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Thursday, 14 May 2015 00:00

Bitcoin 2.0 Investment Will Trump the Risk Adjusted Returns of Early Movers In Digital Currency Space - VC's Enter Vertitaseum aka The Truth! Featured

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Banking without Bankers! Trades without Brokers! Contracts without Courts!

Now that bitcoin, blockchain and digital currency technology is starting to go mainstream the discussion of the utility is a moot point. Alas, the implementation of the technology needs to be the new conversation. Nearly a billion dollars of VC money (reference The Evolution That Is Veritaseum: Benchmarking It To Venture Funded Competition) has been poured into the digital currency sector, yet the vast majority of that money has been poured in to a legacy framework that is bound to obsolesce. As a matter of fact, it will likely obsolesce before an acceptable return is realized from the money invested.

Now, this is a bold statement, and one that is liable to piss off a bunch of VCs that have already invested in the space. All I can say in this regard is… “Don’t shoot the messenger!” Let’s carefully walk through how this is the case.

In "Bitcoin 1.0 vs 2.0 – or – A Comparison of Legacy Exchanges & Veritaseum's UltraCoin" I explained the difference between 1st generation and 2nd generation bitcoin solutions, to wit:

The first bold generation of bitcoin entrepreneurs (it's amazing that you can refer to companies born 2 and 3 years ago as a previous generation, it just goes to show you how fast this space is moving!) built businesses based upon bitcoin as a legacy commodity. Basically, they bought, sold, transmitted or transferred it as a unit of value. They did this because that's how everything was done for the last several thousand years in the financial services industry. Basically, they had no choice - or so they thought. Then came those who read the Satoshi whitepaper and the bitcoin wiki and saw a very different meaning. My team and I are among those entrepreneurs. We saw that bitcoins were malleable, programmable, tools with which one can use to paint upon the canvas of value - any value, in almost any fashion. A far cry from the moving of static financial widgets from place to place. Think of moving bitcoins around (bitcoin 1.0 companies) vs programming bitcoins to act on their own according to their contractual owner's wishes (bitcoin 2.0 companies) akin to pushing a model T Ford around town vs. programming your driverless electric Tesla to go by the grocery store to pick up some fresh produce before swinging by the school to pick up your kids on the way home to meet you to take your wife (girlfriend?) out to dinner.

With this distinction in mind, I view the media with interest as I startup after startup win $25M, $50M, $75M funding rounds for essentially replicating a legacy business model couched in new age bitcoin wrapping. Significant money is spent on regulatory approvals and the fashioning of old systems into new systems - alas those new systems are still straddled with old system limitations which honestly begs the question, "Why bother?". Now, I don't want to assert that regulation is not needed or businesses can succeed without cooperating with regulatory authorities. What I am asserting is that these businesses and business models are being put together to satisfy the shortcomings of last generations technology (1.0) and are not only wasting the capabilities of the next generation tech (2.0) but will eventually (and I belive relatively quickly) be railroaded by nimble, efficient, and tranparent business models built on top of the way bitcoin was meant to be run. Not only does this not break regulations, but in our interpretation it totally sidesteps most regulatory barriers completely, and does so without jeopardizing the trust of institutions (at least those who are smart enough to realize what they are dealing in). 

Regulation in the financial services industry (both on the state and federal levels) is aimed primarily at the protection of the consumer. This is a good thing, both for the consumer and the industry in general, for a consumer that can't trust its vendors is a consumer that won't use it's vendors. This is the reason why the big(ger) bitcoin exchanges, money tranmsitters, etc. are getting regulated - as as to comply with the laws and appear more acceptable to the financial mainstream. The problem with this approach is that they are taking a decentralized, autonomous system of value transfer and attempting to shoehorn it into a centralized, legacy system created hundreds of years ago.

autonomous financial transactions  

Bitcoin 1.0 is where most of the VC money is flowing, but Bitcoin 2.0 is where the true value extraction - the next Google/Apple/Facebook (Veritaseum) will occur. This is all but guaranteed.

In "The Revolution Will Not Be Televised. It Will Not Be Decentralized, But It Will Be Distributed" I diagrammed this for all to see. 

The world of Financial computing used to be highly centralized, with powerful companies basically owning and controlling everything. The advent of the internet brought topological decentralization, but that decentralization is nominal and in name only because the most important aspects, the thing that really needed to be and stay decentralized is centralized and becoming increasingly more so. That thing is... control of the data! Remember, nearly all fiat money is now used as digital currencies. Count the number of physical dollars/euros, etc. in your pocket vs in your electronic bank account - hint: If you didn't realize that banks are some of today's largest data companies, read "Who Are The Three Biggest Data Companies In the World? 1) Google 2) the Fed 3) JP Morgan/ECB"

Many, if not most, are lulled into a false sense of security as they've been led to believe that since they have access to all of this information and all of these financial services, they live in a free and decentralized world. The fact of the matter is, they, you, we have access, but we have sold our control over our own data and capital for said access. That access that all enjoy - meeting friends of Facebook, storing files for later retrieval on Google or Dropbox, or even accessing your coin on Coinbase or money through a regulated bank - all, entail giving up control and data to a centralized data center. He/(she) who hath the (centralized) data center, has the control.

Centralized (A) is how the financial system looks today. Large regulated entities are at the venter of a bunch of other entities who freely send their capital and relinquisih full control of their monies to these central entities in order to access financial services for said capital. This risky for said centralized entities can collapse (MF Global), get hacked (JP Morgan, Citibank) or defraud (Madoff). These are major reasons why regulation is present and needed in such a system. Despite the fact that the flaws are evident, prevalent and pervasive in such a system even with superior solutions invented, this is where the VC money is going today. Veritaseum has multiple patents pending and a fully functional platform that moves us from Centralized (A) to Distributed (B). With Veritaseum, everyone becomes their own bank (without bankers), their own exchange (without brokers or centralized exchanges) and execute and enforce their own contracts (without courts and lawyers).  We can do this with similar or materially better functionality seen in the legacy system (reference "The Unbundling of a Money Center Bank") without anybody having to trust anybody else, whether it be a centralized institution (regulated or not) or a counterparty. This is all done through distributed, consensus driven software.

Veritaseum's business model is different. We actually benefit and profit by putting control back into the hands of the people. Our wallets rest on YOUR client and YOU keep control of your financial assets at ALL times unless you put them in contract (via our smart contracts technology). Even then, you have full insight into where your assets are and how they got there at nearly all times. Our ENTIRE business is conducted ON BLOCKCHAIN - for all to see. 

We make financial asset trading a distributed affair, hence, even though certain entities may have (or are pursuing) gatekeeper status through supernormal control of the data chokepoints, we enable you to still ride on top of their infrastructure and trade value directly with other, on a peer tp peer basis (in terms of capital) while maintaining full control of your assets. We call this ability to retain control of your money, and of your assets, Economic SoveriegntyVeritaseum's CEO was one of the very few (if not only) market participants to warn about Lehman Brothers (see Is Lehman really a lemming in disguise? Thursday, February 21st, 2008) and Bear Stearns months before they collapsed (reference Is this the Breaking of the Bear? March 17th 2008). He is now issuing the warning signals again.

Centralized business models in financial services

The blockchain is capable of mollifyiing the rentseeking effects of centralization and concentration of power through data gatekeepers and server farms.

Veritaseum aims to disintermediate the banking system by congealing the business processes of Wall Street banks into software and code that lives and thrives in the cloud, and the blockchain in particular.

smartcontrats infographic

This DACe in the cloud allows disparate consumers of banking products and services to purchase said services directly from each other through Veritasum using unbreachable smart contracts as the medium.

Veritaseum Pitch Deck 

Download Veritaseum here.

Purchase our tradeable token, Veritase - the intellectual capital commodity, here.

Contact Veritaseum here.

Read 3936 times Last modified on Thursday, 14 May 2015 18:21

2 comments

  • Comment Link Zafar Tuesday, 12 April 2016 03:48 posted by Zafar

    Look, I'm very keen on new paradigms in consumer-finance, or Trade-finance; and I would like to see v2.0 actually work, but there are salient points (of veritaseum) which I have yet to grasp.
    1. How does it fit on top of the legacy banking architecture; how does it interface with it; does one need a UK banking license to be able to integrate 'current cash' with blockchain-ledger redemptions ?
    2. What is its Unit-of-Account, not so much in the technical sense, but if 'various currencies in the wallet' are 'programmable', or M2, then is there an implied cost to the reserves M1, i.e. if a basic stock is required as a foundation to M2-allocation (loss-cover).
    3. I am under the impression that V. is an open-ledger for transactions, a common platform. ...is it true that V. has an integrated financial-instrument bid-ask screen ?
    4. The legal aspects of a transaction can be written into the transaction, how complex can this be? For example, a real office with a subsidiary in each territory, as a bank, to redeem fiat cash. With shareholders and earning a yr-end calculated rate-of-return on M1.
    5. I've used terms like M1, etc., because I'm firstly interested in economy-wide preservation-of-capital; storing money digitally doesn't, on it's own, help me do that. Without access to a printer it's no better than a bank. Similarly, being able to conduct cash-basis Trade finance is attractive, but not overwhelmingly so. As a means to connect trading-desks, it makes sense, still though, working on your own account. Is that a fair reasoning ?

    thnks, hope it made sense

    Report
  • Comment Link Zafar Tuesday, 12 April 2016 03:48 posted by Zafar

    Look, I'm very keen on new paradigms in consumer-finance, or Trade-finance; and I would like to see v2.0 actually work, but there are salient points (of veritaseum) which I have yet to grasp.
    1. How does it fit on top of the legacy banking architecture; how does it interface with it; does one need a UK banking license to be able to integrate 'current cash' with blockchain-ledger redemptions ?
    2. What is its Unit-of-Account, not so much in the technical sense, but if 'various currencies in the wallet' are 'programmable', or M2, then is there an implied cost to the reserves M1, i.e. if a basic stock is required as a foundation to M2-allocation (loss-cover).
    3. I am under the impression that V. is an open-ledger for transactions, a common platform. ...is it true that V. has an integrated financial-instrument bid-ask screen ?
    4. The legal aspects of a transaction can be written into the transaction, how complex can this be? For example, a real office with a subsidiary in each territory, as a bank, to redeem fiat cash. With shareholders and earning a yr-end calculated rate-of-return on M1.
    5. I've used terms like M1, etc., because I'm firstly interested in economy-wide preservation-of-capital; storing money digitally doesn't, on it's own, help me do that. Without access to a printer it's no better than a bank. Similarly, being able to conduct cash-basis Trade finance is attractive, but not overwhelmingly so. As a means to connect trading-desks, it makes sense, still though, working on your own account. Is that a fair reasoning ?

    thnks, hope it made sense

    Report

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