A Buoyant Digital coin at a tender age – Ndau

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Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

The Ndau (XND) is a stateless Buoyant digital currency with a built-in design to act as a store of value, is less known as it is not conducive to pump and dump. It was launched 2 yrs ago out of  the Cayman Islands.

It is more actively traded on BitMart exchange with a presence in New York, China, Hong Kong, and Seoul. According to Cointelligence, BitMart is included in the top 20 exchanges by volume.

Programmable money, like Bitcoin, are available in the market even though the verdict is still out there as to which of the existing cryptocurrencies (if any) qualifies for a digital means of payment, or a digital store of value, or a digital unit of account. Bitcoin is clearly a living proof of an autonomous organization, with no CEO, no CFO, and no board. It went live with a fixed supply and a fixed predetermined monetary policy. The developer and user community has had several disagreements about the direction that the network should take which has resulted in forking the Bitcoin source code.

The fact remains (with its pros and cons) that the fixed supply of 21million Bitcoins cannot be tampered with. The programmed monetary policy allows for new bitcoins to be created only through mining at a fixed rate. This rate is fixed but it decreases as new bitcoins come into circulation and we approach the 21 million supply ceiling. There are proponents and critics to this kind of rigid monetary policy as it has not been tested in economic downturns, in which a flexible monetary policy can have benefits. It definitely sits on the other end of the spectrum from the Quantitative Easing (QE) that Central banks in the Western world have been engaging in after the 2008 Global financial crisis and the 2020 COVID19 induced economic crisis. Devaluation of currencies is a big thorn that is yet another reason that we have been soul searching technological solutions for better stores of value. Data from the Official Data organization and several other sources shows that the purchasing power of the almighty US dollar has been dropping precipitously.

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Soul searching for programmable money that is enabled by blockchain technology that can mitigate this frightful drop in purchasing power of even the No.1 reserve currency, is only natural. Can we create a rather autonomous store of value with a tamper-proof and effective monetary policy? The market has not yet decided whether Bitcoin which is stateless and not backed by any real asset, is our Digital Gold alternative. During the recent downturn, Bitcoin and Physical Gold, similar to several traditional financial assets, have not behaved as expected.

One example of a better potential Digital Gold alternative, is the blockchain-enabled solution of a stateless Buoyant digital currency, the Ndau.  The Ndau (XND) was launched in September of 2018.  Its design is to act as a long term store of value and therefore rewards token holders the longer they hold it. Ndau token holders earn Economic Alignment Incentives (EAI) ranging from 4% to 15% based on the number of months of their holdings.

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The total supply of Ndau tokens is fixed to 30million and there is a programmed market intervention to maintain price stability every time the price moves more than 5%. The supply of Ndau is increased only when demand increases based on a predetermined price curve.

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Ndau is the intellectual child of the Ndau Collective. An anonymous group of early Bitcoin enthusiasts more than 20 leading experts from world-class institutions including MIT, Columbia University, Carnegie Mellon, New York University, University of Chicago, and Goldman Sachs and who specialize in disciplines ranging from economics and monetary policy to cryptography and computer science.

Buoyant

Dictionary definition = able to keep afloat or rise to the top of a liquid or gas.

In virtual currency terms, it means a currency whose value rises and whose downside volatility is mitigated.

Ndau – The name comes from en-dow (endowment).

The proceeds from the sale of Ndau tokens are kept in an endowment and invested in other asset classes. The purpose of the endowment is to serve as a source of liquidity to support ndau’s price. The investment decisions are taken by the Blockchain Policy Council (BPC), a group of nine digital delegates continuously elected by ndau holders. The tokens are native the Ndau blockchain which uses a proof of stake consensus mechanism.

The corporate entities behind Ndau are Oneiro, which is backed by COSIMO Ventures. Oneiro received a seed round of $3mil initially and in October 2019, another $5million. At launch, Oneiro sold $15million worth of Ndau Tokens (which means a bit less than 1million tokens). The recent economic downturn seems to have found Ndau at a fragile point on its journey of adoption and therefore was not able to live up to its design.

At issuance, Oneiro placed Ndau tokens at a price of $17.26 during a private sale. The price remained stable for a long time (about one year) and then started rising. By early 2020, it had actually risen close to $22 (27% increase). By mid-February 2020, it seems that the price stabilizing mechanism of the endowment couldn’t cope with the tsunami of liquidation that hit all assets indiscriminately.

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This indicates that the endowment was too small to cope with the severe changes in demand. According to their website the total tokens in circulation had grown to 4.3million and the price had dropped to $6.97.

Stay tuned and monitor the development of Ndau. We need at least a one-year history in such market conditions to be able to make any meaningful conclusions.

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Security Token news for Week Ending Friday 27 March 2020

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Here is our pick of the 3 most important Security Tokens news stories during the week:

Federal court judge grants temporary injunction against Telegram
A federal court judge Tuesday sided with the SEC against Telegram and granted a preliminary injunction in Telegram’s $1.7 billion initial coin offering. 

Why it matters: All eyes have been on messenging platform Telegram’s plans to distribute its digital tokens, Grams, via its soon to be launched Telegram Open Network secondary public market.  In 2018 Telegram sold 1.9 billion Grams to 175 global purchasers in exchange for $1.7 billion pursuant to a SAFT (Simple Agreement for Future Tokens), an investment contract designed to provide a compliant alternative to an ICO.  The SEC has opposed the distribution on the Telegram Open Network, asserting Grams are unregistered securities. 

Telegram claims the original ICO was a compliant exempt sale of securities, and the Grams then and now and in future are not a security, but a currency/commodity.  The case is pivotal as many token players have already issued tokens through SAFTs; the industry is gauging behavior related to this outcome.  This court ruling against Telegram makes it easier for the SEC to impose penalties on such companies, force repayment of money back to investors and enjoin new issuances and trades.

  A token deemed a security under US law (as distinct from a currency, commodity or something else) is subject to registration requirements. Financial services companies assisting in the buying, selling, structuring or trading are subject to registration and licensing.  The SEC has not issued clear guidelines defining security tokens.  The SEC determined Grams are a security applying a legal test that Grams involve an investment of money that comes with an expectation of a profit derived from the efforts of others. The present case was for the court to rule on a preliminary injunction blocking Telegram from proceeding with the issuance and secondary market distribution of Grams, pending a court determination on the merits. The court, agreeing SEC has a substantial likelihood of success alleging Grams are securities, granted the preliminary injunction.  It remains to be seen if Telegram will take the case to Court of Appeals, return proceeds to it 175 purchasers, or something else.  Telegram certainly possesses sufficient funds to pursue the course it chooses.

TokenSoft Partners with Ex-Military Cyber Firm Hub Security

TokenSoft, a platform for issuing digital securities using blockchain technology, is tapping into Israel’s experience in cyber security, having signed a new partnership with ex-military Cyber firm Hub Security.

Effective immediately, clients of TokenSoft’s transfer agent, DTAC, will leverage Hub Security’s miniHSM solution, which provides token issuers with a cryptographic environment for the whole lifecycle of digital assets. Among other things, miniHSM helps companies grappling with the threat from organised crime and hackers through enforcing end-to-end encrypted USB and wireless Bluetooth connectivity, making its endpoint usage accessible.

Why it matters: Attacks, including breaches at top crypto exchanges such as Binance, have made improved cybersecurity a high priority, and TokenSoft needed to up its game. HUB security offers military-grade cybersecurity tactics including FIPS140-2 Level 4 protection. Built for the use of blockchain-based products, the product offers a combination of hardware and software solutions including a multi-signature vault, hardware firewall, access control, and a neural network learning system designed to anticipate cyberattacks.

France: Blockpulse Pursues First Security Token Offering in Partnership with Lemonway, Plans Stock Exchange for Startups

Blockpulse is the first company in France to pursue a security token offering (STO). Blockpulse is a blockchain-based shareholding management solution. The company launched its service last week in partnership with Lemonway, a Fintech providing payment services. Blockpulse offers a blockchain-based software solution for digitizing securities issuance and management operations for unlisted joint-stock companies

Why it matters: Blockpulse aims to become a “Stock Exchange for startups” within the next 18 months.

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives.

New readers can read 3 free articles.  To  become a member with full access to all that Daily Fintech offers,  the cost is just US$143 a year (= $0.39 per day or $2.75 per week). For less than one cup of coffee you get a week full of caffeine for the mind.

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Security Token news for Week Ending Friday 20 March 2020

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Here is our pick of the 3 most important Security Tokens news stories during the week:

One. Wave Financial to Tokenize $20M Worth of Bourbon for New Whiskey Fund

Digital asset manager Wave Financial is tokenizing a whole year’s production of Kentucky bourbon so global investors can gain exposure to the growing U.S. whiskey market.  Wave announced Wednesday it had finalized an agreement with the Danville, Kentucky-based Wilderness Trail Distillery to tokenize between 10,000 and 20,000 barrels of bourbon whiskey, worth up to $20 million, that will be made publicly available through a specialized digital asset fund.  By tokenizing it, Wave says investors can gain exposure to bourbon’s value appreciation and can also share some of the proceeds from when the whiskey is sold wholesale to merchants, three years after the whiskey is first distilled and tokens issued to investors.

Curator’s Note: The American whiskey industry has been steadily expanding production.  Whiskey is now the most exported US spirit.  Quality whiskey is an asset that has a long barrel life that tends to hold value and even appreciate with time. It is expected the fund administrator will valuate the inventory quarterly to provide a benchmark price for the whiskey-backed tokens, which will be tradable (after a one-year lockup period).

Two. BaFin Approves First Cross-Border STO in the EU – ParkinGO

This week, the German Federal Financial Supervisory Authority approved the first cross-border security token offering in the EU. The STO would give the mobility and airport parking sector giant, ParkinGO the ability to further its market dominance. The news demonstrates an expansion of the EU STO sector, as well as, a forward-looking stance on the part of BaFin.

As the first cross-border STO, the crowdfunding event would reach more EU investors than ever before…BaFin approved numerous other STOs in the past, but the ParkinGO campaign is unique in many aspects. For one, regulators allowed issuers to maintain their investors register on-chain. Additionally, the system permits secondary transactions with all rights attached to the digital asset.

Curator’s Note: ParkinGo, a large Italian parking conglomerate with a recognizable brand, provides airport, port and train station parking at 90 locations in 9 European countries, serving 2.7 million customers.  The token issuance platform is Luxembourg-based STOKR. The offering is to both institutional and retail investors and should be a highly visible token representing a brand European travelers know well. 

Three. Proptech KlickOwn Launches First Security Token Offering for Real Estate in Germany

KlickOwn has launched its first security token offering for real estate in Germany. Launched in mid-2019, the first digital security is for a building based in Lüneburg, Germany. The offering is debt-based seeking up to €1.5 million. As of today, the offering has raised over €350,000. Investors may anticipate a 5% annual rate of return on a “token-based bond.”

Curator’s Note: This small real estate token debt offering for a centuries-old landmark building is utilizing technology provided by Bitbond, which conducted the first German STO issuing its own digital bond. Germany-based KlickOwn recently launched its own security token offering as well. Security token players who have structured and managed their own STO’s issuing their securities earned the credibility and experience to perform in the STO marketplace.

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We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives. 

New readers can read 3 free articles.  To  become a member with full access to all that Daily Fintech offers,  the cost is just US$143 a year (= $0.39 per day or $2.75 per week). For less than one cup of coffee you get a week full of caffeine for the mind.

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The Crypto-Coronavirus Opportunity

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We are facing challenging times globally, that affect all of us economically and for some even our existence. The Coronavirus is a global pandemic that has brought the world economy to a grinding halt. While we do not know how bad it may turn out to be, a crisis can alway be an opportunity. It can help us reshape and implement digital strategies and create new opportunities that accelerate the application of new technologies. How will Bitcoin and cryptocurrencies fare during this chaos?

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.

Coronavirus has infected everything from stocks to Bitcoin. Despite the fact that cryptocurrencies work against the grain of the traditional financial system, because they operate without the need for banks, a couple of days ago cryptocurrencies were not immune to the downturns of traditional financial markets.

The price of Bitcoin witnessed a bloodbath on Friday. Bitcoin’s price dropped 52% in a single day, compared to a 6% drop for gold and a 9.5% loss for S&P’s.

Not only was Bitcoin was hit hard during the week, every asset class experienced its worst since 2008. For the second time in its history, the New York Stock Exchange stopped trading when a market drop triggered its internal circuit breaker, on March 13. This fail-sale system was put in place after the Black Monday stock crash of 1987.

This week Bitcoin’s price suffered and it was one of its most devastating crashes.

While market movements were primarily connected to developments within the cryptocurrency industry, such as favorable regulation being introduced, or rumors that a country is developing its own cryptocurrency, many considered tokens as a safe haven from the uncertainties of the broader financial markets. But the idea that Bitcoin’s price is unaffected by events like the political crisis between Iran and the US or the spread of COVID-19 was displaced this week.

Everyone was selling everything, just like in the financial crisis of 2008–2009. People were trying to minimize their risk across all asset classes. But one person that didn’t seem phased by the sudden drop in crypto prices:

Markets tend to be very emotional and susceptible to herd behavior. Cryptocurrency markets are no exception here. Crypto lovers and believers are likely to buy the dip, while most others will panic and dump their crypto assets.

When panic hits, most people gravitate away from risky assets and revert to survival mode. It’s only normal that people are selling off their Bitcoin to get liquidity, in case the coronavirus pandemic gets even worse. Cash is the only way to buy food and medicine. We can’t really use Bitcoin to pay for basic things, so its possible that retail investors may need to sell their BTC to make sure they have the money to buy extra food, medical supplies and cover other monthly expenses, when prolonged quarantines prevent them from working and making money.

But, cryptocurrencies may have not lost their safe-haven status.

It’s been reported that the reason behind the Bitcoin’s prize drop is a Ponzi scheme by PlusToken. In recent years, PlusToken has scammed cryptocurrency investors in China and Korea for roughly $2 billion, in Bitcoin and other cryptocurrencies. Sales of Bitcoin by PlusToken may have been a contributing factor, in starting the price avalanche, with the con artists behind the Ponzi scheme moving their crypto holdings in ways that would make it more difficult to track sales.

A crisis is always an opportunity. The coronavirus crisis provides the opportunity to change everything and do things we couldn’t do before.

From an economic standpoint, the coronavirus pandemic could be the perfect opportunity for global economies to wipe the slate clean and of past sins like unsustainable inflation and debt creation. The global economy is running out of options when it come to dealing with recession. Lowering interest rates to encourage borrowing and spending, only creates artificial credit bubbles.

The financial world as we know it, is now changing. Central banks will digitize money supply. Several CBDCs (Central Bank Digital Currencies) are being researched and developed in many countries globally. If the coronavirus didn’t hit Wuhan, China’s digital Yuan was to going to be released in the first quarter of this year. Digital surveillance and unmitigated printing powers, could allow financial policymakers around the globe to evade such things as negative interest rates.

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Security Token news for Week Ending Friday 13 March 2020

Security Token news for Week Ending Friday 6 March 2020

Here is our pick of the 3 most important Security Tokens news stories during the week:

Security tokens, blockchain settlement draw interest from institutions: MIT conference panel

“Investors and participants are hungry for transparency in the space, and blockchain promises more transparency,” Kokoshi said. Coupled with the self-executing capability of smart contracts and the promise of lower costs, the technology is very enticing for issuers of security tokens…Lucas Nuzzi, network data product manager at Coin Metrics, agreed with Kokoshi’s assessment and highlighted security tokens as a “high point of interest” for institutions… there’s a lot of demand on the institutional side of things to explore…public blockchains like Ethereum as another backend for their services.”

Curator’s Note: At an MIT conference in Boston last week, Ada Kokoshi of State Street Corporation ($2.5T assets under management) declared the transparency of blockchain is ushering in the adoption of security tokens by issuers and institutional investors. Kokoshi judges the prime mover to be the crypto ecosystem’s ability to integrate with legacy systems to create efficiencies of speed, accuracy and lower costs. 

Morningstar Rates First Ethereum Security In $40 Million Fatburger Deal

“Fatburger just got a little more juicy thanks to a historic $40 million capital infusion that not only involved securities issued on ethereum, but marks the first time investment ratings giant DBRS Morningstar rated securities issued on a blockchain. While the rating itself is on a traditional paper debt security that closed on Friday, Morningstar cited faster access to data about the securities as a result of the increased transparency from using ethereum in its rating document, paving the way for a more pure class of crypto-assets native to the blockchain.”

Curator’s Note: California fast food franchiser, FatBurger, raised $40 million in debt from investors, issuing securities on the ethereum blockchain. Transactions will be effected by conventional means, and recorded on the ethereum blockchain as “digital representations” of ownership, with the issued blockchain security tokens an outside, parallel record that does not govern operation of transactions. Even though the blockchain token parallel does not govern, significantly it is being cited by DBRS Morningstar as beneficial in transparency for investors. This is the first time DBRS Morningstar has rated a security based on distributed ledger technology (even as a parallel system). Distributed ledger technology, by decentralizing and encrypting the storage of information via blockchain, insures the reliability of data, at increased speed and lower cost.

New York-based Cadence, the digital security advisor for the financing, will manage the ethereum blockchain token processes.  Cadence is backed by an impressive list of investors including Argo, Coinbase, Fantail Ventures, and several Chinese investors.

France’s Financial Markets Authority (AMF) has proposed that all of Europe adopt a regulatory “sandbox” to support the emerging security token industry

“The proposal is from Europe’s most reliably pro-blockchain financial regulators. AMF has consistently advocated a forward-thinking approach to blockchain and distributed ledger technology for years, approving initial coin offeringsdrafting blockchain bills and releasing experimental frameworks for crypto firms to regulate themselves. 

‘These frameworks were designed to frame centralized market infrastructures,’ AMF President Robert Ophèle said in a speech. He explained that ‘they are not suited to the decentralized nature of the blockchain environment” and therefore render many projects almost unprofitable…We are faced with a chicken and egg paradox. The space cannot develop under the current framework, but without documentation new frameworks cannot evolve either.’ ”

Curator’s Note: AMF this week proposed a regulatory “sandbox” to support the emerging security token industry.  The sandbox, or “Digital Lab” proposal calls for a three-year exemption period to provide data and feedback to assist regulators in understanding risks and innovation associated with decentralized blockchain infrastructures and security tokens in order to develop new, more flexible regulation. It remains to be seen how other continental financial regulators will react to AMF’s latest recommendation.

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives. 

You get 3 free articles on Daily Fintech. After that you will need to become a member for just US$143 a year (= $0.39 per day) and get all our fresh content and our archives and participate in our forum.

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Security Token news for Week Ending Friday 6 March 2020

Security Token news for Week Ending Friday 28 February 2020

It was a slow news week in security tokens. So we start with a downbeat analysis from Asia. Why is the growth engine of the world not excited by security token offerings?

“The lack of interest is particularly striking in Thailand and Taiwan, two areas that were among the first to enact STO regulations to encourage the investment.”

Two issues stand out. One is the cost to do an STO is high. The second is that developing markets such as Thailand and Taiwan don’t yet have the investor liquidity of major hubs such as New York and London.

For our second story we went with firms investing for the future specifically in those developing markets.

“The Stellar Development Foundation (SDF) announced Wednesday it has invested $715,000 worth of lumens (XLM) tokens in DSTOQ, a security token platform that provides traders with access to global markets from their smartphones.”

However note that Stellar was investing their own currency not a “real” currency like USD. 

For our third story we went with a savvy entrepreneur who made a quick exit from one venture and then reinvested to go “all in” on the Security Token market.

“Meanwhile, Konings has already moved on to his next project, Security Token Group, of which he is a founding partner. Konings says the group has already raised over $1 million dollars in financing, and employs a small team of consultants, developers, and fund managers across its subsidiaries. The company is also on track to break $1 million in revenue this year.He predicts 2020 will be “the year of the security token.”

In short, this week felt more like 2018 with a lot more talk about the future than big things happening today. 

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives. 

You get 3 free articles on Daily Fintech. After that you will need to become a member for just US$143 a year (= $0.39 per day) and get all our fresh content and our archives and participate in our forum.

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Why Bitcoin is Eating the Software World

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Back in 2011, Marc Andreessen famously wrote “Why Software is Eating the World“. Today the idea that every company needs to become a software company has seeped into every aspect of our lives, changing the way we live, eat, interact, and commute. We shop on Amazon, we ride Uber to get around, we order food with efood, we find places to stay with Airbnb and we search on Google when we have a question. Few of us could have imagined the impact software would have on our day-to-day lives. Along with this innovation, we’ve seen some side effects. Some of the biggest companies own almost nothing and employ almost nobody. First it was software, then it was mobile, and now its bitcoin, blockchain and decentralization.

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.

We are at the start of a cryptocurrency paradigm shift, that will bring a wave of decentralised networks. This movement has been building over the past few years and goes beyond Bitcoin, other cryptocurrencies or even open source software and blockchains. Bitcoin is just one use case.

Ten years ago there were no alternatives to government issued currencies. In 2008, Satoshi gave us Bitcoin and last year Facebook introduced Libra. Critics became advocates with JP Morgan Chase leading the pack. JP Morgan may be cautioning their clients against crypto, but they are simultaneously one of the largest corporate leaders in this space, launching the JPM Coin and their Quorum blockchain project, which may soon merge  with ConsenSys.

Almost every sector is looking at blockchain, with governments terrified of being left behind and are scrambling to catch up. Maybe it’s because they understand that if they don’t scramble new countries will emerge. Yes, new countries.

Balaji S. Srinivasan, in his conceptual model “The Network State” has a basic idea: “Just like every company is becoming a software company, every country will be forced to become a software country.”  Srinivasan explains that eventually we’ll see new countries emerge from crypto-communities: “Same people, different places, same beliefs”. Interesting!

Blockchains that are capable of deploying smart contract, will digitize just about every asset and process. We will have digital versions of everything, stocks, bonds, fiat currencies, loyalty points, software licenses, concert tickets, insurance policies, derivatives and things we haven’t even thought of yet. This is a $90 trillion dollar opportunity.

The tools and infrastructure that’s needed by developers to build, deploy, and scale blockchain products is in place. Unless you are building a blockchain or consensus algorithms, using blockchain technology is well within reach of any developer. Seventy-five percent (75%) of the respondents in the State of Enterprise Blockchain Study, think blockchain will be as ubiquitous as cloud by 2025.

But, just like software continues to eat the world, blockchain and decentralization could end up eating software. Bitcoin and Ethereum could make Uber look like Pong. You could have a smart contract handle the money and do the payouts. While blockchain technology relies on software, it offer a new level of durability, interconnectivity, and most importantly, processing power. Because it uses open protocols, anyone can connect, participate, and innovate. That means that with a cryptocurrency like Bitcoin, which was designed to be a peer-to-peer electronic cash system, you can extend the technology to do other interesting things.

Bitcoin introduced two things: digital scarcity and decentralized computing that requires minimal-trust. The significance of Bitcoin’s core technological innovations go beyond the creation of a digitally native money. They enable a new, structurally superior economic model for the software industry. While, software, the cloud and apps are amazing platforms to scale technology, cryptocurrencies provide a radical new layer of transactions and trust on top of these new connections.

Bitcoin and blockchain can enable new forms of governance that decentralize business hierarchies, disrupt the decision making process and organizations , forcing them to be more transparent and accountable. It is too often the case, that the organizations we trust, let us down. Trust in software services from companies like Facebook, Google, Amazon, Microsoft and others will be come under the microscope.

Think of the drama about user data over at Facebook. Say what you will about crypto, but I think you’ll agree that there’s a lot of room for improvement, especially when it comes to software. While software has been immeasurably successful at improving a lot of things, it has only barely started to scratch the surface of the world of trust. Establishing a web of trust, that is programmable and its guarantees come from something more fundamental than a human institution, a mathematical guarantee, is the most important piece of the crypto puzzle.

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Security Token news for Week Ending Friday 28 February 2020

 

Security Token news for Week ending 14 February 2020

Here is our pick of the 3 most important Security Tokens news stories during the week:

Commercial Real Estate Marketplace Red Swan Tokenizes $2.2 billion In Real Estate Through Security Token Platform Polymath 

Red Swan CEO Ed Nwokedi:  “…in the past [real estate tokenization was attempted on] platforms like Harbor, Propellr and Fluidity, which were really tech companies…They didn’t really have the real estate background or the expertise to understand how the private real estate market works.”

New York-based Red Swan says it has tokenized $2.2 billion in commercial real estate representing 16 different Class A commercial properties based in Texas, California and Ontario, Canada. CEO Nwokedi disclosed Red Swan is in the process of becoming a registered investment adviser, which will allow it to manage assets for accredited investors. The tokens are ST-20 tokens running on Ethereum.

 

Security Token Platform Dusk Network Says It Will Tokenize Shares For Thousands Of SMEs In The Greater Benelux Region

The Amsterdam-based company announced Thursday it has partnered with Firm24, one of the region’s largest shareholder registries, and will use blockchain for an automated infrastructure that could introduce market efficiencies and transform how shares, that are not publicly listed, are traded.

Firm24 has more than 35,000 SMEs from Belgium, the Netherlands and Luxembourg (known as the Benelux region).  Firm24 hopes to deploy a tokenized share register to automate corporate actions and connect customers directly, creating tokenized representatives of share certificates that are freely tradable.

LuxTag Claims First Successful Security Token Offering in Malaysia

LuxTag announced it has closed on a $360,000 token offering. The crowdfunding round saw 51% of the funds denominated in Bitcoin and XEM (NEM).  LuxTag claims to be Malaysia’s very first successful token offering. The securities offering was hosted on PitchIn.

LuxTag is an anti-counterfeit, track and trace and anti-theft solution provider. LuxTag utilizes the NEM blockchain platform and NEM’s native tokens (XEM) to run its blockchain operations. The service revolves around digitized certificates of authenticity for tangible products, linking to brands and owners through multi-signature smart contracts and the IoT (Internet of Things) elements.

The company included among its customers Chronoswiss, a Swiss watchmaker, the International Islamic University of Malaysia (for securing authenticity of graduation certificates) and Defeet International, a sports apparel brand based in the US.

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives. 

You get 3 free articles on Daily Fintech. After that you will need to become a member for just US$143 a year (= $0.39 per day) and get all our fresh content and our archives and participate in our forum.

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`Before me, everything was done manually` says the `Blockchain` Figure muppet

Screen Shot 2020-02-24 at 08.04.36Meet the new mascot “Blockchain,” a puppet that Figure Technologies has created for their video ads aiming at the masses who should consider the benefits of HELOCs on the Blockchain.

View the video ad campaign here.

Figure Technologies is a 2year old San Francisco-based startup that is well funded and focused on changing the entire life-cycle of Loans and beyond. From loan origination to servicing, and securitization. They started servicing the needs of homeowners who have most of their wealth locked in their homes with the so-called HELOCs (Home Equity Line Credit).

The technology they have built is slowly and methodically, being piloted and used in different use cases.

Figure Technologies is eating its own dogfood. Crunchbase reports an eye-popping total funding amount of $1.2billion. This includes a credit facility of $1billion from investment bank Jefferies and WSFS Financial Corporation, the parent of WSFS Bank. This financing facility (May 2019) is custodied and serviced on the in-house Blockchain that Figure Technologies has developed, called Provenance Blockchain.

In the summer of 2019, Figure Technologies launched its $20 million Reg D security token offering, the HASH token, also using the Provenance Blockchain.

Figure Technologies is cofounded by Mike Cagney, the founder, and ex-CEO of Sofi, with his wife June Ou (ex- CTO at Sofi). Undoubtedly, Figure Technologies is targeting the same market that Sofi targeted (refinancing debt). It can be seen as the Blockchain competitor or it can be seen as the technology company that will make it easy for Sofi to migrate to a blockchain infrastructure when the time is right.

Current product offering of Figure Technologies

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Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

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On the other hand, the target market is huge and maybe the two companies stay separate as Sofi grows its platform beyond refinancing loans and into wealth management.

Figure Technologies presents a huge global opportunity in private markets. They estimate savings via their Provenance blockchain (Provenance benefit figure) and revenues on the Provenance blockchain (Provenance Opportunity figure)

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Provenance Blockchain

The in house blockchain is public but permissioned. The participants are: The members that transact on the Provenance blockchain (which include the HASH token holders), the Node hosts, the administrator, and the omnibus banks that take care of the fiat bridges to the Provenance blockchain.

The consensus model is from Hyperledger. More details in the Provenance white paper.

HASH token

A great example of a hybrid token that would not be possible in the current financial infrastructure. HASH has equity like attributes and voting rights.

HASH token holders receive directly (digitally) fees from the members that transact on the Provenance blockchain (are you salivating while looking at the Provenance Opportunity figures?).

They also vote for the administrator.

Also HASH has staking functionality for the nodes. Each node has to put up a stake of HASH on which they will earn the return for their services.

Details regarding the allocations and the economics are found the Provenance white paper.

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The refugee crisis is an identity crisis

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In the worst refugee crisis in Europe since World War II, all around the world millions of people have been displaced from their homes and the numbers keep on growing. Globally, according to UNHCR, one person in every 122 is now either a refugee, internally displaced or seeking asylum. Thousands of refugees have crossed the Aegean sea and on their quest, many have drowned or disappeared. Since the first refugees started arriving on the Greek islands, in 2015, the situation has gotten worse. In 2019 alone, 75,000 new arrivals reached the Greek shores and authorities predict that the crisis will even worse, as more refugees arrive every day by boat from Turkey, to join thousands of refugees who are already in the country. So far the Greek government has failed to effectively handle the problem. Can Blockchain help millions of refugees and the Greek government, by solving some of the most critical problems they face?

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.

Migration policy inevitably requires effective coordination at the local, national and international levels, as well as between governments, NGOs and the private sector players.

As the number of refugees continues to rise and even though an immediate resolution seems unlikely in the near future, it is crucial for governments, non-government organisations and the private sector to work together to find solutions. Blockchain technology can play a critical role in the refugee and migrant crisis, through the innovation and provision of tools and solutions to governments, private sector and other international organizations.

While blockchain cannot solve the root problems in the refugee crisis, it can improve living conditions. Blockchain could have a significant impact on refugees’ lives: identity tracking, resource allocation, healthcare, education, employment and social inclusion. It could provide transparency that can significantly improve the lives the refugees and help host countries effectively manage the migration process for refugees and asylum seekers.

Identity and borders
What do you do when a hungry and traumatized man that lost all his belongings tells you: He is Mohamed from Syria, 32 years old and has a computer science degree. He can’t prove any of that. Do you trust him? He could just as well be part of a terrorist organization. It’s not easy.

When refugees abandon their homes, most leave behind important documents such as birth certificates, marriage licences, passports and ID cards. While some refugees have scattered analog records or haphazard digital ones, 70% of refugees lack basic identification.

Building identities on the blockchain has a lot of value since it can be easily verified, cannot be falsified, are time-stamped, and public for everyone to see. Host governments could issue digitally-authenticated identification documents based on the blockchain, allowing refugees could use these documents to prove their identity and that of their families.

This could help with difficulties in tracking and sharing refugee migration data, since governments do not always know which country the refugee has entered before arriving in their jurisdiction. With the help of biometrics, governments can establish unique identities of asylum seekers and refugees, address the issue of lack of documentation for asylum seekers, and also allay security concerns by enabling identification and tracking of those inside the host countries’ borders.

Funding and humanitarian aid
According to the World Economic Forum and UNHCR, there are approximately 22.5 million refugees who are dependent on aid from international and non-government organizations. These organizations face many of their own challenges while distributing aid. Lack of transparency and accountability is a huge challenge when it comes to distributing vital resources.

Blockchain can help track where donations are going, track aid refugees have received, and give donors the transparency needed to make sure they are comfortable donating.

The United Nations World Food Programme (WFP) has directed resources to thousands of Syrian refugees in one of the largest-ever implementations of the Ethereum blockchain for a charitable cause. It gave refugees cryptocurrency-based vouchers that could be redeemed in participating markets, which sped up transactions while lowering the chance of fraud or data mismanagement.

Since 2016, the Finnish Immigration Service has been giving asylum seekers prepaid Mastercards instead of traditional cash disbursements, and today, the program has several thousand active cardholders. The card is linked to a unique digital identity stored on a blockchain. The system, developed by the Helsinki-based startup Moni, maintains a full analogue of a bank account for every one of its participants.

Integrating into society
Integrating back into society can be one of the most difficult things for refugees. Establishing digital identity is only a start. For thousands of refugees living in camps, access to education, jobs and financial support is an uphill struggle. They need to do simple things like all of us, open a bank account, build credit history, get a job and access their health records.

Integrating into the workforce and learning the local language is huge challenge. Most refugees are in the process of having their asylum applications assessed, years after arrival, they have limited access to work.

Storing financial and health records on blockchain, open new financial opportunities to people who don’t have access to modern financial services. Refugees can potentially use the blockchain to establish records of their educational and professional histories, which often get lost when they flee their countries. That’s why the United Nations is exploring using the technology.

Everyone has a personal identity. However, refugees who had to abandon their country, lost all connection with any physical evidence of their past and also lost their way of establishing a future. To participate in an economy, and resettle into society they must have a record of identity. Blockchain is an opportunity to protect the identity of refugees and provide ownership over credentials. The single most important thing that governments and organizations can do to protect refugees, is to begin issuing official records on blockchain and help their transition into becoming productive members of their new society.

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