Tag: Blockchain

Europe’s Insurance Brokers Adopt Blockchain

On By mehranmuslimiblogIn BlockchainLeave a comment

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Every day there is some news about another sector of the mainstream financial world adopting blockchain. In the last few days news has come out that 14 of Europe’s largest insurance brokers have joined forces with Deloitte to operate a blockchain system that will simplify the transfer procedure for clients who want to move to another broker during the first year of taking out a policy. This move will enable insurers to comply with the Hamon Law, which states that insurance companies must make transfers easy for their customers.

Why have they chosen the blockchain? Because it will provide the most secure storage system for customer data. It is more secure than any existing database storage system and it will also allow these insurers to comply with a new EU directive on General Data Protection Regulations (GDPR), which is coming into force in 2018. And this won’t only affect Europe. If you plan to sell anything to an EU citizen, then you must comply with the upcoming General Data Protection Regulation (GDPR) standards (even if you don’t have operations in the EU).

The blockchain can overcome the challenges company’s face in complying with a range of regulations. It can provide a means of cost-effectively producing and sharing information with regulators whilst also reducing the burden of “report exhaustion” many organisations are facing. Furthermore, two of the key properties the blockchain can help with include provenance of assets and a chain of custody for operations on assets.

Companies that don’t adequately protect consumer data face large fines, so now is the time to turn to the blockchain as this group of insurance brokers have. The blockchain platform uses ‘Proof of Process’ technology that secures user data in a shared data storage system. It will limit data release to the absolute minimum for processing transactions.

AIG, another massive insurer has already started issuing policies on the blockchain. It is offer multinational smart contract-based policies in partnership with Standard Chartered Bank and IBM. According to AIG, the insurance sector is seen to vastly benefit from the blockchain technology. It will help cut down the processes that most insurance providers usually face with paperwork and filing of all the requirements.

As Adam Perlow, Founder and CEO of Zen Protocol told Jon Buck, writing for CoinTelegraph: “If the insurer sets some money in a smart contract, and the contract pays out based on the occurrence of an event as determined by an objective actuary/oracle, then there is no need for novel incentive schemes, the insurer simply cannot avoid the payout. In the long run, as one insurance company uses smart contracts to gain the public trust, others will be forced to follow suit.”

 

Cleaning up ICOs

On By mehranmuslimiblogIn Blockchain, Fintech, ICOLeave a comment

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This year has been the year of the ICO and whilst these have brought a breath of fresh air into the marketplace of funding startups and other ventures, the speed at which ICOs have gathered momentum has raised some eyebrows and some questions about just how ‘clean’ this new Fintech mechanism is.

There are two sides to the ICO debate: one the one hand it is positive for the innovators who can raise funds through fairly simple token sales and reach a global market. The popularity is clear for all to see, because the funds raised by ICOs grew from $200 million in 2016 to $2 billion in 2017.

On the negative side, there are those who are concerned about the lack of regulatory controls over these ICOs. That is one reason the mainstream financial authorities are reluctant to accept them as a legitimate method of capitalisation. Add some shady ICOs into the mix and their concerns are understandable.

There are some other issues around ICOs that need to be resolved as well and these involve the technology, which is still in its infancy. Some argue that there are insufficient reporting standards, no exchange regulation and little or no regulation in a number of countries. The result is a clash of standards when those entities using conventional financial systems start adopting the blockchain.

Resolving ICO problems

How can these issues be resolved? There are several ways to solve the transparency problem. One is to define standards of reporting for companies using ICOs and it easy for participants to view the internal workings of the ICO via the exchange interface. This will provide investors with more detailed information about the company behind the ICO.

Second, more due diligence by investors is needed. There needs to be a proper assessment of the proposed business models to ensure they are viable. Investors should also be provided with more information about the company’s legal status.

Greater understanding of the financial markets will also help. It is widely agreed that most financial instruments will migrate to the blockchain in the not too distant future and preference should be given to projects that are using time-tested instruments and are understood by conventional investors, over experimental utility token economy models.

A clean up of the ICO marketplace is needed, because they are not going to disappear. Governments may try to ban or restrict them, but decentralisation is the way forward and rather than ignore ICOs and pretend they are some kind of digital bubble, what is required is a “clean investment system.”

However, this cannot come from central authorities, because that would betray the whole basis of the blockchain, which is decentralisation. What is required is that the companies and investors involved in the ICO market “embrace systems that will promote credibility within the ecosystem,” as CoinTelegraph suggests. Transparency and openness from the company side, and more in-depth research by investors will greatly contribute to a more legitimate and trustworthy ICO marketplace.

 

 

 

 

KPMG backs blockchain

On By mehranmuslimiblogIn BlockchainLeave a comment

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There is some very interesting news today on Coindesk: KPMG, one of the Big Four accountancy giants has issued a press release announcing that it is joining the Wall Street Blockchain Alliance (WSBA). WSBA is a non-profit trading association and adding KPMG as a corporate member will provide a boost to mainstream belief in blockchain.

Eamonn Maguire, who is the global leader of KPMG’s digital ledger services said that he believed the blockchain was maturing and that it will have a dramatic impact on the financial industry. KPMG plans to use its position in WSBA as a board director to “facilitate the growth and adoption of distributed ledger technology across all financial markets.”

Other members of WSBA include BlockEx, Blockchain Intelligence Group and Calypso amongst others. This is KPMG’s latest consortium membership; last year it launched a blockchain services suite with Microsoft to explore this industry further and it has been making statements about how the technology can impact its clients in the future.

Its blockchain service suite consists of tools designed to help banks and other financial services firms build with blockchain in a compliant way. In September 2016 when KPMG launched the service, Maguire said the suite was designed to, “include “full life-cycle support” of blockchain application development, which means the firm is offering a range of services, from business case development to systems and operations integration.”

KPMG is busy training up staff to work specifically with blockchain. It began with about 80 specialists at its New York offices, but now has doubled that number and has a formidable global team, including a data and analytics group focusing on coding and development in support of proofs of concept, prototyping and integration of blockchain capabilities.

Where does KPMG see blockchain going? Eamonn Maguire is on record saying: “Eventually, we see the blockchain as a platform for the provision of services. We will get to the point where auditors and regulators will use the blockchain to perform their analysis.”

WSBA is very pleased to have KPMG on board and for others in the blockchain industry it surely signposts a future where more corporate entities accept and promote blockchain-based activities and products.

 

 

A shift in the ICO landscape

On By mehranmuslimiblogIn Bitcoin, ICOLeave a comment

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There is no doubt that the ICO landscape is changing these days. As a Coin Telegraph writer pointed out, some 75% of recent ICOs have failed to reach their soft cap, which is indicative of an important turnaround in this sector. One of its effects is to squeeze out the scammers and introduce a new generation of ICOs that go way beyond the need to simply raise money for a startup.

According to Nick Ayton, a London-based Fintech journalist, there are “several forces shaping the ICO market.” He is right to point out that 2017 has been the year that the ICO really took off, but like many he is curious about what 2018 will bring. Will it be very different? For example, will ICOs get bigger in terms of the deal, but fewer in number? And, will the pre-ICO sale be a thing of the past?

There are lots of factors to consider. For a start, Bitcoin has had a rocky few months over the Segwit2X fork, now abandoned, and Ethereum seems to be still trying to work out how to handle scalability for all the ICOs that are using its network. But, crypto is still gaining ground and Ayton predicts that it will reach a $500 million market cap early on in 2018.

ICOs overtake venture capital

In October 2017, ICOs reached a peak number and overtook venture capital as a source of funding. However, just to put this into some perspective, it must also be remembered that some ICO funds were hacked and money stolen (CoinDash is one example) and some ICOs have had to return money to token buyers, because the project didn’t meet its soft cap. There has been a lot of discussion over just how many ICOs were scams, which has inevitably led to the arrival of regulation.

The arrival of regulations

It is fair to say that ICOs must now consider not only existing banking and payment regulations, they are aware that there are new ones coming down the pipeline, although quite what they will be nobody knows, which is another issue. Some governments, particularly in southeast Asia want to ban ICOs, whilst others are embracing them, like Russia and Japan.

Places like the UK are keeping their powder dry. We’re not sure how it will position itself on ICOs in 2018, although it already has a regulatory framework in place with its eMoney Laws and Collective Investment Scheme rules. We do know that the FCA has created a sandbox to test out various propositions, and that the USA would love to dictate what happens with crypto worldwide.

ICO costs will explode

One thing we can be fairly certain of is that the ‘bootstrapping’ ICO is coming to an end. In the future, launching an ICO is likely to cost in the region of $250k – $500k, which is a price that will