Harnessing the Power of Blockchain

The financial world has been shaken up by blockchain and cryptocurrency.

With digital currency on the rise of being adopted by many and blockchain companies providing banking, investment and trading alternatives, what’s next?

We speak with Aly Madhavji, Managing Partner at Blockchain Founders Fund to find out the innovative cases, opportunities, risks and much more on how you can lead in the crypto market.

Without using the words “digital” and “crypto”, tell us what you do at Blockchain Founders Fund?

We support seasoned and first-time entrepreneurs across the key business functions with a hands-on intensive go-to market venture program. We empower some of the most promising entrepreneurs with the resources to make their vision a reality. We focus exclusively on adding value to emerging technology projects with real world applications. Any firm that fits in this category and are looking for investment or guidance are aided with the required resources.

What are some innovative ways financial services are harnessing the power of blockchain?

We’re seeing enterprise level blockchain solutions solving problems around cash-based remittances, digital remittances, FX settlements, and many others. Decentralized Finance hasn’t gone mainstream with traditional financial service providers but has created a parallel financial system with plenty of promise to solve major challenges for people which need it most. For instance, traditional escrow settlements which were initially handled by third-party banking systems are being replaced by smart contracts based on blockchain technology that help settle these settlements sooner.

What shortcomings do you feel are there in the blockchain ecosystem at the moment? What should be done to overcome them?

The key is still customer experience and simplicity. The trend is still early for getting mainstream adoption. Many of the tools are still complicated to use for the average user. Some companies such as Splinterlands, one of the leading blockchain games, has made major strides on simplifying the user experience which has led to unprecedented growth of gamers globally.

Due to the current crisis, most investors have opted to focus on more mature companies instead of early-stage startups – what are your thoughts on this and what is the approach for Blockchain Founders Fund?

We focus on early stage, because that where the greatest transformational change to industries is going to come from for an emerging technology.

Do you think that governments can play a key role in spurring blockchain adoption?

Governments can definitely play a part in spurring or stifling innovation. We see governments such as Singapore, Malta, and several others that are embracing innovative technology and understand the impact such technology can have on building a more transparent future. On the other hand, many other governments are lobbied by special interests to stifle innovation. This isn’t a trend they can stop and this will result in setbacks for these countries in terms of innovation, jobs, and overall prosperity. As recently we have seen that El Salvador has adopted Bitcoin as a legal tender show that governments can help make major cryptoassets mainstream and reliable.

There have been cases of hackers breaking into blockchain platforms. What are your thoughts on that, and have those security incidents affected people’s confidence in the technology?

Technically blockchain platforms are almost impossible to hack because of the consensus mechanism blockchain platforms are based on. The hacking of blockchain platforms in Layman terms most of the times refers to hackers’ attacks on cryptocurrency exchanges and siphoning of tokens from the exchange. The most recent hack occurred when hackers stole more than $610 million from Poly Network. Later, the exchange recovered most of what was stolen but there is always a threat of hackers which also exists in traditional banking systems. There is some likelihood that people lose confidence in cryptocurrency exchanges which are prone to frequent attacks but the effect on people’s confidence on the technology is more dependent on people’s understanding of blockchain technology.

What do you make about the rise of Dogecoin and other meme coins?

Dogecoin fluctuated because of celebrity influencers, they explode and fall depending on the social media tweets or Reddit users. In terms of investment, some meme coins because of their volatility are not a viable long-term investment and they probably wouldn’t exist after a couple of years. Even though you’d hear the many investors made a profit by investing in meme coins, there would be many investors that would have lost a considerable amount of investments. So, I would hypothesize that some of these meme coins are short-lived and risky investments. In terms of use cases, Dogecoin is nowhere near the level of adoption of Bitcoin or an actual currency substitute. Unlike other cryptocurrencies such as Ethereum or Solana, which let programmers build applications using smart contracts, Dogecoin does not provide anything similar.