Abolish bitcoin

Their model is what are known as stablecoins — a sort of crypto hybrid that lives on blockchains but is pegged to mainstream currencies. But aside from this connection to the status quo, these multinationals would be challenging sovereign money. They want to opt out of the clunky system that they have been forced to operate in, with its transaction fees and international payment delays, to present customers with an alluring alternative instead.

Their prices are too volatile to act as a serious store of value, for instance, while their ability to process financial transactions is not yet particularly impressive. It has dawned on the corporate giants that as per their products or services, they can make money part of their brand — part of the customer experience. Sell people goods and services, yes, but also offer them a new monetary system to take care of the purchases. It begins to look like almost total control.

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The state has been late to wake up to this challenge, but has now done so in a powerful and surprising way. The traditional global infrastructure has proved strong enough to derail the corporates at least temporarily with red tape. Yet make no mistake — the goalposts have completely changed, and it will be difficult to present a united regulatory front around the world. Ironically, it is the same lack of global uniform regulatory approval for the existing cryptocurrencies that has hindered their meaningful adoption. The other response under examination is to launch state cryptocurrencies.

The likes of China and Russia are in pole position to launch the first within a couple of years. Deutsche Bank recently published a report suggesting that cryptocurrencies could overtake national fiat currencies within ten years, envisaging that these state-backed versions will lead the charge. In short, the future of cryptocurrency lies in either corporate or sovereign digital coins — or more likely, an uneasy cohabitation of the two.

Legendary Investor Jim Rogers Warns Governments Will Have To ‘Eliminate’ Bitcoin

The system supposedly under threat from bitcoin and the other so-called bank killers is instead assimilating them. Where the previous half century saw the rise of corporates to a size and influence comparable to nation states, the next half century could produce a new paradigm in which they increasingly behave like nation states. When we reflect on the way these companies already manage our data, the way they exert lobbying influence on our governments, the trend is clearly well underway. Call it the next phase of globalisation.

Money in will probably therefore be almost unrecognisable compared to what we use today. While SNB plans to expand the trial to cross-border payments in , it has not yet decided whether to issue its own central bank digital currency. Projects like Ripple and R3 are working with traditional banks to bring greater efficiency to the sector. Blockchain projects are doing more than just making existing processes more efficient, however.

The fundraising space is a notable example of this. Raising money through venture capital is an arduous process. Entrepreneurs put together decks, sit through countless meetings with partners, and endure long negotiations over equity and valuation in the hopes of exchanging some chunk of their company for a check. In contrast, some companies are raising funds via initial coin offerings ICOs , powered by public blockchains like Ethereum and Bitcoin. In an ICO, projects sell tokens, or coins, in exchange for funding often denominated in bitcoin or ether.

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The value of the token is — at least in theory — tied to the success of the blockchain company. Investing in tokens is a way for investors to bet directly on usage and value. Through ICOs, blockchain companies can short-circuit the conventional fundraising process by selling tokens directly to the public. Some high-profile ICOs have raised hundreds of millions — even billions — of dollars before proof of a viable product. After soaring in early , ICO funding has since fallen significantly.

At the same time, initial coin offerings represent a paradigm shift in how companies finance development. First, ICOs occur globally and online, giving companies access to an exponentially larger pool of investors. Second, ICOs give companies immediate access to liquidity. Compare that to 10 years for venture-backed startups. Venture capital firms have taken notice, with Sequoia, Andreessen Horowitz, and Union Square Ventures, among others, all directly investing in ICOs, as well as gaining exposure by investing in cryptocurrency hedge funds.

And I hope it does. The democratization of everything is what has excited me about technology from the beginning. The idea behind the ICO is to sell tokens to users and bootstrap a payment platform on top of the messaging network. If, as blockchain advocates predict, the next Facebook, Google, and Amazon are built around decentralized protocols and launched via ICO, it will eat directly into investment banking margins. Several promising blockchain companies have emerged around this space.

Companies like CoinList , which began as a collaboration between Protocol Labs and AngelList, are bringing digital assets to the mainstream by helping blockchain companies structure legal and compliant ICOs. CoinList has developed a bank-grade compliance process that blockchain companies can access through a streamlined API, helping projects ensure everything from due diligence to investor accreditation. Investment banks today are experimenting with automation to help eliminate the thousands of work hours that go into an IPO. And CoinList is just the start.


A number of companies are emerging around the new ICO ecosystem, from Waves , a platform for storing, managing, and issuing digital assets, to Republic. Of course — given regulatory pronouncements — ICO activity should be taken with a grain of salt, and the bubble of unregulated ICOs largely burst after This is not just limited to company fundraising, but also to the underlying fabric of securities. The Blockchain 50 is our first-ever ranking of the 50 most promising companies within the blockchain ecosystem. To buy or sell assets like stocks, debt, and commodities, you need a way to keep track of who owns what.

Financial markets today accomplish this through a complex chain of brokers, exchanges, central security depositories, clearinghouses, and custodian banks. These different parties have been built around an outdated system of paper ownership that is not only slow, but can be inaccurate and prone to deception. Say you want to buy a share of Apple stock. You might place an order through a stock exchange, which matches you with a seller. So we outsource the shares to custodian banks for safekeeping. To settle and clear an order on an exchange involves multiple intermediaries and points of failure.

In practice, that means that when you buy or sell an asset, that order is relayed through a whole bunch of third parties. Transferring ownership is complicated because each party maintains their own version of the truth in a separate ledger. Because there are so many different parties involved, transactions often have to be manually validated. Each party charges a fee. Blockchain technology promises to revolutionize financial markets by creating a decentralized database of unique, digital assets. The potential for disruption is massive. While fees are typically lower than.

Using blockchain technology, tokenized securities have the potential to cut out middlemen such as custodian banks altogether, lowering asset exchange fees.

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Source: Trefis. Further, through smart contracts, tokenized securities can work as programmable equity — paying out dividends or performing stock buybacks through a couple lines of code. Finally, putting real-world assets on blockchain technology has the potential to usher in broader, global access to markets. Polymath is one of the blockchain technology companies that wants to help migrate trillions of dollars of financial securities to the blockchain.

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Polymath is building a marketplace and platform that helps people issue security tokens and implement governance mechanisms to help these new tokens meet regulations. So far, Polymath has announced partnerships with Blocktrade, Corl, and Ethereum Capital to launch security tokens on the platform.

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The Australian Stock Exchange plans to replace its system for bookkeeping, clearance, and settlements with a blockchain solution, developed by Digital Asset Holdings, by mid While tokenized assets are a hugely promising use case for blockchain technology, the biggest hurdle is regulation. Regulatory and legislative guidance will be key to the success of these nascent projects. The worlds of the consumer, the financial institution, and blockchain are slowly converging.

Now go talk about it.

Traditional banks and lenders underwrite loans based on a system of credit reporting. Blockchain technology opens up the possibility of peer-to-peer P2P loans, complex programmed loans that can approximate a mortgage or syndicated loan structure, and a faster and more secure loan process in general. They do this by looking at factors like your credit score, debt-to-income ratio, and home ownership status.

To get this information, they have to access your credit report provided by one of three major credit agencies: Experian, TransUnion, and Equifax. Based on that information, banks price the risk of a default into the fees and interest collected on loans. This centralized system can be hostile to consumers. Further, concentrating this sensitive information within three institutions creates a lot of vulnerability. The September Equifax hack exposed the credit information of nearly M Americans. Alternative lending using blockchain technology offers a cheaper, more efficient, and more secure way of making personal loans to a broader pool of consumers.

With a cryptographically secure, decentralized registry of historical payments, consumers could apply for loans based on a global credit score. While blockchain projects in the lending space are still in their infancy, there are a couple of interesting projects out there around P2P loans, credit, and infrastructure.

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The Bloom protocol seeks to issue credit based on a track record of successful identity attestation on the network, without trusted third parties. Source: Bloom. This grants a user membership to be able to take out loans. Another example of improved lending using blockchain comes from Dharma Labs , a protocol for tokenized debt. It aims to provide developers with the tools and standards necessary for building online debt marketplaces.

Meanwhile, Bloom wants to bring credit scoring to the blockchain, and is building a protocol for managing identity, risk, and credit scoring using blockchain technology. Trade finance exists to mitigate risks, extend credit, and ensure that exporters and importers can engage in international trade. It is a pivotal part of the global financial system, and yet it frequently operates on antiquated, manual, and written documentation.

Blockchain represents an opportunity to streamline and simplify the complex world of trade finance, saving importers, exporters, and their financiers billions of dollars every year.