Issue 5 May 2021
INDUSTRY
REVIEW
BROUGHT TO YOU BY THE YOUR GATEWAY TO BLOCKCHAIN AND DIGITAL CURRENCY USE CASES AND APPLICATIONS
TABLE OF CONTENTS BLOCKCHAIN INDUSTRY REVIEW BY THE CRYPTO CURRY CLUB
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Property lettings on blockchain. What’s next? with Shahad Choudhury, co-founder OpenBrix
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Old Made New - Direct Exchanges (The Great Awakening) by David Parsons and Antony Abell Founders of the TrustMe™ / TPX™ Property Exchanges
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Does crypto fit into the evolution of proptech?
B L O C K C H A I N
I N D U S T R Y
R E V I E W
with rentible.io
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Unbank Yourself – earning yield with crypto with Alex Mashinsky, CEO of Celsius
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What’s next With Crypto Wallets? with Cent Finance
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Crypto concept in Universal Basic Income with Anna Stone head of strategy, GoodDollar.org
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What’s next for ecommerce bringing blockchain and even NFTs into a new ecommerce platform With Cyrus Taghehchian, co founder of blockchain-based ecommerce platform Splyt
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The role of smart contracts in Islamic Finance and Shariah Compliant Financial Products with Dr Farrukh Habib, Shariah Expert and Co-founder Alif Technologies
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Innovating with Blockchain could save your business tax – R&D Tax Credits Explained by Shaun Bartle, Associate Director Finch & Associates
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Events schedule
FOUNDER´S NOTE
THE
WELCOME TO BLOCKCHAIN INDUSTRY REVIEW
In a month where crypto markets have seen the effects (yet again) a few tweets (with cries of market manipulation) can have on crypto markets, this issue of Blockchain Industry Review looks instead at some real-life use cases of blockchain. We bring you features on how blockchain is being used to bring efficiencies to real estate rentals with OpenBrix, proptech with Rentible, and tokenisation of assets with TPX. Also, deep dive features on where blockchain shakes up ecommerce with Splyt, how smart contracts bring benefit to Islamic Finance, crypto in a Universal Basic Income model with GoodDollar and even how innovating in blockchain can save you tax.
Top: Founder- Erica Stanford Bottom: Editor-in-chief Jilian Godsil Designer: Mauricio Cano.
Lastly, it wouldn’t be a publication on blockchain and crypto without DeFi or decentralised finance- a space that is growing exponentially and bringing transformation almost daily to the world of digital finance. We bring you interviews with Alex Mashinsky, CEO of Celcius Network and what is next for crypto wallets with Cent Finance. Thank you for reading! We hope you enjoy this month’s issue
Erica Stanford Founder of the Crypto Curry Club
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What is OpenBrix? One in five people in the UK rent privately from a private landlord. For this, they pay often high sums every month, and live more or less at the landlord’s mercy. Tenants can be evicted at any time, such as if the landlord wants to sell or increase the rent. This, for no gains in credit score or much-needed proof of ability to pay. Currently, if you‘re renting and paying your rent on time every month, you don‘t get any credit for doing so. It doesn‘t help your credit score and doesn‘t help to prove your spending capacity which is taken into account for getting a mortgage. For tenants, this is money going out every month but without the proof of affordability that a mortgage brings: no rental statements are issued at the end of the tenancy or any proofs of payments made. OpenBrix also has specialists to help tenants get set up with utilities, council tax and all practicalities. Every time a tenant moves, all paperwork, checks and searches have to be done again, at great cost to the tenant and at great time outlay to the agent. Openbrix brings proof to tenants of their payments made and can start to generate an immutable record of their rental payments which can be beneficial for their credit scores.
Blockchain Industry Review
Property lettings on blockchain. What’s next? With Shahad Choudhury, co-founder OpenBrix
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Benefits to tenants are clear. Tenants get:
The traditional property lettings business is very cumbersome administratively. The industry is high in physical paperwork, which can be prone to everything from errors to illegibility to papers getting lost, to not accurately - in all cases- being able to correctly identify ID. Plus, on a practical side, paper is heavy, not great for the environment, and drinks can get spilled, amongst other things! A large – and unnecessary percentage- of a letting agent‘s time is spent doing admin, filing paperwork and checking details, which could easily be spared through technology and secure digital identity stores of ID and documents. Tenants and agents tend to liaise by email and phone calls, documents are held in emails and system drives (which isn’t always 100% secure) and signatures don’t generally tend to have to be wet signatures anymore. This allows for the potential for great time savings. OpenBrix is already shaking up the rentals market. OpenBrix is the only decentralised property portal in the world that connects all key players in the property letting and sales market on a single public community blockchain platform. The OpenBrix platform gives control to agents as compared to traditional centralised portals such as Rightmove and Zoopla, which have control over estates agents. Anyone can see some more of the issues agents currently face at sites such as https://www.saynotorightmove.co.uk/
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A bespoke marketplace tailored to them
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A rental ledger for rent payments showing a permanent proof of and record of payments paid for rent
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Credit reporting for rent payment
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ID verifications and document storage
Why blockchain? Could you have done what you needed without blockchain? We absolutely could have done this without blockchain, and in fact most of our offers exist on a multitude of centralised systems. So why blockchain? A centralised structure has always allowed one group to exercise control over the rest of the network. Whenever a disruptor to the property market arrives, they always have arrived in the centralised form. However, In the end they simply replace themselves with the current centralised entity, and become the new central controller of the network. 20 years ago, the group that were the “central point” between property owners and customers were estate agents. Today that central point are the property portals. As recently as 2015, another centralised entity, On The Market, has tried to disrupt the property market, but customers have now realised simply swapping one centralised system for another isn’t the way forward. The way forward is decentralisation. The way forward is blockchain technology. Decentralisation is the only way to truly ensure that no one group can exercise control over the network, its data, its policies or its financial resources.
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For that reason, a Decentralised Autonomous Organisation is required. OpenBrix will be that DAO.
How did you go about getting started and set up with blockchain? We gained initial seed investment for OpenBrix from Adam Pigott, our CEO, and have had the help of some big names in Blockchain, from Adi-Ben Ari in Applied Blockchain to Sadek Ferdous, the former blockchain fellow of founder ShahadChoudhury in the cabinet office. We have built a great technical team to get started.
Why are lettings agents turning to OpenBrix? What does this change for them and how do they benefit? Several reasons: Our unique property ID (OPRID) is the most accurate on the market, giving agents and consumers the up-to-date information on the property status throughout the lettings process . We provide an intuitive, low- » cost property portal that enables agents to market their client’s properties directly to end consumers. » This is similar to Rightmove in many ways, but the differences » are:
OpenBrix allows for pre-qualification of potential tenants based on qualification through services such as right-to-rent. We can integrate with their chosen reference process We help agents manage consu-
mer correspondence such as rental payments and maintenance tickets online. This means: •
Agents can set up and manage all instructions on a bespoke MLS (Multi Listing Service)- Network(s) by brand, location, or as a whole, or all three. Networks are
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only visible to those added. •
Opportunity to access a wider range of property via MLS and the ability to partner with other agents/branches through the MLS.
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Tenant rental records, Property information page, maintenance records and the MLS Networks can all be “White Labelled”, if this is of interest.
What other blockchain platforms are there out there for real estate / rentals? None that we know of! But it’s impossible to know as there are just so many different property portals out there as well as so many various different blockchain-based start-ups and schemes at various stages. What I am sure of is that we are the only blockchain based portal that provides users with decentralised wallets for their rental record, document storage and crypto transfers on Google and Android.
Will OpenBrix users be able to pay rent in crypto? Our Wallet has built in functionality to allow people to transfer crypto to each other. It’s not active but can be activated anytime. In time people
will be able to pay in crypto. At the moment we haven’t chosen to use any cryptocurrency. However when CBDCs (central bank issued digital currencies) are introduced, if every tenant and agent gets or has a blockchain wallet created upon signing in, we would be able to facilitate CBDC transactions across the platform. Right now, we are focusing on the CBDC issued by the state bank from Lithuania. But in time we hope to be able to accept the future Bank of England’s CBDC. We haven’t yet made a decision on accepting stablecoins or Facebook’s prospective Diem cryptocurrency. For now, we prefer to use existing legal tender.
What’s next? We have a big development move ahead of us. From introducing a global Multi Listing Systems which allow estate agents across the world to work together and collaborate, to working with agents and create financial service products for tenants and agents. The next project is working to enable accepting CBDCs. We had planned a big education drive. The biggest obstacle for us had been to try and move the property sector to a more digital environ-
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ment, convincing agents to send documents to tenants via an app and convincing tenants to sign up to a tenant app. However with Covid accelerating digital transformation, this has proved to be much easier for us. Tenancies are becoming more digital, so agents are more accepting of this transformation, and as such Tenants are also more accepting of this growing digitisation. The efficiency and digitisation will have massive cost savings for agents, which can be passed on to tenants also. For property lettings, I think property lettings sites have stagnated by simply acting as a billboard, and that tenants are becoming more discerning and more demanding. So the tenant ledger. Pre referencing and similar functionalities will become more normal.
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O l d Made New - Direc t Exc ha nges (The Great Awakening) The move from “medium of exchange” to direct exchange. By David Parsons and Antony Abell Founders of the TrustMe™ / TPX™ Property Exchanges With the advent of blockchain technology, trusted digital assets and self executing smart contracts, trust in the execution of business transactions is approaching the level of historic confidence of one to one exchange with known parties. This level of trust in dealing with commercial transactions existed since the dawn of trading between peoples. In the past or even in more recent times, obtaining
goods or services in a society between known or unknown parties, goods were exchanged for other goods or services that the two respective exchanging parties needed. This system of direct or barter exchange (trade of value) in which the participants in a transaction simply directly exchange their goods or services for other goods or services was done without using a medium of exchange, such as gold, silver or paper currency.
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Transactions were not always immediate reciprocal exchanges, some were delayed in time. In most developed countries, direct exchange usually existed parallel to monetary systems only to a very limited extent. Today’s market actors use direct exchange as a replacement for money as the method of exchange in times of monetary crisis, such as when currency becomes unstable such as in a hyperinflation cycle or a deflationary spiral or simply because paper currency is unavailable for conducting commerce. Studies have not shown any present or past society that used direct exchange without any other medium of exchange or measurement, and anthropologists have found no evi-
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dence that money emerged directly from barter. They instead found that credit extended on a personal basis with an interpersonal balance maintained over the long term was the most usual means for the exchange of goods and services. This means of exchange coupled with interpersonal balances (trust) works very well for small communities where all the actors are known such as in a village. As the scope of exchange expanded past a village boundary to lesser known markets there was a corresponding diminishing of willingness to give credit (trust) in interpersonal exchanges to lesser known parties so exchanges tended to happen in a more immediate and sequential manner.
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Despite this, economists often inaccurately presented early societies as examples of the inefficiencies of direct exchange to explain the emergence of money, of „the“ economy, and hence of the discipline of economics itself. It‘s more likely money emerged as the possibilities for trust in interpersonal balances became less and less possible as exchanges extended geographically to more unknown and distant market actors. As the time and distance increased so did the trust factor decrease. Money effectively replaced the interpersonal trust balances since money had little relative counterparty risk to accept.
De e p D i ve i nto Direc t Exc hanges As depicted in figure 1 picture at the start of this article, the farmer in a remote podunk town after the autumn harvest is depicted asking the newspaper editor to accept two chickens (perishable after 2 days) in exchange for 52 weekly editions of the newspaper. The newspaper editor has: a pumpkin (perishable after 30 days), a basket of autumn root vegetables (perishable after 180 days), a piglet (perishable after 2 days), and 2 salt cured hams (perishable after 730 days). The newspaper editor also has employees: a typesetter and an apprentice. The editor is determining the value of two chickens before making an acceptance decision. Presumably he is taking into account the following modern day components
of the direct transaction:
into two equal units of account.
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Storage of value
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Unit of Payment
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Chickens will last only 2 days thus a short window of storage must be used quickly, equivalent to a negative daily interest rate of 50 percent.
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Can it be used as a unit payment to the employees at equivalent value?
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Will the employees accept it as a unit of payment?
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Can he use the chickens to pay off other debts?
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Opportunity Cost
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Can the editor demand to be paid in gold backed currency or does he lose the opportunity for revenue with no marginal cost associated with the subscription?
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Unit of Value
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What’s the value of two chickens compared to presumably one year subscription paid in gold back currency USD.
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Unit of Account
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Fungibility.
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Two chickens allows division
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Counterparty Risk
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The farmer is at risk for the newspaper not delivering a newspaper due to external factors out of control of editor.
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The editor has virtually zero counterparty since he is using and has control of the food stuffs.
Long term interpersonal credit (trust) allows direct exchange transactions to take place amongst
Blockchain Industry Review
known participants. The transaction’s reciprodic exchanges sometimes happen not at the same time, but over a period of time. The measurement of counterparty risk for each participant is done on an interpersonal trusted basis without third party involvement. Each participant gains the other‘s trust typically through a long history of previous transactions. Trust in this case can be defined as the sum of the number of successful transactions between two known parties over time.
The newspaper editor in the above example is however making a relatively complicated multifaceted decision in accepting the farmer’s foodstuffs in lieu of payment with US dollars. Factors which include longevity, value, acceptability as units of payments to employees and cost of storage all factor into his decision process. What appears as a simple exchange therefore takes into account a diverse and exhaustive amount of factors into the decision process.
Gold Coin Bank Notes Source: Wikipedia
In the example above the payment of a yearly newspaper subscription in US dollars would be a much easier decision process without a long list of factors to take into account. US dollars (a commodity medium of exchange) would reduce the fac-
tors from ten distinct decisions to just one. This certainly would be the preference of the newspaper editor. However, US dollars would need to be commonly available in the local economy to be able to be exchanged for the farmer’s foodstuffs (the sum
of the farmer’s costs, labour and time) and thus to convert his foodstuffs into a common medium of exchange (US dollars in the example above).
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A B r i ef hi story of non-redeem a ble or n o n-asset ba c ked c ur rency. A political cartoon from the 1864 USA election above depicts the Lincoln administration of the time operating „Chase‘s Mill“ to flood the country with fiat money (or what was then called ‘Greenbacks’). Two other modern day memes below, 156 years later, show the same thing in Europe and in the USA. It is interesting to note that both Legardere and Chase (depicted below) were both attorneys before becoming banking leaders. Previously (pre-1971 in the USA) paper currency was redeemable for money in the form of precious metals gold or silver. Without the restrictions of the redemption of money for a precious metal placed on paper currency creation, politicians, central banks and commercial banks have all been relatively free to expand the currency supply without any true restraints.
Running the machine: Source Wikipedia.
The above political cartoons or “memes” in today’s parlance, illustrate politicians lacking the restraints necessary to prevent hyper monetary inflation. Astonishingly, these memes are separated by almost 160 years, yet illustrate in precise detail the identical causes of monetary inflation. Non-redeemable currency (fiat) or, as it is known sometimes as, ‘legal tender’ must by law be accepted in satisfaction of previous debts denominated in that fiat or be used in the settlement of taxes of the nation state issuer. Should a legal dispute arise over a past commercial or public transaction, the legal tender laws of nation states declare a monetary debt is satisfied if these notes have been “tendered” or formally offered in the correct amount. Of key import under these same laws, it is still possible
to make a contract in something other than the legally designated currency or legal tender. A vendor, for example, may specify the payment type needed may not need to be accepted in legal tender. But if payment for a debt not otherwise specified is tendered in the legally designated medium of exchange, it must by law be accepted at face value. If some other medium of exchange is made legal tender, payment of that medium for a debt cannot be refused on the grounds that the designated currency is not money. Issuing ‘money’ may therefore come in other forms and
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therefore it is possible to issue currency without in fact making it ‘legal tender’. Governments have previously issued various forms of notes that have circulated as currency, but which have not been declared ‘legal tender’. Gold or silver coins may be issued without making them legal tender. At the same time, legal tender status can be conferred on the coins or notes of another country. Consequently monetary standards and legal tender can in fact represent different things.
To d ay’s curre n cy is no l o n g e r useful for Jo h n Bul l or Joe Si x p a c k
Le g fia al te t n nd ot er es n ar ote en s ot are go on od ly fo go r p od a f im yin or p po g o riv rte ut at d int e an go er d od es p s. t o ub So n lic ur go de ce ver bt :U n s S me ins Tr n id ea t d e t su eb he ry t o c . r p ou ay ntr in y's ge b xc ord ise er ta s. T xe h s o es n e
What this means is government can change at will the value of contracts and salaries negotiated in non-redeemable currency. As an example, $10 dollars in redeemable currency (i.e., gold, property or property certificates) is generally immune to the vagaries of politicians‘ decisions. $10 dollars in non-redeemable currency can however have its value changed to anything at any time by governments. Given the choice which one would you prefer?
W h at is ol d is new DECENTRALISED CREATION AND DISTRIBUTION OF MONEY SYSTEMS Bringing all this forward to our current economic cycle, Decentralised Finance (DeFi) systems are designed to be trustless as their core design. This means the asset in the transaction along with payment and settlement occur almost simultaneously in a DeFi transaction under a smart contract infrastructure without third party
involvement or counterparty risk. In such environments currencies such as GBP or USD are being ‘tokenised’ using blockchain technologies and then used in these trustless transactions more efficiently than in the legacy banking systems. Likewise, new
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tokenised assets are being created as recognised currencies and are being used to create complex financial transactions but which can have trusted recognised value. These new forms of currencies are created quickly and are then being used again as their own recognised ‘currency’ in other transactions. This process is repea-
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ted over and over again in the DeFi world. Furthermore, the custodial holding of these trusted digital assets can be kept securely by the owners and no longer require third party custodial services or banks to safeguard or maintain them.
Th e g reat move ba c k wa rds These new decentralised finance mechanisms are now implementing the ability to directly swap one asset for another asset without the use of conversion into fiat currency. The costs of using these systems are negligible coupled with low operational friction on a global scale. This has resulted in a meteoric rise in their adoption across the multiple industries and sectors. In
short, the legacy “mediums of exchange” of USD/GBP/ EUR fiat are being discarded for the more stable and trustworthy “Direct Exchange” systems which remove the uncertainty of value and replace it with ‘3i’ (intuitive, inherent, intrinsic) assets which people are more willing to recognise and accept.
C on c lusion All of these features result in very low transaction costs with regards to the investment in personnel, systems and computing resources and lead to ultra low friction in the exchange and transfer of value and provision of liquidity mechanisms. These distributed systems can be located anywhere on the Internet and can use recognised assets from anyone. In short, the new blockchain
based systems and associated DeFi technologies deployed within and alongside direct exchanges are providing more stable systems, governance and transparency to the underlying real value of transactions than traditional financial institutions, exchanges and governments.
What’s nex t? Instant liquidity mechanisms across trusted asset classes are core to providing blockchain automated liquidity.
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DOES CRYPTO
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fit into the evolution of proptech?
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he relationship between blockchain technology and PropTech was largely initially popularized as the concept of transforming real estate with Blockchain via tokenization started to make its first appearances in public, largely from 2019. When looking at each technology through a separate lens, and then looking at them side by side, the understanding of why Blockchain and PropTech have the potential for a revolutionary synergy becomes clear. While PropTech introduced an approach to real estate in which technology is utilized to benefit users on a global scale and enables them to search, rent, buy, sell, and manage a
property intuitively, it also opened a door for many to exploit the anonymity of the internet for cybercrime, mainly for fraud, scam, and data theft. Blockchain technology, on the other hand, brings among other attributes all the characteristics of increased security that can prevent these exact problems (as well as other added value innovations), yet due to its relative “infancy”, it still lacks the intuitiveness aspect. If we look at the above macro-level complementary differences, we can also see how the two technologies even further intertwine. In PropTech, we have different verticals serving different niches - be it rentals, sales,
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or property management. All of these different ingredients, when mixed, are steadily pushing forward towards the decentralization of PropTech and advancing it into the Blockchain age. Enjin, a successful NFT project, made a parabolic stride in 2021 and has joined forces with LABS group to democratize the real estate industry with NFT Property titles, a process in which LABS Group aims to harness Enjin’s Platform to mint and issue NFTs that represent fractionalized real estate assets, a nextgen solution for the sales aspect of real-estate. Rentible.io is employing DeFi principles and trustless smart contracts for the rentals and property management sector, aiming to remedy existing market problems and to enable tenants and landlords to conveniently send and receive rental payments in different cryptocurrencies. “The origin story of Rentible goes a couple of years back, to two flatsharing platforms for international students in London and Budapest, which grew to support over a million users. The know-how of the market gained during this period and the understanding of the pain points rife in the industry and their actual real-life effect on people, have set the foundations for Rentible” The mid-to-long-term property rentals industry is valued at $3.2 trillion, and with 1.12 billion rentals globally and shared economies estimated to reach $335 billion by 2025, it presents many opportunities for new technologies, alongside many breaches appealing to “bad faith actors‘‘. When also taking into consideration that the number of crypto-wallet users, currently estimated at over 100M, is expected to soar in the coming years, the revolutionizing
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change across the industry is inevitable, much like the manner in which DeFi changed core finance practices at the beginning of 2021. Some of the main market problems that Rentible is addressing rotate around security, liquidity, and data ownership. Ironically, one of the most overlooked problems existing in many mid-to-long-term current-gen property rental platforms is also the one impacting individuals the most. Fraudulent deposits and “let and run” schemes have a massive impact on an industry-wide level as well as on a personal level, and constitute a focal problem in the industry causing substantial loss of money and privacy. Examples from around the world include a case in Florida, where 18 families fell victim to such a fraud and transferred upfront a deposit of $1000 each to secure a property, only to discover that it didn’t exist. In another instance, expats in Spain fell victim to scammers who tricked prospective tenants into sending thousands of euros in deposits before fleeing to Italy. In the UK, which is a hotspot of online property scam and fraud, a student in Bristol was tricked into sending £1,800 as a deposit on a non-existent property, while in London, an online scammer deceived 17 victims and embezzled their deposits for a room which he was supposedly offering, contributing a small part to the more than £918 million lost due to property fraud in the UK alone over a year. Property rental scams listed on Facebook Marketplace are now worrying commonplace, it can be hard to tell which rental listings are real and which are a scam. The other side of this problem comes in the form of data theft, where online scammers
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trick victims to send their full personal details (including scanned copies of passports and other forms of IDs and bank account details) as part of “signing online the rental contract” excuse. This not only breaches private data ownership but also enables the perpetrators to use the stolen personal details to further run similar online rental scams under a “new identity” on other victims. A main focus of Rentible is to create a seamless and efficient platform where participants can benefit from much lower costs than is possible on centralized platforms via disintermediation. For this, the employment of immutable tamper-proof records designed to eliminate the risk of fraud, widespread scams, theft of private data and manipulation of privacy is a pillar of the Rentible’s ecosystem architecture. It’s aim, to protect the privacy and funds of its users by utilizing blockchain-technology attributes. When it comes to accessibility and mass adoption appeal, while many homeowners, landlords, and tenants will be interested to send/ receive rent-related payments in
cryptocurrency, the vast majority of them have no easy gateway or an intuitive platform, or desire to use crypto, to make this option viable. Despite the many headlines in the news about Bitcoin serving as a store of value, the vast majority of landlords, although some may be interested to get into the crypto sphere, simply don’t know how to make even the basic step of opening an ERC20 wallet, and here Rentible seeks to enter and position itself as a first-mover in the sector. Rentible introduces a blockchain-integrated PropTech platform which enables tenants and landlords to seamlessly send and receive rent payments in different cryptocurrencies, making this option accessible to everyone, not only to crypto-savvy enthusiasts as is the standard today. When it comes to liquidity, tenants sometimes might not have the funds immediately available to pay rent or a deposit to secure a flat, but might have the money in crypto. Rentible’s solution for this comes in the form of a community liquidity pool, that will enable those in need to put for example Bitcoin as collateral in order to draw a short-term bridge loan to gap this predicament. Rentible aims to make sending and receiving rent payments and deposits in cryptocurrency between tenants and landlords as easy as a click of a button.
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Blockchain Industry Review
NBANK YOURSELF – EARNING YIELD WITH CRYPTO
First let us stop and commend Alex Mashinsky for his impact on the world as we know it. An early pioneer in VoIP, with patents going back to 1994, he is now in the process of replicating that disruptive game changing charge with MoIP or Money over IP. As we sit in the middle of a pandemic, zoom calls at the ready, his impact is already written for the history books; now his challenge is to do for money what he did for telephony. Modestly he acknowledges this in our call, emphasising that the internet infrastructure is what makes it possible for billions of people to be talking online today, but the sheer impact of his early work needs to take a bow. At the time, he was met by telecoms engineers who tried to explain to him that the internet ran on phone lines, to which he replied: actually the phone network is just an application on the internet.
with Alex Mashinsky, CEO of Celsius
As a serial entrepreneur, Alex is fully ensconced in his next, and arguably more impactful, challenge – posing an alternative to the banks. Tackling the banks is different from upgrading technology. Alex recognises banks were set up to serve the community, giving credit and loans and providing interest on deposits; so it’s not the system that he is tacking per se, but the institutions
as they have evolved away from their initial purpose. In his view, it’s not banking we don’t need, it’s the banks themselves. He has been known to term our relationship with banks as an abusive marriage. “Today’s banks are nothing like their community originals. They do not care about the individual, there is no connection between you and the bank and basically
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it is their job now to extract maximum profit for their customers – to hand over to the shareholders.” The whole ‘too big to fail’ ethos is mind blowing to Alex, so too is the transition of a service industry to a profit squeezing one at every corner from lack of fair interest paid on deposits to charges of every hue on every interaction with the bank. When Alex first heard of Bitcoin he was unimpressed and indeed very critical of the energy expended on the network. “I’d spent my career building bigger, better and faster and here was a network delivering the slowest database possible. I was not going to fall for that one.” In fact, it took several years for Alex to come around to the possibilities of this very slow database. Fixing the double spend issue was the critical point that swayed his thinking and once he cottoned onto that attribute, he began to look at the trillions of dollars of value tied up in it. In the same way the move to digital video coincided with the pandemic and lockdown, the abuse by the banks at an individual level right up to Central bank with their quantitative easing, made Alex realise the time was now, and he was going to launch a bank that went back to first principles. He also quickly realised that while there was an appetite for change, it needed to be easier. “I wanted ordinary folk with small amounts of money to engage. Let the whales, traders and
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OGs look after themselves, I wanted to fix this ‘ordinary joe’ problem. “VoIP took off because people wanted to talk to their loved ones far away, simple, but money has a higher level of trust required. I want to solve it so that the vast majority of people on this planet are using cryptocurrencies without even knowing it.” To that end, Alex is doing Celsius within the system. “There is no way we could help the majority of people in this world and still be an anarchist.” Alex sees cryptocurrency adoption as coming in waves. The first were the anarchists until they ran out. Then the libertarians showed up, until they ran out. The third wave was of speculators pumping and dumping coins, but the fourth or last wave is everyone else. “The people who are going to get us to $300,000 a bitcoin, or even a million, will be the hundreds of millions of retail users who want to use cryptocurrency for their everyday needs – for loans and to earn interest. “That is why we follow all the regulations. We are complaint in every market, we work with the tax authorities, and the fincen authorities, and with the regulators.” It’s much harder to work with the regulator than not, according to Alex. “It’s not possible to pretend the rules do not apply to you. People don’t have to make a choice between compliance or cryptocurrencies, they can use both.” Celsius at the time of writing has in ex-
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cess of $13 billion in assets and that is growing.
participants in the DeFi movement.
“We focus on the hodlers. Our customers are not looking to trade but to use their money. Inside the app, people can store their crypto safely or they can access loans and interest.
Staying true to core values means Celsius is not in the market for a luxury, prestigious headquarters. In fact, Alex points to a report by McKinsey that said statistically anytime a company builds a giant tower and put its name in it, the company was likely to decline thereafter.
Customers can deposit their crypto and use that as collateral to borrow money or pay off loans. As all loans are collateralised, there is no need to check customer credit. This also results in low interest charges. Right now, Celsius has not moved into the mortgage space, possibly the last frontier for customer solutions, but works smart within the system. For example, if a Celsius customer borrows money using their crypto to pay off an expensive loan, they are deferring taxes as they have not sold their bitcoin; being within the system allows for clever collaboration. It also works both ways. During the summer of DeFi, Celsius basically offered its customers secure DeFi and while not headlining like other protocols in the crypto press, it was one of the largest
“Right now, every Monday we pay interest to half a million people. Our average customer is a single mom, or a retired person, or a college student, and they are entrusting us with their live savings. So, yes we have a big pool of money, and yes we behave like a big shot but really our job is to extract as much as possible from the institutions and deliver it back to our community. And we do that better than anyone.”
Your crypto earns more with Celsius
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Blockchain Industry Review
HAT’S NEXT ITH CRYPTO ALLETS? WITH
Article 5
Most people, when looking to get into crypto will start by either asking someone they know who’s already in it what to do, or will Google something along the lines of ‚ ‘How to buy crypto’. Most of the results will link to sponsored content and lists of a centralised exchanges. Some will be more reputable exchanges, other listings will be ads for less reputable sites where there is nothing resembling any assurance that any crypto stored on or sent to those sites will ever be seen again. As someone new to crypto – and therefore not likely to have what is relative insider knowledge of which exchange to trust – and which to avoid at all costs. Data from CoinGecko lists 473 crypto exchanges. A cursory glance at even the top 10% by trust score indicates more than a few which the majority of people in the crypto space would certainly not trust, some with legal ongoings and at least one which is considered to be a known scam. As someone new to crypto, how is one supposed to know which to trust? It can be easy to fall for glossy marketing and
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by the Crypto Curry Club
big promises. User experience in crypto is notoriously bad. Almost the better the exchange is, the worse the user experience, as the better ones will ask for proof of ID and other details before allowing you to onboard. It can take days, is generally the opposite of easy, and is hardly risk-free either. What happens if the exchange gets hacked – a fate that’s happened to more than a lot of crypto exchanges and security provid e r s . Then not only do you lose your crypto – again, has happened too often to mention- but also your personal data can be taken by hackers and you might receive a lot of spam emails trying to part users from their crypto by various devious means. After signing up to an exchange (to buy crypto) you need a wallet, to store crypto in. Most exchanges offer wallets to their users, but as we’ve seen often (the recent Thodex and Quadriga exit scams are just two of the better documented fraudulent crypto exchange exits) this isn’t always safe. Other solutions are storing your crypto offline in a hard wallet (like a physical USB stick) but for these you are responsible for your own crypto.
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If you lose your private key, you lose your access to your crypto. Again, there have been more than a few cases of hardware devices storing crypto lost, broken beyond repair or inadvertently thrown away, only for their owners to then see how much Bitcoin has since gone up in value and want their crypto back. One man in Wales has offered his local government over £50 million to dig up his local landfill where he believes his hard drive containing considerably more than that in Bitcoin- at today’s value- is stored (source). Beyond exchanges, wallets come in either custodial - where another entity controls the private keys to your crypto or non-custodial- where the user does. Non-custodial is more secure providing you can find a secure and safe way to remember and store your private keys. Some chose to store these on paper in a safe, so it can’t be tracked digitally, or memorise them and destroy all evidence. This is great, until you get a disease or neurological disorder and now have no recollection of where your bitcoin is stored or what your private keys are, or where they’re stored. It happens. The crypto wallet with a good user experience and guaranteed safety has yet to be invented. The opportunity for a good crypto wallet offering both easyto-use interface is huge. It’s been long said that the first company that comes up with a crypto wallet that’s easier or as easy to use as something like WhatsApp will do very well. Current crypto wallets fall down at one of either: user experience (almost universally horrible), cost of transactions, or safety (lack thereof).
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The rise in DeFi (decentralised finance) means that people now don’t just want to get into crypto but also want to take advantage of some of the (not risk-free) passive income potential offered by some of the DeFi projects. Some options now offered with DeFi: »
You can lend your ETH, DAI, WBTC and receive interest payments on platforms like Aave or Compound
»
Get flash loans
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You can leverage your positions using crypto as collateral on platforms like Instadapp
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You can earn a savings rate on stablecoins on Curve or Mstable
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You can use your NFTs - rare digital artwork like Cryptokitties, Axie Infinity, Artwork from Knownorgin or SuperRare - as collateral for a loan
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You can borrow against your crypto to invest into other projects, if you don’t want to sell
Blockchain Industry Review
risk adjusted basis than what’s being offered in other asset classes or sectors, partly by growing distrust in banks and governments due to the economic environment and money printing, not helped by the pandemic. New crypto and DeFi wallet Cent makes it easy & simple for users to get set up with DeFi within a few minutes, to get started with yield farming, staking, and trading. The Cent Wallet aims to be as easy to use as possible with a heavy focus being on good UX. It is a true DeFi wallet because it is based on the following features, considered integral to DeFi focused wallets: »
Non-custodial – meaning that users can be confident that even if Cent Finance disappears, their crypto doesn’t.
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Key based - users retain access to their public/private key pair and can instantaneously move their assets out of Cent by punching in their private key in a different wallet. Cent provide users with a cloud backup option in a high security module on AWS
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Accessible - entire onboarding process can be completed within 60 seconds with the only information required being first/last name and email.
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Compatible/Easy desktop integrations – Cent is available both on Android and iOS and on mobile and desktop
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Environmentally conscious – Cent uses Wrapped BTC, not BTC, where WBTC uses far less energy than traditional Bitcoin, a point Elon Musk perhaps forgot to mention in recent Tweets.
As of April 2021, there was over $9 billion Ether locked up in staking alone. DeFi is already providing ways to earn yields, get flash loans, create synthetics and many more services are being added every day, but those getting into DeFi have predominantly been existing crypto investors, just getting started in DeFi hasn’t been easy or accessible to most people. Trying to take advantage of the opportunities DeFi has to offer is even more challenging. The drive to DeFi has been driven partly by the current low interest environment leading people in search of better returns on a
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by the Crypto Curry Club
Your DeFi control centre Cent is a mobile wallet designed to make investing in crypto & DeFi simple, easy and segure. To download Cent wallet go to ‘Cent Finance’ in your App store or go to https://www.cent.finance/ to find out more
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Blockchain Industry Review
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he concept of UBI or Universal Basic income has been around since the 1800s but has gained more popularity in recent years. 2020 Democratic hopeful presidential candidate Andrew Yang made it a part of his political campaign, many Nordic states are actively discussing the idea and increasingly it is seen as part of a raft of solutions aiming at reducing and eliminating widespread income inequality. Having access to UBI meets most resistance with main two arguments. The first is that people will cease to work if they have a basic income. The second is that the UBI will be funded out of national tax. Both arguments can be emotive and divisive. Of course, the UBI proposed so far has not been of the get rich variety and unlikely to tempt the majority of people to cease employment. It is more likely to assist people needing financial support to care for loved ones or pursue passion projects with low financial return. Conversely, there has been a dearth of
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ideas on how to painlessly, or without impeople in their pockets, a situmost likely to rate blowback society.
WITH
ANNA STONE fund UBI at least pacting o w n ation genefrom
GoodDollar, from eToro, comes to the table with a plan to manage both arguments. For starters, it considers UBI should be available to anyone regardless of age, sex, race, employment status and creed – removing the potential them and us scenario. GoodDollar’s appearance is timely as during the lockdowns, UBIs have been essentially implemented in part in many parts of the world (through helicopter money to citizens) and some 20 counties are now actively evaluating this as a policy decision.
HEAD OF STRATEGY, GOODDOLLAR.ORG
by the Crypto Curry Club
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In addition, GoodDollar has looked at implementing UBI outside of government and related tax systems. GoodDollar is the brainchild of eToro founder Yoni Assia. eToro shares similar social aspirations as its brainchild, with both looking to democratise access to finance and lowering the barriers to the formal financial system, namely to capital markets – although initial claimers from GoodDollar are not expected to be able to benefit from capital markets immediately. Setting up GoodDollar, Yoni and eToro invested $3million to ensure the start-up was well funded and did not need to rely on donations to begin its work. Anna Stone takes up the story: “We are all familiar with the size of the unbanked population, some 1.7 billion people, but we are not looking to bank those people, rather to give them access to money. We need to educate them on how to manage their money, which is the first step to building wealth. “There is a journey where people learn about financial assets through an introduction to digital money, and how to manage them.”
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Since the launch in September 2020, some 61,000 people have signed up with 20,000 active visitors to the site every day. “The GoodDollar protocol is a free money flow that anyone can tap into. However, it is really important to understand this is a market incentivised economic model that allows the system to pay for itself.” Users, as in people who wish to claim GoodDollars, sign up for a wallet at wallet.gooddollar.org. This creates a blockchain wallet and when the user signs it, they receive a quantity of GoodDollars every day. This daily distribution of a digital basic income is a digital asset. “The GoodDollar is an inspired example of impact investment allowed by Blockchain.” GoodDollar uses the example of endowment vehicles when a wealthy benefactor deposits money in favour of an institution which receives the interest from the deposit. This method is very popular for funding non-profits or educational institutions. In the world of cryptocurrency, the concept of deposit or endowment is replaced by the word staking in the decentralised finance blockchain world where money, in this case cryptocurrency assets, is locked away to produce a yield. The resulting interest is used to fund the UBI with a portion returning to the investor in the form of GoodDollar coins.
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“In this way, we have built a symbiotic sustainable Basic Income system.” eToro can point to the $56,000 it personally sponsored returning $5000 in GoodDollar. “Proof of concept delivered there and then. Moreover, philanthropic donors enjoy full draw down abilities so their funds are not locked away permanently. While we have first implemented the POC on Ethereum, this vision can be implemented at scale to any protocol and any yield mechanism.” Scaling this model to the world will pose natural problems but right now GoodDollar is focused on growing to the first tier of supporting millions of users. “We are coming from a current world view where there is not enough capital to give every human being access to basic economic assets. We want to change that mindset and use market incentives to tap into the view there is enough and we can do better for ourselves and for others. When we change the world view we can change the narrative.” As a startup, GoodDollar has not as yet determined what success will look like or how much each daily amount might be. Instead Anna turns the question on its head and suggests instead we look at how GoodDollar can enable its users and community, and how it can enable change. “One of the most exciting things is seeing users create a global community where they can collaborate and do more economic activity than they could before.” Traditional consumption revolves around using GoodDollar to buy food. There has been an increase in neighbourhood activities with community members setting up their own marketplaces and conducting peer to peer transactions using GoodDollar. This has extended to community members using Good Dollars to buy old bikes and for agricultural initiatives for food products. “Entrepreneurial endeavours are also on the rise – helped by people who want to see their dollars do good. Now entrepreneurs are using GoodDollars to grow
Blockchain Industry Review
their business. For example, there is a graphic designer in Cuba who accepts GoodDollars for first projects – using it as a lead generation tool. Another example is an entrepreneur who created a gift card business for local restaurants and shops. Yet another example is a community member who has been collecting GoodDollars on behalf of a soup kitchen who found his funds matched by an angel investor in fiat currency. So, he not only tapped into the global GoodDollar community to raise funds in GoodDollars, but also found it matched in fiat funds by a GoodDollar angel philanthropist.” Currently the GoodDollar is not listed on any exchanges but it is an ERC 20 token and interoperable with other Ethereum based tokens. The cash out feature is not supported through the wallet or platform but the aim is to make a ramp to other cryptocurrencies. GoodDollar will stake your charitable contribution on your behalf with the earned interest and yield going back into the GoodDollar economic model, where it is given back to users who are claiming GoodDollars, traceable through blockchain. “We are new and it takes time to build an ecosystem – but our aim is to make GoodDollar liquid and available across as many countries as possible.” Anyone wanting to get involved – either as claimer or supporter – should head over to GoodDollar.org. To claim Gooddollars, go to wallet.gooddollar.org and set up a wallet – from there you just need to login every day to claim your GoodDollars.
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Blockchain Industry Review
What`s next for ecommerce
Article 7
bringing blockchain and even NFTs into a new ecommerce platform With Cyrus Taghehchian, co founder of blockchain-based ecommerce platform Splyt
by the Crypto Curry Club
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Splyt is a well-funded ecosystem with $2.2million raised in a private sale. While that figure in and of itself is impressive, what is more impressive is that the founders turned down a further $350 million from people wishing to buy more tokens. In the world where millions can be shaken from the trees, these founders said they had enough already. Co-founder Cyrus says very simply that $2.2 million was enough and that they were staying within their means. “If we took in more money, things would have been more complex. We had enough money to build our project. Moreover, we built it as a non-profit. We see Splyt evolving. We believe in decentralized governance and we intend this platform to become a social utility for society. We raised over two million and that was all we needed to get to this point.” This stance is even more unusual given Cyrus’ background which includes a stint at corporate consultancy firm Deloitte as well as setting up his own successful consulting business. In fact, part of that experience of working for a large consulting firm taught him three things. The first was the realization of the friction between maximizing profits and doing the right thing.
With Cyrus Taghehchian, co founder of blockchain-based ecommerce platform Splyt
“Part of fulfilment is doing things for others, for giving not just receiving. So, a successful company for me looks after the value in all the community.”
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Blockchain Industry Review
The second? “How to make a powerpoint.” The experience of working at Deloitte taught him the value of story. How to create an easy to digest storyboard in a few slides. “It’s been one of the most effective tools I’ve taken away from Deloitte.” While at Deloitte, Cyrus quickly recognized that quality assurance is as critical for large enterprise projects as for startups. “That’s the third learning I took away – how to be agile. I strive always to bring efficiencies into software delivery, how to shorten cycle times to get product out there faster with the highest quality.” Cyrus is also part of a cohort of individuals dedicated to the betterment of the Ethereum protocol through cooperation. “In some ways it is a little bit of magic.” Cyrus describes Splyt as a better way of doing Amazon’s marketplace. The peer to peer marketplace on Amazon accounts for $250 billion worth of revenue and these are not Amazon products. In fact, some $175 billion of that revenue comes from third party seller fees who are selling under the Amazon brand. “In fact, Amazon pick up between 40 and 60% of seller profits and it’s very difficult for sellers to create a sustainable business. Also this is not transparent – the actual fees are hidden so no one knows what deals are being done.”
Cyrus’ view is to decentralize the entire ecommerce supply chain. It is all transparent and anyone can pull inventory from the shared global catalogue. The stock is then displayed on the affiliate site and once the item is sold, the seller drop-ships it to the purchaser, and the smart contracts within the eNFT release agreed profits to both seller and brand. There are no fees as the site is set up for not for profit. “It’s on blockchain, it’s open source. Anyone could copy what we have done and compete on price – except we don’t charge.” Splyt removes the Amazon function, i.e. the centralized aggregator of inventory, creating instead a decentralized sharing of inventory on the blockchain. Blockchain provides the security and removes the need for trust. They could charge a small percentage for transactions, but as the technology will be open-sourced, eventually somebody will undercut that. “We’ve removed the game theory that drives everything to zero, but that does not mean people can’t make profits. We are about adding value not maximizing profits. Our own model is based on something like Mozilla FireFox, a non-profit linux project where everything is open and free but profits are made on other items like education or consultancy.” Now enter the NFTs or non-fungible tokens which Cyrus describes as programmable data.
by the Crypto Curry Club
“NFTS are programmable data which can be programmed in such a way to be secure. It’s great that there is this current hype around NFTs as art, but it’s much more than that.” NFTs in Cyrus’ world are data sets that are secure, transparent and safe – like stock in the universal catalogue. Each time a product is uploaded to Splyt, an eNFT is minted and assigned to it, which is then made available to retailers and affiliates in the ecosystem. He was investigating their use before CryptoKitties were invented, before the term NFT was popularized and indeed tended to use the term “tokenised asset” back in 2017. In fact, when Cyrus first encountered Bitcoin in 2014, he understood the power behind eliminating digital double spend through technology. The next learning point for him was in 2017 when he was figuring out how NFTs might work – and thereby reduce the double sell issues. “This is much cheaper than other methods of posting stock – one push and your NFT is available everywhere. A blockchain is a public ledger or database and that is how we make it work.” When a seller creates their eNFT (e-commerce NFT), they are asked a number of questions including quantity available, recommended retail price, and the bounty or commission paid to the end retailer. The retailer looks at the list of products, checks out the price and commissi-
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on and selects items for their store. This also eliminates counterparty risk as sales generated from an affiliate are recorded and cannot be ignored; it is all tracked on the blockchain. The blockchain then uses smart contracts to create escrow accounts which holds funds until the item is delivered and which then release the funds. The smart contract automatically releases the correct percentage to the retailer and original seller. Purchasing can be done with crypto and currently Cyrus is looking at integrating a credit card fiat gateway. “Handling traditional payment methods is important. For newcomers to this space tackling wallets and private keys can be daunting – we want people to benefit now without having to understand crypto. “We are intentionally backwards compatible with web 2.0. We have a web 2.0 interface for the majority of the web population with a web 3.0 backend. We’re the marketplace of marketplaces.” Using NFTs and smart logic also allows Splyt to minimise the number of parties in any given transaction. The NFT cannot be stolen; it will only share data with the confirmed parties. This protects everyone. Cyrus uses real life examples to explain how the platform’s fits in. Craigslist is free but full of unregulated people and possible scams.
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Amazon and eBay offer better security but cost a lot more. Splyt aims to bridge those worlds. Sellers are requested to deposit the token, TCR, proportionate to the cost of the items. If the transaction is successful, then the token is returned. This makes for manners on sellers, while scammers may lose their money. It also profits sellers as the more tokens they hold, the more items they can sell. While an Ethereum man at heart, Cyrus has opted to run Splyt on the PolkaDot blockchain as it better suits ecommerce. Cyrus sees PolkaDot as Ethereum with built-in sharding. In terms of roadmaps, this year the intention is to build clients so anyone on Shopify or WooCommerce can download an app and be integrated into Splyt, the decentralized ecommerce network. As the project is open source, he is letting others build clients or apps on top of Splyt. PolkaDot is not yet live so first on his list of priorities is creating interoperability between it and the EVM, or the Ethereum Virtual Machine.
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Blockchain Industry Review
THE ROLE OF SMART CONTR Islami
Finance
and Shariah C
WITH DR FARRUKH HABIB, SHARIAH EXPERT AND CO-FOUNDER ALIF TECHNOLOGIES
I
invited Dr Farrukh to explain about Islamic Finance and Shariah compliant financial products which he explains are basically the same thing. However, before he begins, he points out that Islam is actually a complete code for living that has a comprehensive set of rules and principles for each and every walk of life.
Dr Farrukh Habib, Shariah Expert and Co-founder Alif Technologies
“It’s not only about worship, but it governs public dealings too. In all matters,
Islam provides guidance not only in regard for the man-to-God relationship, but also for the man-to-man relationships.” “Islam extends to the whole family. It is a complete jurisprudence in the sense that it provides all the principles, including a complete alternative of conventional financial systems which is called the Islamic Financial system.” I ask about the differences between Western Financial Systems and Islamic, and Dr Farrukh corrects me on my terminology. Western Financial system is better termed conventional finance as it exists in all corners of the world. “In order to explain the main difference let’s look at the term Riba. It is sometimes translated as interest or usury, but it means more than that. In the Quran, Allah has prohibited Riba but allowed trade, one is prohibited, and one is permissible, so let’s break that down.” Interest typically happens in a lending
by the Crypto Curry Club
RACTS IN
Compliant Financial Products and borrowing transaction. There are two parties, one is the lender, and one is the borrower and the lender charges an amount on top of the principal which is normally termed as interest. Riba can be used to describe the money paid on top of the principal, but it can also occur in a sale transaction. For example, one cannot sell 1 KG of dates of superior quality for 2 KG of dates of a lower quality. In this way, the concept of Riba is much wider than the concept of interest and usury. Dr Farrukh gives another example, where the Prophet Mohammed dictates that gold must be exchanged on a weight for weight basis, regardless of whether the underlying gold is 24 carats on one side and 18 carats on the other side. In fact, there are six commodities that feature directly in these directives and include gold, silver, salt, barley, wheat, and dates. Tthese rules were created more than 14 centuries ago when money was only beginning to be used.
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The necessary switch is that the commodities are exchanged for money and then the money exchanged for other commodities or materials, with the price reflecting the composition of the base element. Moving onto modern Islamic banks, I ask how these teachings are interpreted into a modern context. “Islamic banks do not extend loans, because they cannot earn profits on loans, as Riba is prohibited in Islam. But trade is allowed. Trade is the key to understand and to explain how transactions are done in Islamic banking.” A good example to clarify this approach is the process of buying a house. For most people, this requires a trip to the bank to obtain a mortgage in which the bank loans the principal which the borrower then repays with interest. The transaction is different with an Islamic bank where they will ask to see the house in question. Say the asking price is half a million dollars, the bank will ask if the new would-be homeowner has any savings. Imagine if they have 20% or $100,000, then the Islamic bank will provide the other $400,000 but this is not a loan, this capital contribution from the customer and the Islamic bank will form a partnership in the house. Once the partnership contract is put in place, the owner/customer will want to purchase the remaining shares of the Islamic bank in the house and so the owner will start buying the shares in instalments, gradually increasing his/her percentage in ownership of the house. At the same time, the owner will live in the house. This will involve the creation of a third contract, a rental contract which the owner will pay to the Islamic bank. With the three different contracts in place, the owner will end up paying the same amount as if they had borrowed the money from a convention bank. However, this is based on the three contracts, one a partnership, one a buying and selling of shares in the house, and one a rental agreement. While the financial outlays will be similar, the partner-
Blockchain Industry Review
ship mechanism means the owner begins with owning 20% of the house, and that as time goes on, this ownership percentage grows. In ten years’ time, the ratio may be 60% owned by the owner and 40% owned by the bank. Along this journey, the owner is seen as a partial owner and partner in the deal, which gives them more rights in the process when compared to conventional banking arrangements. Similarly, Islamic banks can extend cash financing using the principles of trade. In the case of wishing to borrow Pounds Sterling, the amount is agreed with the Islamic bank becoming an agent on the customer’s behalf. They will buy a commodity from the London Metal Exchange (LME) and sell it to the customer on a credit basis. The customer now owns the commodity, he/she can sell it in the LME on spot basis for immediate cash. Subsequently, the customer now has the cash needed and will need to pay the Islamic bank in money for that commodity. The credit price is 100% of the amount to be paid plus a mark-up (the Islamic bank’s profit) which is usually calculated based on the prevailing interest rate. “Again, the underlying contracts are different from a loan transaction, with trade being the key issue.” On the other side, people cannot make money through interest by
by the Crypto Curry Club
depositing funds into their accounts. It is again converted into partnerships with the Islamic bank taking these deposits and using them to invest in other shariah compliant ventures. Profits made in this way are then received as profit and distributed among the savings accounts. However, it is interesting to note that Islamic banks still follow the benchmarks of conventional banks in terms of profit and cost. Hence, the economic affect remains the same, but the legal contracts are different. Islamic banks also avoid Gharar (excessive uncertainty and risk), Maysir (gambling like financial products and zero-sum games) and dealing in prohibited ventures. Moreover, Islamic finance also incorporates ethical and social principles embedded in Shariah. “A key component of Islamic law of contracts is that it insists on the parties being more ethical and social. Quran suggests that wealth circulation should not be constrained in one sector of society (only among the rich), it must be circulated in the whole society. “The creation of various Islamic financial products removes the objection of Riba, Gharar and Maysir, but now Islamic finance needs to look at ways of reducing costs, increasing efficiencies and greater financial inclusion. Here is where technology, and in particular decentralised blockchain, can greatly help.” The existence of smart contracts, where activities and outcomes are algorithmically programmed, will allow for greater automation, flexibility, and speed in Islamic financial products. In turn this will also reduce costs and increase transparency. Smart contracts can also reduce non-shariah-compliance risk in many ways. For example, due to the trade-based nature of Islamic financial products, not only more than one contract is required to perform a single transaction, but also the sequence of the execution of those contracts is important. Smart contracts can take care of this matter very efficiently. “Smart contracts will allow Shariah compliance to become more robust.”
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Dr Farrukh has been involved in blockchain projects and crypto assets since 2016. His background is in economics, a primary and masters degree from Karachi, Pakistan, then a further masters in banking and finance from the Queen Mary University of London. From there he moved to Malaysia where he completed a PhD in Islamic finance. While in Karachi, he also studied in a religious school seeking knowledge in traditional Islamic Studies.
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Blockchain Industry Review
Innovating with Blockchain could save your business tax – R&D Tax Credits Explained by Shaun Bartle, Associate Director Finch & Associates
The last few years has seen huge adoption of Blockchain being integrated across almost every industry, from real estate to finance to logistics to retail. There has also been an increase in companies creating their own native cryptocurrency to enhance their business, such as a token that is tracked to the supply chain of jewellery, allowing the end user to know exactly where the material has been sourced from. So, what does this have to do with saving your business on tax? The UK Governments Research & Development Tax Credit Scheme! This generous tax -saving scheme allows companies who are innovating to reduce their corporation tax burden and potentially receive a game-changing cash injection to the business. The scheme does, on the face of it, sound too good to be true, but I can assure you that is not the case. The scheme is a Government incentive that rewards UK companies for pushing the boundaries of innovation and help to fuel growth in the UK, making a claim can potentially provide a valuable cash injection into the business and reduce your corporation tax bill. To qualify, a business must be seeking an advance in science or technology, and when trying to achieve this, encounters scientific or technological uncertainties that are not readily deducible by an expert in that given field. A loss-making company which qualifies for the SME scheme can potentially recoup up to 33p in every £1 spent on qualifying R&D activity (more on this later),
whilst a profit-making company profit-making company can potentially reclaim up to 26p in every £1 spent.
How does this relate to Blockchain? The core value that underpins Blockchain is that it acts as a consensus mechanism that enables a database to be directly shared without a central administrator, essentially cutting out the middle man. Not only this, Blockchain offers businesses advantages such as trust, transparency, efficiency, reduced transaction costs but with faster transaction settlements, and with the pace of technology moving faster than ever before, it was inevitable that technology such as Blockchain would begin to become “the next big thing”, no doubt being helped by the crypto-craze we’ve been encountering with its various highs since 2017. The number of companies exploring the use of Blockchain and actually integrating it into their day-to-day operations has significantly increased. This has led to higher volumes of R&D claims being made where companies are innovating with Blockchain.
So what is the benefit of doing an R&D claim? Credit where it’s due! SME’s can claim an additional 130% deduction of the qualifying expense incurred Whether you are profit or loss making, you may still be eligible for the relief, with up to 33p in every £1 spent on qualifying R&D activity potentially being recovered.
by the Crypto Curry Club
A Tax Credit is an immediatsource of cash which you can reinvest in your R&D and continue to lead innovation.
Potential Benefits As an example, let’s assume a profit-making company qualifies for the SME scheme and their Tax Advisor has identified £100,000 of qualifying R&D expenditure for the period. The potential benefit could be a tax refund or reduced tax liability of £24,700, broken down as follows: £100,000 x 130% (enhancement rate) = £130,000 (known as your enhancement) £130,000 x 19% (current Corporation Tax rate) = £24,700 Now let’s see what the potential benefit could be if that same company were a loss-maker instead: £100,000 x 130% (enhancement rate) = £130,000 We then add this to the original expenditure: £100,000 + £130,000 = £230,000 (known as your enhanced expenditure) £230,000 x 14.5% = £33,350 The 14.5% is the known as the “surrender rate”, as the business is essentially giving up their loss for an immediate cash injection instead. The average claim made by an SME company in the 2016/17 tax year was £53,876. With benefits like this it’s easy to see why claiming R&D tax credits could help transform a business around!
What Costs Qualify as R&D?
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Blockchain Case Study Real Estate The increasing use of Distributed Ledger Technologies (‘DLT’) such as Blockchain to record real estate transactions has led to an increase in R&D claims for Property Investment companies. The R&D is usually integrating an existing CRM system with the DLT. As the Intellectual Property vests with the business and is usually kept as a trade secret, the knowledge that is available in the public domain is scarcely limited. This results in specialists creating and advancing a new integrated platform that is more efficient for the business. To emphasise the impact that Blockchain is having in Real Estate, HM Land Registry themselves are currently exploring how Blockchain technology could be used to provide quicker and simpler services at Government level.
So what next? If you are adopting Blockchain within your business and integrating it with your existing systems, or innovating via another method, you should contact your Accountant or Tax Advisor as soon as possible to discuss whether or not you qualify. It’s important that you act sooner rather than later, as claims can only be made within the 24 months after your year-end. Remember, this could help transform your business around, freeing up cash quickly to enable you to continue to innovate and further growth.
The cost of staff directly involved in the R&D work.
Contact Details:
Some Software & Consumable items.
e-Mail: shaun.bartle@finchassociates.co.uk
65% of the cost of third parties who worked on the R&D projects.
Telephone: 07494 170 202
Grants – You can still claim R&D tax relief if you have received a grant.
Website: www.finchassociates.co.uk
Events
0040
UPCOMING BLOCKCHAIN AND CRYPTO CONFERENCES IN JUNE 2021
JUNE
2021
DATE
EVENT
»
1
10th Workshop on Current Trends in Cryptology (CTCrypt)
Russia/Person
»
1
Securex South Africa 2021
South Africa/Person
»
1-3
Global FinTech Fest 2021
Virtual
»
2-3
Global DEFI Investment Summit
DUBAI/Person
»
4-5
Bitcoin 2021
Miami/Person
»
7
7th ACM Cyber-Physical System Security Workshop (CPSS) 2021
China/Person
»
7
The 3rd ACM International Symposium on Blockchain and Secure Critical Hong Kong/Person Infrastructure (ACM BSCI)
»
10
SecureWorld Gov-Ed 2021
USA/Person
»
11-12
Blockchain Fest 2021
Cyprus/Person
»
14
International Conference on Cyber Incident Response, Coordination, Containment & Control (Cyber Incident) 2021
Ireland/Person
»
14
International Conference on Social Media, Wearable and Web Analytics (Social Media) 2021
Ireland/Person
»
14
Virtual Conference on Cyber Situational Awareness, Data Analytics and Assessment (CyberSA) 2021
Ireland/Person
»
14
C-MRiC Cyber Security 2021
UK/Person
»
15-17
Miners Summit 2021
USA/Person
»
21
Identiverse 2021
USA/Person
»
21
19th International Conference on Applied Cryptography and Network Security (ACNS)
Japan/Person
»
22
ITEXPO 2021
USA/Person
»
22-25 The Blockchain Event | Miami 2021
»
23
»
23-25 Intercon Conference
»
26
10th International Conference on Cryptography and Information Security Australia/Person (CRYPIS 2021)
»
28
9th International Symposium on Digital Forensics and Security (ISDFS) 2021
COUNTRY/TYPE
2nd Annual Global DeFi Summit
*for more information click in any of the events
Miami/Person Virtual Las Vegas /Person
Turkey/Person
JUNE 2021
EVENT SCHEDULE
10
ABOUT THIS EVENT What‘s next for digital assets exchanges and how to go about launching one. Abe.io have launched a new 24/7 global securities exchange on blockchain. This allows a single listing to be made in multiple jurisdictions worldwide and offers new potential ways to reach investors and an alternative to traditional exchanges. In this live chat, we are joined by John Piggot, CEO and co-founder of Abe.io and Richard Crook, CEO of LAB577 and DASL, partner of Abe.io giving us the 101 deep dive on digital assets and global securities exchanges. Join us to hear from John and Richard the answers to:
Thursday
How to start a digital assets exchange? ONLINE EVENT-FREE
Why launch a new exchange? Aren‘t there enough already? What‘s wrong or lacking with the existing ones? Is a new structure for an exchange needed? How go about launching a new digital assets exchange? Where - and how- does blockchain come into this? Why are assets exchanges only now looking at operating 24/7? What is next for digital asset exchanges?
click here to register
Date and time
And any questions you may have!
Thu, 10 June 2021
Crypto Curry Club Live! chats are interactive- come ready with your questions to ask directly to John and Richard!
16:00 – 17:00 BST
WOULD YOU LIKE TO HAVE YOUR COMPANY HERE? email us to hello@cryptocurryclub.com
BLOCK CHAIN INDUSTRY REVIEW MAGAZINE
Issue 5- May 2021
Not subscribed? subscribe to receive the digital edition at cryptocurryclub.com subscribe to receive the digital edition at cryptocurryclub.com If you would like your company or product to be featured in Blockchain Industry Review please email
hello@cryptocurryclub.com
