• Danny J. C.

The Sales Man

Some (many) Blockchain projects are fundamentally flawed. To develop a wallet app and create a coin which then can be send from one wallet to another (cross-border) on Ethereum protocol is rather a simple task these days, with cost of Est 100-200k.


Most funds raised would be allocated to achieve adoption i.e.. to make people actually use this app instead of traditional, existing applications. Another part likely be for licenses, technology and OPEX.


Some firms developed a simple (good looking) wallet and raise 20mil for that reason in 2017 - ridiculous! Their coin then can be use to pay lesser fees or access some premium features.

The fundamentals missing, ignored or camouflaged-away by project owners are the missing infrastructure and corresponding effected slow expansion / development, or worse failure.


For example, a project praises themselves “We provide state of the art Web/ Mobile Apps, a robust back office admin and built-in compliance tools for a comprehensive “remittance in a box” solution.”. (Hardcap USD20mil) - so, you develop and app and backend system, and need 20mil for that?


"XXX wants to establish a marketplace and ecosystem for local businesses to scale while providing remittance users with the ownership of their funds in a transparent manner." (Hardcap USD20mil) - so you develop a platform/ ecosystem, basically online portal and, of course a token to? wait, let me guess, pay lower fees?


...and my favorite "An Ecosystem for Global Non-Cash Remittances" (Hardcap USD10mil" - say what!? cash-less remittance? Really. ok. Whenever I read 'ecosystem' I know already you build a online platform to login/ see balances, and perhaps able to send a useless coin to another member..., which could cost maybe 50-100k


Often buzz-words on impact, a cool logo/ branding and some Twitter-buzz, done-deal!


A couple of questions: "credit for the unbanked to pay the neighbor?", "immigrants all over the world can access digital shopping vouchers" Well, how many merchants do you actually have in your network, willing to switch from 100% cash (mostly in emerging countries, cash is still king)? Even if convincing a couple of merchants, the entire supply chain is to be considered! Or will your merchant except your coin and then be unable to cash out to actually pay the used goods? Then you probably say 'they can sell the coin!' - Where do they sell the coin? On an exchange? Need to be a crypto-fiat exchange which has it's own fee-structure. FURTHERMORE, the question remains, where then the merchant can cash-out? The exchange also need a fiat gateway - which are currently less than 20% of all exchanges out there - and likely not a "cash-out" option but rather a linked bank-account to receive finally the cash. Hence, a bank account is needed. There is now a 'forth' party involved, and this is how the project claims to serve the unbanked/ underbanked? You might say, the coin receiver himself could cash-out? Where? How? With his bank-account and his bank in a remote dessert location in West Africa? Now you say, I ask all the extreme example questions? Well ultimately who are the people mostly depended on remittance? Exactly those, living / working remote, underdeveloped countries, underbanked or unbanked.



You might advertise 'only internet and smart phone' is needed and we can help the unbanked! Fancy. To a small degree you are right, availability of these technologies is great in underdeveloped countries offering a new way of financial inclusion, in theory. My question remains: How does a person who received your remit-coin in his wallet buys the bread to feed the family? How does the person pays for education, electricity etc.? Unless entire value chains and economies are linked and of acceptance of your specific coin payment, this might work. Now, network effect and mass-adoption you basically plan for both, 1) end users - which is already a huge task - , and 2) an attractive system for merchants, suppliers, cross-border.



One more - IF you manage to find a local partner who has an existing eWallet or banking license, you finally have a way to fill the gap - how to cash-out. However, this dependency, this forth-party involvement, how does this effect the total fee-structure you claim to be near 0. Furthermore, if not partner is available in a country of your expansion, you consider to acquire banking/ trading license yourself? Based on your app project? Ambitious.



The same principle questions apply for: Blockchain Wallet Apps, Blockchain Reward/ Payment Platforms, and other Remittance, Virtual / Crypto Bank solutions ... technology alone cannot solve financial inclusion. At least not for now, and not in developing countries. Lastly, any of these projects, not applying a stable coin solution has another fundamental flaw. But this is another topic.


Across categories, all countries must invest in physical infrastructure to ensure the steady flow of supplies and merchandise. But evolving countries are falling behind in payments infrastructure and must adapt to keep pace with the evolution of emerging economic models

The Bank for International Settlements found that in recent years, the amount of cash in circulation has increased to 9 percent of GDP in 2016 from 7 percent of GDP back in 2000.


Infrastructure.


Missing infrastructure is what is the fundamental flaw in most of these projects.


Unbanked and underbanked populations present serious barriers for e-commerce providers and companies that typically avoid cash payments. For example, e-commerce and sharing economy providers wish to thrive in countries with large unbanked populations, it is necessary to explore alternative payment models like cash-on-delivery or any easy mean to convert digital to real cash. Not even in developed countries crypto-payments are yet practical. And why would they. There is no fee when I pay with my debit card, furthermore it's as fast settlement as crypto. Having Alipay, WeePay etc applied in developed countries via NFC or QR Code is super convenient already. Point being, in developed countries 'the need' for applied crypto settlements is low. Remittance, however is due to a disruption, if - and only if - any project could literally replace the cash-gateway a Western Union for cash-in/ out offers. Raising funds to develop a platform and mobile app will not provide that.



Setting the pace.


The emerging markets are home to 85% of the global population. Two billion adults worldwide are unbanked.


A combination of local expectations and governments’ desire to boost financial inclusion and reduce the use of cash is fueling rapid growth in electronic payment and bringing a new breed of mobile and FinTech innovators into the payments market.


Technology has leapfrogged from branch banking to e-banking and now mobile money, which has helped to create pockets of strength even amongst the less financially inclusive countries. Here it comes.... Automated teller machines (ATMs), interactive voice response (IVR), mobile and online banking, these alternative banking channels have seen a massive increase in adoption both at the retailer and customer end. IF, as many in crypto claim, the bank as untrusted intermediary to be excluded when serving technology to all the people for financial transactions, how would you be able to serve the still growing cash-market?


Is there a way to cash-in/out without a bank (and without Western Union-like fees)?


The new disruptive banking market, led by non-bank players, providing a full spectrum of financial services, will only work-out if cash-in/out solutions are considered and deployed. No project will be able to serve an emerging market with technology, not even a developed market is ready for. You won't be able to skip the step of cash/ eWallet, simply by applying a Blockchain app and hope that people are happy to have a coin, which will lead to the above question - what to do now with the coin - entire supply chains/ economies need to be build on, to make it work.


"Governments are promoting developments in card acceptance infrastructure, and in turn increasing debit and credit card usage in emerging markets"... by which people still would need bank accounts... Perhaps projects should distinct between 1) serving the unbanked - which is to enable financial services to the underbanked at full spectrum, and 2) serving emerging countries - which is to enhance payment modes the for banked population.


Odyssey Group US, a ATM manufacturer and retailer, active in South America, USA, Italy, Spain and Africa, with an existing infrastructure of more than 1000 ATMs, with Blockchain-ready software is now building its own remittance ecosystem with a crypto stable coin.


The remittance project is called MoneyFi, ready to serve the underbanked in remote locations, with a solution for payments, remittance and lending. Creating real value to the people by applying lowest possible fees, eliminating 100% the middle men, and disrupting debit card and pre-paid schemes. Financial inclusion and truly impact, serving alternative ways to enable payments, addressing Sustainable Development Goals:


  1. clean electricity, FACT - 3 billion people rely on polluting and unhealthy fuels for cooking

  2. education, FACT - 57 million primary-aged children remain out of school

  3. universal health coverage, FACT - 2 seconds someone aged 30 to 70 years dies prematurely from noncommunicable diseases

  4. reduce inequality, FACT - reduce to less than 3 per cent the transaction costs of migrant remittances from as high as 7-13%



Sources: IWS FinTech, PwC, SourceMedia, Reuters