Weekly crypto roundup: Stellar’s January roundup and Facebook Messenger and cryptocurrencies

Asset news: Stellar This week (February 5) Stellar published their 2018 January Roundup (check out here what Stellar is). The roundup contained: reference to Stellar and the State of Cryptocurrency reference to 2018 Stellar Technical Roadmap recap on Financial Institutions & Partners overview of upcoming events Stellar and the State of Cryptocurrency and Stellar’s 2018 Technical Roadmap I have covered Stellar and the State of Cryptocurrency here and Stellar’s Technical Roadmap here. Recap on Financial Institutions & Partners Termio, an „advertising blockchain” will run their ICO on Stellar. Scheduled for April. LaLa World will implement Stellar for international remittance Tontine Trust is creating a social security and pension system based on Stellar MOIN and TowerChain were announced as two Stellar Anchors (an Anchor within the Stellar-network is somebody who holds and issues assets). OpenGarden announced to run their tokens on Stellar (no ICO). OpenGarden has been around since 2011 and is backed by a couple of investors (total funding around $13). OpenGarden has created FireChat, a chat app that works without an Internet connection. Furthermore — and this is their primary goal — they are working on establishing a network of decentralized ISP (Internet service providers) allowing anybody to share their Wi-Fi to other OpenGarden users.

Thoughts on “Stellar and the State of Cryptocurrency”

In January Christian from Stellar published “Stellar and the State of Cryptocurrency“ (check out here what Stellar is). The report came out in January, at a time where the general market was going downward after doing quite the opposite in the months before or. The team shared the following updates: Transactions per second high but still below industry standard Stellar showed that they are aware of a need for marketing 2017 marked two years of Stellar being battle-tested In 2017 smart-contract functionality was added Bifrost was released Stellar merged several Go repositories into monorepo and there were 128 merged pull requests in 2017 XLM support added to Ledger Nano S See below for details. Relatively high transactions per second, low transaction fees, and marketing-consciousness They reported on their transactions per second (TPS) and transaction fees (tf). TPS, although relatively high, are still below current industry standard (e.g. Visa with around 2k). Also, according to them, they have the lowest average transaction fees compared to selected other cryptos. Crypto Platform Performance and Stellar specs (Source: Stellar) As I believe that the whole industry will convergence towards the same fees over time (the same applies to other technical specifications as well) I believe

Thoughts on Stellar’s “2018 Stellar Roadmap”

 In January Christian from Stellar published “2018 Stellar Roadmap“ (check out here what Stellar is). In the roadmap they focused on two things: their growth in randos per week (r.p.w or rpw) their strategic goals for 2018 Growth in randos per week Jokingly (at least I hope so) Christian shared a 12kk increase in “the critical indicator for a decentralized protocol” (original emphasis), namely randos per week (r.p.w or rpw; number of random people talking about crypto) and promised equally moonish growth. Stellar’s Randos per week (Source: Stellar) I have shared my thoughts on Stellar’s randos per week in “Thoughts on Stellar’s Randos Per Week in the context of increased crypto awareness”. The main points are: Although rpw was meant as a joke, crypto has become more talked about More attention around crypto is important because crypto diffusion — a two-step process (see Two mental steps towards cryptoasset diffusion) takes time. The more people know about it, the faster it will diffuse. Nevertheless, crypto attention has its downsides: a) misconceptions are prevalent, b) several (not only financial) bubbles will burst, c) “overpresence” of pro-crypto people doesn’t represent overall adoption and leads to dangerous conclusions Besides that, they shared their goals for 2018, namely SDEX (Stellar

Bitcoin, Blockchain, and Cryptoassets: discussing bubbles vs. discussing socio-technical systems

Disclaimer: I own several cryptoassets. My views might be biased. TL;DR Because Bitcoin and Blockchain are inseparably linked arguing that Bitcoin is a bubble that will burst but its underlying technology – Blockchain – will prevail is difficult without context (i. e. which Blockchain and – see second – what constitutes a Bitcoin bubble) Basing Bitcoin’s value on USA’s money supply and global gold supply a value for Bitcoin can be estimated that refutes any bubble-related claims Altcoins are better defined as cryptoassets. Cryptoassets can be divided into cryptocurrencies and cryptotokens. Cryptotokens enable a semi-publicization of centralized customer data and through that shift data governance to the data’s rightful creators Cryptotokens can be used to incentivize early adopters and kickstart networks Cryptotokens could create more financially conscious people and lead to positive social impacts by allowing more people to invest in companies Blockchain and Co. can be seen as an all-encompassing socio-technical system that could lead to unexpected second-order consequences in industry and society as it was the case with touchscreens, the Internet, and smartphones (I should make a TL;DR for the TL;DR) In the last couple of days, there has been quite some medial attention regarding Bitcoin. Some part of that activity centered around Bitcoin

PayPal and Raisin: payment-commoditization and FinTech-platforms

Recently PayPal announced a „strategic investment“ into Germany-based Raisin. Raisin is a savings deposit marketplace for savings interest rates. Whereas PayPal is known to be „the button“ for online payments, it has gone beyond being just a payment provider. In fact, when looking at their goals one could even go so far and question whether they are still a payment provider or rather a FinTech platform focusing on personal finance management. For instance, PayPal’s vision is: to democratize financial services, as we believe that managing and moving money is a right for all people, not just the affluent. Our goal is to increase our relevance for consumers and merchants to manage and move their money anywhere in the world, anytime, on any platform and using any device. [3] In regards to Acorns, the micro-investing service they have integrated into their app, they communicate their goal as: help consumers take better control of their financial lives. Part of this mission is to ensure we’re also helping people build financial wellness. And whereas one could shrug that off as marketing talk their product line-up suggests otherwise, namely that PayPal is indeed becoming a FinTech platform for personal finance management applications beyond payments: Online

NAGA, savedroid, and useful ICOs

byte heroes, HydroMiner, Wysker, and cointed (see here for the first three ) were one of the first DACH-based Initial Coin Offerings (ICOs). Now, with the recent ICOs (or announcements) of The NAGA Group and savedroid, we have a few more. Whereas there is no official definition of an ICO, most would agree that it is a way to raise money. However, it is important that a company should only ICO if there is clear demand for the token. Lack thereof will add unnecessary complexity to the business (with little to no upside benefit), threaten the token’s value and consequently lead to angry users and possible legal issues. Unnecessary complexity due to technical issues, lack of historical data, incompatibility and macroeconomic considerations Cryptotokens are still very early in several regards. Besides technical issues (e. g. scalability) lack of historical data (e. g. risk concerns, best practices, existences of bubbles) they are incompatible with users’ “past experiences” and there are macroeconomic considerations. Cryptotokens’ incompatible with past experiences Compatibility is defined as “the degree to which an innovation is perceived as consistent with the existing values, past experiences, and needs of potential adopters“ [3]. Studies have shown that cultures who considered hot

Verivox, Outbank, and Clark: some disruption, FinTech-stack, and fighting incumbents

In November, the comparison portal Verivox acquired Outbank, a personal finance manager (PFM) who temporarily filed for bankruptcy and aboalarm, a contract cancellation tool (Link to Outbank’s German press release, Link to Verivox’s German press release). A lot can be written about that. For starters, why they made that acquisition. Verivox’s reasons for acquisitions: response to CHECK24, additional marketing channel, and response to FinTechs/InsurTechs Looking at CHECK24’s — their primary competitor — recent moves, probably the most obvious reason is that Verivox made the acquisitions as a response to CHECK24. Furthermore, when considering that Outbank is layered atop Verivox, I am arguing that Outbank might be an additional marketing channel (to TV and search) and thus more important to Verivox than Verivox to Outbank. Finally, through that acquisition, they might, in fact, be responding to FinTechs instead of attacking them. Verivox’s reasons for acquisitions: response to CHECK24 In May, Capital (news in German) reported that CHECK24, one of Verivox’s biggest competitors, will be offering several „FinTech products“. Among them a contract management tool, a multi-banking feature and an expansion of their comparisons into fixed-term deposits. Whereas this was often quoted as an attack on FinTechs (amongst others Clark, WeltSparen, and Outbank),

kwitt, Lendstar, and Cringle: timing, feature vs. product, and activities-based banking

Venmo, MobilePay, Cookies, kwitt, N26’s MoneyBeam, PayPal, Wavy, Lendstar…and now Cringle. All of these services, apps, and companies have in common that they are used for P2P payments. Some of them failed, some of them are very successful, some will be and some won’t. Cringle, the Berlin-based startup, believes that it can be successful and has thus started their second crowdfunding campaign on Companisto (link to campaign). Besides P2P payments, Cringle also wants to offer a B2B payment solution allowing retailers and online shops to accept payments through Cringle. I won’t go into their B2B offering, but it merits to say that the German online payment market is dominated by PayPal, bills, debit and credit cards, and that the mobile payment space is yet to be dominated. Here I will look on their P2P payment solution. P2P payments not compatible with how money is handled in Germany and niche approach to circumvent incompatibility From a fundamental point of view Cringle’s success depends on process innovation. Process innovation can be defined along the following lines: „Process innovation means the implementation of a new or significantly improved production or delivery method (including significant changes in techniques, equipment and/or software)“ [8]. And Cringle is

ING-DiBa, N26, revolut: fairly good incumbents and FinTech re-unbundling

According to Gründerszene, the Berlin-based solarisBank might raise a Series B. Whether this will indeed happen does not matter (the news is actually from October). What matters, however, is solarisBank’s position in the FinTech value chain. solarisBank is a banking platform which owns a banking license and offers financial services such as bank account management, credit card issuing or KYC (know your customer) services. In short, the bottom of the stack, the infrastructure of FinTech companies — as some would say — the boring stuff. In contrast, N26 and revolut are doing the exciting, customer-facing stuff; offering an easy to use, nice looking banking app. From a strategic perspective, however, the „boring“ stuff, is actually the sexy stuff (if banking can be sexy at all). This is not only because solarisBank per se is attractive (in many cases they are the backbone of FinTechs), but also because N26 and revolut are playing in an extremely difficult market. Slow customer acquisition and market saturation Whereas there are several difficult things about banking, the one I am referring to is customer acquisition. For instance, Scalable Capital, a robo advisor partnering with ING-DiBa, shows how difficult customer acquisition can be and, in turn,

€300 Million for paydirekt, €500.000 for happybrush

paydirekt might get €300 Million from its founders. It is estimated that paydirekt has already received €100 Million. At the same time, paydirekt’s CEO, Niklas Bartelt, should be replaced (from Süddeutsche). paydirekt was founded by a couple of German banks in 2015 and offers C2C and online B2C payments. Martin Zielke, board chairman of Commerzbank, argued back in 2015 that paydirekt was not founded with the idea of replacing the competition, but rather co-existing with them as — so Zielke — the online payment space has room for more than one company (from Süddeutsche). I agree with Zielke, but it is also a very undifferentiated market where people won’t switch unless given a very good reason. The most significant reason in C2B is network size, i. e. how many shops support the system. This significance of network size implies the vital role of pull marketing; there is little use in convincing people to sign-up for a new service now, so that they can use it later. Instead, people will access an online shop, realize that there is a payment solution they do not have – but need – and thus sign-up for that very service. paydirekt’s push marketing questionable This