Blockchain technology is transformative, disruptive and has the potential to redefine business and propel humanity into the decentralized future. It is also complex, confusing, and only fully understood by a tiny subset of the world’s population. In this podcast, hosts Ben Arnon and Jay Kolbe speak with leading experts - both within and outside of the blockchain industry - who will help make sense of this emerging technology. Conversations focus on tangible examples of blockchain’s impact on mainstream consumers. We also discuss how blockchain will bridge the gap between today’s early adopters and those fostering mass adoption.
This podcast aims to break down blockchain without dumbing it down. Our show is enjoyed by both experienced blockchain technology experts as well as newcomers to the space.
Join us as we bridge from blockchain ideas to realities.
Security Tokens Garner Serious Investor Interest; Legal Precedence Still a Ways Out
Emma Channing, CEO and general counsel at Satis Group, brings her legal experience and token space expertise to Blockchain Bridge to delve into what it will take for the capital raise and security token market to take off.
Emma, who worked on Blockchain Capital's security token offering (a seminal moment in the space), discusses what's changed in the market since then. She talks about the emergence of Alternative Trading Systems (ATS) for security tokens -- i.e. Sharespost; OpenFinance Network and Templum -- and why there's change in how the market views these offerings, who uses them, and ultimately how they'll operate (risk management, smarter contract design and more adept use of regulations to limit "flow back" into markets).
Emma goes into why we're seeing more interest from sophisticated and traditional rather crypto-rich investors in security tokens, due to the latter being skeptical of more regulated offerings because they are used to the ease of transactions and speed of investing in the ICO space. Emma also explains why she believes if a token is truly a utility, then you can't turn it into a security, or you'll kill it "stone cold dead."
According to Emma, security tokens are a "revolution not an evolution," and that confidence in the market still comes from the traditional approach of raising in stages. She believes this is healthier then raising your next 10 years of financing in one year. She also believes that Family Office Networks and institutional investors who are looking for more custody and control (paper & digital), will start opening up to engaging with the space. And that to touch a security, you need an ATS and a broker dealer license; without them you face serious negative consequences.
Emma talks about the difference in perception versus reality in security tokens, and offers Blockchain Bridge listeners some tips for how to navigate this market:
It's really important to have a capital markets background. All the rules of investment banking still apply. Smart people want to work with your securities lawyer and international law firm, not your blockchain lawyer -- don't take on that risk. There's still a huge misconception about how much can really be raised. Conducting a $5 to $10 million raise (up to $20 million) is more realistic these days. Investors are looking for executives who a have been successful in other fields, not people who are just slapping "blockchain" on something and thinking it'll blow up for $50 million. Only a handful of projects knocking it out of the park, including protocol based offerings and teams that have been up and running for a while, and who have major VCs involved. Mindful applications and uses of blockchain that align with its core value proposition, and developers familiar with the tech to deliver products will be the winners. Emma reminds us what's exciting about security tokens is that they can trade instantly, and they're a fantastic way of addressing illiquidity (for private equity). When the rules can be set by the issuer, they can control how founders are rewarded and how long they're locked up, which can reduce the pressure to exit.
Emma talks about why she likes to refer to whiskey receipts case law when trying to understand securities, and why she believes it will take 3-5 years before we'll have the necessary legal precedence we need for security tokens.
She goes into why the SEC is leaving room for a dual token structure, and why the definition of what's a security across global markets including Europe, Asia and the US, is causing many to projects flee offshore given the uncertainty and near impossibility of doing a security token in the US.
Crypto Business Leadership, a 24/7/365 Job (with a Smile)
New York Times best selling author and CEO of Deeper Media, Tim Sanders, joins Jay on the podcast to talk about best practices for executive management and leadership in "Coinworld" (aka blockchain and crypto businesses).
Tim explains why he believes executives with high emotional intelligence (EQ) produce more positive experiences for their business partners and investors. With the inherent volatility of funding in the crypto space, which impacts the "mood state" of these businesses and success, Tim believes that the best executives are those focused on emotional talent development, improving themselves and having a strong sense of generosity and social good.
Tim and Jay talk about why it's important to understand the "mood state of your Telegram," as it can have a huge impact on your treasury and success. We talk about the impact of "Fear, Uncertainty, and Doubt" (FUD) and "Fear of Missing Out" (FOMO) on consensus models, and why emotion, business and consensus live together in crypto businesses.
Tim and Jay discuss why transparency-focused strategies for managing customers and investors in the old world, don't always work the same way on Telegram in "Coinworld." He believes executives must temper immediacy spikes that can distract from long-term goals, and why it's important to speak fluently on social for all levels of investors. We discuss a few bad practices for crowdfunding businesses, including fighting in public and talking down to people.
Tim talks about the importance of founders being hyper-present in "Coinworld," without relying too heavily on outsourcing and scripting in social. He calls this "Jeff Bezos, where's my damn package?"
Tim reviews a few of his best practices for managing the crowd. He believes a video one-on-one is an under-utilized tool for channel management, given that video is 5x more likely to improve how much someone likes you after engaging with them (people look at your face 15-20 times per minute to establish kinship and familiarity).
Tim talks about why he's so excited to advise crypto businesses, offering a little background on some projects he advises including QuantmRe, which is working to bring real assets and fractional ownership to real estate with tokens, and the Divi Project, which enables one-click simplicity to the end users for very technical master node management.
Tim talks about Deeper Media's quest to find the top leadership and management channels for blockchain developers and employees, and why there's a talent crisis in the space.
Tim and Jay talk about the soon-to-be-disrupted $65 billion industry for moving money across "imaginary lines," and where all that money will go. Tim delves into why he has such respect for Brad Garlinghouse, CEO of Ripple, due to his ability to execute with real managers and a well thought out, pro-government approach.
Crowdfunding Success: It's Not Who You Are, It's What You Do!
Ayesha Kiani, Managing Director of Republic Crypto joins Ben and Jay to discuss equity crowdfunding and working to keep funding and token sales democratized.
Kiani believes anyone should be allowed to invest in Republic's projects, and that issuers should aways stay on the right side of the SEC and FINRA. In this podcast, she delves into why Republic's legal-heavy team works tirelessly to reshape agreements that redefine how issuers navigate regulations and offer digital ownership. Always be sure to wear your "regulatory helmet"!
Kiani offers Blockchain Bridge listeners a deep-dive into Republic's due diligence to identify "red flags" with issuers and find best-in-class investments. This includes sharp technology analysis; ensuring sensible tokenomics (i.e. the token actually solves an issue); and partnering with a third-party vendor to vet the team and leadership, in order to ensure the CTO and chief architects really know the technology and are involved with the project full-time.
Kiani talks about Republic's quest to be a global platform, as the company builds up to its main token sale to retail investors under Reg A+ and Reg S for international investors. Republic's asset token will ultimately be used to facilitate access to and investment in the company's diverse roster of issuers, which could include everything from real estate companies and coffee shops, to concert promoters and technology innovators.
Kiani goes on to warn that the market isn't what it was last year (2017); it's no longer about community hype and getting the best press, but rather how you'll deliver on mission-driven projects. While the market isn't what it used to be, that hasn't stopped Republic from drawing an impressive roster of investors (many from China) including Binance Labs, FBG Capital and Neo Global Capital.
Kiani affirms Republic's mission to serve the underserved; they are always keen to support gender and racial diversity. In fact, in a recent study from Republic, the company found 44 percent of the women leaders on its platform have had what they consider "success." Kiani believes a good company can be started by anyone, and if it's a good project, they want to be involved!
Ben, Jay and Kiani go on to belabor the fact that we still have speed and bandwidth issues with the regulation of digital fractional ownership, and why these historical issues, and those with SAFT's ability to deliver tokens, has fueled Republic to create the more advanced options such as the SAFEST (Simple Agreement for Future Equity in Security Tokens) agreement and Token DPA.
But it isn't all work at Republic; they find time to have some fun. This fall with they will launch the second season of Meet the Drapers, featuring, of all things, a 12 year-old entrepreneur, and in early September they'll host Republicon, where investors can learn what it takes to succeed as a crowdfunding issuer.
It Takes a Village to Achieve the Vision for Alternative Assets
Juan Hernandez, CEO & Founder of OpenFinance Network (OFN), a leading trading platform for the $7.7 trillion alternative asset market, joins Ben and Jay to talk about the state of the digital asset ecosystem and OFN's collaboration with market leaders such as Securitize, Harbor, Polymath, TokenSoft, Republic and StartEngine, to bring more compliance and regulatory oversight to the issuance pipeline.
Juan touches on Morgan Creek's recent investment in OFN, and what it's like to be at the forefront of improving digital securities to bring more listings and liquidity to the market. He provides an overview of the "alphabet soup" of regulation, touching on the various applications of Reg S and Reg D, as well as the newer Reg A+ and Reg CF offerings.
We speak about the OFN team's efforts to juggle the dream and expectations for advancing products that allow for digital ownership, while managing an active Telegram channel and focusing on what truly matters -- ensuring compliance and building functional, feature-rich products that bring new standards and core value to the market.
Juan brings up Northern Trust, a 189-year old financial services company, that recently announced they will enter the digital asset space, to pilot, test and prove out the model. This leads into Ben bringing up the challenge of custody, and what it will take to bring the ICO utility token investor -- currently sitting on the sidelines -- into the security token asset space. Juan discusses OFN's unique approach to "distributed custody."
We wrap with a discussion about why it's important to shift the focus from creating marketing "juice" to a builder's mentality, and the challenges of balancing work and family with building blockchain products in the fast-pace, 24/7, global cryptocurrency and digital asset space.
CryptoKitties Ensures Ethereum Purrs
Benny Giang, co-founder of CryptoKitties and product manager at Axiom Zen, joins Ben and Jay to talk about how CryptoKitties took the world by storm at the ETHWaterloo hackathon, ushering in the biggest moment in crypto since Bitcoin.
Benny recalls the excitement that fueled CryptoKitties, as the company blew every expectation out of the water, flipping the crypto space on its head and for the first time making writing lines of code, shipping product and being profitable (in three weeks) cooler than slinging white papers and ideas for changing the world.
Benny talks about the changing digital asset space and pays homage to CryptoKitties' predecessors including CryptoPunks, Pepe, and Spells of Genesis, who were the first to truly explore art on blockchain. He also delves into the value of providing a "gaming component" -- breeding of cats on chain -- to make Ethereum more accessible, and why this "super cute and fun" part of the game is what truly separates CryptoKitties.
Benny recalls how CryptoKitties nearly crippled Ethereum (at one point they were nearly 25% of the total ETH traffic), and blocked several ICOs from launching at the time.
We dive into CryptoKitties' impact of the feature of digital art and collectibles, and how nearly 800,000 unique cat options and the subsequent four billion variations that can be achieved by breeding "Fancy Cats" and releasing various "Exclusive Cats" is shaping the digital asset landscape. Benny describes why the non-fungible, ERC-721 tokens are key to quickly being able to provide the type of third-party assessment of value needed for digital collectibles.
Benny provides tips for what it takes to successfully launch in China and avoid surprises including understanding the Chinese mentality; managing firewalls (no Facebook and Google, no Google Cloud, etc.); the ban on ICOs and crypto; the huge opportunity that comes with so much gaming and developer talent; private blockchains; managing the impact of large corporate copycats; and getting distribution.
Benny gets excited about how CryptoKitties are being used to support causes; ETH developer Nick Johnson turned a kitty he received for identifying bugs on the platform into cows for farmers in Africa, and how a 12-year old named Bella raised $15k by selling cats, which she donated to the Seattle Children’s Hospital.
CryptoKitties slows their roll on the merchandise, in favor of thinking about what it'll take to get themselves into MoMA.
Crypto Embraces Emerging Markets: We're Not a Bank, We're Your Financial Friend
Tricia Martinez, Founder and CEO of Wala and the Director of the Dala Foundation, joins Ben and Jay from Cape Town, South Africa to talk about why she's building a mobile crypto financial services platform for emerging markets.
Tricia talks about her work in Africa to reduce banking fees and to increase financial services participation using Wala and the Dala token. She talks about the current state of banking in Africa, which is slow-moving and burdened with fees that have only served to foster mistrust with consumers.
Tricia believes banks want to partner with crypto and blockchain companies in Africa. However it's difficult for them to work inside-out to fight bureaucracy and actually drive innovation and solutions. Currently, consumers in Africa are working outside of the banking system because of the fees (94% of transactions on the continent are in cash).
Tricia discusses how Wala enables consumers to use their Dala cryptocurrency wallet to access a marketplace to purchase data, mobile airtime and electricity; pay their TV bills and school fees; make cross-border payments with no fees and much more. She talks about how Africans are using Wala and Dala to create unique business models including "microjobs" services, where people who are often unbanked can access quick tasks and easily get paid, and local utilities business platforms where agents use Wala to sell airtime and electricity. Wala is building out more than 100,000 merchant locations around Africa where consumers can use their mobile phone and a QR code to transact with Dala.
Tricia reminds us of the importance of actually being on the ground in Africa to create change, and shares personal stories about disrupting financial services for people who would rather store their money in a lockbox than a bank -- due to fees. Whether its her local Uber driver in South Africa who wants to avoid the punitive fees of a Western Union (which can charge upwards of 10%-20% just to move money across borders), or Africans taking massive risks by giving bags of money to bus drivers to save an additional 3% when moving money across borders, it's clear that Tricia's personal connection with Africa is a driver for her work in the country.