Blockchain Companies: Why Is The Fund You Lead Investing In Blockchain Companies?
Blockchain Companies: Investors do not know how to produce tectonic changes in the world, but they should be a part of them, and a blockchain is such a tectonic change. The 1995-1997 generation of funds invested in Internet infrastructure; in 2002, they invested in open source; and in 2008, they invested in mobile. One-third of the Internet is already running on open source. Blockchain companies allows the kind of repayments that funds need because it is a change that can replace the infrastructure of the financial world. However, in late 2013 and early 2014, the technology matured enough to be attractive for investment by funds.
“The world’s banking infrastructure is based on trust, so it works slowly. Why does it take money for two weeks to get from Israel to France? Because not all banks in the world have a trust arrangement with banks in Israel. To allow the transfer, Swift requires an arrangement between two banks. The transfer must be made through a bank with which they have agreements, for example, Citi. In addition, the banks leave the money with them until they can verify the source of the money and where it goes. In Bitcoin, the very fact that I transferred the bits to you “Now, take almost every region in the interbank and financial system, and think about what it would have looked like without a relationship of trust. In terms of opportunities for startups, many of the characteristics of 1995-1997 are seen today.”
Just as in 1995, it was difficult to imagine what the Internet would look like today, so it is impossible to predict in which directions blockchain technology will develop, says Shochat. “People are good at looking at a linear trend – they might expect it to be 20% better – but they are not good at exponential growth forecasts. The big and significant things are still ahead of us. Take the field of journalism, which is currently based on subscription fees or advertising. , Just because the existing financial infrastructure does not know how to support small payments (micro-payments). Today it is possible, for example, thanks to a product of an American company called 21 Inc., backed by the Andersen Horowitz Foundation.
Israeli startups are playing a significant role in the growth of this new technological arena. The consulting and accounting firm Deloitte lists 38 Israeli startups active in the field. The source of Israeli dominance, explains Amit Harel, Director of Innovation Practice at Deloitte, “8200 and other units are very strong in it.”
Harel defines the startup activity in the blockchain companies as “a growing scene in which about a third of the blockchain companies are already active and commercial, at a different level of maturity.” The report, he says, “indicates that the local ecosystem will very soon become bustling, active and dictating international trends.”
The report identifies five main groups of players in the local scene:
- The developers develop very impressive capabilities on the technical side. Still, they sometimes have difficulty identifying and characterizing the business implications and solutions.
- Global competitors.
- International financial and technology institutions seek Israeli innovation in many areas and see the Blockchain companies as a potential growth engine.
- Local and foreign investors are making their first steps in investing in the field.
- Service providers such as accountants and lawyers Themselves the role of mediators, translators, and catalysts for the process.
Opposite the Tel Aviv Stock Exchange, the Israeli Embassy and the Bitcoin Association operate a joint workspace that serves as a home for entrepreneurs in Blockchain and digital currencies. The embassy island is received by “ambassadors” – community volunteers on-site throughout the activity. “The idea was to create an infrastructure for anyone who wants to work in the field, from meetings, through a work environment to finding partners,” says Manny Rosenfeld, chairman of the Bitcoin Association and one of the community leaders in Israel. Or Israeli leaders. Not only was cyber power created here, but the spearhead of global fintech was also built here. It has often happened that programmers and entrepreneurs who came by chance entered the field and set up a startup. We are here to absorb anyone trying to understand the hype and allow him to join this technological revolution.
“Blockchain companies is a defiance against the financial world,” says Harel, who expects Blockchain to completely change how accounting and auditing are conducted, as it is transparent. It will make the accounting profession smarter, better, and faster. We anticipate that traditional institutions, Banks, blockchain companies, and even governments have implemented it quickly. As usual, regulation will be slower than technology, but it will not take ten years but five. The first buds can already be seen in the world. “Barbados-Dollar, based on the Colored Coins platform.”
And money is just the beginning of the story. In a lecture at the Hebrew University, which is available to watch on YouTube, Prof. Yuval Noah Harari describes money as a magic solution that answered the barter economy’s many market failures—practiced in ancient times. “Blockchain makes it possible to return to this world,” says Harel. “Suppose I want to sell you a Ferrari car and you want to sell me two crates of vodka. I send you a Ferrari and you send me vodka, and only after we approve the deal is made. So we take the money element out of the process and save a lot of fees. We both first had to sell the Ferrari and the vodka, and then we still had to pay a commission for transferring the money. ”
Aside from the financial arena, Harel says, Blockchain is also expected to affect human-state relations. “It does not mean the destruction of the states, but that the states will now be able to offer better services. Using technology. For example, if I want to sell you a car in five years, we will not have to go to the post office to make sure the vehicle belongs to me.” Get the ID, go to the taboo tomorrow and try to sell a property on your behalf. “The role of the mediator will change, but it will not be completely redundant. We will still need someone who is loyal, responsible, and a man to be trusted. Traditional institutions will not dismantle their assets but wear a different hat before we talk about international trade, such as diamonds or artwork.”
Hope For Africa
Despite this impressive vision, many still question the ability of blockchain-based tools, especially Bitcoin, to make the leap that will put them in the mainstream and remove the cloud of apprehension that accompanies them, especially since the 2013-2014 Bitcoin bubble. Shochat is convinced that such a leap will come, even if it is delayed: “Although quite a bit of the dollar value of Bitcoin is speculative, today we also see that the currency has an inherent value that stems from its additional uses – for example, the transfer of money to foreign nationals.” The market of migrant workers transferring money to their home countries is estimated at half a trillion dollars a year. It is a magician for both startups and financial entities aware of the enormous potential inherent in blockchain technology. In addition, eyes are also being fixed on areas with shaky infrastructure and a lack of trust in the local financial system. Hundreds of millions of people operate without a bank account.
Among these entities can be found Visa. According to Visa Europe CEO Israel Oded Salomi, in an experiment conducted by the finance giant in collaboration with the startup Epiphyte, consumers of Kenyan citizens transferred money from the UK to their country while sharply reducing commission costs. : Customers in the UK moved cash from their Visa card to the app, along with an instruction to whom to transfer the money. The recipients in Kenya used the same app and, once identified, received the money in local currency.
“Customers did not know what a blockchain was, but they liked it because it was cheap,” says Salomi. He said that of the six key areas that Visa has defined for its future development – the Internet of Things, big data, authentication and identification, consumer experience, financial system accessibility, and Blockchain – the latter has the greatest potential for disrupting the entire financial industry. “It’s a technology that changes all conventions,” he says. “In recent months, we have been meeting with startups and looking for opportunities for collaborations with banks, clearers, or retailers, and we have already seen some interesting companies. However, the technology is still in its infancy, and there are many issues to be resolved.” “The issue is being tested in government corridors around the world right now. The second challenge is capacity. Visa can run 8,000 transactions per second, while blockchain capacity is much lower.”
Just as it allows for a leap forward in the level of financial activity in countries suffering from a lack of functioning infrastructure and trust in the authorities, Blockchain appears to be a great hope for change in countries where corruption is high. Confidence in the rules is low politically and economically. In Ukraine, for example, two associations have emerged this year that seeks to fundamentally change the way the country operates on two significant levels: the first of which is e-Auction, a blockchain-based system for privatizing government assets, launched in Odesa and now awaiting regulatory approval. The project aims to enable transparency and equality of opportunity and to fight corruption related to the management of state assets.
In the second project, launched in Kyiv in February, a group of technology experts and businessmen are working on setting up a digital democracy initiative that will allow electronic ballot-based voting, whether it be parent committee votes, petitions, primaries, or parliamentary elections. This project, known as e-Vox, is part of a long line of independent projects based on the Ethereum platform – the most advanced project in Blockchain, designed to take blockchain technology a few steps further, given the technological limitations of the blockchain network. Bitcoin wine
Everything Is Shared
The central added value of Ethereum over Bitcoin is its ability to handle more sophisticated contracts than Bitcoin since it can take a larger amount of data. Complex smart contracts can translate into digital language the chain of actions involved in performing bureaucratic activities and execute them automatically. For example, it can automatically transfer dividends on securities when the share value exceeds a certain profitability threshold. The smart contract replaces the registration, signing, and enforcement process while reducing or eliminating the need for lawyers and the intervention of the authorities – the police, the courts, and the expenditure to act.
Similar to blockchain technology, the organizational structure of Ethereum is also complex. Atrium currently functions as a non-profit umbrella organization registered in Switzerland. It deals with the development of the platform – the Atrium blockchain network and the programming language, which allows programmers to develop applications for it or private blockchain networks. The blockchain system for privatizing government assets from Odessa is an example of a private blockchain. However, it is not directly related to Ethereum.
The Atrium ecosystem employs many startups led by programmers who were part of the Atrium founding team and currently head for-profit ventures. Ethereum’s funding sources are the banks, along with another significant source of funding, which is another example of how blockchain technology is changing economic models: the public. Similar to Bitcoin’s Blockchain, Atrium’s Blockchain operates its Ether currency. Before the project’s launch. Offered the crowd to invest in the project by purchasing the first site coins issued. Then began free trading in these currencies on the Distributed Currency Exchange, alongside Bitcoin and other currencies called Altcoins. The $ 18 million raised by the project currently places it fifth on the list of crowdfunding projects that have raised the highest amounts in the world.
The buzz around Atherium gave its signals quickly. The site overtook all the other currencies distributed on the stock exchange within a few months. It settled in second place, albeit by a considerable margin, below Bitcoin. The increase in the site’s value has enabled Ethereum and its related entrepreneurs to fund an important part of their activities. In an interview with TheMarker magazine, Atrium founder Vitalik Butlin, a 22-year-old Canadian programmer of Russian descent, claims that “most of the efforts today are improving security and user interface, both for developers and end-users, and improving its scalability.”
But in points to the German startup slock. It is the best example of the promise inherent in the Blockchain and Atrium. The service offered by this startup is a real connection to the real world in the field of the Internet of Things and the cooperative economy. Slok. It has developed a smart lock that works on a blockchain. It allows you to sell, rent, or share property such as a bicycle, a parking space, or an Airbnb apartment without intermediaries. The company’s investment model also operates on a blockchain basis and is known as DAO – a distributed autonomous organization. This structure allows investors to continue to control the company and receive some of the profits autonomously and automatically as long as its products are in use, even if the company Ltd. that represents it in the current corporate world disappears from the world.
Butrin refers to Atrium’s financial horizon, which looks rosy in light of the rise in currency value: “The jump in site value will allow the organization to continue operating for at least another three years,” he estimates. The jump in currency value in recent months has been phenomenal. It is partly attributed to its collaborations with technology and finance giants, such as the atrium-based startup ConsenSys, which won the first service with official Microsoft certification in its cloud service. The partnership means that Microsoft’s cloud will provide services to blockchain companies for internal use.
“Put In ‘Dead Money”‘
“I do not know if the announcements of these collaborations are what boosted the currency, but without a doubt, it adds confidence in the system and its future and stability and makes more people join,” explains Israeli developer Roman Mendeleil, who about three years ago “left everything” by definition, to devote all Efforts to develop Ethereum, and is one of about 30 members of its first development teams. Roman’s team is currently developing the life. Ether. Camp service scans the web and provides a window into what’s happening inside Ethereum.
On the funding sources, Mendeleil says: “The quiet to develop comes from the banks’ money. They are not dumb. They know their reputation is poor and try to improve it. Development and implementation of projects. They signal to investors that it is worth investing, and new investors come. We started with about 10,000 and today. There are already about 70,000 surfers who hold the currency. The total value of the network has recently been around $ 1 billion, “And the network is only growing. Atrium’s network already has about 30,000 computers that solve mathematical problems and add more and more blocks to the chain.”
Two days after. Published the news of the collaboration with Microsoft, the Wall Street Journal published that the blockchain consortium of 42 of the world’s leading banks, R3 Cev, had completed an experiment on five blockchain companies, including Atrium and media developed by Intel and IBM. Banks that have joined the consortium to advance the research and development of Blockchain in the financial sector include Bank of America, City, Credit Suisse, Barclays, and Deutsche Bank. According to sources involved in the matter, the venture seeks to explore the possibility of creating a global blockchain network that will replace the current money transfer system, Swift.
Are the large-scale investments of the financial sector in the Blockchain companies marking the beginning of a new era, or are they a bear hug designed to stifle disruptive technology while in hostility? The author of “The Blockchain Revolution,” Alex Tapscott, claims that the answer is both. “Financial services companies are not identical, and each has completely different motives,” he tells TheMarker magazine. “The factors that play a role here are fear, opportunism, and strategic thinking.
“The fear stems from the fact that the Blockchain allows the consumer to price the value of the brokerage in a transparent manner, which means that whoever does not offer added value or real value, its profit margins will shrink or disappear altogether—decades, if not centuries. Opportunism results from cost-benefit calculations – technology will dramatically reduce the cost of doing business for many financial services blockchain companies. When it comes to financial products like equities, bonds, and derivatives, there are sometimes even ten intermediaries and parties Third on the way to the deal. “Blockchain will allow transactions to be closed immediately, using the peer-to-peer method, which will allow the entities that will use it to reduce back-office expenses and save money.”
And Strategic Thinking?
“A blockchain is a once-in-a-lifetime opportunity to reinvent the entire finance industry – the way markets operate, the way we document and store assets of any kind, and even the question of who the target audience is for the banks. There are 2.5 billion people without bank accounts worldwide, and a blockchain can lower the barriers to them. We are talking about trillions of dollars of ‘trapped’ or ‘dead’ money. Can be put into the global economy and the global financial system.
“While there is a lot of innovation in banks, in many cases there is not yet its full adoption by senior executives. New innovative players are likely to lead the development of the technology and in any case, banks will seek to acquire them. Or as they say, “
What Is Expected In The Short, Medium, And Long Term?
“In general, I believe that the future cannot be predicted but must be achieved. When discussing new important technologies, we tend to overestimate the impact in the short term and take a dramatic underestimation in the long term. The Internet itself is an example. And yet: in the short time, right now. Blockchain companies are implemented in a wide range of applications in the financial applications industry.
“In the medium to long term, . will create new business models. We will be able to reinvent governance and democracy. There will be a golden age of global entrepreneurship that will also ensure that artists and content creators receive a fair share of the value they produce. “The digital revolution. The first generation brought us the Internet of information. The second generation brings the Internet of value: a new, distributed platform that can help us reshape the business world and fundamentally change, and for the better, the human order.
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