Announcing Our New Author Ilias Louis Hatzis doing Blockchain Bitcoin & Crypto CXO Briefing on Monday

This has been quite a journey. I started Daily Fintech on 29 June 2014. In those days, I wrote every post. Just under 9 months later, that all changed when Efi Pylarinou started writing every week, an event memorialized here at the time (March 2015).

Then Jessica Ellerm joined to write on Wednesday about Small Business Finance and Arunkumar Krishnakumar joined to write on Friday about consumer banking & finance.

Today is another big day, because from today I will only be writing one post per week. That is the nearly 3-year journey from 5 posts per week to one post per week.  It took 3 years because I would never compromise on quality. Daily Fintech is about high signal to noise ratio and respecting the attention of our senior and influential subscribers (nearly 18,000 as I write, coming from 130 countries).

The high signal to noise ratio is most critical to the Monday slot when we do the Blockchain Bitcoin & Crypto (BBC) Weekly CXO Briefing. Read more about this Other BBC News here. This is a market that has a great number of specialist publications and that is also being covered occasionally in most mainstream publications. Our mission with the Other BBC News is not to preach to the saved who already read everything that comes out every day. Nor do we want to write the occasional post to introduce this complex subject to a mass audience. Both are hugely valuable, but not what we do. Our mission is serve the CXO level business leaders, entrepreneurs and investors who will use this technology to change the world. These are super smart people who want to be in the know and in the flow about Blockchain Bitcoin & Crypto – without getting stuck in the weeds.

Serving that super smart audience requires deep knowledge of the space, plus a learn-it-all attitude in a world that is changing so fast, plus an ability to communicate complexity without jargon, obfuscation or dumbing it down

That is why I was delighted to come across Ilias when we chose his post on regulation as our weekly Opinion to link to during Week 8. Then he agreed to write our post this week. From next Monday it will always be Ilias.

Ilias is the “other Greek who lives and breathes Bitcoin, Blockchain and Crypto”. I am referring of course to Andreas Antonopoulos as the more well-known Greek in this space. It is wonderful to now have two such talented Greeks on the Daily Fintech team, as Ilias will be joining our famed Femtech leader, Efi Pylarinou.

Ilias Louis Hatzis is an Internet entrepreneur that started his first company, an internet search engine, in the mid 90s during the dot-com era. Later on he founded several Consumer Internet and AdTech startups and went to work for Google and JWT. As well as still being an active entrepreneur, he mentors startups at the MassChallenge, MITEF and other startup accelerators and competitions.

Having lived and worked in America, Ilias is currently back in his native Greece. So he has the global perspective that our subscribers from 130 countries prize.

Start your week with Ilias and the Blockchain Bitcoin & Crypto Weekly CXO Briefing in your email by 7am CET. It should take you 5-10 minutes to read properly (and a minute or less to skim if it is one of those crazy Mondays).

You owe it to yourself to invest 5-10 minutes a week to learn about the technology that will change your company, your career and your world. Don’t get blindsided by important news. Be in the know and in the flow – without getting stuck in the weeds.

Each week we select 3 news items that matter. We keep it to 3 because we know that you are busy. If it is a big news week, it is our job to find the 3 news stories that matter so that you get a high signal to noise ratio.

For each news item we offer News Decrypted, which explains why investors, bankers and entrepreneurs should take notice. We include a Glossary if we have to mention some critical jargon.

Then we offer Our Take on the underlying trends represented by this news and “where the puck is headed”.

In addition to 3 news items, we select one analysis/opinion/insight piece each week on a controversial subject that we think is excellent.

Our point of view is that all three are important – Blockchain Bitcoin & Crypto. There can be private, permissioned Blockchains without any Bitcoin or any other Cryptocurrency. There can also be Cryptocurrencies other than Bitcoin (Altcoins) and distributed ledgers that use some form of Crypto other than Blockchain. We cover them all.

Please welcome Ilias who will be doing the difficult job each week of parsing the torrent of news and opinion to come up with important signal along all that exciting noise.

How Bitcoin will disrupt Wall Street West and East

We will be discussing how the Wealth Management business can profit from Fintech by gaining access to previously inaccessible assets and managers, at our first Round Table in Geneva on 28 June. The Bitcoin, Blockchain and Crypto revolution will be one of 7 subjects on the agenda.

Today we look at how Bitcoin will disrupt the current nexus of power between top tier Silicon Valley VC Funds and bulge bracket investment bankers in New York – what I call Wall Street West and East. This may lead to new opportunities to invest at the early stage with better risk adjusted returns than current models. Or it may lead to scams and bubbles and become a footnote in history. Or, like most disruptive innovation it might be scams and bubbles first and then change the world later.

Wall Street West is my name for the permanent aristocracy of top tier VC Funds on Sand Hill Road. Today they are far removed from their founding days as early stage investors. Today they are more like momentum investors who accumulate large % stakes in private companies before taking them to their connections in Wall Street East (i.e. the bulge bracket investment bankers in New York).

John Doerr of Kleiner Perkins Caufield & Byers famously called the personal computer industry’s growth from zero to $100 billion in 10 years “the greatest legal accumulation of wealth in history.” Then he saw how that the PC industry was a small wave compared to the Internet which went from zero to $400 billion in 5 years. “There are waves,” says Doerr, “and then there is a tsunami.”

It has been a great ride, but it is coming to an end.

The tsunami referred to by John Doerr is what we will in future call the Centralized Internet and recognize as a 20-30 year period in a multi-century history of the Internet. The next tsunami, powered by Bitcoin, Blockchain and Crypto will be the Decentralized Internet. This brings the Internet back to its founding days as a decentralized network. Bitcoin, Blockchain and Crypto technologies will enable the Decentralized Internet by creating a digital value exchange system.

The Decentralized Internet will also be funded in a decentralized way. This is what will disrupt Wall Street West and East. The value creation will be even bigger than the Centralized Internet, but these gains will be much more broadly distributed (good news for reducing inequality).

The Decentralized Internet will be powered more by the Rest than the West.

A big theme on Daily Fintech is “first the Rest then the West”.

For most of the 20th century, technology was limited to the West. Countries in the Rest (formerly known as developing, then emerging, then rapid growth economies) were “tech deserts” until those economies started to open up (first China, then India, then Africa). Then technology adoption started to flow from the West to the Rest; the last decade has been a boom time for Western tech firms selling to the Rest.

Now the flow is reversing as technology adoption starts in the Rest and then goes to the West. For example, look at Xiaomi to see the future of mobile phones and Alibaba for the future of e-commerce and Paytm for the future of mobile money.

Firms in America and Europe will profit from this shift, but will not drive the shift. This is the same as Britain making money investing in America (when America was an emerging market); British firms made money, but American firms drove the shift and took the lion’s share of the profits.

This megatrend is not limited to Fintech, but within Fintech mobile payments and mobile e-commerce is the big disruption and that is happening first in the Rest and then will flow to the West. Note that I am referring to technology adoptionWhere something is invented matters a lot less than where and how it is adopted, as Steve Jobs taught us after wandering around Xerox Parc and seeing the first graphical user interface and using that for the Mac. Network effects and branding have replaced patents as the technology moat.

The Centralized Internet was dominated by Silicon Valley companies. The top tier Silicon Valley VC Funds could network with the best ventures without using more than half a tank of gas in a Ferrari. This was fortunate because VC Funds have had trouble globalizing and many have given up the challenge.

This opens the market up to new innovation such as Initial Token Offerings (ITOs). These are currently at the bleeding edge stage, with lots of risk, scams and sketchy characters that are typical of the early days of a disruptive technology (think Silk Road and Mt. Gox). You can learn more about ITOs and attempts to create a self-regulatory code of conduct on this discussion on the Fintech Genome.

This is still very early days, but the key point about Initial Token Offerings is that they are a) permissionless and b) global. Anybody can invest from anywhere. This is the power of a global network that the top tier VC Funds catalyzed with their investment in Centralized Internet players. Now the genie is out of the bottle and those same top tier VC Funds have to compete on a level playing field with anybody who has capital and insight.

Watch out when this tsunami crashes on the shore

Bull markets end in a frenzy. The bull market in Centralized Internet ventures is currently in a frenzy. People look for historical analogies to the Dot Com era, but as the old saying goes “history does not repeat but it does sometimes rhyme”. Most of the frenzy/overvaluation this time around is in private not public markets. For more data on this, see this post.

This led to a strange inversion of the norm during 2015 and 2016 when private companies were valued higher (on paper at least) than public companies.

Thanks to artificially low interest rates for a long, long time, even public stocks are overvalued on historical norms. So the ending of the Centralized Internet will be brutal. From this rubble will emerge the new Decentralized Internet.

Liquidity

For many reasons, the IPO bar keeps getting higher. So ventures need much longer and much more capital before getting to liquidity. This is good for really big funds in the short term, but will end badly when the public/private inversion ends. ITOs in contrast offer liquidity from day one.

Don’t need $ billions for data centers

The key point about the Decentralized Internet is that you do NOT need $ billions for data centers, because the network is powered by the computers of the users in the network.

This ends one of the wonderfully simple ways that top tier VC Funds made money. They tracked ventures until they saw signs that hyper-growth was about to start, knowing that large amounts of capital for data centers (and other things) was needed to fund that hyper-growth.

Some centralization, but permissionless

Bitcoin today has a scalability problem. For more, read this post. To put that in perspective, pundits for decades have talked about the Internet’s scalability problems (and yet it has scaled very well).

To scale Bitcoin, it is likely that some form of offchain processing is needed; about 80% of Bitcoin transactions today are offchain. The cyber purist view that every human will run a full node that records every transaction is clearly not technically feasible at scale.

It is likely that this will happen in future through something like Lightning Network.

This is not the post to explain how Lightning Network works. Here are a couple of good introductions:

https://www.youtube.com/watch?v=jUhe7J6-aG0

https://www.youtube.com/watch?v=BFXrTS_MJlQ

The assumption about offchain processing is that it has to be centralized. Offchain processors today such as Coinbase and Bitpay are centralized.

That assumption is false. As we have seen from services such as Skype, large scale services can be decentralized. However, there is something more important than centralized vs decentralized which is permissioned vs permissionless. Skype is decentralized but it is controlled by Microsoft. The idea behind Lightning Network is that anybody can choose to run a full node or a Lightning Network node. Permissionless adds economic incentive and makes it scalable.

A global Wall Street, spanning both early and late stage that is truly decentralised and permissionless will change the game.

Join us in Geneva on 28 June

One of the subjects for our Round Table in Geneva on 28 June will be:

Bitcoin Disruption and the possibility that permission-less innovation and decentralization will change the game.

Note; this is one of 7 subjects on the agenda.

If you are interested in attending this Round Table, please email julia at daily fintech dot com and we will send you the full agenda and other details. Please note that this Round Table is invite only for Family Offices, Private Banks and Asset Managers.

When money is data, data protection becomes job number one for banks

We will be discussing how the Wealth Management business can profit from the Fintech revolution to gain access to previously inaccessible assets and managers at our first Round Table in Geneva on 28 June (which we announced here)

Today we look at a basic question – why we need banks. The answer is quite simple and goes back to the American Wild West days, when it was safer to store your hard-earned money with a bank than under your mattress or in a safe at home.

In today’s Global Digitized Wild West, the problem is the same; only the style and techniques are different. The modern version of Butch Cassidy and the Sundance Kid are getting monitor tans in some basement somewhere as they hack into systems to steal data. Stealing data might be an indirect route to stealing money (via ransomware or phishing to get codes to transfer money) or in the Cybercurrency age it might be direct (Bitcoin is simply data, so if you steal the data you steal the money).

It is a very old-fashioned concept, but the execution is complex as it involves multiple dimensions such as:

  • Is data private by law? For example, Switzerland scores high on this front.
  • Cybersecurity (in all its many complex forms).
  • Physical server security. Safe from physical disruption (weather, terrorism) and from external breaches by thieves and with hot backup if the unexpected happens.
  • Staff security. This includes issues such as vetting and processes to avoid collusion.
  • Government/Taxpayer Insurance such as FDIC.
  • Private Cybersecurity Insurance (see this post for more)
  • How Custody works today and how it will work after Blockchain based Custody goes mainstream.
  • How is the bank perceived in relation to data protection? This can change fast with a big breach.

Wealth Managers, like doctors, must “first do no harm”. They must first protect assets and keep them safe.

Then Wealth Managers, must grow that wealth. Our Round Table is about how to grow wealth. Growing assets is not a scale game, it is all about the mix of talent, insight and discipline, but protecting assets is a scale game. That list above is not something a small firm can do.

So we see a value chain forming with big players offering the data/asset protection at scale to smaller, agile firms innovating in asset/manager selection. That value chain is changing as we enter the cyber asset world with assets stored on distributed ledgers.

That value chain is also changing as a new breed of micro asset managers emerge from the Fintech marketplaces in fixed income, equities and other asset classes. That will be a big subject for our Round Table in Geneva on 28 June. If you are interested in attending this Round Table, please email julia at daily fintech dot com. Please note that this Round Table is invite only for Family Offices, Private Banks and Asset Managers.

Daily Fintech is Pleased to Announce Our First Round Table.

 

 How tech innovation enables investors to gain access to previously inaccessible assets and managers.

On the 3rd anniversary of our founding, we are hosting an invite only discussion in Geneva on the afternoon of the 28th of June to explore investing in new assets and new managers created by the changes in Fintech.

Attendees include Family Offices (both Single and Multi), Private Banks and Asset Managers.

The format encourages peer to peer knowledge exchange by having a maximum of 20 attendees, no sales pitches, absolute confidentiality (no press and Chatham House Rule), and an expert Moderator Bernard Lunn, CEO of Daily Fintech.

Topics covered will include:

The changing business landscape due to digitization, transparency, commoditization and regulation.

New Fixed Income Assets coming from Lending Marketplaces, Supply Chain Finance, and other open platforms in consumer/SME loans and corporate bonds

New Equity Assets emerging from Crowdfunding platforms, block-chain based token offerings, peer networking/club deals and quant approaches to VC.

New value chain partnerships emerging from Open Data and Open API access.

New managers emerging from these marketplaces using the copy/follow model.

A Changing Delivery Stack including the emergence of real time settlement and the race to zero in equities brokerage and asset allocation.

Bitcoin Disruption and the possibility that permission-less innovation and decentralization will change the game.

Global Regulatory Backdrop in a politically uncertain world.

As Daily Fintech is based in Switzerland, we are partial to Swiss Wines! We look forward to a small tasting with guests at the end of our gathering.

Thank you to the following people on our advisory panel:

Michael Warszawski, CFA: Senior Managing Director at Manchester Capital Management.

Nicholas Hochstadter: IBO – We Compare Investment Performance.

Alexandre Gaillard: CEO at InvestGlass.

Marc Lussy: Mentor at F10 Incubator & Accelerator

If you are interested in attending this Round Table, please email julia at daily fintech dot com. Please note that our June 28th Round Table is limited to those who fit our criteria of Family Offices, Private Banks and Asset Managers.

Who wants to write the Thursday Insurtech post on Daily Fintech?

On the 6th March we posted our Daily Fintech author search.

At that time, we were looking for two Authors – one on Insurtech on Thursday and the other on consumer banking and finance on Friday.

A few weeks later, on 24 March, we announced that Arun was taking over Friday, writing about how technology is changing consumer banking. You can see his posts here.

Now we want to focus on finding an Author to cover Insurtech on Thursday.

If you are passionate about Insurtech and you have what it takes to join our constellation of stars, please send an email to bernard at daily fintech dot com.

You can read more about our Authors here.

We have 5 Categories that coincide with the 5 days of the week:

* Monday = Blockchain, Bitcoin & Crypto

* Tuesday = Wealth Management & Capital Markets

* Wednesday = Small Business Finance

* Thursday = Insurance

* Friday = Consumer Banking & Finance.

Please read this to understand how we define and categorize Fintech.

Our Authors are globally recognized thought-leaders in their domain who are often speakers and moderators at industry conferences and highly valued consultants. Writing for Daily Fintech will connect you with our highly influential audience (currently over 17,000 subscribers).

Note that Daily Fintech is not an open platform. We only accept posts from Authors who commit as defined above. We are passionate about keeping a high signal to noise ratio for our subscribers.

Our Authors must:

* Commit to a weekly post within a specified domain and follow editorial guidelines. You must post on the same day/time every week within your domain. WordPress has a scheduling feature, which makes this easy to execute.

* Agree that there is no cash compensation and that Daily Fintech owns the content.

* Be free from corporate policies that might constrain what they could write. We want free agents who want to build their knowledge, network and reputation in this big, fast changing market.

* Follow journalistic best practices. Disclose any conflicts of interest, quote sources accurately and link to them, follow the usual rules about copyrighted content.

*Respect the time/attention of our subscribers. They are senior leaders. Offer them something they cannot get elsewhere and respect their time.

Key attributes of Daily Fintech Authors:

* Domain experience. We look for people who know the subject from real work experience.

* Intellectual Curiosity. We look for people who are “learn it alls not know it alls” and who recognize that whatever they learned in the past may change in the future.

* A passion for explaining complex subjects in engaging ways. We believe that real experts can make complex subjects accessible to people who have little background in that subject.

* Have a global mindset. Our subscribers are global. Today our Authors are in Switzerland, UK and Australia. We would like new Authors in America and Asia, but any location is acceptable as long as you have a global mindset.

Within these constraints you get a lot of creative freedom:

* We encourage our authors to write in their own style, with articles that are friendly and accessible and may draw on personal experience.

* There is no set length. Do whatever fits the subject; just be insightful.

* Post genre. You can do whatever suits the subject. You can do a trend analysis, interview (text or audio or video), single company analysis, landscape report. Whatever the format, offer new insight or knowledge that is helpful to subscribers.

Have a look at our editorial philosophy. If you are passionate about Insurtech and share this view of how to respect the attention of the influencers and leaders in this market, please send an email to bernard at daily fintech dot com.

Announcing our content partnership with Venture Scanner 

In God we trust, everybody else please bring data (thanks Mr. Deming).

Daily Fintech is in the insights business. Every day our awesome Authors come up with fresh insight for the global Fintech leaders in our rapidly growing base of subscribers from 130 countries.

Today we are announcing our partnership with Venture Scanner so that our insights are packed with a lot more data.

Venture Scanner is an analyst and technology powered startup research firm. Their customers use them for a one-time snapshot or continuous coverage on any emerging technology sector (not just Fintech, which is all we are interested in). Their customers research the categories that make up a sector, learn about the companies within categories, and analyze funding and operational data.

Daily Fintech readers can get a 25% discount for access to the Venture Scanner landscape reports and datasets.  Use discount code: VSDailyFintech. This promotion is valid for next 10 days and expires on April 26, 2017.

We will use the data provided by Venture Scanner in two ways:

  1. Test a thesis. We often observe a trend from conversations in the market. When we hear the same thing from lots of smart people in the market, we see a pattern/trend that is worth writing about. Using Venture Scanner, we may be able to get some data to test that thesis.
  2. Immerse in data to see what emerges. Sometimes insights emerge if you just swim around in the data.

Our first post using Venture Scanner data will be tomorrow on InsurTech (as Thursday is always InsurTech day on Daily Fintech).

Welcome Arun to Daily Fintech

Arun (Arunkumar Krishnakumar) is taking over the Friday slot – where we cover how technology is changing consumer banking and finance around the world.

Arun epitomizes our mission at Daily Fintech, which is to create conversations that make things happen. We are delighted to welcome him as one of our constellation of stars.

One reason why senior people give us their attention is that we connect the dots between Fin and Tech. We translate Fin to Tech and Tech to Fin. Arun is equally comfortable in both worlds, as a quick glance at his LinkedIn profile will reveal.

We do that all across the globe because “bits don’t stop at borders”. Arun is from India originally and currently calls London home. Arun has the experience and global mindset to cover innovation wherever it comes from, whether from hyper efficient wealthy economies such as the Nordics and Switzerland or from rapidly growing big population economies such as India and China (and all points in between).

Arun has a particular passion for impact investing.

FinTech is being driven by big agile companies as well as scrappy upstarts and the relationships between the two. Arun’s experience spans both. His big company experience includes Barclays and PWC. In his current role at Angels Unleashed, StartUp Bootcamp and Funding XChange, Arun swims in the world of the scrappy upstart.

Our mission is to enable productive conversations. Our Authors job is to ignite and facilitate those conversations. Please welcome Arun’s unique voice to this conversation.