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FinTech Startups in the Currencies and Exchange space

Well-known angel investor, Sam Altman (Y Combinator, Airbnb, Stripe, Reddit, Asana, Pinterest, Instacart, etc) tweeted out last week

In case you haven’t heard the term before, NFT stands for non-fungible tokens – or digital currencies that trade like money for things of value – art, music, in-game items, and videos that are bought and sold online, frequently with cryptocurrency and in general, are encoded with similar underlying software as crypto.

FinTech is a hot startup arena that angel investors frequently look to for opportunities. Non-fungible tokens are one category of FinTech that I’ll address today. Are there legitimate startup investment opportunities that solve big problems rather than create them?

Many people confuse NFTs with cryptocurrency like Bitcoin. They do generally use similar blockchain programming to track and authenticate and represent something of value. Fungible describes two physically different items but can be exchanged for each other – like two $100 bills.

On the other hand, non-fungible might mean there’s only one or a limited number of something that might hold the same value as $100 bills, but it has special properties that make it unique – that set it apart.

An example of an NFT is a composite of 5000 daily drawings by digital artist Mike Winklemann, also known as “Beeple”. The final digital art piece is called “EVERYDAYS: The First 5000 Days” and sold at Christie’s for a record price of $69.3 million. Anyone can view the individual images or the entire collage for free online. The owner, who shelled out almost $70 million, doesn’t have an actual painting, but they do have the digital file that has built-in authentication that confirms that he or she owns the original item along with ownership bragging rights.

Exchanging something of value for something else considered equal value to both buyer and seller has been around since recorded time.  The emergence of digital exchange is quite recent on that timeline.

BlockChain Technology

Blockchain is a specific type of database. The difference between data stored in a spreadsheet and data stored in a database is two-fold; how much data is stored or housed, and how many users can access at once. For example, Coach Jane might have 5000 to 10000 names, emails, phone numbers and zip codes for people who have responded to her information at one time or another. She could use a basic CRM to store that information, or something like GoogleSheets. She and her marketing assistant are the only people who ever access that information.  But if Jane were a coach for a larger company like Proctor-Gallagher or Crucial Learning, where there are many coaches, she would access her clients through a centrally housed database that handles emails, text reminders, monthly or annualized subscription charges and notes. If Jane quits coaching, Bob takes over; Bob could see what progress each individual client had made and what the client was working on when Jane left; the database would make the process invisible to the client. New notes, new purchases, and new insights from Bob would all be added to the existing database. If Bob takes on additional clients as a result of the good experience of these clients he acquired through Jane’s departure, those clients would be added into the same database.

On the other hand, blockchain structures the data differently. Blockchains store data in blocks then are chained together. Blocks have specific storage capacities and when filled, new data forms a new block and is chained to the previous block. Each block in the chain is given an exact timestamp when it is added to the chain.

There have been concerns about anonymous purchases of illegal stuff, traceable assets transfer, value instability, counterfeits, tax evasion, cartels selling drugs, power outages, power usage and environmental impact – you name it, it’s been imagined and played out in reality.

But on the other hand, blockchain technology and NFTs allow artists and content creators a different path to monetize what they offer. Artists no longer have to depend on galleries or auction houses to promote and sell their art. The artist has a direct path to consumers with an NFT, which also allows them to keep more of the profits.  

Mainstream Legitimacy?

Hong Fang, CEO of OK Coin spoke on a panel at Silicon Slopes Summit on Oct 14, 2021, “We’ve seen a lot of changes in the customers on the platform and how they behave. On the customer type side, I definitely have been seeing a lot more institutions coming in especially since 2020. On the retail side, growth has been exponential, outpacing institutional growth 30x to 50x. Over the last 12-18 months more participation in the US. More speculation. They’re more experimental and open to things happening in the space.” She said that this is still an early-stage speculation behavior, but thinks people are using this as a hedge against inflation, sort of an asset diversification.

John Gerber, Executive Vice President of Security with Mastercard added his voice and representation on the panel as the validity of mainstream preparation for cryptocurrency to more fully dominate the stage.

Ease of transfer across borders instantaneously with no fees was also mentioned as disruptive to traditional banking and companies like Western Union and payday loan companies. And it’s helping impoverished countries dealing with hyperinflation. It eliminates the middle-man fees. Austin Woodward, CEO of TAXbit, speaking on the panel with Hong Fang said, “This is an asset that’s property.”  Countries are now legitimizing crypto as a currency, beginning with El Salvador. Ms. Fang described that first-use stage as essentially a “store of value”. She said that El Salvador was the leader in the second use stage which was as money.

“It’s programmable money, with full transparency and no middleman in between,” said moderator, Dave Jevans, CEO and founder of CipherTrace.

The discussion then turned from cryptocurrency to non-fungible tokens, specifically. Mr. Woodward’s point of the perception or reality of digital assets. Ms. Fang said that NFTs become a distribution channel for an artist removing the middleman in selling art. In the gaming world, there’s a creation of virtual stuff that transfers from one game to another and creating an alternative economy. She brought up the idea of “digital identity”. Mr. Woodward then suggested that patents, titles, property, copyrights could easily emerge in the NFT world.

Mr. Gerber suggested that technology has to stay ahead of cybercriminals and that’s part of his job at Mastercard.

Here are some startups leveraging blockchain technology either as a non-fungible token-based business model or cryptocurrency.


Oneof was specifically built for the environmentally-conscious music community. OneOf describes its role as a way to connect fans and collectors at all levels with their favorite artists. Their core values are, “Artists first; built for every fan and eco friendly.” OneOf claims to use over 2M times less energy per NFT than other platforms. “OneOf is built on the Tezos blockchain, an energy efficient proof-of-stake network. [source: OneOf] That claim means that the energy used to mint 1 NFT is equivalent to sending one tweet. [source: Sizapp]

OneOf just entered its seed round this year, raising $63 million with Tezos Foundation, Sangha Capital, Jaeson Ma, Jack Herrick, Suna Said and Bill Tai listed as investors. [source: Crunchbase]


Decentraland is a virtual game world on the Ethereum blockchain that most cryptocurrency exchanges use. And as the name suggests, it’s fully decentralized, owned, and governed by the community. The game involves virtual land, the ability to visit other people’s creations, which might be landscapes made up of anything – abstract objects, buildings, games, art, etc. Owning land acts as an NFT – like a virtual digital asset, no one else can have landed in the same location, and it’s unique and cannot be exchanged or replaced. The game has some NFT wearables such as accessories, shoes, tops, and more than the game encourages collecting. [source: Sizapp]

(And this is where I agree with Sam Altman’s tweet, and ask myself “WHY?!!”  It’s like paying for real estate in Second Life! Is there not a better investment target for those assets? My sons might have different ideas – but maybe not – I’ve been teaching them about money since they were tweens and even earlier, but they love games. This might just be another result of the generation gap!)

Decentraland is based out of China, but touts some American investors; Digital Currency Group out of New York, along with George Burke, and Boost VC out of California.  Decentraland has raised $25.5 Million so far, with the most recent venture round in January 2020.


Ripple handles global payments using digital asset technology (Blockchain), claiming to improve speed and reliability between financial institutions and reduce costs. “We build decentralized financial solutions for the real world. Ripple is the only enterprise blockchain company today with products in commercial use by hundreds of customers across 55+ countries. These businesses have access to alternative liquidity solutions through Ripple’s global network, which uniquely uses the ‘XRP Ledger’ and its native digital asset XRP to help improve payments services worldwide.” [source:]

XRP is a currency abbreviation for blockchain, like USD means US Dollar.

While such technology is typically considered disruptive to financial services, (similar to those mentioned by Austin Woodward at Silicon Slopes Summit noted above), the Ripple vision is to improve, not disrupt; to streamline rather than replace while working with regulators, governments and central banks for secure and compliant solutions.

Founded in 2012, Ripple began fundraising shortly after, with two seed rounds in 2013, and it’s most recent secondary market fundraising in April 2020. Total funds raised so far total $293.8 Million. [source: Crunchbase] However, the road to IPO hit a snag with SEC charging Ripple and two executives; former CEO Christian Larsen and current CEO Bradley Garlinghouse, with conducting a $1.3 billion unregistered securities offering (digital asset securities). [Source: SEC.Gov]


Kraken is a cryptocurrency exchange and bank that was founded in 2011 by Jesse Powell after another cryptocurrency exchange company, Japan-based Mt. Gox had a severe security breach where 850,000 bitcoins were missing and likely stolen. The breach started out as 25,000 bitcoins taken from 478 accounts, which in 2011 was valued at $400,000. [source: Wikipedia]

Kraken was founded with the intention to be a replacement for Mt. Gox in the event it went out of business which it did in 2014. Kraken also discovered major flaws in the Namecoin (another cryptocurrency) protocol.


Coinbase is also a cryptocurrency exchange platform. Coinbase was founded by Brian Armstrong, a former Airbnb engineer, in 2012. Armstrong jumped into the Y Combinator startup incubator program and was awarded a $150,000 infusion to get started. cofounder Ben Reeves was originally planning to join the efforts with Coinbase, but parted ways before Y Combinator funding event.

Coinbase had a bumpy ride through personnel accused of providing surveillance software to  governments with poor human rights records, and Ethereum Classic (the crypto platform they used) having vulnerabilities, and being targeted by a sophisticated hacking attack attempt. [source: wikipedia]

Bottom Line:

This is very early. Even the experts running these businesses recognize that blockchain technology of a year from now will not be the same as it is now. The technology is lagging on the pace while demand is surging which creates security issues as well as compliance issues with regulators. And the more inflation hits the US, the greater that demand could increase.

However, I really liked what I heard from the Silicon Slopes Summit Cryptocurrency panel in regard to speed of transfer, improved copyright, patent and protections of other proprietary property. The technology proposes to have some real advantages in the real asset space as a result.