SWIFT + R3, Kraken's $100M splurge and Ridiculous Things On the Blockchain

Off the Blocks | Vol 53, Feb 5, 2019

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The Case for Crypto Institutions

The original post by Haseeb Qureshi, GP, Metastable Capital first appeared on HackerNoon last week and makes a well reasoned counterintuitive argument. Contrary to widely held public perception that crypto systems are about lawlessness, Qureshi points out:

Crypto is all about institutions. Specifically, it’s about building scalable, global, decentralized institutions — institutions that survive any particular group, country, or time.

Ask what has driven the economic vitality of the most advanced nations in the world, and we pretty much know the answer: Strong Institutions. If you improve a country’s institutions, the society inevitably flourishes — economically, socially, and ethically. Institutions are essential, difficult to replicate, and hard-won through generations of social and political toil.

Yet, every country has its own walled-off and homegrown financial infrastructure. Each nation must design and staff its own iteration on these institutions: banks, credit systems, exchanges, and legal structures. If they don’t, they’re doomed to be a financial backwater.

With cryptocurrencies, anyone is free to plug into a global financial system: a bank, savings account, payment rail, public registry, and system of contracts. Innovation in this sphere can be shared with everyone. The promise of crypto, then, is to be the first global financial commons. It purports to do to money what the Internet did to information.

This is incredibly powerful.

Today, most citizens across the world can’t do much to combat economic mismanagement. They can try to circumvent capital controls, they can engage in gray or black markets, they can dollarize, they can divest into gold. But in the future there will be another, more powerful option: adopt cryptocurrencies. This will allow people to opt into a global digital economy and financial system, complete with mature financial services.

So it’s incorrect to say that crypto will replace institutions. Instead, crypto will build alternative decentralized institutions. These decentralized institutions will be more portable and global, they will operate autonomously, and they will offer financial certainty to the rest of the world that doesn’t currently have it.

Going forward, we will need to develop better institutions around how projects get funding: more norms around transparency, disclosures, incentives, advisors, partnerships, marketing, lockups and liquidity restrictions, and what it means to both create and capture value. Organizations like Messari and Gemini are trailblazers in self-regulation, but there’s more work to be done.

This is the only way to win people over in the end. Not by shouting at them that they’re not decentralized enough, but by showing them that your institutions are a compelling alternative to their own.

At the end of the day, crypto is not just technological innovation. It’s also social and political innovation. If you want to build valuable institutions, it takes time, patience, and a lot of missteps.

Image Credit

Now for some significant news form the world this week:

  1. Deutsche Börse Blockchain Securities Lending Platform: Major global securities marketplace Deutsche Börse has reported it is “making significant progress” on its blockchain-based securities lending platform. The platform is being co-developed by the German securities marketplace and Luxembourg-based blockchain liquidity management platform, HQLAx. Six banks have to date confirmed their plans to join the ​​securities lending platform, and have initiated their connectivity processes. Based on enterprise blockchain consortium R3’s Corda blockchain platform, the tool is designed to improve the process of “collateral management of high-quality liquid assets (HQLA).”
    […Read More]

  2. JPMorgan: Blockchain Is Making Progress Outside Crypto: Trade-finance blockchain solutions are more common than some others because of high potential gains in efficiency from digitalization, according to a Jan. 24 report from JPMorgan analysts and strategists led by Joyce Chang. While cryptocurrencies have attracted the most attention, it’s the underlying technology used for verifying and recording transactions that matters.
    […Read More]

    We need to separate out blockchain from crypto. There’s been progress made on blockchain, there are successful use cases.

  3. Swift ties-up with R3: Swift, the financial messaging service for the world’s biggest banks, is partnering with blockchain start-up R3. The partnership with R3 will see Swift hook its GPI technology up to the former’s blockchain platform Corda, according to an announcement on Swift’s website. Firms using R3′s Corda network will be able to authorize and settle payments with the help of a gateway called GPI Link. Swift touts GPI as a technology that’s able to speed up cross-border payments between banks, with end-to-end tracking of transactions in real-time. […Read More]

  4. Bitcoin Will Be Internet’s Currency: Jack Dorsey: Co-founder and CEO of Twitter Jack Dorsey declared again that he believes Bitcoin (BTC) will be the internet’s native currency. Dorsey also forecasted that the internet is transitioning to a system in which any data that is created will be online permanently. In the fall of 2018, while speaking at a hearing about Twitter transparency at the U.S. House Committee on Energy and Commerce, Dorsey had publicly noted that blockchain could be used to combat misinformation and scams. […Read More]

    We’re moving to a world in which anything created exists forever, that there’s no centralized control over who sees what, that these models become completely decentralized and all these barriers that we, that exist today, aren’t as important anymore.

  5. M&A | Kraken Acquires Futures Startup for $100 M+: Cryptocurrency exchange services provider Kraken has officially acquired regulated futures trading startup Crypto Facilities in an undisclosed deal valued at least $100 million. As such, Kraken CEO Jesse Powell framed the merger as one that would “massively accelerate” his company’s roadmap, enabling the San Francisco-based startup to sidestep years of efforts to obtain the licenses and approvals necessary to offer a competing service in Europe. Customers will now be able to trade futures on nights and weekends, extending beyond the 9-to-5 trading hours of current U.S.-based offerings. […Read More]

    You can margin in real time, you don’t have to provision for gap risk overnight or over the weekends, you can take less margin which is more capital efficient.

The Final Word | The Top 10 Most Ridiculous Things on the Blockchain


When you put a thing “on the blockchain,” you’re not actually putting it “on the blockchain.” Nothing is “on the blockchain.” The “blockchain” doesn’t exist. Instead, what you’re really  doing is “notarizing information about a thing using a database distributed across a network of nodes, which is sometimes called a blockchain.” Or perhaps you’re “fragmenting data about a thing into non-fungible digital assets that can be traded, via a distributed network called a blockchain, for ERC20 tokens.” But those are far less catchy, so everybody just says “on the blockchain” instead.

DigiPulse tracks your social media accounts, and if you stop using them for a set period, it assumes you’re dead and passes on your cryptoassets to your next of kin. Yes. And because  the system is truly “on a blockchain,” it requires an “oracle” to feed it information about meatspace. Hilariously, this “oracle” is DigiPulse chief Norm Kvilif, who emails you to double-check that you’re dead.

About Proteum
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