The most exciting wave of innovative blockchain startups is just around the corner

2019 will be a year full of innovation, disruption, and changes — particularly in the blockchain industry. While we have made a lot of progress in terms of research, still there is pending real adoption and value creation.

My first experiences with technical disruption started in 2005, while I was leading business development for DineroMail, (currently known as PayU and part of Nasper — JSE: NPN), one of the early internet pioneers in payment processing across the Latin America region. At that time, I had the opportunity to meet several entrepreneurs running startups with very diverse business models, verticals and industries. DineroMail was part of the first generation of internet companies in LatAm that bootstrapped the entire e-commerce in the region onboarding new users/consumers that did not buy anything online before and this was possible thanks to the online payment infrastructure that we built.

When I got introduced to Bitcoin and blockchain back in 2013, I realized that this technology would enable disruptive business models. A colleague from the online payments ecosystem was also getting into Bitcoin and when I commented that “Bitcoin could enable cross-border transactions,” his response was “No — it could enable borderless transactions.” And with that statement, I got enough confidence to immerse myself into this new world. I joined Bitpagos, another payment processor, that was solving a real problem for real people by using bitcoin during its initial days. It was early 2014, Argentina was — and still is — experiencing high inflation and suffering from currency devaluation (an economic cycle that we Argentinians are very familiar with). The government tried to control the Argentinian peso (ARS), but markets are markets and they operate based on supply and demand. That finally led to a new messed-up scenario with two different types of ARS exchange rates vs other strong currencies like USD or EUR. As an example, all banks, clearing house, credit cards, international commerce, exports and imports transactions used an official exchange rate of ~$8 ARS per 1 USD (by presidential decrees) but the non-official exchange rate (i.e. the real exchange rate) was about ~$14/$16 ARS per 1 USD (it was called “Blue Dollar”). The government also disallowed people and businesses to transact and trade using USD; this failed attempt of protectionism was trying to reduce the demand for USD, therefore trying to contain the ARS devaluation.

in that context, with the real economy being priced down and conducting business through a weak and unsuccessfully controlled currency, SMBs (specially those with international customers) were having a really hard time to keep it up. As the currency was devaluating, there was an opportunity for a growing tourist market. At Bitpagos we started helping tourism-related merchants processing credit card payments in USD on their international sales. However, Bitcoin could help to bypass USD restrictions. Bitcoin is an asset that has been mainly denominated in USD value (Currently BTC/USD is the most liquid market) and Argentina was not the exception: bitcoin was traded using the real (Blue Dollar) exchange rate. Adoption quickly grew and we easily onboarded hundreds of merchants such as hotels, entertainment shows, retail for foreign customers, tour operators and travel agencies. They all used our services to charge in USD and then receive the funds in bitcoin, an asset that they trusted more than the local currency and helped them to circumvent the restrictions to keep their business working and accepting payments. Here is a chart that summarizes the business value that was possible thanks to bitcoin (interesting fact: at that time bitcoin was around $280 USD)

* Bitpagos deck march 2015

Here is also a real case we shared in some talks, The “Che Lulu” Hostel:

Also, some of the current big crypto traders and crypto exchanges that are still working today in Argentina were born or started around that time by providing liquidity to the Bitpagos merchants and help them to convert bitcoins into Argentinean pesos. At the peak of our business, even Argentina was having a premium domestic BTC/USD exchange rate because of the amount of bitcoin we were injecting locally through our credit card payment service.

This reinforced my decision to fully dive into the blockchain space — validating my part in the next big thing! Sadly, over the last few years, we have seen more speculation, ideological disagreements and theoretical papers rather than inspirational stories such as the Hostel Che Lulu’s, whose business survived the Argentinian currency devaluation issues due to bitcoin and the disruptive model of Bitpagos.

Now five years later, I still believe this level of disruption and market adoption could take place but we need a different approach, a business approach. In recent years I have been very active as an investor, investing in several blockchain projects, mostly in infrastructure because I believe that this time it would work in the same way as I saw the e-commerce and internet space grow during my early years in DineroMail. That is also one of the main reasons why I invested in Algorand, because of its focus on building a platform for the borderless economy. One that will fulfill what is possible on blockchain for entrepreneurs, developers, and researchers, as well as a multitude of business use cases. It is simple for a business to connect legacy processes, build new applications, and realize new potential. For developers, there are simple and robust programs, APIs, and toolkits enabling new opportunities.

Algorand is making great progress on its platform — one of the most interesting approaches to blockchain yet. At Algo Capital, we believe Algorand’s unique approach is one that is going to be widely adopted and we are looking to invest and support startups using Algorand’s blockchain to disrupt, bring access to the next wave of users and create real value. As my partner Arul Murugan recently mentioned in his Nasdaq article:

“We are witnessing a paradigm shift in the blockchain landscape that will fundamentally change how emerging disruptors, specifically startups, achieve success. All the partners in Algo Capital are ex-entrepreneurs, who are rolling our sleeves and supporting our portfolio companies in shipping the product out, onboarding millions of users, driving adoption and bringing real value.

What is certain is adoption drives value, and the market will eventually catch up to that”

I couldn’t agree more.

If you believe in this vision as we do, feel free to share your project, ideas, and feedback to hello@algo.capital!

Have a very successful 2019!

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