2018 Year-end review through 3 distinctions


In my first Daily Fintech post[1] of 2018, I wrote about Vitalik who “sounded the alarm on Twitter as he has become deeply concerned about all crypto communities getting lost in a pile of monetary gains instead of being ambassadors of a radical, positive and purposeful societal change.” (BTC/USD around 14k).

12 months later there is no FOMO left in the crypto markets. Decentralization has taken a regulatory hit in more than one ways. From exchanges being forced to shut down or find an accommodating jurisdiction (Binance) or become more centralized (Lykke, Shapeshift).

The blockchain ecosystem is more focused on solving scalability issues and has had to put aside some of its “decentralization” ammunition.

The bottom-up blockchain movement has been embraced by corporates/institutions who experiment more and more. 2018 has seen more supply chain and logistics blockchain projects go live (IBM & Maersk, Wall Mart).

As the New Year starts, let’s all reflect on three main distinctions that I have identified as essential in this tech wave:

Traders versus investors.

Corporations versus communities.

Private success versus social impact.

Blockchain Traders & Investors. In 2018, the crowd got slaughtered because it fell into the Crypto Currency Trading trap. Investors with all sorts of exposures in Blockchain ventures, where tortured with regulatory guillotine threats.

Sadly, retail investors got cut out of the next generation of crowdfunding promised by ICOs.

Corporations versus communities. 2018 was not the year that the corporate structure lost grounds to a bottom up community structure of governance. In traditional Fintech, we saw more unicorns globally – Ant Financial, Stripe, Lu, One97, Robinhood, Coinbase, Sofi,. [2]  “Go Big” remained the way to go in Capital markets.

Fintech acquisitions were strong with an increase in total dollars due to mega deals. Notable acquisitions from incumbents include iZettle, Kensho, Seedinvest, Quandl, Cashcare, Lumo, Poloniex, Bittrade, Chain, ….

And incumbents like Blackrock, Vanguard, State Street, and Fidelity, continue to grow their assets managing close to $17trillion and Vanguard brought $1billion a day of new money last year[1]. I call this the mushrooming of the Buy-side[3].

Even in the Venture Capital sector saw the rise of mega-funds and a shift of focus towards later-stage and large dollar investments. Early-stage entrepreneurs are left with less services from VCs as they favor opening their networks and sharing their wisdom for those with the network effects already visible. I call this another new financial exclusion trend.

Divestitures of Fintechs from incumbents were also notable, showing that Fintech/Finance partnerships are as challenging as marriages. BPCE’s purchase of mobile bank Fidor in 2016 seemed like a 21st-century fintech love story. In November 2018, the Fintech romance ends with a cultural clash. Chris Skinner, wrote Clash of clans … or new bank versus old bank (Fidor, BPCE). 

The only disruptor of the corporate structure and its strategies was the appearance and use of Utility tokens that promised to build large, decentralized communities with network effects. In 2018, the narrative of the Utility token potentially revolutionary use, got crushed[4]. Lots of peculiarities exist and we can only say that we are in the experimentation phase still.

Utility tokens are not dead by no means IMHO. I foresee that they will re-emerge in some combination once the markets take a breather.

Private success & social impact. In 2018 Sustainability gained a tad more ground in our consciousness. In spending choices and even in investing[5]. There is more awareness of the silos that persist in our current setup which has finance and tech on a throne and Sustainability and Social impact as an add-on.

#DeleteFacebook proved not to be enough, for the Self-Sovereign identity movement to attain mass adoption. From my personal anecdotal evidence, not even 10% of people know that there is an alternative to being captive through our data. The Internet is broken but the narrative is not strong enough by any metrics. We remain trapped in an ever-connected world in which loneliness is increasing simply because it lacks purpose. As soon as we use technology to turn purpose into a competitive advantage, then social impact a private success won’t be competing and we will be living in a better world. Easier said than done, but the tools are there.

Looking forward to 2019

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[1] Vitalik’s concern hit the nail on the head: The seasaw problematic

[2] One97 – From selling Astrology services over the phone to a Global Fintech Unicorn

[3] What has changed a decade after the financial crisis?

[4]Like blind men groping around an elephant, we all see Utility Tokens from our own perspective. This Chapter aims to offer a wide-angle view so that we can actually see the elephant.” In Investing in Utility Tokens.

[5] Stop Borrowing from the future

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

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