GibFin Forum 2018: Blockchain contribution to Rock’s GDP expected to reach double figures

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The Gibraltar International Fintech Forum 2018 got underway this morning at the Sunborn Hotel attracting 180 delegates and speakers from around the globe.

Chief Minister Fabian Picardo kicked off the event with a simple and clear message to all those in attendance:

”Gibraltar is open for business.”

Gibraltar Ahead in the Regulatory Space

With jurisdictions around the world trying to figure out how to regulate the blockchain industry, Gibraltar has already put in place a DLT regulatory framework based on best principles and is currently looking to release new accompanying regulations that focus on token sales within the jurisdiction. A bill is expected through the Gibraltar parliament in Q2 this year showing Gibraltar to be world-leading in this space.

The Minister for Commerce, the Hon. Albert Isola, whose Ministry has been driving the fintech and blockchain agenda in Gibraltar also addressed the full conference hall onboard. When talking about the jurisdiction’s continued development, the Minister made it clear that as a government, “we are not scared of innovation.”

He added that the government is looking to continue to operate with consumer protection at the heart of what they do.

With a wide variety of speakers in attendance, the focus was well and truly on regulations for blockchain and ICO, a sector that is booming and hit an astounding $3.7bn during the course of 2017.

Gibraltar Financial Services Commission on ICO Regulations

Sian Jones and William Garcia from the Gibraltar Financial Services Commission (GFSC) also gave a talk and answered questions from the crowd. The same event last year saw the GFSC present their DLT regulatory framework to attendees and the wider world, this year it was their proposed ICO regulations.

Sian Jones emphasised that the regulator would not be regulating individual ICOs but those that brought the token sales to market, adding that “it’s not the role of the regulator to approve any individual token offerings,” rather highlighting how regulations are implemented is as important as the rules themselves.

Sian added: “We as a regulator will not be setting a single code of practice that should be set by the market.”

A lot like the Gibraltar Blockchain Exchange (GBX) with its network of Sponsor Firms, the GFSC sees this emerging market needing the creation of “authority sponsors that are accountable to us [GFSC].” This format would encompass GBX, which already comes under the scope of the DLT regulations, effectively making it an ‘Authorised Sponsor’ which could open up many pathways of opportunity for the exchange.

During the presentations Q&A, the GFSC spoke of their core desire to embed consumer protection at the heart of their work, whilst being supportive of helping grow and develop this innovative industry: “Tokens as a new asset class are isolated from financial advice, but it is right that it should be regulated for consumer protection.”

The DLT Licence Experience

In the morning of the first day, GBX CEO Nick Cowan moderated the panel “The DLT Licence Experience to Date.” Joining Nick was Joey Garcia from Isolas, Anthony Provasoli from Hassan’s and Jay Gomez from Triay & Triay.

Nick prophesied 2018 to be “the year of the regulator,” pointing out that Gibraltar has the unique first mover advantage of having a regulator that truly understands this space, and is so accessible and open to dialogue. Nick began the panel by categorising the ‘DLT licence experience’ into three distinct areas, Government & Regulators, DLT advisors such as Gibraltar’s law firms and the users of DLT licences such as GBX, each with their own distinct experience.

Joey Garcia, who was a part of the working committee regarding the original DLT framework explained the reasons for a best principles approach by stating: “Let’s build a ground-up framework that is evolutional.” Nick complimented Joey’s sentiments by highlighting the collaborative nature of the DLT framework: “There is a trinity of bodies here, government, industry and users, coming together to find a solution”

The panel concluded that although Gibraltar has been successful in locating and nurturing emerging markets, such as e-gaming, it has seen an explosive reaction to its leading role with the DLT regulation.

Anthony Provasoli pointed out “3 years ago nobody knew where Gibraltar was, but that is very different today, especially in the last 12 months.” He also highlighted his experience on the perception of Gibraltar saying: “Clients love the fact they can come and sit down with the regulators and have an open discussion.” The panel’s experience echoed the Chief Ministers opening comment that Gibraltar is open for business.

The panel also touched on the subject of Brexit in relation to Gibraltar, which despite the outcome is making strides in placing itself strategically between Britain and the rest of Europe. Joey Garcia believes that due to the global connection of blockchain and the cryptocurrency market that Brexit would not have a negative impact, by saying: “High level, I don’t think it [Brexit] will affect this space.” It is a testament to that strategic approach of Gibraltar to pioneer itself in this emerging technology and become a forerunner ahead of the Brexit transition.

Challenges in the Current Crypto Exchange Landscape

Nick later participated in a panel entitled “The Crypto Exchange Landscape for 2018” moderated by Joey Garcia with Vitaliy Kedyk of CEX, David Honeyman from Lendo, and David Gyori of Banking Reports alongside Nick. The panel discussed the challenges of AML/KYC with current cryptocurrency exchanges, with Nick detailing how the GBX intends to create a new industry standard of governance and due diligence for token sales within a rules-based system that would gain access to a large pool of KYC cleared participants.

The question of centralised vs decentralised exchanges was debated, with a consensus forming that if blockchain technology is still in its early developments, then decentralised exchanges are far off in that timescale development. With the current challenges that existing exchanges face around AML/KYC, accountability and consumer protection, decentralised exchanges would not contain a solution. Vitaliy emphasised this by saying: “Decentralised exchanges can’t deliver the real user experience” which the panel agreed that if this space is to be adopted by mainstream consumers, the user experience would be of paramount importance.

Nick was invited to close the 1st-day proceedings of the conference. He championed Gibraltar for its bold stance on the global stage as a home for those businesses that are utilising DLT technology. Mirroring the success story of GBX and its successful completion of raising $27M in the RKT token sale, with the way Gibraltar fostered the exponential growth of the e-gaming industry a parallel to what we are witnessing in the blockchain space. Nick finished by telling the packed out audience that Gibraltar is open for business and made a call out to those looking to Gibraltar as a home for the business to “give us a chance”.

Blockchain Innovation in Gibraltar and Beyond

A key moment during the 2nd day of the conference came from Philip Young, the Marketing Director of GBX. Phil gave a presentation on the Blockchain Innovation Centre (BIC) an initiative set up by the Gibraltar Stock Exchange (GSX) to help create a hub of blockchain innovation in both Gibraltar and further afield. Phil gave the three bedrock tenants that would “Educate, Inspire, Connect.” Phil spoke of the BIC’s offer of a network of experts that would help select, fund, advise and guide blockchain-based startups in Gibraltar. Additionally, Phil proposed the idea of the BIC helping to establish educational programs seeking out universities both abroad and in Gibraltar to encourage collaborations.

Despite the heavy wind and rain hammering the Rock of Gibraltar, attendance was still high over the two-day event, with great networking opportunities between the panels and presentations. It was encouraging to see that more than 180 of the 300 attendees had travelled to Gibraltar for the event demonstrating that Gibraltar is quickly establishing itself as a global hub for all things crypto & blockchain.

The Gibraltar International Fintech Forum 2018 at the Sunborn Hotel attracts180 delegates and speakers from around the globe.

 

The latest Ethereum roadmap

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I’ve been heavily invested in Ethereum since it appeared, so I was very interested in Vitalik Buterin’s recent talk at Devcon (he’s the creator of Ethereum), which he called “a modest proposal.” He told his audience that he has been “quietly working on a new long-term plan for the future of the blockchain network.” It is a essentially a three to four year roadmap outlining his vision of the potential technical developments that Ethereum can achieve, and as anyone who owns ETH will have noted, the value of the coins showed some upwards movement after his speech.

Enter ‘sharding’

What does his vision include? At the heart of it is something called ‘sharding’.  Without getting too technical, this is defined as: “A database shard is a horizontal partition of data in a database or search engine. Each individual partition is referred to as a shard or database shard. Each shard is held on a separate database server instance, to spread load.” This was something that Ethereum watchers had expected to happen, but Bueterin finally solidified his strategy for using the shard technique.

Expanding Ethereum’s scalability

His roadmap points to problems with the platform and solutions for fixing them. His focus in the talk was on scalability, as Ethereum nodes need to store everything that ever happened on the network. Buterin emphasised the need for solutions that mitigate expensive storage costs that could escalate exponentially as the system expands.

It was clear from his presentation that he wanted to encourage Ethereum developers to think about this aspect when he said: “The amount of activity on the blockchain is orders of magnitude larger than it was just a couple of years ago,” and pointed to daily transaction rates and the 20,000 nodes plus that are now part of the network.

Buterin’s view of sharding

Buterin seems to see ‘sharding’ as the most probable solution to the problem. This way of partitioning data into subsets means that each node would only have to store a small amount of data from the entire network. But, Buterin wants a system where “the underlying math would hold the system accountable, and if they need it, nodes could rely on other nodes for data.” How to execute this in practice and ensure security, i.e. no nodes sending other nodes false information, is something that researchers have been looking into.

From the talk we now know that Buterin has a less conventional approach to using sharding. He is proposing to split Ethereum into different types of shards- there will be a main shard comprising the current Ethereum network, and there would be other shards, which Buterin calls other “universes.”

Most importantly, Buterin believes the partitioning would allow for more aggressive changes on the smaller shards, and more cautious changes on the main blockchain. This will ensure Ethereum’s platform maintains stability while developers can test new changes.

Other announcements included upgrading the smart contract technology and progress on eWASM, his project for running Ethereum on a web browser. He also hinted that a lot of the work in progress is much more advanced than anyone guessed when he finished hi stalk by saying, “Basically we’re just inches away from a proof of concept in python.”

 

5 Things To Consider About Fintech

Technology is more integrated in business practices now, but Fintech is a concept that is just taking hold and revolutionising financial processes. It often seems to me that there is some confusion about what it is and what it really does and for business owners there are questions about whether Fintech platforms are right for their business.

Some of the information published about Fintech, so in an attempt to clarify what it is and what it can do, let’s look at some things to consider before you adopt it.

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What is fintech?

It’s just another type of technology. There is nothing mysterious about it. Some people seem to think that it is just about Bitcoin, but that is not quite true, it is also technology that enables mobile payments for example. So, it has a lot of applications.

Will it work with your existing technology?

When you are adopting new technology, such as a payments method, you need to be aware they won’t magically fix existing problems with your older systems. Before committing to a particular software platform or tool, make sure to investigate how the new tools will work with your existing IT infrastructure.

Increase your IT security

When you decide to use a Fintech tool, be aware that you are making more of your business information available digitally. This makes it easier to access client data and respond in real time, which will improve your business. On the other hand, because more information will be available online, you should boost you IT security to deal with this.

Make sure the Fintech is supported

When you choose a Fintech platform, make sure it comes from a stable company that isn’t going to disappear and leave you without support. Otherwise you might find that you have spent time and money on a product, only to find it has become obsolete quickly, or there is nobody to provide answers when there are problems.

Don’t get hung up on Bitcoin

Because so many people are convinced that Fintech is only about Bitcoin they haven’t explored the full potential of this new technology. The focus on Bitcoin, which is just one way of using a decentralised blockchain, has steered some businesses away from Fintech because it makes them nervous.

Keep an open mind about this new field, because it is going to be one of the most talked about topics in the coming years, and it is predicted that just about every business will eventually be using Fintech in some form.

 

 

FinTech is Growing Up

Wharton, one of the world’s most respected business schools, has recently published an article following a recent conference at the Federal Reserve Bank of Philadelphia on the topic of “Fintech: The Impact on Consumers, Banking, and Regulatory Policy” and it presents some very interesting views on where Fintech is at right now. It’s no longer seen as a fledgling disruptor that is working against the interests of the banking community; now bankers are seeing it as a potential partner when it comes to fintech startups.

Robert Nicholls, president of the American Banking Association said: “We are actively seeking startups to partner with,” and they are busy inviting fintech firms to present to the annual ABA convention. Collaboration is the word on these bankers’ lips and they have even developed a ‘fintech playbook’ for smaller banks. The way they see it is this: banks have trusted relationships, but fintech can enhance the customer experience.

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Banks embrace Fintech startups

As a result of this willingness to embrace fintech, banks of all sizes are looking at ways to create innovations with these new partners. For example, Capital One has integrated its services with Amazon’s Alexa. Consumers can ask Alexa for their account balance, request that it track their spending or even make a payment. Bank of America is set to debut its chatbot Erica on the bank’s mobile app to help customers with personal finance decisions.

And, most importantly, numerous U.S. banks are using a fintech platform that allows customers to transfer money in minutes, rather than days. Zelle and Ripple are key players in this sector for the moment.

Another development to come out of a bank in North Carolina is cloud-based technology that streamlines the commercial lending process. And, Eastern Bank in Boston, has adopted Numerated, a startup that enables clients to apply for a small business loan in minutes and get funding within two days. The bank hired fintech entrepreneurs to work with traditional bankers and build an innovation lab that led to the launch of Numerated.

Governments look for cryptocurrency solutions

However, the banks are still quite nervous when you start talking about cryptocurrencies. It is a sector that is risk averse and the volatility in the digital coin market still makes them uneasy. Having said that, bankers at the conference believed that cryptocurrencies will become strong in economies where “people do not have confidence in their own currency or they are avoiding controls on their money,” as William Nelson at The Clearing House told the meeting. He thinks that developed economies with strong currencies will have less use for it, yet Singapore and England are looking at developing their own digital currencies, which means that world economic leaders have not written off Bitcoin and its peers; instead they are looking for solutions and want to be ready.

The blockchain must be trusted

But while there may be some doubts about cryptocurrencies, the blockchain is much more readily accepted. Gurwinder Ahluwalia  of Digital Twin Labs told Wharton attendees that he believed the flexibility and agility of the blockchain gave it more appeal than crypto coins. He said: “You could have warranty programs. You could have provenance of parts to the aircraft industry, provenance of luxury assets. You could have the tracking of transoceanic shipments. You could have the tracking of food for its various associated benefits.” He added that the last hurdle blockchain has to overcome in order to become widely accepted by the traditional financial world is “establishing trust in a decentralized platform and establishing governance.”

This is on the way as banks, governments and other businesses test blockchain technology. Ahluwahlia believes that blockchain will prove itself, because “It provides the trust. It provides the peer-to-peer. It provides the crytography. It provides the database.” It certainly looks like Fintech will show the ‘adults’ that it is grown-up enough to play a role in the world of global finance.