Philip is a Venture Architect at ConsenSys, a blockchain venture production studio, where he is helping to build an ecosystem of consumer-centric products and enterprise solutions using the Ethereum blockchain. Previously, Philip founded Belayer where he served as CEO and helped build the company to become the leading blockchain technology investment & consulting company in Bulgaria. He feels inspired by strong and determined leaders who can bring the best of their teams and strives to become one in the future
Philip Matov (Venture Architect at ConsenSys)
Interview Date : 26th March 2020
Letters of Credit exchange through Komgo
Komgo is a platform that we helped to develop. It’s a platform that holds 15 of the largest trade finance players in the world in commodity trade finance, specifically for oil. Some of the companies are Credit Agricole, Citi, Shell, etc,. We have built out a platform that helps these players exchange Letter of Credits.
Letters of Credit, especially in the commodity trading business, is an essential instrument. It’s ensuring that when you are trading for example petrol from Asia to Europe, you typically not only have a buyer and a seller, but you also have a financial institution that takes holds of the cargo on the way that makes sure the transaction will follow up efficiently.
It was historically a process that required a lot of different players. You can imagine that commodity trading also includes a lot of jurisdictions and rules in different places, and it requires a lot of paperwork to manage these transactions. So we have reduced paperwork quite substantially as we use blockchain to gain efficiency, and have created transparency for the different players coming to work together. That is only one example of our many credentials, and we are quite proud of that.
Payment Mechanism and digital Efficiency
Very often projects connect with us, so we receive inbound marketing from companies and people who have seen information about our products and our vision. They are typically projects that are in different stages of their development. Sometimes we work with startups, but more often we work with large enterprises and later-stage startups with funding, and who already know and have a product-market fit. They are looking into blockchain because it is a technology that enables 3 things; process efficiency, transparency, or ultimate connectivity leading to increased and more diversified access to international capital. Hence, your asset can be traded on different exchanges around the world which today may not be ready yet, but a lot of different parties are contributing to building out that infrastructure that will create a much more efficient way of trading in the future when it has fully matured as an exchange.
In terms of clients, we talk with investment funds, specifically private equity funds. Traditionally, this has been a space that stays very closed. However, this is not the ideal way to keep a relationship with their investors; they don’t have access to the international market, and the pool of investors that get money from are quite limited. So, we help them streamline their processes and potentially get more access to the international pool of investors, and make their work easier.
Other types of clients are large enterprises and banks. This may include central banks looking to explore central bank digital currency. This is a very important use case because we’d like to enable access to a digital representation of stable value which will serve to facilitate the payment mechanism.
There is this concept in blockchain that is called atomic DVP (Delivery Versus Payment). DVP is a securities industry settlement method in which the transfer of securities only happens after completion of payment. Let’s say if you have an asset that is a digital representation of a real estate, and you get one share of that. If you want to exchange it with someone whose money also is managed on the same blockchain infrastructure, the transaction can happen automatically. The reconciliation is the same is the transaction. So the settlement and the exchange would become the same thing.
However, if one leg is purely digital as a token, and the other one is not, that will creates friction. I can exchange the token very easily, but then you may have to send a wire transfer to my bank account. Many digital asset platforms today are offering the exchange of assets to happen through a wire transfer. Nevertheless, we are looking forward to a world where both legs of the transaction will be digital so that the whole transaction and the system will be much more efficient.
We are in a Transformation
We are very fortunate to be at the beginning of something which we believe will add substantial value to the world. We have been very lucky to not only have found support in the institutional and traditional financial institutions but also the retail and commerce industry. It takes a lot of education, convincing, and time to explain the value of distributed databases but it’s worth the effort. Some hurdles we face are to finding the right product-market fit, or the right solution that could be scalable and repeatable using blockchain technology for a certain company. I believe that ConsenSys has completed a successful transformation towards becoming more of a software product company. We are becoming much more focused on specific use-cases and markets that we believe will benefit most from a digital transformation and distributed ledger technologies.
We support the development both of Enterprise blockchain as well as the development of decentralized infrastructure. Code Network and Payments are parts of Codefi exploring use cases using crypto. So, things like staking, lending protocols, utility tokens, crypto payments, etc. We recently launched Activate which is a platform for buying, using, and managing utility tokens.
Regarding commerce and finance, we have been working very closely with some of the largest investment banks, largest supply chains, retail solutions in the world. A lot of the focus of blockchain efforts today is around rethinking how to issue, distribute, and manage the life cycle of any asset and this is impacting a very wide range of companies.
Bulgarian Crypto Market today
There are two sides to the crypto industry in Bulgaria. On one side when I came back to Bulgaria from Japan, I was positively surprised by the vibrant crypto culture existing in Bulgaria. I was also very happy to learn that quite many substantial and very important blockchain projects were started by Bulgarian entrepreneurs, and some of them were even developed in Bulgaria. Projects such as Aeternity which at one point was one of the top 30 projects. It did not have as much support as Ethereum of course, but it was a great project. It helped grow the blockchain ecosystem in Bulgaria, including delivering capital, facilitate crypto meetups, and building protocol infrastructure.
We have another project called NEXO, which is a crypto loan project. The solution allows you to get collateral against your crypto. They got more than 50 million dollars in funding in an STO (Security Token Offering) as companies have seen its potential.
We have AdEx which is in marketing and commercial space, and another one called Propy which is a Real Estate. So quite a few blockchain projects were founded in Bulgaria, and we’ve developed quite a large community. We have the tech people, it’s always been a place with concentration highly skilled technologists.
On the other hand, the business environment is very traditional and conservative. Some Companies are taking risks, especially IT companies looking to develop products to outsource other markets. Traditional businesses like finance and insurance are typically branches of large international corporations which makes their innovation budgets quite limited, and the amount of power that they have over “what can we invest in” and “how much of a difference can we make” is much less than what you would have with the same company in their head office talking and working with the technologists and innovation officers. In short, the blockchain startup ecosystem is quite impressive and there are very great people from whom I learned a lot. On the other hand, the business environment may not be best to scale your solution.
Interviewer , Editor : Lina Kamada
The Article published on this our Homepage are only for the purpose of providing information. This is not intended as a solicitation for cryptocurrency trading. Also, this article is the author’s personal opinions, and this does not represent opinion for the Company BTCBOX co.,Ltd.