将遵循众安啦即使得到岗位IPO轨迹借贷俱乐部？

zhong an

请指责谷歌的任何翻译错误（目标澳大利亚游泳感谢“时间是什么希望刚够优秀且免费的）。

在2014年12月，我们欢呼借贷俱乐部的IPO“的时候了Fintech景”。在今年二月份，我们描述了传言中安IPO为网景时刻InsurTech。

贷款俱乐部的轨迹，随着股市远低于其发行价，不为众安个好兆头。这是我们解决问题，投资者开始考虑在香港中安IPO。

我们先从我们所说的风力插槽分析。

风插座分析

从纽约的飞行时间，以伦敦为约7.5小时，约8.5小时与走另一条路。

一个小时的差别是由于顺风逆风和。无论你是在一架空客或波音差别不大。飞行员可以没有太大的差别。翻译成公司价值，市场重要的不是组织或团队管理多了不少。一个基本的水平essential-不要试图在一个小公寓飞行大西洋，不以未经训练的飞行员一年的手中留下的跨大西洋飞机。在危机中一个伟大的试点使其中的差别。无论其是白色万物平等的，真正重要的是顺风逆风和。

顺风的中安

这很容易。中国是一个巨大的蓝海市场。不断壮大的中产阶级正在购买保险首次。这是一个千载难逢的机会一劳永逸地抢任职不强。与之相比，美国或欧洲的Insurtech企业出售给消费者，本来就有很多从大，聪明的保险公司的保险。

中安：有一台好的和船员

您可以在数字顺风看到这一点。中安提供超过300种保险产品，并已超过5.35亿客户撰写了超过75600倍亿的政策。他们显然良好地执行。已经募集$900米有充分的理由相信他们会继续这样做。

可能的阻力

中国的经济正处于从制造业和出口过渡导致更广泛的多元化的经济体的消费和更高价值的服务驱动。公牛的情况是这就像一个世纪前押注美国。中国蕴藏着点到各种问题，如过度负债，不良贷款及以上建筑大兴土木。如果这是您的中国经济的看法，你会避免中安IPO。我低头牛市箱目的会有太大波动存在，也许沿着中国方式的1929年式的事件。没有人知道。如果谁认为他们知道可能有东西卖给你。

另一个问题，由成员F​​intech基因组大约由平安面临保险创新的困境提出，魁是忠的大股东的命令，可澳大利亚游泳可能是竞争对手的道路。作为@EricForgy所说的那样，从香港保险业的深入了解写着：

“一样有趣众安是，其实，我觉得平安是更有趣，更是容易，对世界其他地区产生更大的影响。我认为Lufax只是他们向外扩张的开端。中安本身正在想方设法赚取利润。如果你得分数字意味着许多小的政策（每客户）。他们正在尝试努力分支到保险更为有利可图的行业，目标，因为他们做，他们将开始争相与父母平安。我很感兴趣地看到，动态如何发挥出来。我觉得在技术方面平安胜众安是使用大量的平安公司的技术毫无疑问的。平安EST尝试尝试导出很多他们的AI技术的。“

数字埃里克·福尔热引用，以显示收入目标盈利下降较快增长。投资者可以采取两种不同的角度对这个：

或者：这显示了整个提议是有缺陷的。

或者：这是像亚马逊和机会一样大的保险市场在中国，它的国家进行投资的增长。

这是它会更加深入地了解金融股当中表现出来，我们不魁还没有。如果你具备任何见解，请分享“时间在此线程是Fintech基因组。

从中断的超音速飞机。

所有的事情等于正白，逆风和顺风推动价值。但是，一个新的超音速飞机将改变结果和新的平板可能需要不同类型的试点再培训或至少。超音速飞机将削减行车时间约NYLON 3小时。超音速飞机的保险相当于将使用blockchain（魁我们讨论了很多次，这里一个例子）几乎实时结算。

中安清楚地认识这一点，并在Blockchain进行投资。所以，我不希望被傻了眼中安blockchain。当这两个高科技和调节准备好了，我希望中安将准备。最关键的是，这两个技术和监管需要做好准备 – 就像用超音速飞机。这是一个领域，我相信，中安将得到它的权利，因为在中国连大公司和政府一起工作étroitement。

自上市以来贷款俱乐部轨迹

借贷俱乐部DID年IPO $ 15，飞涨近$ 20，然后坠毁于$ 3.51的历史低点（如果我很幸运后，发布该买）。现在大约是$ 5.20，我卖我的股票（贷款俱乐部是一个伟大的公司，目标估值现在比其他的机会较少引人注目的）。

我没有贷款克伦在IPO投资，因为我的水平基本夸我张贴在这里有保留。在$ 15，有没有错误的余地。在$ 3.51的价格隐含阙乐型号全死了，球队被无能，既不夸的是真实的。

许多股票从来不给你这个机会。你永远没有机会在低于IPO价格购买。认为Facebook和Salesforce的;价格下跌有点偶然，但时间不长。

图片来源。

伯纳德·伦恩是Fintech交易制造商，作家，投资者和思想领袖。

得到一个惊人的团队Fintech的每日新鲜见解认为世界各地的领导人。通过每天阅读我们的邮件乘势而起Fintech

注：谷歌翻译掏出链接，请访问英文版本对于那些。

Will Zhong An follow the same post IPO trajectory as Lending Club?

zhong an

In December 2014 we hailed the Lending Club IPO as “the netscape moment for Fintech”. In February of this year, we described the rumoured Zhong An IPO as the Netscape moment for InsurTech.

The Lending Club trajectory, with the stock well below their IPO price, does not augur well for Zhong An. That is the question we address as investors start to think about the Zhong An IPO in Hong Kong.

We start with what we call our Wind Socket Analysis.

Wind Socket Analysis

The flight time from New York to London is about 7.5 hours, vs about 8.5 hours going the other way.

The one hour difference is due to tailwinds and headwinds. Whether you are on an Airbus or Boeing makes little difference. The Pilot cannot make much difference. Translated into company value, the market matters a lot more than the organisation or the management team. A base level is essential- don’t try flying the Atlantic in a small plane and don’t leave a transatlantic plane in the hands of an untrained pilot. In a crisis a great Pilot makes the difference. However all things being equal, what matters are tailwinds and headwinds.

Tailwinds for Zhong An

This is simple. China is a massive blue ocean market. A growing middle class is buying Insurance for the first time. It is a once in a lifetime land grab opportunity and the incumbents are not strong. Compare that to US or European Insurtech ventures selling to consumers who already have a lot of insurance from big, smart insurance companies.

Zhong An has a good plane & crew

You can see this tailwind in the numbers. ZhongAn offers more than 300 insurance products and has written more than 7.56 billion policies for more than 535 million customers. They are clearly executing well. Having raised $900m there is every reason to believe they will continue to do so.

Possible Headwinds

The Chinese economy is in transition, from manufacturing and export led to a more broadly diversified economy driven by consumption and higher value services. The bull case is this is like betting on America a century ago. China bears point to all kinds of issues, such as excess debt, non-performing loans and massive construction over building. If this is your view of the China economy you will avoid the Zhong An IPO. I incline to the bull case but there will be much volatility and there maybe a 1929 type event along the way in China. Nobody knows. Anybody who says they know probably has something to sell you.

Another issue, raised by a Fintech Genome member is about innovators dilemma faced by Ping An insurance, which is a major shareholder of Zhong An but may also could be a competitor down the road. As @EricForgy put it, writing from Hong Kong with a deep knowledge of the insurance business:

“As interesting as Zhong An is, I actually think Ping An is more interesting and is likely to have an even bigger impact on the rest of the world. I think Lufax is just the beginning of their outward expansion. Zhong An itself is struggling to make profit. If you note the numbers imply many small policies (per customer). They are trying to branch into more profitable lines of insurance, but as they do, they will start competing with their parent Ping An. I’m interested to see how that dynamic plays out. I think Ping An wins in terms of technology and Zhong An is no doubt using a lot of Ping An’s technology. Ping An is also trying to export a lot of their AI tech.”

The numbers that Eric Forgy refers to show rapid growth in revenue but declining profitability. Investors can take two different points of view on this:

Either: this shows the whole proposition is flawed.

Or: this is like Amazon and in a market opportunity as big as Insurance in China, it pays to invest for growth.

Which it is will be revealed by a deeper dive into the financials, which we do not have yet. If you have any insights, please share them on this thread on Fintech Genome.

Disruption from a supersonic plane.

All things being equal, headwinds and tailwinds drive value. But a new supersonic plane will change the outcome and that new plane may need a different type of pilot or at least some retraining. A supersonic plane will cut the NYLON journey time to about 3 hours. The equivalent of a supersonic plane in Insurance will be almost real time settlement using blockchain (which we covered many times, one example here).

Zhong An clearly sees this and is investing in Blockchain. So I do not expect Zhong An to be blindsided by blockchain. When both tech and regulation is ready, I expect Zhong An will be ready. The key is that both tech and regulation need to be ready – just like with supersonic planes. This is one area where I would be confident that Zhong An will get it right, because in China big connected companies and government work closely together.

The Lending Club trajectory since IPO

Lending Club did an IPO at $15, rocketed up past $20 and then crashed to an all time low of $3.51 (where I was fortunate enough to buy after posting this). It is now around $5.20. I sold my shares (Lending Club is still a great company, but valuation now is less compelling than other opportunities).

I did not invest in Lending Clun at IPO, because I had reservations at a fundamental level which I posted here. At $15 there was no room for error. At $3.51, the price implied that the whole model was dead and the team was incompetent, neither of which was true.

Many stocks never give you this opportunity. You never get a chance to buy in below the IPO price. Think of Facebook and Salesforce; the price goes down a bit occasionally but not for long.

If you have any insights, please share them on this thread on Fintech Genome.

Image Source.

Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Michelle Moffatt – the agile fintech auditor

Regulatory pressure, new regulatory models, cyber security, big data, small data, new payments platforms and standards, digital identity – there is no question the risk landscape is increasingly mottled with potholes for both traditional financial institutions and fintech startups. Potholes big enough to cause a business a serious flat tire, or at least make the ride somewhat uncomfortable.

This week I spoke at the International Auditors Conference in Sydney, Australia, sharing the stage with a friend and ex-colleague of mine, Michelle Moffatt. We took attendees on a mobile payments discovery journey – from where we are today to the new emerging voice activated platforms and forays into virtual reality payments. The message we had for the audience was simple. To effectively audit these sorts of innovations you have to be across the fundamentals of the technology and be part of the product journey – from inception to launch.

Michelle previously headed up the internal audit function at Tyro – an SME neobank/challenger bank in Australia, Michelle now holds the title of Chief Risk Officer at a fintech startup Spaceship.

Michelle has long been a practitioner and advocate of ‘agile auditing’. She, like a growing number of auditors in the fintech space, is acutely aware of the rapidly changing risk landscape, not to mention the increasing pace of change.

There is nothing worse for an organization when one agile arm (often the development side of the house) comes up against a non-agile one. This has huge implications on the traditional internal auditors role – a function which historically is only introduced at the end of the project.

However there is a growing need for more auditors like Michelle in the space. Auditors that are willing to come on the journey with the team, yet retain their independence. While this type of cultural shift will be notoriously difficult for an incumbent, there is no reason why a startup can’t adopt this approach with their internal audit function from day one. This is one more way the incumbents’ benefit of scale can be eroded by smart technology and alternative cultural thinking.

After the conference I asked Michelle for some feedback on a number of themes that cropped up throughout her presentation. Here are her high level take-away’s.

Audit processes must mirror startup processes – so agile is key

Starts ups are moving quickly so to keep pace internal audit has to mirror the way they work. Agile audit allows you to give feedback early in the product creation piece so that what matters most is taken into account.

Audit culture in startup land verses big financial institutions has fundamental differences

Starts ups are generally more nimble, flexible and have a greater need for pragmatism and commerciality. They are typically flatter structures, and easy access to key decision makers ensures audit feedback & findings are implemented faster.

On the flipside, larger organizations have the corporate support and access to resources that startups typically don’t have.

Both cultures can learn from one another, or find leverage.

Adopting a learning mindset to emerging technologies is critical to the risk and audit function in fintech

Apart from key technical skills and a base level of proficiency yourself, whatever niche you operate in, you can’t afford to sit back and not engage or understand the technologies you are auditing. This includes potential competitive technologies.

Aside from emerging technologies, you need to understand the emerging micro-cultures of the teams you are auditing. I strongly suggest internal auditors attend meet-ups in their space and network internally. It’s a constant education process with the subject matter experts. What is great about this is it builds your own sphere of influence.

What advice would you give to other auditors working at challengers/neobanks, given your time working at Tyro?

1) Don’t freak out, figure it out.

2) Have an open learning mindset

3) Go back to basics – auditing 101

4) Apply common sense, be part of the solution and trust your gut.

What is the internal auditor doing differently 5 or 10 years from now?

Much of the routine work is already being replaced by scripts, with auditors providing the valuable analysis of the results in a commercial solutions orientated way. All internal auditors will have both commercial and technology as technical skills and will be able to plug and play into any audit, any time anywhere with the freelance model on the rise.

Digital Wallets: accessories or innovation

Wallets, purses, and handbags, have been female accessories and there is no sign of change on the horizon. Physical procession of IDs, credit cards, and cash, has been centralized in these accessories for ages. Men have been resisting the wrappers and filling front, back pockets of trousers or inside pockets of jackets. There is no adult that hasn’t been tormented by a misplaced, forgotten, or stolen “pack of personal” stuff (IDs, plastic, cash). Being able to take care of these possessions is a sign of maturity that any parent trains their teenager and delegates when it seems kind of safe.

The 24/7 mobile world seems to have moved part of the “pack of personal” stuff (IDs, plastic, cash) onto our smartphones. Digital wallets from Google, Apple, M-Pesa, and the likes are gaining traction and offering consumer banking kind of conveniences instead of cash and/or plastic. This is no shortage of mobile digital wallets even though end-users don’t seem to be spreading the word. I have yet to meet someone that looks at me in the eye and says “You cannot not have a mobile digital wallet! How can you live without that kind of accessory?”.

Screen Shot 2017-07-20 at 8.52.53 AM

Some are counting on the fact that they are centralizing the multiple credit cards or store cards for us. Others are marketing loyalty programs either from our banking service providers or credit card providers or e-commerce stores. More recently, mobile digital wallets that aggregate and exchange value across various loyalty programs market themselves as creating more value with such interoperability.

All these kinds of Digital wallets are simply a digital interface to access centrally managed accounts through a mobile phone. There is no genuine innovation in these kinds of services since security issues inherent to centrally managed accounts remain and the cyber vulnerability of such third-party trust mechanism is not mitigated. The costs that these third-parties incur in order to handle the promises of maintaining deposits and accounts, keep increasing.

True wallets are those that enable each of us to hold bearer assets (like cash or cryptoassets) without needing a central third party to hold and possess these assets, and at the same time be able to transact with these. The true innovation here is removing institutional risk.

The finance future that is being built right now is offering the ability to hold any digital bearer instrument directly.

A user’s wallet will be able to hold a variety of financial instruments; cash, equity in a company, commodities, or even non-monetary instruments such as identification documents, school records, and driver’s licenses.

This world is the one that Monetas, Lykke, Jaxx, Shapeshift are shaping up. Their wallets aren’t just an interface to a bank. Their wallets are not just another account with an institutional provider. They aim to offer control directly to us and we can choose to trust our smartphone, our hardware wallets (Trezor, Ledger etc), or our hard copies etc.

Once they manage to scale, they will become the darlings of the regulators because who doesn’t dream of a world with reduced cyber institutional risk. The world of this next decade, will get rid of the need for reconciliation between financial service providers, a complex, and expensive process.

Fintech innovation started as a war between start-ups and financial institutions. This culture is clearly not the flavor of the day anymore.

Today we are seeing the emergence of another type of race. Will it be some branch of AI that solves the complex problems around legacy financial processes (like reconciliation between financial providers or vulnerabilities of accounts etc)? Or will it be cryptography that replaces centrally managed processes all the way from central banks to financial service providers?

We will be watching the number of genuine Digital wallets (not the interfaces to centralized accounts) as it rises. The size and the activity in these wallets are the basic indicators to monitor at this stage of innovation.

Efi Pylarinou is a Fintech thought-leader, consultant, and investor. 

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Blockchain Bitcoin & Crypto Weekly CXO Briefing for week starting 24th July 2017

The Blockchain Bitcoin & Crypto Weekly CXO Briefing is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world. Each week we select the 3 news items that matter and explain why and link to one expert opinion.

For the intro to this weekly series, please go here.

News Item 1: South Korea Officially Legalizes Bitcoin, Huge Market For Traders

Decrypted: South Korean has made Bitcoin legit. The South Korean government has decided to pass a bill that would make Bitcoin transfers legal and provide a regulatory framework for Bitcoin trading platforms and exchanges.

Mr. Park Yong-jin, a member of South Korea's ruling party, is leading the changes. He is working on revisions and amendments that will provide a foundation for digital currencies in the country. One of these revisions is for the existing Electronic Financial Transactions Act and will provide the necessary legal approval for cryptocurrency transactions. The new set of regulatory frameworks for Bitcoin will facilitate the growth of the South Korean Bitcoin market.

Our take: Not so long ago, the future of cryptocurrencies in South Korea was uncertain and whether the country would take steps towards regulating digital currencies. But the recent news made the intentions of the South Korean government are very clear. The future of money is linked to cryptocurrencies and South Korea understands it.

Recent news of cyberattacks on local cryptocurrency exchanges like Bithumb, have made a significant contribution and helped create awareness to the masses about digital currencies. Also, despite the lack of regulations, the South Korean cryptocurrency market has been growing by leaps and bounds. The country has seen an increasing number of fintech startups that are building services for remittance and finance, establishing South Korea as a regional fintech hub. To further fuel this growth, the government lowered the capital requirements for Bitcoin remittance companies. Additionally, researchers from the South Korean central bank recently released a report that described how virtual currencies can coexist with fiat currencies.

South Korea recently legalized Bitcoin remittances. Worldwide, 230 million people send $580 billion in remittances each year, and South Korea, with a population of over 50 million, has a large remittance market. The most recent World Bank estimates show remittance inflows of $6.5 billion and outflows of more than $5.9 billion for S. Korea. The new regulations will create more competition in the financial services market. Traditional banks will now have to compete with new crypto players that are offering cheaper and faster services.

While interest in Bitcoin is exploding all around the globe, the jump seems to have been particularly strong in South Korea. Bitcoin has become incredibly popular in the country, with trade volumes going through the roof in recent months. This year South Korea made it to the world’s largest Bitcoin trading markets. The South Korean Bitcoin market processes over 14% of global Bitcoin trades and its the third largest market behind the US and Japan. While the South Korean government continues to legislate Bitcoin and cryptocurrencies, we can expect trading volumes to increase and the South Korean Bitcoin exchange market to surge.

Even though the new bill in South Korea is big news, its only part of the larger picture that is positioning Asia at the forefront of cryptocurrency world. Earlier this year, Japan passed a new law that officially recognized cryptocurrencies, Singapore announced it had successfully digitized its currency using Ethereum and China begun testing a prototype of its own national digital currency.

Clearly, Asia is leading the adoption and defining the cryptocurrency future. Hopefully, the rest of the world and countries like the US. will start waking up and get in the game before it’s too late.

News Item 2: $7 Million Lost in CoinDash ICO Hack

Decrypted: CoinDash, an Israeli startup, opened its planned Initial Coin Offering on June 17, in order to raise capital by selling its own tokens. The site was hacked minutes before the ICO opened to the public and around $7 million in Ethereum was stolen. The hackers broke into the Coindash website and replaced the Ethereum address that was posted on the site with their own address, so instead of money going to Coindash, the funds ended up going directly to the hackers.

While CoinDash ICO still managed to raise $6.4 million in a pre-sale to early investors, the hackers stole 43,488 Ether, around $7 million at the time of the theft, before the company discovered what was going on and was forced to shutdown their token sale. When Coindash realized what happened, they took down their website and posted announcements on the site and social media, alerting investors of the hack and urging them to stop sending money to the fraudulent address. After the hack, in an announcement posted on their website, Coindash said they would give tokens to the investors that participated in the ICO, before it was shutdown.

Our take: The CoinDash hack was not the only one this week. On a smaller scale, the InsureX ICO suffered from a similar type of hack, which caused people to send around 1,100 ETH to a bogus Ethereum address. Also hackers discovered a vulnerability in Parity's Wallet and exploiting the vulnerability they were able to steal approximately 153,000 Ether, estimated at $32 million. With the cryptocurrency market estimated at $100 billion, the concept of anonymous wealth is raising questions about the right to anonymous identity.

These hacks certainly raise a lot of questions about the state of readiness and security measures these companies are taking with their ICOs. The most important question they raise is how can you trust unknown companies to build the product they are claiming, when they cannot secure their website? Governance and trust are issues that are coming up more and more lately, when people talk about ICOs.

The CoinDash hack was very simple to execute and could of been easily prevented.

While rumors have surfaced and angry investors expressed that CoinDash ICO theft was an inside job (1, 2, 3, 4), it will be interesting to see how the CoinDash team handles credibility from this point forward, by reimbursing investors and not only, as CoinDash’s image is significantly damaged. I don't know and I don't really care if the rumors are true. The CoinDash hack could have been prevented or minimized if investors knew in advance the address where they were going to send funds to. Startups planning ICOs should publish their funding address in advance on multiple platforms, including news outlets and social media. Even if hackers mess with one site, it becomes hard for them to hack all of them.

I also read some posts about the Insurex hack, that questioned the use of a WordPress template for an ICO: "Hacks like these demonstrate why using a basic WordPress template for a company website -especially one with ICO plans- is absolutely unacceptable right now". Why? WordPress or WordPress templates are not the problem with these hacks. Its the people running them and using these technologies. They are the ones that need to make sure they plan their ICOs correctly. Sometimes when people start to see dollar signs, their vision gets blurred. Technology was not the problem with the CoinDash and InsureX ICOs hacks, instead it was blatant mismanagement and lack of proper planning. And that's why people are talking about governance, regulation and trust when it comes to ICOs. These kinds of attacks will occur more often and are proof of the lack of diligence behind some ICO projects.

Hopefully one of the items on future ICO planing checklists, will be the use of ENS. For most people, using 160 bit hexadecimal encoded hash string is not ideal. The Ethereum Name Service (ENS), brings human readable names to Ethereum, just like DNS addresses did for the Internet. ENS eliminates the need to copy or worse type, long hexadecimal addresses. With ENS, users can send money to someone at "someone.eth" instead of "0x4cbe58c50480…", and interact with a smart contract at "smartcontract.eth".

The Achilles' heel of cryptocurrencies has been the protection of private keys, that control someone's cryptocoins. Bitcoin and Ether transactions are completely transparent, and all transactions are recorded on the blockchain, a global, public and immutable ledger. On the other hand, blockchain wallets are completely anonymous. Until someone turns their cryptocurrency into fiat currency, it’s almost impossible to know who actually owns the digital wallet. Unlike fiat currencies, cryptocurrency theft is instantaneous, irreversible, and typically anonymous.

Yet, hackers have already found workarounds for turning cryptocurrencies to fiat currencies. For example, the hackers involved in the Petya/NotPetya ransomware attack used a bitcoin tumbler to basically launder the money through high-volume addresses, mixing stolen bitcoins in with legitimate transactions, making the stolen funds nearly impossible to trace.

Hacks like these make us question the security and legitimacy of ICOs and trusting unknown startups with our money. It remains to be seen if these hacks will curb the enthusiasm for ICOs, but certainly public perception is not improved by hacks like these.

News Item 3: Interview with Vinny Lingham of Civic.com

We are starting a series of interviews with people from the crypto ecosystem and today we’re kicking off with Vinny Lingham from Civic.com. Vinny Lingham is a South African Internet entrepreneur who is the co-founder & CEO of Civic and previously the founder and CEO of Gyft & Yola. Last month with Civics’ ICO, he raised $33 million and I thought it would be interesting to get his take on Bitcoin, Blockchain and the current state of ICOs.

Tell us a little bit about yourself, what you’ve been up to in the past and what led you to create Civic?

I am a serial entrepreneur. I was born and grew up in South Africa and got started in search marketing and the search economy. From there I moved to software as a service, then I got into mobile gift cards and now identity. The rational of what I’ve done is an evolution of my way of thinking of things. Initially, I started a company to make money, then as I developed a bigger view of the world, I moved to Silicon Valley and started to think of bigger problems. With my last company, Gyft, we solved the problem of physical assets, gift cards and codes, and through this process I learned a lot about identity, identity theft, how the payment world was under attack and the identity problem has not been solved. Before Civic, I had done three startups. Building companies is very satisfying, so this time around I wanted to build something big, strong, something long lasting that solves a long-term global problem and I picked identity as the space. Because I love Bitcoin and Blockchain, with my co-founder I started Civic, and eventually we want to use blockchain for voting to solve problems around democracy as a big global challenge for the world.

Growing up in South Africa, how did that impact your thinking and how did it drive you to do the things that you’re doing now?

Without doubt, being born in South Africa and witnessing the challenges, the Apartheid, the injustices, the debasement of currency, inflation and all these societal issues that you have in Africa and then coming to America and having a different view of the world, gave me a lot of insights for some ways to fix the world and make it a better place. I had a lot of drive being an underdog, and going to place like Silicon Valley you want to prove yourself. So here I am.

If personal data is immutable on a Blockchain, one cannot simply change it, what are the security risks that worry you and how do you protect against threats and hacks at Civic?

Well we don’t store the data on the blockchain, all that is stored on blockchain is verification hashes, that make sure that you can prove that you are who you say you are, and the actual data is stored on your device. If you lose your device, it’s the same as your files at home being raided. So, because every user stores their own data and the blockchain just keeps a record of verifications of that data, the risks individually are medium to low and the risks to the network are virtually non-existent. You would have to steal every person’s phone to get their data. So, if a billion people use it, you would have to steal a billion phones, and that’s not going to happen. The biggest potential risk to us, is quantum computing in about 10-15 years, but at that point we can just change the algorithms and produce some quantum resistant techniques to counter. I think there are enough people working on the quantum problem, but right now it’s not an issue and everyone believes it will be solved in time.

Civic is in a crowded space and there are lots companies trying to solve the same problem. How do you view your competition, who do you think your competitors are and how do you differentiate?

Really, we are the only company focused on building a global consumer identity brand and we’re going to continue to focus on that. Now, if someone decides to come and build a global consumer identity brand, then we’ll have a competitor to talk about. But for now, no one is doing it, we are the only ones and we’re going to keep doing what we do. Again, my guess is that doing B2B or selling to governments is kind of easy, it’s a well-defined space, but to capture the hearts and minds of consumers, well that’s not easy. We have a first mover advantage, we have a token out there, stronger than any other crypto token, from our initial coin offering and token sale. So, I think we’re in a good spot and we will continue on out exiting course and not spend a lot of time with our competitor’s products, as we are in different markets.

Being a serial entrepreneur that has raised money from VCs, what do you think of ICOs in comparison with fundraising though the traditional venture capital model?

Look, I think the venture capital model provides forms of governance and support at a micro level and what ICOs and token sales provide is lack of governance at a macro level. You go from having one or two VCs funding the business, to something like 10,000 people. The flip side is there is no real governance, so these people must really trust you. It’s all about the team. Can you trust the team to execute by themselves or do they need parental supervision? And that’s where the big time is going to happen in the space. So, I don’t think venture capital is going to disappear, but I think it’s going to be really diminished for crypto companies, to an extent. I think we will see a hybrid, where you’ll see VCs are moving earlier in the process to help smaller companies build their products and provide governance. But I think the bigger raises, the series A and B funds are going to be disrupted in this space. They can’t really compete with a crowd sale on crypto right now. I think this will become the general way of funding. The industry is going to respond negatively to these uncapped, egregious token sales, where ICOs are raising hundreds of millions of dollars, without a plan to use the funds. Pure greed to an extent. The market has reacted violently to that already and the Ethereum market is down massively because of as these uncapped projects, which create a liability towards the Ethereum ecosystem. We’ll see what happens, but I think the market will self-regulate by price and we’ll find people being a lot more circumspective of where they put their money, and hopefully slower and steadier growth will prevail. I really think, we can’t have people raising a billion dollars when they haven’t proven anything yet. It’s very harmful.

What other problems to do you see and what can be done?

Well, the I think it’s the hard fork situation of Bitcoin right now, the whole scaling debate, that’s the biggest impediment to stability in the space. With Bitcoin stable, everything else can sort of function, but it’s not stable and that presents some serious existential risks for Bitcoin now. I think the ICO mania has put a damper on the space, it’s a function of supply and demand and a matter of people disciplining themselves. Right now, even a professional trader or someone that’s in the space heavily can’t keep up with the number of ICOs and token sales happening every day. You can’t do the due diligence on all these projects, it’s just too much of a crapshoot and you don’t know what you’re going to get. As a result, you’re going to have market expense to research all these projects, even for the best of us it’s not easy to keep up, and giving people more money than they know what to do with is not a healthy situation.

I am sure you heard about today’s Coindash ICO hack. What suggestions would you make to projects planning their ICOs?

First, contact Civic, because it would impossible to happen with our technology. You must scan a QR code using a mobile app and the code can only be generated and released from our servers at Civic. We’ve done it very securely and we’re playing around with the idea of making what we did available to more companies. So, we are open to being the identity vendor and partner for preventing that sort of thing.

What do you think we can expect on August 1st with SegWit and the possible fork? Are we going to have a fork with Bitcoin?

I’ve been Mr. Doom and Gloom for six months, and nothing I’ve seen so far has made me change my mind. We may have a hard fork, but there’s definitely going to be chain split.

Opinion: Pathological BIP91/UASF Scenarios

BIP91 is locked in on the Bitcoin network, but to put things in perspective, its only the first step towards Segregated Witness (SegWit) being activated. Even though we've reached an important milestone, there are several more things that need to happen before SegWit actually activates and increases the capacity of the network.

The sole purpose of BIP91 was to lower the threshold for SegWit activation. The BIP141 proposal, which was released more than a year ago, required 95% of the miners to support it, in order to activate SegWit. In a sense, BIP91 is simply a vote on whether the existing SegWit proposal should be lowered from a 95% threshold, to an 80% threshold.

Even though more than 80 percent of the miners have signaled BIP91, that doesn’t actually guarantee anything and it doesn’t necessarily mean that these miners will finally activate SegWit.

The BIP91 lock-in is just the first step to activating SegWit on the network. The BIP91 lock-in was achieved with relative ease. The steps that follow are much more complex. So for now, there is no reason to get your hopes up just yet, as this lock-in period means nothing, until change actually happens on the network. Signaling intent for a solution and effectively supporting it, are two very different things. The number of nodes signaling for BIP148 has actually increased at a faster rate over the past week. Miners might be signaling for SegWit, but that does not mean that they are actually running the right software for Segwit2x. Things can still take a very different turn. BIP91, BIP141 and activating SegWit are only part of the equation. And let not forget November, when SegWit2x’s built-in hard fork happens.

There is a lot of speculation about that is finally going to happen, but for now we'll just have to be patient and see how things develop. But given the extremely positive reaction for BIP91, we are already seeing people who were holding off on Bitcoin entering the market again.

The market is gaining confidence, in light of a positive outcome to the scaling debate, which drove the price of Bitcoin over $2,800 this past week. I think when SegWit is activated around the end of August, we'll see the price of Bitcoin go well over the $3,500 and the entire cryptocurrency market turn bullish again, with prices surging across the board.

Ilias Louis Hatzis is a Blockchain entrepreneur who writes the Blockchain Bitcoin & Crypto (BBC) Weekly CXO Briefing each Monday.

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Wrap of Week #28: Bitcoin, Riskalyze, Uport, Nigeria, Eos Venture Partners, Corporate Venture Capital

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China and India – bright spots in Corporate Venture Capital recovery

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Corporate Venture Capital (CVC) has seen a steady rise for the last few years. Between 2011 and 2016 the number of large corporates establishing their own Venture Capital capability nearly tripled. Last year CVCs participated in about 40% of VC deals that happened in Asia. With major global events such as Brexit and Trump dampening investor appetite in VC funds, CVC deal volumes saw a global dip of 2% last year. However, there are data points indicating its likely to take off in a big way this year.

The CVC world has had challenges due to the compensation structure for the Partners and lack of nimble decision making capabilities. Partners at CVCs have traditionally not been compensated as well as a Partner in an independent VC fund. Also, if the VC arm of a Corporate cannot make independent decisions in quick time, it affects both the startups and the corporates. Sometimes CVCs lose good deals due to their lack of agility, but often they hurt startups by making them wait for investment decisions, and turn them down after a few months of due diligence.

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The brighter side of the deal is that, once the deal has gone through, the Corporate can be a massive launchpad for the startup. And for this very reason, Startups seem to be more forgiving of the red tape and the bureaucracy that they have to go through to get the deal closed.

That said, there is no denying that CVCs have evolved their models over the last few years, and are here to stay. In Asia, Softbank announced the launch of their $100 Billion fund, with $25 Billion of their skin in the game and Apple contributing $1 Billion, the fund has seen good traction since launch. The other big announcements were Baidu’s $3 Billion fund and Samsung’s $1 Billion fund.

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CVCs in India had a good year 2016, until Q4, where only 4 deals were closed. However the general trend last year was that the deal count went up, but the size of the deals came down compared to 2015. This is in contrast to most other top VC ecosystems in US, China and Europe where capital was moving towards more matured (growth stage) firms. VCs in India preferred smaller sized deals in early stage firms, resulting in a higher deal count. The only other region that had had CVC investments go up in the first half of last year was UK, but there was a slow down in H2 2016 post Brexit.

China on the other hand, had a slowdown in CVC investments last year after a strong 2015. This trend is expected to change because, between China and the US there were about 53 new CVCs that were launched last year. They are expected to get more active this year. Also, many VCs and CVCs are eyeing China for Fintech deals in a big way since the start of 2017.

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If CVCs in India perform anywhere close to what they did in Q1 and Q2 2016 and if the new CVCs in China start deploying, we are likely to see a CVC recovery. With VC investments shrinking globally over the last eight years, and CVC’s slice of the VC pie at an all time high (17%), the recovery of CVC might just be what the VC industry needs.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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