FinTech Voices Join Blockchain Conversation at Keynote 2015

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Following on the heels of last week’s American Banker conference, the inaugural Keynote 2015 echoed many of that event’s larger themes, emphasizing the blockchain as a potentially universal solution for a variety of use cases beyond payments.

On the talking block at the Millennium Biltmore Hotel in Los Angeles were trends such as the role of the distributed ledger in identity and security as well as its implications for consumer protection given that the technology could come to replace traditional third parties.

Overall, Keynote succeeded at providing insight into this variety of viewpoints and voices, even if many didn’t express them in direct conversation on stage. For example, among the presenters were Swarm community manager Caterina Rindi and Silvio Tavares, CEO of the credit card industry group the CardLinx Association, who spoke about distributed ledgers from the viewpoints of innovators and incumbents, respectively.

Keynote 2015 chairman Moe Levin perhaps best expressed the desired and ultimate outcome of the event in his opening address, remarking:

“Keynote is like inviting all your friends from different social circles to the same place, you hope they’re open to new ideas and innovations and new experiences.”

Despite the difference in backgrounds, there was strong consensus in both camps that the blockchain will have a substantial impact, in some areas more than others.

One of the most cited was the cross-border payments industry, an opinion that was put forth by speakers as diverse as Blockchain Capital partner Brock Pierce and Karla Friede, CEO of accounts payable solutions provider Nvoicepay.

“I believe cross-border payments will be the beachhead for bitcoin,” Friede said. “This sector has long been a source of exorbitant bank-based profits, making it a perfect starting point for distributed ledgers. In the world of foreign exchange, banks are making 150-300 basis points, those are extraordinarily high fees.”

This opinion was echoed by Pierce, who cited the sector as the one he believes will experience the most growth in the next 12–24 months.

Elsewhere, the event’s venue seemed intent on emphasizing the difficulties of even established technologies at achieving functionality, as fire alarms, light malfunctions and microphone hiccups interrupted conversations almost as frequently as speakers referenced technical issues with bitcoin and the blockchain.

Organizers attributed the issues to a last-minute venue change for the conference.

Innovation 101

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Given Keynote’s goals and roots in the biannual North American Bitcoin Conference, the event gave first deference to speakers representing companies seeking to bring blockchain innovations to the FinTech sector.

Swarm’s Rindi, for example, opened the day’s events by explaining blockchains in layman’s terms, or in her words, “without saying ledger, crypto or bitcoin.” Her conclusion? Blockchains, including bitcoin’s blockchain, are “unalterable, dynamic, (sometimes public) online feeds, recording time-stamped data.”

She went on to give an overview of how blockchains could impact familiar business models, explaining decentralized e-commerce protocol provider OpenBazaar, decentralized ridesharing startup La’Zooz and shared Wi-Fi provider BitMesh, among other examples.

“We’ll get to that moment where blockchains are all around us. We’ll know how to use them, but not how they work,” she concluded.

Following Rindi was Micah Winkelspecht, CEO of blockchain API specialist Gem, who gave an overview of the history of money. Gold, he suggested, emerged as a common store of value due to certain intrinsic qualities, attributes he argued are analogous to bitcoin.

Winkelspecht’s talk excelled when it addressed more current pain points, such as the resistance of banks toward working with bitcoin or its blockchain directly or at least openly.

“Bitcoin’s identity crisis is a lot of people wanted to disrupt banking, and now the banking system is coming into the space,” Winkelspecht said. “But, many features bitcoin included are not appealing to large banks.”

Ultimately, however, he concluded that these new entrants will push the overall ecosystem forward.

“For the next few years, we’re going to see a lot of advancements in distributed ledgers will come from the banking system,” he added. “Every single bank in the world has at least somebody looking at bitcoin.”

Payments pros take podium

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The most interesting new audience in the conversation was from the traditional payments industry, with speakers such as Cardlinx’ Tavares, 2Checkout CEO Sean Harper and Nvoicepay’s Friede providing different viewpoints on the technology.

Tavares was the earliest and perhaps most bearish on the role of bitcoin as a currency in the online commerce ecosystem.

“The reality is that any technology that seeks to displace or work alongside credit cards has a really high hurdle,” Tavares said, before outlining what he considers the myths about credit cards that propagate in FinTech.

These included that credit cards are not anonymous or low cost, and that credit cards aren’t beneficial for consumers. For example, Tavares outlined how the growing trend of card-linked accounts makes deals delivery easier for businesses.

“You can pay with Apple Pay on a completely anonymized basis by using a token,” he said, leaving out how in such situations a third party payments firm is privy to information.

Later in the afternoon, Sean Harper, CEO of online payments processor 2Checkout advocated that the audience refrain from writing off bitcoin as a consumer currency due to the chance it could provide cost savings and convenience as the bitcoin network scales.

“The interesting thing to think about is that bitcoin is very easy analog,” Harper said, comparing the process to established money-sending services such as Western Union. “It’s easy to send someone money using bitcoin.”

Harper also emphasized the potential of the next wave of bitcoin payments startups, illustrating how successful companies like Braintree, Square and Stripe have been by making relatively small improvements to the experience for developers or consumers.

“The difference between Square and VeriFone is one of each of use, but it makes a hell of a difference,” he said.

Currency use case debated

Keynote 2015

The most vocal contingent at the conference in their support for bitcoin as a currency were the representatives of the venture capital space, including many who have made prior investments in such startups.

Speakers on the investment panel included Blockchain Capital’s Brock Pierce, Pantera Capital’s Steve Waterhouse, VC Bill Tai and Cross Pacific Capital’s Marc van der Chijs.

While the speakers noted that the blockchain has emerged as a way to cut costs in the back office, Tai spoke to this conclusion most directly.

“Banks are measured on capital ratios and the efficiency of those assets. Blockchain is a supremely efficient way to keep track of your assets and quickly turn them over,” he said.

Waterhouse addressed the rising interest in private blockchains that use bitcoin’s underlying data structure, without the currency token, expressing his belief that activities conducted on any bitcoin alternatives today will eventually be conducted on the protocol.

“Inside your company a printer has an IP address and it can see the Internet, but I can’t see it,” Waterhouse said. “It will be similar to that, they’re going to be able to see each other, but they’re hidden to people at other organizations. Regardless of the currency that’s used on one or the other, it will converge.”

Also discussed was whether these enterprise organizations are currently seeking to acquire startups in the blockchain space.

“Banks aren’t looking to buy things yet, they’re doing what they should be doing, getting smart,” Pierce said.

Gyft CEO Vinny Lingham was perhaps the most striking in his opinions, stressing that while there’s “no right answer” to the question of whether bitcoin the currency, or bitcoin the decentralized ledger, will prove more successful at spurring innovation.

His belief is that while the later presents a better opportunity today, but that the new activity on bitcoin’s ledger could in turn bolster trading of what he called “the world’s first digital commodity”.

Lingham was perhaps most bearish on bitcoin in the short term, a statement given added weight as his company is perhaps the most successful in the ecosystem at reaching consumers.

“I think the whole idea of bitcoin is so consumer unfriendly, I can’t see it taking off and we’re the largest consumer site on the blockchain. It’s not going to go mainstream.”

Images via Pete Rizzo for CoinDesk

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