trackers that Fintech can turn into Trucks with No Brakes? – in which I go through the Creation/Redemption process that is vital for ETFs.

In summary, for each ETF, one has to think of the Issuer (e.g. Vanguard, Blackrock), the Authorized Participant AP (DTCC reports that there are currently 50 AP firms) and the Market Maker, and the Custodian (e.g. JP Morgan, State Street). The Authorized Participants (APs) are the entities that create and redeem ETF shares and are sometimes the same as market makers; but not always. They are the usual suspects (large broker dealers) and have signed AP agreements with the ETF issuers.

ETPs don’t involve Authorised Participants who are those that make the “magic” Creation/Redemption process of ETFs happen. ETPs are “subordinate” in the liquidity hierarchy to ETFs.

I always remind myself that a derivate structure cannot be more liquid than its underlying asset. Corporate Bond ETFs are the simplest and greatest examples in conventional markets of this. Since the Subprime crisis, corporate bonds have been plagued with illiquidity despite several noteworthy Fintech attempts to solve this fixed income conundrum. Even for equity ETFs, don’t forget that they become illiquid and mispriced in incidents like the surprising Brexit election results. Betterment, the largest standalone robo-advisor, had to suspended trading on Friday of the Brexit result for almost 3 hours[1] because ETFs became misprices

The growth of a basket derivative cannot improve largely the liquidity and mispricing of the underlying assets? Even though, derivatives do add to the maturity of a market (futures, options, structured products) trackers have never actually led a recovery of a distressed market.

The SEC’s concerns will not be alleviated even if HODL5 volumes show strong natural demand. The SEC is watching rigging, insider trading and any kind of 51% attack. A crypto ETF not only needs several market makers to play the roles of the APs but also to convince the SEC that insider trading is less feasible, price manipulation is naturally arbitraged away. Four crypto trackers are not enough to move those needles.

[1] The Betterment/Brexit incident

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Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Bitcoin & Blockchain

Blockchain Weekly Front Page: Silvergate Bank Plans to go Public

crypto-ipo

Last week our theme was “Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility.”

Our theme for this week is “Silvergate Bank Plans to go Public.“

For more about the Front Page Weekly CXO Briefing, please click here.

Twenty-four years go, Netscape released the first free web browser, giving consumers an easy way to access the Internet. But, Netscape did more than just revolutionize our Internet experience, it also revolutionized the model on how to build disruptive companies. Netscape’s IPO kicked off for the Internet era.

While cryptocurrencies prices crashed further yesterday, with Bitcoin reaching a new low this year around $3,500, several major crypto companies are attempting public offerings in hopes of raising billions of dollars to secure market share in the highly competitive cryptocurrency industry.

One of them is Silvergate Bank plans to raise $50 million through the Initial Public Offering.  Silvergate provides financial infrastructure solutions and services to clients in the digital currency industry. Silvergate Bank has more than 480 digital currency customers, with 145 in the pipeline, and it estimates the financial services market for digital currency companies, to be $30-$40 billion. Silvergate Bank would be listed in the New York Stock Exchange (NYSE) under the ticker “SI”.

Bitmain, Canaan, and Ebang, the three biggest players in the crypto mining industry, are racing to be the first publicly offered cryptocurrency mining company in hopes of securing retail investors’ loyalty by being the first one offered on the public markets.

In August 2018, mining firm Argo Blockchain PLC, which offers consumers the ability to mine four cryptocurrencies (BTG, ETH, ETC and Zcash), became the first crypto company to join the London Stock Exchange (LSE), raising around $32 million on a valuation of $61 million. In Canada, HIVE Blockchain, with a market capitalization of $106 million today, when it debuted in September 2017, its stock price soared by 220%, from $0.30 to $0.97.

While we’ve all heard rumors in the past, about an initial public offering by Coinbase, the company announced that it won’t IPO any time soon. When Coinbase does decide to pursue an IPO in the U.S., it would give investors a way to gain exposure to a regulated crypto security.

The time is less than ideal for a public debut with crypto prices low, yet there is a clear trend unfolding among crypto companies to raise funds in the equity markets.

Its possible that the rise of crypto-fueled IPOs could shift the tide, as more exposure for the blockchain and leading crypto companies can benefit the industry. The decision by several crypto companies to pursue an IPO could add legitimacy to the industry. Public offerings by crypto companies could serve as a major step toward the mainstream adoption for the entire industry, enabling a large number of investors to get exposure to crypto-related projects on the public market.

Since ICOs became popular in 2017, there have been constant reminders of the financial risks involved for participants. Unlike ICOs, initial public offerings place regulatory scrutiny on companies and require them to meet certain transparency standards. Initial public offerings by crypto companies show an understanding by these organizations for a regulatory and legal framework, to attract long-term investment, legitimize their businesses, and accelerate growth.

When compared to last year, the last eleven months have been filled with so many positive developments. The first crypto IPO will be very important. The cryptocurrency market will bounce back and its first IPO could be the spark. It will serve as a very clear indication of what will follow and how the crypto industry will evolve.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Bitcoin & Blockchain, Strategic Viewpoint, Uncategorized

7 mega waves in the Blockchain Economy and the dams holding them back

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This post is aimed at “buidlers”, to those in the Blockchain community who use a Bear Market to build solutions and to those who invest in those solution builders.

You can take these mega waves to the bank. More specifically you can take them to investors. These are trends that that are inevitable and we show why. This post also shows the dams that are holding back these waves today. Entrepreneurs look at these dams as their problems to solve by creating the sluice gates that let the water flow in a useful, controlled and profitable way. We also show the picks and shovels that are being used to build these sluice gates.

In each of these waves there are ventures who are building solutions. The sluice gates are under construction. This list is based on observations in the real world, not theory. Which ventures will win will depend on their execution capability, but we are confident that each wave will produce at least one big winner.

Wave 1:  Decentralized Exchanges

  • What:  A Centralised Exchange is an artefact of Legacy Finance and the Centralised Internet. If we went in that direction we would end with a duopoly like NYSE/NASDAQ. There are already hundreds of Decentralized Exchanges.The logic of decentralisation is that every wallet can exchange with another wallet or to put it another way that P2P Exchange is feasible. Although some Legacy Finance markets (such as Public Equities) work through Centralised Exchanges, many Finance markets today operate through decentralized OTC (Over The Counter) traders, so this is easy enough for Institutional Investors to buy into.
  • Why: Centralised Exchanges are a honeypot for thieves (even if the Exchange operator is honest). The only way to protect money when money is data is radical decentralization so that a thief only ever gets one person’s money (and if that is fairly hard to do, they won’t bother).
  • Dam = liquidity. If exchanges are decentralised how do we get best price when we want to buy or sell? How do we get the price transparency of a Centralised Exchange in a Decentralized world?
  • Picks & shovels: liquidity is fundamentally a broadcast messaging data problem and there are computer science solutions to this. There is likely to be a mix of offchain matching and onchain settlement. Hubs will  perform a critical aggregation function and not every wallet is equal – some buy and sell in huge quantities.  Data aggregation based on P2P broadcast messaging is a solved problem in computer science and does not require a scientific breakthrough.

Wave 2:  Decentralized Investing/Trading

  • What: The Legacy Fund Management fee model of AUM (Assets Under Management) plus Carry (aka profit share on exit) will move to a model of signals, decentralised exchanges, networks & syndicates. The big change is that the Legacy Fund Management fee model is based on first gathering assets from LPs then investing.  The Blockchain Economy Fund Management fee model reverses this. You start investing whatever you can afford, then you publish signals of your trades and people pay to follow those signals. The passive investor’s capital is kept under their control, there is no equivalent of AUM.
  • Why: Blockchain changes the rules of the game and the game has not been going on long enough for Legacy Fund Managers to show their track record. We need new compensation models for a new generation of Blockchain native active investors/traders.
  • Dam: How do you a) identify the new and emerging investors/traders b) how do you compensate them properly? How does a a new generation of Blockchain native active investors build trust with passive investors (fka LPs).
  • Picks & shovels: The Decentralized Investing/Trading world is being built using four tools – signals, decentralised exchanges, networks & syndicates. Signals are what an active Investor/Trader provides for a fee to passive Followers. Decentralised exchanges are critical so that we know what a signal provider actually bought and sold (avoiding the scammy promoters who say buy when they are selling etc). Networks are how Followers find Signal Providers. Syndicates are  how enough capital is raised quickly through these networks by aggregating Followers just in time; lets not forget that the purpose of Capital Markets is to fund innovation and new productive capacity.

Wave 3: Stablecoins and other hard asset Tokens

  • What: You can buy/sell them like any Token, on Exchanges, but their value is tied to hard assets in the Legacy Finance world (such as Fiat currencies, gold, diamonds, real estate etc).
  • Why: If you are trader/speculator, volatility is your friend. If you are using Tokenomics to fund a venture, volatility is also your friend; you sell Tokens into a rising market in order to fund the business. In most other situations (such as payments and investing), volatility is your enemy and stability is your friend.
  • Dam: Stablecoins and other hard asset Tokens exist at the intersection of Legacy Finance and the Blockchain Economy. It is not simply a matter of clever code. Interfacing to that Legacy Finance world is not easy.
  • Picks & shovels: a new generation of Stablecoins are entering the market to meet these needs. These exist at the intersection of  Legacy Finance and the Blockchain Economy and the winning formula seems to be “audit heavy/tech lite” (in the words Balaji Srinavasan, the ex Andreessen Horowitz Partner and now Coinbase CTO which he says around 37.40 to 42.3 during  this panel on YouTube with Vitalik Buterin).

Wave 4: Safe & Easy custody/storage

  • What: As easy as putting money in a bank, but as safe and unconfiscatable as your own private keys in your own vault.

 

  • Why: Safe must mean decentralised to avoid the centralised honeypot problem and to avoid the danger of confiscation. That is job number one. To cross the chasm from early adopters with their hardware wallets, brain wallets and other nerd friendly stuff, it must be easy to use for the mainstream.

 

  • Dam:  Insured banks don’t store crypto assets today, so the problem has to be solved technologically so that a trustless/uninsured ecosystem of custodians emerge.

 

  • Picks & shovels: we need digital version of the old bank vaults, hardened against both physical and cyber attack and an easy way for them to interface into the world of investing/trading.

Wave 5: Whitelisted Wallets = your ID

  • What: A self sovereign Digital ID wallet that stores all our assets including our personal data and our reputation assets. Part of our reputation defines what type of assets we can buy and sell.
  • Why: if every wallet can trade with every other wallet through Decentralized Exchanges, it is critical that some form of Whitelisting emerges where  we trust that the wallet we are transacting with is doing things legally and is owned by a person “of good standing”. Even if you are of the libertarian school and believe that the solution must be free markets not regulators, you want some quick and easy way to spot the good guys from the bad guys.
  • Dam: self sovereign Digital ID wallets exist today but are only used by a small number of very early adopters
  • Picks & shovels: Self sovereign Digital ID technology already exists, there is no scientific breakthrough needed.

Wave 6: Security Tokens particularly Early Stage Equity Tokens

  • What: Legacy Finance has Debt + Equity. The core building blocks of The Blockchain Economy are Utility Tokens + Equity. We already have Utility Tokens (albeit often controversially, with many that are scummy and illegal). What is coming are Security Tokens that enable Early Stage Equity to be traded like Tokens.
  • Why: Just ask a) any entrepreneur fed up with the current process of early stage fund raising or b) any early stage investor who wants liquidity and price discovery.
  • Dam: Security Tokens are regulated by Securities Law and this is complex and changes slowly.
  • Picks & shovels: Tokenisation is the easy part and Security Tokens will be able to use all the tools and techniques of the Blockchain Economy. The tricky bit, as with Stablecoins, is the interface with the Legacy Finance world which currently controls Securities.

Wave 7: Credit Card dominance era is coming to an end

Note: this maybe the most controversial mega wave. I am saying that the Peak Credit Card dominance era is coming, not that Credit Cards will soon cease to exist. It is like saying we may start using a lot less oil, but we will still be using some oil for a long time (ie oil will be less dominant but will remain part of the economy).

  • What:  Credit Cards are replaced by Blockchain based payment networks (on chain and offchain).
  • Why: Credit Card payments are expensive for both buyer and seller (which is why Credit Card Networks are so profitable)
  • Dam: integrating credit at the point of sale is hard and the reason why Credit Card Networks are still so dominant today). But it is a solvable problem.
  • Picks & shovels: the dam may first break in niches that are a) cross border (where fees are highest b) for digital products (where there is no return dispute resolution issue) c) where the buyer does not need credit.

There are two ways the water gets past the dam. One way is the regulated way – via the sluice gates in the dam. The other way is the unregulated way – there are no sluice gates and the water goes over the dam, eventually breaking the dam. Regulators and lawyers and technologists, conscious of the threat of a dam breaking are working overtime to build those sluice gates.

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

Check out our advisory services (how we pay for this free original research).

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Bitcoin & Blockchain, security token, Uncategorized

“Build It and They Will Come” – Security Tokens at the Gate

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This post, the 4th in a series of 4, is written by Sheldon Freedman, a fintech and funds lawyer at Hassans in Gibraltar. Click here for last week’s post in this series.

2019 is widely anticipated by blockchain bulls to be the year of the security token. In Instalment 1 of this 4-part series, we described how security tokens are created through strong cryptography, able to digitally represent ownership in an asset, such as shares in a company or fund, real estate, rights to cash flow or financial instruments.  In Instalment 2, we looked at how security tokens are generated on Ethereum-based platforms employing blockchain technologies.  In Installment 3, we observed how new regulatory frameworks for these new securities called “security tokens” do not yet exist – that the issuance and exchange of security tokens is being conducted under existing, traditional securities laws of registration and exemption, while complying with comprehensive, overlapping, global anti-money laundering/sanctions regimes. Today’s concluding segment previews what lies ahead in the coming months for security tokens.

Exchanges, Trading and Liquidity. 

Markets can only operate effectively with liquidity. The creation, i.e. issuance, of a security token is a preliminary step, giving birth to the token. But for securities markets and security tokens to live meaningful lives, there must be robust secondary trading via exchanges which is fully-automated, reliable, inexpensive, scalable, rapid in trade and settlement, compliant, always-on, global. Just as company stock issuance boomed with the development of centralized stock exchanges, so too the security token industry would flourish as decentralized security token exchanges develop. “Build it and they will come” is the mantra that is usually mocking engineers who build nifty technology and assume without any basis in market reality that everyone will want to buy it because it is nifty.  However, if people want to trade security tokens, this mantra is in fact true for security tokens exchanges: demand will follow supply.  Building security tokens exchanges and secondary markets requires enormously complex business, legal and technical collaborations married to massive amounts of capital, but in the coming months we will see beginnings of this integration of blockchain markets into traditional finance.

In Europe, most notably Switzerland’s stock exchange owned and managed by SIX Group is building a fully-integrated trading, settlement and custody infrastructure for digital assets, known as a ‘digital asset ecosystem’ – SIX Digital Exchange.  SIX (acronym for Swiss Infrastructure and Exchange) operates the infrastructure of Switzerland’s financial center.  In USA, the Boston Stock Exchange and subsidiary BOX Digital Markets have announced a partnership with token platform tZero to launch the world’s first regulated security tokens exchange Q2-19. 

tZero is championed by super crypto-bull, Patrick Byrne, CEO of parent company, Overstock.com.  Byrne is committed to integrating blockchain capital markets into the US National Market System (NMS). Byrne is, in effect, staking Overstock’s future on tZero, which is burning at least $2 million per month. “I don’t care whether tZero is losing $2 million a month, “Byrne was quoted yesterday in the Wall Street Journal. “We think we’ve got cold fusion on the blockchain side.” 

This is the creed of blockchain True Believers, which is powering the development of security token infrastructure.  Like other blockchain-related infrastructure companies, Overstock raised capital from the sale of its own security tokens:  $134 million to be exact.  Mr. Byrne is not alone, as investors and blockchain pioneers charge ahead. The Wall Street Journal reports in its article that, according to Overstock, Hong Kong-based GSR Capital has agreed to invest up to $270 million in tZero equity that would value tZero at $1.5 billion. GSR would not confirm this claim to the Wall Street Journal. 

Security Tokens Issuing Platforms.   

Security tokens issuing platforms are daily becoming faster, cheaper, smarter. Decentralized applications (DApps) with back-end code are being developed in every part of the globe where there is a developer-grade internet connection. Several outstanding, mostly USA-based, Ethereum platforms issue tokens, and manage the investor process and the tokens through the lifetime of the asset, such as Securitize, Harbor, Securency, Swarm and Polymath (Canada). tZero expects to be handling token transactions by Q2-19, beyond issuing and managing, as well as offering an alternative trading system moving into other investment sectors such as debt, real, estate and other tokenizable asset classes.

European platform, Token Market, based in Gibraltar, [disclosure – client of the writers]has this week become live as the first security tokens issuing platform offering to public retail (as distinct from private) investor markets. Token Markets was selected by the UK regulator to assist in carrying out security tokens offerings to test, measure and develop issuance of digitized equity in UK.  Lithuanian platform, DESICO plans in 2019 to launch a securities exchange that will provide immediate listing and liquidity for security tokens, operating in conjunction with the Bank of Lithuania.

Impressive platforms with breakthrough architecture/technology may move beyond Ethereum technology.  EOS is believed by many in the longer term to eclipse Ethereum with higher scalability and lower cost.  Distributed platform Cardano claims to be more scalable and more decentralized than Ethereum, as it scales through side-chains/horizontally. Cardano, administered by the Cardano Foundation in Switzerland, was created in Hong Kong, and is led by Charles Hoskinson, co-founder of Ethereum.

Regulation, Compliance.

Financial services represents about 15% of the world economy; inevitably, significant portions will be digitized and integrated.  Though counter-intuitive to some, in financial services industries intensive regulation and strict enforcement are key to establishing confidence, orderly operation and mass adoption. The stringent regulation and enforcement governing financial markets in the USA have helped make the USA financial markets the envy of the world, the model to emulate.  Securities industry regulators are the critical partners in any development of the security tokens industry.  All stakeholders, aware of this, – cheer regulators on to action, or condemn their inaction.

In coming months, there will be significant step-up in activity by issuers and investors under existing global securities regulation, smart contract-auditing procedures and disclosure practices, and evolving regulation of the blockchain-related ecosystem.  Enormous investments of time and acquisition of domain expertise are required for regulators to understand sophisticated systems, methods of capital formation and investor interfaces, and the complex financial services implications that flow from their deployment and development.  The SEC, for example, by its FinHub  is committing considerable resources to engaging ecosystem players.  In addition to being a resource for the industry providing information about the SEC’s views and actions in the FinTech space, FinHub is a forum for SEC staff to engage the public

UK has shown aggressive innovation in crowdfunding by providing exemption for equity offerings up to EUR8 million, stimulating the crowdfunding industry. It came as no surprise when UK regulators (Financial Conduct Authority) recently launched a dedicated regulatory sandbox which includes exchanges for security tokens.  Successful applicants benefit from lower regulatory thresholds and receive direct guidance from the regulator, while the FCA gains confidence and understanding working with new financial technology and processes.

Gibraltar, a first-mover in legislation for digital assets, is the world’s first jurisdiction to license distributed ledger technology for blockchain and fintech businesses. Next month, Gibraltar is publishing shovel-ready legislation for security tokens compliant with all EU directives, the fruit of unified efforts of Gibraltar regulators and local industry experts.

Conclusion

  Security tokens are theoretical game-changers for financial and ownership models, allowing any asset or fund to offer equity, debt, full or partial ownership or revenue share. Bulls and bears abound. For investors security tokens are secure, virtually incorruptible, and accessible to trade by anyone with an internet connection. In the longer term of three to five years, comprehensive fintech banks will have to emerge to conduct the securities token industry to act as traditional investment banks performing funding, underwriting, compliance, retail distribution, analysis, legal and advisory functions to manage processes, because the development of the security tokens industry going forward is about 20% technology, and about 80% regulatory/business. If security tokens will continue to provide access to compliance features for issuers, signs of liquidity for investors and a framework for oversight to regulators, then 2019 could belong to the security token.

Omri Bouton co-wrote this.  We are both at Hassans.

Recommended reading for further research: 

  • StartupEngine Summit – Tokenizing the World, with excellent panels from StartEngine conference October 19, 2018 Los Angeles

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

Check out our advisory services (how we pay for this free original research).

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Bitcoin & Blockchain

Blockchain Weekly Front Page: Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility

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Last week our theme was “Bullish Signals during the Blockchain Bear Market.”

Our theme for this week is “Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility.“

For more about the Front Page Weekly CXO Briefing, please click here.

This has been a rough week for the entire cryptocurrency market. A few days ago, Bitcoin hit its lowest this year, dropping as low as $5,244, before bouncing back to the $5,500 mark.

The voice of uncertainty has rekindled the fear and doubt, and rumors have been surfaced that Bitcoin will hit $2,000 – $3,000, before the bloodbath is over. The price drop forced many retail investors and long term hodlers, to give up their positions. The $6,000 level has been considered to be Bitcoin’s floor. This week’s drop below that threshold, raised concerns about the viability the most popular cryptocurrency.

Other crypto markets also suffered huge losses, with all major cryptocurrencies showing double-digit losses. Ethereum (ETH) dropped as much as 13% and Ripple (XRP) by 15%. Bitcoin’s market cap has fallen below $100 billion for the first time since October 2017. The entire market declined from a total value of $210 billion to almost $180 billion.

Yet, Circuit Capital Index shows that adoption is rising, even though the price hasn’t. According to an article in Forbes, the founders of Circuit Capital, a new San Francisco-based cryptocurrency hedge fund, believe that the poor performance of digital asset prices during 2018 has made difficult to observe the ever-rising interest in the cryptocurrencies, by consumers and investors. Circuit has developed an index that measures mainstream adoption of the blockchain, the technology behind digital assets. The index shows crypto adoption is on an upward trend, even though prices have been heading in the exact opposite direction.

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Another story this past week that’s been on everyone’s radar has been the Bitcoin Cash (BCH) hard fork. The fourth-largest cryptocurrency split on Thursday, November 15, 2018. Bitcoin Cash split into two different coins, “Bitcoin Cash ABC” (BCH ABC) and “Bitcoin Cash SV” (BCH SV). So far, the Bitcoin Cash ABC chain has more accumulated proof of work, and its native currency, BCH ABC, and is trading higher on exchanges. The Bitcoin Cash ABC camp feel they’ve won, though Bitcoin Cash SV has not yet conceded.

While the hard fork caused prices of the forked coins to fluctuate, many think that it also caused Bitcoin (BTC) to plummet to its lowest price this year, after several months of relative stability. As things develop. we’ll see if it will continue to drive the price of BTC even lower.

The last 10 months, it’s been a big party for the bears. But has the time come for the bears to hibernate, and for the next bull stampede to start?

The biggest hope for the next bull run is institutional money. But for institutional traders to directly access crypto, they need to be able to trade, settle and store assets in an institutional-grade environment.

I think we are near the end of the tunnel. But a few things need to happen , before we see the market swing upward.

What still remains in play for the bulls, is the hope for the SEC’s upcoming decision to finally approve a Bitcoin ETF, set for December 29. This would open up Bitcoin to institutional traders, and give it an air of legitimacy.

And it’s not just the SEC’s Bitcoin ETF approval that everybody is anxiously awaiting. Bakkt, the big endorsement by the owners of the NYSE, could boost Bitcoin and the entire cryptocurrency market in 2019. Bakkt plans to make Bitcoin a secure offering for financial institutions, and open it’s accessibility in mutual funds, 401K’s and other pension funds. This would pave the way for widespread adoption of crypto-backed debit cards and crypto-based retail payments, with the eventual replacement of credit cards with Bitcoin.

I am excited for 2019 and the direction of the market, with all the positive developments and regulatory clarity underway. While we don’t know where the market will bottom out, we should consider that the bear market may last a little longer than expected.

If you are truly bullish about crypto and blockchain, the current prices are irrelevant. Bitcoin’s true nature is as an instant way to pay for things anywhere in the world, its not about money. We could see a cashless world sooner than we imagine. Bitcoin and the ideas it represents are here to stay. As the number of people using it increases, it will eventually spread exponentially just like the Internet.

Bitcoin’s price volatility will stabilize as everything develops, but for now we should prepare for the worst, while we work to build the best.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Bitcoin & Blockchain, Blockchain, Consumer Banking, MAS, security token, singapore, smart contracts, tokenization

The rise of Tokenized assets – the bridge between the old and the new capital markets

Most people in Blockchain whom I talk to, feel tokenizing real world assets is an amazing concept with huge potential. I have often thought that the real difference that tokenizing offered, as an economic model, is the ability to tag a number value to something abstract. Like attention, brand value, popularity, karma etc.,

security-tokens

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There have been no lack of attempts to tokenize platforms that act as market places for creating abstract value. In the last year or so, I have come across several firms that act as market places for people to help each other, give and receive points and eventually turn them to tokens.

However, as we create this new value system using Blockchain, it has to be through a logical roadmap. One has to walk before running. And, cryptos have struggled to answer the question “Whats your intrinsic value?” – there are several consensus based answers, but the traditional world typically don’t recognize that. And when the market collapses, the talk about creation of value digitally, often times look baseless.

However, as the Blockchain era turns a new page, we will need security tokens to act as the bridge between the old and the new capital markets.

I still believe value can be created digitally, and there is a market for that. We are at a point, where most of the world agree that Blockchain as a new economic paradigm is here to stay. As institutions plan their entry into this space, the economic model should stand its ground even in a quasi-traditional sense. Security tokens are exactly enabling that. They are beneficial across several dimensions, and some of them are:

  • Inclusion: Tokenizing a fund focused on Manhattan properties could allow people across the world take part in a vehicle, which would have in the past been accessible only to the ultra rich.
  • Liquidity: I can buy and flip a property wholly or partially if it is tokenized. Liquidity has always been a major concern with real estate, venture capital and private equity investments, and tokenizing would change the risk profile of these asset classes
  • Efficiency: Just the speed of execution and settlement that smart contracts offer makes it a very efficient system.

We have had several headlines over the last few months on real world assets backed tokens. Especially from emerging market countries and their central banks. I am closely following India especially. But, Singapore is perhaps the world leader when it comes to their position on tokenized assets.

Earlier this week, the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) announced that the Delivery vs Payments (DvP) app they were prototyping was working successfully. I had written about it earlier on Daily Fintech too, and was looking forward to this announcement.

“Based on the unique methodology that SGX developed to enable real-world interoperability of platforms, as well as the simultaneous exchange of digital tokens and securities, we have applied for our first-ever technology patent,”

– Tinku Gupta, Head of Technology, SGX

Through this prototype, the consortium of MAS, SGX, Deloitte and Nasdaq have tested the functionality where financial institutions can exchange and settle tokenized assets across different Blockchain platforms.

Most of these prototypes are conducted in a controlled environment with minimal risk. Thats because the technology and its viability in a global enterprise still needs to mature. But the concept of tokenising assets, and allowing access to a global consumer base would create new business models (and regulatory headaches).

Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a podcast host.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email

 

Bitcoin & Blockchain, block, competition, finance, WealthTech

Build, Invest, Transact: Blockchain4Finance at the CV Competition

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Annual thematic Blockchain competitions are a staple at the CryptoValley Summit. Last year, it was Blockchain for Insurance and this year Blockchain for Finance. The next theme is Blockchain for Real Estate.

CryptoValley Labs are growing not only in size but more importantly in connecting with the broader innovation ecosystem through partnerships. From various tech accelerators, angel networks, and incubators to corporates. They have rebranded to CV VC to include more of their activities: The summit, the competition, the new VC recently launched, the co-working space, the incubator, and ecosystem research.

Blockchain4Finance: the 2nd CV Competition

Native and non-native cryptocurrencies are already being treated as investments. Some argue that they are solely speculative and others (consciously or not) are into the new Boglism[1] that is now called HODLism.

Blockstate, ShufflUp and BlockKeeper are Blockchain4Finance finalists that are focused on Digital assets as investments. Orion Vault is close to this subcategory, as they are effectively opening up the digital art market and creating a new investable asset class.

The European Parliament this summer asserted that cryptocurrencies can be used as an alternative to money. Ambrpay, the winner of the Blockchain4Finance competition at the CV Summit, Wala and Pigzbe; are focused on crypto and payments.

Capexmove, EnigioTime, and MyBit are B2B tech companies providing tools to Build.

The ten finalists in brief

Ambrpay, the winner, came out of F10 accelerator and is solving the problem of subscription and recurring payments with crypto via smart contracts. Ambray is a decentralized payment gateway. Merchants will not have to deal with crypto (if they don’t want to) and can choose their currency of payment.

Capexmove came out of Level39 in 2017 and this year was accepted at the FCA sandbox. The focus is on business lending by using a blockchain-based debt management and automated loan payment service. From digitizing mortgages, to Bills of laiden, and Wills etc.

EnigioTime out of Sweden is aiming to solve parts of the complex problem of data monopolies by using DLT technology. Starting with a Digital Notary service, a solution of archiving and managing digital data in a decentralized and safe way, to proof of ownership and authentication.

Blockcstate is another Swiss company offering a Smart infrastructure stack that covers the financial product lifecycle. They are issuing Exchange Traded Notes that are fully compliant with Swiss and EU regulation. The first product on the Blockstate stack, called CTF15, is a passive ETN for institutional investors with the largest 15 crypto assets.

ShufflUp out of India has a crypto investment focus. They have started with a retail actively managed product that allows people to invest in a strategy that takes advantage of arbitrage opportunities in cryptocurrencies. They are also developing two other strategies.

BlockKeeper out of Germany, is an open source protocol with an app that can be used to track all blockchain based digital assets and transactions. It is an account aggregator dashboard with very strong customization features.

Orion Vault is a Swiss venture launched by ex-Google engineers, utilizing DLT for digital art, starting with photos. They aim to bring trust, transparency and liquidity to this market with a specific focus on Digital Art as a store of value. They use Ether for transacting. Later they aim to grow into the music and IP segments.

MyBit is another Swiss venture that enables developers to build, test and deploy wealth management apps efficiently (3 weeks!). Their SDK is open source. Some of the apps available are, wallets, automating token/stocks option distribution, decentralized bill splitting, Wills for distributing assets etc.

Pigzbe is out of Chiasso, Switzerland and currently at Kickstarter accelerator. It is an app to educate children about money by using a digital currency called Wollo. Parents can provide incentives to their children and they, in turn, earn rewards.

Wala out of Africa, is a zero-fee money app using the Dala digital currency. Operating already in 7 African countries. Listen to my interview with Tricia Martinez, CEO of Wala , No more fee-driven business models for the unbanked .

[1] Boglism is a derivative word that I’ve coined. Bogle is the founder of Vanguard that has built an empire on the premise of passive investing. Listen to my standup comedy at Cryptomountains Rock side event on this topic (from minute 7:30+)

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.