„Traditional VCs Are Dead“: Full House at The State Of The ICO Ethereum Meetup

“I can honestly say my industry is being disrupted beyond belief right now. The funny thing is, I like it”, said Jamie Burke during yesterday’s Ethereum Munich meetup “The State of the ICO”. Jamie is betting his Outlier Venture’s fund on the idea to launch a handful, large ICOs to invest in communities and therefore in economies, rather than in startups.

Jamie’s fireside chat (no, there was no fire but it was hot as hell) with Datarella’s founders Michael Reuter and Joerg Blumtritt was a fascinating tour de force towards a potential next level of venture investing in general, and a new breed of investors focusing on communitarian, anti-fragile investments rather than amassing a portfolio of companies of which 90% will fail.

Before, lawyers Dr. Nina-Luisa Siedler of DWF and Dr. Markus Kaulartz of CMS inspired the audience with their highly informative and at the same time very sympathetic presentation on the legal aspects of ICOs. Both being long-time experts in the field of blockchain, managed to entertain everybody although their messages were far from being easy-going. Especially their slide “Consequences in case of incompliance” filled the room with enthusiasm. Their complete slidedeck “Legal Aspects of ICOs” can be downloaded here.

Again, the Ethereum meetup was a great success: everybody learned a lot, and from what we overheard on the floor, some of the individual conversations until late at night resulted in new ideas for …. future ICOs.

Tokenization of Finance – Towards a Glass Bank

Financial institutions are suffering from a severe crisis of public trust, often further complicated by their diverse range of business activities. A credit union or money circle would have a clear and limited purpose, as previously mentioned, governed by hard and unbreakable rules.

Credit Unions

With credit unions, as relatively small and lightly regulated financial institutions, challenges with governance and control of funds is challenging. As previously discussed fraud by credit union directors and employees is not uncommon with 46% of CUNA Mutual fidelity bond claim dollars paid out between 2009 and 2013 due to employee dishonesty. Of the 192 credit unions that have failed in last decade, 78 were due to insider fraud. Building savings and loans instruments on blockchains as their operational infrastructure almost entirely remove these problems and immediately restores trust.

Peer-to-Peer Lending

Equally, with regard to peer-to-peer lending platforms, there haven’t been many cases of platforms going financially insolvent. In the UK there are protections such as Financial Services Compensation Scheme (FSCS) but they do not cover P2P platforms and there is no real precedent for what happens with funds and loans in the event of failure. In the case of Yes-secure which closed down in 2014 it is yet to repay everyone, plus interest.

Glass Bank

The ambition of our upcoming Credit Union is to make fraud and insolvency much less likely by effectively forming a “Glass Bank”. This idea was first introduced in 1931 as a futuristic solution for crimes in physical banks. The money circle aims to achieve it through profound transparency and technical enforcement of rules.

Also openness in data, all data relating to a money circle’s performance will be recorded and publicly verifiable on a blockchain, means that all circles can collectively learn from one another to improve towards an optimum market. This is in stark contrast to banks and other traditional financial institutions that are often being forced by regulators to share data to improve competitiveness and market performance.

Upcoming Token Sale

A proof of concept implementation of our money circle was realised to test the viability of the concept and approach. To realise the project completely would require an additional development of another 6 months. Our plan is to open up our money circle solution to the public by offering a token sale. As of today, we are working ion the last mile of the token sale structure and process.

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If you are interested in our effort to build a Glass Bank you are invited to subscribe to news of our upcoming token sale by entering your email address here.