How TO Run a Business w/ Crypto

For this particular topic, we’ll be discussing a subject in the range of investment management (IM), at which capital through leadership and the transformation of asset management businesses in the world of blockchain technology, is creating a major expansion for how we bridge together merging technologies which help to address and resolve current challenges for the adaption of companies in the future. Now, as we’ve discussed before, as much as capital comes in different forms, how we digitally spread its data safely with the help of applications on behalf of the users requests in making transactions, is still a significant challenge, something that requires a great level processing speed as well as the issuing of employment for those who are capable of understanding and deploying research on the commercial implementation, cost reduction and technological configurations of the systems. In the case that there might be confusion, IMs are typically taken for the role of managing investment portfolios on behalf of clients. We cannot forget that this is a title for a white collar profession that some may label themselves as from the get-go, as some do in fact market themselves to gain the ‘false’ sense of trust with your finances, promising to manage them in the long-run. We’ve seen this example before through the FTX incident explained in a previous workshop series 'How NOT to Run a Business w/ Crypto: The FTX Incident’, at which various elements such as putting in place not just developers but also governing bodies of the network-based operations, will only strengthen the security of these portfolio management applications.

Generally speaking, IMs are typically known for managing the portfolios under a discretionary or non-discretionary basis, meaning that the traditional investments their clients make are generally sustained through a process of assigning securities to various types of accounts, and overlooking trades on behalf of a financial advisor. Blockchain technology strives to change this narrative by shifting the procedure to a network- driven model, which can create greater possibilities for efficiency, accountability, and innovation in the financial markets, especially under the line of US shareholders servicing major companies. Of course, without the core structures that make up of how blockchain technology facilitates transactions such as smart contracts, companies simply are not capable of taking advantage of the increasing processing speeds of the network as well as how it contributes to the amount of transactions taking place without these factors, hence why it’s important to also highlight the way IMs are going to collaborate with the technology to reassure the job market will be making use of intermediation.

In addition to the main usages of blockchain technology that we’ve covered thus far, the mergence of financial markets and their curators with the is only thriving to bring disintermediation to some form of establishment. What this means is, instead of gaining central permission of authority on behalf of financial institutions, IMs can successfully create direct contact and communication with clients, taking on the role of reshaping the labor landscape, which may have disadvantages such as job losses. Although the procedure of the general transition is far more complex than explained on an average white paper, there is already a common method that developers and users of various professions within industries is making use of to make sure the supply chain of contractual activities with verification limits, are to be kept ongoing without operational deficiencies.

To explain this method, it would be essential in using an example of already existing companies. When an average company releases a product, whether that’s food or self- driving cars, the shelving process on these items are specifically meant to be monitored by the conduction of an audit or the inspection of inventory. Referring back to our previous article on how the buyer and seller go in the process of exchanging a property, and must meet the minimum requirement of an inspection, the general landscape of how IMs manage portfolios depending on this certain type of capital and plan on expanding it for the client must undergo the same process. Of course, this can come with its disadvantages, such as having the inability to understand how certain items reach a specific expiration date within the supply chain (referring to food supply), for which on a significant level can lead to an inconsistent allocation of the same products to stores, a weak set of patterns towards customer demand, as well as an unstable rotation of the appropriate shelving or products. Regardless, this still helps with driving a verification process that may instantly apply to a wide spectrum of goods and services which doesn’t always have to overlap with the focused world of finance.

In addition to this regulatory method, it could also be safe to say there are specific requirements taking place to also combat financial mismanagement within this field. As discussed previously, equivalent to the FATF (Financial Action Task Force), the implementation of the Blockchain Task Force as well as other documentations such as KYC (“Know Your Customer) and AML (“Anti-Money Laundering), play a bigger role in making users fulfill the right obligations in making sure transactions between users and companies run safely. Although this can be both time-consuming and costly for some people, considering that LLCs have to be set in place as well to protect against violation of property rights (as mentioned in our previous article regarding Propy), it is simply the best way to adapt securities which are token-based and have a particular cycle of governance placed on them. With direct communication also comes real-time access to how the client receives and exchanges crucial information, which is especially important for blockchain startups as they can benefit from how this feature itself can empower the way institutions and other relevant organization identify suspicious behavior from an instant.

Since we have already mentioned clients and users a number of times, it is important to also cover a particular set of people which will later be explained in depth for future workshops, at which this group is known as “data miners”. In specific, with the use of graphics processors and computing power, data miners attempt to implement their own processing speed in order to track existing cryptocurrency tokens attached to IPs (Intellectual Property), or any other baseline applications for the sake of profit. A reason for this mention, is that the opportunities given to miners on behalf of this process is that they will simply be able to grasp the increasing traffic of the networks expansion by having a clear vision of developing marketplaces. These avenues placed upon not just the users but the miners amongst the populus, has already received a healthy amount of investments, with the estimate amount taking up to 13 billion USD by ICOs (Initial Coin Offerings) from the first half of 2018. A note will be made here, that Initial Coin Offerings are essentially the entry level funding that the team behind the token receives for the sake of raising supply and marketing the cryptocurrency itself by any means necessary.

In the current state of this development, there are already leading technology members the world of DeFI that are understanding the potential of this new development, one of them already being the founder of the popular cryptocurrency Ethereum, Vitalik Buterin. The core belief that Buterin holds over this technology, is that through the use of holding governance over specific nodes within the blockchain network, the significance in how applications will help to drive fluent portfolio management is far greater now than ever before, though the overall encapsulation of the financial market which is looking to be pushed in the future by blockchain technology, could mean that more complex software will likely have difficulties with ensuring that security on behalf of user-controlled and governance based systems will take place. Although defects in the code of applications as part of this supply chain will also contribute to the aforementioned difficulties, merits are likely to come towards resolving this issue due to the sake of consistent large-scale financing, as the technology itself ever since its creation in 2009 has received up to 1 billion$ when directed towards its corporate counterparts, with already a 59% increase in investments of them if not more in the last year, which can incentivize developers to drive groundbreaking solutions and new features that will grow fluency in application development under the blockchain protocols.

As part of portfolio management is also the facilitation of bonds and mortgage-backed securities, it is important to keep note that under all of the regulations and policies mentioned before, loans must also be controlled and assessed by these IMs or financial advisors in general. This typically works by making the loan itself offered by a group of lenders, or a syndicate, hence providing funds for a borrower that is looking to manage their own large project or even governmental organization. This is typically for sizable corporations that may historically require a large budgeting limit, at which thanks to the processing speed and direct communication between financial vendors on the blockchain, the funding process for syndicate loans can be near-instantaneous. Connecting back to the general idea of portfolio management, another major key to making sure profits between trades and largely networked firms are utilized sufficiently, is that they must maintain flexibility with the management of assets depending on how much of the asset on a scale can be liquidized. In an “upstairs market” for example, at which firms and institutional investors do not trade publicly on the stock market especially upon a sizable portfolio, the securities made use of, can likely transition to the blockchain networks as the key options of tradability without direct traceable contact is available, especially for the sake of reducing costs of the trading activity itself.

Overall, the transition being made within the blockchain network is only going to thrive in serving not just the user but the conglomerates themselves seeking a decentralized line of trading, which overall shares a safe space for not only communication between these parties, but the ability to create a fluent stream of advisory boards within each node that can take advantage of applications which contribute widely to industries built on sustaining livelihoods of IMs and their involvements in capital management.