The transformation of the payments industry is in full swing. Driven by FinTechs, the payments technology innovation brings new ways of transacting on a global scale, with easier on-boarding, reduced waiting times and lower fees.
It’s no surprise that FinTechs also experiment with blockchain-based platforms that allow for tokenized representation of assets. One such platform is being developed by Billion, a British-Polish FinTech that is currently working with Raiffesen Bank on end-to-end digitized national currency transfers.
Raiffeisen to Pilot Digitized National Currency Project
According to a report, the Austrian banking giant successfully tested Billon’s tokenization platform, dubbed RBI, and moved the project from a proof-of-concept to a pilot project.
Borne out of Raiffeisen Bank International’s (RBI) Elevator Lab acceleration program, the tokenization platform is based on Billon’s distributed ledger technology (DLT) with the goal to enable tokenization of national currency.
Billon was founded in 2015 and is a FinTech company working on integrating national currency transactions, document and identity management tools into a single architecture.
The goal is to bring blockchain capabilities into the regulated world. This is in line with the global trend of commercial and central banks building blockchain-based infrastructure that comply with payment and data regulations.
FinTechs Augmenting Banks
The system from Billon enables banks to complete transactions that have higher settlement speeds, accurate payment status, reduced exception handling and as a result reduce customer inquiries.
Transactions with this system can have additional data or documents attached to them, accelerating the verification and validation process for e.g. the source of funds. Consequently, transfers are quickly settled and cleared while maintaining a clean audit trail and full transparency.
Both Billon and Raiffeisen Bank International plan to pilot the digital currency by the end of this year. The trial is set to include RBI’s corporate and institutional clients. Should the test period be successful, the Austrian bank could start using it in Central and Eastern European (CEE) countries where it has an extensive presence.
Stefan Andjelic, blockchain hub lead at Raiffeisen Bank International, spoke of the necessity of banks having to partner with FinTechs to meet new consumer demands:
“Billon is a great example of a fintech that understands how to adapt blockchain to serve the needs of banks and their clients. Specifically, during the COVID-19 situation, banks need to partner with fintechs to innovate faster and help clients with payments processing and liquidity needs.”
The full extent of the benefits from a tokenized platform are yet to be felt when deployed in a full working environment, but Billon expects the bank to improve customer experience, differentiate its offering and achieve cost efficiencies at several steps during the process.
Blockchain and Banking
There is a noticeable trend amongst commercial and central banks to develop new payment rails and exploring blockchain-based solutions.
Among the first household names in the financial world to entertain the idea of a digital currency was JP Morgan with its own JPM Coin that is marked for settling internal transfers for its corporate clients. Nonetheless, up to this day there is no update from the banking giant about fully deploying the JPM Coin.
At the same time, many central banks across the globe are taking decisive steps to launch their own digital currencies, clear examples being People’s Bank of China with the digital Yuan and the Banque de France testing a digital version of the Euro.
At the highest level, institutions are studying the feasibility of digital currencies and how these can be implemented in the current monetary environment.
VISA is another company whose involvement with digital currencies testifies the looming change in how payments are made. The payments giant has also filed for a patent in the United States to develop a digital fiat currency.
The Trend to Go Digital
The willingness to bring forth a digital version of a currency has also been exacerbated by the current COVID-19 pandemic. Transitioning to an almost fully digital experience could become a prerogative for many companies.
In the wake of the pandemic outburst, the Bank for International Settlements (BIS) published a report on how physical cash could transmit viruses, including the COVID-19. As a result, the BIS advised financial institutions to utilize digital methods of payment transactions, while advocating for central bank digital currencies (CBDC).
With this new blockchain-based initiative with Billon, Raiffeisen Bank is definitely on track to bring better digital payment methods to their offering.
NEM in a State of Flux – Sabbaticals, Community Consolidation, and High Hopes for Symbol
NEM, a mainstay in blockchain, is currently in a state of flux. As the NEM community, tasked with nurturing and driving growth of the NEM blockchain, navigates turbulent times, they have taken some bold steps.
These include the development and launch of Symbol, consolidation of entities which comprise the community, and new industry approaches involving governance, etc., moving forward.
Beyond a change in tactics surrounding their market approach, the NEM Foundation also notes the recent temporary loss of their newly appointed leader.
In their recent statements, NEM notes that the overarching goal, which is driving this current state of flux, is their desire to develop and launch Symbol.
An imminent, and major, step towards facilitating the launch of Symbol is the consolidation of the various entities which comprise the foundation.
- The NEM Foundation
- NEM Ventures
- NEM Studios
With this consolidation, the resulting group will be known, simply, as the ‘NEM Group’. The advent of this new entity marks a move taken in hopes of increasing efficiency, and the cohesive development of Symbol over the coming months.
The newly created NEM Group states, “In short, by mutual agreement between the NEM entities and the Core Team, the three existing NEM entities will move into a single common governance framework, NEM Group. This change does not reflect on the performance of anyone. It is a positive, collaborative step to ensure Symbol is best supported through to launch and beyond. It is also an appropriate structure to help NEM engage open source and enterprise projects post launch.”
The NEM Group will be spearheaded by CEO, David Shaw.
As indicated above, the scheduled launch of Symbol is a root cause behind much of the flux being seen at NEM. Why all the fuss though? What is Symbol, and why is it worth restructuring efforts of this level?
While the benefits of Symbol are plentiful, there is one that stands apart – interoperability. This attribute has long been noted as woefully lacking, throughout the blockchain sector. By acting as a bridging platform between various entities, market participants will no longer need to take ‘detours’ to arrive at their destination – they will now have a direct path to their endpoint.
What has caught our eye here at securities.io, is the ability for Symbol to support security tokens. Only weeks ago, the team at NEM released new standards for asset tokenization through Symbol.
It is clear that the team behind NEM believes that Symbol is the future of the project, and the best path forward. Interoperability? Check. Security tokens? Check. Enterprise blockchain’s? Check. The list goes on.
Thankfully, these moves discussed by NEM do not simply represent hopes. They have established a clear game plan for achieving their goals, and have elaborated on what this plan entails. The following is an excerpt from their recent statement, touching on their next steps.
- Formalise and centrally organise the software development, consulting and treasury management capabilities of the existing entities to be more efficient and operationally effective. This underpins the other two priorities.
- Create a formal and publicly visible project plan (and roadmap), within 10 days of this announcement, for what is required to get to Symbol’s launch, including anticipated timelines and where the community can help.
- Engage the NEM community. Over time, the community has understandably become disengaged. A plan will be put in place within 1 month of this announcement with recommendations for how to rectify this. It will include opportunities for the community (existing and new members) to get more involved in Symbol’s launch and future milestones. It will encompass specific tasks and incentives.
While news of restructuring, and the upcoming launch of Symbol, is being viewed as a positive, there remains a point of contention that a portion of the NEM community is not happy about.
Alexandra Tinsman, who was appointed as the President of the NEM Foundation less than 1.5yrs ago, is going on a 6mth paid sabbatical.
While valid notable health issues are being noted as the reason for the move, not all members of the NEM community were convinced a 6mth paid sabbatical was earned after only 1.5yrs – despite the reported 14hr days every day.
The NEM Group stated, “At this time, we would like to announce that Alexandra Tinsman, President of the NEM Foundation, has decided to step back from operational leadership. She will be taking a well earned 6 month sabbatical (paid) after the long hours of running the NEM Foundation.”
NEM, originally known as the ‘New Economy Movement’, was established in 2015. Operating out of Singapore, NEM has long been touted as the ‘Ethereum of the East’. The company describes the NEM blockchain as a ‘plug-and-play’ business blockchain offering unique smart-contract capabilities.
It is expected that an updated roadmap for the project will be released in the coming days.
Hold Your Horses – FastForward Jumps the Gun on Factom Inc. Receivership
Jumping the Gun
There may be hope yet for Factom Inc. – one of the oldest companies in the world of blockchain. After a recent announcement that the company would be entering into receivership, Factom Inc. COO, Jay Smith, elaborated on the situation, in a conversation with CoinDesk.
It is a surprising turn of events, as it would appear as though FastForward, the main creditor behind Factom Inc., prematurely announced the company’s entrance into receivership.
Smith stated to CoinDesk, “There was a miscommunication and FastForward heard that we were going to put this proposal to the shareholders…Because they’re a public company, anything that has a significant impact on the valuation, they have timelines to publish that. They printed out the press release, and we didn’t get a chance to see it. … There wasn’t any malicious intent on anybody’s part.”
While the company is, indeed, in dire straits, they are not completely down for the count. In their conversation, Smith noted that the company has redistributed 80% of their staff as contractors, resulting in only himself and CEO, Paul Snow remaining full time. A move completed which will allow for development to continue in the meantime, with increased flexibility of operations.
In this conversation, Jay Smith notes that, not only is the company not going into receivership at this time, but that the Department of Homeland Security intends to award an additional three contracts to Factom Inc.
These contracts, which are expected to amount to roughly $600,000 cumulatively, build on a previously established relationship between Factom Inc., and the DHS, with various contracts having already been completed in past years.
Stagnant Series B
This entire situation comes from the inability of Factom Inc. to secure a hearty Series B with satisfactory terms for all parties.
While the company has managed to stay afloat due to successfully being awarded various government contracts, over time, their inability to crack into the mortgage industry is believed to have been a major hindrance. This, coupled with the economic turmoil currently wreaking havoc on world markets, has led to the current situation being weathered by Factom Inc.
It is important to note the difference between Factom Inc., and the Factom blockchain. The latter, is an open source protocol, with many companies developing solutions on top of it. Factom Inc. is simply one of these companies.
While they are, indeed, the most recognizable of the names associated with the blockchain, the fate of the Factom protocol by no means hinges on the success of one company.
Founded in 2014, Factom Inc. is an Austin, Texas, based company. Acting as an ‘ANO’ for the Factom blockchain, Factom Inc. made a name for themselves over the years through a series of government awarded contracts, from entities such as the DHS.
CEO, Paul Snow, currently oversees company operations.
In Other News
When news first broke through FastForward of Factom Inc.’s transition into receivership, we took a look at the situation. While this has been found to be a premature announcement by FastForward, per Jay Smith, there has not yet been a resolution paving the way forward.
Despite the on-going situation, Factom Inc., has not sat idly by in past months, as made evident with achievements such as PegNet and more.
FastForward Announces Factom Inc. to Enter Receivership
The Factom protocol is seeing one of its first adopters, Factom Inc., potentially taking its final steps, as the company enters receivership.
While the Factom protocol, itself, was developed and nurtured through its infancy by The Factom Foundation, this board has long since dissolved. This dissolution occurred after years of developing the protocol, to a point where it was able to operate on its own, in a decentralized fashion.
Unfortunately, Factom Inc., which utilizes the Factom Protocol, has not fared well with the current economic climate, resulting in the current situation.
Factom Inc. while intimately related to the Factom protocol, does not represent the Factom Ecosystem as a whole. They are simply one company, which builds solutions utilizing the open-source and decentralized protocol.
Some of the solutions Factom Inc. has built include,
Intellectual property surrounding these solutions, as well as company assets, will now find themselves in the hands of primary creditor, FastForward. As such, FastForward will facilitate the upcoming receivership process.
Will FastForward rebrand Factom Inc.? Will they liquidate assets? Will they simply restructure? Time will tell what this process entails.
Authority Node Operator (ANO)
As an open-source and decentralized protocol, the Factom blockchain is managed through a series of Authority Node Operators (ANOs). These companies, all of which must meet eligibility requirements and undergo trialling, are described as block validators.
Currently, there are 27 different companies which hold this position, with Factom Inc. being one of them.
The Writing was On the Wall
News of Factom Inc. entering into receivership should not come as a complete surprise. On March 19, 2020, Factom Inc. creditor ‘FastForward’ indicated that this may happen.
In their update at the time, the company had the following to say,
“…at the end of March 2020, without any additional support or funding, Factom Inc. will be forced to enter discussions with creditors about the distribution of its assets.”
Needless to say, additional funding did not materialize, resulting in the development discussed here today. On April 2, 2020, FastForward announced the decision by Factom Inc.
Ed McDermott, Director of FastForward stated,
“We are extremely disappointed with this news from Factom. In light of this Dissolution Event under the SAFE we are taking swift action to protect our position as best we can in the circumstances albeit the ability to generate any meaningful return is uncertain. As we go through the Receivership process and understand more of the events that led to this position our position as investors in Factom is expressly reserved.”
Receivership is a process built to allow for creditors to gain control of a company. This occurs in an effort for them to either impart restructuring efforts, or liquidate assets.
The purpose of which is to allow for an opportunity to bring the company back to profitability, and/or reimburse creditors their funds.
While these may be dark times, there do remain a few promising applications/implementations of the Factom Protocol, which are expected to be unaffected by the receivership proceedings of Factom Inc. The following are a couple examples of this.
Launched in October of 2019, PegNet is an example of one of the more promising, and successful, applications which utilize the Factom Protocol. It is also an example of one of the applications not associated with Factom Inc., which will continue to operate unaffected.
To date, PegNet is said to have already facilitated over $1 billion in transactions.
Factom Asset Token (FAT)
We previously took a brief look at how FAT operates, including its ability to support non-fungible tokens.
There is an unfortunate trend in the world of cryptocurrencies and blockchain – an attraction to hollow, ‘get rich quick’ schemes. Visit the top companies listed on coinmarketcap.com, and you’ll see it populated with many companies which have, to put it bluntly, accomplished next to nil.
Unable to crack the top-100 coins by marketcap for months now, Factom, is not one of these. Overall, the Factom blockchain, and the various solutions built on top of if, have experienced quite a few successes and legitimate adoption over the years. Arguably the most prominent, and well known, example of this is their proclivity for attaining subsequent government grants and pilot programs. While the protocol lives on, unfortunately, these examples were not enough to save Factom Inc. from its current situation.
If a company and the protocol it is built upon, which has received this amount of attention from reputable organisations can suffer, so can any.
In Other News
Beyond what has been discussed here today, the following articles touch on multiple recently announced utilizations of the Factom protocol.