There are many trends within financial technology of interest during 2018. But what we saw during the last quarter 2017, and regardless of where in the world it was, that the absolutely largest trend was Blockchain. This will continue during the whole year – with the three following components.
The man on the street is now reading about Bitcoin, Ethereum and Ripple, the large crypto currencies. Maybe they do not understand, but certainly have heard about. And that will be a large trend in 2018 as well, especially since out of the world’s whole population there are perhaps only 20 – 50 million owning any of these currencies. And I think that will be promoted mainly by the countries where most trading in crypto currencies take place. And the one country to mention in particular is Japan – the centre for foreign exchange historically in the world’s dominating currencies (Pound, Yen, US Dollar, Euro etc.) And what is driving this the most is that about 60 per cent of the world trade in currencies taking place there is on retail basis, e.g. by individuals. With crypto currencies we can see the same tendency; today about 60 per cent of the global trade in crypto currencies is in Japan, and about 80 per cent of that trade is between private individuals. This also means that individuals in Japan have a strong understanding for how crypto currencies work.
One example is that GMO Internet Group will launch a new payment option in February, to pay out salaries in Bitcoin. That trend maintained by Japan in the whole of 2016-2017 I think you will see on a global level, where you see more and more people understanding the risks and own crypto currencies. The people who will do this are probably early adopters; mostly men interested in tech, between 20 – 35 years old starting with this and then it spreads quite fast to other age groups. So, crypto currencies will spread to the public.
It should also be regulated; otherwise it will be a risk against the financial system as a whole if too many place too big share of their savings in this, and it goes down just a little and you could get mass sales and we’d be facing 1931 again…
The 53 largest crypto coins, and especially the top ten are driving this trade. But one trend is that it’s absolutely not only Bitcoin , in fact their share of the total market decreases every week. That is also a trend that I also think will be sustained during 2018. Why would there only be US dollar in the whole planet just as there would only be Bitcoins! There are differences and weaknesses between the difference ones. One example where Bitcoin has a big disadvantage is that it consumes an enormous amount of energy for the mining, which is not sustainable for the planet!
More directed at our risk capital sectors is the so called initial coin offering (ICO), e.g. that you also can get start-up funding via an own crypto currency that you issue and offer for investment. We have seen 1360 ICOs so far that, one could say, partly compete with IPOs but happen at a much earlier stage than on the stock market. This will be very strong trend going forward that will continue, even while becoming more regulated.
Then you have diverse types of currencies, one where the currency can be used for the actual eco-system of a particular company or as pure investment. That is regulated, in different ways, by different financial inspections, as ‘Utility Tokens’ (or app coins, representing future access to a company’s product or service) and ‘Security Tokens’.
The most exiting part of Security Tokens for 2018 will be tokenised funds since it really disrupts the way VCs traditional fund raise and more importantly offers liquidity which is almost unheard of in traditional VC funds.
Blockchain Adoption by Corporates
As for the actual blockchain, the underlying technology, there has been a lot of buzz during 2017. But very few financial institutes, insurance companies and others have implemented it. But that will happen in 2018 as one is now ready to takes the risk to implement in 2018.
By: Dusan Stojanovic , Angel investor, True Global Ventures
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