Special EVEnt Issue. May 2019
BLOCKERMAG CRYPTO // ICO’S & STO’S // LATEST TECH // FUTURE TRENDS // INNOVATOR SPOTLIGHT // INVESTMENT // EVENTS
blockercon AGENDA Full agenda for Blockercon 2019 Check out the incredible lineup of global experts speaking at Blockercon 2019! Taking place 4 th - 6 th June in Bristol. more on Page 5
INNOVATING INVESTMENT THROUGH BLOCKCHAIN more on Page 15
FINANCE
SPECIAL REPORT: BLOCKCHAIN IN FINANCE more on Page 23
shifting paradigms with blockchain
We talk to Panxora about how blockchain is creating ideas that had never existed before, and how they’re disrupting funding models. more on Page 29
Is the financial system changing?
John Boatman looks at the evolution of our f inancial infrastructure and the role crypto and blockchain could play in the future. more on Page 37
CONTACT US B locke r ma g Whisper Media Timsbury, Bath, BA2 0HB, United K ingdom E: W:
05 B L O CK E RC ON AGE N DA 3-day agenda for Blockercon 2019
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19 SH AU N BA RT L E Talks R&D tax savings for blockchain businesses
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23 SPECI AL R EP O RT Blockchain in f inance
29 PA N XOR A Shifting paradigms in funding models
33 R I SE O F T H E UNBANK ED The future of f inancial inclusion with blockchain
37 J OH N BOAT M A N Looks at how our f inancial system is changing
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WELCOME Richard Potts, Publisher, Blockermag
blockchain technology has the potential to transform business as we know it. our mission is to facilitate that change through insight, analysis and expert opinion from the world’s blockchain and business leaders.
Welcome to the third and final issue of Blockermag as you know it! Spring is in the air all around us, and with the crypto winter beginning to thaw and global behemoths like Facebook announcing plans for their own cryptocurrency, the signs are good for blockchain in the long term. The market has however, been fully saturated. The supply of blockchain events and news outlets is at an all-time high, while the demand for understanding blockchain has shifted to a deeper need to build and implement successful products that stand the tests of free-market competition. Blockchain is maturing, changing, evolving and our role as publishers and event organisers must keep pace. So, as well as incorporating Blockercon into our new festival for tech startups, Fireside Summit, we will also be rolling Blockermag into a new magazine with a broader focus on emerging technology and the startup journey. FiresideX is coming soon and you'll be the f irst to hear about it when it's ready! I hope you enjoy this last issue of Blockermag and like me will look forward to reading about blockchain innovation in FiresideX magazine. Website coming soon at www.FiresideX.com
RI C H ARD P OT TS Publisher - rich@whisper.media I SSUE 3
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editor’s Note Karis Copp, Editor, Blockermag
"This issue will serve as the last of the magazine in its current form as we prepare to move on to an exciting new project"
This issue of Blockermag explores a plethora of applications for blockchain in the f inancial services sector – it’s full of really interesting insights from those at the top of their game when it comes to blockchain’s use cases in f inance. As we approach our Blockercon conference, taking place from the 4th to 6th of June in Bristol, UK, this issue will serve as the last of the magazine in its current form as we prepare to move on to an exciting new
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project. Whisper Media is laser-focused on the future of emerging technologies, and in particular how they can drive social impact and improve the world, so we are set to broaden the scope to explore a wider range of tech while still keeping a spotlight on blockchain across key vertical markets. I hope you’ll join us as we continue to take a deep dive into the fascinating world of blockchain and beyond!
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bLOCKERCON 2019
EVENT AGENDA 3 DAYS // 50 KEYNOTES // +120 SESSIONS // WORKSHOPS // MEET THE EXPERT SESSIONS // 4-6 JUNE 2019
DAY 1
TUESDAY 4TH JUNE BLOCKCHAIN FOR GOOD CRYPTO, FINANCE, BANKING & INVESTMENT CAREERS IN BLOCKCHAIN
DAY 2
WEDNESDAY 5TH JUNE CRYPTO, FINANCE, BANKING & INVESTMENT BLOCKCHAIN FOR GOOD LAW & LEGAL SERVICES CAREERS IN BLOCKCHAIN FINTECH & CRYPTO STR ATEGY & INVESTMENT
DAY 3
THURSDAY 6TH JUNE THE FUTURE OF BLOCKCHAIN IN BUSINESS CRYPTO, FINANCE, BANKING & INVESTMENT DATA, SECURITY, PRIVACY & IDENTITY BLOCKCHAIN & GAMING BLOCKCHAIN DEVELOPMENT PLATFOR MS & SYSTEMS STARTING A BLOCKCHAIN BUSINESS STR ATEGY & INVESTMENT
drinks reception Join us for drinks and networking on Tuesday 4 th and Wednesday 5 th June. A brilliant opportunity to mix with the brightest minds in blockchain and emerging technology! At the venue bar from 5pm.
Workshops See blockchain in action with a series of workshops across all three days of Blockercon. Workshops take place in the round-table/exhibitor zone.
meet the experts Interact with industry experts and delegates during informal round-table sessions taking place Wednesday 4 th and Thursday 5 th June.
- BLOCKERCON AGENDA -
Day 1 Keynotes Tuesday 4 th June.
Registration from Midday, talks start 1:25pm
Time
Presenter
Topic
talk details
13:25
Richard Potts Whisper Media @FiresideSummit @Blockercon
Introduction
Welcome Address Brief introduction from the founder of Blockercon, outlining three actionpacked days with total immersion into blockchain technology.
13:40
Matt Whiteman Choco4Peace @Choco4Peace
Blockchain for good
Peacebuilding in Colombia using cacao and Blockchain Choco4Peace is a multi-institutional movement which uses cacao and blockchain to support peacebuilding by generating socioeconomic and environmental impacts in post-conflict regions.
14:05
Areiel Wolanow Finserv Experts @FinservExperts
Blockchain for good
How blockchain can deliver protection for natural disaster in Indonesia: a case study for the rest of the world Insurance is not generally available in parts of the world where people need it the most. Areiel will discuss how blockchain is changing that reality in a way that makes a real difference.
14:30
Muhammad Irfan The Hive Technology @MIjarral
Blockchain for good
Blockchain: Key for the knowledge Economy The opportunities that exist for Blockchain applications are endless and we have to be at the forefront of this new wave. The advancement in technology is rapid yet to the pace of the training and skills development is slow.
14:55
Khalid Belghiti Scrypt.Media @ScryptMedia
Blockchain for good
Blockchain for SDG's The potential of Blockchain and DLTs goes beyond cryptocurrencies. Many actors are exploring the possibilities of using these technologies to tackle some of the most pressing social issues of our time.
- BLOCKERCON AGENDA 15:20
Gavin Smith Panxora @PanxoraCrypto
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How token founders can turn cryptocurrency volatility from a risk into an opportunity ICO founders tend to leave subscriptions in wallets to provide transparency for their subscribers. But this practice has cost ICOs dearly when the market turns mean and crypto plummets in value.
workshop Following on from his Keynote talk, Gavin Smith will run a workshop explaining how Panxora is disrupting funding models. At 4pm 15:45
Laurenti Arnault WTVOX @lefashiontech
Blockchain In Fashion – A Necessary Step Towards Transparency And Sustainability This talk will explain why in fashion, particularly in the supply chains, blockchain is a critical step towards higher transparency.
Blockchain for good
16:10
Srini Katta SocialChains @socialchainsio
Blockchain for good
Blockchain and AI applications for the social economy I will be discussing how Blockchain and AI will disrupt the status quo and put the users/consumers in the front and center.
16:35
Oliver Gale Basetwo.com @MIjarral
Crypto, Finance, Banking & Investment
Central Banking 2.0 - DeFi tools using legal tender The central bank digital currency revolution has begun with the production pilot project between Bitt.com and the Eastern Caribbean Central Bank.
17:00
Tony Evans FGC Group @ConsultFintech
Crypto, Finance, Banking & Investment
Asia: the new opportunity In this talk, Tony will explore why has Asia taken the lead in crypto market in regulation, adaption and the future?
17:25
Alex Marchenko Avalon Chase
Careers in Blockchain
Recruitment challenges of a blockchain startup In my speech I will provide detailed information on ways to overcome recruitment challenges blockchain startups face after raising funds as well salaries overview for both tech and non-tech roles.
drinks reception Join us for drinks and networking following the afternoon session of talks. A brilliant opportunity to mix with the brightest minds in blockchain and emerging technology! At the venue bar from 5pm.
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- BLOCKERCON AGENDA -
Day 2 Keynotes Wednesday 5 th June.
Registration from 8am, talks start 9.30am
Time
Presenter
Topic
talk details
09:30
Adiraj Gupta Crypto, Finance, Crypto Launchpad Banking & @CryptoLaunchpad Investment
The future of Financial Infrastructure Payments & finance will look very different in the next 5-8 years. Adiraj will share insights and information on the changes that will emerge and what to expect in this future of finance.
09:55
Mátyás Záborszky 6SLambo @matyaszaborszky
Crypto, Finance, Banking & Investment
Highlighting what investors are searching for in ICOs/STOs As an investor and a chief adviser, I believe there are 6 proven steps to attract investors.
10:20
Farooq Ahmed Arcift Technologies @FarooqAhmedE
Crypto, Finance, Banking & Investment
A borderless and free world with bitcoin A talk about bitcoin and why it was invented. Comparing it to the traditional banking system and how it promotes a borderless free world where anyone can trade/send payment with anyone around the globe without having third parties and censorships.
10:45
Iain Robertson Own Group @OwnMarket
Crypto, Finance, Banking & Investment
Digital Investment Demystified If you’re interested in raising capital via the blockchain, this session is a must-see! Own is pioneering a faster, cheaper way for businesses to fundraise and attract new investors using Security Token Offerings (STOs).
11:10
Malcolm Tan Gravitas International
Crypto, Finance, Banking & Investment
Digitisation of Assets - the New World Order Covering how digital assets through tokens are a new asset class, that will spur a new wave of investments, and revolutionise many industries, and the way that we do business.
11:35
Hanifa Azri Regal 38i83 @R38i83
Crypto, Finance, Banking & Investment
OIII3 BANK - Ethical Finance Creation of a new Virtual Bank based on ethical finance outside the current FS system. Emotional intelligence and creation of new accelerator model.
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Dr. Yannis Kalfoglou Kalfoglou.info @plakatech
The Future of Blockchain in Business
12:25
Justine Scerri Herrera Crypto, Finance, Michael Kyprianou Banking & & co LL.C Investment @KyprianouCyLaw
Will Cash Remain King? Regulation as a Necessary Evil during the Mass Adoption of Cryptocurrencies (with a specific focus on Malta). Regulation has an important role to play during the potential shift from cryptoassets (speculative nature) to cryptocurrencies.
12:50
Martin Ploom SmartCredit.io @SmartcreditI
Crypto, Finance, Banking & Investment
Do we need credit-money in the cryptosphere? Credit-money is 5000 years old, and central banking is 350 years old. We believe that credit-money will be created in the crypto-sphere, via the lending process. However not centrally, but de-centrally.
14:05
Alpesh Doshi Fintricity
The Future of Blockchain in Business
Decentralization and Ecosystem Development in Enterprise Blockchains As decentralized business models emerge, enterprises will need to figure out how they leverage blockchain and integrate to their business.
14:30
ON Yavin Cointelligence @on_yavin
Crypto, Finance, Banking & Investment
Due Diligence in the Crypto Sphere This presentation will cover the core concepts of due diligence, how we apply those concepts at Cointelligence, and show how we used these concepts to uncover specific ICO scams.
14:55
Danielle Khayat Saikaly Crypto, Finance, The Chain Economy Banking & Consultancy Investment @TheChainEconomy
The Economics of Cryptocurrencies: From Barter to Blockchain Danielle Khayat Saikaly is Senior Lecturer at ESCP Europe Business School.
15:20
Mauro Andriotto Andriotto Financial Services
STO Security Token Offering - Opportunities for SME's in Europe A talk about the financing problems of SMEs and the opportunity of the STO: how it is done, steps, time, pro and cons compared to traditional financial models.
Crypto, Finance, Banking & Investment
Blockchain frontiers In this talk I will elaborate on personal experiences from four different industries, working primarily with large FG500 conglomerates on how blockchain technology is viewed, piloted, deployed and enhanced.
Join us for drinks and networking at the venue bar from 5-pm.
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Day 2 Keynotes, continued ...
Time
Presenter
Topic
talk details
15:45
Wendy O Beyond Associates @CryptoWendyO
Careers in Blockchain
How to work in blockchain without a tech degree My journey from a cooperate healthcare role to finding my way in an unknown new industry. Blockchain is still in its infancy, the direction of the market is still to be determined and created: can you shape it?
16:10
Thomas RĂŠveillon Chaineum @Chaineum
Crypto, Finance, Banking & Investment
The French touch of asset tokenization In a brief presentation, we will provide a clear overview of the asset tokenization process put in place by Chaineum Group.
16:35
Cal Evans Gresham International
Law & Legal Services
HTO - The new fundraising model The Hybrid Token Offering is the logical way forward for companies looking to conduct fundraising through the sale and distribution of digital tokens. Offering a mix of equity and utility to attract participants in all markets.
17:00
Kingsley Udofa The University of Sheffield @KingsDee
Law & Legal Services
Rethinking Law and Regulation: The case for cryptoasset payments This talk focuses on the legal challenges facing the regulation of cryptoasset payments. The talk argues that certain aspects of the law, as currently constituted, are not fit for purpose.
17:50
Sergey Baloyan X10 Agency
Crypto, Finance, Banking & Investment
How to get fundraising and community for blockchain projects How to raise investments and build big community for blockchain projects in 2019.
Interactive Sessions Day 2 'Meet the Experts' round-tables and workshops Time
Experts
Topic
Format
10:00
Simon Wragg - Crypto-4-Beginners
Crypto, Finance, Banking & Investment
workshop: Why Crypto-4-Beginners? Crypto-4-Beginners is an educational and teaching platform designed to teach beginners all about the world of Cryptocurrency & Blockchain.
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Day 2 interactive sessions, continued ...
Time
Experts
Topic
Format
10:30
Ed Chapman - Royds Withy King
Crypto, Finance, Banking & Investment
Workshop: Cryptoassets & regulation – threat or opportunity? With Ed Chapman, Corporate Lawyer & Blockchain Lead at Royds Withy King.
11:00
Areiel Wolanow - Finserv Experts Melissa Tate - DOVU Joerg Molt - Satoshi School Dewansh Poddar - Young Engine Srini Katta - SocialChains Martin Ploom - SmartCredit.io Amit Joshi - HashPrix and LATOKEN Arnoud Berghuis - Dutch blockchain language knowlege foundation
Blockchain for Good
Meet the Experts round-table 1 Meet the experts in a relaxed roundtable format. This session looks at how blockchain is being used for good around the world.
12:30
Alex Marchenko - Avalon Chase Michaela Gillon - Blocktec Sade Jacob - M. W. Cornish & Co Nsikakabas Thomas - Globatalent
Careers in Blockchain
Meet the Experts round-table 2 Meet the experts in a relaxed roundtable format. This session looks at careers in blockchain.
14:30
Iain Robertson - Own Group
Crypto, Finance, Banking & Investment
Workshop: Own Discover the latest in blockchain technology with a workshop session provided by Own.
15:20
Gavin Smith - Panxora
Crypto, Finance, Banking & Investment
Workshop: Panxora Discover the latest in blockchain technology with a workshop session provided by Panxora.
16:00
Iain Robertson - Own Group Fintech & Crypto Srini Katta - SocialChains Alpesh Doshi - Fintricity Sade Jacob - M. W. Cornish & Co Thomas Reveillon - Chaineum Areiel Wolanow - Finserv Experts Melissa Tate - DOVU Ralph Liu - TurboChains Michaela Gillon - Blocktec Justine Scerri Herrera - Michael Kyprianou & co LL.C
Meet the Experts round-table 3 Meet the experts in a relaxed roundtable format. This session looks at fintch and cryptocurrencies.
17:00
Iain Robertson - Own Group Strategy & Srini Katta - SocialChains Investment Thomas Reveillon - Chaineum Ralph Liu - TurboChains Michaela Gillon - Blocktec Alex Marchenko - Avalon Chase Justine Scerri Herrera - Michael Kyprianou & co LL.C Jonathan Dunsmoor - Dunsmoor Law, PC Tony Evans - FGC Group Areiel Wolanow - Finserv Experts Nsikakabas Thomas - Globatalent Alpesh Doshi - Fintricity Arnoud Berghuis - Dutch blockchain language knowlege foundation
Meet the Experts round-table 4 Meet the experts in a relaxed roundtable format. This session looks at blockchain strategy and business.
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Day 3 Keynotes Thursday 6 th June.
Registration from 8am, talks start 9.30am
Time
Presenter
Topic
talk details
09:30
Abiodun Ayorinde LIFTIX Technologies
Data, Security, Privacy & Identity
Africa: Leveraging blockchain technology to revolutionize digital identity verification The rising need for the use of Blockchain technology to revolutionize identity verification has hit its zenith; making possible the simplification of large and complex systems of multiple verifications.
09:55
Tim Keough Chainable Corporation
Blockchain & Gaming
Blockchain & Gaming: Putting the "Fun" in "Non-Fungible" I'll be giving my talk on the multiple use cases of non-fungible tokens, especially in the gaming sphere. I'll define non-fungibility then highlight some of the general applications for non-fungible tokens.
10:20
Ali Azam Vault @VaultPlatform
Blockchain Development
How to Mutate the Immutable? Smart contracts are immutable code, guaranteed to be always available and never changing, which conflicts with the human fallibility of software development. In this talk we will look at the most commonly used ways for handling upgrades and their impacts.
10:45
Pedro Febrero Bityond @Febrocas
Blockchain Development
Crypto constellations: an outlook of consensus This talk will cover: 1. Crypto currencies and blockchain 2. Crypto-constellations dimensions 3. Governance decentralisation 4. Security 5. Scalability 6. Promoting what matters 7. Conclusion(STOs).
11:10
AndrĂŠ Bruckmann Mycro @Mycrojobs
The Future of Blockchain in Business
Blockchain & Crypto: How to reach mass adoption? Blockchain is one of the most disruptive technologies around, but mass adoption seems far away. How can we reach the point where ordinary people enjoy the advantages of Blockchain and cryptocurrency?
11:35
Declan Goodwin Vistra Corporate Law @JordansLimited
The Future of Blockchain in Business
Where's the smart contract revolution? A talk exploring what's holding back the smart contract revolution, including examining the legal status of smart contracts and how they fit into the existing legal and commercial environment.
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Rhiannon Payne Sea Foam Media & Tech @SeaFoamMedia
The Future of Blockchain in Business
Building Distributed Ecosystems to Empower Global Innovation Entrepreneurs and innovators struggle to raise capital, build their teams, access knowledge, and develop products using high tech like blockchain and AI. This talk addresses these problems head-on.
12:25
Aviva Ă•unap Savii Digital Marketing and Media Agency @SaviiDigital
The Future of Blockchain in Business
Meet Bob The Blocktrain Blockchain is going off the rails, but many people still have no clue what blockchain means. Education in this space is not just needed for adults, it should be required for all children: meet Bob the Blocktrain!
12:50
Alex Partin alexpartin.com @AlexPartinIT
The Future of Blockchain in Business
Entrepreneurs vs the Blockchain Paradox This talk is aimed at entrepreneurs who are interested in cryptocurrency adoption trends as well as the near future of marketing in our industry. It will contain practical insights into improving your positioning on the market.
14:05
Helen Tanner Data Cubed
The Future of Blockchain in Business
Blockchain + Data = Big time business opportunities Whether it's data strategy, data security, ETL, data cleansing, data permissions, data analytics, data science, predictive analytics, data visualisations...the challenges and opportunities are largely the same.
14:30
Lior Zaks Tel Aviv University @TelAvivUni
The Future of Blockchain in Business
Blockchain, braking conceptions and misconceptions, window to the future path The Bitcoin phenomena was thrown into the world a decade ago. Where are we standing today? How does the future look? Should we direct and improve it, can we utilize it? How can we shape the future path?
14:55
Mattias Bergstrom Quantum1Net @Quantum1Net
The Future of Blockchain in Business
The Value of Decentralization How to calculate the value of a decentralized world. Sharing Economies, second markets how will they develop and provide value? Follow me as we walk down the path of a decentralized future.
15:20
Ralph Liu MuleChain, Inc. @RalphYLiu
The Future of Blockchain in Business
From MuleChain to TurboChains - how to connect the blockchain technology to the real world How to take the benefits of the blockchain technology beyond developing cryptocurrencies for trading purposes by create utilities and applications in the real world.
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Day 3 Keynotes, continued ...
Time
Presenter
Topic
talk details
15:45
Alex de Bruyn DoshEx @thedoshexchange
The Future of Blockchain in Business
The application of oracles in blockchain An oracle, is a third-party agent that acts a trusted data point of verifiable events that link blockchains to the real world. If blockchain were created to destroy trust and the reliance of third parties, how do oracles have a place in the blockchain realm?
16:10
Amit Joshi HashPrix
The Future of Blockchain in Business
Present challenges and the future of healthcare applications on blockchain My talk will cover the current healthcare use cases being taken up and the challenges faced in implementing blockchain. This will be followed by what lies in the future for healthcare on blockchain globally.
16:35
Joerg Molt Satoshi School
The Future of Blockchain in Business
From the beginning of Bitcoin to Distributed Ledger Technology - What does it change? Big words shouted out: Bitcoin, Blockchain, ICO and now STO but is this only a sales movement or does it really change something? And what happens to the philosophy behind Bitcoin today?
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Interactive Sessions Day 3 'Meet the Experts' round-tables and workshops Time
Experts
Topic
Format
11:00
Iain Robertson - Own Group Srini Katta - SocialChains Ralph Liu - TurboChains Tim Keough - Chainable Martin Cornish - MW Cornish & Co. Matyas Zaborszky - 6SLambo Mario Stumpo - BmyBit LTD Alex Partin - alexpartin.com
Starting a Blockchain Business
Meet the Experts round-table 1 Meet the experts in a relaxed roundtable format. This session looks at starting a blockchain business.
12:00
Tony Evans - FGC Group Alex Marchenko - Avalon Chase Pedro Febrero - Bityond Areiel Wolanow - Finserv Experts Martin Ploom - - SmartCredit.io Rhiannon Payne - Sea Foam Media Jonathan Dunsmoor - Dunsmoor Law, PC
Starting a Blockchain Business
Meet the Experts round-table 2 Meet the experts in a relaxed roundtable format. This session looks at starting a blockchain business.
14:30
Iain Robertson - Own Group
Crypto, Finance, Banking & Investment
Workshop 2 Discover the latest in blockchain technology with a workshop session provided by Own.
15:20
Srini Katta - SocialChains Sade Jacob - M. W. Cornish & Co Thomas Reveillon - Chaineum Mattias Bergstrom - Quantum1Net Eric Alexandre - Jetcoin Pedro Febrero - Bityond dr. Yannis Kalfoglou - Kalfoglou.info Alex Partin - alexpartin.com
Platforms & Systems
Meet the Experts round-table 3 Meet the experts in a relaxed roundtable format. This session looks at blockchain platforms and systems.
16:00
dr. Yannis Kalfoglou - Kalfoglou.info Strategy & Iain Robertson - Own Group Investment Sade Jacob - M. W. Cornish & Co Thomas Reveillon- Chaineum Matyas Zaborszky - 6SLambo Tony Evans - FGC Group Martin Ploom - SmartCredit.io Jonathan Dunsmoor - Dunsmoor Law, PC Arnoud Berghuis - Dutch blockchain language knowlege foundation
Meet the Experts round-table 4 Meet the experts in a relaxed roundtable format. This session looks at blockchain strategy and investment.
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01 SA SCH A R AGT SCH A A Co-founder and CEO of investment f intech, Own
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INNOVATING INVESTMENT THROUGH THE BLOCKCHAIN Sascha Ragtschaa, co-founder and CEO of investment f intech, Own, looks at how blockchain is enabling enterprises to call time on complex methods for raising capital. For many companies – large and small – access to new financial resources is surprisingly difficult. At one end of the scale there is crowdfunding; a public risk to your reputation, which can leave you vulnerable to missed targets and copycat schemes. At the other end there are IPOs and private fundraising offers; slow, complex and expensive to launch, involving the co-ordination of multiple custodians and regulatory third parties. Until now, there’s been no simple, streamlined way to raise capital, which embraces the capabilities of the digital world. But all that is changing thanks to the blockchain.
Believe beyond the hype Blockchain has moved the goalposts for fintech development, but it’s only in the past year or two that we have seen discussions move beyond the hype stage towards genuine use cases. One of the strongest emerging scenarios is investment; using the blockchain to issue and securely store digital cryptographic tokens, which represent ownership and are backed by tangible assets. The emergence of tokenization has lit a fire under the financial services industry. Despite being in its relative infancy, we are already seeing a massive appetite for generating new investment opportunities using digital asset tokens. A 2018 report predicted that the market will grow from its present $983 million worth to more than $2,600 million by 2023 – at a Compound Annual Growth Rate of 22.1%.
A new generation of investor Tokenization is a much easier route to raising capital than traditional alternatives because © B L OC KE RM A G - 1 4 -
it gives businesses complete control of the fundraising process. Fewer third parties are involved making it cheaper to manage, and tokens can be exchanged and traded right after issuance in many jurisdictions, giving companies immediate liquidity. “THE ABILITY OF THE BLOCKCHAIN TO SECURELY STORE AND PROVIDE ACCESS TO DATA IS CRITICAL TO THE MARKETING VALUE OF INVESTMENT RELATIONSHIPS” Digitising assets also lowers the barrier to entry, opening up investment opportunities to new audiences. Companies can offer fractional shares, and the rapid nature of token-based fundraising – the process takes around 10 weeks, whereas an IPO takes upwards of six months – is highly appealing to younger generations that have grown up in a world of instant gratification. Given that two thirds of people aged 18-29 and 65 percent of 30-39-year-olds find the stock market intimidating or ineffective, the value of a quicker, digitised route to raising capital should not be underestimated. Appealing to the millennial audience provides many companies with the opportunity to bridge the gap between investors and customers, creating vital overlap and accompanying cross-promotional opportunities. The ability of the blockchain to securely store and provide access to data is critical to the marketing value of investment relationships. Some tokenization platforms are looking beyond pure issuance, incorporating tools that enable companies to communicate and engage with investors online – to turn this cautious but curious group into advocates for life.
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- INNOVATOR SPOTLIGHT -
Finding the right infrastructure Building
tokenization
technical
platforms
on
the
M
any existing blockchain products tend to have the wrong consensus protocol for supporting equity transactions. Ethereum, for example, uses a proof of work protocol which is not scalable in terms of number of transactions per second.
such as gaming companies and casinos, which can potentially have a massive impact on the speed and scalability of investment transactions. Secondly, because generalist blockchains are multi-purpose, they are not designed to support the specific needs of the financial services industry. This means tech companies building tokenization platforms often have to make compromises to their design and infrastructure. Many existing blockchain products tend to have the wrong consensus protocol for supporting equity transactions. Ethereum, for example, uses a proof of work protocol which is not scalable in terms of number of transactions per second. Finally, public blockchains are less stable when it comes to controlling transaction fees. Currency prices can fluctuate based on what activity is being processed; if a much-hyped game launches, for example, it will push up the price of gas.
blockchain offers a number of attractive benefits to ambitious businesses. Every transaction is tamperproof, meaning it cannot be altered in future. The decentralised nature of blockchain technology, meanwhile, means that data is not only encrypted; it doesn’t sit with a single organisation. “MANY FINANCIAL SERVICES TECH COMPANIES HAVE NATURALLY TURNED TO ESTABLISHED PUBLIC BLOCKCHAINS LIKE ETHEREUM TO BUILD THEIR SOLUTIONS, AS THE INFRASTRUCTURE IS ALREADY IN PLACE. BUT RELYING ON A GENERAL PURPOSE BLOCKCHAIN TO PROCESS INVESTMENT TRANSACTIONS HAS ITS DRAWBACKS” It is also a highly transparent way of managing critical information. Every transaction, transfer and voting action is disclosed and publicly available for all parties involved to view, which is something many governments are actively developing legislation to promote. However, when it comes to supporting investment technology, not all blockchains are created equal. Many financial services tech companies have naturally turned to established public blockchains like Ethereum to build their solutions, as the infrastructure is already in place. But relying on a general purpose blockchain to process investment transactions has its drawbacks.
“THE STRUCTURAL ADVANTAGES OF THE BLOCKCHAIN ARE ENABLING FINTECH COMPANIES TO CATCH INVESTMENT UP TO MODERN EXPECTATIONS – CREATING A QUICKER, SMOOTHER AND LESS COMPLEX METHOD TO HELP COMPANIES GROW”
Aligning investment with modern world expectations Until this point there has been a satellite delay between the speed and digital ease with which the world operates, and the processes for raising capital. The structural advantages of the blockchain are enabling FinTech companies to catch investment up to modern expectations – creating a quicker, smoother and less complex method to help companies grow. Tokenization technology is there for the taking, and businesses that move first will gain the most. Their challenge, however, is to find a platform built on a blockchain that enables long-term growth. SA SCH A R AGT SCH A A is co-founder & CEO of Own, which provides companies with rapid access to capital through its digital investment platform.
Firstly, with a general blockchain like Ethereum, fintech companies are competing for space with applications from across many other sectors. This may include resource-intensive businesses IS SUE 3
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Investment for the digital generation Own is pioneering a new way for businesses to raise capital online, attract new investors and nurture them for life.
We use cutting-edge digital asset technology to make fundraising simpler and cheaper than ever before, to help companies of all sizes reach their next level.
VISIT US weown.com
Find us at:
The global blockchain conference & expo
04-06 June
Bristol Harbour Hotel United Kingdom
@ownmarket
- BLOCKCHAIN INNOVATOR -
01 S H AUN BART LE R&D Specialist at Burton Sweet Tax Advisory Services
“ TH I S CO ULD H ELP T RA N SFORM YOUR BUSI NESS, FREEI NG UP CASH QUI CKLY TO ENABLE YOU TO CON T IN UE T O IN N OVATE AND DRI VE FURTHER GROW TH” — Shaun Bartle
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INNOVATING WITH BLOCKCHAIN COULD SAVE YOUR BUSINESS TAX —
Shaun Bartle, Tax Advisory – R&D Specialist at Burton Sweet Tax Advisory Services, explains how businesses could be rewarded for taking advantage of the opportunities in blockchain. Tax. That taboo word that plagues business owners. However; what if I were to tell you that there is a highly generous tax relief available to UK companies who are advancing scientific or technological knowledge within their sector that can save businesses cash? Some of the most common replies I hear when discussing the Research & Development Tax Credit Scheme with clients is, “It sounds too good to be true, Shaun” or “I don’t think we will qualify for the scheme”. It may seem that way, but I can assure you that is not the case. “MAKING A CLAIM CAN POTENTIALLY PROVIDE A VALUABLE CASH INJECTION INTO THE BUSINESS AND REDUCE YOUR CORPORATION TAX BILL” Put simply, it’s a Government incentive that rewards UK companies for pushing the boundaries of innovation and helping to fuel growth in the UK, and 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 can potentially reclaim up to 26p in every £1 spent. Large companies and SMEs claiming under the Research & Development Expenditure Credit (RDEC) scheme can reclaim around 10p in every £1 spent on qualifying R&D activity. © B L OC KE RM A G - 1 8 -
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
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hilst the value of Bitcoin and other cryptocurrencies may have declined since the all-time highs of December 2017, the number of companies exploring the use of blockchain and actually integrating it into their day-to-day operations has significantly increased.
the middle man. Not only this, blockchain offers businesses advantages such as trust, transparency, efficiency, reduced transaction costs but with faster transaction settlements. With the pace of technology moving faster than ever before, it was inevitable that technology such as blockchain would come to be viewed as the ‘next big thing’, no doubt being helped by the ‘crypto craze’ we encountered in late 2017. Whilst the value of Bitcoin and other cryptocurrencies may have declined since the all-time highs of December 2017, the number of companies exploring the use of blockchain and actually integrating it into their day-today operations has significantly increased. This has led to higher volumes of R&D claims being made where companies are innovating with blockchain.
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So what are the benefits of doing an R&D claim?
“THE TOKEN WOULD PROVIDE THE EVIDENCE THAT THE USER HAS BEEN ACTING IN AN ECO-FRIENDLY WAY, SUCH AS PROVIDING INFORMATION ON RECYCLING ACTIVITY OR REDUCTION IN CARBON FOOTPRINT.”
• SMEs 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 • A Tax Credit is an immediate source of cash which you can reinvest in your R&D and continue to lead innovation.
The specification sought by the client was to have a trusted software system that could integrate with its current CRM system, where the data was kept securely in real-time and would be easy for the end user to access. Due to this specification, the client wanted to use a blockchain platform to record and store the information, such as storing the amount of energy consumed by the user.
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:
However, the client was seeking to go one step further than only integrating their current CRM system with a blockchain platform; creating a ‘token’ that was specific to them. The token would provide the evidence that the user has been acting in an eco-friendly way, such as providing information on recycling activity or reduction in carbon footprint.
£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:
A further advance in technology (as you can tell, this is a very ambitious and innovative company) was to implement a smart contract on the blockchain, which would use the tokens to distribute and update third party contracts. As an example, the client was negotiating with a potential customer who would use the token as payment and then plant a set amount of trees, all based off of the information provided by the token. It is a measurement of how eco-friendly the user is being.
£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
What costs qualify as R&D?
This case study highlights multiple examples of where the client was seeking an advance in technology within their sector. They were building a completely new and unique platform and integrating their existing CRM system with a blockchain platform, which was no easy task!
• The cost of staff directly involved in the R&D work • Some Software & Consumable items • 65% of the cost of third parties who worked on the R&D projects • Grants – You can still claim R&D tax relief if you have received a grant
S H AU N BA RT L E , Tax Advisory – R&D Specialist at Burton Sweet Tax Advisory Services.
Law, finance, insurance; whatever service it may be, firms in these sectors all rely heavily on core software to manage their client’s needs. We are seeing an increase in the amount of businesses integrating blockchain software within their current supply chain, an example of which is provided below: Recycling Case Study Our client had undertaken an in-depth market analysis for the eco-friendly activities industry and deduced that there was a gap in the market for a unified, centralised system that would combine information on plastic, recycling, lowemission outlets and energy consumption. IS SUE 3
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SPECIAL REPORT
blockchain in Finance —
Karis Copp explores the ways in which blockchain and cryptocurrency can transform the f inancial services sector, and looks at how likely major disruption is to the industry. Over the course of the last few thousand years, currency has taken a myriad of forms, from the barter systems of ancient civilisations that involved exchanging goods for items like tea, spices, and shells, to the development of rounded bronze coins and the initiation of merchant receipts and ledgers that evolved into paper money. It has taken some unique forms throughout history, too; the Micronesian island of Yap is known for its use of large limescale discs that can be up to 12ft in diameter known as rai stones as currency.
SPECIAL REPORT
“THE ROOT PROBLEM WITH CONVENTIONAL CURRENCY IS ALL THE TRUST THAT’S REQUIRED TO MAKE IT WORK. THE CENTRAL BANK MUST BE TRUSTED NOT TO DEBASE THE CURRENCY, BUT THE HISTORY OF FIAT CURRENCIES IS FULL OF BREACHES OF THAT TRUST”
BLOCKCHAIN IN FINANCE
Many early systems were largely built on trust; in each other, in the systems created, in the agreed value of items remaining valid. But over time, as societies and civilisations evolved, trust began to be replaced by intermediaries. Power and responsibility were taken out of the hands of individuals and into the hands of financial institutions, until those institutions became so integral to a functioning society that citizens will struggle to get along without a bank account, particularly in higher income economies. However, as many of us learned around a decade ago, intermediaries, regulations, insurance and everything else that comes with it doesn’t necessarily mean we are protected. The financial crisis of 2007 and 2008 sparked a global economic downturn, and practices such as ‘predatory lending’ along with extensive regulation failures and to put it frankly, widespread greed among financial services
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01 C E N T R ALI SED I N ST I T U T I ONS A hallmark of modern-day f inance
organisations led to huge swathes of people losing their jobs, businesses and homes, and suffering financially for years. People’s trust in the financial institutions was shaken to the core as financial devastation in many forms spread like wildfire across the world. The timing of the crisis and the birth of Bitcoin wasn’t simply serendipitous; it was most likely deliberate. In the original whitepaper released in 2009, Satoshi Nakamoto wrote: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” Could it be that trust was on its way back to the people? “BLOCKCHAIN’S ABILITY TO REMOVE THIRD-PARTY INTERMEDIARIES MEANS REMITTANCE PAYMENTS CAN BE MORE EFFICIENT AND WITH LOWER PROCESSING COSTS THAT CAN BE PASSED ON TO USERS AND CUT DOWN ON LENGTHY SETTLEMENT TIMES” The short answer is that we’re not there yet. However, the opportunities that blockchain provides to the financial industry are substantial, and we are already seeing incredible disruption in certain areas, even if adoption of blockchain and of cryptocurrency as a widelyused monetary system is still, realistically, some way off. However, after a reluctant and at times hostile attitude to blockchain and cryptocurrency from major financial institutions, the tide appears to be turning; a survey on the financial services sector and fintech carried out by PwC found that approximately 77 percent of organisations in the sector plan on adopting blockchain by © B L OC KE RM A G - 2 2 -
2020, with banks making up a third of those surveyed. We could be entering a new phase in which the giants of finance embrace .P. Morgan’s recent launch blockchain of its JPM Coin, a digital coin because they are either beginning tied to fiat currency, could be to see its value, or a catalyst for accelerated they feel they have adoption of blockchain no other choice. Financial experts technology, and crucially, have raised the increased transparency within possibility of a ‘domino effect’; the financial sector whereby the institutions see their competitors take the plunge and follow suit. J.P. Morgan’s recent launch of its JPM Coin, a digital coin tied to fiat currency, could be a catalyst for accelerated adoption of blockchain technology, and crucially, increased transparency within the financial sector.
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Spanish banking group Santander are one of the institutions blazing a trail in blockchain in finance; last year it launched ‘Santander One Pay FX’, a blockchain-based international money transfer service using technology from Ripple. Ana Botin, Executive Chairman of Banco Santander, said of the project: “Transfers to Europe can be made on the same day and we are aiming to deliver instant transfers across several markets by the summer. Our goal is to help the thousands of people who use international payments services every day, and we will be adding more currencies and destinations in the coming months. Blockchain technology offers tremendous opportunities to improve the services we offer our customers, WWW. B L O CK E R M A G.CO M
02 C EN T R AL R ISK S The vulnerability of centralised banking was brought into sharp focus in 2008
03 DIGI TAL DISRUP T ION Can cryptocurrencies really disrupt entrenched traditional forms of money?
04 FINANCI AL ADOP T ION Will stock exchanges, banks and regulators support cryptocurrencies rather than resist their rise?
SPECIAL REPORT and the launch of Santander One Pay FX is the first of many potential applications.”
You can read the full article on page {PAGE} of this issue.
2018 seems to have been the year these organisations upped their game in relation to blockchain. Goldman Sachs backed crypto startup Circle, which last year rolled out a cryptocurrency described by the company’s CEO as ‘basically a dollar that operates on blockchain’. J.P. Morgan created Quorum, an enterprise blockchain on Ethereum before rolling out the JPM Coin earlier this year. Those without publicised projects are more than likely looking into what form their involvement in the space will take.
One game-changing use case is in the area of cross border payments and remittance costs. In March of this year IBM launched Blockchain World Wire, a network for cross-border payments that uses crypto to make almost instantaneous transactions across borders, and a growing number of startups are tackling the issues with remittances using blockchain and cryptocurrency.
The tokenisation of assets is of course one of the major disruptive use cases for blockchain in the financial ecosystem. After the Initial Coin Offering (ICO) mania of 2017 and downturn in 2018, 2019 and probably beyond will see the rise of Security Token Offerings (STO). When ICOs began gaining traction, getting involved was pretty simple; almost anyone could create a token in order to raise capital for their startup, and due to the lack of regulation it meant that deception within ICOs soon became prevalent. So-called ‘pump and dump’ schemes, involving artificially driving up the value of the tokens before quickly selling them off at a profit became an issue. The Securities Exchange Commission (SEC) released a statement that read:
“BLOCKCHAIN’S POTENTIAL IN FRAUD REDUCTION IS A STRONG USE CASE IN A NUMBER OF SECTORS, AND THE FINANCIAL INDUSTRY IS NO EXCEPTION” It’s common for migrants to transfer small amounts of money elsewhere in the world ordinarily to help family members – the fees associated with doing so through traditional institutions are high, and process and settlement times can be long. These types of payment transfers are typically pricey thanks to the need for intermediaries to facilitate electronic transfers, but less developed economies can often have slower and more fractured financial infrastructures, which can drive costs up further.
“Many platforms refer to themselves as ‘exchanges’, which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange. Although some of these platforms claim to use strict standards to pick only highquality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.” Security tokens are not subject to the same issues as they are regulated in the same way as traditional securities, i.e. by a governing body such as the SEC. Ransu Salovaara, CEO of TokenMarket, explains: “It is our belief at TokenMarket that tokenisation will become the gold standard for investment in the future. Tokenisation has the opportunity to bring newfound efficiencies to the investment markets for regulators, companies and most importantly, investors. “An investment opportunity in which every investor, every VC and regulator has access to the same information, pricing and technology should be the benchmark that the markets hold themselves to. In doing so, security tokens can propel these markets into the future by closing this gap between average investors and high net worth individuals. They provide clearer information, clearer access to the market participants and are powered by a form of technology that has trust built into its core.” © B L OC KE RM A G - 2 4 -
5th Anti-Money TwillheLaundering Directive come into force
on 10th January 2020, tightening regulation around cryptocurrency
Blockchain’s ability to remove third-party intermediaries means these payments can be more efficient and with lower processing costs that can be passed on to users and cut down on lengthy settlement times. On top of this, implementing cryptocurrency for cross border payments exempts senders from currency transfer fees, again bringing down the costs for remittance payments. Fintech business Everex is among those taking on the challenges of cross border payments. As CEO Alexi Lane puts it: “The vision of Everex is enabling cross-border payments and currency exchange via blockchain technology in counteraction to legacy payment systems, thus granting the unbanked access to global financial services, and reducing the cost and speed of remittances by utilising the benefits of blockchain technology. Given that 90 percent of Myanmar’s population do not even have bank accounts, with Laos and Vietnam at 80 percent,
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the bewildered senators questioning Facebook CEO Mark Zuckerberg over privacy concerns, many of whom were obviously unfamiliar with how the social media giant operates, to see how organisations can end up with unprecedented power and influence.
and other Southeast Asian countries showing similar figures, Everex is intent on granting vast strata of society new financial opportunities. “The financial data of underbanked users will enable financial partners to offer other financial services, such as lending, insurance, and trade finance. This endeavour will also assist in bringing underground cash-based financial services to the blockchain and into regulated payment space.”
Of course, blockchain’s relationship with regulation is always likely to be trickier than that of other emerging technologies; its ethos is the idea of decentralisation, initially born out of disillusionment with the institutions currently in place. A delicate balance between decentralisation and regulation will need to be struck, and it remains to be seen how harmonious this relationship can be.
Blockchain, or perhaps more specifically cryptocurrency, has had a historically bad rap when it comes to its use in fraud and illicit activity. However, blockchain’s potential in fraud reduction is a strong use case in a number of sectors, and the financial industry is no exception, in fact it’s perhaps one of the most crucial. The future of Know Your Customer (KYC) and anti-money laundering (AML) processes is blockchain-based, if the number of projects already underway are anything to go by. KYC processes are currently time consuming, and its easy to see how distributed ledger technology can save time when it comes to identifying and reporting fraud.
There is an abundance of opportunities blockchain offers financial services, from quicker, easier and cheaper global payments and transactions, a reduction in siloed data and lengthy, intermediary-heavy processes, the promotion of financial inclusion for the unbanked, accurate and immutable records of assets, transactions and credit history, major declines in risk and fraudulent practices, and the list goes on. But there needs to be a change in culture and a better level of awareness around the technology, otherwise those in positions to affect change won’t have the tools they need. These institutions need to learn from the mistakes of the past and have a clear vision for the future in order to ensure the sector is on the right trajectory.
In relation to fraud in cryptocurrency, efforts are lockchain’s relationship increasingly with regulation is always being made to ensure robust likely to be trickier than measures are that of other emerging in place – cryptocurrency technologies exchange Binance, for example, once more resistant than others to compliance processes, is now working with IdentityMind in the fight against fraud, despite facing accusations of lax compliance measures in the past. The 5th Anti-Money Laundering Directive will come into force on 10th January 2020, tightening regulation around cryptocurrency, which demonstrates a step in the right direction for both regulation of blockchain in financial services and the fight against crypto-fraud.
K A R I S C OPP is Blockermag Editor at Whisper Media
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Modern technology moves at such a pace that governments and regulators often can’t keep up. It’s further hindered in this space by the fact that even the initial idea of regulating crypto and blockchain has, for the most part, been far too slow. Lack of understanding when it comes to the technology itself is crucial for effective legislation; we only need to look to IS SUE 3
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WHAT NEXT FOR BLOCKERMAG?
BLOCKERMAG IS CHANGING WEBSITE COMING SOON AT www.FIRESIDEX.com
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SHIFTING PARADIGMS: IN CONVERSATION WITH PANXORA —
Blockercon sponsors, Panxora, are bringing unique expertise to Blockercon 2019. We sat down with the company’s CEO Gavin Smith and COO Marcie Terman to chat cryptocurrency, how blockchain is creating ideas that had never existed before, and how they’re disrupting funding models.
Thank you for speaking with us today. Tell us a little about yourself
How do you use blockchain? Gavin: As a company we are focused on public blockchain, not private blockchain as we believe this is where the real opportunity exists. For instance, one of our projects, was an Initial Coin Offering called AICoin. This launched in 2017 as a bit of an experiment. AICoin uses a smart contract to allow participants in the AICoin project to guide the direction of the project. All key decisions are subject to a vote which is held through the smart contract. We didn’t want to use the subscription capital up to do what the collective holders of AICoin decided on. Rather we wanted to hedge the assets and use the excess generated through that activity to feed into a strategy that used The Wisdom of the Crowd to make decisions. This strategy has been running since 2017. When we did our first audited accounts after 15 months, the strategy had yielded 71% in profits. During the same period bitcoin was down 16%. This has financed the plans of our collective and we’ve achieved some pretty awesome stuff. So true democratisation in action using blockchain technology.
Gavin: The Panxora Group was set up to provide the same opportunities to cryptocurrency holders as those enjoyed by people using fiat currencies: to invest, trade, and profit from the assets that they own. My personal background is 20+ years in the financial and commodity industry, and before Panxora I was in charge of optimising hedge activity for one of the largest trading companies in the world. These
he Panxora Group was set up to Tcryptocurrency provide the same opportunities to holders as those
enjoyed by people using fiat currencies: to invest, trade, and profit from the assets that they own.
We are coming to Blockercon to promote a service based on the tech that we are using so effectively ourselves. This is the Active Treasury Management service. This is a service for ICOs, which hedges the funds the token founders gather during their subscription period, rather than leaving those funds in crypto wallets as uncovered risk. This service protects the token’s assets during market downturns and should build up excess returns when the market is rising. These funds are then thrown back at the project for founders to use extending the project runway, listing the token on exchanges or any of the other things that tokens need to improve their chances of a successful outcome.
companies use hedging to protect the value of the assets they need to hold like copper and oil. But they also use the hedge to generate excess returns as well. Frequently as much as 40 – 50% of their yearly profit is generated from hedging activity. Marcie: My standard response is ‘I live to shift paradigms’.
Shifting paradigms - what a great phrase. What does that mean to you? Marcie: I seek to move the entire world forward and right now, I am devoted to solidifying the cryptocurrency and blockchain industry.
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Many people will say that there are quite a few ways to manage cryptocurrency already. What do you offer that’s different? Gavin: Our service is geared towards ICOs in a way a hedge fund or conventional money manager is not. For instance, it's vitally important to them that they have access to their capital and hedge funds will have a 6 month lock-in period at a minimum. A token project can’t afford to tie the capital up for long periods of time. So with the Active Treasury Management Service there is no lock in period. In fact, we offer a structured proposition, without Panxora taking custody of funds at all. Instead, token founders lodge the assets on cryptocurrency exchanges in accounts they create. Panxora only has API access that allows them to trade the contents of the account. If the token founders need $100,000 to pay for staff, an office or machinery, that funding is available immediately. And only the founders have the right to remove money from the exchange, after all, it’s their account. “PANXORA CAN ADD VALUE IN A WAY ANOTHER INVESTMENT OPTION IS NOT STRUCTURED TO DEAL WITH. HELPING A TOKEN REGAIN ITS FOOTING WHEN MARKET CONDITIONS AND LACK OF FOCUS HAS DERAILED A PROJECT” Another significant difference is the focus of the trading models – which is based on the similar problems faced by commodity trading companies that is shared by ICOs. In commodities, these traders need to hold a position in a very volatile asset - it might be a copper or oil position. In the ICO space cryptocurrency is the volatile asset the founders are holding. Our AI trading model is structured to protect against risk and then on generating an excess return. This turns the investment paradigm on its head. Instead of seeing how speculative you can be - we say: “Well you have this value, so how can we protect it and then create excess returns.” It’s risk management rather than just profit generation as the goal. All this – money under management, returns generated, how much is removed by founders for operating costs is reported openly to the token community. This can become the pivot point where Panxora can add value in a way another investment option is not structured to deal with. Helping a token regain its footing when market conditions and lack of focus has derailed a project. Some tokens, especially those launched in 2018 during the long crypto-winter have come under fire for not being transparent - where the funds are, how they are being used. The founders are struggling to execute the strategy with less © B L OC KE RM A G - 2 8 -
money. They certainly don’t want to put that money into a listing on an exchange, so they stop talking to their community and they worry about how to handle the difficult transition from subscription period onwards. Panxora can help the token structure a plan to transition from subscription to trading. We have market making software that we have developed for use by our proprietary trading group that will not manipulate the price of a token but using the excess funds generated through the Active Treasury Management Service, a token may choose to use some of those funds to make a two way market in a token so panicked selling does not develop during the downturn almost all token experience when they are first launched and bounty hunters and other short term holders want to sell out their stake and move on to the next opportunity. The experience Panxora’s founders have of market trading, the ssentially, blockchain software they will could make the world use on behalf of their clients augment a better place. More the benefit of the equitable. service. We work with the founders to understand their project, what their token needs and where they are in their journey?
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Founders and investors must note, however, that in a recent advice paper from the European Securities and Exchange Commission, the majority of member states surveyed took the view that a utility token which promises profits should in fact be classed as a security. It is therefore expected that future legislation in the UK will adopt this approach. This would be taking a similar position to the US Securities and Exchange Commission that applies the ‘Howey’ test when determining if an asset is a security. The approach of other EU countries (such as France) may differ.
In your opinion, what is the most valuable thing about blockchain? Marcie: That’s such a big area! There are some very disturbing things going on in our culture today which blockchain technology will throw a spanner into the works, and provide opportunities to people who would not necessarily have access to them in a way. Essentially, blockchain could make the world a better place. More equitable. For instance, think about communities that develop within blockchain projects. There is this element of global inclusion that has opened up the doorway to revenue streams for people in the developing world. I was recently listening to a podcast about the phenomenon of Silicon Valley, there you have an industry, an WWW. B L O CK E R M A G.CO M
- BLOCKCHAIN IN LAW infrastructure that has grown up to support the development of start-up companies. Blockchain has extended this, making the world the limit, not a few square miles in northern California. We are talking to ICOs in Asia, Latin America, people in Kenya and South Africa, who are all bringing their ideas to fruition. Support systems for these new businesses delivered via the Internet so that geography is not the limiting factor anymore.
They are thinking about it in a different way, bringing new industry paradigm.
Gavin: And before, capital was tied to institutions and doled out to people they knew, in their geographical area. Blockchain is now democratising that.
Gavin: I love the blockchain industry and meeting new people, because when you start speaking to people, you get a confluence of different ideas that creates a spark of something new. I find interacting with people knowledgeable in their areas very enjoyable. Marcie: My experience of token founders is largely young incredibly bright people who may lack business experience. We’re looking forward to facilitating these people upping the game of the business side of the proposition, so they can execute on extraordinary ideas that they have. We’ve seen it happen before, when a business has brilliant ideas but were unable to continue because they don’t have that business experience. It’s a factor of youth, which is intrinsic in this business because of who blockchain is attracting.
Marcie: There are things now which could not have existed before the invention of blockchain, and that’s just totally mind blowing.
What are you looking forward to the most at Blockercon 2019?
Marcie: Imagine the ideas from these intellects that until this decade where just untapped. We’re seeing the tip of the iceberg of what is possible. Gavin: For me, people talk about blockchain in a very generic manner. The real value is public blockchains. For a long time, larger enterprises have been focussed on permissioned private blockchains - an exciting new development is that large companies are starting to identify the
Gavin: So many technical minds think about the technology only, with financing as an afterthought! What we’re trying to do is provide a safety net, and that’s something we’d like to do for delegates at Blockercon 2019.
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he real value is public blockchains... an exciting new development is that large companies are starting to identify the benefits of implementing their secure DApps on a public blockchain.
Marcie: So if you’re reading this, we’d invite you to stop by our stand and tell us about your projects. We want to hear your stories. They’re not only interesting to us, but the way we work best with people is when they tell us their story, and we can then work collaboratively to structure the solution to work for them.
benefits of implementing their secure DApps on a public blockchain. The DApp environment still allows them to secure and limit access to their application domain infrastructure while utilising the benefit of the public blockchain to provide a secure transport layer and good level of encryption.
Interview by E M I LY PE R K I N S , Associate Director at Oggadoon, with GAV I N S M I T H , CEO at Panxora and M A RC I E T E R M A N, COO at Panxora.
Data is power in the 21st century. What does blockchain offer businesses that nothing else has previously offered? Gavin: The availability of the technology. From our perspective at Panxora, we talk about investment opportunities and how opportunities are spreading wider. But it’s also the ideas: if you show 50 people blockchain technology, they’ll come up with 100 ideas of how to use it! Making that available to people who wouldn’t necessarily have access to a big infrastructure elsewhere really has opened up the development of ideas. Many ideas hitting public blockchain are not coming from big institutions, they are coming from people introduced to it a year ago. IS SUE 3
gavin smith from panxora
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ACTIVE TREASURY MANAGEMENT SERVICE
Proven strategies to guide your token from ICO to SUCCESS Call Panxora COO, Marcie Terman for more information +1 345 769 1857
panxora.io/ico.fund
01 AC C E S S to FI NA NCE Can Blockchain pave the way for f inancial inclusion?
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oday, estimates put figures of ‘unbanked’ adults in excess of two billion, meaning they cannot open a bank account and participate in global financial systems.
The future of financial inclusion with blockchain Karis Copp looks at the ways that blockcain technology can help pave the way to f inancial access for the billions of people without it. In our last issue, which included a key focus on blockchain in law, we looked at the opportunities the technology presents to different facets of the legal sector, but also at how access to justice through blockchain has the power to transform countless lives. It seems that a deep dive into blockchain and the financial sector for this edition wouldn’t be complete without an exploration of the ways in which wider access to financial tools could have a similarly transformative effect. Lest we forget that the original blockchain technology, Bitcoin, was created as a ‘purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution’, as stated in the original whitepaper. Today, estimates put figures of ‘unbanked’ adults in excess of two billion, meaning they cannot open a bank account and participate in global financial systems. If you can’t avail of this most basic financial service, the system is rigged against you; no possibility of a mortgage, savings, loans, and consequently fewer prospects throughout © B L OC KE RM A G - 3 2 -
life. Decentralised banking services that don’t require traditional institutions have the potential to considerably level the playing field for the more than 1.7 billion unbanked (and many more underbanked) people worldwide (World Bank). “BLOCKCHAIN OPENS THE DOOR FOR VERIFICATION OF IDENTITY, FINANCIAL HISTORY AND ASSETS WITHOUT THE NEED FOR INTERMEDIARIES” A major barrier to the initial opening of a bank account is a lack of sufficient identification; banks adhere to stringent anti-money laundering (AML) and Know your Customer (KYC) policies, resulting in a difficult process without the proper documents. There is a myriad of reasons why this might be unavailable to people, such as fleeing from conflict zones, living in a country where corruption is rife or where there is an unreliable identification issuing system. Blockchain technology and digital ID opens the door for verification of identity, financial history and assets without the need for intermediaries, and therefore opens WWW. B L O CK E R M A G.CO M
- BLOCKCHAIN IN LAW the door for access to bank accounts.
weeks to reach the intended end destination. Using blockchain in cross-border payments cuts out the processes and transactions along the way and reduces the considerable fraud risk involved, driving down costs and speeding up payment timeframes. Coins.ph in the Philippines, a country with one of the highest number of overseas migrants in Southeast Asia, converts remittance payments into cryptocurrency before it is sent to its destination, then the recipient can withdraw the money as fiat – the removal of third parties means fees and settlement times are reduced.
Businesses like Humaniq are working on bringing digital identity into the mainstream, working with biometric data to build an identity that doesn’t require a passport or even an email account.
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sing blockchain in cross-border payments cuts out the processes and transactions along the way and reduces the considerable fraud risk involved, driving down costs and speeding up payment timeframes.
Blockchain provides major opportunities in the shift towards financial inclusion for all, but there is a long way to go to reach that goal. As always regulation is a barrier, as is education around the technology that can hinder investment and research into use cases. As long as global governments and corporate organisations begin or continue to look into its potential alongside the technology pioneers already blazing a trail in this space, millions more people will have the chance to get over the first hurdle and enjoy the financial access many of us take for granted.
Now that the technology is there, it could be Another area where blockchain can make a huge difference is the global remittance market. Remittances are the payments sent back to the home countries of migrant workers completed through a company such as Western Union. Typically a costly and arduous process, users can be hit by high fees and it can often take
K A R I S C OPP is Blockermag Editor at Whisper Media
expert speakers blockercon 2019
Aviva Õunap
Ali Azam
Rhiannon Payne
Chief Executive Officer
Senior Blockchain Developer
Chief Executive Officer
Savii Digital Marketing Agency
VAULT PLATFORM
Sea Foam Media
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Fireside i The off-grid startup technology festival 3-4 September 2019 | Near Bath Fireside Summit is the UK's first off-grid startup technology festival, taking place just 5 miles from the city of Bath on Tuesday 3rd & Wednesday 4th September, 2019.
- INNOVATOR SPOTLIGHT -
IS OUR FINANCIAL SYSTEM CHANGING? John Boatman, founder of Boatman Financial and co-founder of Boatman Admin Services looks at the evolution of our f inancial infrastructure and the role crypto and blockchain could play in the future. I’ve been involved within the independent financial advice and financial services industry for 25 years. During this time financial advice has changed considerably, but money is changing too. I believe that the main areas of change within financial services are regulation and innovation.
*Fiat currency is legal tender whose value is backed by the government that issued it.
Financial Crisis We still face many challenges in the global financial system and a number of these stem from the banking and financial crisis of 20072009 - this period was considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s. Trust in the financial system was weak and many aspects of society and the economy began to be challenged. I still believe that many of the high street banks offer poor customer service and are still not really considering what is best for their customers.
ith more mobile devices and increasing W internet access around the world, as well as the improvements of
decentralisation technologies, it may be possible to build an entirely new financial system
Money is changing An independent study of 2,000 consumers commissioned by CREALOGIX Group, the provider of digital banking solutions, found staggering differences between the approach to finances and banking among the millennial generation.
Financial Education In my opinion, regulation has not, unfortunately, encouraged more people to ask for independent financial advice or improve their financial education. Many people worry about money or debt and I still don’t understand why we don’t teach financial education in our schools, academies and colleges. This financial education would better prepare our young adults for the complex financial system and the world of banking, mortgages, credit cards, savings, pensions and investments
The research revealed: • 44 percent of under 35s have never used a credit card compared to just 24 percent of over 55s. • 11 percent of millennials state they do not use a debit card either, almost 50 percent use mobile phone wallets. • The research also found that digital currencies are more popular amongst younger generations with 1 in 4 under 35s using digital currencies versus just 4.5 percent of over 45s. • 91 percent of millennials prefer banking apps and online banking with less than 2 percent using telephone banking and 6 percent visiting bank branches! • Many under 24 year olds prefer to have all their bills, accounts, investments, savings and other financial information on one mobile device or app.
Fiat Currency Did you know that the average life expectancy for a fiat* currency is 27 years, with the shortest life span being just one month! Founded in 1694, the British pound sterling is the oldest fiat currency in existence. At a ripe old age of 325 years it must be considered a highly successful fiat currency. However, success is relative - the British pound is now worth less than 0.50% of its originally value – meaning the most successful long standing currency in existence has lost 99.5% of its original value. IS SUE 3
Is this the reason that more bank branches are - 35 -
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01 J OH N BOAT M A N Founder of Boatman Financial
closing, and we are seeing the emergence of ‘challenger’ banks like Monzo and Starling Bank?
created ten years ago during the global financial crisis, maybe even because of the lack of trust in the financial system.
We are also seeing more innovations within money thanks to technologies like Contactless, Apple Pay, Google Pay, Fitbit Pay and digital currencies. After the introduction of contactless payment cards in 2008, 75 percent of Britons are now using contactless payments as the number of payments doubled in 1 year.
Now of course there are a plethora of cr yptocur rencies, re we moving this speculative towards a cashless market is currently largely unregulated, society or towards and has experienced more use of digital or many volatile cryptocurrencies? periods over the last ten years. However, if you begin to understand the technologies of cryptography and blockchain you can start to understand why some people consider cryptocurrencies to be part of the ‘future of money’.=
71 percent of UK adults used online banking and 41 percent used mobile banking in 2017. At the end of 2017 UK consumers made 13.2 billion debit card payments compared to 13.1 billion cash payments. Source UK Finance - UK payment market report (2017) “MANY PEOPLE LIVING IN EMERGING ECONOMIES STILL LACK ACCESS TO RELIABLE, AFFORDABLE AND EFFICIENT FINANCIAL SERVICES”
Financial unbanked Many people living in emerging economies still lack access to reliable, affordable and efficient financial services. To participate in the global financial sector – one must have access to a bank account however, it is estimated that globally 1.7 billion adults remain unbanked e.g. without an account at a financial institution or through a mobile money provider. Sometimes the reason for this is that they do not ENOUGH money to open an account! Other reasons are fees, lack of trust and even distance. Another worrying hurdle is their level education, about 62 percent of unbanked adults have only attained primary school education or less (Global Findex Database).
Digital or cryptocurrencies It is still early days within the area of cryptocurrencies and crypto assets - the most well-known cryptocurrency, Bitcoin, was © B L OC KE RM A G - 3 6 -
A
So, are we moving towards a cashless society or towards more use of digital or cryptocurrencies? Many are already making cashless payments, and some are making payments with cryptocurrencies on a peer-to-peer basis with no reliance on a bank. We certainly need more regulatory clarity, and this is helped by the recent consultation paper CP19/3 from the Financial Conduct Authority called ‘Guidance on Cryptoassets’. Cryptocurrency can be more efficient than our own fiat currencies but we need faster, better user experiences within the cryptocurrencies, exchanges and digital wallets. Remember many people don’t understand how the internet actually works, I believe in some cases payments using crypto will happen without you knowing it. We are already seeing internal crypto payments within banking intuitions and also central bank digital currencies (CBDC) – these are simply the digital form of fiat currency. So strangely it could be the banking sector that starts to benefit from the efficiencies of cryptocurrencies before the rest of us. Personally I think it’s only a matter of time before many businesses and individuals adopt more efficient payment options similar to cryptocurrencies. WWW. B L O CK E R M A G.CO M
- INNOVATOR SPOTLIGHT -
Financial trust
financial system.
The existing financial system created a lack of trust eight to ten years ago, but from that came a Bitcoin whitepaper and maybe a suggestion that ‘the system’ doesn’t need financial institutions to create trust. So will emerging technologies like
Away from the subjects of money and currencies – the efficiencies of blockchain/ DLT can significantly benefit supply chains and will help many businesses in the future. Microsoft alone is currently working on more than 300 blockchain projects across multiple business sectors (Michael Platt, Senior Director Blockchain, Microsoft 6 March 2019), and look at IBM Blockchain and their food trust project.
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sing blockchain in cross-border payments cuts out the processes and transactions along the way and reduces the considerable fraud risk involved, driving down costs and speeding up payment timeframes.
Finally, I believe the regulated tokenisation of equity and crowdfunding for small- to mediumsized businesses using blockchain technology has huge potential – look out for the UK first FCA-regulated security token offerings (STO). Innovative blockchain technology isn’t the answer to everything, but it is revolutionary. It’s clearly early days for these emerging technologies, but we certainly have an exciting five to ten years ahead of us!
blockchain and distribution ledger technology (DLT) along with cryptocurrencies benefit society and businesses, building that trust in money again?
J OH N BOAT M A N has over 25 years of experience within independent financial advice. He is the founder of Boatman Financial and co-founder of Boatman Admin Services. Twitter @johnboatman_uk
With more mobile devices and increasing internet access around the world, as well as the improvements of decentralisation technologies, it may be possible to build an entirely new
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Fireside i The off-grid startup technology festival 3-4 September 2019 | Near Bath Fireside Summit is the UK's first off-grid startup technology festival, taking place just 5 miles from the city of Bath on Tuesday 3rd & Wednesday 4th September, 2019.