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Technology Stocks
Fintech (cryptocurrencies, ICOs etc.)
An SI Board Since December 2014
Posts SubjectMarks Bans
121 18 0
Emcee:  Glenn Petersen Type:  Moderated
Fintech is new and innovative financial technology applications that are competing with traditional methods and incumbent institutions for the delivery of financial services. Financial services has long been seen as one of the business sectors most vulnerable to disruption by software because, like publishing, financial services are made up of information rather than concrete goods. In particular, mobile services and blockchains have the potential to significantly disrupt the incumbents and reduce costs for consumers. While financial institutions have historically been shielded by a wall of regulation, and managed to weather the dot-com boom without major upheaval, a new wave of startups are actively “disaggregating” global banks.

Fintech eliminates middlemen. Financial products and services that have historically been the realm of entrenched legacy institutions are migrating to mobile devices and software platforms, which allow customers to execute transactions effortlessly and on a peer-to-peer basis. Fintech startups raised $17.4 billion in funding in 2016 and are on track to exceed that amount in 2016.

The most dramatic developments in this space have been the introduction of cryptocurrencies and initial coin offerings (ICOs). The first cryptocurrency, Bitcoin, was conceptualized in 2008 by an anonymous person or group known as Satoshi Nakamota and implemented in 2009. In his white paper on Bitcoin, Mr. Nakatoma also conceptualized blockchain, which serves as the core component for the technology underlying most cryptocurrency transactions.

Since its introduction, Bitcoin has increased in value from less than a penny to a recent high of over $20,000, spawning the introduction of hundreds of other cryptocurrencies.

Arguably, the cryptocurrency market, and Bitcoin specifically, has evolved in a direction that runs counter to Mr. Nakatoma’s original intent. Mr. Nakatoma’s paper, spawned by the economic crisis of 2008 stated that, “I’ve been working on a new electronic cash system that’s fully peer-to-peer with no trusted third party.” In other words, Bitcoin was supposed to be a way for individuals to pay for products and services while circumventing the existing financial establishment and middlemen. Unfortunately, that vision never materialized in any significant way and the currency has become a speculative commodity that has attracted the inevitable middlemen (Coinbase etc.).

When the current fervor corrects, and it will, many, if not most, of the current cryptocurrencies will be washed away. Hopefully, some will survive and thrive, as did many of the Internet companies after the burst of the Bubble. I am a firm believer in the value of cryptocurrencies, free of governmental and institutional control, as a medium of exchange. It will be interesting to see if our governmental authorities allow this to happen on a long-term basis. Personally, I am pessimistic.

The initial coin offerings (ICOs) are very interesting. They are essentially a crowdfunding mechanism for startups and other businesses to raise funds without giving up an ownership interest. The “coins,” which are more accurately referred to as “tokens,” generally give their owners the right to future services and products. As with the cryptocurrencies, there is an aftermarket that trades the tokens. Quality-wise, the tokens are a mixed bag. Some are funding legitimate projects; some will crash and burn; and others are outright scams.

The fact that the ICOs are not offering ownership stakes is important. According to the SEC, if the companies selling tokens offered ownership stakes they would have to comply with securities laws. There have been hundreds of ICOs this year, which have raised over $4 billion.

Initial coin offerings are crowdfunding campaigns on steroids.
My quote. Feel free to use it, with attribution, of course.

SI already has a board that does a good job discussing cryptocurrency trading on a daily basis. I envision using this board to discuss cryptocurrency issues in a more general fashion and to drill down on specific investment opportunities in the fintech and ICO arenas.

This board was originally created to discuss LendingClub Corp., the first peer-to-peer lender to complete an initial public offering.

External resources

Cryptocurrency market caps: coinmarketcap.com

Initial coin offerings (ICOs) market caps: coinmarketcap.com

Satoshi Nakamoto whitepaper (Bitcoin: A Peer-to-Peer Electronic Cash System): bitcoin.org

Related SI boards

Bitcoin: Subject 59173

GBTC: Bitcoin Investment Trust (not an ETF): Subject 59732

IOTA (which does not use a traditional blockchain technology): Subject 59917

Blockchain: Subject 59919

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121The SEC Is Setting Up a New Division to Talk to ICO Startups Nikhilesh De CoinGlenn Petersen-10/19/2018
120ETN at 378sats or Steady buying ETN is still strong and has excellent volume. IGraystone-10/9/2018
119The practice account or Crypto trading A lot of people haven't taken the tiGraystone-10/3/2018
118Whaling or Crypto whales The interest in cryptocurrency has created a brand newGraystone-10/2/2018
117Consolidation at 300 satoshis or High over 400 satoshis After hitting a high ofGraystone-10/1/2018
116Up 40% on 778 BTC or Upside Anyone watching the movement on ETN has to be impreGraystone-9/28/2018
115ETN's API or Instant payment confirmation Electroneum is a crypto-currency Graystone-9/27/2018
114LendingTree is the secret success story of fintech Through acquisitions and a fGlenn Petersen-9/9/2018
113Shrinking to survive: Japan's banks face a quiet crisis Thousands of positiGlenn Petersen23/8/2018
112The private placement memorandum for Overstock.com's tZERO Preferred Equity Glenn Petersen-3/4/2018
111OSTK is down about 10% in early trading: Overstock: $250 Million tZero ICO UndeGlenn Petersen-3/1/2018
110Hyperinflation meets tech: Cash-scarce Venezuela sees boom in payment apps By AGlenn Petersen-2/15/2018
109WhatsApp has launched person-to-person payments into beta in India by Sarah PGlenn Petersen12/8/2018
108SEC halts one of the largest 'ICOs' ever as it wades deeper into the murGlenn Petersen-2/3/2018
107 A crypto startup that vanished and changed its website to the word ‘penis’ alleGlenn Petersen-1/29/2018
106h/t The Ox More than 10 percent of $3.7 billion raised in ICOs has been stolen:Glenn Petersen-1/22/2018
105Open banking: The money revolution nobody knows about It’s going to transform tGlenn Petersen-1/15/2018
104h/t scion China's blockchain fever gets hotter even as regulator queries prGlenn Petersen-1/12/2018
103True North Energy is a black box. There are no details in the press release abouGlenn Petersen-1/10/2018
102TNEN:OTC acquired Kryptonite Sine announcing the deal on Monday the stock has dDragonfly1967-1/10/2018
101OSTK up another 3% today as it continues to pivot: Overstock Invests $2 MillionGlenn Petersen-1/8/2018
100OSTK was +8.4% today.Sr K11/5/2018
99How the Winklevoss Twins Found Vindication in a Bitcoin Fortune By NATHANIELGlenn Petersen21/5/2018
98The co-founder of Ripple was worth $58.4 billion earlier today. Message 3142038Glenn Petersen-1/4/2018
97How to buy ripple, one of the hottest bitcoin competitors cnbc.comJakeStraw-1/4/2018
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