Image source My eyes usually glaze over at headlines about #Banks getting fined for yet another #scandal. Yawn, just a cost of doing business, too much regulation, a few rogue traders, move on, nothing new to see here. But there was something different about the #Wells #Fargo story. This wasRead More
Bank Innovation
The Germany’s burgeoning #fintech industry is quickly emerging as a regional leader with a number of startup gaining international recognition and Berlin becoming a “strong contender for London&8217;s fintech crown,” according to a new report by UK payments startup GoCardless Ltd.
&8220;It&8217;s no secret that Germany took its time to enter the scene, especially with investors erring on the side of caution due to the complex nature of German financial regulations, the #report says.
&8220;But now the gap is finally closing on the UK. As Brexit places London’s ‘EU passport’ in jeopardy – the UK may soon find itself overtaken by Germany in the near future.&8221;
Germany&8217;s fintech universe by city, EY Analysis 2016
With now 250 companies employing approximately 13,000 people, Germany&8217;s fintech industry is growing rapidly.
A report by EY released in March, suggests that the German fintech market is fragmented but has developed three main hubs: Berlin, Rhein-Main-Neckar region and Munich, each standing for a distinct characteristic.
In terms of investment, Germany is lagging behind the UK, with €524 million invested in domestic fintech startups in 2015 compared to €707 million for UK startups.
Ventures focusing on banking and lending alone have attracted a big chunk of Germany&8217;s overall fintech investment, raising €402 million in 2015.
GoCardless ‘What you didn’t know about German FinTech&8217; report
The report notes the involvement of Peter Thiel, the co-founder of PayPal and a prominent figure in the tech industry, in a number of deals. These include participation in funding rounds of Zinspilot, a platform for comparing interest rates, and Hamburg-based consumer loan platform Kreditech.
Traditional #banks and financial institutions have too been involved, with a number of them either acquiring or partnering with startups to add innovative products and services to their portfolios. These include Sparkesse which acquired the majority of shares in payments startup Payone in 2015, as well as Deutsche Bank which has been collaborating with domestic startups such Gini and Fincite.
Gini is a B2B focused financial data analytics startup delivering an API that uses artificial intelligence to enable businesses to automate paperwork, while Fincite is a German #robo-advisor provider.
Deutsche Bank has further announced plans to invest €1 billion in digital banking in the next five years as part of its &8220;Strategy 2020&8221; to boost efficiency, cut down on risky businesses and boost its capital base, as reported by Handelsblatt in March.
One of the UK&8217;s competitive advantages over Germany is the supportiveness and openness of the Financial Conduct Authority (FCA) related to the UK&8217;s ambition to become the fintech capital of the world. &8220;A major component of that policy includes tax incentives to encourage seed investments, along with government programs to support innovation,&8221; the report says.
This has helped foster a flourishing fintech startup community with widely renowned ventures such as TransferWise, Funding Circle and Monese.
Germany&8217;s Federal Financial Supervisory Authority (BaFin), on the other hand, is deemed &8220;more complex and more conservative towards the development of fintech.&8221;
&8220;The BaFin is still far behind on implementing policies similar to the FCA&8217;s,&8221; it says.
&8220;For many German FinTech startups, acquiring a banking license from the BaFin is considered a path to profitability as it enables establishment of faster processes. But it also requires startups to implement strict controls and supervision for fraudulent activity. The application process can be long, complex and costly for recently founded startups, which discourages venture capitalists from making major investments in the industry.&8221;
In light of the regulatory hurdles, banks have been trying to bridge the gap through investment funds, while players such as &8220;fintech company builder&8221; FinLeap have introduced products and services to help startups with financial regulations.
For instance, FinLeap&8217;s SolarisBank is a fully licensed digital bank focusing on powering e-commerce businesses and fintech startups with modular, API-accessible financial services.
While some local fintech startups have to rely on partnerships with existing financial institutions to help them grow, others such as N26, formerly known as Number26, have been awarded a full German banking license.
Berlin-based N26 is a digital challenger bank that allows users to open an online banking account from their smartphone &8220;in under 8 minutes.&8221; N28 provides customers with a free MasterCard payment card, as well as the ability to send money abroad in 19 different currencies.
N26 is currently available to customers residing in Germany, Austria, Ireland, France, Spain, Italy, Greece and Slovakia.
Another challenger bank that holds a German banking license is Fidor Bank (Fidor Group), which was acquired by France&8217;s Groupe BPCE in July 2016.
&8220;There&8217;s already lots of activity in the German FinTech scene and some of the established players mentioned earlier have already laid the groundwork,&8221; the report says.
It concludes:
&8220;There is massive potential for Germany to rival, and perhaps even take over from, the UK when it comes to fintech. The UK leaving the EU may also pave the way for Germany to take that lead sooner than expected, with the UK’s so called ‘EU-passport’ in jeopardy.&8221;
The post New Report Highlights Germany&8217;s Fintech Industry&8217;s &8216;Impressive Growth&8217; appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Die Schweiz hat mehr und mehr #Fintech Startups und Initiativen. Schweizer Banken versuchen aufzuholen oder sich gegen grosse Player zu positionieren (bspw. ApplePay) und haben eine Vielzahl von (Gegen)-Initiativen gestartet. Teils zusammen mit den Fintech Startups oder im Alleingang.
Luc Schuurmans hat in einen kürzlichen Tweet eine ” 19 #Swiss #Banks Answers to the Fintech #Challenges Map&8221; präsentiert die wir hier gerne zeigen.
Der Investomat ermöglicht themenorientierte Anlagen ab 5’000 Franken im Rahmen von Exchange Traded Funds (ETF). Das Cockpit ermöglicht die Simulation, laufende Transaktionsübersicht und historische Wertenwicklung des gewählten Profils.
Kontomat
: Der Kunde kann Kündigungsfristen beim Sparkonto und Laufzeiten bei Festanlagen beliebig bestimmen und kombinieren. Einfache Benutzerführung und gut verständliche Funktionen machen die Lösung leicht bedienbar und sichern jederzeit die vollständige Uebersicht beim Sparen und Anlegen bequem von zu Hause aus.
Swissquote: vergessen ging in seiner Aufstellung hier noch das E-PrivateBanking von Swissquote
Paymit ist ein Zahlungsmittel, welches das Senden und Anfordern eines Geldbetrags mit dem Smartphone zwischen zwei Privatpersonen (P2P = Person to Person) sowie das Bezahlen von Waren und Dienstleistungen in Geschäften (P2M = Person to Merchant) in Echtzeit ermöglicht. Paymit ersetzt somit das Bargeld in vielen alltäglichen Situationen. Mit Paymit können Sie zum Beispiel Wohngemeinschafts-Einkäufe oder Restaurant-Rechnungen unter Ihren Freunden oder Bekannten teilen. Zunehmend ist der Einsatz von Paymit auch bei Kleinhändlern möglich.
Twint ist eine Payment- und Shopping-App. Egal, ob an der Ladenkasse, im E-Commerce, an Automaten oder zwischen Freunden. Mit TWINT zahlst du einfach mit dem Smartphone und profitierst gleichzeitig von attraktiven Angeboten und Shoppingtipps. Das ist praktisch und sicher zugleich. Die Händler profitieren von günstigen Transaktionskosten sowie einer neuen mobilen Marketingplattform.
Hypomat ist ein Vertreter der jungen Generation der Online-Hypotheken. Hier finden Sie eine Übersicht über dessen Produktwelt. Wer die Zinsen und Produkte der Schweizer Anbieter von Hypotheken vergleicht, bei mehreren Instituten Offerten einholt und auf deren Basis nachverhandelt, kann über die Jahre tausende von Franken sparen. Ein wichtiger neuer Anbieter ist Hypomat, der die Online-Hypotheken Sparte der Glarner Kantonalbank darstellt.
FRiBenk. Online-Hypothek mit sofortigem und verbindlichem online Kreditentscheid. Günstige Zinsen. Transparente Konditionen. Keine versteckten Zusatzkosten
DigiHyp. 0.3% Zinsvorteil mit digihyp, der Online-Hypothek der Bank Coop. Bis 2 Jahre im Voraus den tiefen Zins sichern. Sofortangebot innerhalb weniger Minuten.
e-hypo ist das Online Hypotheken Angebot der Schwyzer Kantonalbank. Hier finden Sie einen Überblick über deren Hypo-Produkte. Speziell ist: e-hypo löst nur bestehende Hypotheken ab, offeriert also keine Neuhypotheken. Wer die hiesigen Hypotheken Anbieter vergleicht, mindestens drei Offerten einholt, dabei sowohl Banken als auch Versicherungen mit einbezieht und die Offerten konsequent nachverhandelt, kann über die Laufzeit eines Immobilienkredits tausende von Franken sparen.
Die HomeGate AG mit Sitz in Zürich ist ein Schweizer Internetunternehmen und Betreiberin des gleichnamigen Immobilienportals. Sie gehört der Tamedia in Zürich sowie der Edipresse Publication Romandie in Lausanne. Neben dem Betrieb eines Immobilien-Marktplatzes mit verschiedenen Zusatzfunktionen publiziert Homegate auch einen monatlichen Mietzins-Index.
UBS ist eine der 30 Grossbanken, die vom Financial Stability Board (FSB) als «systemically important financial institution» (systemisch bedeutsames Finanzinstitut) eingestuft wurden. Sie unterliegt damit einer besonderen Überwachung und strengeren Anforderungen an die Ausstattung mit Eigenkapital. Die Eidgenössische Finanzmarktaufsicht (FINMA) nimmt die Aufsichtsfunktion wahr.
Credit Suisse ist eines der grössten global tätigen Finanzdienstleistungsunternehmen mit Hauptsitz in Zürich. Die Bank ist eine der 30 Grossbanken, die vom Financial Stability Board (FSB) als «systemically important financial institution» (systemisch bedeutsames Finanzinstitut) eingestuft wurden. Sie unterliegt damit einer besonderen Überwachung und strengeren Anforderungen an die Ausstattung mit Eigenkapital.
Die Baloise Bank SoBa AG mit Sitz in Solothurn ist fest im Kanton Solothurn verankert. Mit der Übernahme der Solothurner Bank SoBa – vormals Solothurner Kantonalbank &8211; durch die Baloise Group im Jahre 2000 und der folgenden Implementierung des partnerschaftlichen Geschäftsmodell erhielt die Baloise Bank SoBa dank dem Aussendienst der Basler Versicherungen Zugang zu einem schweizweiten Vertriebsnetz.
Bank Linth mit Sitz in Uznach ist eine stark im Linthgebiet und am oberen Zürichsee verankerte Schweizer Universalbank. Sie beschäftigt 256 Mitarbeiter und hat eine Bilanzsumme von 5.099 Milliarden Schweizer Franken (per Ende 2011). Das Unternehmen ist an der Schweizer Börse SWX Swiss Exchange kotiert und befindet sich seit 2007 zu 74,2 Prozent im Besitz der Liechtensteinischen Landesbank.
YNOME is a digital marketplace which helps you review, compare, and select financial services from private banks to fintech&8217;s.
Miteinander-erfolgreich ist die Crowdfunding-Plattform der Basellandschaftlichen Kantonalbank BLKB zur Finanzierung von Projekten und Ideen in der.
I Believe in You. ibelieveinyou.ch ist die erste Crowdfunding-Plattform, die sich ganz auf die Finanzierung von österreichischen Sportprojekten spezialisiert. Einzelsportler, Mannschaften, Freizeit-, Breiten- oder Spitzensportler, Vereine oder Veranstalter können über die Plattform ihre Projekte bekannt machen und finanzieren. Außerdem soll so dem österreichischen Sport Zugang zu bisher nicht erschlossenen privaten Mitteln verschaffen und die Solidarität der Bevölkerung für den österreichischen Sport fördern.
LokalHelden: die Spendenplattform für Vereine und gemeinnützige Organisationen. Ein Engagement von Raiffeisen.
Die Hypothekarbank Lenzburg mit Sitz in Lenzburg ist eine stark im Kanton Aargau verankerte Schweizer Regionalbank. Sie beschäftigt 216 Mitarbeiter und hatte per Ende 2014 eine Bilanzsumme von 4,548 Milliarden Schweizer Franken. Das Unternehmen ist an der Schweizer Börse SIX Swiss Exchange kotiert.
Crowders.ch crowders.ch ist eine elektronische Plattform, auf der Einsteiger, Kenner und Spezialisten die Kursentwicklung der Swiss Leader-Index-Titel (SLI®) prognostizieren. Der SLI®-Index umfasst die 30 liquidisten und grössten Schweizer Aktientitel.
The post 19 Swiss Banks As Solutions For Fintech Challenges appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
#Brexit — this topic has been in everyones mind for the prior weeks as I traveled across Germany and the US, not only in financial services. Nevertheless, today the first shock in financial services has gone and according to my opinion the Brexit has the potential to become THE game changer for implementing #Blockchain #Technology — fast track. Not only in financial services.
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” – Bill Gates
But why? Currently London is to the European Union as Manhattan is to the United States. But why is London so important for Financial Services in Europe? European finance depends on the „City“, not to mention London’s dominance of financial services in UK: London is representing 9.6% of the United Kingdom’s GDP. Globally the FCA is one of the most innovative regulators, not only in terms of #passporting and #sandboxing for #FinTech Startups. According to my opinion, passporting, sandboxing and a new EU bureaucratic for the UK could be the game changer in terms of Blockchain.
First: What’s passporting?
To break it down: when you get a license for financial services in one country, you are able to passport this license to other countries, meaning you don’t have to spend money on applications for each country, learning different languages and wait to got through the bureaucratic application processes for all the European member states. A great approach for global acting financial institutions — with this approach London established itself as a financial service gateway to the European Continent.
Second: What’s sandboxing?
The UK regulator, the FCA, established a safe space for FinTech startups, where businesses can test innovative products, services, business models and delivery mechanisms. Means building new businesses in a live environment without immediately incurring all the regulatory consequences. Linked to this approach for FinTech Startups, the FCA established a safe space for Blockchain Startups early 2016 as well. Blockchain Startups should experiment in a safe environment with financial service technology. All the efforts are underlined by the support of the Central Bank of England — the Central Bank of England has taken steps to explore the potential of Blockchain Technology as well.
Third: This brings me to the point >> passporting, sandboxing and a new EU bureaucratic for the UK could be the game changer in terms of Blockchain and Brexit, but why?
Taking the real opportunity for the UK and the European Union is to use the current time of uncertainty of leaving the EU to take action. Action in terms of implementing a new technology. For instance currently it is rather uncertain that global #banks will keep the passportability of their licenses as well as staying in the UK. Banks need new incentives for staying in the UK.
From Pixabay
To break it down shortly — incentives for Banks and the UK in relation to Blockchain could be (extract):
&8211; Value Innovation — using sandboxing for establishing new standards to record, exchange, and trade assets as well as liabilities. Replacing traditional exchange and centralized markets as well as lowering barriers for business creation
&8211; Re-Architecting the EU bureaucratic — implementing a document formation and management system for self-enforcing contracts (so called smart contracts) between the EU und UK
&8211; Rebuilding Government and Democracy — rekindling the public’s trust in political institutions in the UK by establishing greater transparency and accountability in voting on the Blockchain
New difficulties, but also great opportunities arise in our digital interconnected world between the EU and UK. London and the UK must act and innovate &8211; more than ever &8211; to ensure London’s preeminence as a global financial hub.
The potential is big: the FCA has an innovative approach for Blockchain Startups and Banks — trial and error: this is unique in the European Union and might be one reason for Banks staying in the UK.
From Pixabay
sandboxing: this is unique in the European Union
Nevertheless, the Brexit was a defeat for the European Idea, but every defeat makes you stronger, learn from the past, adapt the future, be innovative and just try. The Internet of Information was just the start, the Internet of Value has the potential for changing our whole life:
Stand up Europe and implement the Blockchain Technology!
Source: Own Research/ Ideas, Forbes, Fortune
This article first appeared on LinkedIn Pulse. Featured Image: Pixabay
The post BREXIT &8211; A Catalyst For Blockchain Technology? appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Saving isn’t sexy, and more to the point, it doesn&8217;t earn #banks as much #money as spending does–at least in today&8217;s near-zero interest rate environment. The recent Wells Fargo scandal over unauthorized account openings and the fees that followed them shines a spotlight on a longstanding problem for retail banking: banksRead More
Bank Innovation
You might have seen Ripple’s news yesterday, but turns out that is not the only big development in #blockchain this week—it’s now exploring the final frontier. Yep, that’s right: blockchain in #space. If you don’t know, Ripple raised $ 55 million in funding yesterday, as well as adding seven new #banksRead More
Bank Innovation
Uber/AirBnB are often referred to as the poster kids of the ‘sharing economy’ which consequently, yet deceivingly, became synonymous with ‘Uberisation’. Harvard Professor and #sharing economy Guru, Yochai Benkler sheds light on the misconception in an interview with the authors of Blockchain Revolution (p. 134): “It is indeed ‘nonsense’ to call Uber or AirBnB ‘sharing economy’ companies. Uber has used the availabilityof mobile #technology to create a business that lowers the cost of transportation for consumers. That’s all it has done.” These centralized platforms are but service aggregators which use mobile technologies to tap into unused value (be it vacant rooms or be it seats in a car) while creating value for the platform owners, rather than for the participants in the exchange. While some Internet companies, such as Wikipedia, have facilitated genuine sharing, others have appropriated and commoditized the social relationships and vocabulary of sharing. Uber and Air BnB have cracked the code for large scale service aggregation and distribution at global scale, but all this at a cost to the users. Both Uber and Air BnB leverage the value found in excess capacity via participatory platforms which are designed to reward the platform owners. Uber drivers create considerable value but get to keep only part of it. The company retains a significant share of the price paid for every ride, not to mention the retention of user information involved in transactions as well as their moving patterns to be lateron commercialized with no returns to the users – or the risks that that personal information be hacked, which already happened to Uber drivers.
Uber, Air BnB and the likes are smart intermediary platforms that create value for their owners. Namely the value collected from those who use its intermediation capacity to find a ride / a place to stay (or any other service mediated by similar platforms). Users help build such a private network by simply creating a profile with personal information as requested, and the network consists of all the people who exposed their profile to that private network. However, when they try to do business with other people in the network they have to pay network operators in order to do that (ask any Uber driver how frustrating and demoralizing that is!). This begs the question: what would aplatform enabling true sharing economy, with the value created being returned back to reward the value creators, look like? Are there principles which can guide the design of such platforms? To understand the paradigm shift that demystifies the sharing economy lets go back to the basics of communication networks. In such networks decentralization leads to faster innovation, greater openness, and lower cost while it also creates the conditions for competition and diversity in the services the network provides.
This is not the case with the good old landline telephone network. The telephone itself was a very primitive, or as Andreas Antonopoulos calls it – a ‘dumb’ device. The telephone network was a ‘smart network’ offering services dependent entirely on the central switches owned by the phone company, and consumed via ‘dumb’ devices that gave users no opportunity to improve nor change their network providers.
A glimpse into the highly specialized and service-specific networks on which the financial services industry is built, reveals the same pattern. Most of these are layered atop the Internet, but they are architected as closed, centralized, and “smart” networks with limited intelligence on the edge. All these networks mediate the services by interposing the service provider between the “users,” and they allow minimal innovation or differentiation at the edge. The #banks have built closed network systems on top of the decentralized Internet. Only banks can be members, and the network services are highly centralized. Centralized innovation means slow innovation. It also means innovation directed by the goals of a single company.
Enter the #Blockchain to change all this through an open network platform for financial services on top of the open and decentralized Internet. The financial services built on top of blockchain are themselves open because they are not “services” delivered by the network; they are “apps” running on top of the network.
But how can you tell if a network is decentralized, and what makes it more likely to be decentralized? To the novice, Uber-like networks seem to be decentralized… After all, aren’t they running on “smart” devices? Here comes the deception. While Uber indeed runs on a ‘smart’ phone, it does so via a … quite dumb app which is completely controlled by and supports the goals of the company.
Decentralizing that network means to detach people’s profiles from the apps themselves, and expose those profiles to a public shared network. The blockchain offers a secure infrastructure on which this can be done, so the costs of establishing trust become NIL. On blockchain trust does not rest with the organization owning the platform (such as in the case of Uber and AirBnB) but rather it comes with the functionality, security and auditability of the underlying code and the mass collaboration of the countless people securing the blockchain. In fact, the blockchain offers a basic dumb network that connects peers from anywhere in the world. It doesn’t require membership registration or identification. It doesn’t control the types of devices or applications that can live on its edge. It offers one service: securely time-stamped scripted transactions. Everything else is built on the edge-devices as an application. It allows any application to be developed independently, without permission, on the edge of the network. A developer can create a new application using the transactional service as a platform and deploy it on any device. This arrangement opens a market for applications, putting the end user in a position of power to choose the right application without restrictions.
By eliminating intermediaries, the cost for every participant in the network lowers dramatically. Users are no longer needed to pay to private network operators with money, their digital footprint, or by consuming advertisements extensively.
What happens when an industry transitions from using one or more “smart” and centralized networks to using a common, decentralized, open, and dumb network? First of all, the internal costs shrink considerably. The costs of contracting are reduced via software contracts which take care of policing, timely payments, transaction execution, bargain, etc. On this foundation a tsunami of innovation that was pent up for decades is suddenly released. All the applications that could never get permission in the closed network can now be developed and deployed without permission. At first, this change involves reinventing the previously centralized services with new and open decentralized alternatives, which involves the removal of entire layers of intermediaries which are no longer necessary.
The Internet effected such disintermediation by replacing brokers, classified ads publishers, real estate agents, car salespeople, and many others with search engines and online direct markets. In the financial industry, the blockchain creates a similar wave of disintermediation by making clearinghouses, exchanges, and wire transfer services obsolete.
The time has come for the ‘smart’ platform intermediaries, such as Uber and Air BnB to be disrupted.
Where the Internet reduced the cost of search and coordination, the blockchain cuts the costs of bargaining, contracting, policing, and enforcing these contracts. Platform users are peers able to negotiate the best deals and get the service from any entity that is registered on the blockchain platform. Where in contributing to Wikipedia peers do so altruistically, for the fun of it, as a hobby – the blockchain enables reputation systems and other incentives which can reward the peers per the value of their contribution.
For Uber and AirBnB, blockchain technology provides the platform users (aka the suppliers and consumers of these services, namely drivers and their cars, and passengers) a means to collaborate that delivers a greater share of the value back to them. The blockchain can make platform building cheaper through its open APIs (standard common data base) and more manageable through standard common contracts. The common database offer transparency which consumer and suppliers can use to obtain the best terms and also to cooperate as peers to create their own platform rules. If drivers want to set up their own network on blockchain – they do not need the intermediary services of Uber any longer, they can share for good the value they create together.
With this clarified lets return to our initial question and quest for demystification of the sharing economy. The new models would look more like a member owned cooperative. In a car-sharing cooperative most people don’t own cars but rather share vehicles in a commons. All revenue, except for the overhead would go to its members, who would also control the sharing software platform and make decisions. If this were a blockchain-enabled car-sharing platform, it would consists of a set of smart contracts that store data on the cars in the fleet. The initial entry and registration of each driver would contain criminal record, record of previous driving, vehicle ownership, safety inspections and insurance, etc. Smart contracts would continuously watch for timely reinspection/insurance and permit renewals. The drivers have thus created a blockchain cooperative and they receive all the wealth they create. A room sharing coop would consist of a home listings blockchain which also maintains reputations scores and has a similar interface with AirBnB where pictures and info about the rental places can be uploaded. So, the user experience is identical to AirBnB – the difference is that the communication is done peer to peer on the network via cryptographically signed messages that only you and the room renters can see, not stored on AirBnB data base any longer.
In regard to privacy protection, the blockchain enabled sharing platforms do not track nor store all the transactions in a database (as in the case of Uber / AirBnB). They simply return a True or False when an identity request needs to be confirmed, which is validated via a separate service. This separation of identity from the transactions carried between the identities implicitly resolves the privacy issues while reducing risks associated with hacking private information. Smart contracts working in the background also enable personalization of service, such as insurance for the renters based on ther reputation of both owner and renter, house / car value, etc.
These cooperative blockchain empowered platforms enable the rental of excess capacity beyond rooms or car seats. In a true sharing economy, on such platforms people can share anything, such as the examples listed in the book Blockchain Revolution:“expensive power tool or farming equipment used seasonally, as well as garage / parking space, woodwork shop space, a plane / boat or even fishing gear. Further one can rent their commodities such as Wi-Fi hot spots, computing power or storage capacity, the heat generated by our computers, excess energy from our solar panels, extra mobile minutes, and even our expertise. When you travel your WiFi can rent itself out in your absence, charging for every second of usage; further, your subscriptions, physical space and energy sources can become sources of income metering their use directly to a counterparty and charging them for it through micropayments. The blockchain’s decentralized value transfer protocol allows them to securely transact with one another. In the case of a car cooperative people can reserve, unlock and use a car for a certain amount of time metered on the blockchain which will take care of the charges seamlessly per smart contract specifications.”
The blockchain offers a foundation for peer to peer organizations that enable economic models for shared value creation – and open possibilities of ‘prosperity for the many’ through distribution of value creation and value participation, solving the ‘wealth for the few’ prosperity paradox plaguing our society today in spite of increased wealth creation by corporations. To achieve this, Luis Fernando Molina and colleagues propose the following pillars to sustain a sharing economy enabling platform:
● Decentralized: Like the internet, a sharing economy enabling platform is not owned by anyone in particular. Any individual can own some nodes, but not the network itself.
● Open Standard: It is possible for anyone to implement the network protocol. This protocol must be defined by a standards organization where anyone can participate in.
● Open System: Different apps of the same type using the platform can interoperate between each other.
● Permissionless: Anyone can run a network node. Anyone can use the network. Anyone can write apps that consume the network services.
● Dumb (Antonopoulos article from above): It is a dumb network that pushes innovation to the edge, giving end-users control over the pace and direction of innovation.
● Shared Asset: The resulting network of people is a shared commons asset anyone can use. The cost of contacting these people is transferred directly to the people without intermediaries.
● Inclusive: The technology enables maximum connectivity independent of node location.
● Incentivized: There is an economic incentive to run a network nodes.
Molina is working with peers to deploy such platforms which are user controlled, censorship resistant, flexible and scalable – enabling person to person exchange of goods, services, assets and data, and free from the whims, risks, costs and interference of unwanted, self-interested third parties who are no longer needed to facilitate the exchange. Sharing economy blockchain-enabled platforms reward through an open ended stream of micropayments to authors of reusable software components that can be perpetually combined and recombined to create an ever-expanding library of useful, highly customizable, peer to peer commercial applications (‘apps’).
Mike Hearn envisioned such a sharing economy and used the example of an autonomous car to illustrate it. Residents of a particular neighborhood could invest in such an autonomous car and be rewarded with free or discounted rides for a prescribed period. The car owns itself — or, more precisely, the operating computer program owns it. This program would pay the car’s running costs and take in its own revenue on blockchain (from users, investors, etc). The funding itself resonates with the sharing economy – since everyone would share the risk via ‘cryptocurrency assurance contracts’, a blockchain- based version of the popular crowdfunding model in which organizers pledge a certain amount when others’ donations reach target levels. Further, any programmer or niche business can customize ‘apps’ for the car. Such ‘apps’ could post offers on rates, or rank those offers to help the passenger make choices depending various factors (such as if they are willing to pay for faster routes e.g. toll roads etc.) Apps can identify parking options and prices and even book parking spaces in advance. The blockchain-enabled sharing platform could also support safety controls, such as prevention of unqualified or inebriated drivers from taking control of the wheel.
Models for using the blockchain as foundation for the sharing economy are being currently arduously explored, mainly from the perspective of the commons, where thework of Bollier brings forth novel perspectives regarding the deployment of collaborative entities that issue blockchain-based shares—or crypto-equity tokens—that give the holders ownership or membership rights in a type of decentralized cooperative.
I’m still at a loss when it comes to coining a nickname for the “Blockchain-enabled sharing economy” – but I can state for sure that to equate Uber and AirBnB with the ‘sharing economy’ and consequently name it ‘Uberisation’ is a regrettablemisconception!…
[linkedinbadge URL=”https://www.linkedin.com/in/mihaelaulieru” connections=”off” mode=”icon” liname=”Dr. Mihaela Ulieru”] is Global Technology Policy Innovator
[TBT + ICYMI. When I published this exactly three years ago last week, the “denial of #banking services” issue was only known to those of us working in Money Services Businesses. Renamed as “derisking,” it has now become a global phenomenon that is affecting both #banks and non-banks, and has no end in sight.]
Last Friday’s news that the Internet Archive Federal Credit Union (IAFCU) had shut down Tradehill’s account must have sent chills down the spine of every virtual #currency entrepreneur. If it didn’t, it should. The IAFCU was supposed to be one of the few, if not the only, #Bitcoin-friendly financial institution in the U.S. rescuing virtual currency exchangers from ‘banking oblivion’. At this point, we can only speculate about the true causes of this unfortunate situation, and we certainly hope it gets resolved favorably, promptly and permanently.
Let’s hope it’s another case of entrepreneurial immaturity, as that would be the lesser evil compared to other potentially more devastating ones. However, with all due respect to the parties involved in this particular case, there is, in general, a fine line between immaturity and stupidity; one that cannot be ignored in a nascent industry that is riddled with risks, and in which a few bad apples could set the entire industry basket back by years. My point is: Are convertible virtual currency exchangers doing their homework?
News flash 1 to virtual currency exchangers: you are financial institutions!
Being a financial institution requires a heightened degree of governance –organization, discipline and control– as well as excellent stakeholder communications. Even if exchangers choose to partner with a licensed financial institution rather than to obtain their own licenses, a famously daunting and onerous process, they have to remember two things: (1) they still are financial institutions in the eyes of the government, which means they will need to comply with most federal AML regulations, and (2) by extending their licenses to them, their principal partners will be taking on additional risks which, by virtue of the halo effect, could have repercussions in their own existing operations and banking relationships.
In today’s environment, where even non-financial accounts are being closed, how do you think an existing master account depositary institution will react when they find out that their corporate client will be partnering with a Bitcoin exchange?
No Compliance, No Banking
This corollary to the main title has been a well-known necessary, yet not sufficient, condition in the money transmitter industry for a long time.
News flash 2 to virtual currency exchangers: There is a strong correlation –and even causality– between being a money transmitter and being unable to obtain and maintain a bank account.
Having opened, been denied, maintained, and lost dozens of bank accounts in dozens of countries within several money services businesses over the past decade, this is what it all boils down to: No compliance, no banking; no banking, no business. I know that many in the space would prefer things to be different, but TODAY these are the rules of the game.
When FinCEN officially declared on March 18, 2013 that certain ‘convertible virtual currency’ operators were money transmitters, crypto-preneurs fitting this definition had to add the following two items to their long list of problems to be solved:
Applying for and expecting to be granted the luxury to maintain a bank account before completing both of the above is naïve and unrealistic. And it gets worse, even when exchangers have checked the boxes on the two items above, a third condition will be required: the revenue must be large enough to outweigh the bank’s internal risk management costs. I’m sorry if I’ve burst anyone’s bubble, but that has been the story of our lives in the money transmitter industry for a long time.
Tough Choices
As if dealing with the myriad risks and adoption challenges inherent in the #technology itself was not enough, ‘convertible virtual currency’ operators have been confronted with decisions so tough that many may soon be out of business –either because they chose to ignore the FinCEN guidance and its attendant obligations, or because they chose to take them as seriously as expected. The former would get them in trouble with the law. The latter, too deep in the red.
The good news is that, in spite of the tight budgets and the limited options, it is possible to obtain and maintain bank accounts in the United States. It just requires a lot of hard work, and it all starts with a fundamental cornerstone: a world-class risk management and compliance program.
This challenge can be approached in various ways. There are a lot of smart and experienced lawyers that can help understand the details of what must be done. In general, however, they will not be able to help much with how to make it all work within the unique confines of a company, operation and product. In my experience, nobody better to build a solid, sustainable, risk management program than one’s own internal engineers and product owners with the full support of an enlightened leadership.
What are you waiting for, crypto-preneurs? Are the stakes not high enough?
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Toronto-based D+H, which provides financial #technology to many of the world’s largest #banks, has joined #Bank #Innovation #Israel as a #sponsor. D+H’s history in the financial services industry spans nearly 150 years, and the company generates more than $ 1.5 billion in annual revenue.
Bank Innovation
Investors still want a piece of the #blockchain. #Ripple, the enterprise blockchain startup, today announced that it raised $ 55 million in Series B funding to accelerate customer adoption of its #technology. That brings Ripple’s total funding to $ 93.6 million since its launch in 2012, according to Crunchbase. “I think there’sRead More
Bank Innovation
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