Category: ICO

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

On By mehranmuslimiblogIn Bitcoin, Blockchain, Digital Innovation, Economy, Fintech, Governments, ICOLeave a comment

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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.

 

Will ICOs outperform Venture Capital in 2018?

On By mehranmuslimiblogIn Fintech, ICO, Initial Coin OfferingsLeave a comment

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Although there has been some negative press around ICOs since they skyrocketed in 2017, it hasn’t stopped them from raising more funds for blockchain-based startups than traditional venture capital (VC). Indeed, according to Jason Rowley, a contributor at Techcrunch, ICOs are on track to do even better in 2018.

The investment from VC in 2017 was $900 million and in the first two months of 2018 it amounted to $375 million, but this looks like chump change compared with the ICO fundraisers.

Crunchbase recorded a total of 527 funding rounds by both VC and ICOs for 2017 and 2018 to date. In terms of numbers of startups, VC still has 68% of the market, but, whilst ICOs may only have 32%, the dollar volume is considerably higher.

Basically, as Jason Rowley says: “despite the smaller number of ICOs, these funding events — on average — attract much more capital than the average venture funding round.” In fact, if you look at the dollar volume, ICOs take 78% of the market for blockchain-related startups. In figures, this equates to $1.3 billion raised through VC and $4.5 billion raised by ICOs, according to Crunchbase.

Of course, not all ICOs have been a runaway success. Bitcoin news reported that out of 902 businesses raising an ICO, some 142 failed before they could even close the funding round, and another 276 failed after the fundraising was completed. A further 113 projects have been classified as ‘semi-failed’, either because they have stopped posting on social media, or because experts have assessed that the community is too small to give the project a chance of success. Ultimately, “59% of last year’s crowdsales are either confirmed failures or failures-in-the-making.”

This doesn’t mean that the ICO sector is doomed, there are still going to be many successful coin offerings – Telegram’s ICO is just one example of healthy show of support. Undoubtedly some will continue to view this form of fundraising with scepticism, but if investors do their due diligence and more regulation comes into play, there are no good reasons to think that the ICO does not have a secure and sustainable future.

Are celebrity brand ambassadors worth it?

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, Fintech, ICO, Initial Coin OfferingsLeave a comment

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Generally, having a celebrity endorse your product is a ‘good thing’! Advertisers will give their right arms for a famous face to front their product. In 2017, Paris Hilton, Floyd Mayweather, Ghostface Killah (Wu Tang Clan) and Jamie Foxx were among the celebrities who were most vocal about their support for crypto and ICOs and they all used their social media platforms to let their followers know what they’re doing in the crypto world.

One thing that ICOs who use celebrity endorsements need to note is that if celebrities don’t disclose if they are benefiting from making an endorsement, the Securities and Exchange Commission in the USA may view it as illegal.

And that is what has happened to Bitcoiin2Gen (B2G) ICO, which has been using Steven Seagal to endorse its offering. As reported in Cointelegraph and many other outlets, New Jersey Bureau of Securities (BoS) regulators issued a ‘cease and desist’ order on 7th March and have accused the team behind the ICO of “fraudulently offering unregistered securities in violation of the Securities Law.”

Clearly the B2G team didn’t get the memo from the SEC about the dangers of celebrity endorsements!

The BoS order focused on what it said was “the secretive nature” of Steven Seagal’s involvement with the business and its ICO. A statement from the regulators said:

“The Bitcoin Websites do not disclose what expertise, if any, Steven Seagal has to ensure that the Bitcoiin investments are appropriate and in compliance with federal and state securities laws.”  And added, “Additionally, there are no disclosures as to the nature, scope, and amount of compensation paid by Bitcoiin in exchange for Steven Seagal’s promotion of the Bitcoiin investments.”

Perhaps Seagal was not the best choice of celebrity for a blockchain business, as he is better known as an actor specialising in martial arts, but then none of the other celebrities backing crypto in 2017 are immediately linked to Bitcoin or the blockchain either.

But, it is easy to see where the problem lies from a regulatory perspective. These celebrities have an enormous power over their fans, so when Steven Seagal tweeted on March 6th that B2G would shortly be listed on major exchanges, his fans will take his word as gospel. If he says, “invest in this ICO because I have” in so many words, then that is what his followers will do, and many of them will not be savvy investors who understand the risks and rewards of crypto assets. This is something that the SEC is well aware of, and now it is acting on its previous warnings.

So, whilst a celebrity may do wonders for your alcohol brand or similar consumer item, they are not quite so desirable when it comes to promoting your ICO – unless every aspect of their involvement is completely transparent and regulators can see that they are active in and knowledgeable about the blockchain and cryptocurrency.

 

 

 

 

The importance of decentralization

On By mehranmuslimiblogIn Blockchain, Ethereum, Fintech, Governments, ICO, Initial Coin OfferingsLeave a comment

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If you cast your mind back to the early days of the Internet, many of the services were built on open protocols owned by the Internet community. Big platforms like Yahoo, Google and Amazon started during this era, and it meant that centralised platforms, like AOL, gradually lost their influence.

During the Internet’s second growth phase, which largely started in the mid-2000s, the big tech companies like Google, Apple, Facebook and Amazon built software and services that left open protocols trailing behind. The skyrocketing adoption of smartphones helped propel this as mobile apps started to dominate the way we used the Internet. And, even when people did access the open protocol that is the worldwide web, they usually did it through the medium of Google and Facebook etc.

On the one hand, people worldwide benefited from free access to cutting edge technology, but on the downside, startups couldn’t grow their Internet presence without worrying that one of the centralised platforms, like Google, would simply change the game plan and take away any chance of growing an audience and making a profit. This has stifled innovation and in many ways made the Internet less interesting. And, there is a global political aspect to the dominance of centralisation, which we have seen most clearly in the emergence of ‘fake news’ that has turned some social hubs into battlegrounds.

The third age of the Internet

And so we arrive at the third age of the Internet. And as Chris Dixon says in his incisive article on Medium, crypto-economic networks, which in turn owe their existence to the networks developed by Bitcoin and Ethereum, will enable its further evolution. Dixon says: “Cryptonetworks combine the best features of the first two Internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.”

The case for decentralisation

First let’s look at the problem with centralised platforms. They have a predictable modus operandi, such as a big drive to recruit users, adding third-party developers and media organisations, and as they grow, so does their power over users. Dixon quite rightly says that when they hit the top of the S curve, “their relationships with network participants change from positive-sum to zero-sum.” And for the third-party platforms, the game has changed from cooperation to competition. So, all the entrepreneurs n the third-party community start to shun the centralised platform.

Now enter the decentralised cryptonetworks. Dixon defines them as:  “networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants.”

Cryptonetworks are also able to maintain a level of neutrality that the centralised platforms can’t offer, and don’t want to either. Plus participants and users are given a voice through the community governance of these decentralised networks. This is available, “both “on chain” (via the protocol) and “off chain” (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.”

To sum it up: cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. That’s why they just can’t keep Bitcoin and Ethereum down, no matter how much they try, because there is a community that believes in it.