The East-West ICO Divide

On By mehranmuslimiblogIn Bitcoin, Blockchain, ICOLeave a comment

ico

The saying “East is East and West is West” curiously even applies to ICOs. You might have assumed that there was a universal view of ICOs, but it isn’t so: in the West, enthusiastic support for an ICO is primarily based on the ‘ideas’ that the ICO platform brings to the blockchain party, while in the East they are much more concerned about the ICO’s ability to generate a return on investment.

The divide exists in other ways as well. For example, the Asian market took off on its own, informed by the ecosystems around bitcoin and ethereum but also distinct from them. Zhuling Chen, co-founder of Aelf, a cloud computing startup based in Singapore, attributes this to the fact that, “At the very beginning, the information coming from Asia to the US was very limited. We didn’t know what’s really going on.”

 

The differences between the Asian and U.S. ICO markets became more clearly visible during Blockchain Week in NYC. Brady Dale, writing for Coindesk says:

“If one common theme ran through our conversations about Asia, it was this: retail and institutional investors all want returns to realize much more quickly than investors do in the U.S., which may help explain why it has always had a vigorous ecosystem of exchanges.”

Another Asian investor explained it more succinctly: “Asians love to gamble.” Jason Fang told Coindesk:

“They don’t want long lockup periods like so many Western projects expect. Instead, they want to see tokens get released, listed and realize some of the gains that come from retail investors and market makers buying into a new coin.”

Another view, according to Ricky Li of Altonomy, one of Asia’s largest crypto funds, also pointed out that Asians want in and out quickly, and that they have a tendency “not to diversify their portfolios over time.” He also said:

“Chinese companies and their neighbors will raise funds in ether and largely maintain those positions, sometimes failing to lock in gain or riding volatility through their whole portfolio.”

A lack of software documentation in Asian languages has been another divider between East and West. But overall, it seems that the demands of ICO investors are quite different, and ICOs trying to please a global audience will need to take this into account when building their roadmap and strategy.

 

 

 

 

How fintech and neo banks are using IT

On By mehranmuslimiblogIn FintechLeave a comment

fintech

Most people see fintech startups and neo banks are something run by young, terribly hip people of the kind you see on the TV drama ‘Silicon Valley’. That is only part of the truth; the people behind them are achieving success because they embrace the technology that allows them to understand their customers’ needs and have the flexibility to develop rapidly-evolving products.

They have an advantage over the traditional banks, because the banks have IT systems that are old, slow and complex. The newcomers are not encumbered with the same problem.

The Financial Times said about the banks’ IT: “The cost of maintaining these often ageing and unwieldy systems eats up three-quarters of banks’ IT spending, according to Celent. That leaves only a quarter to spend on innovations to keep up with the rapidly emerging threat from the many technology groups and start-ups trying to steal market share in areas such as payments.”

By contrast, the neo banks ands fintech startups are up-to-date with infrastructure and have a huge competitive advantage as a result. While banks are forced to fund costly projects to create IT solutions that will integrate with their ageing infrastructure, the fintechs can invest in whatever technology they need to drive growth, knowing it will integrate with their existing IT systems.

The newcomers also have better customer insights, because they have made to their business to get to know the consumer better than the banks do. They are using data analytics tools to collect data from research and surveys, social media, and their existing customers using online and mobile applications. And they use CRM systems to personalise their product offers. PwC’s Global Fintech report reveals 75% of financial services leaders think fintech’s biggest impact will come from its increased focus on the customer.

Finally, fintech startups and neo banks make grater use of Cloud tools and this enables them to deploy apps at greater speed and they can scale up or down to meet customer demand.

Will a customer prefer to get a loan from a fintech that can complete the process and transaction in 15 minutes or go to a traditional bank where it may takes days or weeks? The answer is logically that they will go to the fintech. And will the banks try to catch up with the IT innovations and speed up their systems? That remains to be seen.

 

 

A decentralised business is better for you

On By mehranmuslimiblogIn Bitcoin, Blockchain, FintechLeave a comment

The background of a magnificent city

Let’s start by looking at Equifax. This is a U.S. company, and one of only three, that provides credit reporting on American citizens. Last year there was a massive security breach, which meant that the personal information of at least 143 million was in the wrong hands.

The problem here is that your personal data is centralised when these big credit-rating companies have it, and that means it can be manipulated; by them or by other parties through theft.

If Equifax stored consumer data on a blockchain-based system, the information would not only be better protected, the company itself wouldn’t be able to mess around with it in any way.

The blockchain uses cryptographic hash functions that both encrypt your data and track historical changes to it. Therefore, at any point in time, if any piece of your data is tampered with, you personally will be able to immediately see where and when the information was changed.

However, security isn’t the only advantage decentralised storage of data can bring. The communities using decentralised ledgers are incentivised to show more respect and this contributes to more efficient operations.

The incentive of having a stake in the business

Some platforms, especially those decentralised ones that have utility tokens, engender a sense of community, because every person involved has something to gain by making sure the platform runs for the benefit of all. It also means that they literally have a stake in the company just through token ownership. Also, all the community members can see how a platform uses their personal information and the steps taken to protect it.

There will always be bad actors in any company, and sharing economies are no different, although you’d think that in this particular sector, people are less likely to take advantage of other community members, but we’d be naïve to believe everyone really gets the idea of ‘sharing’. However, in decentralised communities, any bad actors are actively disincentivised, because if things go well, the stakeholders all benefit. If a bad actor contributes to making the company less successful, then they are shooting themselves in the foot.

If you take the example of Uber, which is s centralised company; none of the Uber drivers have a stake in it. They have no incentive to act in a way that makes the company more successful, because all the benefits of success go to the founders and shareholders. If Uber was a decentralised business, with drivers having some form of stake in it, it would be a very different story.

We may see an increasing demand for companies to adopt a decentralised approach, because ultimately it benefits the consumer, and they could be the driving force that increases the use of a new decentralised business model.

 

 

 

Fundstrat bullish about Bitcoin for 2019

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, FintechLeave a comment

KryptoMoney.com-Bitcoin-price-64000-Fundstrat-Tom-Lee

Fundstrat Global Advisors, co-founded by Tom Lee, has just published a report claiming that Bitcoin prices will reach $36,000 by the end of 2019. How has it arrived at such a bold prediction? Fundstrat says the answer is mining costs.

Fundstrat’s Quantamental Strategist, Sam Doctor, analysed the relationship between Bitcoin mining costs and price, to come up with the prediction that the price range will fall somewhere between $20,000 and $64,000 next year.

He based his calculations on a Bitcoin Price to Mining Breakeven Cost Metric, known as P/BE, which he claims has “proven a reliable long-term support level.”

A statement from Tom Lee, published on Twitter, said: “We expect the mining economy to grow over the next several years, and project a BTC price of ~$36,000 by year end 2019 based on the historical average 1.8x P/BE multiple.”

The Twitter statement also points out that the rise in electricity costs is slowing and use of power is becoming more efficient as larger rigs with a higher hash power per watt, are now appearing. Plus, mining operations are getting bigger, bringing the benefits of scalability to the scenario.

However, he did point out that there was one risk to the prediction: “a material shift in the trajectory of hash power could change the P/BE support level of BTC price.”

It is interesting that Tom Lee’s personal prediction for BTC was $25,000 by the end of 2018 and both Lee and Fundstrat have been bullish about BTC this year. They also issued a statement in April, saying that 82% of institutional investors believe the price had now bottomed out.

If you own BTC and both Fundstrat and Lee are correct than it will be worth holding on to them for some time to come.