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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This Week in Fintech ending 28 February 2020

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This weekly summary from our 5 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

Ilias Hatzis started his first company, an internet search engine, during the dot-com era & now focusses on crypto.

Efi Pylarinou worked for top tier Wall Street firms and is now a top global Fintech influencer.

Jessica Ellerm is CEO of Zuper Superannuation & previously worked for a top Fintech startup, Tyro.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners.

Sheldon Freedman is a  Fintech lawyer at Hassans International Law Firm

If you want to continue receiving This Week in Fintech, you can either become a paying Member for $143 per year (and receive all our content in addition to this weekly summary) by clicking here.  If you just want to receive This Week in Fintech for free, you will need to fill in this form. Or fill in the same sign up form at the bottom of this post.

Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy.

Monday Ilias Hatzis @iliashatzis our Greece-based crypto entrepreneur (Founder & CEO at Mercato Blockchain Corporation AG and Weekly Columnist at Daily Fintech) wrote The refugee crisis is an identity crisis

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?

Editor note: Ilias, writing from Greece which is on the front lines of the refugee crisis, looks at how a decentralized identity running on Blockchain could help.

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote `Before me, everything was done manually` says the `Blockchain` Figure muppet

Meet 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.

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).

Editor note: Fascinating big time use of Blockchain to do Business Process Elimination in a huge market with plenty of funding and a very credible team.

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Wednesday Jessica Ellerm @jessicaellerm, our Australia-based Fintech entrepreneur and thought leader specializing in Small Business and the Gig Economy & CEO/Co-Founder of Zuper, a new superannuation startup in Australia wrote Intuit Muscles Up With Strategic Fintech Acquisition

Small business accounting powerhouse Intuit has snapped up personal finance platform Credit Karma for a cool US $7.1 billion in cash and stock. It’s the latest large M&A in the fintech space, following hot on the heels of Visa’s acquisition of Plaid, for US$5.3B, and PayPal’s acquisition of rewards platform Honey for US$4B.

Editor note: The Small Business Fintech market is growing up fast!

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote Dominoes fall- business disruption and risk management in the COVID 19 environment

It’s clear there is much of which to be concerned regarding novel Coronavirus 2019 (aka COVID 19), including  the direct impact of illness and death among those who have contracted the disease, and the indirect effect of closure of travel, quarantine, closures of schools, businesses, and frontiers. 

Who is considering the effect of the virus on local, regional, and global business?  Whether you believe in the extent of virility of the virus or not, one thing is certain- businesses across the globe are showing symptoms from COVID 19.  Is this an insurance disaster or unexpected new market

Editor note: The world of Fintech, Insurtech & Crypto does not live in a vacuum but is impacted by things happening in the world such as climate change and public health (eg COVID 19).

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Friday  Sheldon Freedman, Fintech lawyer at Hassans International Law Firm wrote: Security Token news for Week ending 28 February 2020

Editor note: This weekly snapshot is the news that matters for busy senior people in the Security Token market.

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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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From Adam Smith to the Glasgow Economic Forum 2020

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What was the most important document published in 1776? Most Americans would probably say “The Declaration of Independence”. But many would argue that Adam Smith’s “The Wealth of Nations” had a far bigger and more global impact.

The University Glasgow in Scotland is home to the “Father of Capitalism”. Since Adam Smith published his works that revolutionized the world’s marketplaces, the progress over the last two hundred fifty years has been explosive. Year after year, the world has grown more connected and more prosperous.

Today, the world is far more complex because of globalization, climate change, population growth and movement, and we need new approaches to problems.

True to his spirit, for the fifth year in a row, students from the Adam Smith Business School at the University of Glasgow, are organizing the Glasgow Economic Forum (GEF). This is a student-led conference that brings together academics and professionals to share and exchange ideas that can stimulate discussion on how we can approach these complex problems.

The two-day event will be led by world-class speakers from Oxford, Cambridge, OECD, the European Commission, Heidelberg University, and the Scottish Government among others. Professor Sarah Smith from the University of Bristol will deliver a keynote speech on the role of women and minorities in the economics and the ways the #DiscoverEconomics initiative can help to boost diversity in this subject area. The second keynote speaker is Professor Doyne Farmer, from the University of Oxford and Santa Fe Institute, and he will talk about Modelling the Economy as a Complex System.

During the event there will be a fintech workshop, organized by Garreth Stubbs from the University of Glasgow Fintech Society. This event is supported by the Bank of England and the Young Scholars Initiative.

Here are all the details about the event:

Date: Saturday 7 – Sunday 8 March 2020
Time: 9:00am
Venue: Lecture Theatre 201, Charles Wilson Building, 1 University Avenue
Audience: Event is open to all
Admission: Early bird – day pass £13.66, weekend pass £18.76

Website: https://www.glasgoweconomicforum.com
LinkedInhttps://www.linkedin.com/company/glasgow-economic-forum
Instagram@glaeconomicforum

Louis Hatzis is the founder and CEO of Mercato Blockchain AG. The idea for this post was prompted by one of the investors in his company, whose son is a student at the University Glasgow and one of the organizers of the Glasgow Economic Forum (GEF).

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Dominoes fall- business disruption and risk management in the COVID 19 environment

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It’s clear there is much of which to be concerned regarding novel Coronavirus 2019 (aka COVID 19), including  the direct impact of illness and death among those who have contracted the disease, and the indirect effect of closure of travel, quarantine, closures of schools, businesses, and frontiers. 

Who is considering the effect of the virus on local, regional, and global business?  Whether you believe in the extent of virility of the virus or not, one thing is certain- businesses across the globe are showing symptoms from COVID 19.  Is this an insurance disaster or unexpected new market?

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

Much of the production and retail business world lives with the two-edged sword of global interaction; on one edge a manufacturer in Barcelona can economically design and digitally source machine parts from a ten person shop located in Hubei Province in China, on the other edge is the disruption that may occur to the Spanish manufacturer if the machine shop is inactive or unable to produce a custom part.  Potential tech problems certainly predated the current viral outbreak, e.g., connectivity, ISP issues, in-house tech issues, etc., but having 59 million inhabitants of this province alone in question being exposed to and managed for contagion is a disruptive analog force that may affect business activity for weeks if not months, with figurative ripples being felt around the globe.

If one considers COVID 19’s global reach as of this writing ( WHO situation rep, 2/26/20220 ):

COVID

And the exposed population, cases and deaths in China alone:

COVID population

The magnitude and effect of the outbreak on just that 1.4 billion population becomes graphically clear.

Unless your business was affected by the SARS outbreak in 2004, affected by the more localized (but terrifying) Ebola virus, or mosquito borne diseases like Dengue or Zika, the business effects of outbreaks are typically small- unless you are immersed in the outbreak.  Businesses in Hubei Province in China certainly understand the effects, as millions of SMEs are shuttered due to the quarantine actions currently in place.  But, were you aware that Brazil reported 2.2 million cases of dengue in 2019 alone, with more than 700 deaths due to the outbreak?  Dengue does not have the quarantine requirement of COVID 19 so life goes on, but life is still disrupted as are businesses.  (full disclosure- the author contracted dengue while posted in a tropical environment- not a fun experience, but also not a disease where death is commonplace.)  The point- by degrees disease outbreaks can have far-reaching effects, and businesses must be aware and have risk management plans.  And you who have service industries and consider yourself immune to these issues- it’s a complex business ecosystem where all are affected.

For this article a deep dive into what’s covered by insurance and what’s not will not be taken- that would be too lengthy an effort for a Daily Fintech reader who needs an overview.  I can say that Business Insurance and Marsh and McLennan have a good summary document here, “Liability policies may respond to coronavirus” .  Travel insurers typically do not afford coverage if a traveler simply decides not to travel due to perceived risk (some policies have the ‘cancel for any reason’ option but it’s an exception placement.)  Suffice it to say that effects of outbreaks do no not fit well into insurance cover.

So what’s the point for this article?

Awareness and consideration of how outbreak ‘dominoes’ can affect your business, and are there insurance options that might provide financial protection?

Consider these quotations from the 2/25/2020 Economist:

“IF China is the world’s factory, Yiwu International Trade City is the factory’s showroom. It is the world’s biggest wholesale market, spacious enough to fit 770 football pitches, with stalls selling everything from leather purses to motorcycle mufflers.  Its reopening was delayed by two weeks because of the COVID-19 virus, the crowd was sparse and the dragon dancers, like everyone else, donned white face-masks for protection. “

And,

“The muted restart of the Yiwu market resembles that of the broader Chinese economy. The government has decided that the epidemic is under control to the point that much of the country can go back to work. That is far from simple. More than 100m migrant workers, the people who make the economy tick, are still in their hometowns, and officials are trying hard to transport them to the factories and shops that need them.”

An outlook from a visiting business person:

“Yiwu is testimony to some of the ways in which people far and wide will feel its economic effects. Agnes Taiwo, a businesswoman from Lagos, arrived in China just as it started to implement its strict controls to stop the outbreak. She had hoped to book a large shipment of children’s shoes and get back to Nigeria by early February. But nearly one month on, snarled by all the closures and delays, she has not yet been able to complete her order. And her return to Nigeria has been complicated because EgyptAir, the airline she took on the way over, has cancelled all flights to China. “This is serious,” she says. It is a sentiment that many others around the world are starting to share.”

The Economist states the case for China business concerns well; what of the cascading effects of supply chain disruption?

Let’s consider the potentials for risk management working backwards from end businesses:

  • Most business interruption covers are based on an occurrence of direct physical loss, either on premises or within a supply chain. Unfortunately, disease outbreaks are seldom considered direct losses, and in most cases are excluded causes of loss.

Continuing, how about:

  • Worker’s compensation?
  • Liability from infection from customers being on premises?
  • Directors and Officers cover if business results flag due to alleged poor planning?
  • Supply chain risk- all along the supply and transportation chain? Has just in time become a liability?
  • Loss of suppliers due to failures of businesses in the worst outbreak areas?
  • Actions of governments? Legal ramifications of non-compliance?
  • Employee actions due to extended periods of no work?
  • Loss of key staff due to inability to maintain salaries?
  • Loss or reduction of digital connectivity due to vendor issues caused by the outbreak?
  • Effects of civil unrest?
  • Interest rate risk from speculation?
  • Capital valuation changes due to stock market responses?
  • Inability to travel to affected areas where management oversight is critical?
  • Increase of cyber risk due to reduced attention to risk?
  • Reduced productivity due to requirements for and inefficiencies of virtual work?
  • Consider the effect that reduced business will have on governments and taxing authorities- will there be significant collateral effects for your business’ taxes, or services received from the government?
  • In the case of a significant outbreak in your area, what government services may be curtailed or cut, and how will that affect your key operations?

Attention, planning, and expectation for a worst-case scenarios are prudent courses as Mother Nature has ways to prove governments wrong.  Re-engaging 100 million workers is a huge undertaking for China, but so may be getting your staff back into routine after a week or two of preventive closures by authorities.

  • Dust off the business continuity plans prepared for natural disasters. Don’t look for the disease outbreak section, it probably doesn’t exist.
  • Contact your insurance broker, have the hard discussion and ask for a frank assessment of your business’s insurance. Ask for the specifics on supply chain, outbreaks, indirect losses, liability, D&O, etc.  What you will learn will be better than not learning at all.
  • Be upfront and inclusive with staff. They are smart, and know things you don’t.
  • Trade war activity over the past year has caused you to find alternative sources for products- contact those sources and solidify your position with them.

Going forward there are learnings for the risk management industry, and for any business that might be affected by issues related to outbreaks.  The availability of parametric insurance may become more commonplace, and the practicality of its inclusion in insurance plans will increase.

Consider the example provided by Parametrix, an Israel-based insurer recently awarded the UK Zurich Innovation Challenge (thanks to Mark Budd and Nicola Cannings who have kept me apprised of the contest’s outcome.)

While not an exact match for supply chain issue parametric cover, the company founded by Neta Rozy “creates parametric (claim-free) insurance for SaaS, PaaS and IaaS downtime such as cloud outages, network crashes, and platform failures. Their products help close a protection gap in business interruption insurance, tailored to the tech-reliant SMEs.”

Carry the parametric principle to supply chain interactions, or any business interaction where a disruptive trigger, or index can be identified, and a risk amount can be applied.  Business disruption due to a specific government command, for example, or supplier closure due to a WHO declared outbreak.  There may be many reasons why indemnity covers are unable to be written, but parametric options must be considered as an alternative.

While SMEs are the typical customer for Parametrix, there is basis for larger, more dispersed firms to consider alternate risk methods, almost as cat bonds might provide for natural disasters.  If an outbreak can affect global GDP to an amount of $1 trillion in lost growth, a globally established firm might suffer effects that are similarly material to its P&L and hedging the risk is prudent.

The key is that global outbreaks do occur,  perhaps not as potentially costly as COVID 19, but significant none the less.

Global reach, fragility of supply chain interactions, and business continuity demand different approaches, and provide the insurance industry new opportunities for risk products.

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

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Intuit Muscles Up With Strategic Fintech Acquisition

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

Small business accounting powerhouse Intuit has snapped up personal finance platform Credit Karma for a cool US $7.1 billion in cash and stock. It’s the latest large M&A in the fintech space, following hot on the heels of Visa’s acquisition of Plaid, for US$5.3B, and PayPal’s acquisition of rewards platform Honey for US$4B.

The acquisition by Intuit is further proof they are bullish about their stated goal of becoming an ‘A.I. driven expert platform,’ as they embed themselves further into the personal finance space.

It certainly doesn’t mean the business is leaving behind the small business sector – in many respects it seems to have realised, possibly sooner than many of its competitors, the tight correlation between consumer and small business finance needs. Win one, and you no doubt win the other.

Proof that SMEs are still core to Intuit’s success can be found in the global corporation’s latest numbers.

In the second quarter of Intuit’s fiscal year, which ended January 31 2020, the business reported revenue growth in its Small Business and Self-Employed Group of 17 percent. This was against a broader revenue uplift of 13 percent across the group. Revenue in the company’s Small Business Ecosystem grew 35 percent.

Intuit has stated that the acquisition of Credit Karma will grow the company’s Total Addressable Market (TAM) to US$275B, specifically increasing the TAM for the consumer segment for Intuit from $29B to $57B.

Credit Karma also gives Intuit access to more engaged members. While Intuit claims to serve around 50 million customers globally, Credit Karma brings with it 106 million customers across the US and Canada. Not only that, it has 37 million monthly active users, that engage with the Credit Karma platform over 4x per month.

Not one to let Xero dominate the SaaS market, Intuit’s acquisition of Credit Karma is a true show of muscle in the sector. Certainly it will be interesting to watch this battle play out over the coming years.

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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

Screen Shot 2020-02-24 at 10.31.05

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.

You get 3 free articles on Daily Fintech. Get all our fresh content and our archives and participate in our forum, by becoming a member for just US$143 a year.

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)

Screen Shot 2020-02-24 at 10.09.07

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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This Week in Fintech ending 21 February 2020

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This weekly summary from our 5 experts, brings you insights based on their experience as investors, entrepreneurs & executives.

Ilias Hatzis started his first company, an internet search engine, during the dot-com era & now focusses on crypto.

Efi Pylarinou worked for top tier Wall Street firms and is now a top global Fintech influencer.

Jessica Ellerm is CEO of Zuper Superannuation & previously worked for a top Fintech startup, Tyro.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners.

Sheldon Freedman is a Fintech Lawyer at Hassans International Law Firm

If you want to continue receiving This Week in Fintech, you can either become a paying Member for $143 per year (and receive all our content in addition to this weekly summary) by clicking here.  If you just want to receive This Week in Fintech for free, you will need to fill in this form. Or fill in the same sign up form at the bottom of this post.

Your Editor is Bernard Lunn. He is also the CEO of Daily Fintech and author of The Blockchain Economy.

Monday Ilias Hatzis @iliashatzis our Greece-based crypto entrepreneur (Founder & CEO at Mercato Blockchain Corporation AG and Weekly Columnist at Daily Fintech) wrote Bitcoin price surges. Is Coronavirus behind it?

The Coronavirus is negatively already affecting several global industries and should the disruption continue, we could see the impact reach all the way to the end of 2020. One of them, electronics and tech are already feeling the impact of the coronavirus. With Bitcoin’s scheduled halving in May, Chinese miner manufacturers have seen a rise in demand for new equipment. The world’s largest manufacturers of mining equipment are based in China (Bitmain, Canaan, MicroBT, and InnoSilicon) and all of them face delays in production and delivery. The price of Bitcoin and cryptocurrencies have increased whenever investors start to panic. 

Editor note: Ilias analyses the complex interactions between Coronavirus and  the price of Bitcoin.

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Tuesday Efi Pylarinou @efipm our Swiss-based Fintech Adviser,  founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019 wrote `NonTransparent ETFs` one step forward and two steps backward

The `NonTransparent ETF` wrapper caught my attention recently, while reviewing WealthManagement news and trends. What kind of innovative investment vehicle would choose in our times, this kind of name?

In late January this year, the SEC approved a new ETF wrapper and several companies will be able to launch active ETFs or license the wrapper to asset managers. T. Rowe had first applied for SEC approval to launch actively managed ETFs (what is now called `NonTransparent ETFs`) as early as 2013.

Editor note: Efi looks at how the very strangely branded non-transparent ETFs work and why they are bad news for investors.

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Wednesday Jessica Ellerm @jessicaellerm, our Australia-based Fintech entrepreneur and thought leader specializing in Small Business and the Gig Economy & CEO/Co-Founder of Zuper, a new superannuation startup in Australia wrote Small Business Fintech is levelling the cost of capital playing field

Today, Jessica is taking a break. This post is by Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy.

We saw the potential in the Small Business Fintech megatrend, which we described as “big enough to drive a truck through” back in 2015 and Jessica Ellerm started our regular weekly column 4 years ago in February 2016 (when it was seen as a niche within a niche).By 2020, Small Business Fintech has become mainstream and is scaling fast. Today we reflect on the growth of this market. 

Editor note: The second order implications of this leveling of the playing field are profound.

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Thursday Patrick Kelahan @insuranceeleph1, our US based Insurtech expert (a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners who also serves the insurance and Fintech world as the ‘Insurance Elephant’) wrote Flood insurance- where the rising tide has NOT raised all ships

The problem is known, the data lakes related to the problem are deep, there are huge costs associated with it and plenty of human suffering.   Whole sectors of predictive data businesses have grown to better understand what is behind it, options abound in an attempt to mitigate its effects.  Governments around the globe spend billions in preparation for and response to the events.

So why isn’t flooding, flood damage mitigation, flood damage repair costs/financing, and flood insurance availability less of a global problem?

Editor note: Pat looks at two possible approaches to the problem of flood insurance as well as showing the huge second order impact of a big coverage gap.

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Friday Sheldon Freedman @sf10002, a Fintech Lawyer at Hassans International Law Firm wrote: Security Token news for Week ending 21 February 2020

Editor note: This weekly snapshot is the news that matters for busy senior people in the Security Token market.

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Security Token news for Week Ending Friday 21 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:

BitGo Acquires Harbor In Surprise Expansion Beyond Crypto Custody

Crypto custodian BitGo announced Tuesday the acquisition of Harbor, a security token platform. The move allows BitGo to expand its services from custody, becoming the first single entity in the USA digital securities-cryptocurrency space holding broker-dealer, transfer agent and qualified custodian licenses. The terms of the deal were not disclosed.

BitGo is a Silicon Valley-based digital asset trust company and security company, claiming transaction volume of $15 billion per month. Harbor is a highly-regarded security token platform in San Francisco, and a licensed broken-dealer and transfer agent. This acquisition by BitGo of Harbor dramatically demonstrates BitGo’s determination to expand its digital assets footprint by undertaking new services.  Both companies are backed by numerous Tier One venture and other funders. 

Openfinance Lists LDCC Token from Lottery.com

Openfinance, a trading marketplace for digital assets, announced the listing of Lottery.com‘s LDCC token.

Lottery.com is a Texas-based company that enables consumers to participate in state-sanctioned lottery games via their mobile phones. The LDCC token is available for all US investors, not only accredited investors. The company aims to expand its business to provide a security token platform for charities, sports franchises, and other organizations to conduct raffles, sweepstakes and other games of chance to gamify fundraising.

Switzerland’s Validity Labs Joins the International Token Standardization Association ITSA

This week, the Swiss-based blockchain educational and infrastructure platform, Validity Labs confirmed it joined the International Token Standardization Association (ITSA). The decision to join the ITSA comes at a crucial stage of the EU’s STO regulatory development. The move demonstrates a further push for a more robust framework to support the expanding security token sector.

Validity Labs is an activist education force in Europe, and one of the leading providers of blockchain-based decentralized applications.  The company offers end-to-end STO implementation services with the goal to bridge the line between technology and legal compliance within the sector. 

ITSA is a non-profit German law association that specializes in token taxonomy. Token taxonomy is the identification, classification, and analysis of blockchain-based tokens. ITSA is a leading voice for the promotion, development, and implementation of comprehensive security token market standards.

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.

 

The post Security Token news for Week Ending Friday 21 February 2020 appeared first on Daily Fintech.