John Biggs is CEO of stealth bitcoin startup Freemit and a former editor at TechCrunch. His work has appeared in publications such as The New York Times, Gizmodo and Men's Health.
In this opinion piece, Freemit CEO John Biggs casts a critical eye on the current state of the FinTech industry today.
What we’re experiencing in FinTech is a Cambrian explosion of personal and B2B financial apps and services. From wealth-advising robots to cheap equity trading platforms to mortgages in minutes, we are facing a world in which middlemen and women are being replaced by code.
But this code has creaky foundations. Zenefits was built upon – and was sued by – an old-guard payroll company. Many modern financial companies are still sending CSV files to central repositories using arbitrarily secure systems. Hackers stole $80 million from SWIFT – a platform that banks use to move money overseas – and were only caught because a human middleman noticed a spelling error.
“When I first came here, this was all swamp,” they say. “Everyone said I was daft to build a castle on a swamp, but I built in all the same, just to show them. It sank into the swamp. So I built a second one. That sank into the swamp. So I built a third. That burned down, fell over, then sank into the swamp. But the fourth one stayed up. And that's what you're going to get, lad, the strongest castle in all of England.”
But why do we have to keep building our castles on swamps?
Connecting modern apps to old foundations is a chump’s game. Forcing Bitcoin and cryptocurrencies to play nicely with established players in any real sense is a pipe dream akin to Linux on the desktop. Banks will let crypto in on their terms and as long as it benefits them directly. There is no fighting it, no matter how many ramparts you charge and flags you wave.
The answer, then, is to create new land. That is happening now, but in a very sneaky way.
The “it’s just a blockchain!” crowd have shut up for now because they’ve realized that appeasement doesn’t work. Ethereum, like Hansel, is so hot right now but no one outside of enthusiasts understand it.
Then we have the die-hards. These big, Bitcoin-centric companies are shipping small ideas. We need to remember that 21 Inc, a company funded to the tune of $116 million, has released a single flagship product: a Raspberry Pi connected to a fan.
What happened to moving heaven and earth to make Bitcoin real? What happened to the endless dream of a united, incorruptible currency? Did it die with hunt for Satoshi?
Either the cryptocurrency industry – and not just the mass of enthusiasts – bands together to drain the swamps or finds new, solid lands on which to build. Either way, we’re at a standstill until this thinking changes.
We need fiat money to start behaving like bitcoin. We need these new FinTech apps to work across borders, for money to be “interoperable,” transactions to be fair and fast, and ensure that regulations are adhered to, globally. We are working on a way to connect FinTech apps together, to create a network. You can read our white paper here.
But we’re not alone. We’re one of several networks with the potential to bring about a true Internet of Value on new land: Stellar, Ripple, Ethereum, and of course Bitcoin, but the way we merge crypto with fiat is the key.
We have our own approach and we don’t know who or what is going to emerge as dominant. The paper is a description of what we intend to add to the global conversation. What we do know is that we’re experiencing three major trends at once – a multi-polar world, a FinTech app explosion and massive broadband/smart-phone penetration – and there is an opportunity to take advantage of them all, not just for the success of a company, but truly for the benefit of humanity.
We have to stop thinking like the King of Swamp Castle. Repetition while expecting a different result may have worked for the King, but it doesn’t work for businesses.
The entire industry needs to finally move off the swamp or else the entire industry will burn down, fall over and then, obviously, sink.
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