FinTech Weekly Summary | Aug 01 – 08

There is a lot of talk about FinTech and the dreaded b-word. However, whether it’s a bubble or not (yes I just said it) it doesn’t matter. FinTech is enabling breakthrough and changing the industry that has hardly changed for the last century. I would like to share an extract from Tom Evslin‘s blog post (as highlighted in a recent Fred Wilson post) from January 2005, when the investment world was just waking up to the fact that the Internet bubble wasn’t the end of things, but just the beginning that really sums it up well:

“Historically, the results of bubbles have usually been more empowerment for more people.  Historically, bubbles have provided an explosion of funds which blasted away the entrenchments of an old oligarchy not only to the benefit of entrepreneurs but also to the benefit of consumers in general.  Think of the constantly falling price of transportation and communication. If we should find a way to stop bubbles, if we were to put the genie of irrational exuberance back in the bottle, the winners will be whoever are the incumbents at the time and the losers will be all those who could benefit from another great breakthrough in infrastructure like railroads, canals and the Internet.

Bring on the next bubble.  And invest in it at your own risk. I will.”

Have a fantastic week,


Crypto Tokens and the Coming Age of Protocol Innovation
By Albert Wenger

Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it). Since the creation of this software (e.g. web server/browser) is a separate act many of the researchers who have created some of the most successful protocols in use today have had little direct financial gain. With tokens, however, the creators of a protocol can “monetize” it directly and will in fact benefit more as others build businesses on top of that protocol.


The Golden Age Of Open Protocols
By Fred Wilson

Protocols are a geeky topic. It’s way more interesting to talk about applications. Open protocols are at the heart of many of the most important systems that we have. These are open systems that developers can build applications on top of. On the other hand, proprietary protocols tend to lock in users and drive value to the owners of the proprietary protocol, like Microsoft, Apple, Google, etc. One of the problems we have had in tech is that there aren’t large monetary incentives to create and sustain open protocols. If they are open they cannot be easily monetized by traditional means. However, that is changing with the emergence of blockchain technology and crypto-tokens. I believe that business model innovation is more disruptive that technological innovation. Incumbents can adapt to and adopt new technological changes (web to mobile) way easier than they can adapt to and adopt new business models (selling software to free ad-supported software).


The Three Value Propositions of Ethereum Classic
By Michael del Castillo

The value propositions for ethereum classic break down into three categories – moral, strategic and opportunistic value. Though the functionality of the two networks (Ethereum classic vs Ethereum affected by hard-fork) is at the moment exactly the same, the symbolic power of a ledger that hasn’t been modified proved enough for one developer to take lead on keeping the chain alive. I think it is very fortunate for ethereum ecosystem that there is now a choice for these people. Instead of giving up on the ethereum altogether, they self-selected into a separate ethereum community with a distinct set of values. For those looking to turn back the clock on the potential investment opportunity of early ethereum, ethereum classic has proven an enticing way to do so. Of course, with an increased susceptibility to a 51% attack and only a small number of developers actually building anything on ethereum classic, not everyone agrees that classic ethers could be valuable at all.


A good idea isn’t enough. 3 lessons from building Skype and TransferWise
By Taavet Hinrikus

A seed depends on a whole host of factors to grow — from the fertility of the soil to the right mix of rain and sun to not being eaten by a passing bird. The same goes for an idea. For an idea to really take hold, other factors come into play from timing to the emerging technology that makes it possible. In fintech, it is the perfect storm of a loss of trust in the banks, the rise of mobile and the experience of better in other sectors that means that consumers are willing and ready to embrace non-bank alternatives. But you can only reap what you sow. The most important thing is to just get on and plant the seed. 


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I'm a #26 Global FinTech influencer. An Economist by profession, I have worked on both sides of the table - tech startups and global financial organisations. I love football, technology, travelling and photography.