It’s been a tough few months for crypto, with prices of all the major coins taking a hard turn in the wrong direction. A lot of people have lost a lot of money. Startups and enterprises alike have been guilty of misunderstanding the technology — or worse. An American ice tea company changed its name to Long Blockchain and saw a huge jump in their share price (before getting themselves delisted). So-called experts are charging hundreds of dollars for seminars with names like “What is Etherium?” (if you can’t spell it, forget being considered an expert).
Speculation, unregulated ICOs and hucksters may have muddied the waters for everyone, but that doesn’t mean there isn’t good work being done. There are still great companies in the blockchain and crypto space that are working away, outside the hype cycle, focusing on product and building a business.
So when I was given the opportunity to put together a panel for the inaugural CryptoCamp conference this November, I knew exactly who should be at the front of the room.
Toronto and Barbados-based Polymath is addressing transaction inefficiencies in the securities market and positioning themselves to take advantage of opportunities in the tokenization of securities and assets. “When people talk about security tokens what we hear the most about is liquidity,” said Polymath’s Chief Product Officer Thomas Borrel, “but there are other forces at play here that provide infinitely more value.
“One is about optimization. The sad story about securities today is that they are predominantly managed by spreadsheets. So the value here that the blockchain can bring is that optimization for both within trades within one jurisdiction, but also across jurisdictions.”
Polymath has built a securities token platform that supports multiple regulatory frameworks within the tokens themselves, for example, restricting the sale or trade of a token to a specific pool of buyers, or to accredited investors according to the regulations of the buyer’s country of residence. Polymath’s self-service platform has supported as many as 35 separate token issuances since launching on the main Ethereum network in August 2018.
Verifying who those buyers are falls squarely in the wheelhouse of Toronto’s SecureKey. The well-funded startup landed their biggest customer way back in 2012 — the Government of Canada. If you’ve ever logged in to the CRA website then you’ve used SecureKey’s Concierge service, which leverages your bank login to verify your identity. SecureKey will be launching VerifiedMe early in 2019, a new mobile application that augments bank login with verification from mobile device and carrier networks.
VerifiedMe is built on the Hyperledger Fabric blockchain network, and stores a hashed ‘proof of consent’ that permission was provided by the customer. “There are seven Canadian FIs [the big 5 banks plus Desjardins and National Bank] that each host nodes on the [Hyperledger] network as well as being an anchor to your profile.” said Rene McIver, Chief Security Officer at SecureKey. “What we put on the blockchain is proof that a transaction occurred: that the request for information was made [and] proof that the user saw the information request.”
The customer information is securely encrypted during transit, and importantly, customer information itself is never stored on the network. “Putting identity on the blockchain would probably be a very bad idea,” suggested McIver. “We don’t do it.”
McIver shared that the company has partnerships with all major banks, telcos, credit bureaus and multiple government departments who will be both providers and consumers of VerifiedMe’s identity service. These relationships position VerifiedMe as a compelling platform for companies building B2C platforms with KYC requirements or require proof of verified personal information such as age validation, income verification or citizenship status.
Our third panelist was Jon Lister, co-founder and President of BlockEQ. The six-person startup formed a mere nine months ago, and just days after the conference was acquired by cryptocurrency exchange Coinsquare for $12M.
BlockEQ has built an exchange and wallet on the Stellar network that addresses a significant technical limitation of bitcoin and ethereum networks – speed and cost. Transaction confirmations on Stellar typically take 3-5 seconds (3-4x faster than ethereum, bitcoin confirmations commonly take up to half and hour) and extremely cheap – less than one one-thousandth of a penny.
According to Lister, the simplicity and integrated exchange of Stellar hold significant advantages. “Stellar has a built in exchange to the network” said Lister. “It doesn’t rely on any smart contracts or third party relayers to manage an order book. What we’re building what’s called an anchor on the Steller network. An anchor is similar to what any bank provides for fiat currencies: you create an account, make a deposit and you can make transactions from that account.”
“So BlockEQ will offer the same platform. Users can come with Bitcoin, Ether and Litecoin, and we’ll [be adding] support for Dash, Monero and for ERC 20. So once the user’s deposit has been received, we issued them Stellar tokens that represent their deposit, and with those tokens they can exchange them across the network, and send or receive from any users on Stellar in seconds for a fraction of a penny.”
BlockEQ’s acquisition may seem surprising given the chilly crypto climate, but it’s an indication that there are many companies creating real value with blockchain technology, be it Ethereum, Hyperledger or Stellar. For BlockEQ, Polymath and SecureKey, the 2019 forecast looks positively toasty.
Dec 12 • 5 min read