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are cryptocurrencies and related companies banks?
could be.

Hi,

this week: are cryptocurrencies and related companies banks? some thoughts on crypto exchange strategies, a promise, and crypto donations.

The Importance And Impact Of Crypto Donations

Crypto donations have been around for quite a while (the Freedom of the Press Foundation has been accepting Bitcoins since 2013) and lately, they have been picking up in interest again, according to Researchly's industry sentiment tool.

As such, Binance’s announcement last week to donate $1,000,000 to West Japan’s flood victims is one of the most recent ones. Because I believe that crypto donations have not received the attention they deserve, this post examines them in more detail. It first shows the three different types (fundraising, charity coins, and crypto-foundations), explains the drivers behind them (crypto wealth and inefficient traditional donations), looks at three benefits of crypto donations (financial support, banking the unbanked and pushing crypto diffusion), and concludes by looking at the future of crypto donations (the role of stablecoins, rise of autonomous funds, establishing proof of impact, managing fund distribution).

Read it here

are cryptocurrencies and related companies banks?

Litecoin indirectly acquired 9.9% of German WEG Bank. Indirectly because TokenPay who bought 9.9% of WEG Bank in May, has traded this 9.9% to Litecoin but TokenPay again acquired 9.9% of WEG bank in this transaction (9.9% is the highest stake an entity can have in German banks without regulatory approval). In exchange for the 9.9%, Litecoin will provide “broad and comprehensive marketing and technology service” to TokenPay (whatever that means).

Somewhat at the same time, Binance announced a $155 million investment into Founders Bank through Neufund. Founders Bank is a Malta-based decentralized bank aiming at a European banking license.

There are a few things to unwrap here and I will do so in a separate post (this is the promise), but for now it suffices to state the following:

The crypto industry is becoming more and more a driving force in the overall FinTech industry. Whereas previously cryptocurrencies have mostly been considered just virtual currencies, they are now becoming financial platforms or banks. Besides Litecoin and Binance we also have Coinbase building a crypto empire for users’ crypto lifecycles. We have seen this fight between incumbent and challenger banks before, among others with revolut and N26 (see revolut, N26, and the future of banking).

Considering the modest success of these startups (compared to incumbents) the question is what do Binance/Liteocin possess that will ensure their success in the banking industry? Funding, customer base, and worldwide infrastructure come to mind.

But banks either have the deep pockets as well or do not need them because they are already established. Also, most of them already have a large customer based (especially in Germany; see ING-DiBa, N26, revolut: fairly good incumbents and FinTech re-unbundling), and can build upon established infrastructure like SWIFT (see The Impact of FinTech innovation on Blockchains). With this in mind, I am unsure if these new challenger banks are spreading themselves to thin and if Europe is the right place for their banking endeavors.

some thoughts on crypto exchange strategies

Finally, I also like the contrast between these two worlds; Litecoin - a cryptocurrency - invests in a traditional non-blockchain bank and thus operates partly in the “traditional” world, partly in the “new” world vs. Binance - a crypto exchange - operating almost fully in the new world (almost because they are not a decentralized exchange). This is also interesting because it goes again the traditional dogma that FinTech startups need incumbents to succeed. Whereas I am unsure whether breaking this dogma will work in Binance’s case, I am nevertheless excited about the outcome.

In the context of Binance’s expansion strategy (diversification) it is worth contrasting it to the activities of their competitors Robinhood and Poloniex’s. With its plan to “Kill Trading Fees”, Robinhood is following the cost leadership path and Poloniex’s recently announced mobile app can be interpreted as “trailing differentiation”/product development (trailing because Robinhood and Binance already have a mobile app). As a side note it is crazy that Poloniex has not added a mobile app sooner (Poloniex was founded in 2014).

The lonely news and the ones you have to click to read more

Major League Baseball Collectibles Are Coming to Ethereum Like crypto kitties just for baseball game moments. Yet another application for asset tokenization.

Oh, and I would like to hear from you. Just reply to this e-mail.

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  • You work on blockchains and Co.? Let me known.

So long,
Leo


 
     
 

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