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Technology Stocks
An SI Board Since December 2014
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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:

Initial coin offerings (ICOs) market caps:

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

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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ReplyMessage PreviewFromRecsPosted
168New Investors Discover Tax Pitfalls of Robinhood and Other Trading Apps Common Glenn Petersen1April 18 Coinbase Valuation Closes at $86 billion. Alkami Has Solid First DaThe Ox-April 14
166A well laid out case on behalf of LendingClub. LC is up substantially since you Glenn Petersen-March 28
165Robinhood Is Said to Have Filed Confidentially for U.S. IPO By Matthew Monks aGlenn Petersen-March 23
164FUSE has drifted down to $10.18. MoneyLion investor presentation: PhenGlenn Petersen1March 21
163Stripe closes $600M round at a $95B valuation Ingrid Lunden@ingridlunden TechCrGlenn Petersen-March 14
162Timios Announces Expansion of Its Retail Purchasing Business https://investorDJK1-March 5
161Square’s bank arm launches as fintech aims ‘to operate more nimbly’ Mary Ann AzGlenn Petersen2March 2
160Why Is No One Talking About LendingClub Stock? Once a hot IPO, LendingClub fellThe Ox1February 28
159Any thoughts on MoneyLion - FUSE SPAC? Another Fintech Is Going Public Through The Ox-February 28
158Robinhood is still on track for a hot IPO despite the GameStop uproar PUBLISHEDGlenn Petersen-February 25
157Cowboys. Presumably, they have changed out their legal team. It will be interestThehammer-February 1
156Cowboys. Presumably, they have changed out their legal team. It will be interestGlenn Petersen-February 1
155Robinhood has also run afoul of regulators as it rushed to release new products.Thehammer-January 31
154The Silicon Valley Start-Up That Caused Wall Street Chaos New York Times JanuarGlenn Petersen-January 31
153A major fintech IPO: Max Levchin’s Affirm pops nearly 100% after market debut Glenn Petersen-January 13
152Walmart launches fintech startup to build digital financial products for customeGlenn Petersen-January 11
151Affirm Holdings Affirm Holdings Inc. is postponing its initial public offering,Sr K112/12/2020
150Lagarde Says Her ‘Hunch’ Is That ECB Will Adopt Digital Currency Alexander WebeGlenn Petersen-11/21/2020
149Chinese fintech giant Lufax plans international push as $2.36 billion U.S. IPO gGlenn Petersen-11/2/2020
148Lufax Proposes Terms For $2.2 Billion U.S. IPO Summary * Lufax has filed to rJulius Wong-11/2/2020
147Helps that they're like a closed ecosystem... it's like we're handicFollowing-Mr.Pink-10/27/2020
146Yes digital currencies are inevitable and China certainly has a good head start Glenn Petersen-10/24/2020
145state-backed digital currencies just seems like such a natural event. but I'Following-Mr.Pink-10/24/2020
144Central Bank of Bahamas Launches Landmark ‘Sand Dollar’ Digital Currency CoinDeGlenn Petersen-10/22/2020
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