Happy 5th Birthday Daily Fintech

I am a bad parent who does not celebrate each birthday. I celebrated the first birthday of Daily Fintech with this post on 30 June 2015. I am happy with what I wrote then, except for the last sentence where I clearly did not “report back on the second anniversary.” Nor on the 3rd or 4th anniversary. I am trying to correct that by celebrating the 5th anniversary properly today.

Although I have failed with birthday celebrations, I am happy with one thing I wrote on that first anniversary:

“Like any startup, it is an experiment to find product fit to market and I can only promise to keep iterating on that journey.”

According to the legendary investor and blogger Fred Wilson,  the data shows that “It takes seven to ten years to get to real liquidity”.  As he puts it:

“I am not sure why seven to ten years and not five to seven or not ten to fifteen. It’s seven to ten. That’s how it has always been and seemingly always will be. “

So Daily Fintech is 50% there if it is 10 years and 71% there if it is 7 years

“Liquidity” is the definition of success for an investor. If you have external investors (we do not yet at Daily Fintech), that also needs to be your definition of success as an entrepreneur.  If you have bootstrapped and self funded, you also have the option of running a business with the old fashioned objective of what Warren Buffet calls the “owners reward’ of profits.

Either way, it takes seven to ten years to build sustainable business value.

I am happy that in our first 5 years we have done two things well.

  • High quality original content. Daily Fintech now has 6 very talented and experienced people who write once per week, so that we get original Fintech insight every day (M-S). I dislike the word “content”; it implies fodder for the advertising beast. I like to call what we offer “insightful original research that is presented well in good writing to smart people who want more signal and less noise”, but I do recognise that is a bit of a mouthful, so I will use the word content here. Given our focus on high quality original content, it made sense that the first person on our advisory board, in 2018, was Paul Conley and that during 2019 we engaged the services of Triumvirate Content Consultants.
  • Not pulled into blind monetisation alley ways. I knew that traditional online advertising, the obvious content monetisation answer, was failing; I knew this from my earlier work as a digital entrepreneur and while this was not obvious in 2014 it is obvious now in 2019..  I could see a few other blind alleys and am happy to say that we did spend long in these blind alleys. We do have a sense now about how to create sustainable monetisation that fits our high quality original content, but we are still in the early days of this journey so yes it is a “seven to ten years” journey.

I was asked recently in a meeting about targets and I replied that I was much more comfortable with direction and process than with targets. I know where we are going (direction) and I know what it takes to go on a long arduous journey (process), but cannot anticipate all the twists and turns in the journey, so I can only end with what I said on the first birthday:

“I can only promise to keep iterating on that journey.”

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

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

Privacy at lower levels of the Bitcoin & Internet stack is not good news for tokenomics funded privacy coins 

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TLDR Privacy was not part of Satoshi Nakamoto’s white paper. This gives credence to the idea that the author was a fallible human being. Nor was privacy built into the Internet, as Facebook, NSA and others have taught us. Privacy is now being  built into the lower levels of the Bitcoin stack and into the Internet stack; this is not good news for tokenomics funded privacy coins such as Monero and ZCash. Read on to learn about Freenet, I2P, Tor, Nym, Confidential Transactions & MimbleWimble.

This update to The Blockchain Economy digital book covers:

  • Tokenomics Funded Privacy Coins

 

  • Independent Bitcoin Mixers

 

  • TOR

 

  • I2P

 

  • Freenet

 

  • Nym

 

  • Confidential Transactions

 

  • MimbleWimble

 

  • Context & References

Tokenomics Funded Privacy Coins

The two best known tokenomics funded Privacy Coins are Monero and ZCash

The market has not been kind to them compared to the recent market price action for Bitcoin BTC.

This is one of 5 reasons why I am an economic Bitcoin maximalist – any single feature of an Altcoin can be copied:

“Altcoins as a sandbox for experiments and a donation to the community is cool, but it is not compelling as an investment thesis.”

This is one reason why BTC dominance is so high in this bull market. 

Independent Bitcoin Mixers

Before we get to Freenet, I2P, Tor, Nym, Confidential Transactions & MimbleWimble, lets look at the independent Bitcoin mixer (or tumbler)  services; these are something that you add onto Bitcoin if you want a bit more privacy. There are so many of these that there is now a site dedicated to them.

This is now an arms race, with governments and companies paying well funded analytics vendors to track transactions. This is why many think this was a design error in Satoshi Nakamoto’s white paper, which some of the lower level privacy solutions aim to overcome.

TOR (The Onion Router)

TOR, the first anonymity network, uses a volunteer overlay network to conceal a user’s location and usage.

You can see that somebody is using TOR even if you cannot see who it is; so some websites restrict access through TOR.

TOR uses “onion routing”, which uses encryption in the application layer of a communication protocol stack, nested like the layers of an onion. TOR encrypts the data, including the next node’s IP address and sends it through a  randomly selected set of TOR relays.

In the arms race, those seeking to de-anonymize the user may do so using vulnerable software on the user’s computer.

TOR was funded initially through the Office of Naval Research and DARPA.

I2P (Invisible Internet Project)

I2P aims to overcome TOR’s big problem, which is speed,  by loading dark web services faster.

In many cases it is not TOR or I2P. It is TOR and I2P.Some dark web service hidden by TOR have I2P mirrors.

I2P is peer-to-peer friendly. TOR  discourages heavy downloading, but many I2P users are also BitTorrent users.

Freenet

Unlike Tor and I2P, Freenet is totally decentralized across thousands of hard drives. Freenet users store encrypted files on their hard drive without knowing the contents of the file.

In the most secure/private mode, Freenet users can choose to only connect to explicitly trusted friends of the user.

Freenet is widely used as an anti-censorship tool in China.

Nym

Nym’s CEO, Harry Halpin, is clearly going after the privacy coins such as Monero and Cash with this quote:

“peer-to-peer traffic is actually capturable/recordable by any enemy who is watching the network”

Nym has been added to TOR to as Halpin puts it to protect against big cyber savvy governments and corporation, as opposed to those “which can only see a small portion of the internet” .

Nym uses the mixing/tumbling technology mentioned above bu adds it to TOR and Halpin asserts that Nym does not take grants from the US government. Like most of the privacy solutions profiled here, Nym is open source software, run by volunteers on a non-profit basis.

Confidential Transactions.

Confidential Transactions is a mixer in Bitcoin Core that lets senders encrypt the bitcoin amounts in transactions with random strings of numbers called “blinding factors.” This is decrypted by the receiver.

Mimble Wimble

Mimble Wimble (named after a Harry Potter curse) is another mixer in Bitcoin Core that does the opposite to Confidential Transactions as the the receiver (not the sender) generates the blinding factor. Although primarily designed for privacy, MimbleWimble also enhances scalability (because it gets rid of the need to track transaction history per coin).

Context & References

https://dailyfintech.com/2018/04/14/347Ai48/

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

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

The return of the QR Code and China’s obsession to it

 

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Image Source

A few days ago, I had a LinkedIn discussion with Richard Turrin on QR Codes and their relevance in today’s go-cashless world. A few commentators on the post felt QR codes were the thing of the post, and I had a different view. I believe, in a world that’s getting digitised in a hurry, QR code is what bridges the digital world with brick and mortar.

QR Codes have gone through ups and downs since they were first created in 1994 by Japan’s automobile industry. QR – stood for “Quick Response”. However, those were days when mobile phones were clunky and the user journeys weren’t as friction-free as the ones we have these days.

When a customer scanned a QR code, an app or a website would be launched on the mobile using EDGE or GPRS. Once the website came up, users would have to use the clunky interface to fill in relevant details. I guess, that was enough to kill the QR code – or so many thought at that time.

QR Codes are more efficient than Barcodes because they are able to hold more information than Barcodes. This is because, QR codes have a two dimensional layout, where as with Barcodes it is just a one dimensional horizontal layout. And purely from a marketing perspective, QR Codes can be customised with a firm’s brand on it, unlike bar codes.

Utility of QR Codes seem better than Barcodes. But are they safe to store our information? For example, can I store my bank card details in a QR code and claim it is more secure? It certainly is – atleast in most scenarios.

Credit card thefts and frauds come in different shapes and forms. Even in a contactless payment mode, account details are still transmitted to the point of sale (PoS) device. So if the PoS device is hacked, hackers can get hold of the customer’s payment details. If at the point of sale, there is an issue with the internet, the customer experience could be poor.

The other hiccup is the case of lost devices, as QR codes do not check for user identity. This can however be overcome by asking for biometric information from the user at the time of registering. It could also be a selfie of the user at registration. At the point of sale, the device using QR codes, may have to use some ways of identifying the user.

Since QR codes rely on Wi-Fi networks, a hacker could get into the network and overlay fake QR codes. And then there is this issue of different variations of QR codes released by different vendors. There needs to be standards for ease of use from a customer’s stand point.

Despite some of these downsides, what makes QR codes special?

  • Simplicity
  • Versatility
  • Expanding mobile internet and
  • Smartphones adoption.

With better internet access and smartphone penetration, QR codes have become more common place in Asia. Smartphone penetration in China has risen to 63% and to 35% in Asia as a whole. In Latin America (Argentina), customers have taken to QR codes as it is a simple interface for the unbanked to perform digital transactions.

Pictures showing Alipay and WeChat QR codes in China and PayTM QR Codes in India have brought the concept back to life – in a big way. In India, PayTM are running campaigns to get millions of small and medium entreprises onto QR Codes. In Africa, firms like Dumapay are using QRCode to simplify the point of sale payments process. It has become easy for a roadside shop to accept payments using a QR code print out and no Point of Sale device.

Apart from payments, QR Codes can be used for several other interactions. They can be use for

  • Offering discounts,
  • Sending a pre-defined message,
  • Sharing contact details
  • Embedded pricing information
  • Linking to marketing videos or pages

China has taken the use of QR codes to a whole new level, as observed in the picture below. A quick google search on China and QR Codes reveal some really cool use of this tool.

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Image Source

As QR Codes are versatile, most top apps like Pinterest, Snapchat, Wechat and device manufacturers like Xiaomi, Motorola, Samsung, Huawei all have inbuilt QR Code readers.

But in the wrong hands, QR Codes can be used to lead a customer to a malicious page and get hacked in the process. There is definitely caution needed when using QR Codes.

It may be hard for the west to embrace QR Codes like Asia, Latin America (in some parts) and even Africa. But several firms across the world are creating their own customised QR Codes to stay relevant. QR Codes may not have succeeded in the past and they may not be the future either. But they most certainly have a place in the present.


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).


 

The local insurance agent- insurance ecosystem re-defined

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You don’t have to look very far to find an active insurance ecosystem- just visit the neighborhood insurance agent or contact a commercial broker.  They have been fostering the ecosystem method of serving customers since before the term was moved into the front row at the innovation and InsurTech get-together.

TLDR.  Read any of the volume of current discussion regarding insurance ecosystems and you’ll find references to smart device apps, on-demand, shopping or ride sharing companies that are adding insurance options (Paytm and LIC, Amazon and Acko, Flipkart and Digit) but these are not surprisingly in insurance markets that are developing through a ‘digital native’ business culture.  Ecosystems per se have been a difficult ground up start in more developed insurance markets, e.g., U.S., Canada, and Europe.  But what of the US and Europe- forget being part of an ecosystem?

A quick look at defining an insurance ecosystem finds:

Ecosystem- “An ecosystem is a new business paradigm in which firms use digital tools to leap over traditional industry boundaries or forge partnerships.”  (WHY ECOSYSTEMS ARE THE FUTURE OF INSURANCE, Accenture).

Huh.  Leap over traditional industry boundaries or forge partnerships.

Or this-

“we suggest that middle-market insurers may want to consider expanding their horizon well beyond the standard product and service options they typically offer policyholders (see figure 2). This would involve creating or joining a much broader ecosystem offering a wider range of business support solutions, as well as facilitating educational and networking opportunities for customers.”  (Building new ecosystems in middle-market insurance, Deloitte)

Hmmm.  Offering a wider range of business support solutions, as well as facilitating educational and networking opportunities for customers.

I suggest if we look past the urge to see ecosystems as a new paradigm in developed insurance markets you will find- the agency model.  Not just the independent or captive agents who are churn and burn lead chasers, but the agents who have a holistic approach to building relationships (old school suggestion of recognizing inter-connectivity of business- nascent ecosystems.)

Digital ecosystems such as are noted above typically didn’t begin as systems; they were applications.  WeChat was launched in 2011 as a mobile chat app by China digital giant, Tencent.  Within four years it had developed by the popular demand of users and affiliate companies into being a 200 million users per month- wait for it- ecosystem of users and providers.  The application was adding value to what was originally a form of communication.  It was accessible, easy to use, had features that were meaningful in daily life.  It’s said that WeChat was the impetus behind the explosive growth in use of QR codes in China.

How does that tie into insurance, or insurance ecosystems?

There are tens of thousands of insurance agents in the U.S. alone, each of whom is working to build business, retain customers, increase the actual or perceived value customers find in the agent’s service, in other words- working to sell a reason for the customers to interact with the agency more often than once per year.

Smart agents have figured ways to do this for years before digitization- sponsor little league, be active in the chamber of commerce, bring a dish to pass at the service organization luncheon, donate bicycles to good readers at school (Chris Paradiso !), names on bowling shirts, filling sandbags, holding a customer’s hand when a claim occurs, referring the accountant next door, keeping a bank account in the local 1st National, keeping abreast of business and tech changes, and so on.  Building the value he/she could bring to customers, being a resource.

How is it that agents can be the insurance ecosystems of today?  If in China- have your QR code on WeChat, of course.  Piggyback on the platform Tencent has constructed.  But in mature markets where the insurance industry has tenure, the model has it’s own reference- ‘legacy’- and the availability of carriers is a fractured confusion to customers?

Active agents have the basis- relationships with collaborative businesses/organizations, and a pool of mostly content customers.  How might the agent leverage these resources?

  • What does an agent’s website say when it’s opened? Chances are it says, “I want to sell you something.”  So, people visit the site when they need to buy insurance.  Why not have a splash page that showcases the value/connections/resources that the agent has built over time?  A site that is a resource pool for clients that also serves as a selling tool when needed. (not like that of the Life Insurance Corporation of India– love their resources but the splash page is crazy busy).
  • Collaborate with business partners- what’s wrong with having synchronization of messages within the respective websites? If the agent resides in a smaller community then resources are common, success of one results in success of another, and there’s that synergy thing to take benefit from.
  • Be an active part of social media that makes sense for business. Not just a ‘like’ clicker, but a question asker, expertise sharer (Billy Van Jura )
  • Don’t try to re-create the wheel- link to existing resources customers are familiar with. Have an FAQ link on your site?  Did you know that Pinterest has an insurance info page? The details aren’t too tough to get a link onto your page, and cross-clicks builds your digital presence.
  • Be an easy source of information/links for emergency, weather, and government contacts. Be the source customers want to keep as a favorite.
  • Build a smart device application that makes sense- not a selling tool but a resource for the user that can also serve as a selling tool.
  • Leverage the digital resources your stable of carriers has- they know that being a digital resource is important; some are better at it than others.
  • There’s a lot more that the reader can think of- convert your analog ecosystem into a digital version.

There are agents who are working to perfect targeted ecosystem plays, e.g., cyber insurance (Brett Fulmer, Joe Hollier, Ben Guttman in the US), or in unique SME plans (Michael Porpora ), or in facilitating service tools for high net worth customers (Kurt Thoennessen).  A very good example of building an ecosystem/resource platform is Pat West whose firm, Hedgequote’s primary function is to be a resource for those needing information on insurance and potential firms from which to purchase.

I regret I do not know many agents working outside of the US, but some good examples who are building services beyond the basic sales model include Muhammad Ayodeji working in Lagos, Nigeria, (who in addition to representing insurance well posts traffic and accident updates through Twitter), or Mark Callanan in Sydney, Aus, who investigates crop and parametric options for the farmers and farm landowners in the country.  And one never knows- the transition that German insurer DFV-AG   has forged from being a more traditional carrier to digital expert may lead the firm into digital ecosystem land.

The point is that ecosystems can be insurance businesses that truly offer a wider range of business support solutions, as well as facilitating educational and networking opportunities for customers.  Perhaps a clever player will build an ecosystem of business connections that is a digital repository of business links.  Ecosystem is still be defined- agents can evolve beyond the world of sales quotas and discussions about premiums.

“Alexa, who does my insurance agent recommend for plumbing repairs?”

 

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

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).