A Cambridge, Massachusetts-based company developing identity solutions for blockchain-based systems won $15,000 at a startup competition hosted by the venture arm of Spanish banking group Banco Santander yesterday.
Announced in November, the Distributed Ledger Challenge was organized by Santander InnoVentures, the $100m FinTech venture fund created by Banco Santander in 2014, and Onevest, a venture capital network based in New York. The Amazon Web Services Pop-up Lofts, a working space located in Manhattan, hosted the event.
Cambridge Blockchain, which won the event, was one of five finalists that saw more than 100 entrants submit pitches. In addition to Cambridge Blockchain, the list of finalists included Coinprism; ExiVest, a startup equity dark pool project; Midasium, a startup seeking to develop smart contracts for the real estate industry; and blockchain rewards network startup Ribbit.me.
It was through Santander InnoVentures that the Spanish banking group invested in Ripple and Digital Asset Holdings. The firm later published a report on potential cost savings banks could unlock with the technology.
The panel of judges featured Mariano Belinky, managing partner for Santander InnoVentures; Julio Faura, head of research and development for Banco Santander; Juan Jiménez Zaballos, director of corporate innovation for Banco Santander, Greg Shvey, partner for TradeBlock; Peter Smith, CEO and co-founder of Blockchain; and James Smith, CEO of Elliptic.
The event opened with an introduction by Belinky and Faura, followed by a question-and-answer session with the panel of judges.
Both Belinky and Faura spoke to the interest within Banco Santander, as well as the broader financial industry, in using other implementations of the code that underpins bitcoin and other digital currencies.
Faura said during the remarks:
"We’re talking about smart money, money that can be programmed, we’re talking about new use cases, new functionalities, we’re talking about payments, machines paying, machines talking to machines, about new financial products."
Faura went on to tell the packed room that Banco Santander sees distributed ledgers, as well as other types of financial technology, as a means toward achieving new ways of doing business, something that wasn't as high a priority for the bank in past years.
"It’s something we really believe is going to change the world," he said.
The event saw five startups pitching their ideas to the gathering of bank executives, technologists and startup entrepreneurs. Each firm had eight minutes to make their presentations,
CoinPrism CEO Flavien Charlon, like others at the event, pitched his project by appealing to pocketbooks of the various types of financial services that could see potential cost savings by using blockchain-based systems.
"There is an increasing amount of regulation being applied to financial services. That means more reporting, more auditing," he said. "But most financial services aren’t in a position to follow those requirements because of their outdated systems."
Cambridge Blockchain CEO Matthew Commons also pitched his identity-focused startup in the context of regulatory compliance.
He said his firm’s platform incorporates a blockchain that allows transacting parties to learn certain types of information about one another without compromising their full privacy.
Commons argued that his firm can provide a means for banks to manage access to distributed ledgers that they might use – and make it easier to use these types of systems in the first place.
"This is one of the most critical areas where blockchain technology needs to improve if it’s going to get out of the lab and into real enterprises," he said.
Ribbit.me CEO Greg Simon, who announced the recent closure of a $1.5m funding round during the event, framed his startup as a means for merchants and other companies that offer rewards the program to shave costs by making the process of onboarding customers or adjusting programs more efficient.
"If they want to add someone else, or change the rules, the legacy system isn't dynamic like ours is," he said.
Midasium CEO Michael Smolenski said he and his team wanted to build a system for creating smart contracts for real estate tenants and owners.
He pitched programmable transactions, which would exist on a blockchain embedded within the payments system of whichever bank is using it, as a new way to manage relationships in real estate. Smolenski said that banks would benefit because it would provide a new avenue for gathering data, information that could later be used when determining the creditworthiness of a borrower.
"Banks would really love to have access to this real-time data, because at the moment it's based on a paper-based system and Excel spreadsheets," he said.
ExiVest founder and CEO Zeeshan Mughal pitched a platform a dark pool – a trading environment in which identities are private – for private startup equity, using blockchain technology as a mechanism for settling trades.
Following the presentation, some of the judges suggested that startups might balk at the idea of ceding some control of who can obtain control of equity in a startup, a point that Mughal conceded would be an issue for some startup equity holders.
He went on to defend the use of blockchain technology for the project, saying that "the blockchain allows us to be more transparent."
Correction: This report has been updated to reflect that Cambridge Blockchain, not Blockchain Cambridge, presented at the event.
Photos by Stan Higgins for CoinDesk