Tag Archives: blockchain

What DTCC’s IBM Blockchain Transition ‘Reimagining’ Credit Derivatives Signifies

What DTCC's IBM Blockchain Transition
'Reimagining' Credit Derivatives Signifies

On the heels of the announcement by the U.S. Depository Trust Clearing Corporation’s (DTCC) transitioning a central part of its financial infrastructure onto a blockchain, the premier post-trade market infrastructure for the global financial services industry that processes trillions of dollars, many are wondering what it means for the blockchain market’s future.

It’s been described as a "watershed moment" for the industry in deploying distributed ledger technology (DLT) in production at this scale and a "reimagining" of credit derivatives processing by two of the IT vendor parties involved. According to Bridget Van Kralingen, Senior Vice President, IBM  Industry Platforms, it represented "one of the largest and most groundbreaking distributed ledger projects to date in the financial services industry.”

The DTCC’s Trade Information Warehouse (TIW), which currently automates the record keeping, lifecycle events and payment management for over $11 trillion of cleared and bilateral credit derivatives, is to be re-platformed by IBM, in partnership with Axoni and R3 through a DLT framework to drive further improvements in derivatives post-trade lifecycle events. It will enable DTCC and its clients to further automate and reduce the cost of derivatives processing across the industry by removing disjointed, redundant processing capabilities and associated reconciliation costs.

The solution will be deployed in a number of stages, with an “end-state vision” to establish a permission distributed ledger network (i.e. private) for derivatives – governed by industry-owned DTCC with peer nodes at participating firms. It has been developed with input from a number of the big banks including Barclays, Citi, Credit Suisse, Deutsche Bank, J.P. Morgan and UBS as well as key market infrastructure providers, IHS Markit and Intercontinental Exchange.

Hurdle To Adoption

Eric Wiesen, a General Partner at early-stage, post-seed venture fund Bullpen Capital that invests in technology companies, says that although the “hurdle to adoption still remains high” the DTCC’s decision “validates the blockchain approach for core financial markets – not just fringe markets.” In addition, since the DTCC’s project uses neither Bitcoin nor Ethereum, one might ask what this move signals about the Public versus Private platform debate.

“The simplest answer here is that the IT environments of the financial services industry are both very complex and highly regulated,” said Wiesen, who in 2015 joined Bullpen located in Menlo Park, California, from RWE, and is currently a board member at Imgix and Yieldbot.

An early investor in Venmo, Braintree and NerdWallet, Wiesen explaining further said: “The evolution from the current methods, which range from API’s all the way back to 1980’s-style mainframe software, is one that involves both large-scale migration to new software and the migration to a largely new means of information flow, is a huge project both internally to each financial institution (FI) and to groups of counterparties.”

He added: “Add in the somewhat sketchy history of the Bitcoin blockchain and the markets where it has been deployed and you get another layer of resistance," he further noted. "Then, lastly, uncertainty about financial regulation under the Trump administration adds one more layer. It all adds up to a requirement of very high conviction and consensus to deploy.”

Blockchain Tech Adoption

Reflecting on the future adoption of Blockchain technology in the financial markets space going forward and how far developments could go, Wiesen opined: “If you view blockchain as an IT solution rather than a global force for change, the rationale for adoption makes a lot of sense. A blockchain approach strips out significant cost and speeds up transaction processing and settlement.”

He added: “These are factors that matter to many FI’s, which is why so many of them have been undertaking trials. Ultimately, it strikes me as very likely that as major players (DTCC and their partner, IBM being the latest to announce) move into production, that we’re likely to see more and more firms follow to attain the benefits of the blockchain approach.”

Costs Savings & Efficiency

Simge Alpargun, IBM, Territory Leader for Financial Services based in Istanbul, who gave a presentation last October on the Blockchain and its impact on all industries at the CoinsBank Blockchain summit in Belek, Turkey, noted: “What the Internet did for information the Blockchain will do the same for transactions.” Notwithstanding the need for “a standard”, the upshot of blockchain-based business and technology is that it reduces time and saves on costs.

In IBM’s case, as a founder in the HyperLedger Project, an open source collaboration hosted by the Linux Foundation, it has been working on standards in relation to “blockchain rules” and finding “real-life scenarios” to apply distributed ledger technology across financial services and other industries.

Alpargun referred to post-trade settlement as a prime business use case where adopting the technology can be applied to yield efficiencies alongside the transfer and sharing of high-value assets (e.g. Asset exchange). Add to that why not use the blockchain for dispute resolution. But as she also pointed out to industry movers and shakers in attendance on the Turkish riviera that one “cannot force all parties to use the same fabric.”

It was at this same event that I attended and reported on for Forbes, Nick Ayton, CEO of SmartLedger Labs and Blockchain-X, speaking in relation to Blockchain technology aimed at the capital markets and asset management, asserted that “blockchain operational models are the future”.

Ayton, who designs and implements digital and blockchain-based Business Operating Models and is currently working on a book about blockchain applications, noted that the “monopolistic tech landscape keep costs high”, identified hot spots where costs could be stripped out using DLT. For example, savings in Sales & Marketing could range from 20% to 30%, Operations (c.20%-30%) and  IT Functions at around the 15%-20% level.

Public versus Private Platforms

In addition, since the DTCC’s project uses neither Bitcoin nor Ethereum, does the news announced earlier this month on January 9 signal much or anything about the public versus private platform tech debate? “It’s hard to know where this ends up and smart people line up on each side of this question,” Wiesen remarked, whose firm Bullpen most recently launched Bullpen III, a $75 million fund that will invest in technology start-ups between their Seed and Series A financing rounds with participation from Greenspring Associates, Venture Investment Associates (VIA), Oberlin College, and other institutional and individual investors.

“But this project certainly tilts the scale more toward the private side.” That said, he also posited “whether that trend continues is hard to predict,” he observed. In terms of the collaboration with IBM, its timings and the tangible benefits, cost savings and efficiencies, Wiesen elaborated that: "In a future where they move their infrastructure from what I imagine is a complex environment of interconnected software with a ton of proprietary adapters and middleware to a blockchain, the cost savings and improvement to settlement time – currently as long as a week for some of DTCC’s trades –  will be pretty monumental to their business.”

That IBM is working with the DTCC them "lends credibility to the effort and is consistent with the industry’s view of IBM as a leader in global IT services projects" according to Wiesen, whose investing philosophy and approach is informed to some large measure by his experiences as a two-time founder, first in the 3D Graphics hardware space and later on in the enterprise software/ERP sector. The other category of player are the technology companies themselves, he pointed out. Axoni in the case of DTCC and companies like Chain, who power Visa’s new blockchain payment network (incidentally where Wiesen was once on the Board).

“I think these deployments will validate the companies that enable these new blockchains and who continue to develop and iterate on the core platforms themselves," asserted Wiesen. Under the DTCC agreement, IBM will lead the initiative, provide program management, DLT expertise and integration services as well offer the solution-as-a-service. Axoni is to provide distributed ledger infrastructure and smart contract applications, while R3 is acting as a solution advisor. The development was scheduled to begin this January and build on Axoni’s AxCore distributed ledger protocol which will be submitted to Hyperledger when the solution is anticipated to go live in 2018.

As to future developments in the blockchain space it’s a big question and I don’t have a crystal ball. Some might have been scared in the beginning, while others in finance circles have been in denial. But the progress cannot be denied. While it will no doubt lead to job losses there will be job gains too. And, as one blockchain pundit at CoinsBank’s inaugural blockchain of event put it: “We always move to a better place with technology.” That is, presumably as long as it’s safe.

Chuck Reynolds
Contributor

The Business of Blockchain: A New MIT Technology Review Conference

The Business of Blockchain
A New MIT Technology Review Conference

Our one-day conference will explore the opportunities and challenges associated with blockchains.

  This spring, MIT Technology Review will introduce a new event, here on the Institute’s campus in Cambridge, Massachusetts. We invite you to join us at The Business of Blockchain in the MIT Media Lab on April 18, 2017.Working with our knowledge partner the MIT Media Lab Digital Currency Initiative, the leading center of research in the field, we have developed a one-day conference to explore the opportunities and challenges associated with public digital ledgers, or blockchains.

Most people first encountered blockchains when they learned about the digital currency Bitcoin, which uses one to record transactions and resist counterfeiting. The technology made it possible for people who have never met and don’t trust one another to exchange money without the aid of a traditional third party, like a bank. But many companies, researchers, and governments are now considering how blockchains could build trust and cut out middlemen in a broader range of commercial activities. including banking, public services, supply chains, energy, and much more.

If those ideas work out, blockchains won’t be something consumers see very often. But they’ll be something that every business and organization will need to consider if it wants to operate efficiently and in partnership with other organizations. Wherever there is a transaction, from tracking the exchange of money or goods to the transfer of sensitive information, blockchain technologies offer the potential to create new kinds of markets, operating at unprecedented speeds, with novel transparency.

We believe that blockchains have the power to create entirely new kinds of business. If blockchain technology is the Internet of money, we are currently defining and building the fundamental protocols for the future of commerce. Business and other strategic leaders need to understand this emerging technology.

Join us in Cambridge this April and meet the entrepreneurs and researchers who are at the forefront of developing a whole new approach for handling the transactions of tomorrow.

Chuck Reynolds
Contributor

Bitcoin Could Take Over These Multi-Trillion Dollar Markets

Bitcoin Could Take Over These 
Multi-Trillion Dollar Markets

 

Bitcoin served investors and traders globally throughout 2016 as digital gold. It protected assets and wealth of individuals struggling to deal with economic uncertainty and financial instability of certain regions. The next stage in the long-term roadmap of Bitcoin is building mainstream awareness as a currency, taking over multi-trillion dollar markets dependent on fiat or banking services.

Tuur Demeester, chief editor at Adamant Research, specified seven major multi-trillion dollar markets which Bitcoin can compete with in the future. These included electronic payments, e-commerce, remittance, hedge fund, gold, cash and offshore deposit market.

Huge potential of electronic payments and remittance markets

Some markets mentioned above are already being challenged by Bitcoin primarily because of Bitcoin’s ability to eliminate third-party service providers or institutions to oversee activities through manual processes. In particular, the $2 tln electronic payments and $514 bln remittance markets have seen a rapid emergence of innovative Bitcoin startups and service providers that are gradually acquiring promising market share. Within the global remittance market, Cointelegraph reported yesterday that the highly anticipated Bitcoin-based application Abra is planning its international launch next month to create a decentralized network of remittance senders and receivers.

Essentially, Abra is like a peer-to-peer version of dominant remittance companies like Western Union, in the sense that users can send payments to recipients internationally who can then receive transactions through individual Abra tellers. The key difference between Western Union and Abra is that the latter guarantees lower fees and a more secure network with non-fraudulent transactions.

The Philippines which oversees some of the largest remittance markets across the globe has also seen the growing popularity of Bitcoin-based remittance service providers like Bitspark, Rebit.ph and Coins.ph three companies that have established reliable and robust infrastructures within the country. Startups like Bitspark and Rebit.ph even allow Filipino users to send money to international recipients instantaneously with low fees.

In several multi-trillion markets, Bitcoin has overtaken key players and industry leaders. For example, within the remittance market, the market cap of Bitcoin surpassed a Business called Western Union, a dominant organization which has served the global remittance market as the base platform.

Oldie but goldie

The $7 bln gold market is another key market that Bitcoin is directly competing against. In regions like India and China where gold imports and exports are either banned or heavily regulated with local authorities seizing the precious metal from residents, the demand for Bitcoin is increasing at a rapid rate. Traders and investors in two of the largest gold markets are looking for alternative safe haven assets like Bitcoin to protect their wealth.

Chuck Reynolds
Contributor

Could Banks of Tomorrow Save more than $12 Bln a Year Thru Blockchain?

Could Banks of Tomorrow Save more
than $12 Bln a Year
Thru Blockchain?

Accenture, a $75 bln consulting and professional services firm, revealed in its report that the implementation of Blockchain technology could save investment banks up to $12 bln a year. The report entitled “Banking on Blockchain, a Value Analysis For Investment Banks” released by Accenture Consulting in collaboration with Aon, is based on a survey which the firm’s researchers conducted with eight major investment banks.

According to the report, the utilization of Blockchain in supplementing manual processes and operations of banks can save organizations up to 30 percent in annual savings and 27 percent on average across the banks surveyed by Accenture.

Researchers at Accenture stated:

“Considered in this light, annual cost savings would equate to 38 percent or around $12 bln. If we take an average of this $12 bln with the $8 bln base case cited above, we estimate $10 bln in annual cost savings.”

Automation on a transparent and immutable ledger

Essentially, Accenture’s report demonstrates the potential of a transparent and immutable distributed ledger within the realm of traditional finance. By relying on a network which eliminates the concept of centralization and trust-based relationships the majority of operations of investment banks can be automated. Reduction of manual labor and operations will optimize complex financial tasks, which often take hours to even weeks to complete using IT infrastructures integrated by banks today.

“We estimate that investment banks spend around two-thirds of their IT budgets supporting legacy back-office infrastructure, plus billions more each year on cost reduction initiatives. In other words, it’s costing too much time, effort, liquidity and capital to support processes that don’t offer a sustainable improvement in profits,” the report added.

However, Accenture emphasized that investment banks or any financial organization looking to adopt Blockchain technology must understand the fundamentals of the technology beforehand. Various operations exist that can be optimized simply with improved database technologies or IT infrastructure without the implementation of Blockchain.

Fundamental understanding of Blockchain is required

One reason Accenture reaffirmed the importance of grasping the in-depth technical knowledge of Blockchain technology to its partner firms and clients is because of a number of resources, capital, and talents that are required to develop, implement, deploy and maintain a Blockchain-based platform.

In mid-2016, the research firm Greenwich Associates revealed that over $1 bln is being allocated in the development of Blockchain on an annual basis. The development of Blockchain technology or Blockchain-based platforms is difficult and expensive primarily because of the shortage of developers. There are only a handful of developers that have a fundamental understanding of the technology and working proficiency on Blockchain technology to maximize its potential.

“Among firms stating their organizations have some Blockchain initiatives underway, 32 percent have an annual budget in excess of $5 mln per year, and a further 15 percent have budgets in excess of $2 mln. Projected across the entire financial services industry that level of spending will likely top $1 bln in 2016,” said Greenwich Associates.

Chuck Reynolds
Contributor

Bitcoin Prices Spike Above $900 But Turbulence Remains

Bitcoin Prices Spike Above $900

But Turbulence Remains

 

coindesk-bpi-chart-94

 

Bitcoin prices passed $900 today, though this feat was diminished by several rallies that ultimately failed to push its value above this benchmark. Overall, the digital currency rose to as much as $904.76, after falling below $880 earlier in the session, climbing above this level amid modest volatility.

Later in the session, the price mounted another comeback, hitting a high just above $905, according to the CoinDesk USD Bitcoin Price Index (BPI). At press time, however, the price had dipped again to a value of $894.95. This upward movement represented the latest session of relatively mild price volatility, at least compared to the sharp price fluctuations experienced earlier this month.

Most notable, however, about the day's trading, may have been the lack of any serious decline over the day's trading. Bitcoin prices enjoyed their latest climb in spite of new Chinese regulatory developments that found the nation’s exchanges responding publicly to pressures from the People's Bank of China, the country's central bank.

Bullish sentiment

Still, market sentiment has been bullish, according to figures provided by a handful of exchanges, even with the confirmation that major Chinese exchanges Huobi and OKCoin had stopped offering margin trading. The market was 91% long on 19th January, Whaleclub figures reveal. In addition, more than 53% of Bitfinex orders that were executed in the 24 hours through 22:15 UTC were buy orders, according to BFX Data.

Chuck Reynolds
Contributor

Donald Trump Inauguration Special Make Bitcoin Great Again!

Donald Trump Inauguration Special
Make Bitcoin Great Again!

As the Trump era dawns on the world, there are mixed feelings. On the one hand, there is the promise of a new age of politics brought on stage by a man that won the elections as an outsider. On the other hand, the anxieties stemming from the sheer unpredictability of the man. Yet there is one widely imagined benefit that Trump may have – He is good for Bitcoin.

Make Bitcoin Great Again

Bobby Lee, CEO of BTCC is certainly upbeat about Donald Trump assuming the presidency. In a tweet, he says “Together, we can make #bitcoin great again”. Lee has been positive on Bitcoin prices for 2017 and in an interview with CNBC, which you can view here, he basically stated that geopolitical reasons will lead to Bitcoin rising to newer highs.

Why the Donald is good

Donald J. Trump and the Federal Reserve are both critical factors when it comes to why Bitcoin may do well in the incoming administration. The Federal Reserve is likely to keep hiking interest rates, which will push up the United States dollar. Trump’s policies involve a massive amount of infrastructure building, which will likely give the dollar an upward edge.

As the Denmark-based Saxo Bank wrote in a report titled – Outrageous Predictions for 2017, “The Trump regime pulls out all the stops and jumps on a fiscal spending binge, further increasing the circa $20 tln of the United States national debt and in the process. This potentially may triple the current United State budget deficit from approximately $600 bln to $1.2-1.8 tln or some 6-10 percent of the United States’ current $18.6 tln economy.”

They add, “This creates a domino effect in emerging markets. China, in particular, leading people globally to look for alternative forms of currencies and payment systems not tied to central banks that have exhausted monetary policies or crony governments that are in full financial repression mode nor transaction systems that are long overdue for a revolution.” Interestingly Bobby Lee hasn’t missed out on this potential clue either. Look at what he has been retweeting below.

Trump’s budget chief loves Bitcoin

Finally, perhaps even if it is a long shot the thing that can work in favor of Bitcoin –  the man in charge of the Trump administration’s budget office, Mick Mulvaney is a Bitcoin enthusiast and the founder of the Congressional Bitcoin Caucus.

Mulvaney has stated:

“Blockchain technology has the potential to revolutionize the financial services industry, the United States economy and the delivery of government services, and I am proud to be involved with this initiative.”

Mulvaney is also a gold investor and has accused the Federal Reserve of debasing the value of the dollar according to Bloomberg. All in all, it seems that the Trump era is likely to be a godsend for Bitcoin.

Chuck Reynolds
Contributor

How To Invest In The Institutional Revolution Of Blockchain

C

How To Invest In The Institutional
Revolution Of Blockchain

  We’ve all heard that Blockchain will revolutionize business. We nod our heads in agreement, but do we really understand it? In an attempt to uncover the significance of Blockchain and opportunities for investing, I spoke with one of its leading voices, Richie Etwaru. Etwaru is a Chief Digital Officer, author, keynote speaker, and a repeat TEDx speaker. This is an edited version of our conversation on the phone and over email.

For “non-techies” like me, could you provide an overview of Blockchain?

Etwaru: Blockchain is a protocol that allows trust, consensus, and autonomy. The first use of Blockchain was Bitcoin. However, anything that can be represented digitally, such as rights, goods, and property, can use Blockchain. The core of Blockchain is a distributed ledger, the opposite of ledgers as we know them today. For example, Bitcoin combined technologies of distributed ledgers, network computing, and cryptography to coordinate the secure and trusted inventory and transfer of money represented digitally.

Organizations (such as governments, corporations, and volunteer groups etc.) currently operate in a trust vacuum. They use some type of double-sided accounting to coordinate the transfer of value between each other via multiple proprietary ledgers. Because they make the assumption that the other party’s ledgers are not to be trusted, they use inefficient middle wo/men to manufacture trust between organizations. However, organizations operating on a Blockchain, operate in the abundance of trust. Blockchain transactions are secure, trusted, instantaneous and don’t require a third party for validation.

What is the historical perspective of Blockchain?

Etwaru: Ledgers stem from the Dutch word legger, meaning “a book laying or remaining in one place”. Early versions of ledgers were physical books kept in a single place in a church where the official representations of scriptures were written and read in sermons. That’s why modern double-sided accounting using financial ledgers, such as sales ledgers and accounts receivables, are known as the principal “book of account”. And, of course, the practice of keeping official representations of assets, liabilities, income, expense and capital is referred to as ”book keeping”.

The actual books are mostly gone. Today’s modern digital ledgers, coupled with debiting and crediting via double-sided accounting, enable the inventory and transfer of goods, services, rights, property and several other types of assets/value. For example, the amount of cameras for sale at any given second on Amazon.com is the result of a ledger with debits and credits between Amazon’s inventory management systems, camera suppliers, and consumer’s shopping carts and shipping partners.

Tell us more about the concept of a distributed ledger.

Etwaru: The ledger is about to have an upgrade at an epic scale, into a distributed ledger.

A distributed ledger is the digital inventory of value where participants on a network each h  ave a copy of the ledger. Transactions that change inventory are verified by the majority of network participants. Once verified, these transactions are written to all copies of the ledger at the same time as an irrevocable block of transactions chained to prior blocks via a sophisticated set of encryption techniques. The distributed ledger reduces double counting, the need for settlement, the need for double-sided accounting, and dependence on trusted third parties to manufacture trust.

The trust of a single ledger is sacred, like that old book lying in an ancient church. But to trust someone else’s ledger or thousands of other ledgers at every moment, requires that we operate on a commerce protocol that enables the secure and trusted inventory and transfer of anything that one would ever want to account for.

Is blockchain to business what social media is to communications, ie, a great leveler?

Etwaru: Yes, this is like what social media did for communications. Any person or collection of persons or things may be able to organize, govern and corporate as they see fit. The Blockchain is a new type of commercial freedom  However social media was an information technology that drove an information revolution. The Blockchain is an institutional technology driving an institutional revolution.

How could Blockchain bring about an institutional revolution?

Etwaru: The difference between the collaborative and industrial corporation is the incentive model. For the first time, Uber, AirBnB and Wikipedia are showing us that a pure intrinsic motivation model of commerce can work. People can be completely self-motivated to create value in what we can call a common market.

This intrinsic motivational model coupled with the ability to leverage Blockchain to design how we organize and govern in groups to create and capture value gives rise to a model of commerce that much freer than the one we have today. In the future, we may find that the design of the institution we know it today where we are employed, managed, governed, and paid — with capital invested, boards of directors, shareholders and dividends — may seem very archaic. Blockchain begins the powering of this institutional revolution.

How can Blockchain invite more people into commerce and change business structures?

Etwaru: The potential of Blockchain extends far beyond new business models. For example, according to the United Nations, over 2 billion people on the planet do not have sufficient identity. This hinders their ability to participate as consumers in commerce. Blockchain can help that. For example, the government of Estonia has been piloting digital identity for citizens on a Blockchain. This type of democratization of trusted identity not only lowers identity fraud but also levels the playing field. It extends the boundaries of commerce to those who have monetary value but no identity to participate in commerce. We can now allow those people who are not trusted as consumers into commerce.

In addition to the impact of Blockchain enabling commerce, it also lowers barriers of groups of humans to organize and govern. Until now, that has required incorporating, following written by-laws, governing with boards of directors, installing management layers, and carrying the overhead to “run” an organization and “prove” compliance.

The distributed ledger coupled with smart contracts give rise to an organizational archetype that does not currently have a legal home. Referred to as a Decentralize Autonomous Organization (DAO), a DAO is an organization where the vision, mission, strategy, principles, currencies, assets, and operating model are represented on a Blockchain. Abundant trust and sharing leads to transparency. Simple consensus leads to decisiveness. Autonomous execution of smart contracts lead to a reduction in managerial overhead and lower the barriers to entry.

The jury is still out on how governments will accommodate these new free form “corporations” as they enter commerce. While governments catch up, the world’s largest DAO (called The DAO) is a crowd-funding project where over 10,000 people have autonomously poured almost $200 million into an investment pool. The DAO has no shortage of first generation challenges and growing pains, however this $200 million experiment suggests that instead of relying on choosing between an S-Corporation, a C-Corporation, or a Limited Liability Partnership etc., entrepreneurs of the future will be able to “design” their own organizations customized to the optimal needs of their mission, vision, and strategy to change the world.

How are businesses and individuals investing in blockchain today?

Etwaru: There are three types of investments into Blockchain. First there are those that are still chasing Bitcoin and digital currencies. While viable, these Bitcoin-only investments are typically limited to the Fintech sector and are similar to the email gold rush at the boom of the Internet. Bitcoin is to Blockchain what email (or AOL chat) were to the Internet. It’s the first instance, but one of the least interesting ones.

Second are those that are building platforms. Ripple, Ethereum, and The HyperLedger Project are all instances of investments into making Blockchain platforms. These vary in size, model, and sophistication. Ethereum is somewhat crowd sourced and focusing on the consensus and smart contracts layer. The HyperLedger Project is more of a collaboration of large Fortune 500 companies perfecting the trust layer and use cases in trust.

The third are those building on top of the platforms, or ahead of the platforms, in anticipating that the platforms will catch up. These are vertical, very specific use cases to prove digital music/art rights, show ownership of cars/equipment, or to store and share records of sensitive information about persons or things. Many of these are in Fintech, the shiny object that first distracted the venture capital and angel investor community, but increasingly, investments are being made beyond Fintech into Blockchains of rights, non-monetary assets, and property and others.

Chuck Reynolds
Contributor

 

 

Trump’s ‘Acting’ CFTC Chair Details Vision for Blockchain Regulation

Trump's 'Acting' CFTC Chair Details
Vision for Blockchain Regulation

Donald Trump hasn't even formally appointed CFTC commissioner Chris Giancarlo as chairman yet, and he's already appropriated the president-elect's slogan: "Making Market Reform Work for America." In comments given to about 300 swaps traders, analysts and more at the SEFCON event in New York City this week, Giancarlo for the first time referred to himself in public as "acting chairman" and laid out his "agenda" going forward for the regulation of blockchain and distributed ledger tech.

Reading from a prepared speech, the current CFTC commissioner yesterday reiterated his five-point plan for regulators to promote the technology, adding that if implemented successfully, he believes DLT could make regulatory compliance easier – even if Trump has plans to remove the control altogether.

Giancarlo said:

"DLT may allow market participants to manage the enormous operational, transactional and capital complexities brought about by Dodd-Frank. At the same time, it may provide regulators with the market visibility necessary to fulfill our mission to oversee healthy financial markets."

To accomplish this, Giancarlo expanded on his plans as first outlined in May for regulators to "promote" DLT and other financial technology. Specifically, he said regulators need to designate "savvy" teams to work with FinTech companies, create safe environments for innovators to experiment, "participate directly" to help build proofs-of-concept and collaborate with both local innovators and international regulators to minimize overlap.

Call for cooperation

And Giancarlo’s America-centric slogan doesn’t appear to come at the expense of cooperation. In fact, as he argued, the CFTC needs to collaborate with other US financial regulators to "emulate" work being done in the UK, Australia, Singapore and Japan "to avoid stifling innovation and DLT's potential benefits". The DLT plan was part of five "elements" Giancarlo said would help make market reform work for America. These included providing customer choice in trade execution, fixing swaps data reporting, making the regulatory culture more progressive and encouraging FinTech innovation (the category that included his DLT plans).

Not only did Giancarlo indicate that distributed ledger technology could make Dodd-Frank compliance easier if successfully implemented, but he said it might actually strengthen the job market. "Making market reform work for America," said Giancarlo, "means fostering FinTech innovation for the health and betterment of US financial and capital markets, market participants and the American jobs they support."

Audience reaction

The reaction among audience members to Giancarlo's speech was largely positive, though skepticism remains regarding whether the cost of implementing DLT might be worth the potential benefits. For instance, Kevin McPartland, head of research at Greenwich Associates, said he doesn't expect much change to happen for the first year that Giancarlo is in charge of the CFTC, assuming Trump formalizes the appointment.

Instead, McPartland thinks there will initially be even less change to regulatory considerations, as planned modifications are tabled and the new chairman works to replace a depleted array of commissioners. However, once the new team has its footing, McPartland believes Giancarlo would likely align his blockchain controls with Trump's policies.

McPartland described the impact on regulation to CoinDesk:

"I’m not sure it will be better or worse, just a little bit different. If there is a more hands-off approach taken by financial regulators, that should allow the industry to more freely innovate and move forward as opposed to spending so much time and money on compliance."

Micaeh Green, partner at Steptoe & Johnson LLP and co-chair of the law firm’s government affairs and public policy group, largely echoed McPartland’s stance that Giancarlo would likely give the industry a light touch on regulation. According to Green, Giancarlo will likely increase the interaction between regulators, technologists and market professionals to help ensure what is being built is compliant from the day it goes live, but without hindering its possible applications in diverse sectors. "I think what you hear out of Mr. Giancarlo is, 'Let's see if that can be used,'" said Green. "Because it can be very efficient, from the market standpoint, it can be very cost efficient from the market standpoint, and reducing cost is very important."

Conflicting views

Optimism aside, the future might not be smooth sailing. As the Financial Times reported yesterday, Giancarlo’s embrace of the Dodd-Frank act – and the potential benefits blockchain could have on making compliance easier – puts him in direct opposition to Trump. During Trump's presidential campaign he promised to "dismantle" the Dodd-Frank Act, the regulatory overhaul put in place after the financial collapse of 2008 as part of a bid to help increase industry oversight. It would appear that Trump might have no interest at all in Giancarlo's belief that blockchain could simplify compliance.

Larry Tabb, industry analyst and founder of Tabb Group, told CoinDesk that even if a blockchain solution was feasible – and useful – it might not save enough money to be worth implementing. "The amount of work just to get it into production is just so high," said Tabb. "Let’s just say we spend $100m building out a platform. Each of those firms have to spend that to implement it. You’re talking about billions and billions of dollars just to retrofit stuff that works today." Regardless of what the future might eventually bring, however, Giancarlo reiterated his goal for the speech was to make explicit his plans going forward.

Giancarlo said:

"In my work as acting chairman – and, if I am honored to be nominated and confirmed by the Senate as CFTC Chairman, my priorities should come as no surprise. These priorities are part of an agenda I like to call 'Making Market Reform Work for America.'"

Chuck Reynolds
Contributor

Some Social Media Marketing Tools to Catapult Your Brand in 2017

Some Social Media Marketing Tools
to Catapult Your Brand in 2017

With millions of brands emerging each year, all vying for the public’s attention, small businesses may find it difficult to compete against more established, larger corporations and businesses with attractive social media campaigns. Sharp visual imagery by professional designers and firms are often costly. While fees may play a huge factor in this perception, this should never hinder owners from maximising their social media footprint.

Here are a few cost efficient social media tools to help small businesses catapult their brands into the new year:

Facebook Canvas Ads

With billions of users, Facebook is a great platform to advertise your brand, and they’ve just made it easier to do so with Canvas. Canvas is a new form of expressive advertising that allows businesses to showcase their products and services on Facebook in a visual storyboard. It’s a combination of videos, still images, and a call-to-action button, to allow users to develop appealing integrated Facebook advertising. Facebook advertising charges may apply and varies depending on the budget set by the user.  

Everypost

Everypost is a new app that helps businesses save time by streamlining their social media content in just minutes. Users are provided with social analytics, team collaboration abilities, future scheduling options, and more. Packages may vary, but their free, personal option is a great way to test out the service before upgrading.

Ripl

If you’re seeking eye-catching video advertisement creations with a low cost and high impact, then Ripl is the app for you. This app allows business owners the ability to create professional video advertisements in three easy steps with templates that are simple to use. Users are given access to a full catalog of unique designs, the ability to add music, schedule posts, and add logos. The app is currently free to download on the iTunes App Store and Google Play. A pro version is available for a small fee, and it provides additional resources and support to help small businesses boost their brands.

Studio

One way to better advertise your business or service is to turn your images into professional designs. Studio provides beautiful lettering and custom designs that are easy to layer on top of your photos. This free app allows users to remix Studio templates, and customize them to fit their brand messaging. The beautiful overlays will capture the eyes of your followers and rejuvenate your social media stream.

Chuck Reynolds
Contributor

Ways Data Can Boost Your Social Media Marketing

Ways Data Can Boost Your Social Media Marketing

 

After a decade of attempting to connect with customers and prove return on investment, brands are still struggling to achieve success with social media marketing and engagement. What does success look like? For most marketers, success includes anything from raising brand awareness and thought leadership to lead generation.

But how can we develop and curate the right content, post at the most effective times and prove impact? In my experience and from what I hear from our customers, the only way to achieve real success is by using and leveraging data. Social media marketers can boost their performance and the performance of their campaigns by leveraging the power of data to inform their decision-making. Here are six ways to do just that:xxxxx

Use the right technology:
Choose a social technology that relies on data to increase efficiency, support collaboration and improve workflows. The right tool will allow you to grow your capabilities and activities by adding additional pieces of the suite when digital efforts and priorities shift. You’ll want to be sure the tool can be configured in multiple languages to develop deeper relationships with global customers and that the interface is intuitive, easy to manage and offers the analytics you need. Plus, a simple but visually appealing way to show those analytics is a must (I’ve spent too much time formatting data in the past). In your assessments, make sure you look at how the importance of data has played in to the platform’s development.

Break the ROI myths:
Many marketers struggle to prove ROI because of myths that declare that social impact is unmeasurable. This is not true. You can use data to track consumer behavior that proves the value of social. For example, measure attribution. What motivated the customer to buy? What was the path they took? When did they convert? Social’s impact is an important part of the overall ROI of a campaign and needs to be measured. I’m not saying it’s easy, but it is possible, and the best marketers are doing it today.

Measure, optimize and succeed:
Once again, this is where a data-driven platform will offer performance analytics that are housed and viewed in one dashboard. Data should be available, relevant and understandable so that stakeholders across your organization can visibly see the impact social has on your customers and revenue. Take the same approach you would with measuring and optimizing search, email and other digital channels. Hold social to the same standards as you do everything else.

Don’t post and pray:
Stop playing the content strategy guessing game. Data and machine learning can tell you when and where to post. Brands that follow optimized timing recommendations see an increase in reactions of 17 percent on Facebook and 4 percent on Twitter. If you have the right tool, an auto-scheduler can automatically pick the best time to publish, eliminating guesswork and increasing post performance.

Go beyond perceived influence:
Don’t rely on perceived influence. Just because your audience follows a celebrity doesn’t make that celebrity the right influencer for your brand. Data can drill down to reveal who the true influencers for your brand are and allow you to hone in on what your customers’ interests and areas of expertise are. It will also show you how they like to engage so you can craft the right message for the right audience at the right time. Social influence and expertise tools, such as Klout Data, use machine learning to identify relevant trending topics, subject matter experts, profiles and influence scores for you.

Understand your customer in every dimension:
Your brand’s audience is not just your customers. It’s every single person who touches or interacts with your brand: customers, employees, vendors, affiliates. Think of this as your “total community.” When you take a total community approach, you’ll identify and enlist the help of every stakeholder and include them in your approach to how customers will be engaged. You can co-create the customer experience and then scale it to apply to every touchpoint in the buyer’s journey. Data will provide the depth of insight you need to see your total community holistically and empower you to craft truly personalized social engagement strategies.

The right data will make your work more efficient and effective and boost your performance by giving you an edge in social engagement, strategy and interactions. Now more than ever, leveraging data is essential to ensure the actions you take result in delighted customers and better performance reviews for you.

Chuck Reynolds
Contributor