BBVA Innovation Edge. Cryptocurrencies (English) by Centro de Innovación BBVA

Three internationally renowned experts give us the key aspects to enter the world of digital currencies. What is blockchain technology? In what areas can this revolutionary technology develop? What can we expect of its near future?

VIDEO I INTERVIEW

Delve into the world of cryptocurrencies

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DIGITAL CURRENCIES

A future that is present and past The great novelty of these currencies is its technological development, the way money changes hands: the intermediary disappears and the customer has the ability to record, secure and make the payment or collection.

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The near future Lucia is 10 years old. She still doesn’t know what a virtual currency is, but she is indeed part of the generation that will begin to use them massively on a daily basis in the near future. Like millions of other children, she is familiar though with “fake money”, with which you can buy “many things” in mobile games or virtual communities such as Club Penguin. “It is money that’s inside the phone [device]; when you want to pay, you send it to the cashier or the shopkeeper, who has a special machine to get those coins.” And how do you send it? “With a mobile message, although you have to be careful not to show it or send it to anyone because, then, how do you recover it?” The perception of the child of what is a virtual currency is not too far from what an adult could explain, and it is essential when trying to understand the key concepts of a phenomenon that promises to transform the economy. Currency, means of payment and security: three pillars that summarize a major economic matter, now and always.

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Money has always travelled virtually Gold, copper, nickel or silver; virtual, digital, cryptographic... History has seen currencies of all colors, sizes, nationalities and all sorts of names for more than two thousand years. The big break happened a few centuries ago, when the way money changes hands was transformed with the introduction of ledgers. “In modern payment systems, payments are made by reducing the balance in a customer’s account and increasing the balance in the recipient’s account by an equivalent amount — a process that has not changed since the 16th century. The difference lies in the technology employed to record the balances”, explains the Bank of England in a special bulletin about virtual currencies. In fact, it is all an imaginary and virtual journey, where briefcases only intervene in minority practices.

the past and present of modern banking, now facing a new revolution. But if virtual money already existed, why is everybody talking about virtual currencies like Bitcoin? What’s new, really new, is once again the technological development, the way money changes hands. In this new mutation, however, it seems that the intermediary disappears and the client is the one who has the ability to record, secure and make the payment or collection. The intermediate step, the traditional bank as we know it, disappears – a decentralized model, as opposed to a centralized one.

Over the past half-century, these entries have passed from being registered and communicated on paper to being done electronically between two clients, with the bank as witness, guarantor and intermediary of the deal. That’s

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Virtual currencies seem to be another response to an unstoppable trend aiming to improve processes and reduce costs, which involves technology and globalization. They are, in themselves, the crisis and catharsis of the old economic model based on borders, customs, brokerage and tolls of all kinds that populate international, national or local economies. Like any crisis, they are also an opportunity. The possibility of establishing a new financial model based on software and data is more real than ever in this 2015.

For example, today most financial assets (stocks, funds, derivatives, deposits...) only exist as digital records in private or central banks. Currencies too. A small part of the money in circulation comes to life in the form of notes or coins, even though the majority lies within the oceans of information and data that live in the computers and technology systems of banks. They are the custodians and guardians of data.

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Technology is the question Bitcoin, like hundreds of other currencies of its kind, brings into question this model by proposing a currency which is a computer code, limited in supply, saved and recorded by the user, but localized and controlled by all its users in real time through their computers. It is therefore the entire community of users who guarantees that this currency exists and has been transmitted from one person to another. Itâ&#x20AC;&#x2122;s a peer to peer (P2P) model that makes unnecessary, at least in theory, the presence of an intermediary. Behind Bitcoin there is a technological design that allows disintermediation, point to point transmission, data encryption and digital signing. Their transmission in the form of instant messages, with popular apps like Telegram (or WhatsApp), allow to guess that such applications may soon play a leading role in virtual currencies.

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Development boom According to the Bank of England, there are four types of recent innovations in electronic payments that are often confused with one another:

VIRTUAL WALLETS Such as Google Wallet, Apple Pay, etc.

VIRTUAL MONEY They are credits in online gaming or local currencies. They remind the days of Second Life, back in 2003

MOBILE MONEY Transmitted via mobile phones

DIGITAL CURRENCIES Like bitcoins

Only the two last categories have the decentralized component that makes virtual currencies revolutionary. However, these four branches coexist and complement each other depending on their purpose. Its use is still scarce, but their development is experiencing a boom of activity that involves entrepreneurs, startups, investors and accelerators. We are going through a present of creative chaos, a maze of possibilities and expectations where it is still unclear which is the dominant species, the king of the jungle who will exercise the law of the strongest.

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Today there are more than 100 virtual currencies, with a market value of 4 billion dollars, according to Coinmarket . Under the shadow of the famous Bitcoin – the most popular and used of all of them – hundreds of replicas have

emerged, with specialized features and uses including exchange rate; loyalty programs; granting of credit; storage; donation; allocation of the digital property, and buying time, among others.

Anyone can create a virtual currency, but not all will survive. To succeed they must have:

Offer a solution to a problem and improve an activity’s efficiency Above all, it must be better than what already exists

A purpose for its existence beyond financial speculation

A sufficient critical mass

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Bitcoin and its derivatives meet many of these features:

They are better in the sense that they are able to reduce costs

They have elite users within the technology developer community itself

They solve problems such as, for example, making a loan or transfer of digital goods and recording that transaction in a reliable way

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The future How will virtual currencies look like in five years? As almost anything in economics, we can predict and establish a model of behavior. However, it doesn’t make much sense if we consider the recent evolution of some technologies and digital services. WhatsApp or Instagram hardly existed in 2009, and now they are common applications used by millions of people. Facebook, Twitter and LinkedIn were in full global spread, but they barely had revenue; today they obtain more than 20 billion dollars a year between the three of them and show profits. Did anyone bet a dime on Google in 2008 when it launched Android? Maybe even less people than on Chrome OS, the operating system that aims to reach hundreds of millions of computers around the world starting this year and may sweep Windows off the map. Five years ago, the fate of Microsoft could change. Steve Ballmer, then CEO of the company, criticized Google for having two operating systems and described its strategy as unclear. His own employee Ray Ozzie, Chief Software Architect at Microsoft, corrected him saying: “Android is a bet of the past, based on applications; Chrome is the operating system of the future, when everything will be in the cloud.” From today’s perspective, Ozzie was totally right about the strategy of his then rival Google (although he lasted only two more months in Microsoft).

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Every day there are new predictions, but they rarely crystallize in a revolutionary phenomenon. Would Apple have bet on its luxury iPhone in 2007, for its iPad in 2010 or its Watch in 2015? The present of virtual currencies seems to be Bitcoin, but we still don’t know how it will be really used, or if a new and improved system will be born in the coming months or years. However, and taking into account Hollywood’s historical capacity to predict the widespread use of a device or technology service (Startrek’s tablets in the ‘80s; autonomous cars in Demolition Man, 1995; video calls in Back to the Future... ), we can foresee another future for virtual currencies: their use to trade time, i.e. hours, minutes or seconds. In the movie In Time (2011), the protagonists go to work and get paid with time. The rich manage their time fortunes and buy luxury cars with time units. Isn’t this the most valuable asset and the real engine that moves business transactions or relationships? Will we see time virtual currencies?

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VIRTUAL CURRENCIES

The entry of banks in the sector

Regulatory pressure over banks, who are waiting for a common regulation on this technology, is leaving innovation in virtual currencies in hands of financial startups. Banks remain vigilant, but are also getting involved in the process with investments and funding emerging companies.

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Blockchain technology represents a new source of business for banks, as the transformation of the value chain opens up a new revenue stream. It will affect all those services involved in the exchange of assets. However, the concept of bitcoin doesn’t allow just that, but also a new way of understanding finance through an economy that is collaborative, participatory and between individuals.

deposits (passive or money). The same goes for service fees such as account maintenance, credit or debit cards, etc.

WHAT IF THE BANK AS WE KNOW IT IS NO LONGER NECESSARY? That is the approach of the bitcoin technology, and that’s why some entities are stepping up to address this disconcerting future.

These technologies that underpin the creation of bitcoins allow the unique identification of digital goods and their transmission to another person or company directly – without intermediaries. And here comes a potential threat to banks, whose business is based, among other things, on providing trust. The typical bank margin includes charging for loans (assets or money lent) a bit more than what they pay for

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It has sponsored the development of Coinffein, a Spanish startup leaded by Alberto G贸mez and Sebasti谩n Ortega, who claims to be the bitcoin for the identification and transaction of financial assets such as stocks, mutual funds, commodities, warrants, options, futures... It takes advantage of the peer-to-peer transactions allowed by bitcoin-style technologies, so that the user can cover the entire financial process without having to visit a bank. It goes from the identification of an asset to the allocation of its ownership to a user and the ability to transmit it (sell it) to somebody else.

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The groupâ&#x20AC;&#x2122;s approach to the bitcoin world has gone hand in hand with its investment in startups through BBVA Ventures. Its investment in the incubator 500startups, with hundreds of startups of all kinds passing through its hub, has allowed BBVA to follow closely some of the most innovative projects in the sector. This Silicon Valley accelerator has supported Traity, for example, a company that claims to be the reputational ID in Internet and allows to apply techniques of social intelligence (based on social networks) for scoring related to financial products such as credits, among others. Coinbase is the icing on its portfolio of investments, although its links with financial startups

are many through the specialized fund Ribbit Capital, also participated by the bank. Sumup, a startup that develops points of sale (PoS) for retail, is another of its noteworthy investments. BBVA sustains that the bank of the future will be, rather than a guardian of data, a financial services intermediary. Francisco GonzĂĄlez, President and CEO of BBVA, visualizes the bank of the future as a driver of technology development to simplify the user experience. The acquisitions of Madiva (real estate big data) or Simple (mobile and personal finance) expand their possibilities for providing technological services and keeping engaged with the evolution of the financial ecosystem.

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It has opted for an alliance with Telef贸nica in various joint ventures and has launched in 2015 its first fund specialized in fintech (finance and technology). Under the brand Innoventures it has started to invest in startups and soon it will also enter the virtual currencies area. It participates in projects like Monitise, Yaap and Cyanogen, the future rival of Android.

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The British bank has launched along with Techstars an accelerator of projects related to finance. Among these young companies, the development of technologies based on Bitcoin is not something unknown. Projects like Crowdestates (mortgages), Aire (cards), Gust Pay (payments) or the Spanish Novicap have visited Barclays headquarters, who has invested in them and is observing whatâ&#x20AC;&#x2122;s happening in the sector and among virtual currencies. One of its major business areas is precisely its exchange rate and forex broker, one of the largest in the world alongside UBS, Deutsche Bank and JPMorgan.

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In response to the Call for Information on digital currencies launched in November 2014 by the UK Treasury in order to analyze the development of this technology, Citi issued the report HMT Call for Information on Digital Money . In this official response, the bank pointed out that the lack of clear regulation is creating uncertainty by preventing legitimate players, such as banks, to enter this field. In its paper, Citi urged authorities to resolve these uncertainties in order to allow banks to decide how to approach digital currencies.

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The Swiss bank has decided to focus on investing ‘in house’, in internal projects led by its own employees instead of outsourcing fintech innovation to startups. Thus, UBS has created a laboratory to investigate the potential of the underlying technology in Bitcoin, just as BNY Mellon and other banks have done. In early 2015, UBS announced its intention to explore how blockchain technology can streamline transactions. It has run some tests with smart-bond, a tool that uses this techno logy to do cryptographically what normally would be done by the intermediary. There are many more examples of how the banking industry is trying to catch up with the upcoming technological revolution, but initiatives are scattered. So far, startups that have created online foreign exchange services are the big beneficiar-

ies in the short term of the bitcoin technology: they are the ones who charge commissions for every transaction that takes place on either side of the Bitcoin, changing it to euros, to yen or dollars. Although the US banking industry’s involvement in fintech projects through investments in startups is less visible, it is in fact quite noticeable through numerous specialized funds. There are two examples that clarify the relationship of large US banks with financial innovation products such as bitcoins and others: they are, for example, the main funders (providing capital and credit) of the largest credit platforms between individuals and companies (P2P) in the country, Lending Club and OnDeck. US banks already work and have been reaching agreements for years with financial startups to develop the technological side of their business.

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The competition of the market makers This is the formula to combat the so-called market makers, i.e. Google, Apple or Amazon â&#x20AC;&#x201C; companies able to change in a short time the banking habits of consumers through their tools and technologies. WhatsApp, owned by Facebook, is already revolutionizing telecommunications in 2015 with the massive spread of VoIP calls, just as it did before with its chats against SMS. It also plans to enter the m-payments sector, although Apple seems to be the best-positioned to extend the massive use of electronic payments via mobile phones with its Apple Pay service. For now, both will use the infrastructure of traditional operators and banks. But what about the day the development of bitcoin or other technologies allows them to contact consumers without going through the bank?

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GLOBAL SNAPSHOTS

(Potential) bitcoin-based success stories

To avoid letting a language die, people have to speak and write in it. For a currency to become a reality, the same: it has to be used, have a value, and be a â&#x20AC;&#x2DC;buy & sellâ&#x20AC;&#x2122; tool.

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In 2015 there are hundreds of virtual currencies Yes, hundreds. There are so many that it seems hard to believe that they all have chances to be used and needed by people (or machines). Soon there will be so many that they will exceed the physical currencies which they are called to replace. Nevertheless, today they are only used by a minority, and their consideration as currency is still being questioned. The physical world in the 21st century has evolved into five major currencies grouping more than 90% of transactions: dollar, euro, yuan, pound and yen (in this order). There are more, but they aren’t relevant from a global perspective and don’t have influence beyond certain territories. But with the Internet this approach changes, as the ‘territory’ itself is global.

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CURRENCIES l OTHER USES BITCOINS It has already become a name associated with a range of products, the same as Kleenex to tissues; Coca-Cola to any soda with certain taste, or â&#x20AC;&#x153;Google itâ&#x20AC;? for searches on the Internet. But the bitcoin protocol is also the spark behind hundreds of initiatives and startups that can become potential successes. And they will reach that stage when they become part of the daily life of users.

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CURRENCIES l OTHER USES NAMECOIN Of French origin (Gerald Boily and Vince Durham are linked to its design), this bitcoin-based â&#x20AC;&#x2DC;currencyâ&#x20AC;&#x2122; is actually a domain registrar. It serves to generate a new set of protocols, localization and identification on the Internet of, for example, the rightful owner of a website. Its features allow, among other things, to speed up the tedious task of transferring a domain (without intermediaries), its registration, and reinvent the classic DNS (Domain Name System) hierarchy that today configures any connected device, be it a web or an app. Its structure and mode of operation is a clone of Bitcoin: limited to 21 million units maximum and a progressive creation of them under the mining mode.

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CURRENCIES l OTHER USES DODGECOIN, LITECOIN There are countless developments and versions of bitcoin, but if we have to mention some of them, these two should be highlighted for two reasons: they improve the safety of other systems (through complex strings and previous encryption) and are more used than the rest in terms of activity and transaction. Their issuing volume (maximum of coins in circulation) and mining (creation of money) is less limited.

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CURRENCIES l OTHER USES RIPPLE If bitcoin transfers money in the form of computer code, Ripple does the same but with credit. It is therefore a P2P credit system based on the bitcoin technology and concept. Its users transfer among themselves these virtual credits, with the objective of eliminating the intermediary (the bank). The system itself and its users act as banks in the form of community. They are the ones who record the debt, ensure that it has been returned (or not) and allow to establish lender-borrower relationships among them.

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CURRENCIES l OTHER USES ETHEREUM It aims to provide an alternative protocol based on blockchain to create ‘smart contracts’. It uses an integrated turing-complete programming language which allows to write ‘smart contracts’ and decentralized applications to create their own arbitrary rules for property, transaction formats and state transition functions. This protocol goes beyond ‘the currency’; it addresses decentralized file storage protocols, decentralized computing, decentralized prediction market... it also has the potential to increase the efficiency of the computer industry and boost other peer-to-peer protocols.

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CURRENCIES l OTHER USES COINBASE

A platform of reference for the exchange of virtual currency “A currency that doesn’t depend on any country... you can be your own bank and make transactions worldwide very easily and quickly. Or what’s the same: you have the control and the reins of your own money.” This is how Brian Armstrong defines the US startup Coinbase, a leading platform in the field of buying and selling virtual currency which was launched in 2012 as an alternative to the current monetary system and is regulated by an algorithm and the trust of its users. The platform has currently 2.5 million users. Headquartered in San Francisco, Armstrong (a former programmer at Airbnb) founded together with Fred Ehrsam (former consultant at Goldman Sachs) the American platform that serves as a virtual wallet and e-commerce mediator with bitcoins. In 2014 it was launched in 13 Euro-

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CURRENCIES l OTHER USES pean countries: Spain, France, Belgium, Italy, Portugal, Holland, Austria, Cyprus, Finland, Greece, Latvia, Slovakia and Malta. Months later it did so in the UK - with the approval of London’s City, the British and European financial capital - and is currently present in 26 countries. This expansion is based on three pillars: a consumer wallet (the bitcoin online wallet), that allows to make payments in a simple, anonymous and safe way; a platform with APIs, so developers can build bitcoin apps for businesses; and an exchange, where individuals and companies can trade bitcoins against all major currencies. As Armstrong explains, “we want our exchange service to be the most liquid one, improve our API so people can develop all kinds of applications, and expand our Bitcoin Wallet to reach the maximum of nations.” In the United States, its exchange has conquered California and New York, and its new service, Instant Exchange, is an insurance against volatility as it allows users to send and receive payments in bitcoins eliminating the risk of exchange rates. When bitcoins are purchased or sent to another person or company it is possible to pay for them immediately

Invest

Convert USD to Bitcoin and back through your bank account

Pay Friends Coinbase keeps your bitcoin secure

Shop Online

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CURRENCIES l OTHER USES using the local currency, and when received in the bitcoin wallet they can be transformed directly into the local currency, avoiding future exchange rate variations. Licensed to operate in 25 US states, Coinbase is transparent in all its operations against money laundering and its comprehensive identification model of customers prevents possible frauds. Earlier this year, BBVA invested in the world’s largest cryptocurrencies portfolio, which has an exchange service that allows users to buy and sell bitcoins instantly. It did it through BBVA Ventures, the BBVA Group venture capital project that invests in startups that are transforming the finance industry. The 75 million dollars of the new Series C funding round brings the total capital raised by Coinbase to 106 million dollars. The round was led by DFJ Growth with the participation of existing investors, including Andreessen Horowitz, Union Square Ventures and Ribbit Capital. The next target of the leading company in virtual currency exchange is India and to expand throughout the North American market. “Many may think I’m crazy, but I believe bitcoin will surpass the dollar as currency in the next 10, 15 years,” bets Armstrong.

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CURRENCIES l OTHER USES GEMINI Two key names in the Bitcoin ecosystem are related to this project: Tyler and Cameron Winklevoss, the Harvard blond twins who became famous after their appearance in the movie about Facebook as the architects behind the social network. They are two of the biggest holders of bitcoins almost from the beginning; that is, they were on top of the pyramid when the bitcoins bubble and speculative fever exploded in 2013. Their fortune in bitcoins multiplied after investing several million dollars. Now they want to create a bitcoins stock exchange to compete with other markets such as Coinbase and provide liquidity to que currency incorporating large banks and Wall Street hedge funds to the system. The Winklevoss have also invested in Xapo.

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CURRENCIES l OTHER USES XAPO Behind this brand is one of the key names in the birth of online banking 15 years ago: Wenceslao Casares. He was the founder of the online bank Patagon, which failed after its millionaire acquisition by the Santander Central Hispano of Emilio Botín, José María Amusátegui and Angel Corcóstegui. The project was ahead of its time, but nevertheless it ended up being the base of Santander’s Openbank. With Xapo, Casares is at the forefront of bitcoin, as a leader in virtual currencies storage and with its concept of ‘safe’. He has also developed a currency and payment gateway for users and businesses. Casares has garnered wide support, from the Winklevoss and funds such as Benchmark, Fortress or Ribbit Capital (participated by BBVA). He is one of the most experienced fintech entrepreneurs and achieved ‘exits’ with the sale of his previous project, the financial security app Lemon, which he sold to the US group Lifeclock.

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CURRENCIES l OTHER USES COINFFEINE It is a Spanish startup owned by Bankinter and other seed venture capital funds. Itâ&#x20AC;&#x2122;s still at a very early stage, but it has already shown its intention to specialize in a particular area: become the bitcoin for the identification and transaction of financial assets such as stocks, mutual funds, commodities, warrants, options, futures... How? It remains to be seen how it does it, but the concept of peer-to-peer transactionality enabled by bitcoin-style technologies provides a new system that, theoretically, makes unnecessary the presence of a depository or settlement agent, reducing the financial relationship to the issuer and the investor.

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CURRENCIES l OTHER USES KANTOX, PEERTRANSFER... They are among the most successful specialized projects in the financial scene. Born in Barcelona and Valencia, these two startups compete with banks in two specialized finance segments: sending money or remittances, and currency exchange for businesses. Behind both projects we find peerto-peer platforms using technologies similar to what bitcoin suggests for transactions. If they remain as they are, there is not much to add, but both startups can very well grow with additional services and gradually become the banks of the future.

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CURRENCIES l OTHER USES AMAZON COIN The e-commerce giant is always in the front line when it comes to innovation in retail. And if to do so it has to launch its own virtual currency, then so be it. Amazon launched Coin in 2013 to provide discounts to users of its digital content stores such as Kindle (books), Amazon Store (apps), Instant Video or Music for series, films and audiovisual material. Even though it has never provided figures regarding its use, the currency is still available for its millions of customers in these key moments for the company. Through its Prime program, Amazon is transcending the online world and has become a logistics platform for its partners. Prime is a private sales club, with users paying a subscription to receive multiple services. The latent presence of Amazon Coin can generate disruptive synergies in combination with Prime. Donâ&#x20AC;&#x2122;t forget that the value of a currency is in its use, the number of users and the size of the market of goods that can be purchased. Amazon has more than 20 million different products for sale in its pages.

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CURRENCIES l OTHER USES THE SOCIAL COIN This Catalan startup has by-passed the mercantilist concept and conver足 ted bitcoin in a currency for chains of favors and altruistic actions. The encryption technology based on the concept of Bitcoin allows to track and measure the extent of a social action. The project, which is based in Barcelona and run by a group of young people, has been financed with a crowdfunding campaign and is about to launch its own app. Companies like Cisco and Iberdrola have collaborated with them as a way to encourage their employees to volunteer.

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CURRENCIES l OTHER USES DROPCOIN Another currency with a laudable goal: reward creators of content, at a time when the absence of solid business models for small media prevents a greater plurality of information. With just a click, this startup from Navarra (Spain) offers readers of websites the possibility of making micro-donations.

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DIGITAL CURRENCIES

The security dilemma

One of the main arguments raised by the creators and supporters of virtual currencies as means of payment is safety. Is this reputation founded? Some of its detractors base their critics precisely in security flaws and the cyberattacks they have suffered. innovation edge | Crypto-currencies | centrodeinnovacionbbva.com

It is almost a mantra among experts when pointing out the greatest cybersecurity threat to a system: itâ&#x20AC;&#x2122;s you! Yes, it is the user who, at some point, will expose the vulnerabilities of a system, whether it is an employee, a customer, a supplier, or a manager of a small or big company, a bank or a high level institution. In col-

loquial terms, it turns out to be something like: â&#x20AC;&#x153;You can put a thousand firewalls and the best protection, but there will always be a user on your network that compromises the system accessing it from the wrong place or clicking on the wrong linkâ&#x20AC;?. Malware, apps, websites... they are all potential threats.

P2P, strength and weakness Given this starting point, Bitcoin and other virtual currencies would be far from being immune and infallible.

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THERE IS NO CENTRAL AUTHORITY:

There is no authority guaranteeing issuance, payments, the value of the currency or its property; it is the system formed by the community or network of users who guarantees who owns what in real time.

TRANSMISSION:

The transmission of these currencies between users is not encrypted and can be tracked by others. It is a ‘clear’ communication, without encryption. This means that anony mity is only limited to the user’s identity and the transactions traffic (incoming and outgoing) can be monitored and spied.

COMPUTER CODE:

The most famous cryptocurrency is a computer code that can’t be changed, or at least in theory it seems impossible. This feature is the foundation of potential uses based in bitcoin, such as the identification of digital property.

VULNERABILITY:

The transmission of information is public (though just for advanced users), opening the door to vulnerabilities that can only be solved by specific tools, such as the digital wallets.

IDENTIFICATION OF THE DIGITAL PROPERTY: THEY ARE P2P SYSTEMS: It is unalterable and has a unique ID, allowing to catalogue it also as a currency, although it is not.

Among pairs or individuals, so its great strength is at the same time its greatest weakness.

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The myth of anonymity Bitcoin as such is anonymous, because it doesn’t require identification to be used. But this myth falls down at the drop of a hat with the above mentioned possibility of building tracking tools. “Since the amount of bitcoins kept in any location is public information, the money owned by a specific person whose identity has been compromised can be deducted, and also where the money came from and which was its destination. Undoubtedly, this would be a serious danger to the privacy (and even the integrity) of people if Bitcoin is adopted en masse,” warns the security agency Incibe in a report.

Even today the real origin of Bitcoin remains unknown. The real identity of its creators and pioneers is masked behind the pseudonym Satoshi Nakamoto. This can mean a weakness for the system in the future, since it may have encouraged the creation of some back doors in order to create vulnerabilities, although this seems unlikely as it is open source technology. However, this anonymity can also be its strength, as it has allowed to focus the debate on the development and opportunities of the currency, regardless of who created it and why.

That anonymity was in question after the actions against Silkroad, an online market for illegal goods such as drugs or weapons which were traded with bitcoins. It was only a matter of time that the authorities (in this case the FBI) established a map of relationships connecting dealers, buyers and the creators of Silkroad.

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Daily volume of activity

$ 54 million

Fraud rate of 0,3%

1 millon

(the credit card fraud rate is 0,09%)

bitcoins were stolen in 2014

Theft rate, is the myth of a super-currency crumbling down? Therefore, the degree of vulnerability or security is linked to the complementary actions adopted by the user, such as the digital wallet used for bitcoin transactions like transfers, payments or simple storage. In turn, these additional measures (wallets, platforms...) open new paths tor vulnerability. 90% of the thefts of bitcoins since 2009 took place in Mt.Gox, which was the largest exchange for trading these cryptocurrencies. It went bankrupt in 2013, after a hacker attack and unable to meet the reimbursements of its clients. That insecurity, inherent to any platform, reveals that virtual currencies are not safer than current banknotes.

Until 2014 it is estimated that around 1 million bitcoins have been stolen, with an added value of about 800 million dollars (based on its exchange rate a given time), according to information published in forums like Bitcointalks. This figure would represent a fraud rate of only 0.3% compared to the volume of activity of bitcoin (over 54 million dollars a day). However, this ratio would be four times the credit card fraud rate (0.09%), a sector which moves more than $ 15 trillion in transactions and records $ 13 billion in thefts, according to estimates of the banking sector.

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Why is it considered a safe currency when data indicate otherwise? The explanation is simple: time. Technologies such as bitcoin are less than five years old, while more traditional payment systems like credit cards have been circulating for over half a century and are still evolving in terms of security and anti-fraud measures. Absolute numbers suggest a greater insecurity, although in theory it is much more difficult for cybercriminals to attack a distributed network with millions of users than just one hub with a great stock of currency. Wallets and retailers are the ones taking the highest risk. The need for a new generation of â&#x20AC;&#x2DC;digital banksâ&#x20AC;&#x2122; or the transformation of those which already exist is therefore more than evident, as well as the creation of a regulation providing security to the users of cryptocurrencies.

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CHRONOLOGY

Bitcoin from its origins

The development of what we know today as bitcoin started between 2007 and 2009. Its birth is surrounded by mystery, contributing to make this technology even more attractive. Its origins lead us to a pseudonym, Satoshi Nakamoto, somebody who no one knows or has ever seenâ&#x20AC;Ś innovation edge | Crypto-currencies | centrodeinnovacionbbva.com

The bitcoin chronology

2008 November The first public appearance of Bitcoin was in the mailing list cryptography2, where a user with the pseudonym Satoshi Nakamoto announced that he had been working on a new system of electronic money.

Sources: Bitcoin milestones Bitcoin historical quotations: profits from mining

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January The first version of Bitcoin sees the light. Mining starts and a few days later the first transfer of bitcoins is done.

2009 February A profile created in the P2P Foundation website under the name Satoshi Nakamoto posted the message â&#x20AC;&#x153;Bitcoin open source implementation of P2P currency,â&#x20AC;? which opened the door to participate in the network.

September The domain Bitcoin.org is registered.

October The first currency exchange rate is set: 1 dollar equals 1.3 bitcoins.

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February Mt. Gox and Bitstamp are launched, becoming the largest exchange markets for bitcoins and protagonists of its most famous speculative episode. Platforms to buy and sell virtual currencies start to spread.

2010 May The first commercial Bitcoin payment is accepted. That same month, a user pays for a 25 dollars pizza with 10,000 bitcoins. That will be the most famous transaction of the currency when in 2013 its price escalates to over 1,000 dollars per bitcoin.

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February Launch of Silkroad, an online market of illegal products which are traded in bitcoins.

2011 June Wikileaks comienza a aceptar Wikileaks starts accepting payments in bitcoins. The virtual currency becomes famous; it is now a global issue and an object of concern to several governments.

November The first major international conference on Bitcoin is held in Prague.

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February Tradehill, the first major bitcoin exchange platform, closes due to regulatory problems and a dispute among its users.

2012 March Summer Coinbase, Peercoin and Ripple, three of the most important startups of the virtual currency ecosystem are founded. In this fruitful summer, Bitinstant suggests creating bitcoin debit cards. There is a boom of projects based on Bitcoin, focused on the uses of the technology rather than on its financial component.

The web hosting platform Linode is hacked, suffering the greatest theft so far of bitcoins to a group of users (at that time valued in more than $ 200,000).

September There is a conference in London on the virtual currency. The Bitcoin Foundation is created, acting as a reference for the ecosystem during the following years. WordPress, the most used platform to create websites in the world, begins to accept payments in bitcoins.

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February The price of bitcoins begins to heat up: $ 31 per unit are paid in Mt. Gox.

2013 April

October Silkroad closes after an FBI operation related to drug dealing and money laundering. It is the first seizure of bitcoins by authorities, and therefore there is a transfer of bitcoins to a government account.

December More than 5 million dollars in revenue are registered through bitcoin mining in a single day. This record triggers the participation in the ecosystem and attracts new users. That same day, bitcoin marks a record of $ 1,151 per unit.

The bubble starts to grow. For the first time, Bitcoin goes over $ 100, and in a matter of days it exceeds $ 250. The financial industry, starting with its most aggressive investors, sets its eyes on Bitcoin as its value starts to surge.

End of 2013 The Central Bank of China prohibits the use of bitcoin in its financial system. Other countries such as Thailand joined the ban, while other governments (Canada, Australia, Japan...) opt for pragmatism: they allow their activity and tax the bitcoin like any other financial asset. International agencies specialized in money laundering put the focus on the bitcoin system.

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January The founder of Bitinstant and president of the Bitcoin Foundation, Charlie Shrem, is accused of money laundering in the US.

2014 February Mt.Gox, the largest exchange market for bitcoins, shuts down. It unleashes a wave of panic in the price of Bitcoin, which falls to 500 dollars, 50% less than a month before.

Summer Some of the most important startups in the bitcoin ecosystem raise important rounds of financing for their development. The ecosystem starts to become professionalized.

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June The Superintendent of the New York State Department of Financial Services (NYDFS), Benjamin Lawsky, unveils the final version of the BitLicense , aimed at companies that operate with Bitcoin and other cryptocurrencies in this state. Thus, to operate in New York, companies holding client funds or exchanging virtual money for dollars or other currencies will have to obtain a license. The new regulation establishes specific conditions to maintain the license, related to consumer protection and compliance of money laundering laws, capital requirements, changes of ownership and cybersecurity.

2015 The bitcoin is stabilized between 230 and 280 dollars per unit. Already 14 million units of bitcoin have been created, more than half of the 21 million expected in 2030.

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VIDEOGRAPHIC

How to use digital currencies?

In this videographic we will show you, step by step, how digital currencies are to be used, what do you need to be able to use it, where you can use it and what transactions you can carry out with your digital money. Donâ&#x20AC;&#x2122;t miss this tutorial and learn the simple, fun way how to keep up with cryptocurrencies.

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On the

web

In depth A list of links to other useful tools and resources that you may find useful as a supplement to the information offered on the â&#x20AC;&#x2DC;Crypto-currenciesâ&#x20AC;&#x2122; report.

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Web Internet of Finance: unleashing the potencial of blockchain technology â&#x20AC;&#x201C; Institute of International Finance, Abril 2015. A Next-Generation Smart Contract and Decentralized Application Platform. Hitos de bitcoin. Ingresos por minerĂa. Citi response to the HMT Call for Information on Digital Money. Diciembre 2014. PwC. Los medios de pago, un paisaje en movimiento, Junio 2015. Accenture response: Digital currencies: Call for Information, Diciembre 2014. Finance Magnates. CoinDesk.

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1 Trending issues Summaries of the most relevant news of selected topics that have been published over the course of the period based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

also in this issue

2 Technology trends In the following section, we outline the upcoming technologies that will change everything, with predictions on what may come of them in financial industry.

Innovaci贸n

Highlighted in this section some of the actions in which BBVA Innovation Center takes part, on innovation and entrepreneurship. Through this section we also provide direct access to the BBVA Innovation Center events. innovation edge | Crypto-currencies | centrodeinnovacionbbva.com

Trending issues

In this section, readers will find summaries of the most relevant news of selected topics that have been published over the course of the month based on its relevance to the Banking industry. The summaries were prepared by the editorial board. Further information is made available for each given topic.

Core Banking Platform New Formats Mobile Banking Social Business Mobile Payments CustomerCentricity Brands & Branding

80% of banks will replace their core systems within five years According to the Invigorating Banking report, sponsored by Five Degrees and done by Finextra Research, there is strong support for core system replacement and renovation. 83% of respondents believe that their bankâ&#x20AC;&#x2122;s technology can no longer support their needs, and another 89% think it is inevitable that banks quickly modernize technological processes to avoid losing market share. Thus, four out of five banks believe they will have to replace their core banking system within the next three to five years. In addition, nearly 90% are in favor of including SaaS or cloud-based services as part of the infrastructure, according to this survey among bank executives.

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Trending issues

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New challenges and opportunities for banks New technologies have already been the engine of transformation of business models in different industries, and therefore the vast majority of banks are trying to deal with â&#x20AC;&#x153;the inexorable trend towards the digital market, which is changing the behavior of users and leading to the emergence of new disruptive competitors and new business models.â&#x20AC;? According to a publication of the Unacc, this new group of companies is challenging the established system reinventing different parts of the ecosystem of financial services: from Square, as a disruptive payments services company for points of sale, to ZestFinance, which uses Big Data technology for credit rating operations, or Simple, rethinking the user experience in retail banking.

Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data Future of Work DIY

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Millennials prefer mobile banking According to research conducted by Gemalto, 92% of the young millennials have a mobile phone, 42% have a tablet and 38% have both devices. In addition, seven out of 10 connect to the Internet more than two hours a day, and almost four of every 10 millennials spend more than five hours. Beyond these data about daily habits, the study analyzes the behavior of these young people regarding financial services. Nearly three out of 10 respondents say they have never visited a bank branch. Research shows that this generation is characterized by opting for online services: 62% of them say they use mobile banking at least once a month, accessing bank services through a smartphone or tablet.

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Trending issues

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Social business… a profitable enterprise The concept of ‘social business’ developed by Professor Muhammad Yunus, founder of Grameen Bank and Nobel Peace Prize, refers to a self-sufficient company in financial terms, which aims to achieve a social objective, whether related to the protection of environment, the promotion of science or arts, etc. One of the characteristics of this type of companies is that they reinvest their profits in the development of the business. It is true that earnings do not increase, but they don’t register losses either. Currently, these companies are enjoying a “very favorable” economic, social and political context, because the crisis has increased the need to fight against exclusion and poverty.

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Trending issues

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Barack Obama orders the use of Chip&Pin cards This measure recently approved in the US will favor the mobile payment sector and European providers. It should be noted that in the United States the majority of cards still use magnetic strips, a format much less secure than the Chip&Pin, widely established in Europe. The executive order signed by the US president forces the federal government to issue EMV debit and credit cards with chip. EMV (Europay, MasterCard and Visa) is a global security standard that uses a computer chip to authenticate transactions. This is a great opportunity for companies (and particularly SMEs) developing EMVcompatible mobile payment systems.

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Trending issues

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The Iceberg Theory applied to customer experience The Iceberg Theory, based on the minimalist writing style of Ernest Hemingway, sustains that the heart of a story has to lie below the surface, and shine through. This theory is behind the premise that a good customer experience requires a lot of work: if the strategy is really well designed, the client wonâ&#x20AC;&#x2122;t see all the effort. That is: you have to address all the problems and find solutions before the user detects them, or at least before he perceives there is something wrong. The challenge is to make invisible all your work in order to truly put the customer at the center of the corporate strategy.

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Trending issues

Core Banking Platform

Loyalty to a brand in Twitter

New Formats

Why do you follow a brand on Twitter? This is one of the questions that many social networking strategists of brands make in order to increase their number of followers. SimplyMeasured analyzed the followers of the 10 most popular brands on Twitter to investigate what they have in common and try to understand the behavior of consumers when they click on â&#x20AC;&#x2DC;Moreâ&#x20AC;&#x2122;. The results show that Internet users follow more than one brand, and in many cases several brands of the same market niche (i.e. competitors) at the same time.

Mobile Banking Social Business Mobile Payments CustomerCentricity Brands & Branding Crowd Finance App Ecosystem Gadgetology New Banking Concepts Big Data Future of Work DIY

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Trending issues

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Discover the crowdfunding ecosystem Entrepreneurs are one of the big beneficiaries of the rise of the P2P financial ecosystem, as it responds to their needs and demand for project funding in the initial stages. It is at this point when investors come into scene, becoming a peer-to-peer alternative to the traditional financial market. In fact, in these early stages of funding these investors are often called Friends & Family, as they are part of the core group who believes in the entrepreneurial project. But beyond these figures we find professional investors: business angels, crowdlending platforms and even donors or prospective clients who buy in advance the product or service. Hence, to give coherence to this new model are emerging P2P technology platforms in different versions: crowdfunding, crowdlending, equity crowdfunding, donations or rewards, etc.

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Trending issues

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Fansino, the winning app of the Mobile Premier Awards Despite being in its beta phase, Fansino has been the winning application at this yearâ&#x20AC;&#x2122;s Mobile World Congress. It is a music-related app that helps connect artists with their fans. Artists can tell when a fan is listening to their music and therefore assess the impact of their songs, while fans can chat with them. This app connects to Facebook and checks the artistsâ&#x20AC;&#x2122; social networks, so users can see the latest news published by music stars. The apps GPSGAY and SATS Mobile Triage were the other nominees for these awards.

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Trending issues

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Apple Watch is in stores Australia, Canada, China, Spain, France, Germany, Hong Kong, Japan, United Kingdom and United States are among the first countries to sell Apple’s new device, its smartwatch, a high precision gadget offering ‘groundbreaking’ features for health and sports. The Watch is available online or by reservation at Apple Stores and Apple Authorized Resellers in China and Japan. “Apple Watch begins a new chapter in the way we relate to technology and we think our customers are going to love it,” said Tim Cook, Apple’s CEO, when presenting the device. It allows users to send messages, read emails and answer incoming calls on their iPhone directly from the wrist. It offers up to 18 hours of autonomy and comes with a unique charging solution that combines Apple’s MagSafe technology with inductive charging to connect quickly and easily.

App Ecosystem Gadgetology New Banking Concepts Big Data Future of Work DIY

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Trending issues

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â&#x20AC;&#x2DC;Social bankingâ&#x20AC;&#x2122;, a new banking experience Branches, online banking, mobile banking... these are concepts that are more or less common among bank customers. However, the so-called social banking is increasingly gaining strength as a new experience in the interaction between customers and banks. If until now banks used social networks to monitor and analyze the behavior of their users, services, customer care and, above all, strategies of brand marketing, now they are beginning to design and develop financial services designed for social networks. An example: the Indian bank Kotak Mahindra has launched Jifi, a service which integrates social networks to attract new users. Itâ&#x20AC;&#x2122;s the fusion of Twitter and Facebook with traditional banking.

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Trending issues

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The Data spring Madrid was this spring the city of Big Data, bringing together various organizations and initiatives: the InnovaChallenge Data Week, the Big Bang Data exhibition and the cycle â&#x20AC;&#x2DC;Vivir en un mar de datosâ&#x20AC;&#x2122; (Living in a sea of data), among others. It was an intense program of activities which involved a large number of organizations and initiatives to explore and reflect on the creative, social and political practices that arise around this culture of data. Exhibitions, lectures, workshops, debates, datathons and guided tours contributed to explore subjects as diverse as: techniques and methodologies related to data visualization and data mining, data journalism, collective cartography, crowdsourcing, access policies and reuse of information (Open Data, Open Science), institutional and government transparency practices, economy of data, and online safety and privacy.

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Trending issues

Core Banking Platform New Formats Mobile Banking

Stress in the office can cause panic attacks across the company

Mobile Payments

As the world economy continues its transformation, it is important to maintain a level of balance within the workplace. The challenge is to promote an environment free of stress in the office in order to achieve balance, engagement and productivity.

CustomerCentricity

According to various studies, 40% of US workers have job stress and nearly a quarter say work is the main source of anxiety in their daily lives.

Social Business

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The TechShop movement: how to learn electronics, welding or carpentry TechShop was founded in 2006 by Jim Newton and Ridge McGhee, a professor of robotics and a science adviser who were inspired by the lack of access of their students to the tools and equipment required for robotics. The challenge was to give people access to machinery and technology normally only open to specialists. Anyone can join this movement and have access to multiple tools: computing machines, industrial sewing machines, oscilloscopes, laser cutters, 3D printers and all kinds of welding equipment, etc. These groups offer training on the use of each tool, but the key of the learning process is that once you have mastered the basics everything really depends on you: Do It Yourself.

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EACH SECTION EXPLAINED

Core Banking Platforms Here you will find articles related to basic IT infrastructure which supports main banking processes, including technologies such as SOA, WOA, digital platforms, etc.

New Formats Based on design principles focused on customer insights, New formats offers retail banking customers more channels which are more granular and highly functional; a consistent, simple, and collaborative universal user interface; real-time intelligent processes; highly personalized solutions; and is open to social networks and the web. Examples of these new formats are provided here.

Mobile Banking Relevant news about mobile banking platforms (which enable customers to access financial services, such as transfers, bill payments, balance information and investment options) can be found here.

Social Business Social Business is the integration and use of social technologies by an organization, which includes social media/work media, crowd listening, crowd intelligence, crowd working, etc. Stay tuned to see how this space will evolve.

Mobile Payments The process of using a hand-held device to pay for a product or service, either remotely or at a point-of-sale. Up to date information is provided.

Customer-Centricity Customer-centricity is the organization’s understanding of customers at a granular level and the capability to create, deliver, and capture different kinds of value propositions to different groups of customers, based on customer understanding.

Brands & Branding Marketing in the modern world have many channels to reach consumers at their disposal: (smart)phones, tablets, PCs and (smart)TVs and different ways to communicate their brands, such as traditional ads, banner ads, SMS/MMS, etc.

App Ecosystem There are 5 main components in the current Apps Ecosystem: connectivity, devices, OS platforms, app platforms, and apps; along with related products and services providers (MEAPs, Mobility as a Service providers etc.).

Gadgetology Gadgets are everywhere and it seems that there are more and more each passing day. We are moving towards a contextual computing environment and, as a result, the number and functions of gadgets are poised to grow (thanks in part to the internet of things). In this section, we share a word or two about gadgets.

New Banking Concepts Banks around the world continuously explore new approaches to strengthen customer relationships, both in the virtual and the physical worlds; including Virtual assistants, natural language search tools, new marketing tools, different segmentation (children, gen Y,…) etc. This section will cover news along these lines.

Big Data It been said, “what gets measured, gets managed.” The Big Data trend offers organizations an opportunity to manage just about everything. Here we’ll share stories about Big Data capture, curation, storage, sharing, analysis, and visualization.

Future of Work Work, increasingly, is not about where you do, but what you do. The future of work is more flexible and collaborative; and values are going to play an important role, especially corporate values. The way we work is changing fast … stay tuned.

DIY Do It Yourself (DIY) refers to a trend of people doing “projects” to either be creative/recreational and/or costsaving activity. This trend becomes really interesting as new technologies enable new functionalities such as 3D printing, health/wellness, etc, which help empowers individuals; this may even change the we think about businesses in the future.

Crowd Finance A process where small amounts are money raised for a definite purpose, Crowd finance sources funds collectively from individuals. In other words, the money comes from a wide range of individuals and not from a single entity. Read more about it here.

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Technology trends The following section outlines the upcoming technologies that will change everything, with predictions on what may come of them in financial industry.

Smartwatches: a new way to make apps “For all of its technological marvel, the Apple Watch is still a smartwatch, and it’s not clear that anyone’s yet figured out what smartwatches are actually for. “ This phrase from Nilay Patel, a journalist from The Verge , pretty much sums up the current state of wearable technology. It’s hot, fashionable, everyone talks about it, but we still don’t know exactly what do we need it for. The Watch has just been launched with prices ranging from 350 to 15,000 dollars. It’s still too early to know whether it will start a revolution just as the iPod, iPhone and iPad, but many large technology companies were waiting for Apple to present its new gadget to start experimenting with such devices. It’s the case of Citymapper, an application that recommends users different routes to move around the city on foot, by bike, taxi or public transport. Citymapper has been one of the first apps adapted to the Apple Watch.

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In an article published in Medium , the creators of this app explained how they conceived its smartwatch version: “We’ve learned on mobile that users turn the app on and off multiple times during use”, they said. “This is the nature of transit information when you move across the city. You need snippets of information. Different things at different times, depending on where you are along the way.” With this in mind, they have created an application that offers quick information about the state of public transport, which with a simple tap on your wrist notifies you when you have to get off the train and gives you the departure times of buses and trains without having to take the phone out of the pocket. Furthermore, they claim that “using a wearable app may also be safer” because “city dwellers are generally walking too fast, crossing streets, using stairs, jostling through crowds.” The testimony of Citymapper shows us the smartwatch through the eyes of a developer. Smartwatches are not yet computers attached to our arms; they are, rather, a second screen for our mobile phone (in fact, many of them are not even autonomous devices and need to be connected to a smartphone). For now, these watches are here to save us the gesture of taking the phone out of the pocket to check emails and monitor our physical activity, but they are still not ready to steal the throne to phones.

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The language of watches Apple’s first iPhone was a breakthrough product for many reasons. One of them is that it invented an entirely new language. The finger gestures on the smartphone’s touch screen completely changed the way we use technology. The movements we make with the thumb and index fingers to turn pages, zoom, drag objects or type a message are part now of our daily life and have been incorporated in all kinds of products. Smartwatches have new features that require the user to communicate with them in a whole new way: the screen is small, it is intended to take quick glances, the device is attached to the wrist and can only be controlled with one hand, and there is little space for buttons inside or outside the screen.

n the case of Apple Watch, we should highlight features like the ‘taptic engine’, a technology that ‘taps’ the user’s wrist for notifications and alerts, and the crown, a button that can function like a computer mouse. In the coming months we will discover what developers come up with, and what users demand: In what language will we interact with our watches? Will voice control prevail? Will there be new touch gestures? Will there be more watches with crown?

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Jorge Piñera, Head of Mobile Development at the Spanish company 8fit , is working on a version for Watch of his fitness application. Piñera explains that the possibilities, for now, are quite limited. “With an iPhone you can grab the tool palette and do whatever you want,” he says, “but with Watch there are elements you can change very little. We feel very constrained, but we believe the result will be pretty good.” In these early versions of the watch, Apple wants to stay in control and leaves little room for experimentation. For Jorge Gutiérrez, CEO of the Spanish company Tecnilógica , the difference between developing for mobiles and developing for smartwatches is as big as it was at the time between computers and smartphones. “If gestural and voice interfaces improve in the near

future, watches will become independent devices, other uses will appear and some of the differences may disappear,” he says. Rita Madariaga, lead of mobile development at Tecnilógica, adds that “we are in the first versions of these devices and there is still plenty to explore”. She also believes that these gadgets will unleash their full potential when they have more autonomy. Pedro Piñera sees the watch “not as an application, but as a complement.” Hence, training sessions “are started with the mobile and are controlled with the smartwatch.” 8fit will use Apple Watch notifications to provide users information about their diet, while the rest of the app will focus on giving them information about exercises without having to take the phone out of the pocket.

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Many of us stopped looking at the time on the wrist long ago; we now look at it on the phone says Jorge Gutiérrez “And while we are on it we read a notification, we check Twitter... We have got used to it, and we assume this as something natural; we don’t consider it a lack of attention if we are with another person”. Smartwatches, says Gutiérrez, could turn around this process and allow us to check all these notifications faster.

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Piñera says that the size of the screen “forces you to select very well what information you have to show, and display it so that the user can see everything at a glance”. However, he doesn’t think there is much room to invent new touch gestures. “You have the same as on the iPhone, but in such a small screen you can’t introduce a multitouch”, he explains. “Pressing the screen opens a new menu, and they have tried to introduce new gestures with the crown, but I don’t think there is room for many more,” he concludes. Jorge Gutiérrez also believes that “there is no room for many gestures” on smartwatches, but he considers the crown one of the great features of Watch. “A finger on a smartwatch covers around 60 or 70 percent of the screen, and 80 or 90 percent of the information,” he says. “I believe that all the interaction you can move from the screen to the crown will be a success, and I would be surprised if other manufacturers don’t begin to incorporate this type of control.” So, will we all end up wearing technology? Pedro Piñera says “it’s a mystery.” “The iPad was criticized when it was launched, but Apple makes good quality products. It is possible that iPhone users also want this device”, he says. Jorge Gutiérrez believes they will become “usual” devices, but he doesn’t think they will be “as ubiquitous” as smartphones. “In their current form they are going to be targeting high income customers, and won’t have as much penetration”.

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BUSINESS

Digital bank seeks long-term, stable relationship with startup. Offers engagement and support. Qualified partner will possess commitment, talent and eagerness to conquer the world.

bbvaopentalent.com

After the close of registration, this year will be remembered by the global character of its entries, as more than 650 startups from over 60 countries from all around the world have entered BBVA Open Talent. The surge in entries from the USA is noteworthy, having become the country with the highest number of participants, ahead of Spain, Colombia, Mexico and the United Kingdom.

USA

166 Mexico

UK Spain

View all data in this infographic

143

47 Colombia

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We suggest we go hand in hand, because as the african proverb says:

If you want to go fast, walk alone, but if you want to go far, walk together

The 7th edition of this competition is already underway:

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This is the 7th edition of BBVA Open Talent, BBVA’s most ambitious competition so far, and the most mature. We are looking for innovative fintech projects, but also related ideas that contribute to the industry’s evolution and transformation, such as Big Data, security, e-commerce and others. We are interested in finding projects and entrepreneurs to become our fellow travel companions. At BBVA, we are committed to innovation. We have been partnering with entrepreneurs for over seven years now. We have a passion for discovering and promoting talent from whom we can learn and share knowledge. Show us your ideas that will disrupt our industry in e-commerce, security, mobile payments, data and others, and we will provide you with support that will increase your chances of success. We win when you succeed. The final events, in which the 60 finalists will have to compete before the jury and in public to become one of the six winners, will be held in September. After these, two champions will arise from each of the three regions: Europe, Latin America and USA & Rest of the world.

Each winner will receive 30,000 euros to develop a project in collaboration with BBVA. In total, more than 180,000 euros will be distributed among the six winners. We don’t just want a photo or a teambuilding trip with you. We want to give you more. We want you to give us more. That’s why we are preparing an immersion and interaction program that will be implemented over two nonconsecutive weeks.

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In these two weeks, you’ll meet people from some of the best companies in the finance and technology industry and have the opportunity to use BBVA’s contacts to the benefit of your business. Through this project, we’ll work together, get to know each other, and find out what you need - all while working together to disrupt the financial ecosystem. In addition, BBVA offers the winners of Open Talent 2015 the opportunity to enjoy a unique experience with the Roca brothers in the heart of their restaurant El Celler de Can Roca and in La Masía, their innovation center. Also, BBVA create the Special Award for Financial Inclusion . BBVA looks for startups with digital financial solutions for low income customers or small business that provide products and services for low-income customers and digital financial solutions that enable the bank gather and process information. he winner will travel to Maputo, Mozambique, to pitch his project in the Global Policy Forum in September 2015.

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INNOVAQUOTES

InnovaQuotes, an app to inspire you Discover #InnovaQuotes, your personalized quotes generator. It’s an app from BBVA Innovation Center’s Facebook page that has been awarded on this year’s Digital Awards with the recognition of Best Campaign on the Social Networks. In this app you can find hundreds of quotes that will grant you the necessary inspiration for innovation and entrepreneurship. More than a year ago, BBVA Innovation Center began to share via social media all sorts of “inspiring” content in the form of quotes. The motivating nature of the content secured Twitter and Facebook users’ interaction. After a long time sharing them, and given the positive reviews of these inspiring quotes, at BBVA Innovation Center we wondered: why not create an app that helps you find the perfect quote for the right moment?

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INNOVAQUOTES And so InnovaQuotes was born, a simple web and Facebook-integrated application that delivers -to any user that might need it- a personalized quote after answering only five short questions. A responsive app accessible either from the BBVA Innovation Center site or from the BBVA Innovation Center Facebook page . On June 24th this app was awarded the Best Campaign on the Social Networks award on the 2015 edition of the Digital Awards. These awards, organized by OMExpo and eCOMExpo, recognize the best digital marketing and e-commerce solutions of the year.

WEB

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Mobile banking The transformation towards digital banking generates new business models. It is the era of mobile banking. Innovation startups innovadoras as Simple, Moven, GoBank, Fidor Bank are leading the way to mobile banking, financial institutions without branches that are causing a digital transformation in banking.

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Cloud services Many business services are already cloudbased, but do you know how to make the most out of them? The average citizen is not much aware of the existence of cloud-based services, but businesses are increasingly choosing them over the traditional ones. Cloud computing is progressing at increasing speed. It seems unstoppable, and its influence will be perceivable on every aspect of our everyday lives.

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Virtual Reality Total immersion in a world increasingly within your reach. Virtual reality has outgrown its sci-fi dream status to become an innovative trend on which companies are increasingly betting on. “It helps the decision-making process in a world that doesn’t exist yet.” This is one of the core values of virtual reality, the trend that has seen many companies accross different sectors, from architecture to communications, place a bet on it. It is no longer a matter of videogames. innovation edge | Crypto-currencies | centrodeinnovacionbbva.com

Millennials The youth between 18 and 30 years old, the so-called millennials, are under the spotlight all around the world. They are every brandâ&#x20AC;&#x2122;s desire and pretty much every marketdisruptive trend is targeted at them. They are expected to account for 50% of the planetâ&#x20AC;&#x2122;s consumerism by 2017.

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Open4U

You might also find this interesting from BBVA Open4U

The best alternatives to Arduino: from the Do it Yourself to the Internet of Things Smart textiles, drones, robots, computers, homemade wearables, the Internet of Things... Since Chris Anderson coined the term Do It Yourself (DIY) in 2010 in his article ‘In the next industrial revolution atoms are the new bits’ , published in Wired magazine, many projects have been launched by open hardware, open source and crowdsourcing enthusiasts. Anderson described it then as the new industrial revolution; now, almost four years later, that definition doesn’t seem poetic madness. Raspberry Pi, BeagleBone, Sharks Cove, Minnowboard MAX, Nanode, Waspmote or LittleBits are some of the most interesting alternatives to Arduino, the open source hardware.

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Open4U

Get the maximum benefit from data with these four tutorials Mapping data, visualizing them in geospatial apps and applying automatic learning. We put our knowledge into practice with the help of these video tutorials:

A ranking of the best predictive analytics solutions for companies Predictive analytics is â&#x20AC;&#x153;a business game changerâ&#x20AC;?. That would be the perfect summary of the latest Forrester Research report with its annual classification of the best predictive analytics solutions for companies . There are no more excuses. All the companies in the world have such advanced and easy to use data analytics solutions available that not knowing what will happen within six months is a mortal sin.

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