Emerging Fintech & Bitcoin Trends 2020


Hi guys, I’m Nik.


And I’m Yuri. We’re co-founders of Moon Tower.


And you’re watching Moon Tower HQ. Today, we’re going to talk a little bit about the general trends that we see in FinTech and in Bitcoin as well. One of the things that I think a lot of people are always a little bit on the sidelines when it comes to digital assets is the acceptance of it in the general area of finance. And I think this piece, we’ve been intimately involved for quite some time and picked up quite a lot of different nuances I think globally as well as locally as to how different government entities and how people, in general, are perceiving this.

In particular, when we look back at it, there has been a lot of misunderstanding about where Bitcoin is, what Bitcoin is used for. But as time has evolved, it’s been pretty clear with both the regulators as well as the governments as well as individuals that there are a lot of used cases for Bitcoin outside of what they were originally thought to be used for which is more or less on the greater side of the spectrum.

The piece that I think is really interesting to take note of is not only the adoption of Bitcoin from a regulatory standpoint where you have jurisdiction such as Gibraltar, Lichtenstein, Estonia, and many others who are coming out with regulation, and I think very open and understandable regulation for companies to be able to actually operate within a margin of safety and security and be able to actually provide services for individuals who are interested in this area. I think that’s also from a financial perspective, a lot of institutional players are starting to enter this space as well.

This started in 2017 roughly when the big score, I would say actually technically the third big run-up happened in Bitcoin, if you’ve been around from the very beginning. And it was during this time that a lot of interests started to come in from outside of the ecosystem. That’s more technocratic, I would say. And starting to look at to actually people that are either family offices, hedge funds, or other type of institutional players that are starting to actively participate in this market.

And as a result, there is a certain maturity that has come along with it. Not only do you have certain types of exchanges such as the CMEs that are allowing institutional people to actually trade the volumes that they usually do. Even though, as you mentioned in previous episodes, the Bitcoin network and in general, the digital asset space is still relatively young, but you see all of these bigger players starting to enter in and the market is most certainly maturing as a result of that. You have a lot of different options as to what you want to do in terms of an investment vehicle into these digital asset classes, so security tokens being one of them, which we’ll touch on upon a little bit later.

But fundamentally you see more or less a global acceptance which actually I believe recently was India that has now unbanned Bitcoin. This kind of is an interesting trend of banning and unbanned Bitcoin. I think Yuri, maybe you can speak a little bit more about how you see over time a government kind of coming in, trying to do something and then coming back out and then coming back in. And where do you see this as going in the next maybe five to 10 years?


Definitely. Well, I believe that the treatment of Bitcoin by various governments will vary over time. And as soon as governments and officials talk about Bitcoin, they pretty much legitimize it. They give it legitimacy because people think, well, it’s something important to talk about so let’s hear what they have to say. But the thing about this new ecosystem is that it is not controlled or governed by any centralized institution.

So, it’s pretty much what is called “permissionless” innovation. And because of that, not a single government can impose any global controls over Bitcoin, it’s a network or for that matter, anything else that is related to Bitcoin and digital assets in general. So, in my opinion, what we will see happening in the next five or 10 years is a competition between governments.

Among governments, there will be those who will decide to outright ban it, just like India did and undid recently. And there will be those who will decide to embrace it and create a very clear legal infrastructure for those market participants who want to essentially build on top of this economy, emerging economy.

So definitely, businesses that feel welcome in certain jurisdictions will move their operations there while restrictive governments who want to exercise full control of something that they don’t even understand yet, they will just lose customers. They will lose tax revenue and they will lose potential games from this technology in general.

So that’s my take on what will happen with governments and other financial institutions as well. Because when we talk about governments, it’s a complex system of not just public officials, but also the private financial institutions, and they’re mostly intertwined in various countries. We will see larger financial institutions like banks and mutual funds and other institutional investors enter the space. And maybe some of them will try to affect it in some way by lobbying governments to pass certain regulations or laws.

But like I said, the competition will be what will decide the future of where the biggest Bitcoin companies will be built. And the biggest FinTech hubs will appear. As you mentioned, Europe and some offshore jurisdictions like Gibraltar are leading the way right now which is understandable. They are smaller nations, it’s much easier to make decisions there compared to larger countries like Russia or the US or even Canada.

So that’s one of the trends that we see. And I think there are also other trends that we can see in FinTech and Bitcoin in general. And those trends can be very noticeable not just in the development community, but in the investment and traders’ community. One such trend is called Dollar Cost Average or DCA or as people like to call it, alter DCA. Can you talk about that a little bit?


Yeah, absolutely. So when it comes to dollar cost averaging, if you’ve tuned into our previous episodes, we’ve talked a little bit about this topic, but it’s really important to understand that dollar cost averaging is an investment strategy first and foremost, somewhat also considered a passive investment strategy if you’re talking about it from an automated perspective and it’s also a long-term strategy.

Essentially, it’s when you have an asset class that is in a particular state which is in a constant upwards trajectory in which you buy over a certain period of time, whether it’s daily, weekly, monthly, on a scheduled basis, a certain amount, and you end up eliminating a lot of the volatility as a result and capturing pretty much the long-term macro trend of that particular asset class.

I think one of the interesting trends in particular of dollar cost averaging when it comes to digital assets is this concept of stacking SATs, which is all over Twitter and a lot of different areas as well. And when people have originally entered into this space during the 2017 round-up, which is I believe when a lot of retail individuals started to get really first and foremost exposed to digital assets is, they were not really able to understand that you can buy a fraction of a Bitcoin.

A lot of people thought that, okay, well if I want to buy a Bitcoin now, I have to pay $10,000, $5,000, or whatever the price is. But really, the cool thing about digital assets and Bitcoin, in particular, is that it’s infinitely divisible. There is a certain denomination which is called Satoshis, that you can actually buy at a much smaller amount and start to accumulate that way.

And I think this ability to denominate a digital asset into very small denominations is very powerful, not only psychologically but also transactionally. So maybe you can talk a little bit about the transactional side of Bitcoin in digital assets and how we’ll see that trend evolving into the future as well.


Definitely. Interesting that you mentioned Satoshi says the unit of account for Bitcoin. I can expand a little bit on that. One Bitcoin, one full Bitcoin has 100 million Satoshis, so that’s how the visibility is, you can literally send 0.00001 Bitcoin to someone and that is a fraction of a Bitcoin. But because psychologically, it’s a little bit difficult to operate with decimals, a lot of people just start using Satoshis as their unit of accounts. It’s much easier to send someone 100,000 Satoshis or 10,000 Satoshis instead of a very large decimal number.

And this is what we see in this next trend that we want to discuss, which is the payments network that is being built on top of Bitcoin that will allow Bitcoin to scale its payments to the levels of visa or MasterCard or beyond. Because the network is called the lightning network. And it’s interesting that the lightning network users have decided to adopt the Satoshi as their unit of account rather than the whole Bitcoin because lightning is mainly intended for smaller purchases. If Bitcoin itself is the digital gold, the sound money of this future, the store of value, then the lightning network is essentially a payment rail for Bitcoin.

And because for payments normally, you don’t need larger sums of money so people tend to store smaller amounts in their lightening wallets. For example, if you want to pay for a coffee, you will use the lightning wallet, it will be an instant transaction and it will be denominated in Satoshis. You can send 1,000 Satoshis for a cup of coffee to someone. And this is the trend that we’re seeing right now, the denomination along with the adoption of a payments technology built on top of the network of the main protocol in Bitcoin.


Interesting. And outside of the payments side of things, which I think is a very interesting topic which you can actually dive very, very deep into, want to broaden the scope a little bit and start to talk about also the other types of investment assets, if you will, that exist in digital currency realm.

This kind of ties back into our regular talk initially. I’m sure a lot of people are familiar with the concept of an ICO. This was what pretty much caused the 2017 craze. There were a lot of people who are creating projects that for the most part I would say did not have a lot either technical underpinnings other than just simply maybe one white paper [chuckles] at that. And then just a lot of marketing.

As a result of this, you had different spinoffs of the Bitcoin code, core code that spawned these various different projects. Ethereum is one of them, XRP, and a clutch of others. But these projects didn’t really bring very much to the table when it comes to actually use their value or their value proposition. Their value propositions were very much based on the future of what this platform can be, what it can provide.

But from a technical perspective and also from an investment perspective, these were not of sound quality, I would say. But what’s really interesting is as the regulatory environment started to become more clear and as we were saying, certain jurisdictions have come and provided a certain framework within which to operate, you’re starting to see a more legitimize type of asset class that’s starting to evolve. Now, this asset class in particular that caused the security tokens or a securitized token, if you will, there are different names for it.

The original STO or security token offering, I believe was actually done out of Switzerland, and this is an interesting jurisdiction in and of itself, but what’s I think truly remarkable about something like this is whereas before in traditional finance, if you wanted to float security on the market, you had a very difficult time doing it outside one small jurisdiction and regulation.

So if you’re listing on Canada, on the TSXV, or something along those lines, you have to deal with the government regulators in that area. But if you wanted to open it to a broader market, well that will become much more difficult. However, with security as tokens, which actually provide a proper legal framework, which is very similar to that of traditional security where stock is that you actually have this much more global breadth of available for individuals who want to participate.

Now of course there are certain regulatory nuances that one has to consider, and there’s a lot of law firms right now that are specializing in this and I would say are making a killing as a result. But the positive to come in light of this is that now you actually have some type of investor protections that are put into place.

So unlike the ICO, so the 2017 era which was fundamentally worse than pink sheets in my opinion, primarily pumps and dumps, these security tokens actually provide a legitimate basis from which investors can participate in projects early on. And this is inline or akin, more or less with kind of like a pseudo-IPO.

So from this perspective, you’re getting a lot of interest from individuals that might not necessarily have an interest in Bitcoin in particular, but are interested in diversifying their portfolio on a more global perspective with something like an STO or a security token offering.

I think that if we take this topic of securitized tokens, we can really see unlimited potential for them as long as you’re playing, again within the rules and regulations of the particular jurisdiction in which you’re operating in.
But hopping back from the topic of security tokens and focusing primarily on how does the investor access these types of digital assets. Maybe we can talk a little bit about Blockstream and its liquid network.


Definitely. Well, one comment I would like to make is that all technology is neutral, so it can be used by bad guys and good guys at the same time. It just happens that bad guys usually find the best technologies first because they have to innovate. They always have to be one step ahead of the good guy so that they can actually break the rules.

So that’s what explains the crazy in 2016 and 17 with ICO. Essentially, they just discovered the printer that allows them to print money out of thin air and then hire a marketing team that would wrap their product in a nice and shiny package and sells it to the greater fool. That’s what happened with all these projects.

But at the same time, there exist legitimate companies that want to raise money legitimately and provide some kind of an instrument to the investor that will essentially say you own a part of this company or you are entitled to a part of the revenue for this company.

So that’s what security documents essentially are. They allow you to essentially go IPO without an actual IPO. Now, this will differ from jurisdiction to jurisdiction and these companies have to at the moment consult with the relevant authorities.

But if legally everything is fine, then what they can do is they can go to the liquid side chain which is an additional network that works very closely with the Bitcoin network itself. And they can issue tokens that represent equity stake in their company or that represents really you share potentials or something like this. Essentially, they’re not conduit documents. They don’t provide any magical utility to you besides strictly securitized for monetary value.

So, what this a side chain called liquid network allows to do is to issue tokens with just a few commands. It’s very easy, right? So like I said, it can be used by bad guys again to just the issue worthless tokens, and so you can do that all day long. But it can also be used by legitimate projects to raise funds and start defining this new paradigm of fundraising because it’s nice to have the traditional finance and its systems in place. But they have been around for a while now and we have progressed to progress goes on, and you cannot limit people from participating in the markets anymore because it’s the 21st century, it’s the century of the digitalized economy.

Bitcoin alone already breaks all the rules pretty much of traditional finance. We can just move value around anywhere you want to without anybody’s permission. I think security tokens is just an expansion of this paradigm. You essentially go into the 21st century with this new vision of unlimited decentralized finance. It’s distributed across the globe and no one is in charge. But that does not mean that there are absolutely no rules.
If you have a company, follow the local regulations. What I’m saying is that the technology only gives you a way of doing things, but at the end of the day, it’s still up to you how you structure your product, how you issue your stock, and all that stuff.


Yeah, absolutely agree. And I think to tie up this point, what’s really interesting that you mentioned is that the landscape is changing and fundamentally from what it was even 30 years ago, to have to think back years and how many has it been? Time flies. But nonetheless, there used to be a time where you would actually have to go to a particular broker and physically trade a check that might settle in a couple of days in order to receive your shares, you have to do it and very locally.

But now, this entire trend is gone global. So that’s really the biggest takeaway from what we’re talking about here is that global finance has now truly become, I would say borderless within of course there are certain regulatory frameworks that still uphold particular jurisdictions. But the access to these individual asset classes has literally gone to newer heights, and to people that haven’t had the ability to participate in these markets before.

You’re not only talking about sued the younger generation, but you’re also talking about the underbanked. In this particular framework, it’s quite interesting to see where this technology is going and what’s possible in the future.

And with that being said, we hope that you guys join us into that bright future and keep your mood boots on.

And thank you very much for checking us out today.


My name is Yuri.


And my name is Nik.


Go check out moontower.ceo and see what we’re up to.



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Written by Moontower

July 14, 2020

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