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During the week when heatwaves boiled the world, our Experts posted cool fresh insights each & every day. Daily Fintech offers unique insights about the future of Fintech written by and for senior executives, entrepreneurs and investors. Monday Ilias Hatzis @iliashatzis our Greece-based crypto entrepreneur, wrote “Bitcoin to the Moon” TLDR: Bitcoin, Ethereum, Litecoin and […]
The post This Week in Fintech appeared first on Daily Fintech.
During the week when American politics became even more toxic, Daily Fintech Experts posted fresh insights each & every day.
Monday from @iliashatzis, our Greece -based crypto entrepreneur, described the strange news of President Trump publicly voicing his negative views on Bitcoin. Read here.
Tuesday from @efipm, our Swiss-based Fintech Adviser, analysed why incumbents are beating startups in the robo advisory market which she has been tracking since 2015. Read here.
Wednesday from @jessicaellerm, our Australia-based Fintech entrepreneur, described how a major digital challenger bank, Nubank in Brazil, is moving into the small business market. Read here.
Thursday @insuranceeleph1, Patrick Kelahan, our US based Insurtech expert, interviews the author of a study of 194 insurtech ventures with the aim of having a solution box to look in when you have identified what problem you want to solve. Read here.
Friday from @karunk, a London based Fintech investor, looked at how AI based credit decisions, while smarter than ye olde FICO scores need to make their algos transparent both to consumers and regulators. Read here.
Saturday @lunnbernard, CEO of Daily Fintech, described the technology from satellites to mesh networks that will power Bitcoin even if the Internet is shut down. Read here.
The post Last week in Fintech & Crypto appeared first on Daily Fintech.
During the week when hurricanes headed for America and the awful drought in India got worse, our Experts posted fresh insights about Fintech each & every day.
Monday from @iliashatzis, our Greece -based crypto entrepreneur, celebrated America’s Independence Day by describing how Bitcoin shows that a community of people can create a currency system on their own, just like the Colonials did. Read here.
Tuesday from @efipm, our Swiss-based Fintech Adviser, questions why the variety of `anything Fintech as a service` is helping BigBank more than SmallBank today. Read here.
Wednesday from @jessicaellerm, our Australia-based Fintech entrepreneur, continued analysis of the red hot India Small Business Fintech market by looking at TenCent’s investment in NiYo. Read here.
Thursday @insuranceeleph1, Patrick Kelahan, our US based Insurtech expert, curated & analysed the most important news items in Insurtech globally during the last week. Read here.
Friday from @karunk, a London based Fintech investor, describes how in India, the third most active innovation ecosystem in the world after US and China, most Blockchain projects are driven by Government initiatives for financial inclusion. Read here.
Saturday @lunnbernard, CEO of Daily Fintech, is surprised that the SEC Crypto regulation gets it almost right with the Reg A Blockstack token offering and opines that this may define a new innovation capital market. Read here.
The post Last Week on Daily Fintech appeared first on Daily Fintech.
Although I have failed with birthday celebrations, I am happy with one thing I wrote on that first anniversary:
“Like any startup, it is an experiment to find product fit to market and I can only promise to keep iterating on that journey.”
According to the legendary investor and blogger Fred Wilson, the data shows that “It takes seven to ten years to get to real liquidity”. As he puts it:
“I am not sure why seven to ten years and not five to seven or not ten to fifteen. It’s seven to ten. That’s how it has always been and seemingly always will be. “
So Daily Fintech is 50% there if it is 10 years and 71% there if it is 7 years
“Liquidity” is the definition of success for an investor. If you have external investors (we do not yet at Daily Fintech), that also needs to be your definition of success as an entrepreneur. If you have bootstrapped and self funded, you also have the option of running a business with the old fashioned objective of what Warren Buffet calls the “owners reward’ of profits.
Either way, it takes seven to ten years to build sustainable business value.
I am happy that in our first 5 years we have done two things well.
I was asked recently in a meeting about targets and I replied that I was much more comfortable with direction and process than with targets. I know where we are going (direction) and I know what it takes to go on a long arduous journey (process), but cannot anticipate all the twists and turns in the journey, so I can only end with what I said on the first birthday:
“I can only promise to keep iterating on that journey.”
Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO of Daily Fintech and author of The Blockchain Economy.
I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.
Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).
An independent volatility benchmark for Stablecoins
The GOSCI mission is to create an independent volatility benchmark for Stablecoins.
Many in the cryptocurrency community worry that Facebook’s cryptocurrency will usher in centralized corporate control on a global scale.
This what motivated us to launch GOSCI – Global Open Source Currency Index. We want a level playing field via a benchmark that is independent from institutional control (either corporate or government).
The best Stablecoin is the most stable (aka least volatile) Stablecoin. Low volatility not corporate clout is the measure of excellence.
The GOSCI Idea
GOSCI (Global Open Source Currency Index) is designed to be the exact opposite of Bitcoin and other cryptocurrencies in three ways:
1. GOSCI is Non Volatile by design. It is a model created from a basket of Fiat currencies, comprising more than 90% of global GDP.
2. GOSCI is a model/index, not a stablecoin. You can use GOSCI to benchmark any Stablecoin – including Stablecoins from corporate giants such as Facebook.
3. GOSCI does not compete with Fiat. GOSCI is not a threat to Governments that issue Fiat Currencies, because GOSCI cannot be used directly as a store of value or a currency/medium of exchange. Even if some governments decided they did not like GOSCI, it cannot easily be shut down because GOSCI is free and open source and does not require any regulatory approval.
From a regulatory point of view, GOSCI is not a Utility Token or a Payment Token or a Securities Token or an Asset Token. GOSCI is simply a spreadsheet formula filled with data that is in the public domain – which anybody can use (it is open source).
The model is a free/open source project, created by Daily Fintech, but with an independent governance structure.
You have the option to pay for the right to use the GOSCI name and to be involved in GOSCI model governance, see later.
How GOSCI can help the Stablecoin ecosystem
You can use GOSCI to benchmark any Stablecoin. We are not in the business of benchmarking Stablecoins. Our focus is to create the least volatile basket and invite anybody to benchmark any Stablecoin against that index. You can benchmark your own Stablecoin or any Stablecoin.
There are three different approaches to creating a Stablecoin and each requires a volatility benchmark:
Why License GOSCI when it is Open Source?
We publish the model and the formulas. The data for the model is in the public domain (GDP data by country from the IMF). GOSCI is free, open source and permissionless. There are two benefits of Licensing GOSCI:
The Bitcoin volatility problem is not going away
Bitcoin is a great store of value but flawed as a medium of exchange due to volatility. Layer two services such as Lightning Network may solve the scalability problem, enabling low value payments, but they do not solve the volatility problem. For more on the limitations of using Bitcoin as an interim store of value for payments to enable it as a Medium of Exchange please read this November 2015 post on Daily Fintech.
GOSCI is non-volatile by design.
USD Is Not The Gold Standard Of Non Volatility
USD is less volatile than BTC, but many sophisticated investors try to hedge against USD volatility risk with assets such as Gold, Bitcoin and Currency Baskets.
GOSCI is built from 36 national currencies that in aggregate account for more than 90% of Global GDP (vs about 25% for USD).
GOSCI is non-volatile by design.
Why & how we use GDP numbers for rebalancing the Index
GDP data is widely available. Even if some GDP numbers lack credibility it is the best data available to track economic activity and over the long term economic activity drives currencies.
With 36 national currencies that in aggregate account for more than 90% of Global GDP we are confident that GOSCI is non-volatile. Chasing 100% of Global GDP would add a lot of complexity with little extra benefit. There are 164 national currencies, so the 10% long tail includes 128 currencies.
When GDP changes, the index rebalances. For example if China GDP grows faster than US GDP, this will impact the currency weightings.
Why Now
At some point in the future, USD will be replaced as the global reserve currency. No global reserve currency lasts forever. In other transitions, the currency shifted to the rising economic power (e.g from Britain to America). The problem today is that the rising economic power is China and the Yuan is not credible as a global reserve currency and many countries will resist China in that role for geopolitical reasons.
The transition to the next global reserve currency coming at a time when cryptocurrencies are gaining traction is a unique moment in history.
The question is what will replace the USD?
GOSCI is designed to avoid the control of large corporations over cryptocurrencies. Many BigBank and BigTech companies, such as JP Morgan and Facebook, have announced plans for their own proprietary cryptocurrency. GOSCI is designed to empower a world that is decentralised and permissionless and not controlled by large corporations.
Any single Fiat currency will be resisted for geopolitical reasons, so the three non-corporate alternatives are a) IMF SDR b) Gold or Oil c) Bitcoin.
Why GOSCI is a better volatility benchmark than the IMF SDR.
The SDR is an international reserve asset, created by the IMF (international Monetary Fund) in 1969 to supplement its member countries’ official reserves. So far SDR 204.2 billion (equivalent to about US$291 billion) have been allocated to members, including SDR 182.6 billion allocated in 2009 in the wake of the global financial crisis. The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling. The SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system, the SDR was redefined as a basket of currencies.
Why GOSCI is a better volatility benchmark than Gold or Oil.
Gold is flawed as a volatility benchmark for two reasons:
Oil has the same flaws as a volatility benchmark as gold.
Governance
GOSCI was created by Daily Fintech, but with an independent governance structure.
One License One Vote builds on a well proven principle. You can only buy one GOSCI License. If you pay the GOSCI Annual Licensing Fee, you get a vote on how to change the model (in addition to the branding rights).
The way Governance works in GOSCI:
To have influence, you need to be a Licensee (but the annual fee is low enough for even bootstrapped or self funded early stage ventures).
Annual License Cost
0.1BTC (translates to USD1,000 per year if BTC is at USD10,000).
Why Licensees pay in Bitcoin not GOSCI or Fiat
GOSCI is not an asset. You cannot buy anything with GOSCI. So you cannot pay in GOSCI (but you will be able to buy things with Stablecoins that use the GOSCI model).
As Cryptocurrencies work globally and Daily Fintech readers come from all over the world, any Fiat currency we chose would incur exchange rate risk and fees – and it may seem odd for a site that writes a lot about Crypto enabled payments innovation to charge in Fiat currency.
By charging in Bitcoin, we give Licensees an incentive to buy sooner rather than later. We assume that anybody who gets this far in a nerdy post knows how to pay in Bitcoin and is a long term Bitcoin bull (and therefore expects the price to rise from here). If you want to protect against Bitcoin increasing in value you can buy up to 5 years of License in advance.
Please send an e-mail to julia at daily fintech dot com if you are interested in licensing GOSCI.
The Model
You can see the model in this Google Sheet. We use data from the IMF for GDP per country.
References
The Daily Fintech SmartExpert Service is an easy engagement model for our advisory services. Now you can start working with us by simply choosing your expert, paying for the hour and scheduling your call with the Expert.
In this post we unpick that simple phrase “paying for the hour” and explain why we decided to innovate on that front by partnering with one of the next generation of StableCoins for payments rather than simply using the credit card rails and what we learned from that experience. We like to write about payments innovation. With this partnership we are testing our theories in the laboratory of the real world and making that experience available to our readers.
In this post we will describe:
For our big picture view on why StableCoins are so important (but also so hard to get right), please read this update to The Blockchain Economy digital book that was published on Saturday.
Why we are using a cryptocurrency for payments, rather than relying on the legacy credit card rails.
First, we do offer legacy credit card rails as an option. If you are not comfortable using cryptocurrency, just use Paypal.
Second, we like to test our theories in the laboratory of the real world. Back in April 2017 Daily Fintech articulated the thesis that Bitcoin Will Move From Darknet Early Adopter Niche To Clearnet Mainstream:
“This will happen first among free agent, knowledge workers who offer digital products/services cross border.“
“Free agent, knowledge workers who offer digital products/services cross border“ describes the Daily Fintech SmartExpert service. Now it is time to test that theory in the laboratory of the real world.
Third, it just makes practical sense in a borderless world for DailyFintech’s global subscribers and Experts. Once you really look at how cross border payments work using legacy bank and credit card rails, you see three big practical problems:
Our theory is that change will be driven by Merchants not Consumers, because Merchants have the motivation. We decided to test this theory by offering payment for the Daily Fintech SmartExpert Service using a StableCoin.
Why use a StableCoin rather than Bitcoin or any other Tokenomics funded cryptocurrency.
in a word – volatility. When we first started thinking about how to do this, we planned to use Bitcoin and we created a clever (but, in hindsight, overly complex) way to deal with the volatility problem. When we discovered StableCoins, we saw that we did not need a complex way to deal with the volatility problem. The complexity of explaining how we dealt with Bitcoin volatility would have created friction that would have impeded the chances of success for the Daily Fintech Expert Service.
So much for Bitcoin. What about all the Altcoins that offer quick, low cost payments? They solve the speed and fees problem very well, but they do NOT solve the volatility problem. Any cryptocurrency that is funded through Tokenomics has an inherent volatility problem. The venture and their early investors want the price of the coin to rise and some traders bet against it rising; the push and pull of these bulls and bears creates volatility.
What is needed is something that is a) a cryptocurrency b) non-volatile by design. In short we need a StableCoin. For more on Stablecoins, please see this chapter of The Blockchain Economy Book
The next question was – which StableCoin?
Why we chose the GLX StableCoin
GLX is a StableCoin issued by a company called Globcoin.
We chose the GLX StableCoin for 5 reasons:
In fact, in full disclosure, I like Globcoin so much that I agreed to join their Board and help make things happen for them.
What we learned during this project.
Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.
Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).
TLDR. Daily Fintech has engaged the services of a firm called Triumvirate Content Consultants (TCC) to to help monetize our content assets through new distribution channels and new markets.
Today’s post is not about Fintech. It is a peek behind the curtain of the business of creating the free original research that you see here every day. It is nearly 5 years since our first post on 29 June 2014 (for the record, here it is). It is still relevant like many of the over 1,000 posts in our archives.
We recently decided to bring on more professionals to help us grow. We started with Paul Conley, because what defines Daily Fintech is the quality of our writing, how we are able to make big complex subjects accessible and interesting to busy senior people. Paul shares that passion. He has made a career out of helping media companies do that well. Here is the post announcing Paul joining us as Content Adviser. Paul introduced us to the folks at Triumvirate Content Consultants (TCC), which goes to show that quality attracts quality. Paul Gerbino and his colleagues at TCC live and breathe the intricacies of content licensing in the same way we live and breathe the intricacies of the reinvention of financial services through technology. The media business is going through wrenching change. Our simple belief is well-written research will always have value. By working with the experts at TCC we turn that into simple belief into new revenue streams so that we can continue to do what we do but better and on a bigger scale.
As Triumvirate Content Consultant’s President Paul Gerbino put it: “We’re passionate about helping companies with unique content tap into new revenue. Daily Fintech is known for its quality content, market insights and expert perspective. There are lots of other organizations whose customers want access to their research. Our job is to make that happen.”
TCC will be representing us to the many firms that have expressed interest in licensing our content. If you are interested in doing so please send an email to Julia Spiegel (our Chief Commercial Officer; her email is julia at dailyfintech dot com).
I am delighted to announce that Pat Kelahan will be writing the Thursday Insurtech column from now on. We interviewed Pat a week ago and then asked him to write the regular column each Thursday. You can see the first post from earlier today. Pat joins the other 4 Authors, one for each day of the week covering a different domain within Fintech from different parts of the world:
– Monday = Blockchain, Bitcoin & Crypto = Ilias Louis Hatzis from Greece
– Tuesday = Wealth Management & Capital Markets = Efi Pylarinou from Switzerland
– Wednesday = Small Business Finance = Jessica Ellerm from Australia
– Thursday = Insurance = Pat Kelahan from USA
– Friday = Consumer Banking & Impact Investing = Arun Krishnakumar from UK.
One reason why senior people give us their attention is that we connect the dots between Fin and Tech. We translate Fin to Tech and Tech to Fin. To do that in Insurtech means combining a) a deep understanding of how Insurance really works b) a customer-centric mindset c) an ability to explain complex subjects in engaging ways. Pat combines all three. You can read more about Pat from his interview last week and on his LinkedIn profile and follow Pat on Twitter. Here is an extract from last week’s interview for Pat to tell us about himself in his own words:
I am a father of seven, husband, multi-tasker and someone who strives to see and communicate the need to keep customer service as the focus of business, including insurance. Having been involved in insurance claims assessment and management for almost twenty years, retail and business ownership for another decade and one half, and construction/disaster work, my customer-focus has seen many iterations. In addition to the direct work of insurance I have remained a student of the industry, gaining understanding of how the ‘pieces’ fit together, and how effects on one facet affects the others. My current role is as Building Consultant/Forensic Market Strategist for H2M architects + engineers, a large engineering firm located in Melville, NY. How does that keep me in the insurance world? Well, the firm has an active division that assists property insurance carriers with forensic cause and origin work, including assessing mold, asbestos, and environmental damage claims, and consulting with adjusters for understanding of what causes claims. In addition, I am charged with helping the firm anticipate changes in property insurance and what comes next. Toward that end I network extensively with insurance stakeholders across the globe, and have introduced the insurance persona, ‘The Insurance Elephant’, to better focus the industry’s need to keep customer service in all it does, particularly as InsurTech efforts evolve. My duties also include presenting at industry conferences, conducting industry training, and consulting on building damage with insurance adjusters and others within the industry. I have a graduate degree in business from a top 50 university, have served as mayor of a village in upstate, NY, and been seated as a member of boards for not-for-profit organizations.
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 for CHF380 please click here to send an email.
Each week we are adding a new Expert to the Daily Fintech Expert Service. Today we are bringing on board Jessica Ellerm who has been writing every Wednesday on the Daily Fintech platform since February 2016.
Jessica is the person to call if you are involved with with Small Business Finance & Payments or the reinvention of pensions (aka “PensionTech”) or if you plan to launch your Fintech service in Australia or New Zealand. Jessica also has a lot of experience in how to apply digital marketing & behavioural economics to Fintech.
Now you get a chance to talk to somebody who really understands those markets as a serial entrepreneur, for only CHF 380 per hour.
For more on Jessica, please go here, or click on her LinkedIn profile, or see Jessica’s posts on Daily Fintech.
To book an hour with Jessica for CHF 380, please click here to send her an email.
Each week we are adding a new Expert to the Daily Fintech Expert Service.
Our Experts work all over the world, giving Daily Fintech a global perspective.
This week we profile our Expert in China, Zarc Gin, who works for a Fintech, Insurtech and Blockchain focussed VC fund in Hangzhou, China.
China is not only a massive market. It is also a market that operates quite differently from the West, because it went straight to the digital and mobile age.
Zarc is the person to talk to if you want to:
– learn from what is happening in China to apply to your home markets.
– think about how to enter the China market.
Now you get a chance to talk to somebody who lives in China and who knows Fintech, Insurtech and Blockchain for only CHF 380 per hour.
For more on Zarc, please go here.
To book an hour with Zarc, please click here to send him an email.