Why I am closing my Steemit account and why I am a bear on EOS


TL:DR. Steemit feels like a cross between a popularity contest and a work from home hustle. And the EOS ICO turned me into a bear on Dan Larimer who is also the man behind the curtain for Steemit (and EOS and Bitshares).

Clearly I  don’t expect this post will get a good reaction from Steemit fans! That is part of the point. Media should be independent. A post on Steemit slamming EOS is probably not a good way to earn Steem.

This was an experiment that had reached a natural conclusion for me. Steemit enthusiasts will tell me I should persevere, but there are only so many hours in a day. 

There was a lot to like about Steemit. The idea of a social network where content creators get paid by other content creators is appealing. 

Right objective, wrong implementation.

I can see how to make Steemit work as a creator. It is similar to points systems on venues such as Hacker News and Reddit. That is what makes it a popularity contest. If you write something that the top influencers like, you collect Steem. That feels like a PR game of “you scratch my back, I will scratch your’s”. Yes that is similar to the “if you follow me, I will follow you game on Twitter” which I don’t do either.

The Internet has been brilliant at enabling everybody to write as well as read. It has been less good at providing an income for creators. For a long time, Advertising was the answer, but with ad fatigue and adblockers that model is challenged. However Steemit does not look like the answer either – which is the subject of today’s post.

The blockchain part of the Steemit story seems like contrived PR – a bit of a random buzzword generator. You don’t need blockchain to rate content – hello Reddit, Hacker News and Fintech Genome. Nor do you need blockchain to pay content creators – hello Patreon. 

The blockchain part of the Steemit story seems to be designed to sell a narrative that EOS is the Ethereum killer platform. I do not buy this story either. The technology advantage is totally unclear. I can see a pitch that you can program Smart Contracts in any language not just Solidity, but no clue how they will do this, let alone a MVP.  There are lots of blogs and vlogs along the lines of “I don’t understand the technology but Dan Larimer is a genius so I am sure it will be an Ethereum killer”. Steemit is proof that Dan Larimer is a genius and thus why investing in EOS is a winner. Does that translate to “I bought some EOS coins and I hope somebody will buy them for a good price”? The pitch is a bit like for a super expensive car – “if you have to ask the price, you cannot afford it”. In this case “if you have to ask what the technology advantage is, you are probably too technically illiterate to understand it”.  Who knows, but without a convincing technical explanation of why EOS is better than Ethereum, one should note that the EOS ICO is done using….Ethereum. 

I onboarded onto Steemit using standard two factor authentication. Then I was told that my application was “awaiting approval”. I was not the first to find this seemingly manual process step strange, but I was approved after a few hours. So I will probably remain as a statistic around “inactive registered users” along with all the other social networks where one is inactive.

This apparently manual process step was a red flag for me.

What happens if I recommend Steemit to someone and they cannot sign up? I think there are better ways to trap spam accounts. Maybe this is a pragmatic entrepreneurial “do things that don’t scale” that is life-stage appropriate, or maybe not. I don’t know but it is a red flag. 

Steve Jobs managed two companies successfully. Dan Larimer is managing 3 – Bitshares, Steemit and EOS – and I doubt he is in Steve Job’s class as an entrepreneur. No professional investor would back an unproven entrepreneur with three parallel ventures. Is the crowd being smart or dumb?

I imagine that Dan Larimer is brilliant, probably a visionary who is far ahead of his time. Some of his experiments may appear as a footnote in history along the lines of “back in 2017 there was an attempt at a similar idea that failed…”. I like experiments, I just choose not to be part of this experiment by donating either my time or my money.

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.

The infrastructure for asset management of Digital Assets – Melonport


I confess that I hadn’t been to Zug in 2017 and I grabbed the opportunity of the Crytpovalley meetup last Thursday at GG6 with its catchy topic “Crypto Valley – A better Silicon Valley?”. Max Wolter and Alexander Bremin, have captured moments about the people that have made and continue to make Crytpo Valley in Zug a unique and vibrant place. Read more in Alvalor Mission to Crypto Valley – a tale of the big world of crypto around the little town of Zug and about the many amazing people who make this place a reality. From Bitcoin Suisse, one of the first startups in Zug before Crypto Valley’s birth; to Monetas, one of the instrumental ones in nurturing the Crypto ecosystem in Zug, all the way to Søren Fog, founder of the Crypto Valley association and the crypto-expert legal partners MME.

The Alvalor project is a live example of a venture in its very early stage that is choosing to grow in the vibrant Zug ecosystem. As we were sipping wine, Max shared his excitement around the Alvalor new blockchain platform “that extends state channels to allow arbitrary applications to be executed, eliminating limitations of block space and blockchain size. We are modeling after the Ethereum foundation as a non-profit Open Source project, with a focus on research.” Max and Alexander also confessed “Opening our offices near teams that serve as an inspiration to the blockchain community, such as Melon Port, Akasha and SingularDTV, will be a privilege. There can be no doubt that Alvalor is primed for success in a location as unique as the Crypto Valley.”

Melonport is my pick today for many reasons that I can sum up in one word as “My biases”:

  • Melonport is co-founded by a woman, a young ex-Goldman Sachs trader and a Swiss blockchain developer who is an expert in the Ethereum world
  • Melonport is a blockchain venture focused on digital asset management
  • “Melon” is the Greek word for “Future”

A Swiss Ethereum expert with a background in mathematics from ETH Zurich and a female tech leader creating a venture that brings transparency, lower entry and running costs for hedge funds and asset managers, and access to a new asset class that promises genuine diversification; a vision that is broad and will be needed in the future world that is under construction.


I will start from the future that is beckoning infrastructure that can accommodate the new financial instruments and the new value creation.

  • Melonport wants to be able to accommodate all kinds of Digital Assets.
  • Melonport wants to be able to accommodate all kinds of Digital Asset management strategies (passive, active, open-end, closed-end). This encompasses the entire lifecycle from setup, to trading, custody, redemption, valuation, etc.

Melonport is a Decentralized blockchain protocol relying on the Ethereum Blockchain. In plain vanilla terms, Melonport is a protocol which means that they are building a core part that allows all sorts of Modules, that can function on top of the core part. Melonport is expecting a live beta version over the next couple of months. This will include the core part and 7 modules that Melonport has promised to offer in their green paper. These are the basic functions that a portfolio manager (PM) needs to setup his/her business. Once the PM chooses the parameters of the modules, the portfolio is ready for deployment in a secure and decentralized way (to be explained later).

Foundational Melonport modules:

  1. Registar: this where the PM chooses which assets will be traded. I love this, because the smart contract that operates this module, re-assures me that when I invest with a hedge fund manager who has promised to offer Alpha by a Long/Short strategy in one sort of tokens; the PM can’t “punt” on the bitcoin/TUSD rate.
  2. Functionality: PM can customize the rights around the use of the funds which may vary from one asset to another. This module determines whether penalties apply or not for certain actions by the PM.
  3. Price Feeds: PM picks the feed module (one or several) that will be used to evaluate the portfolio for mark-to-market purposes. This smart contract solves in a secure and transparent way the problem of ambiguous pricing for various assets and manipulation by the PM.
  4. Exchanges: PM chooses on-chain exchanges for trading.
  5. Trading: PM sets various rules around trading and risk management. For example, caps on leverage, caps on trade size with respect to total volume of the asset, caps on concentration exposure etc
  6. Management Fee: PM specifies the calculation of the management fee which typically is linked to the gross value of AUM.
  7. Performance Fee: PM specifies the calculation of the performance fee which typically is linked to the increases in the gross value of AUM. It also typically, involves a high-water mark, which means that if the PM is performing below a designated benchmark since inception, then the performance fee is not paid. This module will allow for more customization by the PM

Since Melonport is an open-source protocol with these 7 basic functionalities, anyone can develop more Modules on top of the Melonport protocol and create a new portal to access it.  If a hedge fund manager or a passive asset manager designs his/her portfolio parameters using the 7 basic Melonport modules, that can be seen in Blockchain land as the offering of a legally binding contract. The contract terms are defined by the smart-contract terms that are operating the modules. Melonport will be partnering with data feed providers and exchanges like CryptoCompare for price feeds from various exchanges, or  Oraclize for fetching data.

I won’t get into the tech details of how shares are created and how they are redeemed in the Melonport world (anyone interested can read the green paper). I will however, outline what value is created in the Melonport world. I foresee, that this will be a world that will reduce substantially the costs of setting up a fund for many reasons but mainly because the costly custodian and fund administration function will be given over to a few modules operated by smart contracts. The cost of using the Melonport protocol is MLN tokens. At the same time, there will be large efficiency gains because the processes will be real-time, without human errors, and fully transparent. These features are absolutely necessary for investing in protocol tokens and their derivatives.

The Melonport protocol is creating a digital asset management world that offers both Decentralized storage and Decentralized execution. I am excited about this future world that the assets, the track records, and the smart contracts are stored on a decentralized Blockchain. This reduces the centralized custodian risks that showed their ugly head especially during the 2008 financial crisis. In addition, decentralized execution using the Ethereum virtual machine, reduces counterparty and settlement risks.

We can all foresee a future world in which a variety of hedge funds are using the Melonport portal but also for the creation of passive investments focused in the protocol token asset class. We can foresee that Funds-of-Funds (FOFs) will be able to offer value since costs will be reduced and multi-layered risks mitigated. We can foresee better diversification across digital asset classes that would be expensive to design in the analog fund world that we currently live in.

Before ending my coverage of the Melonport protocol, I want to circle back to the variety of Digital Assets that are being created by companies like Lykke, Digix, T0 platform etc.

I like to think of the growing Digital Assets space in 3 main categories:

We will be watching Melonport rollout the infrastructure for asset managers to create new strategies focused on digital assets: protocol tokens, derivatives, and tokenized old assets. Mona El Isa says:

We are primarily building “Melon”, as an infrastructure to set up and manage funds built around protocol tokens — an asset class which we fundamentally believe will have a place in every single diversified portfolio ten years from now.” Source The Difference Between Protocol Tokens and Traditional Asset Tokens

Efi Pylarinou is a Fintech 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.



Blockchain Bitcoin & Crypto Weekly CXO Briefing Week 2

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 offer one expert opinion.

For the introduction and index to weekly posts please go here.

News Item 1: Bitcoin Pool ViaBTC says no to Segwit

News Decrypted: Last week we reported that a major Bitcoin miner (Bitmain) who has been backing the breakaway group (called Bitcoin Unlimited) has filed for a patent to a technology called ASICBOOST that would be harmed if Bitcoin used a technology called SegWit. For explanations/glossary please go to last week’s post. Our take on last week’s news was that this signaled the last bloody battle in the Bitcoin Civil War and that Bitcoin Core was winning.

The news this week is that another Bitcoin miner is saying no to Segwit.

Our Take: This week’s news seems to indicate the opposite of what we reported last week, but we hold to our conviction. Our take this week is that there are always skirmishes after a war is over. You could also say “it ain’t over till the fat lady sings” and that there is always some risk, but that does not invalidate that there is more upside than downside. If you read this week’s news item below the headline, it is more “not yet” than a no, despite the headline. You often get “headline negotiations” ie making a tough public statement followed by private negotiations.

News Item 2: Billionaire investor holds 10 percent of his life savings in bitcoin predicts price to hit 2000

News: Billionaire hedge fund investor Mike Novogratz, who made it into the Forbes billionaire list in 2008, revealed that he holds 10 percent of his net worth in Bitcoin and Ethereum.

Decrypted: Bitcoin price continues to rise and so we get forecasts that it will continue to rise. There are many more stories like this that are along the lines of “follow the brilliant investor leader”. Novogratz also invested in Ether. Another high profile investor making bullish statements is Tim Draper.

Our take: These investors are talking their book and they bought when the price was much lower, but that does not invalidate what they are saying. With the Bitcoin Civil War nearly over, there is more upside than downside, but nothing goes up in a straight line. A major Bitcoin hacking story is likely in 2017 and that will be a buying opportunity. It depends on your time horizon. If you view buying Bitcoin like a 10 year bet on a startup, these fluctuations are irrelevant.

News Item 3: Criminals who deal in bitcoins in Florida could soon be busted for money laundering.

News: Just because you use bitcoin to do something illegal, does not give you a defense.

Decrypted: This is only relevant as it drives mainstream sentiment and regulation. If the headline was “Criminals who deal in dollar bills in Florida could soon be busted for money laundering” it would not be significant.

Our Take: Regulators are in a quandary. On the one hand, bitcoin should be like cash – it is irrelevant as a defense for illegal activity. That is what this week’s news is about. On the other hand, banks and governments want to have control over cash and so don’t want bitcoin to be a legal currency and tax authorities prefer to see it like a commodity and to tax based on capital gains. The last sentence in the news article is interesting “But critics say the law could deliver a chilling effect on the bitcoin, which can be valuable in promoting commerce between Florida and countries such as Venezuela, where traditional banking systems have gone awry.” In short, money laundering out is bad, but money laundering in is good.

Opinion: Bitcoin continues to struggle ethereum looks strong

Why it is worth listening to: Ethereum is the only crypto currency with a market cap even comparable to Bitcoin and Ethereum is building the world’s first decentralized operating system.

Our take: Ether, like all Altcoins, have done well price-wise during the Bitcoin Civil War. If that is over, bitcoin price will rise and much of that will come from people converting Altcoins to Bitcoin. Ethereum could be the one exception to that. However, as a reality check it worth noting that few mainstream people have heard of Ethereum – this is reserved for crypto true believers . Also, the news last week was more about traction for Sidechains, which takes away some of the programmability benefits of Ethereum and to have a major differentiator, Ethereum needs to prove Proof Of Stake as an alternative to Proof Of Work and there is still real technical risk in that. If you love the idea of the world’s first decentralized operating system (I do), you may want to buy the Ether currency. As an investor, Ether at current price has a lot more risk than Bitcoin.

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

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.



Polychain Capital: A hedge fund investing at the Protocol layer of Web 3.0

Today is the slowest day of the rest of our lives.

Entrepreneurs at heart move to launch new projects, new businesses as they are committed to pushing the boundaries of existing business practices. They are driven by their genuine desire to seed the unimaginable.

Brian Armstrong, founder and CEO of Coinbase, a leading app in the digital currency space, is known for his ability to form teams that create value, by hiring entrepreneurs whose CVs may not reflect their potential. Olaf Carlson-Wee, was one of his hires and part of the core team, who is now moving on to launch Polychain Capital that I am so excited to share my understanding of this endeavor with you today. I guess Brian’s intuition, while very rewarding in the first phase of building Coinbase as a scalable business, comes with the demise that Olaf had to move to something more avant-garde. Polychain Capital clearly qualifies for avant-garde currently and most probably will need 2 years to move to the next phase.

Screen Shot 2017-03-23 at 10.48.31

This is all the info that is on the website of the business that Andreessen Horowitz and Union Square Ventures recently funded with $10million. In this post, I explore this hedge fund, its investment strategy, and how its positioning in the ecosystem of innovation in Wealth Management. I will discuss the kind of assets Polychain will invest in, and why it has chosen to do so.

The story started in 2014 while at Coinbase, Olaf found himself exploring the potential of Protocol 2.0 ventures, like Mastercoin or Counterparty. This is different than researching companies, simply because they are entities that are not owned by shareholders but rather from birth are decentralized and therefore, the users are essentially the equity owners. The next trigger towards coming up with the Polychain Capital idea, was when Coinbase included Ethereum in the summer of 2016.

Polychain Capital wants to invest in Digital assets at the Protocol Layer, not at the App layer. They are interested in investing and creating value for their institutional investors, at the Protocol Layer.

So the kinds of ventures that they have on their watch list, are

  • Ethereum – a more knowing decentralized protocol that can enable innovation to be built on it, that can attract developers, and that can enable all sorts of applications from digital IDs, file storage, messaging, wallets, supply-chain finance etc.
  • IPFS ecosystem
  • Tezos
  • Rchain
  • PolkaDot
  • Difinity
  • Cosmos

Most of these are early in their life and the million dollar question is which of them will be the enabler for a full stack app creation, or in other words which one will power off Web 3.0. Will proof of stake and proof of work, be replaced by another combo? What is the unimaginable decentralized web going to look like?

What is clear is that Polychain Capital is NOT looking to invest in ventures at the App layer. So, for example, they are not including in their portfolio Melonport, an asset management platform built on the Ethereum protocol, or Augur, a trader’s forecasting tool also built on the Ethereum blockchain.

Polychain Capital is based on the belief that the Bitcoin Blockchain protocol will continue to lose market share (in the digital assets space it has dropped from 97% to roughly 85%). Bitcoin is actually suffering from the innovator’s dilemma and Polychain Capital doesn’t see any killer app built on the Bitcoin Blockchain (these are views of Polychain Capital from the Ether Review #59 interview with founders Olaf Carlson-Wee and Ryan Zurrer).

Therefore, Polychain Capital wants to capture the growth of other protocols that will outperform the Bitcoin protocol (stuck in Innovator’s dilemma land).

Polychain Capital is positioned as a hedge fund because not only it is suitable for institutional investors but it’s investment strategy approach has taken elements for the VC approach and combined them with active trading from the hedge fund world. The way that they will be dynamically managing the portfolio holdings isn’t clear yet (at least to me) but the principle of how they will go about capturing this next wave of compelling innovation, is laser clear.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.


Ethereum is winning in both Enterprise & Consumer markets


Redecentralization is as important as the invention of the PC. We will look back on the early years of the Internet as a strange blip that will be called the Commercial Internet or maybe the Centralized Internet. PCs, for all their faults, empowered individuals. In the Commercial Internet, individuals become the product served by giant centralized data centers to advertisers. That is why it is Redecentralization; it is getting us back to the original decentralized design of the Internet and the idea that individuals should own the data and processing power that is so critical to modern life. Like the PC, an operating system is needed. Ethereum is that operating system.

I recognize that there are alternatives to Ethereum and that Ethereum is still a work in progress. However most of the debate has shifted from what platform to use to what kind of ecosystem of value will form around Ethereum. People are talking about how to use Ethereum, not whether to use Ethereum. If you don’t use Ethereum, you have to defend that decision.

In business, you plan around probability. There are very few cases of 100% certainty in dynamic fast-moving markets; a high probability is enough. People building on Ethereum are starting projects by banking on a high probability that it will succeed, and creating fallback plans for the low probability that it will fail. That is fundamentally different from evaluating different platforms before starting the project. The prize is so big that some technical risk is better than being late to market.

One reason that Ethereum is getting so much traction is that it is equally suitable to both enterprise and consumer use cases.

Enterprise use of Ethereum

During bear markets, enterprises love to cut costs and will pay handsomely to any vendors who can deliver that.

We saw that in 2002 and in 2009. I do not know when the macro cycle turns, but I do know that statistically we can count on it turning.

When it turns, enterprise IT comes back into fashion and Blockchain is another tool in the enterprise IT toolbox.

Blockchain represents a different generation of enterprise IT. For decades, enterprise IT has been about optimizing existing processes. In the founding days of Enterprise IT we turned manual processes into computerized processes; the payoff was massive. To borrow an overused phrase, it was transformational. For decades we have simply been doing incremental changes to those computerized processes and the payoff has been much less; we were optimizing rather than transforming. If you cut 10% of costs the project was a success. Blockchain based enterprise IT projects don’t seek to optimize processes, they seek to eliminate processes. For example if you move to real time clearing & settlement, you don’t optimize credit risk processes in post trade processing, you eliminate credit risk entirely and all the processes that go with it.

Consumer Use of Ethereum

We have already reviewed three Ethereum based DAPPS here.

If you want a more comprehensive list, go here.

This is called traction – for the Ethereum platform.

It is too early to tell which of these consumer DAPPS will get traction in the market. I am confident that we will see a lot more of these DAPPS coming down the innovation pipe and a few will get mainstream traction.

At the leading edge of Ethereum adoption
Last week I left the smart Manhattan offices to head to northern Brooklyn to visit Consensys. This was not a colorful developer pampering office. Yes, we sat around a conference table that doubled as a ping-pong table; but this was clearly a bootstrapped operation full of bright people fired up by changing the world not by the trappings of success. I had trouble finding the office because there was no logo on the door; I went through a coffee shop to get to their offices. This neighborhood was still in the early stages of gentrification.

Around the ping-pong table (ahem, conference table), developers were as comfortable talking about the finer points of derivatives clearing and compliance as they were discussing developer tools. Big Wall Street firms could feel comfortable here despite the decor.

Yet they were also developing consumer-facing applications.

It is hard to put a label on Consensys. All of these fit:

  • Consumer app developers
  • Enterprise IT developers
  • Core Ethereum developers.
  • Venture production studio.
  • Custom solution vendor.
  • Consultants.

With or without Bitcoin?

You can use Ethereum’s internal currency (Ether) or you can use Bitcoin via a sidechain. It does not matter where you come down on this debate, you can use Ethereum.

Permissioned or Permissionless?

You can use Ethereum to run a private permissioned Blockchain or a public permissionless Blockchain. It does not matter which is right for your use case, you can use Ethereum.

Network effects forming around Ethereum

The reason that it matters that Ethereum can handle enterprise or consumer, Bitcoin or Altcoin, permissioned or permissionless is that platforms win when a lot of developers invest time to learn it. If they see only limited use case, they will be more hesitant. If they are being paid by day by a bank for an enterprise solution while working at night on their consumer DAPP, they will love Ethereum because it can do both.

The reason that developer interest matters so much is that Ethereum is a work in progress where there is a lot of synergy around the component services.

This is eradicating the hard distinction between consumer facing and developer facing. You can use a prediction market in your DAPP via Augur or do value exchange via EtherX or price feeds via Oraclize. Critical components such as Identity will be used by most DAPPS as well as being consumer facing.

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought-leader.



Here Come The Ethereum DAPPS


A platform is defined by its use cases. If great apps appear, the platform is judged a success. If not, the platform disappears into the dustbin of computer history. So I went looking for the emerging DAPPS (decentralized apps) coming out of the Ethereum platform.

DAPPS look like normal apps. That is deliberate. Ethereum made the UI building part familiar to developers used to deploying to the cloud. Instead of deploying to AWS or another server farm, you deploy to Ethereum ie to a decentralized Blockchain. You can build the frontend in HTML or QML (QML is optimized for mobile, you can read the basics here). This is Hackathon territory. You can build a DAPP in hours. So there will be lots of throaway DAPPS that never get launched.  There will also be lots of DAPPS that get launched and disappear in obscurity. This is still really early days in the decentralization wave and the big winners have probably not yet even been conceived let alone launched.
Here are three that look promising at the end user level – Slock.it, Augur and Vunk.


Internet Of Things, Sharing Economy, Blockchain. Slock.it hits all three. If that sounds like a venture created by a random buzzword generator to woo investors, suspend disbelief for a moment because Slock.it may be quite practical.

Slock means Smart Lock. If you use AirBnB as a host or a guest, you discover that the lock is the key. In a traditional hotel you have a receptionist to give a key to a guest after confirming payment.  If you stay with an AirBnB host you need to coordinate arrival time so that the host is there to let you in. That is a pain point for both parties. I first wrote about this emerging need in September 2015 after using AirBnB.

On a more recent AirBnB visit, there was a lock controlled by some Samsung device that was unlocked by a number sent to me by my host via a text message. That was an improvement.

What if it was a smaller transaction, such as renting a bike or a washing machine? That is where Slock.it is focused. Technically their code is deployed to a smart lock, using something like Rasberry Pi to build the smart lock. They don’t build the smart lock, they give the smart lock manufacturer the ability to run transactions, because the Slock.it smart lock runs on the Ethereum Blockchain.

Slock.it reference washing machines and bikes as use cases. The latter use case resonates and I will use this in the example.

As the bike owner, you set the deposit price and the rental price. The DAPP keeps the deposit in Escrow until the renter returns the bike. As the bike renter, you pay the deposit and at the end of the rental period you get the deposit back minus the rental cost. The bike owner gets the rental money. All of this is done on the lock itself. It is a smart lock running a smart contract. There is no centralized service. That is radical.

I can envisage this as a type of decentralized version of the “Boris Bike” in London or a more controlled version of the free white bikes in Amsterdam. I would love to use it when I visit cities.


Augur is a DAPP we have already reviewed back in May 2015. It is a decentralized prediction market. Prediction markets are nothing new. Nor are betting sites, which are simply a way to monetize a prediction. I predict that Harry The Horse will win the 3.45 at Cheltenham and if I am right I get a reward. Or I can take a long shot bet on Bernie Sanders being the next President of America. Or that Lending Club will be worth a lot more or less than the $6.8bn it is worth today. Augur will reward you for getting the prediction right.

“Why do prediction markets need a decentralized blockchain?”

You could build a crowdsourced prediction market using your favorite programming language and bung it onto AWS.

Augur’s answer to that question is that centralized prediction markets suffer from two problems:

  • They can be shut down. That can happen for all kinds of reason – regulation, bankruptcy, fraud.
  • Somebody has to report on what happened that triggers the payout. In many markets that is pretty obvious. I can see whether Harry The Horse won the 3.45 at Cheltenham and it will be front-page news everywhere if Bernie Sanders becomes President and it is easy to track the price of Lending Club. In the long tail you cannot rely on institutions to report. The chance of the one expert trusted to report on the event being subject to fraud or mistakes is high. So you need a trustless decentralized network to do the reporting. The beauty of a decentralized prediction market is that it can cover so many more markets and events – as long as there are enough people reporting on that event to be statistically significant.

Augur enables the long tail of prediction markets.


FreeMyVunk enables you to trade your “virtual junk” that you accumulate while playing video games. Not being a video gamer, I tested the idea on a teenage gamer and from that sample of one got a big thumbs up. To quote them:

Anyone who has ever played a video game has thought to themselves, “Wouldn’t it be nice if I could trade my World of Warcraft DoomHammer which I don’t use anymore for my friend’s Galil in Call of Duty: Black Ops!”

This illustrates the power of Blockchain to power almost anything. It can be the decentralized value exchange. Fiat currencies is the obvious mainstream example, but this also applies to AltCoins and Loyalty Points. The beauty of FreeMyVunk is that it starts in a market that young early adopters can relate to.


There are many reasons why I have been an Ethereum fan since I spotted it during the summer of 2014. It scores reasonably well on the 8 criteria that Daily Fintech Advisers suggests using to evaluate Blockchain platforms:

  • Adequate Funding: Platforms need enough funding to be properly developed and supported.
  • Source of Funding: The motivation of the investors matters to developers in the long term, as it can force the platform in a direction that may not be in the interests of application developers. When selling trustless systems, the motivations of investors comes under the spotlight. The traditional VC model has been augmented by Currency Issues of some kind or another and these also raise motivation concerns.
  • Commercial model: Most of these platforms are open source. Some are aiming at a Red Hat type model. Others want to make money from a currency that they control. Others want a piece of the application pie. Developers need to understand the commercial model and decide if they are comfortable with it.
  • Trust model: Who do you need to trust? Some such as Ripple and Stellar require trust in a currency controlled by an institution.
  • Ease of development: This can be a personal decision i.e different developers find different things easy or hard. Developers look for something that uses a choice of familiar languages and that abstracts the complexity of a decentralized network. Today we are in the experimentation phase where application developers are building their MVP and through this they are learning what is genuinely easy to use.
  • Performance & Reliability: It is too early to tell. One hears theoretical arguments for different platforms, but we will have to wait until it is possible to have third party testing of apps on different platforms.
  • Bitcoin, Alt or None: This is a heated debate at the moment. Many people think that Blockchain platforms shoulduse Bitcoin and that is why many people back Counterparty and Blockstream. The shouldargument is irrelevant to most application developers, who just want to know whether their app needs Bitcoin or an Alt based currency or no currency.
  • Layer in stack: Some people critique Ethereum for attempting too much. In this view it is better to offer less functionality at a lower level in the stack. Maidsafe and ERIS position in this way. This appeals to developers who value control (perhaps over speed to market).

Ethereum clearly has developer interest. Their recent DevCon in London had 400 in physical attendance and 15,000 watching the livestream.

However none of this matters unless we see real and useful apps. The proof of the pudding is in the eating, not in the ingredients or the instructions. That is why these 3 DAPPS matter and why I expect to see many more coming down the innovation pipeline.

The three that I reviewed are at the top of the stack. They are end user apps. You and I can envisage using them. There are others that sit in the middle of the stack. The end user of these apps are more likely to be developers who build them into end user facing apps. This could be called middleware but it nothing like the middleware that we think of in traditional centralized technology. The ones that look interesting are:

Two Digital Identity on the Blockchain startups that we looked at in May 2015OneName and ShoCard.

MakerDAO. Their Dai Credit is a cryptobond that pays interest based on collateral which maybe something like Ether. This will be open source and so will be evaluated by any developer looking at Ethereum as an open source platform.

In the world of enterprise Blockchain, banks are building Proof of Concept apps using Permissioned Blockchains. These consumer apps go a stage further. They are Minimum Viable Products (MVP) released into the wild on a Permissionless Blockchain. The POC developer may get an internal audience of a few hundred people. The MVP developer could get to Product Market Fit (PMF) and be seen by millions. We will have to wait and see which ones get to PMF, but conceptually they seem sound.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought leader.

Canadian crypto battle between Montreal with Sidechains & Toronto with Ethereum

What is it about Canada with its radical blockchain technology? Is it the need to think different to compete with its giant southern neighbor?

Within Canada, the two cities of Toronto and Montreal are in opposite sides of the big debate over whether blockchain technology can be separated from bitcoin the currency.

In Toronto, where Ethereum was conceived, the view is that yes you can have applications using blockchain without using bitcoin.

In Montreal, where Blockstream created the Sidechain technology, the view is that bitcoin is the currency to be used for all blockchain transactions.

Of course, that is over simplifying. There are people in Toronto who favor Sidechains and people in Montreal who are fans of Ethereum.

My 101 guide for those who don’t follow this debate closely;

Ethereum does not rely on bitcoin. In other words, there are no bitcoin miners verifying the transactions. This enables more complex applications to be created, not limited by things like bitcoin block size or the time taken for miners to verify transactions. Blockstream uses Sidechains as a two-way peg with bitcoin. Complex transactions go off to a different blockchain and then come back to the bitcoin network.

My take is simply that it is horses for courses. Some use cases will be more suited to Ethereum and others will be more suited to Blockstream.

I have one concern about Blockstream which is that they have raised $21m from VCs and yet they have not said how they plan to make money. There is debate in places like Reddit, but I cannot find any official company statement on this. I understand that in the social media phase, many ventures postponed even thinking about monetization until they reached scale. I understand that can work well if the monetization is some form of advertising. However in a tech platform that pitches to developers, entrepreneurs want to know before committing. In ye olden days it was simple – you just paid license fees. Blockstream has now released an open source version, but developers have learned to be wary of building apps on top of platforms such as Twitter that can unilaterally change the rules.

I am sure Blockstream will reveal their plans and will get traction with developers who believe that the best way to verify distributed transactions is to use the mining infrastructure that comes with bitcoin. The big picture is that developers are spoiled for choice and that is why we are starting to see more end user facing applications appear. We have covered two user centric blockchain ventures. One – Augur – uses Ethereum. The other – Lighthouse – uses bitcoin (although it is unclear whether they use Sidechains). This indicates that this is not a winner take all battle. Some use cases and some developers will favor Ethereum and other use cases/developers will favor Blockstream.