Updates from user Toggle Comment Threads | Keyboard Shortcuts

  • user 4:54 pm on May 8, 2016 Permalink | Reply
    Tags: , , , , , , ,   

    Making Bank as a Platform (BaaP) a reality 

    shutterstock_378867058

    This is the second post of a two post series I co-authored with David Brear. Both posts appeared originally on The Financial Brand thanks to Jim Marous.

    You can read the first post here.

    All up to speed? Excellent. As you will already know from Part 1, as a #Platform has never really taken off for various reasons. Traditional approaches and business models are easy as the #banks had full control. Financial services industry incumbents created products, pushed them out and sold them to their customers. Value was produced upstream by the banks and consumed downstream by the customers.

    Unlike traditional models, platforms do not just create and push products out. They allow users to create and consume value. At the #technology layer, external developers can extend platform functionality using APIs. At the business layer, users (producers) can create value on the platform for others to consume.

    This is a massive shift from any form of financial services business that we have ever known. A platform play within financial services is different from traditional business thinking. Creation of network effects is more important than simply bringing in users or charging all users to make money.

    In this model, for financial services, software and technology are not the only end products. Instead, they simply serve as the underlying infrastructure that enables users to interact with each other. Most importantly, the business itself doesn’t create all the value.

    We believe that this is the future of financial services business models and will outline how we think this can be pulled off.

    7 Layers of #BaaP

    We recommend the book Platform Leadership by Annabelle Gawer and Michael A. Cusumanoto to those who want to explore further what platform strategies are. We are borrowing from this book somewhat, especially from the authors’ four levers of platform leadership which we have expanded upon to create the “7 layers of BaaP”.

    • Scope of the firm
    • Product
    • Service
    • IP/Data
    • Technology
    • Relations with Partners
    • Internal HR Organization

    How do financial services industry incumbents fair?

    Against this model it is clear that a platform play would not be successful within the banks with their current setups and mindsets as they have not developed the ability, nor the sophistication, to pull it off.

    Screen Shot 2016-04-03 at 7.31.49 AM

    What would a #Bank BaaP look like?

    But across these platform levers what could a bank BaaP be and how could it operate?

    Screen Shot 2016-04-03 at 7.33.49 AM

    Ultimately there will be different platform answers for different banks or insurers given their direction and make up. What is clear though is that being a platform is different from partnering or merely becoming a “digital” incumbent.

    6 key questions to enable banks for BaaP

    1) What is the focus of your company? – If the core of your business used to be articulated around intermediating between deposit taking and extending credit then what will the new core be around? Is this going to continue to be a store of money or will it be around something else?

    This something else could be identity or the data of customers but if not identity and data then what else is of value that you could focus around?

    Answering this first question will make it easier to choose a clear strategy for customer centered products based around it. In addition, answering this question may lead a bank or an insurance company to make an acquisition should the part of the core identified not currently reside within its skills set.

    For example, we would venture to say that a bank may want to purchase an identity management platform &8211; consensus computer based &8211; and an insurer may want to purchase a cybersecurity consultancy or service provider.

    2) How are you going to attract partners to your BaaP? &8211; Once the core and product/service decisions have been made, what partners you choose and how you plan to attract them to the platform will be of paramount importance.

    We would characterize this decision across a continuum, from complementary collaborative to competitive partners, and as changing over time based on the needs and demands of the business.

    Other industries who have seen success in these strategies have done so through very inclusive practices around the platform. Excluding competitive partners reduces the overarching capability that would be held in the platform and changes the dynamic of the BaaP owner responsibility.

    3) How are you going to rethink your architecture to support this new direction? &8211; The technology architecture needed to support a platform strategy is radically different than the current ones implemented into most banking organizations.

    This maybe the most difficult lever to re-engineer, given the level of legacy debt in play, but it is one of the most needed. A holistic technology architecture where silos are broken down, open source and open standards are used judiciously, and where APIs are used widely is a must to include partners and interact with them, and to exchange or analyze the right information at the right time within the right situation. Most stakeholders know this, few have the right answer, including most incumbent software service providers. This will change though.

    4) How are you going to protect your BaaP? If you think cybersecurity was top of mind for FinServ incumbents, then it will be ever more crucial with #FinTech incumbents and their platform businesses and partners. It is an implicit statement and a crucial one. The only platforms in the financial services industry, that is Visa or MasterCard and their eco-systems, warrant cybersecurity, fraud and data breaches daily.

    5) Do you understand what new business architecture is required for your BaaP? – The business architecture is significantly more important to the long term success of any BaaP play than its technology equivalent.

    Financial services industry incumbents will need to become governance nerds and fast. Will decisions taken between the incumbents in the platform eco-system be consensus-based, top down, a hybrid? How will differences of opinion be reconciled, how will conflict be resolved? This will depend in part on the incumbent internal DNA as well as the types of partners chosen, i.e. collaborate or competitive ones.

    6) HR needs be rethought &8211; which resources are needed for the core and which for the platform? &8211; Internal human resources will need to be rethought. The obvious rethink will develop along the lines of which resources are needed for the core and which for the platform. It will also develop along the lines of which disciplines will resources need to acquire and apply to their businesses. By this we do not mean traditional intra-disciplinary business skills pairs such as marketing and financial engineering, business development and strategy, trading and sales. Rather, I mean legal and coding, trading and data analysis, strategy and information systems management where non-financial services skills are added to the traditional mix.

    No platform Vs. Absolute Platform

    If we plot these paradigm shifts across these vectors, where the Financial services industry incumbents will have to move the dial from left (current status) to right (absolute platform status), the decisions for each vector become clear. I view these as meta vectors that can apply to front end, middleware, backend processes, people, products and services alike.

    Screen Shot 2016-04-03 at 7.40.56 AM

    BaaP on the horizon

    Its clear from our research that BaaP in Banks is possible but will take a huge amount of change to take place.

    Examples of BaaP thinking is starting to emerge in Europe particularly taking advantage of favorable regulatory frameworks and market opportunities.

    solarisBank

    FinLeap’s, the Berlin FinTech startup factory, investment to create Solaris Bank as a BaaP offering opportunities to FinTech companies to take their services to market via an organization who is fully licensed to do so as a digital bank.

    Solaris Bank has been born out of the need of FinLeap to gain traction with some of their own startups who have failed to gain the umbrella of someone with a license.

    Solaris Bank is looking to offer a full range of transactional services, compliance, capital financing and loans through a range of FinTechs. These are aggregated into one uniformed service to the customer.  It remains to be seen how their platform strategy will flesh out and which core services they will focus on and which ones they will partner for.

    The Open Payments Ecosystem

    The Open Payments Ecosystem (OPE) has been established by Ixaris with European Commission funding.

    The  purpose of OPE is twofold:

    • To make it easier for developers to build payment apps for banks by embracing Open APIs in a pre and post PSDII world.
    • To make it easier for banks to safely access new payment technologies by providing resources like curated app marketplaces.

    The project features six “sub-systems,” each representing a different stage in the life cycle of payment services.

    • A developer environment for payments app development and testing.
    • A payments application store.
    • A secure execution environment that prevents the original developer from accessing live customer data.
    • A compliance system for the life cycle of the app.
    • The ability to add additional service offerings for payment service providers
    • A comprehensive data warehouse for business intelligence

    While not fully a BaaP construct the OPE programme will offer, within the confinds of payments, all of the needed attributes to change how payments services are constructed and how people within the platform are remunerated. In its current guise, the OPE programme is the closest to the iTunes development platform model within banking that we have.

    Mondo Bank

    While most know Mondo Bank for their Alpha and Beta programme, and selling out of a million pound of stock in 96 seconds, they also made no secret of their longer term intensions to become a marketplace. We would define a marketplace strategy as a sub-set of a platform strategy and are, similar with solarisBank, intrigued by how Mondo’s thinking will develop.

    While their focus has been on creating a unique current account for the UK market they see the integration with innovative financial services and technology providers is an obvious step to giving customers control over their money. Instead of thinking that they “own the customer”, as most banks globally do, Mondo intend to give users the power to choose, based on price, convenience and customer-service from a range of services and products that are not created by them.

    Tandem

    Tandem is the second startup digital bank to have been granted a full license from UK regulators. Although more bank than marketplace, Tandem is focused on customer service as opposed to product offerings. As such this approach forces them to partner with best of breed offerings &8211; not part of their core offering – and integrate such offerings to their platform for their own users’ benefits. Tandem does not give the power to choose, rather it curates best of breed offerings, and delivers a platform experience to its users.

     

    It’s clear that there is a huge amount of benefit to be had for banks to become the platforms for banking in the future.

    Building a marketplace does not mean one has built a platform strategy. Ceding control of the old core, i.e. access to checking accounts, without developing a new strategic core will spell doom for those who trend those places.

    These new BaaP partners will not only be found within the scores of FinTech startup disruptors but, also outside of the traditional financial services universe such as technology incumbents, social networks, e-commerce giants.

    Building a platform strategy without understanding that some control will be lost to or shared with partners will not be effective. Only looking within human resources will make it more difficult execute a platform strategy.

    Tech companies such as Amazon, Facebook or Alibaba are already executing from a mature and growing platform. They do not have the benefit &8211; or for some the curse &8211; of being regulated, licensed and able to handle money. Still they are formidable competitors that want to &8220;own&8221; their customers in depth and breadth, and this means a customer&8217;s money, not only a customer&8217;s spending.

    Banks who dither and miss the opportunity to reinvent oneself as a platform will find themselves on the wrong side of societal trends. Similarly, regulation and regulators will need to adapt and be educated in the intricacies of platform strategies.

    Rather than view this as an impediment we believe this might be a great advantage. Financial services industry incumbents with aspirations to become truly digital players already have a strong and long-standing relationship with the regulators as well as a large number of suppliers who could become partners.

    While Mondo, Solaris and OPE have fantastic ambitions who better than the existing banks with all of their investment, employees and existing customers to take the lead, educate and ease the transformation towards the future and BaaP?

     

    FiniCulture

     

  • user 11:49 am on May 8, 2016 Permalink | Reply  

    Fintech and blockchain developments for the week of 2 May 2016: What you may have missed 

    AAEAAQAAAAAAAAfGAAAAJDMyMTM0ZDY1LWQyY2ItNGY0ZS05MGE2LWIxMDRlOTMzZjE4YQ

    Deloitte is all in on #blockchain: The professional services firm announced at the Consensus 2016 conference that it is partnering with five startups to build blockchain based products. Two of the companies, BlockCypher and ConsenSys, are helping Deloitte build digital #banks The firm had a busy week as news also came out that it had created a new solution for storing product warranties on blockchain using the recently released Facebook Chatbot.

    Blockchain regulation in Delaware: Also at Consensus 2016, the governor of Delaware announced the U.S. state’s intention to nurture blockchain and promote its use by ensuring that the regulatory environment does not hinder the growth and development of the #technology.

    Chain impresses the Wall Street crowd: #Fintech start-up Chain recently gave Wall Street executives a first-hand view of digitizing cash on the blockchain. The meeting was kept hush hush so as to encourage participants from sharing ideas. The event was well received though the need for further collaboration was stressed. Said Ian Lee of Citigroup: “While blockchain technology has a lot of potential, it will need to integrate with and co-exist with the financial system that exists today”. It was a busy week for Chain as it also announced the release of its blockchain protocol which the company developed in conjunction with financial institutions.

    Hong Kong falling behind: The contest between two regional powers to become global fintech hubs may be swaying in Singapore’s favour as Hong Kong’s regulatory landscape may be hindering its growth as a destination for startups. The stakes are high and the outcome lucrative as Accenture reported that fintech investments in the APAC region reached almost US$4.3 billion in 2015, making up 19% of global financing activity.

    Tough times for peer-to-peer lender: Not all is rosy in the fintech world. Peer-to-peer lending platform Prosper announced plans to reduce its workforce by 28%, close its Salt Lake City office, and reshuffle management.

    Fintech in the Caribbean: The next time you visit sunny Barbados may be other than for tourism. The island is making a strong push to diversify its economy by becoming a fintech champion in the region. To that end, the government is modernizing legislation to offer new opportunities and to provide regulation of emerging financial startups.

    Paypal’s Singapore Incubator: Singapore based fintech startups will have another option for incubators with the opening of Paypal’s own. The nine-month program will offer a select few with coaching and mentoring from Paypal executives and other industry veterans. The startups will also have access to the payment’s processor’s network of venture capital connections. Applications can be submitted here.

    Feel free to contact Abraham A. Tachjian to discuss these or any other related topics. 

     Abraham A. Tachjian is Legal Counsel at Standard Chartered Bank – FinTech/Blockchain Proponent and Speaker and this post was originally published by on linkedin

     

  • user 10:56 am on May 8, 2016 Permalink | Reply
    Tags: , Interpretation, , Marxist,   

    A Marxist Interpretation of Venture Investing 

    shutterstock_397027105

    You may find it odd for a #venture capitalist – a capitalist &8211; to attempt to interpret #investing in startups through a #Marxist lens. Be that as it may I enjoyed the thought provoking argumentation and hope you will find humor in this tongue in cheek exercise!

    Entrepreneurs, when founding a startup, engage in a revolutionary and subversive act. They self actualize their ideas and dreams as well as themselves and appropriate the capacity to transform the world. In other words, an entrepreneur exerts meaningful labour by leveraging his vision in the real world. This labour is his and his alone, and his relation to it is crucial. (Relation should be read as ownership in this context). The fruits of his meaningful labour are embodied in his startup.

    Entrepreneurs need capital in order to achieve their visions. For the purpose of this discussion, let’s assume this capital comes from Capital which is dissociated from Entrepreneurs. In this sense, Capital mediates the social relationship of production and the Entrepreneur gives up ownership of his startup. This is akin to alienation whereby the Entrepreneur loses the ability to solely determine the life and destiny of his startup. Of course the Entrepreneur receives capital from Capital in the exchange &8211; without which achieving his vision may not be possible. Nonetheless the end result is an alienation from his meaningful labour. To what extent is this alienation material or will become actualized is key to the discussion.

    Another way to visualize this alienation is to use the term “class struggle”. Here the #interpretation of the term is dual. First, we are confronted with a class struggle between the Entrepreneur/Labour and the VC/Capital in a general sense. Second, we are dealing with separate classes of stock,  common shares vs preferred shares, one &8220;struggling&8221; against the other, in a specific sense.

    Class struggle permeates the narrative of early stage investing from the start of a term sheet negotiation til the sale of the startup. The major terms found in a term sheet serve to define the investment and the relation between the Entrepreneur and the Venture Capitalist. A different interpretation forces the astute reader to conclude that each term also serves as a means of alienation by Capital. These terms enable Capital to control or eventually take over Labour&8217;s fruits, i.e. the startup and/or its assets: liquidation preference, cumulative dividend, control provisions, governance issues relating to board composition and board election, contract and compensation issues relating to the Entrepreneur, various flavors of anti-dilution. The more protected Capital is, the more alienated Labour will become. Either materially so or potentially so over time depending on specific future events.

    Class struggle becomes even more intractable as the capital stack densifies over time and as Labour faces Capital(s). Several classes of preferred shares may alienate one another and in turn individually and collectively alienate the common share class. The ultimate alienation for an Entrepreneur being his removal in whole from his startup. To be clear, alienation can only remain within the realm of potentiality should outcomes develop in a positive fashion.

    The old adage that main terms are as or even more important than valuation takes on a vivid dimension when the above Marxist interpretation is taken into account.

    As this alienation is inevitable &8211; potential or actualized &8211; Labour needs to choose Capital wisely and concede the right level, both in depth and breadth, of its alienation. Where does the Entrepreneur draw the line and where does the Venture Capitalist accept the line to be drawn are eminently complex questions.

    No liquidation preference, no cumulative dividends, the lightest possible control provisions, an Entrepreneur friendly board, benign overall governance will make for minimal alienation. What if no other class than common shares existed and were issued over time? I recently witnessed the CEO of a #fintech startup push back against aggressive liquidation preference and cumulative dividends by stating such terms would work against shareholder alignment. He really meant alienation, unconsciously so. I also witnessed another founder pushing back on special controls and board representation a corporate investor was requiring prior to investing by arguing he feared too much control by one corporate would risk altering the strategic roadmap of his startup. Subconsciously so, he also meant that too much corporate control was an alienation he did not care for.

    I think all Entrepreneurs are hidden Marxists in as much as left to their own devices, they would insist on zero alienation. I do not think all Venture Investors are of the malevolent Capital type described by Marx, although it is indeed in their nature, theoretically and sometimes practically, to generate alienation. The best Venture Capitalists intuitively grasp that too much control generates false comfort and negative unintended consequences. I view the &8220;purest&8221; Venture Capitalists as non-interventionists intent on ensuring, to the maximum of their abilities, the visions of the Entrepreneurs they back without undue meddling. Witness the stories we hear and read about top tier VCs who negotiate an investment and a term sheet in a couple of hours over a handshake and who only get high praise and positive reviews from the entrepreneurs they work with. Praise the Entrepreneur that encounters such a VC, as his alienation will be minimal.

    The ideology of venture capital investment with its term sheet and final documents accoutrements can also be interpreted as false consciousness, whereby the Entrepreneur is sold the venture capital investment ideology (terms and conditions associated with an investment) while the true nature of alienation is hidden. Caveat Entrepreneur! Be mindful that the venture capital investment ideology is actually true &8211; capital needs to be remunerated, comes with caveats… &8211; but that as the true motives it impels remain hidden from the Entrepreneur, it is therefore false consciousness.

    I will leave you with two parting thoughts.

    First, there is a cost to the absolute absence of alienation. Freedom is indeed very dear and forces an Entrepreneur to a higher level of solitary fiduciary care. Indeed, the absolute absence of alienation may not be optimal.

    Second, I guarantee that no Marxist or Capitalist was harmed while writing this post.

    FiniCulture

     

  • user 9:21 am on May 8, 2016 Permalink | Reply
    Tags: , , , , ,   

    The Sandbox Network 

    shutterstock_297017477

    With poetic license and my apologies to Shakespeare and his fans.

    “…2nd Regulator:
    By the pricking of my brains,
    Something delightful this way comes [Knocking] Open Locks
    Whoever knocks!
    [Enter #Fintech/Finserv Stakeholders]

    Fintech/Finserv Stakeholders:
    How now, you secret, black, and midnight lord!
    What is’t we can all do?&8230;”

    Something indeed delightful this way is coming. Something that could become essential to the financial services industry, to fintech. Something that is materializing thanks to the keen insights and ground breaking intent of the Financial Conduct Authority (FCA) – the United Kingdom&8217;s financial regulator. That something is the FCA&8217;s regulatory #sandbox (the Sandbox), which is the very first experimentation of its kind.

    To date, regulation has been a top down affair, with either legislative fiat or regulatory fiat brought down to the industry. Some will argue that the industry is usually consulted at the regulatory or legislative level. Some will even argue that lobbies meddle and influence legislative or regulatory fiat. They will be correct. Yet, this does not mean these feedback loops that help shape financial services regulation are bottoms up in their approach. Incumbents or lobbies represent an industry do not talk for the base, for innovators, disruptors. I view the FCA&8217;s Sandbox initiative as the first bottom up approach to regulation.

    Indeed the stated goals and benefits of such an endeavor are impressive:

    for startups and incumbents the potential benefits are =>
    &8211; to lower the barrier and costs to testing and experimenting with a regulatory framework
    &8211; to lower the risk of misinterpreting existing regulation
    &8211; to receive tailored regulatory guidance
    &8211; to receive temporary waivers, &8220;no enforcement action&8221; letters in order to test a business model or #technology live
    &8211; to build a more optimal path towards compliance and regulatory approval

    for a regulator the potential benefits are =>
    &8211; to get educated as to innovation, new technologies and new business models
    &8211; to optimize market structure
    &8211; to protect consumers
    &8211; to inform and shape future regulation
    &8211; to modernize their own operations
    &8211; to promote healthy competition
    &8211; to encourage innovation

    I wonder if #bitcoin and the bitcoin #blockchain early days and development would have been altered, for the better, had there been a tier one sponsored Sandbox where startups, hackers and incumbents would have been able to experiment and share with regulators.

    Now that the FCA is embarking on this Sandbox journey, what next?

    I expect regulatory wisdom and foresight to spread by osmosis. From what I understand the Monetary Authority of Singapore (MAS) is working on a similar scheme, unsurprisingly. In the United States, the Office of the Comptroller of the Currency (OCC) which regulates banking, is working on its own project. So is the Federal Depositary Insurance Corporation (FDIC). I know of no other project in the works, which does not mean regulatory brains are not in neuron overdrive at this very moment. Thusly I expect sandboxes to crop up all over the world. How these sandboxes will be architected and how they may, or may not, interact with one another will be fascinating to witness.

    These twin &8220;How&8221; questions force us to take a closer look at the FCA. Why was the FCA first to market? What makes the FCA so special?

    The FCA is one of the most sophisticated and respected regulators in the world. It rules over one time zone and an industry/economy/eco-system essentially centered around the greater London area.  What is a Sandbox if not a platform for constant and incremental testing! The FCA is also a very independent regulatory body &8211; one may say one of the most independent body in the world, unencumbered by political interference. The FCA does not suffer from a proliferation of regulatory competition in the UK as it stands alone with the Prudential Regulatory Authority (PRA). Finally, the FCA is, from what I can gather, an organization that is guided by &8220;philosophical&8221; tenets. This latter point is essential to understand as it allows the FCA to be a pragmatic caretaker of financial regulation that is opened to a/b testing and experimentation.

    Let&8217;s take the United States as a counter example &8211; and I will leave aside philosophical arguments centered around market solutions vs government solutions, libertarianism vs central action. The USA financial services industry &8220;suffers&8221; from a very complex regulatory landscape: 50 state examiners for the insurance industry, 50 state bank regulators, the FDIC, the OCC, the Treasury, the Fed, the SEC, the CFTC, FINRA (yes I like to joke around), FinCen (within the Treasury), the CFPB to name but the main ones. These various agencies sometimes overlap and often &8220;compete&8221; against one another which creates either areas of confusion and misunderstanding or gaps where no regulatory clarity exists. There are four time zones (not counting Alaska and Hawaii) and more than one metro geography (NY, Chicago, San Francisco, LA, Boston, Washington DC, Seattle&8230;) that matter. Some will argue that political interference indeed occurs with various regulatory bodies (think of how a new administration impacts how the SEC behaves for example). Finally, main US regulators are guided by &8220;rules&8221; which does not allow them easily to experiment and tinker like the FCA does.

    Absent the benefits derived from what defines the FCA, what would be the right architecture for a Sandbox, one that would ensure optimal results? I believe a Sandbox would need to incorporate a) a strong strand of &8220;innovation management&8221; DNA, b) a level of neutrality to ensure collaboration among all stakeholders (between regulatory bodies and between regulators and the industry), c) a level of independence to make sure profit or special interests do not hijack the overall mission and d) a deep and broad sophistication around various subject matters (regulation, legal, technology, financial services business models, startups, innovation).

    This translates succinctly into a not-for-profit organization with a stable sponsorship base and an inclusive yet independent governance framework.

    Now, picture a universe of Sandboxes, some like the FCA, some independent not-for-profit organizations. Some focused on one country, others focused on a group of countries. A US Sandbox, a LATAM Sandbox, a Brazil Sandbox, the UK Sandbox, a EU Sandbox, a Western Africa Sandbox, an Eastern Africa Sandbox, a South East Asia Sandbox, a China Sandbox&8230;

    Further, picture Sandbox cooperation, bilateral, multilateral, thereby creating a bottoms up #network that would foster innovation, market structure optimization and financial inclusion by taking account of grass root technology and business models advances from startups, developers and incumbents. I know I am dreaming but, playing the FCA chess game several moves ahead I do not think such a vision is that far fetched, although the details when implemented may vary from my current crude vision.

    Do remember that we do have top down multilateral cooperation around financial services regulation either at the State/Government level or international organization level. Why not multilateral cooperation from the bottoms up too, via Sandboxes, as powerful tools to augment the interplay between innovation and regulation?

    ps: I enjoyed using as &8220;props&8221; both Shakespeare&8217;s Macbeth and an allusion to a movie about Mark Zuckerberg and Facebook. The supernatural phenomena that is Regulation and the omnipotent traits shared by a regulator and Zuckerberg will not have escaped readers.

    FiniCulture

     

  • user 4:54 pm on May 7, 2016 Permalink | Reply
    Tags: , , , , , Swan   

    Black Swan Events and Fintech 

    shutterstock_386526730

    If you have not read The Black Swan by Nassim Nicholas Taleb, I recommend you do post haste. For a brief description of #Black #Swan Theory without reading the book, see here.

    Taleb makes a distinction between two types of Black Swan #events: a) “…those that are present in the current discourse&8230;” and b) &8220;&8230;those nobody talks about, since they escape models&8230;&8221;  He goes on to state that, due to natural human behaviors, the incidence of the first type of Black Swan event may end up being overestimated while the incidence of the second type of Black Swan event is usually underestimated. Further, needless to say that whatever the type, Black Swans are notoriously difficult for human beings to identify and analyze correctly. Our brains are so hardwired to focus on the immediate past or future that we naturally occlude data residing in the long tails.

    Re-reading Taleb’s work recently got me to ask myself several questions. Which are the Black Swan events already well documented in the #fintech/finserv ecosystem? Which are the ones few talk about that one systematically underrated? I include both Black Swans that can be directly linked to fintech and those that would have an indirect influence on fintech to my musings.

     I can think of the following Black Swan events of the first type that are overestimated:

    – Fintech startups will fundamentally disrupt finserv incumbents

    &8211; #Bitcoin will revolutionize the financial services industry.

    &8211; Bitcoin will eliminate the need for financial institutions as intermediary agents.

    &8211; The Uberization of Financial Services has arrived.

    &8211; New technologies will disrupt financial services

    &8211; Roboadvisors are the future of wealth management

    &8211; Crowdfunding/Crowdlending is the future for financing individuals/companies

    &8211; Regulatory rules (Basel IV or others) become even more draconian and are applied as is, further hampering the finserv industry by reducing profitability, adversely impacting liquidity and increasing volatility.

    Are there any other Black Swan events every one is talking about in fintech/finserv?

    What about Black Swan events that few people are talking about, i.e. those that are underestimated. Does the threat of GAFA (Google, Amazon, Facebook, Apple) and Ali Baba competing against financial services incumbents fall in that second category? The narrative most mined at all fintech conferences I attend seems to revolve around &8220;fintech startups vs finserv incumbents&8221; where the questions asked are should there be competition or cooperation and who will be the ultimate winner. Seldom do I hear about potential GAFA threats although I know savvy bankers and insurers take the threat seriously. Does this mean this Black Swan threat is underestimated as it does not fit most participants&8217; models?

    Here are other Black Swan events I think may be underestimated in the industry:

    &8211; Any action from central #banks that would eliminate fractional reserve banking &8211; and implications thereof for the role of banks in money creation and lending intermediation

    &8211; A repeat of the economic crisis of 2007-2008 &8211; or even worse another great depression &8211; which would further weaken financial services firms and make them even more vulnerable to fintech startup competition or GAFA competition

    &8211; Large financial services conglomerate breakup by legislative fiat or due to market forces, thereby reducing incumbent size to a point where fintech and finserv blend into one thereby redefining the rules of engagement and competition and probably favoring large non-bank competitors. I have Robert Sams to thank for pointing this one.

    &8211; A string of natural disasters clustered in time &8211; thereby weakening insurance companies and banks&8217; balance sheets due to resulting losses. Would such losses weaken incumbents to the benefit of startups?

    &8211; Long term and secular deflation with continued negative interest rates. How would bank react? How would asset managers be impacted? How would consumers react vis a vis their savings strategies? How would lending be impacted? I have Jan-Maarten Mulder to thank for this one.

    &8211; Quantum computing ushers a new era of financial services, making many existing offerings obsolete

    &8211; Oil prices crash and remain low, thereby inducing strings of bankruptcies in the industry, followed by heavy losses with large banks, forcing regulators to step in and further crippling said incumbents to the benefit of their non-bank competitors and fintech startups

    &8211; Cybertheft takes on a new meaning and as digital identities become central to our lives, an entire country&8217;s worth of identities is hacked and stolen, thereby chilling digital adoption in material ways. I have Michael Meyer to thank for this one.

    Can you think of any other Black Swan events of the second type that would have an incidence on the world of fintech/finserv?

    Let the brainstorming begin.

    FiniCulture

     

  • user 4:48 pm on May 7, 2016 Permalink | Reply
    Tags: Arms, , , , , , ,   

    Technology Arms Race & Financial Services 

    shutterstock_373858780

    We now hold these truths to be self-evident, that #fintech startups (especially of the d2c variety) do not pose an existential threat to finserv incumbents, that finserv incumbents are endowed by their regulators with certain unassailable defensible rights and duties embodied by licenses and are saddled by history with obsolete technologies that hinder their effectiveness in a changing world, thereby creating material barriers to a stable Life, Liberty and the pursuit of #Financial Stability.

    We are still exploring whether the following are also truths, that the existential threat to finserv incumbents lies with GAFAA, that fintech startups can help finserv incumbents counter such existential threat.

    Some do not believe #technology giants are a real threat, arguing none of the GAFAA (Google, Amazon, Facebook, Apple, Alibaba and their smaller brethren) are interested in obtaining licenses and directly competing against #banks or insurers. Although I do not know with certainty that Apple or Amazon are thinking of owning and operating a bank, I do know the real question we should ask ourselves is “Can and how would GAFAA or other similar companies cripple financial #services firms?”

    It is evident we, individually or as businesses, engage with the world via our smartphones and tablets. We spend time on these devices interacting with a variety of apps (social messaging for example) or platforms (Facebook for example), reading, creating, sharing, consuming, purchasing. The more time we spend on these devices, with these apps and platforms, the less time we engage directly with the manufacturers of the products or services we ultimately consume. This state of affairs may not pose an existential threat with a brand like Nike for example. It is easy to engage emotionally and mentally with simple concepts whether physical or digital, ones where we have a meaningful bond that helps define who we are. It is not so easy for a provider of a checking account, a loan or an insurance policy. We do engage with money in completely different ways.

    To me, this means there is a potential catastrophic scenario in the making whereby financial services providers would be relegated to being &8220;dumb&8221; providers of products and services without having any meaningful control or tie to the end user – retail or enterprise even though it is arguably more difficult to visualize for the latter.

    Finserv incumbents are now fully engaged, having woken up to the initial threat of fintech startups and realizing they do need to reform the way they do business. Innovation is the name of the game &8211; a dual mandate to be sure where both technology and culture need to be upgraded. For the purposes of this post, I only focus on the technology part of the innovation equation.

    The technology part of the innovation drive is multifaceted. Legacy rails, core systems, market infrastructures need to be upgraded. These &8220;basic&8221; upgrades a necessary but not sufficient. New technologies also need to be acquired. I view Artificial Intelligence (AI), Augmented Reality (AR), #Blockchain/Consensus Ledgers, Quantum Computing (QC), Internet of Things (IoT) to be the main enabling technologies the financial services industry needs to acquire in order to close the gap and compete effectively.

    One does not acquire technologies in a vacuum and there is a competitive battle in the marketplace for the hottest assets. As this post from CB Insights shows, tech companies are hard at work acquiring the best AI startups. Try as I might, I could not find any finserv incumbents on the list of acquirers, nor could I find finserv service providers.

    How does a bank or insurer close to gap in AI if tech giants have first dib at the best assets? I do not know how things are developing in QC or AR but I would not be surprised if the same narrative were to be present. To be fair, the insurance industry is present and active in the IoT field and the banking industry is very active in the blockchain/consensus ledger field which shows a bank or insurance company can take the lead in a strategic technology field. Gaps are indeed being addressed, but not systemically.

    To be fair, there are many ways to bridge a technology gap other than through acquiring.

    &8211; Finserv incumbents could partner with tech giants, indeed such examples exist. Some tech giants are better at partnering than others. The risk of losing direct ownership of the customer still exists though.

    &8211; Finserv incumbents could develop their own technology solutions via internal R&D (such a strategy has not paid hefty dividends in the past, even if one is able to attract top talent)

    &8211; Finserv incumbents could develop partnerships and commercial agreements with independent startups. There will be AI, QC or AR startups that will decline selling to tech giants and pursue their own destiny. Let’s assume some of these startups will be up to par with what giant tech companies are concocting within their walls, the question therefore is which type of independent startups are most appropriate to partner with. The AI, QC or AR startups specialized in the financial services, or those that have a horizontal &8220;go to market strategy&8221; approach. Startup xyz that only sells to banks or IBM Watson? Which will be most optimal?

    With every #arms #race one needs to play to one&8217;s strengths. A finserv incumbent&8217;s strength is twofold in my opinion: a) deep knowledge and mastery of arcane work flows and processes specific to money/data flows, b) mastery of licensing and AML/KYC peculiarities.

    Extending these strengths to enabling technologies (AI, AR, QC, blockchain, IoT) thereby ensuring optimal customization and applicability is therefore key. Choosing the right strategy, best fitted to this goal while at the same time ensuring one does not lose the arms race is paramount.

    Regulators should play a role in facilitating their wards technology arms race battle. We know banks now have a difficult time making equity investments, and rightly so if these equity investments are made with a speculative and casino-like financial bent, from a proprietary trading point of view. Could strategic and technology based investments be viewed differently? Especially as the industry wakes up to the fact that financial services incumbents need and have to behave more like technology companies? After all, it is not too far fetched to picture an insurance company acquiring a cybersecurity consultant or service provider to hone its skills at underwriting cybersecurity risk. From the same token, a bank could (or should?) operate via a mix of acquisition/build a data analytics or AI startup. Such a move may actually be central to a strategy of delivering superior products or managing a client&8217;s identity or data.

    Building resiliency into a bank or insurer business model will require different approaches, and competing effectively in the technology arms race we are currently witnessing will have to play a part in a portfolio approach.

    Finally and clearly, a rising interest rate environment would greatly help finserv incumbents. Fire power in the form of an increase in operating earnings has a tendency to solve many a problem. This leads me to fire a parting question: What if the next 20 years will deliver continued low interest rates environments across the world? In this environment, financial services firms, and their regulators, will have to come up with drastically different approaches, else the technology arms race may be lost permanently.

    FiniCulture

     

  • user 3:05 pm on May 7, 2016 Permalink | Reply  

    Crypto 2.0 Musings – Combining Ricardian and Smart Contracts 

    AAEAAQAAAAAAAAlxAAAAJDBjYTA1OGY0LTY3YjktNGU4NC04ODM5LTUxNzMxODYyOWY2OQ

    Nick Szabo proposed the idea of smart contracts back in 1997

    • Many kinds of contractual clauses (such as collateral, bonding, delineation of property rights, etc.) can be embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive (if desired, sometimes prohibitively so) for the breacher.
    • A canonical real-life example, which we might consider to be the primitive ancestor of smart contracts, is the humble vending machine. Within a limited amount of potential loss (the amount in the till should be less than the cost of breaching the mechanism), the machine takes in coins, and via a simple mechanism, which makes a freshman computer science problem in design with finite automata, dispense change and product according to the displayed price. The vending machine is a contract with bearer: anybody with coins can participate in an exchange with the vendor. The lockbox and other security mechanisms protect the stored coins and contents from attackers, sufficiently to allow profitable deployment of vending machines in a wide variety of areas.
    • Smart contracts go beyond the vending machine in proposing to embed contracts in all sorts of property that is valuable and controlled by digital means.

    Satoshi Nakamoto incorporated the idea of a smart contract in his #Bitcoin: A Peer-to-Peer Electronic Cash System whitepaper. Instead of a vending machine safe keeping snacks and cash, and dispensing snacks plus change in exchange for cash, a distributed ledger, controlled by smart contract code, keeps account of how many bitcoins are held by which account and determines if new coins can be issued or existing ones transferred.

    So what happens when the vending machine fails to give you back the right change? Most likely you look for a sticker on the vending machine with a phone number to call. You call the number, tell the operator the machine number, they pull up the instructions on what to do in case of failure, based on clauses of the vending machine legal contract, and hopefully proceed to solve the issue.

    Wait, hold on, the operator follows instructions based on legal contract clauses! So there is an overall legal contract, some of contract clauses are performed by the vending machine’s smart contract code, others are performed by people. Bitcoin’s design deliberately focused on a pure digital asset exclusively controlled by distributed-consensus-seeking smart contract code, which means that all legal clauses are covered by smart contract code, and hence there is no need for an encompassing legal contract, but for most real world use cases, including vending machines, you do need an overarching legal contract, and autonomous agents – be they humans, organisations or smart contracts, distributed or centrally operated, to ensure performance of one or more legal clauses.

    Traditional legal contracts are unstructured paper or electronic documents that are not machine-readable, not surprising given they were only designed for human consumption. They also tend to be declarative, not procedural in nature i.e. they specify what should happen, not how. That is why often there are operating instructions and procedures that describe how humans should do what things in order to comply with legal clauses. It is therefore useful to think of smart contracts as procedural code that is executed by a centralised or distributed-consensus-seeking platform in order to enforce performance of one or more declarative legal contract clauses, but in order to do that, the legal contract’s automation salient details must be machine readable.

    This is where Ian Grigg’s idea of Ricardian Contract comes in

    • Our innovation is to express an issued instrument as a contract, and to link that contract into every aspect of the payment system.
    • By this process, a document of some broad utility (readable by user and program) is drafted and digitally signed by the issuer of the instrument. This document, the Ricardian Contract, forms the basis for understanding an issue and every transaction within that issue.
    • By extension, all issues of value, such as currencies, shares, derivatives, loyalty systems and vouchers, can benefit from this approach.
    • A Ricardian Contract can be defined as a single document that is a) a contract offered by an issuer to holders, b) for a valuable right held by holders, and managed by the issuer, c) easily readable by people (like a contract on paper), d) readable by programs (parsable like a database), e) digitally signed, f) carries the keys and server information, and g) allied with a unique and secure identifier (content hash).

    Whilst the focus of a Ricardian Contract is in recognising that financial instruments e.g. currencies, bonds, shares should be issued as human and machine readable contracts, same principles can be in my opinion applied more broadly to any kind of legal contract, so as to be fully or partially enforced by both human and smart contract autonomous agents.

    This is by no means a new idea. Primavera de Filippi published an excellent Legal Framework For Crypto-Ledger Transactions post about integrating legal and smart contracts. She cites CommmonAccord, a global legal contract template system, as a means to create Ricardian Contracts.

    Eris propose an alternative eris:legal system, based on legal_markdown templates and CommonForm renderer, for what they call cryptographically-certain duel integration process:

    • Deploy a smart contract
    • Reference the chainId and contractAddress of the deployed smart contract in the final draft of the real world contract.
    • Finalize the real world contract and find its digital fingerprint.
    • Send a transaction logging the checksum of the real world contract into the storage of the smart contract.

    #Blockchain smart contracts are by no means the only way to enforce Ricardian Contract clauses. Open-Transactions project, see whitepaper, implements financial instruments as Ricardian Contracts, processed by a transaction server based on cryptographic proof instead of trust, allowing any willing parties who wish to contract with each other to enjoy the benefits of a server without needing to trust it – a solution that demotes transaction servers to mere notaries, only able to counter-sign contracts that have first been signed by their clients. Barclays’ Dr Lee Braine recently presented yet another alternative vision when he demonstrated an ISDA Master Agreement proof of concept on R3’s Corda – a blockchain inspired platform lead by Richard Gendal Brown – R3’s CTO.

    One of the issues I foresee with the emergence of many different template and markup standards is the very plurality of standards. How do you know that the term in contract A is same or different in contract B. How can you create a nice looking document, yet mark it up in such a way as to make it machine readable. Turns out most of these questions have already been solved by the Semantic Web project in the form of RDFa standard that embeds Linked Data in HTML, an extension to HTML5 that helps you markup things like People, Places, Events, Recipes and Reviews.

    It builds upon standard Web technologies such as HTML, HTTP, RDF (allows creation of unambiguous structured data taxonomies) and URIs, but rather than using them to serve web pages for human readers, it extends them to share information in a way that can be read automatically by computers. RDFa was originally designed for Search Engines and Web Services to use this markup to generate better search listings and give users better visibility on the Web, so that people can find websites more easily, but in my opinion can be applied without alteration to Ricardian Contracts.

    Let’s provide a simple example – a Ricardian Contract for weather insurance. Here is what a user would see in their web-browser:

    —-

    Example Weather Insurance Ricardian Contract

    I, Alex Batlin, authorise the transfer from address ‘abcdwerr’ to address ’24dsfrg3434′ using smart contract agent address ’24dsfrg3434′ of ’10’ unit(s) of GBP pounds held by smart contract address ‘4854398578934’ on the condition that website ‘Weather.com‘ confirms that ‘0.5’ cumulative inches of rain did indeed fall between start date ‘9:00AM UTC 10th of March, 2015’ and finish date ‘9:00AM UTC 11th of March, 2015’ in country ‘GB’ and postcode ‘EC2Y 0RT’.

    —-

    Hopefully pretty much self-explanatory, but on first glance not very useful for machine consumption. Let’s have a look at the underlying HTML:

    —-

    <html>

    <head>

    <title>Example <a href=”http://reference.com/master-agreement-123″>Weather Insurance</a> Ricardian Contract</title>

    </head>

    <body prefix=”rc: http://batlin.com/ricardian#”&gt;

    <h1>Example Weather Insurance Ricardian Contract</h1>

    <p typeof=”rc:RicardianContract”>

              <span>I, Alex Batlin, authorise the transfer</span>

              <span property=”rc:hasTransferAuthorisation” typeof=”rc:TransferAuthorisation”>

                          from address ‘<span property=”rc:hasFromAddress”>abcdwerr</span>’

                          to address ‘<span property=”rc:hasToAddress”>24dsfrg3434</span>’

                          using smart contract agent address ‘<span property=”rc:#hasAgentAddress“>24dsfrg3434</span>’

                          of ‘<span property=”rc:hasInstrumentUnits”>10</span>’ unit(s)

                          of GBP pounds held by smart contract address ‘<span property=”rc:hasInstrumentAddress”>4854398578934</span>’

              </span>

              <span property=”rc:hasTransferCondition” typeof=”rc:TransferCondition”>

                          on the condition that

                          website ‘<a href=”https://www.weather.com&#8221; property=”rc:hasOracleUrl”>Weather.com</a>’

                          confirms that ‘<span property=”rc:hasCumulativeInchesOfRainDetected”>0.5</span>’ cumulative inches of rain

                          did indeed fall between start date ‘<span property=”rc:hasStartDate” content=”2016-03-10T09:00:00<“>9:00AM UTC 10th of March, 2015</span>’ and

                          finish date ‘<span property=”rc:hasFinishDate” content=”2016-03-11T09:00:00<“>9:00AM UTC 11th of March, 2015</span>’

                          in country ‘<span property=”rc:hasCountryCode”>GB</span>’

                          and postcode ‘<span property=”rc:hasPostCode”>EC2Y 0RT</span>’.

              </span>

    </p>

    </body>

    —-

    You will notice that many HTML tags have additional attributes like property and type. When the same document is parsed through an RDFa parser, the following structured data (for this example in Turtle format) is extracted:

    —-

    @prefix rc: <http://batlin.com/ricardian#&gt; .

    [] a rc:RicardianContract;

       rc:hasTransferAuthorisation [ a rc:TransferAuthorisation;

               rc:hasAgentAddress “24dsfrg3434”;

               rc:hasFromAddress “abcdwerr”;

               rc:hasInstrumentAddress “4854398578934”;

               rc:hasInstrumentUnits “10”;

               rc:hasToAddress “24dsfrg3434” ];

       rc:hasTransferCondition [ a rc:TransferCondition;

               rc:hasCountryCode “GB”;

               rc:hasCumulativeInchesOfRainDetected “0.5”;

               rc:hasFinishDate “2016-03-11T09:00:00<“;

               rc:hasOracleUrl <https://www.weather.com&gt;;

               rc:hasPostCode “EC2Y 0RT”;

               rc:hasStartDate “2016-03-10T09:00:00<” ] .

    —-

    You will notice that at the top there is a link to the taxonomy definition file, which means every single property, is completely unambiguous. In fact you can define many different taxonomies or use many shared ones within the same document, which promotes re-use and efficiency, and you can use your client to also pull-in descriptions, labels, additional facts and any rules associated with a property. See if you can read the extract below, from the http://batlin.com/ricardian taxonomy file:

    —-

    <rdf:Description rdf:about=”http://batlin.com/ricardianhasAgentAddress”&gt;

       <rdfs:label xml:lang=”en”>Agent Address</rdfs:label>

       <rdfs:comment xml:lang=”en”>Address of the smart contract responsible for doing the actual condition transfer.</rdfs:comment>

    </rdf:Description>

    —-

    Pretty powerful stuff! It’s worth pointing out that many financial vocabularies or taxonomies like ISO20022 are already expressed in XML Schemas, which can be easily converted to RDF schemas. In another words you do not need to re-invent how create your legal documents, just write them in HTML, which even MS Word supports, you don’t need to re-invent structured data serialisation – use RDF, you can use RDFa to mark-up HTML with RDF, and you can reuse existing taxonomies like ISO20022 either by converting them from XML Schema or writing them native in RDF Schema or OWL.

    So ok, you have defined your Ricardian Contract as RDFa marked-up HTML document that grants someone the right to withdraw some money from someone’s account based on a pre-specified condition, now what?

    This is where I get inspired by Bitcoin – it defines a distributed ledger that safe keeps bitcoins and defines in a smart contract the generic transfer and issuance rules e.g. only allow someone who possesses the correct private key to spend only the ones what they own etc. If I try and create a more generic pattern, lets say on Ethereum, I end up with what I called the Instrument Smart Contract (ISC) – something that defines the procedural rules linked to one or more contractual clauses of a financial instrument Ricardian Contract and keeps ledger of ownership.

    Bitcoin actually specifies some of it’s transfer rules via scripts attached to transactions – default one being that a specific key is required to spend the transactions, whilst double spend prevent etc. rules are hardwired into the protocol code. Scripts can support more advanced conditions like multisig. To create a more generic and re-usable pattern, I propose the idea of an Agent Smart Contract (ASC)– something that encapsulates more user specific conditions in procedural code to achieve the declarative end state, again linked to legal clauses.

    In effect, the Weather Insurance ASC is granted permission to transfer value held in the GBP ISC from issuer to beneficiary if it is presented with sufficient evidence by the beneficiary. In this example, proof-of-contract and proof-of-weather (a form of proof-of-condition) will be required as evidence. Proof-of-contract is the digitally signed Ricardian Contract expressed as RDFa marked-up HTML document. Proof-of-weather is in this case a digitally signed JSON response from a RESTful API service by Weather.com with contract matching parameters. It could as easily be a smart contract controlled by a smart oracle – if on-chain notary is an advantage.

    Here is a, not at all well thought out, process to claim your insurance and get paid:

    • Beneficiary buys the weather insurance from an insurer and receives from them by email or other means the digitally signed Ricardian Contract, which is stored in beneficiary’s digital wallet.
    • Beneficiary’s wallet will inspect the contract and decide when it should query the weather service to determine if a claim can proceed.
    • Assuming a claim can proceed, the wallet sends a transaction that primarily includes the Ricardian Contract to the ISC to register the ASC as a trusted third party able to act as a value transfer delegate on behalf of the issuer.
    • The wallet then sends a transaction to the ASC, primarily including the Ricardian Contract and Weather.com JSON response.
    • The ASC validates the contract and JSON response, and if all ok sends a transaction to the ISC, instructing transfer of GBP in this case from issuer to beneficiary.

    Note, the ASC may itself be an ISC – meaning that for instance if you buy a bond, the bond gives you the right to get paid coupons from the issuer’s money smart contract. In this way you can implement complex atomic swaps spanning multiple instruments e.g. Delivery vs. Payment, Payment vs. Payment. In fact the ASC may be a good place to implement Interledger’s notary services, as long as the ISC supports ledger-provided escrow. Interledger is a protocol for payments across payment systems. It enables secure transfers between ledgers and allows anyone with accounts on two ledgers to create a connection between them. Ledger-provided escrow removes the need to trust these connectors. Connections can be composed to enable payments between any ledgers, creating a global graph of liquidity or Interledger.

    The ASC can also be a good place to implement state (micropayment) channels and off-chain oracles. Many contracts never get exercised e.g. options, insurance – so recording them on-chain is a waste of resource – good enough security can be achieved without use of on-chain smart oracles or storage of contract instance if proof-of-contract and proof-of-condition (in this case weather) is submitted to ASC when the claim needs to be made. Another advantage of this approach versus bundling all logic into the instrument code is flexibility – code can be kept tight and implement core logic, and allow many claim conditions e.g. if the holder of a bond fails to collect coupon payments, but has a credit default swap, this can be activated and money collected from underwriter.

    That’s about it, would love some feedback!

    This post express the opinion of the author: Alex Batlin that originally posted it on linkedin

     

  • user 12:45 pm on May 7, 2016 Permalink | Reply
    Tags: , , , , , ,   

    Digital Currency and the Popularity 

    Ever since #Bitcoin and other #digital currencies came to existence, they have made it to the mainstream financial #technology. The way the exchange rate of Bitcoin is going up, it appears, some day it may reach to $ 20,000. Though the value of Bitcoin has fluctuated drastically throughout the years; for instance, it reached to $ 1200 in October 2013.

    According to some experts and observers if you have Bitcoin and see what happens in the coming months and years, you will be able to see that the price has appreciated to great extent as there are limited Bitcoin. Additionally, as there are no central #banks that circulate Bitcoin, these cannot be manipulated, there is no inflation.

    Needless to say with businesses jumping on the bandwagon and investors becoming interested in the digital #currency, it appears the momentum is going to up and up. In fact, Bitcoin as a digital currency has injected itself into a lot of conversations about the future of technology, economics, and the internet.

    Future for Digital Currency

    From the grand design for digital currencies, it appears they have a bright future. However, a lot of experts say that the future of digital currencies remains a controversial topic as they will always be challenged by the fiat issued by the governments around the world. The governments don’t want to recognize digital currency that can challenge their sovereignty.

    The digital currencies like Bitcoin, dogecoin, litecoin, etc. were developed because of trust issues with financial institutions and digital transactions. Not to say that even when digital currency Bitcoin is not considered to be money by everyone, it is independent of traditional banks and could eventually pose competition for them.

    Which Digital Currency Will be the Most Popular One?

    There are several digital currencies that include Bitcoin, dogecoin, litecoin, etc. These are the top three major names that come to mind when speaking of digital currency. These are a form of virtual currency that is electronically created and stored. Some types of digital currencies are cryptocurrencies, but not all of them are.

    Needless to say Bitcoin is expected to lead the group. Bitcoin was created to take power out of the hands of the government and central bankers, and put it back into the hands of the people. According to various estimates there are currently about 12 million Bitcoins in circulation. Interestingly, litecoin is catching Bitcoin in terms of #popularity.

    Find the latest Bitcoin news, price and analysis from reliable sources.

    More Blockchain Articles

     

  • user 11:24 am on May 7, 2016 Permalink | Reply
    Tags: , , , , , Extra   

    Extra about Bitcoin and Bitcoin change 

    Ever heard of it? I hadn’t both till an astute reader talked #about it in a remark lately. In researching this new currency, a digital one, I turned intrigued, then astounded. Initially I used the example of the Borg from Star Trek, however #extra not too long ago I’ve come to imagine that one key to describing it is to start out from normal foreign money, and to then describe #Bitcoin in relation to that, relatively than trying to describe it as a standalone phenomenon. He stated: Even for the police to find one thing, they need a staff of 15 guys, two diggers, and all the non-public safety gear.
    To begin utilizing bitcoins, all you need is a bitcoin pockets. Since bitcoin is a virtual foreign money, you can’t hold it physically, except you alternate it for goods and providers. Your e-pockets is where your bitcoins are saved safe. You’ll find many bitcoin pockets providers like My Wallet from http://#blockchain.information. Under is an try to answer that and lots of other questions surrounding the virtual currency. And we promise to talk actually, really slowly. Make bitcoin transactions.
    Various electronic cash techniques which? Use contactless fee transfer to facilitate simple fee and give the payor extra confidence in not letting go of their electronic pockets throughout the transaction. Sorts of methods edit Centralized programs edit While a counting scale lets you automate and velocity up a cumbersome operation they do not price a lot. Because of the technical developments products have not solely turn into higher they’ve additionally turn into extra affordable and this holds true for counting scales as nicely.
    Within four years of coming into existence, Bitcoin has become the world’s costliest foreign money and its per unit value soared past $ 1,200 stage or about Rs. sixty three,000 lately, although the costs have now slipped beneath $ 750 a piece Rs. forty five,000. After RBI and other central #banks across the world warned financial intermediaries about dealing with virtual currencies by traditional channels, the thrill round such denationalised currencies, which aren’t backed by any belongings, had lowered for some time.
    Bluetooth LE additionally gives extra than just payment prospects. A Bluetooth LE transmitter can beam deals and digital coupons to customers or pedestrians. It could possibly even navigate folks to specific objects in a retailer. S.McMahon cowl’s the newest Comcast Cable TELEVISION specials and affords so consumers can discover the best financial savings out there. She finds the bottom Comcast Cable TELEVISION offers , so for those who’re considering digital HD cable tv ensure you check out Suzanne’s opinions. Hence, it can be thought of as a blessing, the invention of the digital cameras for teenagers, as it’s simple for teenagers to use (since all they need to do is press the flash button) and will improve the variety of kids concerned about pictures.

    The FDA is constant to analyze other defibrillators in the marketplace. Patients who have experienced health issues or harm associated to these units should search authorized assist. To study extra in regards to the medical units, visit http://guidant.legalview.com/.
     

  • user 11:18 am on May 7, 2016 Permalink | Reply
    Tags: , , , Roulette,   

    Theory behind Bitcoin Roulette 

    The #Roulette is a very popular gambling game. It has gained popularity and it has been revolutionized since the introduction of Bitcoins. Many companies and investors have increased their investments in Bitcoins because of the high number of traded, mined and played Bitcoins. The revolutionized Roulette game is a traditional classic casino game which allows the player to wager with Bitcoins. The bet verification system of this game allows users to prove their outcome. This system is based on the #Bitcoin #blockchain and it ensures 100% fair game. There are different Bitcoin Roulette games available online, but the most popular ones is the Bitcoin Blackjack. Bitcoins operate as the ideal digital chip in casinos and they provide privacy, irreversibility and instant payments.

    The roulette game is traditionally played in casinos. Bitcoins has revolutionized the game and now gamblers can play the game online using this digital currency. Apart from Bitcoin Blackjack, the single-zero roulette is another favorite amongst typical casino players. This game is a favorite because it offers players the best odds and allows more payouts than any other game availablein casinos. The single-zero roulette game is one of the fairest casino games that anyone can play. Bitcoin Roulette rules are quite easy to understand. The roulette wheel is comprised of thirty seven slots and each slot has a number and a color. The wheel starts with a single 0 slot which is colored green. The single slot contains thirty six numbered slots from 1 to 36 which are colored red or black. In this game the players can choose to place bets on either a single number or a range of numbers. The bets can also be placed on the colors red or black or whether the number is odd or even. Understanding this game becomes easier with more practice.

    The croupier who is like the manager or controller of the roulette table is the one who determines the winning number and color. Every roulette game like the Bitcoin Blackjack game has its own croupier who understands the game perfectly. To determine the winning number or color, the croupier spins the wheel in one direction, then spins a ball in the opposite direction around a titled circular track which runs around the circumference of the wheel. The ball spins along the track until it loses momentum and falls on to the wheel and into one of 37 colored and numbered slots on the wheel. The place where the ball falls or lands is the winning number and color. Bitcoin Roulette is an interesting and easy game to play and it will definitely stir your interest.

    Players who are not familiar with how Bitcoin Casino operates should ensure that they read the “how to play section” in the game website that they intend to play before putting a wager or a bet. Bitcoin Blackjack is not any different from Bitcoin Roulette. The concept of playing is the same. The difference comes in what is used to play. Playing Bitcoin Casino is preferred by most players becauseit is available online and users aren’t required to have an account.. You play this game instantly and anonymously.

    Bitcoin Blackjack is a popular roulette game. Bitcoin Roulette is played online and is quite simple to play and exciting.

    More Blockchain Articles

     

← Older posts

Newer posts →

c
compose new post
j
next post/next comment
k
previous post/previous comment
r
reply
e
edit
o
show/hide comments
t
go to top
l
go to login
h
show/hide help
shift + esc
cancel
Close Bitnami banner
Bitnami