A Month Ago

There has been a lot of discussion about the forthcoming launch of Facebook’s ‘Facecoin’ and what a huge fan Jack Dorsey (the founder of Twitter) is of Cryptocurrencies.

Once either of these social media giants launches their own token, it will no doubt help to further fuel interest and adoption of Digital Currencies. Indeed, if you take a closer look at Instagram, there are over 800 million Instagram users, of which 500 million are active EVERY DAY! It is not just ‘selfies and pictures of plates of food’ that are being shared on Instagram. According to an e-marketing specialist, The Drum, Instagram will generate over $10 billion of revenue for Facebook (its owner) in 2019. Online digital advertisers are increasingly looking at social media sites, such as Instagram, as part of their digital engagement with existing and prospective customers.

However, as the chart above shows, the total number of people on social media is a staggering 3.4 billion, and the vast majority are using mobile devices to get onto social media sites. It is not just large social media sites using Blockchain technology - there is a host of other lesser-known social media platforms that use Blockchain technology as well, and many are using tokens to reward and encourage active users.

Minds - similar to Twitter and Facebook, with approximately 2.7 million monthly visits. A ‘Free Speech Social Network’ which does not push particular content over any other and uses a selection of popular features from Facebook and Twitter.

Choon - similar to Spotify. Designed to help musicians ensure they are paid a fare-share for what they create, receiving a form of Crypto tokens as payment. Choon also pays listeners to curate playlists and listen to sponsored tracks in exchange for tokens.

Indorse - similar to LinkedIn. A platform for people looking for a job, by allowing them to post their CV, listing what projects they have worked on and then, anonymously, experts in that person’s professional network can ‘endorse’ them. The user and the endorsers are incentivised to use the platform by being paid ‘Indorse Bucks’, creating a more reliable and honest database of people’s experience and skill sets.

MeWe - similar to WhatsApp, but with a focus on privacy. This could be a better solution for people who use private Facebook groups (shared with close friends) using features such as disappearing messages.

Steepshot - similar to Instagram. This social media platform enables smartphone photographers and influencers to be paid for their content, by earning tokens as an award for their photos and the interest they generate.
So social media, which is now being used by over 3.2 billion people, is embracing Blockchain Technology and or Digital Assets (by giving way tokens to users) and, in many cases, without its users even being aware. Perhaps this is how this technology and this New Asset class will become mainstream. After all, do we really care, let alone think, about what operating 7system our smartphone uses? Or what the latency and cybersecurity challenges are of using a debit card as we pay for our weekly groceries?

The massive growth of social media has financed selling adverts based on users data. This...

Social Media
Fidelity, the global asset manager which looks after over $6.7 Trillion of customers’ funds, has carried out a survey with Greenwhich, which has a database to interview of up to 3,000 institutions.

This gives Greewhich un-paralleled access to some of the world’s biggest pension, hedge, mutual and alternative managers’ insight. The survey found that 47% of institutional investors thought Digital Assets are worth investing in. The survey also found that 46 percent of respondents like the low correlation between Cryptocurrencies and other asset classes. Of the 441 institutional investors that were interviewed for this survey, between November 2018 and February 2019, 72% preferred to buy investment vehicles that hold digital assets, while 57 % chose to buy Cryptocurrencies directly. Custody continues to be a challenge for institutional managers, with 76% of the respondents saying that security is a problem, and there is a preference for well-known established custodians to offer custody services.

Amazingly, over 22% of the respondents had already invested in Digital Assets, compared to almost 0% in 2016. One suspects that we will see another substantial jump in ownership by institutions as more Security Token Offerings (STOs) come to the market, which is typically backed by “real assets”, as well as being subject to greater regulatory controls.

It is, therefore, no surprise that Andreessen Horowitz, the legendary Venture Capital firm, has generated $10 billion-plus on paper in estimated profits for its investors. Over the next year or so, no less than five of the firms it backed - Airbnb, Lyft, PagerDuty, Pinterest and Slack - are going public. Andreessen Horowitz has also been investing in Blockchain technology-related business and Cryptocurrencies, and itself has just raised over $2.7 Billion.

Another sign of institutional interest in Digital Assets can be seen by the ongoing Merger and Acquisition (M&A) activity, as this is a sign that Digital Assets, as an asset class, is beginning to mature as corporate brokers and organisations look for synergy and undervalued opportunities.

As the graph shows, M&A has been mainly focused on firms which are building the digital infrastructure i.e. exchanges and services that support them, with companies like Kraken being particularly active. So as ever, nothing changes, as it was the merchants who sold picks and shovels in the California gold rush that made money, more often than the prospectors who panned for gold itself.

Digital Assets
Initial Coin Offering (ICOs) have been used to raise capital by over 5,400 organisations - the largest amount of money being generated was EOS, that reportedly raised $4.3 Billion followed by Telegram with $1.7 Billion, so it is not hard to see why ICOs have attracted so much attention globally.

Unfortunately, it would seem that a number of ICOs are potentially fraudulent, with some estimates saying that over $500 million has been raised for questionable/phony projects. This type of crowdfunding is being replaced by Initial Exchange Offerings (IEOs), which in many ways are very similar to an ICO. The difference is that an IEO is launched and managed by a Digital Exchange, instead of the organisation that is raising capital, itself, carrying out the marketing and distribution of the token. The exchange typically conducts due diligence on the token to be issued and holds and sells the tokens on behalf of the project team. The buyers of the IEO are existing clients of the Digital Exchange, and while this means that there are considerable savings in terms of marketing and promotional costs, many of the exchanges that offer IEOs are charging companies to have access to their distribution capabilities.

It is ironic that ICOs offered the ability for anyone to get access to the potential profits of a token rising in value in a highly decentralised manner. IEOs seem to be moving back to a more centralised model, where investors will need to “sign up” to particular exchanges to get access to individual IEOs and be subject to compliance and regulation. This more centralised style could appeal to regulators, as they may impose regulations on exchanges issuing IEOs and, in effect, treat them like a Nominated Adviser (NOMAD) or a corporate broker.

We are starting to see more asset-backed tokens i.e. Security Token Offerings (STOs) that offer the ability to trade property, commodities, publicly quoted and private shares, and bonds. The institutions that are more likely to buy these STOs ought to draw comfort from this enhanced level of regulation that IEOs may bring.

Digital Assets
Pepsi has been working with Mindshare to see how the process of digital advertising can be more efficient and cost-effective.

Only a small proportion of the money spent by advertisers is productive, as there are numerous intermediaries “taking a cut”. Also, a considerable amount of the money spent on digital adverts is fraudulent or inaccurate, as it includes activity from "bots".

Pepsi, this March, ran a trial in Asia and discovered that there was a 28% improvementin terms of costs for viewable impressions, in running the campaign through smart contracts, versus one without,” according to Mindshare.

There are a number of other firms exploring how Blockchain can help in the advertising world including Kellogg, Kimberly-Clark, Pfizer, Unilever and AB InBev (which owns Budweiser beer). The International Advertising Board, in a study it undertook, found 48% of clicks from adverts are erroneous.

Coca Cola has been running various projects for over a year on how it can use Blockchain technology to improve the transparency of labour conditions among its workforce. They have been working with the US State Department to create a digital secure database on which to hold workers’ contracts and employment rights.

Meanwhile, in London, Dandelyan (which won the World’s Best Bar for 2019) and CUB restaurant (which won the sustainability award), are both using Blockchain technology to enable its cocktail drinkers to know where the ingredients in their drinks have come from.

There is a growing interest, especially from millennials, to know the provenance of what they are consuming. Furthermore, they are prepared to pay extra if they can be sure of knowing what they are buying, where it has come from and how it has been produced.

If a cup of coffee is more your thing, then look no further than Starbucks, which signed-up the ex-head of global sales and the Windows division of Microsoft in 2015. Starbucks continues to embrace technology and drive efficiency savings, and by using Blockchain technology is enabling it to have greater transparency over its supply chains and where some of its consumables, like coffee beans, come from.

According to the International Labour Organisation, nearly 25 million people work in forced-labour conditions worldwide, with 47% of them in the Asia-Pacific region. Therefore, if platforms using Blockchain technology can be created to reduce the exploitation of labour, it has to be welcomed.

Food & Beverages
Digital Advertising
With over 30% of CVs potentially containing fraudulent information, any way for HR departments to be able to check a candidate’s qualification has to be welcome.

The cost to get copies of your old “GCSE”, “O-level”, “A-Level”, or University degree certificate can be as much as £40 per qualification. The hassle factor in dealing both with and the time it takes, can be considerable for many existing analog databases. However, if the qualifications are held digitally, tamper-proof and securely on a Blockchain, employees, and employers alike, can efficiently have access to copies of the qualification documentation.

A research group at the University of Basel, in Switzerland, called Center for Innovative Finance, has been working on a project to put academic qualifications onto a Blockchain. Interestingly, it took less than two weeks to complete this initiative, demonstrating that using Blockchain technology can be implemented quickly.

Away from academia, the commercial world is also exploring the use of Blockchain-powered solutions to store qualifications, with the Institute of Chartered Accountants of Scotland doing a trial with PWC staff.

Governments are also using Blockchain technology to store educational qualifications. The Singapore government has developed “OpenCerts”, where it is possible to check qualifications from a variety of different academic institutions online, and so help potential employers identify fraudulent CVs.

Higher Education
The Bolas de Madrid, Spain’s largest Stock Exchange, has just announced that it will be using Blockchain as part of its settlement system, having carried out tests and found that the total time to process a trade had been reduced by as much as 80%.

The Spanish Stock Exchange is being encouraged to use Blockchain technology, as there has been considerable interest from start-ups using the technology to raise capital. There has also been considerable activity from a number of large Spanish corporations - BVVA ( one of Spain’s leading banks) issuing bonds, and Acciona and Iberdrola (two of Spain’s biggest power companies) both using Blockchains in their power distribution networks.

The London Stock Exchange (LSE) has recently been used by a company called ‘2030’ to raise £3 Million, making it the first Security Token Offering (STO) in the UK and paving the way for further firms that are likely to raise money digitally.

The CEO of LSE recently said You can certainly see distributed ledger technology having an application in the issuance process… I can see that technology being used in settlement too.” This interest in Blockchain technology by Stock Exchanges is not new, as in an article in Coin Desk they revealed that in 2016 there were ten different exchanges looking at the technology and how they could use Blockchain. Inevitably, institutions, especially regulated ones which are subject to close scrutiny, are never going to move quickly! There has been considerable work and various initiatives, and it would appear that the infrastructure continues to be built, making the trading of Digital Assets 24/7 and removing many of the existing intermediaries a reality.

International Trade And Development
Stock Exchange
Believe it or not, the size of the global sports memorabilia industry is $5.4 Billion, according to Forbes.

So it is no surprise that Fantastec has bought in PwC as its exclusive Blockchain Partner, as it looks to target leading football clubs in England and Europe.

Even the biggest clubs, such as Arsenal football club with a capacity of 60,260, is tiny, even if it is successful and manages to increase its stadium’s capacity to 90,000, compared to its global fan base:

Arsenal’s followers:
Facebook - 37.5million
Instagram - 13.5 million
Twitter - 14.1 million
Global fan base - 125 million

Football teams, given the size of their global fan base, are keen to explore ways in which they can reach out to their fans. Doing this digitally is very cost effective, and helps to explain clubs’ interest in Fantastec. This is a company which offers “digital football cards” (soccer cards for our cousins across The Pond), to collect and swap and then gain access to players videos and special memorabilia.

Talking of Americans,
Captain Kirk, aka William Shatner, has just announced his involvement with Mattereum, a London based law-tech firm, which is also addressing the issues around the authenticity of memorabilia using Blockchain technology.

Fantastec has signed-up Arsenal, Real Madrid in Spain, and
Borussia Dortmund in Germany to its ‘blockchain-powered solution; SWAP offers fans the chance to get digital collectibles like autographs or player cards’.
These clubs are looking to generate greater fan engagement, as well as making money from additional merchandising and, by using Fantastec’s SWAP platform, are able to reach out to their fans worldwide who are unable to attend matches. If Digital cards perform like their paper-based ones, they could turn out to be a canny investment, as in the US the index of the top 500 baseball cards has beaten the S&P 500 since 2008 by twofold!

Last year, Arsenal became the
first Premier League football club to sponsor a firm that did an Initial Coin Offering (ICO) called Cash Bet, which raised $38 million for this California-based firm, established in 2012.
One wonders how long will it be before we see a major football team launch its own Digital currency as a way to further ”lock in” and monetise its fans.

Given the recent dominance of English football teams in the Champions League and the UEFA cup, where all four teams are English, and the dominance of the UK as a fintech hub, could it be that a football team from England is the first to issue a Digital currency?

Digital Currency
The World Bank cites that corruption is one of the key challenges holding back many of the poor in the world, as it can stifle investment into a country.

It undermines trust in society, and it is the poor that are the most vulnerable, according to some studies, by having to pay the highest percentage of their income in bribes.

There have been success stories in the fight against corruption, such as in Afghanistan, where improvements to the management of its public finance, and making its procurement system more transparent, have helped the government save approximately $270 million.In Guinea, all of its civil servants in 2015 had to partake in a biometric identification system to eliminate fictitious or fraudulent positions, and potentially save more than $1.7 Million fraudulent salary payments.

In The Dominican Republic the “Participatory Anti-Corruption Initiative” was created, and it claimed it has helped to lower public spending by 64 percent.

Blockchain is proving to be a useful technology that governments are increasingly using to help in this battle against fraud and corruption. The Peruvian government has recently said that it is looking to use a platform on the LAC-Chain Blockchain to register purchase orders from Peru’s Compras, a government agency that regulates electronic purchases in Peru. The LAC-Chain has been developed by the Inter-American Development Bank (IDB), which was created to promote the use of Blockchain technology in Latin America and the Caribbean. It has a network of nodes (based on Quorum) which is a Blockchain, developed by JPMorgan and is used by the JP stablecoin. It is hoped that using Blockchains will create much greater transparency and a trusted record of transactions, and so encourage additional investment into Peru while reducing bogus invoices, fraud, and corruption on at least some of the government’s spending.

In Latin America and the Caribbean, only half of adults have access to banking services. However, 90% of unbanked adults have a mobile phone. As smartphone penetration continues to grow, the popularity of virtual currencies is also growing. In Brazil, some companies and retail stores are accepting cryptocurrencies as payment. In Colombia and Argentina, more and more of their citizens are using Bitcoin as their currency of choice, due to a lack of confidence in governments and spiraling inflation rates.  Venezuela has launched the Petro, a Cryptocurrency backed by its oil reserves. In the Middle East, Iran and separately, Saudi Arabia and UAE, are launching Digital currencies. All three of these countries have said one of the reasons for doing so, is to fight their countries’ “black economies”.

Ernst and Young produced a report “How Blockchain can help create better public services” last year, in which it gave numerous examples of how Blockchain technology is able to help governments globally.
The adoption of Blockchain technology by governments is important, as it is likely to encourage commercial organisations to embrace Blockchain as well. This ought to help improve peoples’ understanding about what Blockchain can offer and the good it can achieve, as opposed to associating this technology with Bitcoin and people carrying out nefarious activities in some form of anonymous manner.

Government Relations
In 2018, The World Bank claimed that the global remittance market (money typically sent back by workers overseas to their home countries)  reached $689 billion, up from $633 billion in 2017.

The top three countries to receive money from overseas were India ($79 billion), followed by China ($67 billion) and then Mexico ($36 billion). While some banks are charging 11%, the average cost to send money home, according to the World Bank, was 7% i.e. over $48 BILLION is being paid, by often those on low incomes, such as security guards, cleaners and domestic staff. These very same transfers could be carried out for a fraction of this price if the banks were bypassed, along with the other intermediaries, and transfers were carried out using Digital Assets.

Therefore, it ought to be no surprise that Facebook is looking to take a share of the global cash transfer market with the launch of its own Digital currency, as reviewed in last week’s Digital Bytes. This may explain why Facebook is no longer banning adverts for Cryptocurrencies, which it enacted in January 2018. Interestingly, Facebook is looking to raise $1 Billion for its new stable coin project and has been courting Mastercard and Visa to invest.

Meanwhile, PayPal has been cautious about Bitcoin, has announced that it is working with Blockchain technology to be able to handle other Digital Assets. PayPal needs to replace the revenue that it generates from e-Bay (which used to own PayPal until 2014), who after 15 years, stated it will be using an alternative payments service-provider, called Adyen. Adyen is a publicly-listed Dutch company which has already revealed a tie-up with BitPay, and will enable Adyen’s clients access to Digital Assets. Therefore, indirectly, e-Bay clients will have access to Digital Assets too.

PayPal currently has over 270 million users, who potentially will have access to be able to deal in Digital Assets. Who knows, maybe PayPal will develop a closer relationship with Facebook? After all, PayPal is already Instagram’s payments provider and Facebook is looking to launch Facecoin on its other platform, WhatsApp, later this year in India.

Not to be left behind in this digital transformation of payments, Mastercard continues to file patents, as it looks to integrate traditional fiat currencies with Digital currencies. It has been working on Blockchain-powered solutions to improve security, in an effort to minimise fraudulent activities. It is also trying to overcome the challenges of integrating different Blockchains so data about different Cryptocurrencies can be held in one place.

As we can see, the traditional landscape of money transfers is being disrupted by Digital Assets. With companies such as BitPay and Facebook entering the market, traditional firms like PayPal, Mastercard and Visa are having to adapt, as their “fat margins” are being challenged by these lower-cost providers.

Digital Money
New York-based Phillip Morris, is looking at using Blockchain technology to track tax stamps on a packet of cigarettes, and it hopes to save, as a business, over $20 Million a year.

Currently, the process of dealing with the tax on packets of cigarettes is largely a slow analog manual process, with a sticky label to show that the tax, of approximately $5.50 per packet, has been paid. It is thought the counterfeiting of these tobacco tax stamps costs the industry and governments $100 million a year. Allegedly, with a good quality photocopier, it's possible to create fraudulent “look-alike” tobacco tax stamps and not pay the tax!

Phillip Morris believes that by using Blockchain technology it can develop a system that has greater transparency and traceability. This offers a much more efficient system for those parties involved i.e. manufacturers, distributors, merchants, and governments, as well as ensuring the correct taxation is applied and collected.

This is another good example of where we are seeing a more “top-down approach“ to the way that Blockchain technology is being applied by businesses on behalf of governments. Instead of a small start-up looking to raise capital via an Initial Coin Offering (ICO), a multinational corporation is using the technology to improve the efficiency and way it conducts business.

Tax duty on alcohol was introduced in the 17th Century and in 2018, it generated over £11 Billion of tax receipts for the UK government. In the UK, if you want to sell more than 35ml of alcohol that is more than 30 percent proof, the container will need to have a stamp fixed to it, based on legislation that goes back to 1979.

Surely there is no reason why the drinks industry cannot also use Blockchain technology, like the tobacco industry, and improve the efficiency, traceability, and transparency in the collection of duty on alcohol?

Logistics And Supply Chain
The market for offering custody services globally is massive, with the top 15 providers having over $131 Trillion of assets in custody.

As we see more institutions investing in Digital Assets, we will need to have organisations offering custody services to cater to this new asset class.

This opportunity has not been lost on custody providers, as one of the largest custody providers Northern Trust has for a while been rumoured to be launching a custody service for Digital Assets. Fidelity, Goldman Sachs, and Coinbase are already offering custody services for Digital Assets.

Intercontinental Exchange (ICE), that runs 12 different stock exchanges and with a revenue of over $6 Billion, has just acquired DACC which offer Digital Asset custody services for over 100 Cryptocurrencies for 13 Blockchains. It is understood that one of ICE’s subsidiaries, Bakkt, has applied to the New York Department of Financial Services to be a trust company, which will enable the firm to serve as a Qualified Custodian for digital assets.

Kingdom Trust, which is a US-based custodian, was the first custody provider to get Lloyds of London to ensure its Digital Asset custody service last year.

Nomura, the massive Japanese bank with over 26,000 staff and offices globally, announced last year a joint venture with Ledger and Global Advisor Holdings, (a Cryptocurrency manager based in Jersey in the Channel Islands), to launch an institutional-grade custody solution for digital assets. The three parties have established a company called Komainu, which is looking to offer custody services that will also cover the insurance, regulation, and certification of the Digital Assets that it offers custody services for.

It would appear that we are seeing a reversal to where we were before asset managers relied on nominees and custodians. In the 1970s, due to the huge amounts of paperwork that bearer securities created, nominees like DTCC were created. Interestingly, Digital Assets which can be traded and transferred using Blockchain technology, are not dissimilar to bearer securities as records of the ownership of these assets are not held by a third party.

This means the “bearer” (the person presenting the asset), is paid directly, should they wish to sell. Blockchain technology is able to record the transfer digitally of assets, efficiently and potentially at a cheaper price, and without the need for many of the current intermediaries - all of whom charge fees for their services, so adding to the friction costs of trading securities.
There is an argument that with the creation of Multisig wallets custodians are no longer required. A third party, like a trustee, could be appointed and authorised the transfer of assets from a digital wallet under agreed terms and conditions.

This type of trustee service is currently being investigated by trustee providers, like PTTrustees, for the holders of digital assets. So we can see that, as the adoption of Digital Assets increases, there are new as well as traditional custody service providers beginning to offer a range of services for pension funds, asset managers and banks, and no doubt there will be more to follow…

It is of note that trust companies are moving from The Channel Islands, where they...

Digital Assets
Société Générale issued a $112 million corporate bond last week using smart contracts on the Ethereum Blockchain - a public, not a private, permissioned Blockchain.

This was a surprise as many institutions thought that it would be better, from a regulatory standpoint, not to use a public Blockchain, but a private one. If you were to buy $100 of Société Générale’s bond which it has just issued, you could be due a coupon/income of $2 every six months. However, the cost to receive this income could be greater than the actual payment due. This is because the cost to receive your coupon could be as high as $40, since the cost of processing the income payment on the Ethereum Blockchain maybe this much.

Therefore organisations believe that a private Blockchain, where potentially the price of transactions can be controlled, is a more suitable Blockchain.

Société Générale now joins companies like BVVA, Commonwealth Bank of Australia and Nivaura, all who have issued bonds using Blockchain technology. There has been a lot of attention given to how Security Token Offerings (STOs), are going to enable equities to be traded 24/7, and enable companies to raise capital. However, the bond market is $40 Trillion while the equity market is $30 Trillion in size, so there are huge opportunities for more banks to start issuing bonds using Blockchain technology. If it is proven, it is indeed more efficient, prone to fewer errors and from a compliance standpoint, better, and cheaper for organisation to issue bonds using Blockchains. We could see the whole bond market being shaken to its core!

Although the European Banking Authority and Moody (the credit rating agency), have warned that if we saw the widespread adoption of institutions using one Blockchain, this could lead potentially to counterparty systematic risk. Moody has also said that using Blockchain technology could reduce the risk of errors and afford greater transparency, as all parties involved would be using just one set of records. If this is the case, then the biggest issuers of bonds are governments, so they have the most to gain. Since, if a bond issued on a Blockchain has a better credit rating like Moody is proposing, governments may be able to offer a lower rate of interest on the bonds they issue, thus generating potentially significant savings. If governments start issuing bonds on Blockchains this will also act as a powerful incentive for regulators in different jurisdictions to offer clearer guidance. This, in turn, could accelerate more organisations to use Blockchain technology when issuing bonds.

Jaguar Land Rover (Jag) has been actively investing in various businesses involved with AI and  Blockchain technology for a while as it looks at how its vehicles are going to be more digital, and potentially driverless.

Jag has now announced that it is going to be rewarding people who drive certain Range Rovers and F-Pace vehicles with Cryptocurrencies, in exchange for sharing data about road conditions such as congestion or potholes. Jag has announced it is teaming up with IOTA and will be giving its drivers these Digital Assets, which could then be exchanged for the payment of tolls, drinks or electricity to charge a car. While Jag has not confirmed when this scheme is going to be commercially available, it is already trialing it in Ireland.

Mercedes Benz last year was rumoured to be launching a Mobi Coin to reward drivers who drove in a more economical manner, with data automatically being sent to Mercedes to monitor the way its cars are being driven.

Using Digital Assets to pay people for data, whether that be personal information or about what people are actually doing, is likely to become an important way for companies to track behaviour and then design goods and services that are more relevant and appealing.

Digital Assets
In South Korea, Longenesis and a biotech firm called Insilico Medicine, are working together to create a Blockchain-powered medical records storage system.

The objective is to improve the collection, storage, and retrieval of data, but most importantly ensure this is all carried out in a transparent way with patient consent. This new service will enable patients to have control over their data and aims to be compliant with the General Data Protection Regulations (GDPR).

This is not the first case of implementing Blockchain for medical records in South Korea. The Seoul Medical Centre has announced earlier this year it would create a Blockchain-based platform as part of a “Smart Hospital” project it was running with the Korean Ministry of Science and ICT.

Asia is increasingly becoming more and more important for tech-innovation and the implementation of Blockchain as well as other technologies. South Korea is investing huge amounts into the development of Blockchain technology, becoming one of the countries with the highest rate of Blockchain usage.

Hospital & Health Care
West Ham United, whose home ground was the site of the 2012 Olympics, has just announced that it is launching its own token, enabling its 40 Million fans to vote on club decisions and have access to exclusive offers.

West Ham fans will be able to buy tokens, as well as earning them as a form of loyalty scheme and be able to encash them for “a once in a lifetime experience”.

The company behind the West Ham token has already signed up Juventus and Paris St. Germain (PSG), to launch PSGs own cryptocurrency. Meanwhile, Cardiff and Newcastle last year were reported to have been looking at issuing a token as a way to raise capital.

The London Football Exchange has launched its own token, designed to build a digital “fan-driven football community,” thus allowing members access to ticketing, merchandise, hospitality, and retail services.

It is not just clubs that are getting engaged - Lionel Messi signed an endorsement contract to represent SIRIN LABS, a company that recently launched a Blockchain phone that could store cryptocurrencies. Meanwhile, in Colombia, the footballer James Rodriguez has also launched his own token, JR10, that can be used to buy James’ merchandise.

Brazilian footballer, Ronaldinho, last year announced he, too, was launching a token - the Ronaldinho Soccer Coin (RSC) - although fans are still waiting on the “sidelines” for this! These examples arguably indicate how Blockchain is being seen by the world’s football community as a way to enable greater engagement with football players, clubs and fans.

Cryptocurrencies have now even extended to the transfer market, with a Turkish club, Harunustaspor, being the first football club in the world to pay one of its players part of his signing - on fee in Bitcoin.

In 2017, over $6.2 Billion was raised by Initial Coin offerings (ICOs) and, of the 875 companies that issued a Cryptocurrency, many were small start-ups using Blockchain technology i.e. “Bottom Up”.

However, we are now seeing multinational corporations like IBM, BMW, Google, London Stock Exchange, Amazon, LVMH, BP, Alibaba, FedEx, Facebook, Fidelity, JP Morgan, BVVA, Nike and governments embracing Blockchain technology as they realise the benefits this technology can offer.

The Mexican government is looking at using Blockchain technology and Internet of Things (IoT) to track grain, so grain producers can monitor the warehouses where the grain is stored. The company behind this project, GrainChain, is also hoping its platform will provide precise tracking, data, transparency, and reliability for grains in the supply chain. Meanwhile, the Central banks for Canada and Singapore have just successfully completed a test project to transfer Cryptocurrencies between themselves.

“The Bank of Canada and the Monetary Authority of Singapore (MAS) have conducted a successful experiment on cross-border and cross-currency payments using central bank digital currencies. This is the first such trial between two central banks, and has great potential to increase efficiencies and reduce risks for cross-border payments,” MAS stated.

As institutions and governments start implementing Blockchain technology and Digital Assets i.e. “Top Down”, we are likely to see greater clarity around regulations which, no doubt, will lead to even greater adoption as confidence and acceptance grows.

Supply Chain
Facebook with $44+ Billion in cash, having bought back over $10 Billion of its shares in 2018, will not want to keep getting fined. It has just been fined in the US, for over $3 Billion, which is more money than the value of the UK’s Royal Mail, an FTSE 100 company.

Google has $102+ Billion in cash, and despite having bought back $8.6 Billion worth of its shares, may look to increase the amount it buys back- a further $15 Billion of its shares. Unfortunately, Google, like Facebook, has also been on the receiving end of European regulators’ wrath, being fined $5 Billion in 2018, and then a further $1.49 Billion so far in 2019.

While both these companies have the cash flow to pay for these fines (and some argue these penalties are simply the price for them doing business long term), one suspects this is not a sustainable model. So how long will it be before they are forced to look at new markets to dominate?

Google and Facebook can afford to employ some of the smartest brains on the planet and, with piles of cash and increasing pressure from shareholders and regulators, both firms have increasingly been active in the Blockchain sector. Blockchain technology potentially offers both these organisations the opportunity to create their own “payment token” and so by-pass the banks, cut costs and speed up payments for the millions of firms that advertise with them. Advertising makes up the majority of Facebook’s and Google’s profits, and with Facebook’s 2 million and Google’s 4 million advertisers, they have a captive market to approach.

Google has been investing in Blockchain technology for a while and, in 2018, announced it was building its own Blockchain. Interestingly, at Facebook’s F8 conference recently, the CEO Mark Zuckerberg, spoke a lot about privacy which is a challenge for a business that has been built on sharing data and monetising this information for its corporate benefit. In 2012, Facebook had to address the challenge of becoming more focused on mobile users, which it successfully did. So, are we now going to see Facebook move from being reliant on 2 Weekly Blockchain and Digital Assets Analysis by TeamBlockchain Ltd. advertising revenue, which in 2017 was 89% of its $40 Billion of income, to target e-commerce?

Such a shift in business is not new - just look at the tremendous success WeChat and AliBaba, in Asia, have had in the financial services sector. Zuckerberg has often spoken about how technology ought to be used for “good”- well, if he can use Facebook’s cash pile and global 2.7 Billion users and tackle the challenge of the “unbanked”, it may show capitalists’ more caring side! Alternatively, is it an example of Facebook using decentralized technology to exploit the financially “un-sophisticated”, and make even more money for its shareholders?

Facebook, according to the Wall Street Journal, is talking to financial firms and online merchants, and other reports claim it has been in discussions with Visa and Mastercard as it gears up to launch its own Cryptocurrency. Potentially Facebook’s Crypto could slash the current 2%-3% merchant fees and reward you tokens based on your Facebook activity i.e. number of likes, shares, followers you have and the number of adverts you look at.

Privacy and security of data are key...

As more organisations turn to their lawyers for help and advice, lawyers themselves are struggling to recruit sufficient staff to fill their vacancies.

Many of the global law firms have been adding staff as demand has risen for data privacy and security legal expertise. Mary K. Young, a partner at Zeughauser Group, the law firm consultancy: “don’t focus on the crypto, focus on the blockchain. It will be a game changer.”

In Canada a new law firm is focusing just on CRYPTO believing that companies need help with this new asset class, a focus on the international challenges, without dwelling on national issues.

Lawyers advising on Blockchain technology will be need multi-disciplinary skills, especially those advising organisations in the financial sector. These lawyers will need financial services, data privacy, regulation, and technical knowledge to be able to effectively advise clients.

Given the recent price rises in many Digital Assets (partially fuelled by the rise of BitCoin and Ethereum), a number of firms that issued Initial Coin Offerings (ICOs) are now worth considerably more than they were a few months ago.

As we start to see regulators offering clearer guidance, as the SEC has recently, will plaintiffs engage law firms to start action against those organisations who would appear to have broken the law, when they originally carried out their ICO?

In a recent report from Oracle and Finxtra Research, “Key Drivers, Emerging Trends, and Development in Corporate Banking”, they discussed how Fintech start-ups are increasingly becoming a threat to the status quo that traditional banks have enjoyed for years.

One of its key findings was how Artificial Intelligence (AI) and Blockchain technology are able to securely store, interrogate, capture, and validate data, while removing the need for multiple records so improving the efficiency of data management . As many of the banks’ customers are becoming more global, and as economies are becoming more digital, banks are being asked to provide faster services - whether that be for cash or credit management, while improving the efficiency of money transfers at ever lower transaction costs.

One of the key factors is for a bank to maintain its customers' trust and confidence, as banks have traditionally been a place to store cash, borrow money and transact. However, in a survey carried out in the USA by Gallop, it has seen since 1979 to 2018, that confidence in banks has fallen from 60% to 30%.

Banks’ public image and trust, since the financial crisis in 2008, has been severely challenged as summarised by a quote from The American Banker magazine, “A lack of widespread trust raises questions about banks’ relevance in the digital age and leaves them open to further political attack.”

In a report back in 2015 from the World Economic Forum, it stated that it believed “Blockchain technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities”. Traditional banks, with their legacy IT systems, are struggling to adapt. FinTech firms that do not have diverse hard and software systems to maintain and integrate are able to embrace technologies like Blockchain and AI and offer solutions. This has led to traditional banks moving away from building more in-house solutions and turning to nimbler Fintech firms.

If we look at ‘Know Your Client’ (KYC) costs, firm Consult Hyperion states it can cost a bank between £10 to £100 per client to carry out these checks which, depending on the riskiness of the client may need to be done every year. While carrying out these checks, vast quantities of personal data need to be collected and then securely stored which creates its own set of challenges. Alternatively, KYC checks can be carried out by firms like Blockpass, which can offer KYC services for less than £2 per person, and it does not store the personal data, so does not have the onerous burden and complexities around storing of this information.  In the area of fraud detection, Teradata is an AI firm selling fraud detection solutions to banks. It claims it helped Danske Bank to reduce the bank’s false positives by 60 %, and this was expected to reach 80% as machine-learning continued improve the model. At the same Teradata has increased detection of real fraud by 50%.

Artificial Intelligence
Coss and ARAX have announced they are going to merge, which is being heralded by some as the first merger of two firms that had issued utility tokens by carrying out Initial Coin Offerings (ICOs).

The combined business will be able to enjoy economies of scale bringing together two management teams and create a much larger utility token for their users.

Coss, which stands for Crypto One Stop Solution, is a Digital Asset exchange based in Singapore, and ARAX is a Digital Asset wallet which supports seven different Blockchains and seventeen Digital Assets and has over 250,000 users.

As the price and the liquidity of Bitcoin and Ethereum (Crypto) have improved, it is now possible for firms that have carried out ICOs to start selling some of their Crypto assets, which could potentially have two consequences. Some of these firms will be sitting on Crypto assets that have become much more valuable in the last few months and are, in effect, “digital Cash shells “, which may well encourage merger and acquisition (M&A) activity.

On the other hand, as these firms now potentially have greater asset value, we could see more litigation. The potential for litigation was laid out recently by US law firm Polsinelli LLP, in their paper entitled “Cryptocurrency Class Action Lawsuits: A New Frontier”

As we start to see Security Token Offerings (STOs), which will potentially be backed by real assets, such as publicly quoted equities and bonds, it will not be too long before we see STOs also being caught up in M&A. Then the lawyers and regulators will need to work out how to equitably combine traditional assets with this new asset class…

Mergers And Acquisitions
Bloomberg reported last year that The Peoples Bank of China (PBoC) was looking to launch its own Digital currency, which would enable it to have more control and be able to track transactions, be able to reduce the Black market economy and even automatically refuse companies loans who had been blacklisted.

The PBoC has registered 78 patents since 2016, according to Bloomberg. In October 2018, PBoC was looking to recruit staff at its Digital Currency Institute, who have experience in software and encryption law. It would appear that China wishes to create a Digital Currency that is centrally controlled, arguably the opposite originally planned for Bitcoin when it was created in 2008!

China is looking to launch its own Digital CurrencyTo be called “Digital Currency for Electronic Payment”, and the governor Zhou Xiaochuan of the PBoC, was recently quoted saying its focus would be on “convenience, rapidity, and low cost in a retail payment system while taking into account security and protection of privacy.”

Meanwhile, ahead of a G20 meeting in Osaka in Japan in June this year, the Japanese have launched a manual for Cryptocurrency regulation as it looks to try and coordinate the approach that countries currently take. In some jurisdictions, regulation is minimal, while others take a more stringent or draconian approach.

Digital Currency
Serena Williams, who has won 23 tennis Grand Slams, has revealed via her Instagram (which has had over 22,000 likes) that she set up a Venture Capital fund in 2014, which has Coinbase as one of its investments.

Coinbase is a US-based Cryptocurrency exchange which was established in 2012. It has over 13 Million accounts, making it the largest Digital Exchange globally and, following its last $300million fund-raise, was valued at $8 Billion.
However, Serena would appear not to be alone, as there has been an increase in the amount invested in Crypto assets as the chart indicates.

According to Crypto Fund research, there are more than 750 different funds which invest in Crypto assets and have been set up as either Crypto Hedge funds or Crypto Venture capital funds. The value of the assets that these funds managed at the beginning of 2019 was $10 Billion which, despite the poor performance during 2018, was $3.5 Billion more than the start of 2018.
For those wishing for more information on 25 of some of the better-known and larger funds which invest in Digital Assets, this link may be helpful.

It has long been a challenge for artists to protect their intellectual property (IP), and ensure that they are paid fairly for their creations.

As we see more and more IP being created and circulated digitally, this has become a bigger challenge. There is now a massive market online: a billion people use Instagram, to post photos and images for example.

Some of these images “go viral” and are re-used globally by individuals and sometimes by corporations for their own marketing purposes, with no fees paid to the originator. While the likes of Getty images has armies of lawyers to protect their image rights, it is very hard for individuals to take action for themselves against those who use their IP.

However, this is beginning to change. Pinterest’s first employee has just started a new business:
Markerplace, to address this problem. Using Blockchain technology one is able to create, in effect, a digital record enabling an image to be sold on a limited-edition basis.

Another company, called File Protected, has a Blockchain solution too. This firm has been set up by Andy Rosen, a world-renowned photographer who was deeply involved with punk music in the 70’s in the UK and then moved to LA, producing videos for the pop music industry in the 80’s and 90’s. Andy has built a Blockchain-powered platform which enables IP rights to be transferred securely and transparently, allowing licensing agreements to be created and fees to be monitored using digitally.

This is a growing market as corporations are increasingly engaging with people on Instagram to help promote their products and services, using their photos and endorsements as part of these firms’ digital marketing strategy. There over
8 Million people using Instagram who have 50,000+ followers and who could potentially monetise their Instagram accounts.

Intellectual Property
Performing Arts
The USA government has announced that it intends to increase the amount it spends on Blockchain technology to $123 Million by 2022, compared to $10.7 Million in 2017, which would be a 1,000% increase!

Meanwhile, US investment into Blockchain technology outside of the government is expected to swell by over $37 Billion by 2025 from $1.8 Billion in 2018, which would be a compound annual growth rate of over 44%.
In Europe, a survey reported that it would spend by 2022 $3.5 Billion on Blockchain technology, and it cited as well as (financial services), manufacturing, resources, and distribution as the key areas in which it believes money will be invested in.
In spite of the naysayers, who have decried Blockchains and Digital Assets, we are starting to see governments, and multinational commercially-minded corporations investing in this technology and new asset class.