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I recently spoke at an event hosted by Hall & Wilcox and Accenture at Stone & Chalk Melbourne on the topic of enterprise blockchains.
As part of the event, I recorded my top 3 tips for enterprises looking to implement blockchain tech in their organisation. The video is below.
Many in the Australian digital currency ecosystem were pleasantly surprised when in this year’s Budget the Australian Treasurer announced an effective date for the removal of ‘double GST’ on digital currency transactions. Effective 1 July 2017, the purchase of digital currency will no longer be subject to Australian GST. In effect, this will result in digital currency being given the same GST treatment as money.
However, more importantly, this would make Australia only the second country (the first being Japan) in the world to make actual amendments to their tax laws to accommodate digital currencies.
As it currently stands, when a consumer purchases an item using digital currencies they bear GST twice – once when they purchase a digital currency and secondly when they purchase the good or service which is subject to GST using a digital currency. On this basis, digital currencies are at a disadvantage as compared to fiat currency when it comes to using them for transactional purposes.
Although, much of the initial debate surrounding the GST treatment of digital currencies revolved around bitcoin, the provisions are broader and will likely include other similar digital currencies (Etc, Zcash etc). This is especially important to note given the recent and persistent rise of ICOs (initial coin offerings). In effect, these changes allow for innovation in the digital currency space without the unintended application of GST to transactions involving them.
In the Government’s ‘Backing Australian FinTech’ statement made on 21 March 2016, they committed to fixing this impediment to the growth of the Australian digital currency ecosystem. After this, a discussion paper was released in May 2016 regarding the possible amendments that could be made to the GST Act to remove ‘double GST’ on digital currencies. This paper called for submissions from industry participants on a number of technical implementation issues. After submission closed much of the digital currency community has eagerly awaited the implementation date.
As someone who’s been involved with petitioning government for these changes, it is positive to see them finally commit to an effective date for the amendments. This again highlights the progressive thinking the Australian Government is showing in the fintech space to ensure that regulatory impediments to industry growth are removed.
What has been released so far by Treasury is an effective date for the amendments. However, the draft legislation has not yet been released. This means that there are a number of important tax technical questions that still need to be answered. Specifically, how will digital currency be defined? How has treasury chosen to actually make the amendments to the Act (the so called input tax vs money treatment)? These are still unknown.
Having said this, these are all things that will likely be resolved in the next few months. The important thing to remember is that effective 1 July 2017 Australians will not subject to ‘double GST’ on digital currency transactions in Australia – which is great news for the future of the industry.
If you’ve been reading the 2016 pundit predictions in the digital currency and blockchain space you’ll notice a strong trend. Bitcoin is back! A number of articles (I’ve included some below) are calling this the comeback year for Bitcoin.
So what has changed? Bitcoin still is… well bitcoin. We’ve seen an uptick in the price, which might in part be fueling the bullish predictions. However, fundamentally nothing has changed. In fact, one might argue that Bitcoin has even more problems it needs to solve in 2016 – for example, the unresolved blocksize debate.
However, what many are starting to see is that the 2015 battle cry of ‘Bitcoin v Blockchain’ was really a red-herring. In 2015, the financial industry clamoured around permissioned blockchain and distributed ledger technology, but to date has been more busy forming consortiums and creating labs rather than actually pushing product. The question of which is more valuable, permissionless or permissioned blockchains, is proving less relevant and which will actually push a ‘killer app’ first is proving to be more relevant.
It’s easy to find Bitcoin’s flaws, but it’s hard to deny that it’s on the right side of history. The movement towards truely open and extensible software that has transparency as a default is hard to ignore. I think many are starting to realise this is what the main attraction is – not another database technology. So bring on 2016, the year bitcoin is resurrected for the 87th time.
This week two Spanish-born residents of London, Edurne and Mayel, sealed their union on a blockchain. What makes this interesting is that they were the first to use the recently announced public notary service being offered to Estonia e-residents via Bitnation’s platform.
You may have heard of Bitnation before. Recently, they offered victims of the European refugee crisis a digital ID and a bitcoin visa card so that the displaced could more easily receive money from abroad and spend it. Interestingly, Bitnation is a DAO (Decentralised Autonomous Organisation) that is building a platform to provide government services that aren’t necessarily provided by a specific government. Under the partnership with the Estonian government, they’ll be offering notary services (including registration of marriages) on a blockchain.
Although in and of itself the idea is not novel, that a government would actually deploy it is. Many governments are thinking big about innovation in government services (we’re definitely seeing it here in Australia), yet for the most part innovation starts small. It usually starts at very low levels in the ‘stack’. A small change here, a small change there and all of a sudden things start to get interesting. Estonia is a glittering example of this. The e-residency initiative is a great case study in how governments can build small platforms that can have interesting ‘apps’ built on them (e.g. a blockchain based notary service).
Thinking about government services as a platform and then extending them through ‘apps’ makes sense – and maybe building the platform on a/the Blockchain makes even more sense. Regardless, governments now have another example of what ‘creative destruction’ looks like – and all from a small Baltic country.
This week the Australian Senate Economics References Committee released its report in to digital currency – ‘Digital currency—game changer or bit player’ (yes, I kid you not, that’s the name of the report).
Most media commentary regarding the report has centred around the committee’s recommendation to modify the Australian Goods and Services Tax (GST) Act to recognise digital currency as ‘money’. In effect, this would mean that bitcoin transactions would not attract GST in Australia – removing the current ‘double GST’ on a variety of bitcoin transactions.
Obviously, this recommendation has been welcomed by the Australian bitcoin community. However, it’s worth keeping in mind that to action these changes for Australian law purposes is not a trivial task. Practically, it requires agreement from every state and a Federal government to actually drive the amendment – given the current size of the industry this seems unlikely. So although this is a great basis for further conversations with government, there is no practical impact for bitcoin startups in Australia – just yet.
As with reports similar to this one (see for example the Canadian inquiry report), it shows that many within the highest ranks of government see the importance of innovation in the financial services sector. With ‘software eating the world’ banks are looking less and less likely to drive this change. This means that startups need to lead the way.
To allow this to happen in the digital currency space, a legal framework that provides a welcoming environment for innovation to thrive in is required. This report hopefully provides a step in this direction for the Australian Bitcoin industry.
A few weeks back I did a ‘blab’ with Suzanne Nguyen (@stringstory) about all things Bitcoin. Check it out HERE and let me know what you think.
Banks are getting behind blockchain technology in a big way. Many are starting to see the possibilities of running clearing, settlement and internal fund transactions through a blockchain.
Below is a list of financial institutions that are currently experimenting with blockchain technology. Some are further down the track than others – but all are keenly investigating the technology’s potential.
In the table below I’ve included a list of financial institutions who’ve been mentioned in the media as experimenting with Blockchain technology. The list is a work in progress. As information changes and further banks begin experimenting with Bitcoin/blockchain technology I’ll add or amend entries in the table.
If there are any errors or omissions please feel free to flick me an email at me@alantsen.com
| Bank | Country | Technology Stack / Activities |
|---|---|---|
| ANZ | Australia | Ripple |
| Commonwealth Bank | Australia | Ripple |
| Westpac | Australia | Ripple |
| Barclays Bank | UK | Bitcoin (Safello) |
| Santander Bank | UK | Internal proof of concept |
| UBS | UK | Research lab |
| DBS Bank | UK | Hackathon |
| USAA | US | Internal research |
| Bank Of New York Mellon | US | Bitcoin (BK Coin) |
| LHV Bank | Estonia | Bitcoin (Coloured Coins) |
| BBVA Bank | Spain | Internal experiments |
| ABN Amro | Netherlands | Internal experiments |
| ING Bank | Netherlands | Internal experiments |
| Rabobank | Netherlands | Internal experiments |
| BNP Paribas | France | Internal Research |
| Société Générale | France | Internal research and experiments |
| Fidor | Germany | Ripple |
| CBW Bank | US | Ripple |
| Cross River Bank | US | Ripple |
| Citibank | US | Own Tech (Citicoin) |
| NASDAQ | US | Bitcoin (Chain) |
This week Redpoint Ventures partner, Tom Tunguz penned a pieced titled “The Fastest Growing Areas Of Startup Investment In 2015”. The post examined trends in the major categories of startup investment from 2012 through to mid-2015.
The piece generated a fair amount of interest in the Bitcoin community (for example seeHERE, HERE and HERE) as Bitcoin was the fastest growing sector (151% CAGR) according to the data. However, as a percentage of dollars invested, Bitcoin still only accounted for a minuscule piece of the overall pie (0.18% of total VC dollars invested).
A common thought in the world of venture capital is that non-obvious investments are the ones that yield the biggest returns and to generate 10x+ returns that’s where you should go. The data suggests that Bitcoin is becoming a more obvious vertical for VCs. If you’ve been keeping an eye on investment news this probably isn’t a big surprise – with many well known VCs (e.g. A16Z, USV) and corporate investors (e.g Goldman Sachs and NASDAQ) piling into the sector.
With most bets in the space still heavily weighted towards ‘on-ramp’ companies, the growth in infrastructure and ‘blockchain’ based startups is still to come. Further, the overall share of investment dollars still has a lot of growth left in it – which is probably unsurprising given that most companies are still raising seed rounds.
Regardless of how you see it, Bitcoin (and blockchain tech more generally) is still a hot category and it’s only going to get hotter. So if you’re an investor, it’s time to grab your chips and make some bets.
For some reason I tend to be a libertarian magnet. Every time I speak at a Bitcoin event I’m always approached by all the crazy libertarians in the room. In the main, they ask polite questions about where the world of Bitcoin is headed and what the legal landscape might look like in the coming years for Bitcoin. However, there always comes an uncomfortable moment where the question of the Bitcoin ‘movement’ is raised. You know the “Bitcoin is going to bring down governments” and “I use Bitcoin because the government can’t take it from me” comments – if you haven’t heard either of these you haven’t been to enough Bitcoin related events.
I can see why people think I might buy into this view of the world. I’m incredibly bullish on b/Bitcoin. On both fronts, I believe it’ll have a profound impact on the way a number of industries are organised – everything from the law to the way machines interact with each other. However, emphatically, I don’t believe in the ‘movement’.
I don’t think governments will topple (I think they’ll embrace it), I don’t think banks are at risk of being displaced (I think they’ll be the biggest adopters of Bitcoin/blockchain), I don’t think you’ll see it become the world’s reserve currency ( I think it’ll do for internet commerce what Paypal initially did – but at even larger scale).
Put simply, Bitcoin is not a movement. It’s an application stack. To use an oft quoted line (or in internet speak, a meme), it’s the “TCP/IP of value”.
Take solace my libertarian friends, Bitcoin is going to be massive – but just not in a ‘the global financial apocalypse is coming and I’m insulated by owning bitcoin’ kind of way. It’ll be a movement like the internet was a ‘movement’. It’ll functionally change the way we move value in the online age. However, no government will be brought down by the tidal wave of Bitcoin. It’ll simply ride the wave.
So if you see me at a conference or a meetup come over and chat. I love hearing views on where the hell Bitcoin is headed and how it’ll change the world. But just so you know, I don’t think bitcoin is going to bring down ‘our corrupt capitalist governments’ – I just think it’ll redefine how the world transfers value. Hopefully that’s enough of a ‘movement’.
This week Coinbase released a great little summary of Bitcoin metrics as at July 2015. Overall, it’s an interesting overview of some of the more important Bitcoin metrics. Here’s a quick TL;DR of the piece.
Overall (unsurprisingly), the piece paints a positive picture of where Bitcoin is at. It’ll be interesting to see where the price (and general sentiment) heads in the next few months with Greece, China, BIP-66 and the ever looming hard fork… but these are all probably topics for another Friday 😉