If you haven’t yet, make sure you read my summary of Day 1 first.
Day 2 started with a morning panel with:
- Paul Fox from Blockchain.capital
- Leon Gerard Vandenberg from RightsFusion Pty Ltd & Solara
- Oliver Harvey from ASIC
- Ross Buckley from UNSW Law
The panelists took turns in giving their views around blockchain, investments and regulation, leading into a Q&A at the end. I was running late to this session and believe I may have missed Ross’ individual slot.
Paul’s slot - I’m a VC and Bitcoin stole my job
Paul raises an interesting perspective on Angel investors. They don’t invest to make money. To them it’s a hobby. There are other, provably more profitable ways to make money.
He also raises the fact that sure there are lots of ICOs but more and more of them seem to be missing their targets. Many reasons but one he mentioned was China’s clampdown on cryptocurrencies.
ICOs are so hot right now that there are companies dedicated to helping it happen with pre-packaged solutions for launching and marketing the token generation event: https://icobox.io/
With so many ICOs it becomes increasingly difficult to discern good ideas from bad ones and then from plain scams. Nevertheless people are still innovating and are not deterred by these challenges. One example is TrustToken, which tokenises physical assets.
Leon’s particularly not happy with the current Australian Guidance towards ICOs. The current challenge is how to protect consumers, while still enabling companies and entrepreneurs trying to do a legit ICO - I’m assuming Leon is referring here to the plethora of scam ICOs out there.
To Leon - and many in the audience - an ICO is just another tool with very desirable properties: it gives companies the means to connect with individual investors who believe in their cause without diluting equity. In addition, Leon & his board had their share of bad experiences when trying to seek legal advice around ICOs and explaining their SOL Token
There are many types of tokens/coins: equity tokens, cause coins, utility tokens… I knew about some of these but the concept of cause coins is new to me - say, SaveTheElephantsCoin.
Oliver was basically talking about capital raising.
In particular he points out that the number of IPOs in the US is at an all time low whereas in Australia the trajectory is in the opposite direction. Unfortunately he didn’t dive into the why of this change in scenery in the US.
Personally I wanted to have asked if the decline in IPOs is due to company expansion by acquisition. Companies like Google, Facebook and Atlassian have acquired dozens of smaller successful companies who could have otherwise gone public - is there a correlation here?
Another piece of data Oliver shared is that 25% of companies listed on the ASX have a market cap of up to $5M - he then goes to say that if a company is looking to raise about that much money crowdfunding platforms such as ICOs might just be the way to go.
Are ICOs making entrepreneurs soft?
The problem raised by this question is whether having too much money too soon - as is the case with lots of ICOs - can be bad for founders.
The panel’s general opinion is that it can be a hindrance: it may lead to scaling up too soon and losing focus as one now thinks it can do many different things at the same time. VCs in general are sceptical of this.
One way to mitigate this mentioned in the event is to have the funds locked up by smart contracts (potentially tied to milestones as opposed to simple time triggers).
The bottom line is that ICOs are still evolving.
Why invest in ICOs vs traditional investments? Are we opening the floodgates for less knowledgeable, naive people to invest?
Should mom and dad be investing? Maybe not - there isn’t enough information out there, not enough regulation. We’re not there yet.
That said, what ICOs - in particular the tokens people invest in - provide is unprecedented liquidity. Tokens aren’t going away.
In the midst of all this information exchange Naval Narvikant was mentioned as someone to watch. He’s got a couple of articles and podcasts which have been recommended:
Software architecture and engineering for blockchain applications - Ingo Weber - Data61
Dr Weber started with a demo of ethviewer - a way to visualise the ethereum blockchain in realtime and observe how transactions are received, processed and added to blocks. Just plain cool!
The general message is that most blockchain applications have the blockchain as just another component in their architecture and the strengths and weaknesses of each component should be respected and planned for. e.g.: don’t do big data processing on the blockchain
In addition Ingo mentioned the Red Belly Blockchain, an unforkable blockchain built down under.
Blockchain risks, Opportunities and Future scenarios - Mark Staples - Data61
The next speaker, Dr Mark Staples, is also from Data61.
Dr Staples explores a couple of reports published by Data61 about the future of Blockchain in Australia. These reports can be found here.
What’s changed since these reports:
- Active interest and growing understanding by regulators
- Australia leading the ISO TC307 standard on Blockchain and DLT
- Widespread adoption and benefits yet to come
- Cryptocurrencies are a double-edged sword for Blockchain and DLT
- Technological innovation: Distributed Exchanges, Scalability, Privacy…
LoyaltyX - Philip Sheller
The premise for this talk is that loyalty programs are failing to deliver.
Philip came from Qantas’ Frequent Flyer store and knows a thing or two about loyalty programs.
The basic idea around LoyaltyX is that customers get rewarded in cryptocurrencies. This presents a couple of interesting benefits:
- They can use the crypto they earn to buy more things at the merchant
- Since it’s crypto, they are not locked in and can take their rewards and spend them elsewhere
- But hey, it’s still crypto so they may choose to hold and trade at a public exchange at a later time - maybe for a profit
They ran a private pilot with UNSW merchants and students and the results are promising.
ROI with a stable cryptocurrency - Kevin Kirchman - WorldFree
Kevin presents on FreeMark. It’s an alternative to blockchain technology aimed at providing a stable coin backed by a basket of commodities. One fundamental difference is that in FreeMark you don’t necessarily know - or care - where your coin came from.
There are lots of startups trying to solve the stable coin problem. I believe it’s absolutely a problem that needs solving but it’s hard to tell at the moment who will come out on top.
Creating and settling agricultural assets on a blockchain - Emma Weston
Emma talked about AgriDigital, a startup whose goal is to enable trust and transparency for global agricultural supply chains. In a nutshell I believe AgriDigital can be described as realtime payments and digital escrow for settlement with farmers.
The problem they are trying to solve is for farmers to get paid quicker - oftentimes the farmer who sits at the very start of the supply chain doesn’t get paid within any reasonable amount of time. Sometimes they even loose track of their goods upstream - another reverence to the provenance issue.
For this to work it seems Emma needs a stable coin - again, it’s a hot topic - but for their pilot with RaboBank it was simply agreed that one of their tokens is worth 1 AUD so as to validate the technology.
Final panel - Payment Systems - Reserve Bank of Australia
This section was delivered under the Chatham House Rules. It basically means that no-one can tell you who said exactly what.
+I really enjoyed the discussions here. One topic was the issuance of a digital version of the Aussie dollar (DAD) which would enable many types of sophisticated payment systems. While there isn’t a conclusive indication of the future no Retail Reserve Bank sanctioned DAD was envisioned, but an AUD Bank branded ‘Wholesale only” DAD may be possible. I am pleasantly surprised by the level of thinking on this topic from the Blockchain community and the RBA.
Even though cryptocurrencies and blockchain technologies aren’t new - bitcoin was created in 2009 - you can see and feel that interest from technologists, the public and regulators has grown tremendously in recent years.
Blockchain technology, implications and research still have a long way to go but 2018 has started on a really good note and I can’t wait to see what the future holds.