This Week in Fintech ending 20 August 2021

This week our experts brought you the following insights based on their experience as investors, entrepreneurs & executives.

Monday Ilias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at  Kryptonio a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords and Weekly Columnist at Daily Fintech) @iliashatzis wrote $600 Million DeFi Hack

This week Bitcoin jumped above $47,000 and on early Sunday the market capitalization remained stable at around $2 trillion, up 0.5% following a remarkable week. Bitcoin is up four weeks straight and is on pace for its second monthly advance. Overall, it’s seen its fastest 21-day advance since February, the last time it was in the midst of vaulting toward records. The broader market remained in the green with Ethereum continuing over $3,200, Ripple gaining 20% and Ripple and Stellar, Dogecoin, and Cardano gaining 4 to 10 percent. Trading volumes on all exchanges are up by 4%, indicating that the market is moving to extreme greed and that investors are regaining their confidence. Once again, the cryptocurrency market is defying the odds against it, the negative criticism about its impact on the environment, and regulatory crackdowns lawmakers around the world are have already put in place or are planning on. Yet, last week the market posted its biggest record for a DeFi hack. In a tweet posted on Tuesday, Poly Network reported that hackers stole over $600 million. This is the biggest in DeFi’s history. The hack resulted in $273 million stolen in Ethereum tokens, $253 million in tokens on the Binance Smart Chain, and $85 million in USDC on Polygon. While the hackers returned some of the assets they stole, who should take responsibility for it?

Editor note: DeFi is a honeypot for criminals because there is no external cop enforcing rules and there never will be. A voluntary code of conduct with a brand enforced by members is the only way.

Tuesday Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy wrote: Part 3  Who will fund projects that end our obsession with growth at all costs.

Imagine these two pitches  to investors:

A. We will get to $10m annual revenue with $7m costs and $3m Free Cash Flow. After that growth will be nominal.  At best investors will value that $3m Free Cash Flow at some discount to the US Treasury 30 year return.

B. We will get to $100m annual revenue with $200m costs and losing $100m a year. After that we will go into hypergrowth to get to $500m annual revenue with $300m costs and $200m Free Cash Flow. Investors issue a press release about funding the latest unicorn with lots of capital.

Now imagine you are one of 8 billion people living on our planet. You want many more A pitches. Capitalism has failed us. What we need is a way to invest in 10 companies of Type A with an aggregate of $100m annual revenue with $70m costs and $30m Free Cash Flow. That is such a simple thing to do yet we do not have it. We have no way to fund sustainable capitalism.

Editor note: This is simple stuff to fix, kindergarten level vs the PHD level of fixing our climate crisis.

Wednesday Alan Scott Managing Director EMEA at 24 Exchange @Alan_SmartMoney wrote his weekly roundup of Stablecoin news.

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Thursday

Rintu Patnaik, an Insurtech expert based in India, wrote: Parametric Micro-Insurance: The Opportunity, Enablers and Distribution Models

 

Risk management and social protection are generally well established in developed countries, on the back of insurance markets. North America generates over half of nonlife premiums globally, with the US being the largest market. Despite this, a sizeable chunk of the population even in the US economy is uninsured or underinsured for natural disasters, with low-income households lacking standard property or renters coverage with policies excluding disasters, such as flood and earthquake. On the other hand, these groups suffer disproportionately in the aftermath of disasters and recovery is arduous. Follow-on financial impacts, such as declines in credit scores, can persist for years. Devoid of safety nets, disasters become tipping points into abject poverty, with loan defaults, accumulated debt and erosion of small savings. 

Editor note: Fascinating look into how parametric microinsurance can help the poor deal with natural disasters when traditional insurance cannot help.

Christian Dreyer @x3er, the Swiss based CFA who focusses on how XBRL changes our world wrote his weekly roundup of XBRL news.

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Friday Howard Tolman, a well-known banker, technologist and entrepreneur in London, wrotehis weekly roundup of Alt Lending news.

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