Fintech 🤝 crypto #3
Blockchain 101, Revolut goes all-in into DeFI & the magic behind credit cards
Hi friends 👋
Fintech and DeFi are not slowing down. Almost every day there is news about some web2 company (fintech & non-fintech) getting their foot into the door of the crypto world. We are still so early.
Welcome to “Fintech 🤝 crypto” - episode #3
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Alright, let’s go! 🚀
Weekly theme - Blockchain 101 🤔
I know what you are thinking now. Blockchain? What?
Let me explain.
My personal goal - apart from creating a top-quality newsletter for you - is to share the knowledge about DeFI, crypto, and web3 as much as it is possible.
That is why this part of my newsletter (Weekly theme) is kind of special to me. I would like to use it to introduce to my readers different concepts from DeFI world and explain them in “ELI5” way.
Recently I’ve come to the conclusion that some of my readers can be really proficient at fintech and the ecosystem around it. They know a lot about finance, taxes, stocks, and whatnot.
But there is this “crypto” space emerging (for the last over 10 years…) and it’s built on the top of one thing: blockchain 🔗
The thing is - not everyone fully understands the core concept of the blockchain. They might think they understand it, but they would not be able to explain it in simple words to somebody who has never heard of it.
I can give you the simplest definition of the blockchain right away:
A blockchain is a digital ledger in which transactions are recorded securely and cannot be modified or erased once entered.
It is “decentralized”, meaning that there is no central authority running things.
Examples of blockchains:
The biggest problem with such short, written definitions is that they might explain the concept on a very basic level but, at the same time, they hide a lot of information and make the reader start asking questions like:
What exactly does it mean that transactions are recorded securely?
How does blockchain make it impossible to modify or erase transactions?
What transactions are we talking about?
And how is it possible that the whole thing is decentralized at the same time?! 🤯
The answers are coming.
I am here to recommend you the best blockchain 101 video there is on youtube.
Grab a cup of coffee (or tea), book 18 mins for yourself to listen to Anders Brownworth's soothing voice and you will grasp the whole concept of blockchain.
Who knows, maybe these 18 mins will change your life:
There is also part 2 (only 9 minutes!) that answers all the questions you have about the security of blockchain.
Again - 💯 recommended:
Happened last week 👀
Last month DeFi space has reached the all-time high in terms of Total Value Locked with seven blockchains holding 95% of it.
The biggest chunk of the market goes to Ethereum. Then we have BSC, Solana, and Terra.
Total Value Locked in October: $220 billion (!) It’s almost 40% up from the previous month 🔥
My comment: This graph confirms numerically what everyone in the space feels and knows. DeFI is booming. And it’s here to stay. $220 billions of TLC, 40% increase m/m - these are not rookie numbers. From the graph above it’s clearly visible that around July 2021 the numbers started to go up. Plus look at Solana - they are hitting a home run in 2021.
My comment: Crypto has always loved NYC. It will be great to see NYC loving crypto back. Eric Adams is not the first politician that accepts paychecks in bitcoin. The first one was the Miami Mayor - Francis Suarez. After them, four other US mayors declared the same thing. Well, that escalated quickly. But it’s a good thing - both for bitcoin and for the whole web3 & DeFi movement. Who will be the first politician in Europe? 😶
In short: Apparently, Revolut has a plan to build their own crypto exchange. According to a job ad posted on LinkedIn, the successful candidate "will be leading a technical team to architect and build Revolut Crypto exchange".
Revolut is already offering to their customers the possibility of buying cryptocurrencies. Now they want to take another step and build their own crypto exchange. They don't want to miss a train. They want to go all-in into DeFI.
Revolut is another big fintech player (after Square planning to make bitcoin a native currency of the internet, and Stripe hiring an experienced crypto expert Matt Huang to their board of directors to create long-term Stripe’s crypto strategy ) that is embracing this space and this does not surprise me at all. We will see more news like this in the upcoming months. Fintech will embrace crypto and the most dynamic companies are already working on it.
4) Chipper raised a $150M at $2B+ valuation - it’s the highest-valued tech startup in Africa 🔥
In short: Chipper Cash, an African cross-border payments company, has raised $150 million in a Series C extension round led by Sam Bankman-Fried’s cryptocurrency exchange platform FTX. This extension round takes its valuation slightly above $2 billion.
My comment: South America and Africa will be the hottest fintech regions in the next 3 years. We are already seeing this in 2021 but I would expect that DeFI will speed up the development of payments infrastructure and apps in these regions even more. Here is a good summary of the current state of the African fintech market. Chipper’s valuation at the level of $2 billion is a clear sign of what’s coming. Don’t miss it. 👀
Great reads worth your time 📚
1. How credit cards make money (by Patrick McKenzie)
Payments are deceptively complicated—everyone has used them and thinks they have good intuitions for how they work. (…)
Consider the humble credit card. Swipe it. Tap It. Dip it. HTTP GET it. You have probably used one, mostly oblivious to how it is a complicated bundle of services with a pricing structure strictly more complicated than a venture capital fund’s.
Who would have thought that an article about credit cards can be “a great read”. This one is a gem 💎 Although this topic is not new to me, I still found this read very insightful and interesting.
2. Banks Tried to Kill Crypto and Failed. Now They’re Embracing It (Slowly) (New York Times)
A well-written article about banks feeling their power waning and wanting to regain control over digital currencies (like Bitcoin) and other digital assets.
The thing is: crypto does not need banks, but banks need crypto.
The whole banks/crypto narrative reminds me of when Nokia’s board got their hands on the first iPhone and dismissed it as a kids’ toy and decided to stick with what they were doing. The rest is history.
Gold Tweets 🏅
CBDCs are coming. China is leading this global race. If you want to understand what’s going on there, go and read this:
Metaverse as a moment in time, not a place? A thought-provoking thread:
Fintech is the largest unicorn sector in the world (valued at $705bn):
That’s all for now 👋
Next episode - next Monday. Have a great week everyone.
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