About Haseeb Awan

Haseeb Awan is a Financial Technology (FinTech) entrepreneur with a track record of two successful business exits, raising over 100M in venture capital & growing the customer base from 0-4 Million users & expanding to 15 countries across 4 continents within 18 months. He has been included among the top 100 influential people in FinTech globally, won multiple international awards, wrote for and is mentioned on multiple international media & frequently speaks at international conferences & government committees. He is Engineer by degree with Master’s in Engineering Management & also has studied Financial Markets from Yale University & holds Project Management Professional (PMP) designation. He is also a Y-Combinator Alumni as well Next Founders & couple of other associations. He is among the earliest entrepreneurs in blockchain space & personal investor in 30+ companies & advisor to over 10 companies.

It’s Perfectly Alright to Ask for Privacy

Why would I be worried if I am not doing anything wrong?

This is a very common question whenever you raise concerns about privacy. My default response is asking if you’ll be comfortable having a camera + mic in your living room let along with bedroom or even toilet.

I am NOT paranoid when it comes to surveillance, neither should you be concerned about being a lonely voice demanding & questioning it. Times are gone when only important people had to be cautious of surveillance. We’ve seen spy movies where detectives follow them around, noting their movements and then reporting it to their bosses.

Technology has made it efficient and we’ve far more footprints all over the place then in the past. Pretty much every website has a monitor that tracks your behavior and optimizes themselves for you to buy into the problem they’re trying to sell.

Let’s go back 100 years ago, how many records would your tailor have or the store you go for grocery shopping. How many people would they’ve interacted with which involved sharing of personal information?

The only concern we’ve nowadays is while giving away our personal information such as telephone numbers or Email is SPAM. You never thought that you’re giving up information that can be used against you.

We’ve more Identities linked to our telephone number than the social network. Think about it, a personal corporation has far more data on you than the government itself, and that organization is only meant to maximize their profit and serve its stakeholders. Rest assured, you don’t count as a stakeholder. You’re just a product for them, who serve their purpose as they want. 

Once they collect your data, they put it out for the bid. The highest bidder takes the virgin data to maximize their returns & exploit you when you’re most vulnerable. You’re looking for something & kinda desperate, so they prey on your thirst to answer with information that serves themselves. 

Regardless of the outcome of the attack, you are now sold to the second higher bidder who does the same & then it’s repeated till you’re thrown away.

There comes another cycle where a company who bought your data for the first time can’t prey on you anymore, they’ll combine their own research & then resell you. The second company (who plays another vital role) will begin another set of data that’s being formed to prepare you as a better product for a different set of buyers.

Perception is very critical. Why? Since you may not be terrified of getting killed in a road accident, even being involved in one but a single airplane crash, you might deliberately put off your air travel plans for a month or so, though it is the safest mode of travel.

Similarly, privacy isn’t taken seriously & mostly you’re looked down upon when you raise concerns. It’s like a taboo to talk about privacy, though being cool, if you take it seriously & practice or preach it, you’re out of the cool club and into a club that is sometimes considered paranoid or even narcissist or anti-government.

With the emergence of Covid19, we’ve all kinds of tracking apps being installed and all praises for the organizations that are able to limit a patient’s ability to move, but in the long term, I am seriously concerned about repercussions.

Does an institute, either private or government, have the right to limit an individual’s movement based on a decision that they have a vested interest in?

Google/Facebook are household names & they control us directly or indirectly. With their current alliance in tracking our movement is ignored or in few cases appreciated by many, but if they’re given the access, how far can they go?

90% of the people said that they don’t read T&S before signing for any service. Remaining 10% lied. Between those 10 pages, there is a clause I am just attaching samples from a major telecommunication company where they explicitly mention how they’re tracking you.

For the folks, who are lazy to read them, it means they monitor everything you do, from calls to websites to location.

These companies have employees who’re given this access without proper protocols which are often then dumped on the dark web( AKA illegal internet) for cybercriminals to decimate & exploit it as they please.

We live in a very civil world & before you crucify me for saying that, go back a few hundred years ago & see how barbaric the regimes were. We’re protected and our justice system has improved a lot. So the question takes another form, i.e. why isn’t the government doing anything about it & why is this not a major issue?

Like okay, google knows that I want to buy a new car so they can help me in making my decision, but they can’t sell me a car unless I want to. I am sure there are gov agencies keeping a leash on these predators as they do for other crimes.

So the answer is yes, there are & frankly, the government is doing a very good job where they can but the system is very complicated. We live in a fairly decent democracy which doesn’t allow you to change laws on the fly.

While an average American is struggling to pay off his debts, these corporations have an army of lawyers & lobbyists to find gray zones to operate without getting in trouble. There are many cases where you hear about the fines, but as massive they look, it’s just a slap on the wrist which goes directly to the enforcing agency rather than the people who were impacted.

A lot of private organizations have more power than countries. I am sure FB, Google have more liquid cash, let alone (illiquid) assets, than the majority of the countries in the world. You can’t do business if google bans you. 

Paypal, eBay Amazon can literally throw you out of your platform without disclosing a reason & you’ll be done. You can’t take out a loan without providing every information to a 3rd party credit agency which can have very low standards of security. At that point, it’s not a matter of choice or luxury. You’re compromising on your basic human rights if you don’t give in to these 3rd parties. 

At this point, you’re for sale & it isn’t much you can do about it. It’s kind of normal for you. Anyone can go online and find information on you that you may even remember or able to connect. Your information can be fed into a database where different types of algos are run to find your weakest point and then exploit it.

Surveillance compresses creativity and performances. Think about it, if you’re studying or working on your computer or anything. Would you perform well if you know that no one is watching or if there‘s a camera on you?

Fear is incited within yourself that leads to depreciation in our coherent thinking ability. In communities where strict enforcement of surveillance is imposed, innovation rests in peace.

You can’t think beyond survival if you’re in constant fear that someone is watching you. Now we may & we should trust our governments, however, there are limitations to which we draw the line. 

For instance, if you put a soldier with every person, we may be able to reduce the crimes but that’s what dictators do. They turn ordinary citizens into spies where an individual is afraid to trust anyone because you don’t know who’s reporting to whom.

With the increase of our dependency on digital tools, it’s getting much simpler to collect, share & work around our mindsets. One of the misused terms is metadata which aspires to the confidence of anonymity but a false sense of security is worse than no security. This term is abused critically by pretty much everyone. 

“Data is the new oil” is a common term & it points to the fact that oil gives you power. If there isn’t any oil, the world will stop moving. Similarly, we’ve companies that are necessary for us to have a quality life but we’ve no option to opt-out of their surveillance. 

They explicitly mention selling you out but you don’t have an option to opt-out, because their business models would stop working since it does include selling you. You’re the product.

You must have noticed the word “cookies” while browsing websites. Think of it as a tracking device in your shoes that transmits your every move & then auction it to the highest bidder. Bidders can predict your behavior and set up a trap in the way they want.

Election manipulation has been in the news lately so the way they do is very simple. Imagine you care a lot about a specific cause, let’s take an example of gun control that you absolutely want to be banned.

Now if you’re going to vote for Candidate A, Candidate B can get your data & then wherever you go, chase you with ads of candidate A statements against Gun Control. They can also show you how they care about Gun Control & that’s on top of their list. 

This way opinions can be formed & elections can be rigged because everything else is filtered & you’re fed with the information that serves their agenda the best. Every one of us is vulnerable and if that vulnerability is exposed to everyone, that’s dangerous and this is exactly the risk right now.

Now the question comes that should we get rid of everything digital & reduce our footprints & may be living in caves. No that’s not the point. Frankly, it’s not possible regardless of whatever you do. You can reduce it, but then it depends on what’s an acceptable limit. Would you not keep a phone at all, would you not use any social media or would you not keep a credit card?

Maybe living off-grid is an option for many but it doesn’t work for me or probably 99% of you. From hotel booking to renting a car or booking flight etc, you need a credit card. Privacy & isn’t binary. There isn’t a utopia out there for either of these but we can try out best. There are some trade-offs that you can do to achieve the quality of living without compromising your lifestyle.

While big companies may look like an easy target to blame, issues are much bigger than that and are difficult to be solved by a single entity so our best option is to make some modifications to our lifestyle.

It does require some research which may cause inconvenience in the beginning but ultimately it pays off. Luckily, we’ve great alternatives to pretty much a lot of things that we can do.

Here are the alternatives

You can also use add-ons in your current browser to turn on cookie tracking

  • VPN – NordVPN
  • Cellphone: Efani.com
  • Messenger: Signal

I run EFANI.com but the only reason it exists is that I decided not to be a product so if there’s a better product out there, please comment down below so I could learn about it & add it to the (aforementioned) list

2020-04-30T21:24:41+00:00April 30th, 2020|

Which India did we leave?

I am a Pakistani born Canadian living in USA. Since my birth I was told about the people across the border who’re holding onto your Juglar Vien ( Shahrug ) i.e Kashmir. Growing up perception started to change especially when I moved to Canada to study & interacted with lot of Indians who became my best buddies. I played for an Indian Cricket team, did business & assignments with them too.

This is where the confusion started – If we can live with peace here why did we split up ? From time to time, thought started that what if partition won’t have happened. But I only met Hindus from India so maybe they’re just being nice but if you look from a financial point of view, it made sense. At least we won’t be spending more on weapons than development. Jokes of an unbeatable cricket team compromised of Pakistani Bowlers & Indian Batsmen were common. Indian movies are widely watched & Pakistani singers make Indians dance. Also Muslims got split into 3 countries weakening their strength but numbers don’t dictate the strength. Look at how britishers ruled us.

So then what was that which our forefathers saw & we can’t. Muslims in 1947 were split into pro & anti partition. Muslims which remained pro partition had a strong argument in favor of two-nation theory while the Muslims against had their own side of story. It was a painful partition but here we’re now but what was the India then ? I thought that what

One doesn’t have to put a flag in his chest or prove he is Indian. People who were against partition were the folks who believe they want to live in secular India and to be honest, I would’ve bought that too, but the current situation says other ways. There’s a difference being a minority because of religion. My Prime Minister Justin Trudeau said “ A Canadian is a Canadian is a Canadian “ when his opponent Harper was pushing for two tier citizenship where one person citizenship can be revoked if he has committed act of terrorism against the country but this rule won’t apply if you’re only Canadian or like 2nd 3rd generation Canadian. While it was a popular motto for the majority that why would a foreigner who just became Canadian and go against the country should be allowed to stay Canadian, but the difficult stance that once a person is Canadian he isn’t distinguished based on anything and every citizen is equal. Trudeau Canadian won defeating the hate mongering Harper. 

There’s no if-buts-then. Either India is a safe place or every one or for every one excluding one faith

We’ve fake news today so information around what actually happened 70 years ago becomes even more confusing. As an Indian comedian said to a Pakistani “ In your books, you won 65, in our books we won. Tum bhi Khush Hum bhi khush “ . To be honest hearing stories are confusing. On one hand scars from the survivors of 1947 massacre leave you stunned that how can these two do this to each other but on the other hand, friendships & desire to reunite from the elders warm your heart. 

When Faiz poem “ Hum daikhain gay” is sang in India or Ram Prasad Bismil acclaimed “ Sarfaroshi Key Tamana “ in Lahore, question  become even more confused 

Which India did we leave ? The one that shunned the basic human rights based on their faith or the one that stood up against the discrimination based on faith. 

Minorities in Pakistan are on the rise but we’re way far from where we should’ve been. Even worse incidents have made the headlines where a Muslim was tied by ropes and beaten to death for not saying “Jai Shri ram”. Its equivalent to ISIS pushing a non-muslim to say “Allah O Akbar”. 

Anytime I met Muslims from India, they generally make sure that I know that they’re happy in India and partition was a mistake, but then a quote comes in my mind by architect of Pakistan.

“Muslims who’re opposing Pakistan would have to prove their patriotism to India for the rest of their lives – MA Jinnah 1945”

Does a Muslim have to carry Indian flag while Hindu can get away with a Saffron Flag because religion comes before nationalism. Would a Muslim carrying ISIS flag can get a pass by displaying a religious extemist terrorist organization ?

I’ve always admired India for their multiculturalism. Yes there are incidents here & there but I won’t expect anything else from a country with such a massive population with limited resources. Shining India was very appealing for folks across the border who in their heart said why are we not part of it? While India hosts the world #1 cricket league which is preferred by any cricket player, we’re literally requesting ANYONE to visit us. 

Current protests & its impact on the gov to overturn their decision to exclude a community based on their faith is a litmus test for confused folks like me. Since the situation is pretty mercurial at least I’ll get the answer to which India did we leave!


2020-04-30T21:19:02+00:00December 22nd, 2019|

Science of DAI

3.5 billion Google searches are made every day & 20% of them are the items that’ve never searched before. This leaves us with 700M things that people are asking for the 1st time. This is the opportunity generated EVERY DAY!

Same goes in the crypto world where no project is 100% perfect and the imperfections engenders new opportunities. Let’s talk about one problem, which is more than a bottle neck for crypto to go global as a medium of exchange and store of value. Crypto volatility. This is something that has also been the reason for the risk in crypto investment. Suppose you borrow in Bitcoin and the current market value of the coin is let’s say $10k. You are expected to return the loaned Bitcoin after couple of weeks and you find the market value of the coin soared to $12k or dropped to $9k while returning the loan. This volatility makes the scope of the project limited. The figure shows the fluctuation in one day value of Bitcoin.

These are the imperfections that make it hard to deal in crypto but have given rise to coins which tend to maintain its value over time called Stablecoin. This concept is called Collateralized Debt Position or CDP-a financial cryptocurrency concept & has been in development by MarkerDAO project which is offering DAI as a possible solution to coup volatility in crypto. Stablecoin like DAI is a crypto that is pegged into currency (USD or GBP) or assets. They could be both centralized as well as decentralized. I have written pretty detailed guide over the top and could be read here Stablecoins – A Complete Guide

DAI is the first decentralized stable coin that is based on Ethereum Blockchain. It is actually a very great source of stability and since it is backed in excess by collateral all the time, so you do not have to worry about fluctuation in the value of your coin. The coin is actually pegged into USD and the value is pretty much stable due to that reason. Being pegged into USD means the value of DAI is pegged by the regulatory authority to the value of the dollar. The table below depicts the DAI price chart (DAI to UST).

We have around 87 million DAI in circulation in the crypto market right now. In an analysis, DeFi Plus calls MakerDAO the most popular decentralized finance app in crypto space. The token’s value is however supported by as much as $300 million worth of ether locked in the system of MarkerDAO.

But this is after a long four months that DAI started maintaining a consistent dollar valuation. The famous data scientist Alex Svanevik in an interview in May 2019 had said that there has been a surge in trading prices of DAI on the leading Coinbase from $0.95 on 8th of April to between $0.98-$1 range in May and June. He further added that this may be considered “super close to the $1 peg”. Today on Aug 26th, it was trading at a value above $1 as visible from the table given below.

To this rise in the value of the coin, the COO of RealTPlatform David Hoffman quoted that DAI could be moving to a “whole new phase”.

How does Marker System Work?

There are many operational mechanisms which make sure DAI stays relative to USD. This is made possible by the smart contract platform that is offered by Maker on Ethereum blockchain and which through a series of dynamic feedback system or CDP stabilizes and backs DAI. Through CDP, user can generate DAI by depositing some asset into the smart contract. Suppose you have ETH or any asset and you want to create DAI. Simply deposit your asset or ETH to smart contract for loan and once the CDP holds your deposited asset, you can easily generate DAI equal to the value of the asset in USD.

You may use DAI in any way possible like any other currency. The best part is when you are returning the loan, you would have to return the same DAI borrowed plus some interest on the DAI. Suppose the value of the asset (ETH in our case) was $100 at the time of depositing the asset, and you borrowed 100 DAI. This is called collateralization ratio which refers to the amount of Dai that you can create relative to the ETH you put in the smart contract. While returning the loan, you have to return 100 DAI plus some interest on DAI to get back your ETH. This means the graph for the loan you take in DAI stays horizontal to the x-axis that is you would have to pay the same dollar amount plus some interest on the DAI borrowed.

The concept of interest in stable coin is pretty interesting and has given rise to a sought of price war between companies offering stablecoins.

The problem with non-stablecoins is volatility. You just cannot be sure about the dollar amount that you would have to return if you borrow in NonStableCoin or any asset with high volatility. You could end up owing 2x than your initial loan.

What happens when the value of asset (ETH) collateralized fluctuates?

So there could be both rise and fall in the value of asset deposited into the smart contract. The rise in the value of the asset results in more stability of DAI, the fall is however gloomier.

When the value of the asset deposited into smart contract goes up, DAI becomes stronger resulting in further collateralization of the system. There are other ways that contribute to increased stability. This happens when demand for DAI rise than the supply of the coin. The simple demand law of economics 101 holds here. Moreover, there is a concept called Target Rate Feedback Mechanism under which Market incentivize the creation of DAI for users if the price of the coin should trade above $1.

Fall in the value of the asset deposited into the smart contract makes problems. The value of DAI falls below $1 and the system could possibly collapse if the value of ETH held as collateral falls below the value of the amount of DAI it is backing. Such a situation is tackled by Marker by liquidating CDPs & by auctioning off the ETH deposited into the smart contract. ETH in CDP is auctioned off until there is enough DAI available to pay back what was lost from CDP. In simple words, CDP is liquidated in case of insufficient collateral.

Target Rate Feedback Mechanism:

However Marker is very able to maintain stability and keep DAI stable through a mechanism called TRFM. Target Rate Feedback Mechanism TRFM is an automatic mechanism which is employed by DAI to maintain stability. As 1 DAI has a target price of 1 USD, the change that is needed in the price of DAI overtime to approach this target price during market ups and downs is determined by the Target Rate. The onset of TRFM breaks the fixed peg ratio ie 1DAI/$1USD but it is important to push back the price of DAI where it needs to be. So when the target price of DAI is less than one USD, an increase in TRFM occurs which pushes up the price of DAI again to the value where it should be. When this happens, the generation of ADI through CDP gets more expensive.

This rise in the value simultaneously increase the demand for DAI and cause the users who hodl DAI gain profits. The rise in demand for DAI and the reduced supply in the market as users try to buy from the market and borrow from CDPs eventually pushes up the price of DAI to reach its target price.

Moreover, there are certain dynamics that determine the TRFM and TR. In most cases, it is the market forces in the form of demand for and supply of DAI that determine both TRFM and TR. In addition, the sensitivity parameter of the TRFM could also be set by the Marker voters which in turn determine the degree of response of TRFM whenever the target price of DAI deviates from the value it needs to be at.

A Sensitivity Parameter of “10% in 15 min” means that the Target Rate can change the price of DAI in the market to a maximum of 10% only in 15 minutes. This makes the max hourly change by TRFM in price of DAI as much as 40% per hour.

One might also argue why is the change restricted to only 40% per hour and not more than this. SO this restriction is important to control the system in case of hack. The restriction actually provides the time to trigger a global settlement in case there is hack that grants attacker control over the Oracles. It is due to this reason that the SP is set to a max of 10% in 15 minutes by Marker Voters.

Global Settlement:

So despite so much development and improvement in programing in the blockchain space, one cannot overlook the prevalent cyber threats and hacks that often cost companies millions of dollar. The recent hack of Binance is the perfect example when more than 7k Bitcoins were transferred from the exchange which cost more than $40M to the exchange. To keep the system secure and escape such a scenario, Marker has developed a process called global settlement. In case there is a hack that grants the hacker control over the Oracles, triggering the global settlement freezes the system. This means the owners and users of DAI and CDP get the exact value of the asset they have deposited into the smart contract. So if I have 110 DAI and 1 ETH = $110, I can exchange my 110 DAI for one ETH through a smart contract. THe whole process if fully decentralized.

So who triggers the global settlement?

Selected and trusted individuals have access to the global settlement keys and it is they who trigger the global settlement.

One might think it makes the system centralized. No, this does not make it centralized because triggering the global settlement just freezes the system and it does not give the individuals having GSK (global settlement keys) the option to interact with the system on your behalf and hence cannot steal your DAI or ETH. It just end up exposing you again to the volatility of your asset (collateral).

Importance of global settlement:

Global Settlement plays important role in the equilibrium price of DAI. To understand this, let’s assume a situation in which intrinsic demand for DAI is zero. The only value of DAI would come from its future claim on ETH collateral. AS a result, the market value of 1DAI would be equal to the probability of GS. This means if the aggregate expectations of having a GS is 90%, the equilibrium price of DAI would be $0.9 USD and would be stable at the value provided the aggregate expectation of having a GS stays 90% without any fluctuation. The stability will results in demand for DAI and hence a price rise to its target price as long as supply of DAI to the market stays below the demand for DAI. So the probability of GS is vital to the equilibrium market value of DAI.

Benefits of using DAI:

There are many benefits which makes it a game changer.

  • It is equal to $1 USD with negligible fluctuations.
  • It could be traded freely like any ERC20 token.
  • If you have an Ethereum wallet, you can accept, own and transfer DAI without getting a third party involved in the process and it therefor cuts the cost of transactions. DAI makes it free to transfer your dollars across border without any fees.
  • It is fully decentralized and hence no government bogy or regulatory authority can control it.
  • It is secure, transparent and resilient.

This is the beauty of blockchain and it has actually taken the economics and commerce to a whole new level.

2019-11-23T21:06:30+00:00September 19th, 2019|

Need help with your YC application?

I am YC Alumni from S’14 & happy to review your application. Over the last 5 years, I’ve reviewed more than 100 applications, so have got a bit of sense of how it should be written. This however doesn’t make me an expert or authority of any sort. It’s just a second set of eyes to review to give feedback. YC is alot about giving back to community, which here are the founders who’re building companies that’ll shape our future.

I’ve wrote this blog piece to help future aspirants.

  • Regardless of what stage are you at, you should apply to YC. Just going through the application will help you answer questions that may make you uncomfortable. Keep a copy of the application and do review it from time to time to see how you’ve progressed.
  • DON’T do things just to get into YC. Focus should be to do things to help grow your company
  • Keep application concise & to the point
  • Search for previous YC applications which are publically available to get an idea
  • Search for YC Founders on Social Media. LinkedIn/Twitter are the most obvious ones, where other founders have publically shown the willingness to review it.
  • Founders time is precious. Be courteous & thankful to them
  • Send the best version of your application. Founders may NOT review it twice.
  • Don’t pay any one to do it.
  • If you’re unable to make it this time, that’s fairly common. Keep the founder who reviewed your application updated. You’ll be surprised how quickly the next batch comes.
  • Reviewers don’t know your industry so don’t use vague terminologies
  • Here is the process I’ve devised for the application

Create a google docs with your COMPLETE application with comments options so I can put my comments along with it. If it’s not ready, I may not be able to provide you feedback on it. I’ll leave recommendation based on my assessment unless you specify me not to do it

Here is the link to apply

Review My Application

Watch this video by Garry Tan on tips as well , who interviewed us for the YC & was our group partner as well. He is an amazing guy

Content of this post is written in personal capacity & will be updated as required.

2019-09-18T19:21:33+00:00September 18th, 2019|

Creating Value is the only way to stay relevant

Businesses are built on a very simple principle, which is to provide value to the customer, and get paid for it. As long as the cost of providing the business is lower than what you get paid for, you’re bringing in the value for your business. To sustain you need enough people to pay you. Now if this is so simple why do such big corporations fail? Hours of meetings, bailout packages as well as the best brains can’t see the writing on the wall & just disappear overnight.

Nothing lives forever but there have been corporations which have enjoyed an extremely long monopolies over decades if not centuries. While internet has challenged the status-quo & shattered them to ground, few companies are still thriving. What differentiates the losers from winners?

It’s all about relevancy. How relevant are you to the eco-system? The moment, you’re not, you’re replaced. Lack of relevancy can be attributed to any reason but the most common is competitors outpacing the value you provide for the money. It’s almost impossible to find competitors on value for money proposition so thee best defense is to fit yourself in an ecosystem where they stop functioning without. Sole reason of their existence is you. They’re able to survive only because you’re breathing.

Now though it looks slightly dramatic, it’s fairly possible but hard though.

I came across a term called Network Effect. I was intrigued to look it up so I read few papers on this subject which clarified. Similar to the power of compounding. Network effect provides an unfair advantage to the common denominator.

Best and common example is Visa/MasterCard who have built a brand that other companies leverage to build their business. With every stake holder joining either of these they’re strengthening them even more making it almost impossible to break the monopoly. It’s hard for me to think of any other strong example than the credit card network.

There are firms which are staying relevant by providing a value which is hard to beat. Best example that comes to my mind is Amazon Web Services (AWS) which is used by majority of the fortune 500 companies whose billing them in millions per month. Now even though it may make economic sense for the client companies to build it economically, it doesn’t make business sense because of the low returns vs bandwidth required. It may be a very small cost in the grand scheme of things. Dropbox, Box, twitch, snapchat etc. have lot more worries & they know they can charge the premium required to justify outsourcing their core functionality.

Apple not producing their own hardware components or Samsung even remotely planning to build the processing chip. They know they’ll never be able to compete with the likes of Intel or qualcomm due to sheer volume they do. Adidas, I believe doesn’t own either of the manufacturing units, because they’re able to capture a higher value in selling the product.

Now the difference between Qualcomm & Mastercard is relevancy. Qualcomm has to stay relevant by providing the best chips throughout their dominance while Mastercard have reached a point where unless there is a massive blunder, they’re fairly difficult to be taken out of equation.

This enlightened me to the concept of Capturing value through building network effects. Uber, Airbnb, eBay, Amazon etc. have achieved similar level of dominance. People on both sides of the market are aware of the effectiveness due to supply. While many may disagree with the percentages charged by these platforms, it’s still cheaper to go through them over alternative methods.

Companies at times undersell & unable to capture the value purely due to their vulnerability to even exist in the market. Example would be where Apple captures almost 90% of the profits generated in the sale of it’s product. There are many items from developing countries which are bought for pennies and then rebranded to be sold for 50-60X because original producers don’t have the bandwidth.

So now the question is how to build this level of strength. While this is a billion-dollar question, answer is to be the common denominator in the ecosystem where you are the foundation. If you fall the industry falls. Be a network, be the lowest denominator & empower others to build on top of you. In the end once you achieved it, stay humble & don’t forget the basics.  It took a small ice berg to sink the unsinkable Titanic.

2019-07-15T07:09:51+00:00July 15th, 2019|

Facebook: It’s time to launch a Banking and Financial Arm

Blockchain technology got a massive boom in 2017 raising the market cap to 770B before crashing to sub 130B within 18months. Majority of the growth was based on the hype with little or no substance to back it up & when the sale begins there wasn’t any fundamentals to support the price. We heard about big names getting into the game but none of them actually made it to mainstream in terms of products. 

    While dump really hurt the growth, it also stalled any major corporation interest in the space. While bitcoin has almost done 3X within spam of 4 months, we heard the news of Libracoin, a cryptocurrency effort by world largest social media giant Facebook. Skepticism aside, just an official effort from such major corporation is a big win for the industry which has more cons than pros. I’ve not disectd the paper at length but have been asked by many friends on what does it mean for the bitcoin.

As mentioned earlier, it’s in the interest of cryptocurrency since facebook has the maximum market penetration in the entire world. As of Q1’19, they have 2.38 Billion active users. No other organization or country have that kind of market reach or distribution across the planet. With them making it super simple for their users to on & off-ramp the cryptocurrency is massive. Gone are the times where Facebook was limited to sharing photos & statuses. Now it’s a complete media platform for businesses and individuals which isn’t just limited to connecting but a serious amount of commerce happens through it.

Messenger is one the most popular application of facebook with mind blowing usage.

Here are the key statistics:

  • 20 billion messages are sent between people and businesses every month
  • There are 300,000 active Messenger bots on the platform
  • Messenger is the second most popular iOS app of all time – behind only the main Facebook app
  • 1.3 Billion people use Messenger every month
  • 40 Million active businesses

No other company have statistics even close to this when it comes to engagement.

Today, Facebook is not only a social media landscape rather it is the entire virtual world where from promotion to status updates to managing your own business pages can happen. And as sending messages from one place to another one is possible; the future holds a hope for something similar for payment transactions too.

Today Facebook has merged E-commerce industry into its layout and offers promotion, buying and selling of products/services. Now, imagine the payment methods used in today’s transaction; everything happens via bank, right? The digital wave has although transformed the mode of payment, but the infrastructure still stays the same: Centralized banking channels. Although, the payment method of e-commerce industry is done by banking sector today, but it will be transformed into digital currency soon. In fact, some e-commerce websites are accepting digital currency in their payment sections.

Since, Facebook is supporting a large network of e-commerce industry, it is possible that Facebook coin would be supported and promoted by e-commerce industry. Recently, Facebook has launched a new blockchain based currency named “Libra” on a platform called “Calibra”. This would support cross border transactions with the help of blockchain and that too instantly and at extremely cheaper rates.

With the announcement, the stock price of Facebook has surged 20% cumulatively and had a very positive impact on the current crypto industry as well where the bitcoin has surpassed USD11,000 resistance for the first time in 2019. Now coming back to Facebook. Well, public also get conscious upon the discussion of any new currency. A currency backed by the centralized party; I feel, it would be hot discussion.

Facebook has got its maximum possible market share; Facebook just had to maintain that market share as expansion of can’t be done within the same industry now. So, the company with the highest market penetration can use the same to become a financial institution as well. By launching a Facebook coin, it will not only get the connectivity, but it will also get the more market share in the industry of digital currency.

The aim of Facebook is to connect people onto the single platform by which users will be able to use their every account from a single username. That is why Facebook is keep monitoring and is supporting only real accounts rather than fake accounts; for promotion and connectivity, Facebook is also completing the Corporate social responsibility (CSR). As, Facebook is providing free Internet service in the developing nations so that these nations can also get connected with the world.

Well, Facebook has the most active users in the world; so, ideally everybody has a single real account. Facebook is promoting/supporting this through connecting people’s different account onto the singular platform (User Id) through which Facebook can get to know the psychographic/physical factors of its users.

Like, in terms of applications, Facebook has connected itself with Instagram, WhatsApp, etc. Only, payment/currency sector is not connected with it. But Facebook will also attach currency with it as the company is getting the utmost benefits from blockchain technology. Facebook Coin will not be only promoted by the e-commerce industry, but it will also be transformed as the bank accounts. From currency accounts to entertainment/business profiles would be onto the singular platform by the single User Id.

They’ve the most information on what’s happening in the world but that’s not enough especially with the outlash they’ve been getting around privacy and selling data to advertisers. In addition there is a limit to how many people can be on facebook and they’re approaching that limit very quickly. There isn’t enough people on the planet. With Mark’s pledge to prioritize privacy combined with stalled growth it has to come up with new avenues to earn revenue and I think that’s where the idea of Libra is brilliant. They have the opportunity to become the world largest financial institute and payment process. They’ve access to people in regions which is almost impossible to others to get. Kids get a facebook account way before their bank accounts and I am confident a decent percentage of their users don’t have any bank account at the moment. With facebook, issue of Cash-in & Cash-out is solved and if it becomes a global standard money may not even leave the system giving it such a tremendous amount of capital that can turn it into the world most powerful empire.

With such fears there is some resistance from regulators in terms of who can sense of bit of fear if that happens. While there has been some serious questions posed by thee bitcoin maximalists, that’s a minor issue in my opinion at this point in time so let’s see how things progress

RANDOM FACT: I am also LIBRA by star !

Here is the official link to Libra

2019-07-07T20:00:02+00:00July 7th, 2019|

Money without Boundary

Concept of countries, states of boundary is fairly new if you consider how old the human history is. With passage of time, states on the same of sovereignty, control and stability have been taking away rights of people to extent that people started protesting to take it back. While I am a law-abiding citizen & strongly encourage following the consitution, same constitution provides me the right to differ from the polices. While governments are turning out to be one big giant elephant that is unable to get anything efficiently, I am getting more and more biased towards the concept of super lean governments and open economy.

As much as I support democratic processes, they are not super-efficient & with change of governments every few years, massive shift in policy hurt the long-term stability of economy. Inflation, currency devaluation, debt/GDP ratio and other economic terms are aliens for a common person, but they do impact an average person.

I wrote about trust in previous blog on how important and critical is trust in every transaction. Trust is a super expensive commodity which is underrated in terms of dollars. Would you prefer to pay 10X more price for a car to a dealer that you trust vs the one that you don’t. While in terms of car, the cost of saving 9X money may justify the extra work required in doing the due diligence to protect yourself from being a victim of a fraud, it’s not practically possible to do it all day long for regular transactions.

This is why we gave the power of money to governments and are super happy with it until recently banking crisis, currency devaluation and inflation have started to make more press. My exposure to multiple currencies is due to my multiple residencies, it’s frustrating to see how non-serious currency inflation is taken. Unfortunately, we don’t have much options when it comes to deal with the masses, and I don’t see that changing soon. There isn’t any competition or threat to state-backed assets & utilities regardless if it’s fiat, electricity, roads or other utilities. Biggest reason is the scale at they operate, resources they’ve & little real accountability. I trust the government because they are voted in by people like me and there is a fair chance while I like the agenda, he doesn’t have the ability to execute what he claims.

While states enjoy a clear monopoly over whatever they operate in, there should be a competition like any other industry. It looks fairly awkward that how can you compete with government but there are numerous examples. Airline is the biggest one where we’ve state owned airlines as well. In Canada, I’ve used private roads controlled by private organizations & in Europe there are private railway tracks. Healthy competition leads to better product for the end customer because he has options.

Fiat is enjoying it’s dominance through a monopoly with no competition at all. Yes we do have Canadian Tire Money which is similar to any other loyalty points that you get while shopping, but the usage is limited. Companies have pooled in their points to create a wider market but in all honesty they’re still very limited. I can’t spend my airmiles to buy grocery or my gas station points to fly.

Though how difficult it looks, there is a slight possibility that this dominance may soon be challenged. Bitcoin is also referred to as MoIP. Money Over Internet Protocol. Similar to other IPs, it has the ability to transfer value over internet very efficiently. I’ve purchased items using bitcoins in-person & offline and if you think about it, a value that wasn’t created by any centralised body, let alone state was accepted. This is a massive shift in mind-set. I suspect the end user did convert it immediately into fiat because that what vendor manages his accounting but still going that far is an achievement in itself. Bitcoin had it’s tough times, but has been surviving over a decade. Fluctuations apart, you can cash in & out across the globe. We’ve put our trust in code more than human. After-all the digital transformation is happening across the globe.

While we’re super early in the shift, this can be start of a movement where we leave the currency management to a code that isn’t vulnerable to politics, economy or a small group of people that can manipulate it for their own purpose. While it looks practically impossible, but why can’t we have a global currency that is acceptable by every states. On micro level, we do have euro which is shared across multiple countries. On another scale, dollars, pounds are acceptable by many vendors across the globe. I personally never heard any one saying no to the option of accepting dollars for a purchase.

Keep aside bitcoin but imagine if there is a global currency that is governed by the code, transparent with all the information available on blockchain. We have adopted to global standards such as HTTP, SMTP, TCP/IP so why can’t we have MoIP. I’ve not found a single use case where changing something into digital didn’t improve the efficiency.

If we take a step back, we’ve gold which is defacto storage of value that’s acceptable globally and keeps a hedge any inflation. Gold was set as a standard because of it’s unique proposition and the biggest of it was scarcity since it’s limited and can be transported. Market value of gold is far from it’s intrinsic value because of the believe system. Gold has existed for centuries and centuries though currencies have came and gone. If you look at the chart below, you’ll see how currencies have been replaced.

If we shelter the identities of gold vs bitcoin and make a comparison, bitcoin is far superior to gold to be used as storage of value. Gold is a good indicator of economic strength but has is limited in terms of accessibility and storage . You can’t buy $5 worth of gold and store it safely even though that’s the income of majority of the world population. Isn’t it unfair to have an asset as storage of value which majority of the world can’t own or store. If we expand it to bitcoin, now entire world can own it and storage it without using a 3rd party. What kind of an economic impact would it have if we include everyone in a growing economical class rather than just limiting it to the top few percent. I am blessed so have diversified across multiple asset class with real estate being the safest and cryptocurrencies the riskiest, but that’s an unfair advantage that doesn’t uplift the economy of a poor person who can’t afford to invest. Why not create an asset class that’s global and accessible to everyone?

Whenever there is a friction in either acquisition, storage or transfer, usage is limited of any item. We often underestimate how big of a market it can be and that resources are scarce, or we always need a disparity in the world for the economic system to perform well. Though I am no way a socialist however I strongly believe that people should be given fair chance to compete.

Similar asset would give this chance to everyone across the globe to participate in an economic event that is easy to acquire, store and transfer. Now we’re hedging our future downside because the entire world is now operating at same frequency when it comes to economy. Asset dropped in Africa would drop the value in China or Germany. I read somewhere when it comes to money everyone has the same religion which translate that we often forget our differences when economic incentives are aligned.

Biggest reason to fight is to acquire resources which can be power, money, oil, land or ego. If we have the same asset or economic bond, there is a chance we eliminate the wars because now hurting other economy means we’re going to get hurt too. If we look at the world debt, that’s way above entire assets in the world and it’s not stopping here. We’re racking up more debt than we can afford, and it has created a very serious misbalance in budget for the countries.

Technology have provided us a growth unprecedented to anything in the past. When email was launched we thought it’ll be replace snail mail, similarly no one expected that cellphone will add a difference user class that didn’t exist before. If not more, growth has been 100X or more in both these email and cellphone example. Similar to this, if we have a similar global asset glass,I’ll induct people who couldn’t be any such economic events due to limited resources in term of time, money and intellect.

While Bitcoin is still an experiment with very little penetration across the world, it has sparkled the conversations around government free money which isn’t backed by any centralised body let alone government & is globally accepted. As much as this looks like a utopia dream, I think we’re not far from it. It’s coming and the clock is ticking, it’s just a matter of when.

Companies are now more powerful than the governments in terms of economy. If you compare balance sheet of Apple, it’s far superior than probably any country in the world.So the question arises, would you trust a government or a company. In a bigger scenario, would we be able to accept a decentralized economic system which isn’t tied to success or loss of any individual entity

2019-07-07T19:39:51+00:00June 3rd, 2019|

Banks of future will be a financial product marketplace

Today when we think of loan or a financial product, the first thing that comes in our mind is bank. You want to have mortgage, go to banks, you want to have credit card, go to bank, you want to make a deposit, you go to bank, you want to wire, you go to bank. Though many may argue that they use online banking but that’s still a bank and unless there is a very strong reason for you to go to a 3rd party, you try to consolidate financial matters through one single institute & the first choice is bank.

Their brand power, accessibility & trust factor is unprecedented. 3rd party vendors are not more than your corner convenience store where you go when you need something in emergency, but weekly/monthly grocery is through Walmart or any big retail store. While price is certainly a factor, availability everything under one roof is also very convenient. Same is the case with bank however as opposed to big shop pricing discount services at bank are often expensive as opposed to 3rd party. There is a premium to exchanging currency or do a wire transfer. Though lot of it is attributed towards the fact that they can charge that premium without churning a big chunk of their business, but the other factor is high operational expense that they’ve to occur. While our parents were used to banks, we’re using a combination of services to well fit our need, but it’s diluting the dependence on bank. As the shift grows banks have to take a different approach competing with startups & they’re well poised to do so.

While they’ve the customer base, well capitalized and have the infrastructure & regulatory clearance.  They however may lack the thirst to innovation & are slow to move. I however think that the best approach for them is to partner up with startups & built a marketplace.

Now while banks have their own arrangements and partnership for every product they offer, they do operate more like a close loop system, but I think it’s time to change it. They should instead turn into a hub to offer multiple services. May be like Amazon but white label. At the moment they’re operating more like United Airways but what if they shift their model to Expedia with a white label badge. You want to transfer money from A to B, you’re presented with 2 options. Be there in 4 hours, it’s cost $10, be there in 2 days, cost $1. On backend banks have APIs of startups which provide those services and banks can use those startups to find the most efficiency way to perform a specific service. Win for banks and win for customers. Customer churn rate will reduce and banks will keep their branding.

There has been recent cases where banks have partnered up with startups providing them the branding but if they do it well, they should just actively pursue it as a business line. I don’t expect big banks to buy into this idea soon, but the one that does will emerge as a winner and won’t provide space to startups to displace them.

My bank of future will have very few branches and will have partnered up with 100s of startups offering services and competiting for best quality & cost.

Let’s see who that’ll be in 5-10 years

2019-05-22T21:47:21+00:00May 22nd, 2019|

Decentralized Open Finance

I wrote about Trust & it’s importance in the last blog post here. I’ll try to cover more on Open Financial also known as decentralized financial systems AKA DEFI. You can pickup thee term as per your liking but as much they’re interchangeable they’re also subset of each other depending on the reference that you apply.

An open system can be decentralized or centralized depending on your definition of centralization & same with openness where it could have so much high barrier to entry so it’s not truly open. Example is being a bitcoin miner where you can’t participate unless you run a very sizeable operation. Theoretically it’s decentralized but there are couple of entities that control majority of the hashing power.

Trust in finance is super important & that’s the basic of any transaction.

When you look at all the financial system around us, we believe they’re open, but they’re not regardless if they’re in developing or developed country. They’re operating more like silos. They do interact but with permission very inefficiently. If you had to transfer money from one bank to another bank in us, it’s quite doable but you’re at the mercy of bottle necks involved in every party involved in the transaction.  I still have restrictions in performing multiple tasks that require branch visit. We do have SWIFT, Interac, SEPA & other systems which are comparable to protocols but they’re inefficient with no visibility into the process.  There’s a reason why majority of the world is unbanked because cost of banking is high. There is an argument that unbanked don’t need a bank because they are poor but in fact they’re poor because of barrier to financial tools.

To bring down cost of banking or access to other financial tools, unbundling of the system has to be done & DeFi makes it possible. I’ll give you example of how that can be done. Right now if you look a the process of loan origination, there are mainly 3 parties at a financial institute that make it happen. They’re

  • Debt Raiser
  • Debt Issuer
  • Underwriter

Debt issuer makes the business case for the loan, while underwriter assess & approves the risk & loan, and debt raiser finds the money to fund the loan. Though they all belong to same institutes but there is a friction between them since they’re responsible for their own departments. Now hypothetically what if all three work independently and are able to scout outside their institute, that’ll ultimately benefit the customer. Chances of success are much higher due to participation of more and more players. Now the biggest pain point here is trust. Would they trust each other now that they’re dealing with outsiders ?

That’s where DeFi & protocols become important. Now I’ve simplified it a lot, but this is how it’s supposed to work. E-Mail is based on Simple Mail Transfer Protocol

(SMTP) which is common across the globe so your interface can be whatever you like it be but for transmission it has to follow SMTP standards.

I’ve been particularly excited about Decentralized exchanges & protocols which empower small players to build interesting applications. ERC20 based tokens on top of ethereum were a success which lead to thousands of applications being built serving different used cases. While different chains don’t talk to each other at the moment, but that’s going to change in coming days.

No one size fits all and that’s the case with financial apps too. Needs are different based on demographics so niche apps are required to serve them well. While protocols are scary for the majority but  there isn’t any neeed to be paranoid about the utility. What percentage of people around us knows how does SMTP work. They just use gmail, Hotmail etc.
It wasn’t possible to transact online without using a 3rd party. Decentralized exchanges make it easy. Now we have tools to hedge, lend, borrow that are gaining popularity on the internet as well. I am very excited about this development because it opens up the financial world to everyone with internet access, which is billions of us. Local, national, international all can enjoy the tools without any discrimination. 

Coming back to trust issue where I laid the importance of trust in financial transactions. Protocols make this job easy & playing field for every participant. As long as you satisfy the protocol rules, you’re in. Your app doesn’t need to have a track record of centuries or decades to participate. Rules of pedigree are broken here.

 Status quo enjoys the trust, regulatory barriers & support of the top movers & shakers but soon their kingdom will be challenged. There’ll be a revolt by the millennials where they’ll move to alternative options which probably will be built on decentralized financial system which is open, non-discriminatory and fair to to every one. It’ll be a war where incumbents have to innovate, competitive to a very rare breed of smart and intelligent engineers globally who’re building tech apps to serve the customers much better.  I expect majority of the incumbents to give up or find intelligent ways to build partnership & integrate into the decentralized system.

Some of these things might look alien, tails from utopia but there is serious work in progress where transactions are growing with more and more participation from community and institutes alike. Tech companies have tendency to go parabolic once they find market fit & I expect this the case here as well.

2019-05-12T19:23:43+00:00May 12th, 2019|

Trust & Decentralized Finance – DeFi

There’s a famous saying

“It takes ages to build trust & seconds to destroy it”

Trust is super important for any aspect of life.

Our economy is built on trust. We interact directly or indirectly with external factors throughout our day based on the trust that they’ll perform as we expect. With passage of time, trusts get stronger & stronger which leads to higher confidence in our own ability to perform. During any transaction, trust is super important. Once it’s established the transaction goes through smoothly.

In ancient times, humans primarily only depend on their small tribe with less need to involve a foreign element but with passage of times as the civilization have evolved, we have to work with unknown parties on daily basis. Our modern economy is built on multiple layers of trust where we are trusting the system to perform as we expect.

Due to my interest in Finance, I’ll focus on that portion only where the biggest example is the bank who controls our money. Regardless of whichever bank you see, there is generally a sense of trust and credibility. There is very rarely a thought that the bank will just shut down tomorrow or run with your money. We also have insurance where we do expect them to pay us whenever we have a claim. There are also government institutes where we believe they’ll be watching out for the bad actors and protecting us if some thing goes wrong.

This all system is TRUST. Though we actually can count couple of the institutes, they themselves are depending on multiple other. Living in a systematic society and 1st world country, we’re used to trust and certainly take it for granted. It’s like the water that would come when we open the tap; because that’s how I’ve seen since I am born.

With globalization, we’ve to trust international players as well as new entrants. Majority of time we don’t have an option or have no other choice. Recently there has been multiple cases where the trust has been shattered for the masses, sometime deliberately some time by accident. Example of deliberate would be company selling your data to a 3rd party without your consent or manipulating your opinions while in accidents where they genuinely were hacked. While I’ve been fairly cautious, I can’t possibly live off the grid.

My first encounter with crypto was 7 year ago and have to admit that it wasn’t a conscious decision but with passage of time I’ve gone deeply in love with the philosophy of open networks, cryptography and free-market economy. While there hasn’t been a single school or thought or system which has been able to put things in order on global scale, it’s hard to resist admiring a system which is built on such fairness. I won’t say it’s the utopia I dream of, but much better than other monetary systems which we have.

It wasn’t possible in the past to deploy such a grand operational financial system purely based on trust and cryptographic algorithms. Bitcoin network is running for more than a decade with the maximum uptime possible without any singular authority. Recently I came across a report which said that 1 in 5 American own a cryptographic asset. That’s massive because it may be in top few spots when it comes to an asset class. In case of bitcoin, you don’t care who generated the bitcoin or how much effort he has to put in, as long as network accepts it, it’s part of the system.

If you look at this behavioral change where the entire system is flat level field for all the participant, this put disadvantage the status quo at a massive disadvantage. Bitcoin and other cryptocurrencies are an experiment and relatively in the industry, but the impacts on economy & behavior are very undervalued. Companies and individuals are building and contributing towards a system with a self-rewarding schema that’s designed without any flaw. Yes there are needs for improvement but the philosophy behind it can be replicated towards other fields of life.

Crypto has built a trust that didn’t exist in the past and is only getting better from here. Systems will improve & I expect a hyperbolic economic shift due to induction of new products, ideas through collaboration.

World is turning out to be more equal playing field and should get more flatter from here on. This is healthier and with more financial openness, we’ll have a much better world .

I am really looking forward to decentralized financial systems AKA DEFI

2019-05-04T19:40:30+00:00May 4th, 2019|