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In this week’s newsletter we would like to bring your attention to some notable projects we believe are of relevance to any financial institution exploring blockchain technologies. We will also highlight some important events from this week.

Enjoy,

Cryptiv

Blockchain startups that will eat your lunch.

Initial Coin Offerings have emerged as a new method of financing blockchain startups. In 2016 we have seen over $100M raised. We will discuss three different projects and why they should matter to mainstream financial institutions.

ICONOMI

Funds raised: $10M

Market Cap: $35M

ICONOMI can be described as a crypto mutual fund that will offer both passively and actively traded funds. The passive fund is akin to an ETF index for the cryptocurrency market. The Index fund will give investors exposure to a collection of cryptocurrencies representing 92% of the crypto-economy’s market cap. This flagship fund will be managed by ICONOMI’s team of traders and there are plans to open up the platform to any asset managers. Those who had invested in their crowd sale hold ICN tokens, which will pay out dividends to the token holders as ICONOMI collects fees for their services.

Melonport

ICO begins February 15th.

Melonport describes itself as software for digital asset managers. Individuals can develop their own portfolios of cryptocurrencies and invite other investors to buy a stake within that portfolio. The returns on these portfolios will be made transparent with the intention of creating competition among managers. Unlike ICONOMI, Melonport, will be entirely decentralized and built on top of the Ethereum protocol. Co-founder and Ex-GoldmanSachs trader, Mona El Isa, discusses why she thinks the current Hedge Fund model is problematic and how Melonport can address these issues in her recent blog post.

Augur

Funds Raised: $5M

Market Cap: $50M

Augur is a decentralized predictions market build on Ethereum. It’s objective is to allow anyone to create a market on a future event — like ‘Who will win the presidential election’ or “Who will win the Superbowl’ — allowing anyone to speculate on these markets without authorization from a central authority while paying low fees. It utilizes smart contracts to enforce bets and a distributed oracle system to determine outcomes.

So why does this matter?

First off, these applications are in large permissionless and charge low service fees. Secondly, they provide more accessible and sophisticated means through which individuals can invest in and speculate on the crypto-market. Such services have largely been facilitated by financial service firms operating under tight regulatory constraints and within traditional capital markets. We now have an alternative financial market with services/products that mimic traditional ones.

We are seeing a disruptive innovation that enables “consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.” This should cause for concern among financial institutions.

So how should incumbents prepare for this potentially disruptive force? We will discuss this in our next newsletter!

This Week’s Updates!

Bitcoin ETFs

Grayscale Investments, a company owned by Berry Silber’s Digital Currency Group, has filed with the SEC to list a Bitcoin ETF on the New York Stock Exchange. Grayscale isn’t the only one trying to seek approval for a Bitcoin ETF. The Winklevoss twins and a group called SolidX are also currently awaiting SEC approval.

A Bitcoin ETF has been long in the works, with the SEC delaying the Winklevosses’s filling twice now. Just this week, a former employer of the Winkelvosses has cast doubt that the SEC will approve the ETF due to difficulties around enforcing AML/KYC regulations on crypto-exchanges and due to concerns with the high-level of Bitcoin trading occurring in China, outside of the SEC’s jurisdiction.

Losing Faith.

A fascinating report has been brought to light by a ConsenSys blog. The report surveyed +33,000 people from 28 countries and suggest a growing distrust of social Institutions (corporations, governments, the media, and even NGOs) with 85% of surveyors lacking a full belief in the system, 53% believe the system is failing them, and only 15% believe it is working.

Why is this relevant to the blockchain space? As ConsenSys suggest, blockchain technologies can provide the means through which individuals can circumvent these ‘untrusted’ institutions and regain control over the management of their wealth. Looks like the ‘radical’ Bitcoin-ers and the mainstream populace have some things in common.

EU report warns of security risks around blockchain adoption.

Turns out, companies have been so focused on commercializing blockchain applications but never considered who’s going to actually manage the private-keys! The report outlines some of the implementation challenges around establishing blockchain applications and recommends ‘good practices’ to overcome the security challenges innate to using blockchain technologies.

Can open-source software compete against commercial giants?

Rusty Russell, an advocate of open-source projects and a memorable contributed to the Linux Kernal, talks about his career in getting paid to give away code for free. Since working on Linux he has begun working full time on Bitcoin.

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