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The previous article described some methods to create and validate a business idea as an entrepreneur at the start of your road. You have already seen that you must take care of all the details to increase your chances of success. But that doesn't mean you have to "do everything." The team you build around you is critical. In the following lines, I will give you some suggestions on how to build it. A study conducted by professors at universities in Oklahoma, Texas and Oregon shows a simple and, at the same time, surprising result: 60% of startups fail due to poor team management. The ideas we talked about in the last article are essential. But putting them into practice is just as important - and here, the team is what matters, with its multidisciplinary skills. Having this in mind, you should consider several things.

Did you cover all the skills?

You probably have a clear vision about your core business, most likely with a powerful technological component. For example, you already know you need, let's say, more developers - and what type of developers. But you will be less inclined to identify the so-called "support" skills that are indispensable for a company at the start of the road. You probably won't have any problems buying your toner or paper, so there's no point in hiring someone for it. But for starters, don't forget the following: • Your business cannot work without an accountant. It is one of the mandatory legal requirements for any professional management you would like to do. • Human resources, cleaning, logistics? In the beginning, you'll probably need to handle things without specific departments. I say this from my own experience: if you have a university education, at first it will seem a little crazy to cover all these needs, especially after you had a well-paid job in a large company. But you will quickly learn. • Law: seems less important but is just as crucial as other departments. I know business people who experienced plenty of problems because the contract models they used were copied from the internet and had problematic clauses, especially in the last part, referring, for example, to the courtrooms where disputes are settled. If your business has an online component, you will need to make sure that you meet the legal requirements related to data protection and cookies. You will realize that this can be solved by a timely consultation with legal specialists and compliance. • Marketing: this should be on your agenda even if you do not directly interface with individual consumers. An essential component for startups is the "corporate affairs" field implemented for big companies, which includes everything related to the company's image and communication with other firms - or with potential investors. It is natural that your revolutionary product only exists as a sketch or in the proof-of-concept stage. However, your startup needs to sell through branding. Concerning all the above, it is best to divide the skills you need into "internal" and "external" because some specific activities can be outsourced, such as the online environment. This will help the internal organization chart become a lot clearer.

Part-time, volunteering, internship, friends

If you start with a financing that covers salary costs for a year or more, this kind of resource is not for you. However, in the real world, most startups have limited funds in the beginning. Therefore, you will need to identify all the resources you can use for free - or almost for free. • Friends: You can ask them to take you to meetings, assuming you don't have a car, or carrying your belongings, as long as they are not excessively large or bulky. If I were to speak from my own experience, I don't know how I would have managed in the beginning without friends and family. When I say this, I am not referring primarily to material support or encouragement, but real help. • Volunteering/internship: Simple tasks can be solved by senior students or recent graduates who are very much interested in internships. It is good to know that there is a law on volunteering, according to which volunteers are required to have a job description, to avoid past situations of "jack-of-all-trades" sent to buy coffee. But, on the other hand, according to the same law, the experience of volunteering in your startup will count not only on their CVs but also towards seniority - so you do have something to offer. • Part-time: At first, it is difficult to understand the number of working hours required for a specific task. One suggestion I can give you is to get an estimate from the candidates who will often give honest answers. Part-time is also an option if you need a person with superior programming, business skills or others. If he possesses these skills, that person probably has a well-paid position in a larger company. But it is likely for him to have the availability or desire to invest some time in your startup as a second job.

How do you recruit?

Assuming that the initial organization chart is crystal clear to you, you must start identifying promising candidates. Consider the following things: • Various job sites and LinkedIn will help you for free or at low costs for hard skills. I use LinkedIn successfully by receiving funding requests from entrepreneurs. I have thus made some promising investments. • The CV is essential, but what should you focus on? It might be better to pay less attention to professional experience if your startup operates in a new, disruptive market. In a food company, the Sales Director must be highly connected with the big retail chains, with a significant experience. But most likely, studies and certifications are more important to you, so you need to have the know-how to check and validate them. • Pay attention to the psychological profile of the candidates. Those who dare to join a startup will be attracted by the novelty and the possibility of developing professionally. But what you offer is neither a high salary nor stability. From a motivational point of view, it is worth looking carefully at the letters of intent of the candidates. They are called "letters de motivation" for a reason. If there are too many "challenges" in those letters, the author probably does not need many challenges.

Pay attention to brainstorming, the roles of others and your role

Any startup needs to be creative, so you need to ensure that the brainstorming process works for your company. Brainstorming ("mental storm") has strict rules that you can easily find online. One of the essential premises of the concept is related to a critical psychological theory from recent decades. An elite team delivers good results if it relies on role distribution, apart from each member's hard skills or professional background. One of them may be the primary creator of ideas. A second one may very well be a good critic of ideas, not in the sense of rejecting them but by refining and adjusting them. A third one could translate everything very well into figures, financial or technical data. A fourth may distinguish himself through synthesizing the problem and solutions through personal insights. And so on. This theory will make you think about your role. As a company founder, you will be tempted to oversee all your startup details, and it is excellent if you manage to do that. But disruptive innovations are the prerogative of highly skilled creative people. They will be less willing to comply with rigid hierarchies, rules and mandatory provisions. Today, a good manager uses employee motivation and the power of their example rather than authoritarian tools. A characteristic of new businesses is that no manager can exceed, in terms of competence, the knowledge of any member of the team, taken separately. Although the startup I founded three years ago, Key Way Group, has hundreds of employees now, I still apply these rules. But it is about the young people, with many different skills, who contribute to the growth of the business through their motivations and the pleasant climate that we managed to provide for them. I think these are essential elements of my success story. You can follow me on Twitter and LinkedIn!

I am an entrepreneur and investor. For years I have been learning how to start, grow and capitalize on a business from books and especially from experience. Therefore, I will introduce you to a series of articles that examine the problem of startups from different angles. Much of the considerations I will formulate are based on my own experience, although I will often mention things from the published literature, which I continue to consult. And to start the discussion about startups, I can only begin with the basic ideas. In today's dynamic world of entrepreneurs, every business starts from an idea. Suppose in certain parts of the globe or certain economic areas some people receive "exclusive properties" from employers, parents, or more or less occult structures. In that case, productive businesses can only be born by identifying a market need to apply an effective solution.

How to find a lucrative idea

  Ideas seem somewhat spontaneous. And so they are, to a large extent, but different creativity techniques favour their appearance: • Look for the solution to a problem. The entire fintech market, in which I work through the CAPEX.com brand, responds, for example, to the need of the Millennial generation to trade the most diverse assets from anywhere, at any time of the day or night. Thomas Alva Edison was very successful with the invention of the light bulb for a straightforward reason: the world needed a brighter source of light than gas lamps. Such needs or problems are encountered everywhere, in everyday life. Sterling Seizert, an American investor, recommends keeping a journal of issues and looking for the best one for your business. • Is it a personal problem? Good. Suppose you are horrified by the overcrowded city, and you prefer to travel by a different means than your car. The tiny vehicles move much faster than taxis or Ubers. You guessed it, we're thinking about electric scooters or scooters. Travis VanderZanden founded Bird, one of the most successful e-scooter startups, after noticing that his girls are not excited about the bikes they received for Christmas and return to the scooters they already had. This made him think, "Why not a scooter for adults?" • Is there such a thing as bad ideas? Most certainly, yes. Paul Graham, the co-founder of the Y-Combinator business incubator, gives us an example of a social network for pet owners. The potential users of such a network are numerous. But such a network has a big problem: it does not respond to a need and does not solve a specific problem. An idea should be refined to be successful. A platform that connects pet owners with veterinarians? Pet exchange? Beauty contest for dogs? Only now can we start talking about viable startup ideas. • How many types of ideas are there? "Forbes" mentions three. Spontaneous ideas, of which we have already talked about, are the ones that come out of a sudden, at the strangest of times. They can be valuable, even if they can be stimulated. There are also insider ideas, which are born from experience in a specific business. Returning to the example of VanderZanden, it is worth mentioning that the founder was successful working for Uber and Lyft in a domain of expertise close to the startup he launched, Bird. And finally, we can talk about deliberate ideas, which start from the desire to launch a startup. To give you a personal example, after several years of activity in the fintech industry, I was curious what a market with a lower yield but more constant in evolution looked like. Real estate was an obvious option, but I realized that you must behave differently than speculatively anyway to be successful in this market. In the first decade of the 2000s, the real estate craze and the sub-prime crisis were history when I decided to invest. You could not simply buy to sell for a profit the next day. We stress out the concept of added value because real estate acquisitions do not make sense if they are not followed by arrangements, related services and the creation of a portfolio of quality tenants. We have invested a lot in financial resources and working hours to get even more benefits. Without doing so, I would certainly have lost.

Test your idea - the business plan

  Everyone talks about the business plan and agrees that it is indispensable. I will not insist on the chapters because there are countless online and offline resources that you can consult. In the case of startups, a business plan is even more critical than when it comes to developing a profit centre or new product for an existing company.   The business plan has an essential role: it turns the idea into numbers. For the usefulness of this discussion, I will put myself in the place of an entrepreneur at the start of his career. Suppose you've already found the famous idea. If you fall in love with it, that's perfect: it must mean you have the makings of an entrepreneur. Passion and energy are essential. But be careful because love can exceed certain limits. Try to split your expectations into two key areas: customers and financial projections: • The former is usually defined through market research, which helps to shape the so-called target market, the desired or targeted market. However, start-up entrepreneurs do not have the resources for a dedicated market study. There is no reason to stop here: there is a whole series of free resources that can approximate to some degree the behaviour of potential consumers, from the National Institute of Statistics (in the case of Romania), to Google AdSense or Facebook simulations, after which you can form an idea about the demographic interests of consumers, without spending a lion or euro. These will undoubtedly be useful as arguments in conversations and presentations for investors and even for others. • From a financial projections point of view, things might look confusing at the start of the road. But any kind of estimate, even a naive one, is preferable to the lack of data. From this point of view, the advice attributed to Warren Buffett, the great American investor, works well: "keep an eye on costs". There will be rows of Excel that you didn't think of. But you may also have pleasant surprises: for example, the fact that the monthly online presence (email addresses, and possibly a simple site) costs at Google as much as a meal in Bucharest, which you can afford without problems. Something similar happened to me when I realized that for the fintech business I founded, Key Way, I can easily afford headquarters at City Gate, in the Romexpo area – Casa Presei, with Microsoft, Alcatel and T-Mobile. We have considered the easy-to-reach destination for our 100+ employees that our group has in Romania. There are also notoriety benefits, but not as meaningful.

Conclusions

  If you have come this far with reading this piece, you likely have the determination and the passion needed to become a successful entrepreneur. At the same time, all the steps and methods suggested above - and many more recommended by successful entrepreneurs - might not seem very useful for you at first glance. However, to become a successful entrepreneur, you must consider them, even if you don’t follow them by the book. If I can say one thing from my own experience, business success depends on your passion every day in your dream business. There is no recipe for such a passion. But it is not just about financial gains, but rather about the desire to change the world - or at least to consolidate Romania on the global business map. And this is certainly possible. You can follow me on Twitter and LinkedIn!

In the past episodes of this Blockchain series, I talked in-depth about the technology that both myself and other fintech entrepreneurs are convinced will revolutionize the capital markets. I conclude this series by discussing some use cases for this technology at various stages of the project and the profound changes it is starting to make to the financial markets and macroeconomics. As we have already shown, cryptocurrencies such as Bitcoin and Automated Market Makers or smart contracts are already economic realities. It is also customary as such this because Blockchain is a technology that can be used wherever databases are required, in the financial world and beyond. It is easy to guess that many of the next unicorns (startups worth at least $1 Billion) will rise primarily from this technological sector. As proof of this, I will first list five initiatives from different stages of implementation, in various sectors: 1. Elections. The fact that Blockchain is a decentralized register, impossible to falsify and whose records have timestamps, eliminates, in principle, any possibility of fraud related to electronic voting while retaining all its advantages. This is what a startup from the U.S. state of Virginia, FollowMyVote, is already doing.                     2. Medical databases. Here, the utility of Blockchain consists in maintaining the confidentiality of personal data, but also its interoperable and decentralized characteristics help. A Denver-based company, Burstiq, focuses on smart contracts in this sector.                     3. COVID vaccination. We have already talked about monitoring stocks and ingredients from the food industry and the possibility of identifying the origins of a toxic element. The idea of using the technology in stocks of COVID protection equipment and vaccines is typical, and a group of researchers in Abu Dhabi and the United States has already developed a proposal that takes into account such a thing. The scandals related to the Russian Sputnik V vaccine, of which one variant was approved, and another delivered, would be impossible through such strict monitoring, not to mention the advantages of streamlining the distribution. 4. Copyright. The evidence of music broadcasts on the radio and in different spaces is hugely complicated. The artists are continuously complaining about their revenues disappearing into the void due to many broadcasts gone missing with or without intention. Blockchain is a registry available to anyone, automatically and without error. And here, the discussion leads to smart contracts, and this is handled by a New York company called Mediachain, which Spotify acquired in 2017.                     5. Money laundering. Even if Blockchain started its career with cryptocurrencies on the Dark Web, for various illicit payments, it could be used to certify the identity of individual financial operators, along with their biometric data. Ocular, a Los Angeles startup, creates a database that makes identity theft or forgery impossible while simplifying access to legitimate users' documents.                    

The capital markets revolution

When referring to online trading and financial markets, the Blockchain is in its element, and the diversity of concepts and approaches is almost infinite. From my point of view, the novelty brought by this technology on the capital markets refers to three fundamental mechanisms, all related to: 1. The tokenization of assets. Thanks to Blockchain, documents that prove ownership of some assets or even the assets themselves, whether it's art or wine, are replaced by non-counterfeit tokens (symbols). You have probably already figured out the advantages of this transformation: security, liquidity, convenience, transparency.                     2. Democratization of investments. Nowadays, small investors generally have access to promising companies only after making their initial listing on a stock exchange (when they tend to mature and produce a steady but low profit). Venture Capital firms involved in this tend to delay the listing time to reap higher yields (profit or return of investment) as possible. This barrier tends to be removed by converting securities (shares, unlisted shares) into the same tokens, which can be accessed through "unicorn funds". This is precisely the structure proposed by ADDX (previously iSTOX), a blockchain company in which the state of Singapore and its stock exchange are involved. Access to unlisted companies can be granted starting from $20,000, a relatively large amount for beginners but insignificant compared to the millions circulating in the area of investment funds. What I said at the beginning, that Blockchain would produce the next unicorns, is also verified, meaning that it will contribute to their financing, irrespective of the industry.                     3. Ease of financing. From the entrepreneur's point of view, the mechanism described above translates into money from several sources, available on more advantageous terms, faster and more on-time than now. Peer-to-peer lending platforms increasingly benefit from the input of Blockchain technology and are just a marginal example, as the lender will only expect interest. But an entrepreneur who seeks to co-opt mini-angel investors in the longer term will usually place on the market many tokens that can be accessed by those interested, who expect benefits like those of angel investors but proportional to the much smaller amounts. The process is called ICO (Initial Coin Offering) because the idea of cryptocurrency is applicable here, but not in the sense of "virtual money bag". But, as the name suggests, in a sense, close to IPO (Initial Public Offering), ownership of a part of a startup. Bureaucracy, late access, high access thresholds and all other barriers related to traditional finance are missing entirely.                     By granting access to the capital markets for many young, economically active investors from the Millennials segment, the Blockchain makes all this money productive, which would otherwise generate actual negative interest rates in bank accounts or simply be spent on entertainment. And the beneficiaries of the financing are exactly the entrepreneurs of the same age category, characterized by creativity and special business skills. I don't think that in 10 years, the global economy will be similar to the one we have today. The regulation and refinement of technologies that today may seem exotic or risky will lead to a world in which prosperity will be even more accessible to any informed and initiative-driven person, regardless of his starting capital. And this prosperity will impact the entire society.                     You can follow me on Twitter and LinkedIn!

In past episodes of this series of articles, I stated that the Blockchain technology would certainly expand its scope from cryptocurrencies themselves to other financial and capital markets. The most substantial evidence in this regard is the incredible rise of Automated Market Makers, starting from 2018. In the following lines, I would like to explain how this new market segment works.

Market makers and traditional trading

                      As the concept of Automated Market Makers is a modification of the traditional trading system, we will start with a definition of so-called non-automated market makers. Beginner investors find out fairly quickly that brokers (or trading companies) are not the only trading intermediaries. Market makers are the second link in the seller-buyer chain. They have two primary responsibilities: 1. Ensuring the market's liquidity, in other words providing the necessary asset volume needed to carry out extensive transactions. 2. Establishing the bid and ask price, with the difference being the spread. Market makers ensure that an investor (or, as a rule, the broker designated by him) can trade within these limits. The profit comes, predictably, especially from the difference between these prices and is shared with the brokers. It is easy to understand why traditional market makers must be massive financial institutions to assume such a status. Depending on the asset class/classes in which it operates, the role falls in the hands of several types of institutions: • Stock Exchanges: for shares and other similar assets. The role is mainly assumed by famous stock exchanges such as the New York Stock Exchange or the London Stock Exchange. • Banks: trading fiat currencies. • Specialized market makers: for example, these are used by exchanges like NASDAQ. Regarding the difference between market makers and brokers, Investopedia offers a relevant and easy-to-understand comparison: the former resembles wholesalers, while the latter has similar characteristics to retailers. I know from personal experience that some brokerage firms can turn into market makers over time, just as a delicatessen can launch its gourmet brands for distribution in other stores. However, I can confirm that the two businesses remain conceptually different when referring to department structure and functionalities.

What does the Blockchain bring new to the table?

                      Because I talked more in-depth about Blockchain in one of my previous articles, I will not insist on technical aspects. Through Automated Market Makers, I will only say that it makes the leap from the actual cryptocurrencies to the markets where these are traded, and this leap is currently taking place right before our eyes. This is one of the first manifestations of the ecosystem called by specialists DeFi (Decentralized Finance). In the market maker segment, the Blockchain breaks the monopoly of large financial institutions through automation. The walls, the offices, the employees and especially their massive liquidity are replaced by something that looks more like a software structure. In short, the term Automated Market Makers (AMM) defines: • A software architecture based on Blockchain, digitally connecting liquidity providers with brokers and trading companies. In turn, these will interact with investors, most likely through online platforms. • A mathematical formula that sets the maximum liquidity in a given area. • At the moment, Automated Market Makers make transactions between cryptocurrencies and fiat currencies or tokens (value symbols derived from them) possible. However, the technology applies to any asset transaction, and I do not doubt that it will be used in the future. • Very low commissions (these can even go to zero, but in this case software creators can no longer turn in a profit). Since 2018, Uniswap, Sushiswap, Curve, Balancer or Kyber Network have entered this new market. In the case of Uniswap, the AMM with the highest volume, the operating formula is straightforward: x * y = k, where x and y represent assets, and k stands for the total liquidity in a specific area. One of the working principles here is that the liquidity in the respective area does not change for the symmetry of the transactions. Other Automated Market Makers use more complicated mathematical devices. However, it is clear that the Blockchain brings clear advantages here, such as: • Very low costs for users, between 0.1% and 0.3% for large Automated Market Makers. • Secure, decentralized processes. • A competitive market, with clear benefits for customers, because anyone can create a segment / become a market maker, even if it does not automatically entice success for that market. For that market to function, the Automated Market Maker must attract so-called Liquidity Providers, who charge commissions because they provide the necessary volume of assets. This way, the so-called Liquidity Pools are created for each pair of assets. Formulas such as the one mentioned for Uniswap help adjust the price according to demand and supply. Automated Market Makers also have another significant advantage: the so-called smart contracts, created from computer codes. These contracts are impossible to break because they extend the software architecture represented by the market and the respective pools.

Precautions and the future

                      Automated Market Makers are an explosive market, but it is only at the beginning of its evolution. At the moment, it suffers from a series of inherent disadvantages, such as the possibility of error (even if it is not the market maker who makes them, but the user because the latter can cause errors when finalizing the aforementioned smart contracts). Also, because the markets created often touch on cryptocurrency trading, Automated Market Makers inherit their reliability. In other words, they will have problems when a new cryptocurrency also has functional issues. Specialists also noted the relatively limited number of functionalities currently available on this type of platform, compared to more mature areas of the fintech industry, which are in the process of accelerated diversification. Ultimately, the future of Automated Market Makers will be dictated by the general requirements of the fintech area. In my view, they are by no means limited to technology, but to the following things: • Transparency/trend towards financial and technological education. • Regulation and good practices. • Shallow entry threshold: in the case of AMM, investors and Liquidity Providers can enter the market with minimal amounts. In the latter case, the necessary amount can start from $50k, which is low compared to the financial strength of traditional market makers. • Usability/reliability/facilities from the user's point of view. Whatever the current shortcomings, I believe that Blockchain-based markets and tools will undoubtedly evolve in this direction, as is the case with the first such market, the cryptocurrencies market. The technology is far too valuable and versatile for such initiatives to stall, even if we might witness some bubbles and crashes. And that is precisely why I considered this introduction to be necessary. You can follow me on Twitter and LinkedIn!

Cryptocurrencies such as Bitcoin or Ethereum are a novelty that fascinates some while putting off others. The former people are driven by cryptos’ massive increase in value in recent years, while the latter people consider their large price fluctuations, which can turn a portfolio into a small one. However, I believe that the real novelty lies not in this category of virtual currencies but instead in the technology that makes them possible: the Blockchain. I am by no means the only investor with experience in the financial markets who is convinced of crypto’s revolutionary potential. That is why I wanted to publish a series of articles explaining a series of terms and concepts that are not exactly accessible for the less initiated.                    

How Bitcoin works

  The easiest way to start these explanations is to talk about the most well-known example of Blockchain put to good use: cryptocurrencies. For any currency to function as it should, a consensus had to be made that a certain thing, such as Bitcoin, has a specific value. A specific amount of coins is still required, hence the need for an issuing authority, such as central banks in classical currencies. Coins cannot function correctly without accurate and secure records (preventing theft) of the volumes held by individuals or institutions and the transactions that occur. Cryptocurrencies are a disruptive version of fiat currencies because of Blockchain. First of all, the issuing authority is no longer a central one, making some people happy for political reasons. In any case, the money circulation does not occur due to possible subjective decisions of some people, but through an automatic process called mining. In addition, the record is kept on numerous computers at the same time, making it 100% accurate. The Blockchain also allows for a seemingly paradoxical thing to occur: the transactions are entirely transparent, but the identity of their participants is undisclosed and hidden. How is this done in terms of software architecture? The tech’s name is pretty self-explanatory: "blockchain", meaning "a chain of blocks". In other words, it refers to a database comprised of containers (blocks), which are present at the same time on several computers. For example, a classic accounting register exists in a bank's computers, possibly with one or more backups. Distributed ledgers built on Blockchain technology are present simultaneously on several computers in two ways: firstly, there are backups and secondly, each computer stores different parts (blocks) of the database /register. In addition, Blockchain also contains a feature that makes it extremely versatile: the so-called timestamp, which is the time stamp that the blocks of information must include. As the database expands, the information is marked with dates and times. For cryptocurrencies, this refers to the circulation of new monetary volumes. In other applications, this means that the origin of any quantity present in the register can be traced back to its incipient phases.                                     So far, I talked about three main advantages of the technology: 1. Security: decentralized data storage protects Blockchain structures from the vulnerabilities of traditional banking information systems, whose centralization makes them easy to penetrate with a single hack 2. Confidentiality: networks do not monitor the type and purpose of the transaction, even if cryptocurrencies are used on the Dark Web. It is challenging for a transaction to be associated with a person. 3. Low costs for users: very low, for example, compared to bank fees. 4. Timestamping: although very secure and confidential, the technology allows monitoring up to the source of all data (financial or non-financial) included in the databases.   Some other Blockchain characteristics: • The Blockchain is "permanently open", 24 hours a day. • Almost instantaneous transactions (up to a maximum of 10-15 minutes), way less than the classic 48 hours in the banking environment • “Banking the unbanked”: the technology can be available to any Internet and mobile owner, regardless of the country in which he lives, if banks impose various restrictive conditions for opening accounts. The World Bank says there are currently about two billion adults worldwide without access to banking.                    

Multiple uses for Blockchain and Decentralized Finance

  Cryptocurrencies appeared on the market in 2009. Since then, Blockchain and related technologies have started to be used, effectively and not experimentally, in many other industries. Related to capital markets, three types of concepts are emerging: 1. Alternative banking services: traditional banking has an ambivalent attitude towards Blockchain. Giants like UBS or Barclays have created their research labs, but central banks like the Federal Reserve don’t think that the technology is mature enough yet. Instead, some alternatives to banking services like Mojaloop, started by Bill and Melinda Gates, which provide open-source payment services for disadvantaged areas, slowly pick up speed. The concept on which Mojaloop is based is called Interledger and is related to Blockchain. 2. Automated Market Makers (AMM): an industry currently experiencing a boom. These are intermediaries providing liquidity and setting up prices in asset transactions. Automated Market Makers are based on Blockchain and compete with financial giants like the New York or London Stock Exchanges. 3. Smart contracts: software alternatives to classic contracts, functioning on the Blockchain infrastructure. Investopedia offers an example of using a smart contract when renting an apartment: like any contract, it will include a guarantee, the monthly fee to be paid and the rental period, but we can, for example, the access code to the apartment. When the tenant transfers the first established sum of money, the smart contract will automatically change the access code to the one the two parties agreed upon and will send a notification to the tenant about it, and he will be able to enter the apartment. If somehow the access code cannot be changed or modified by the owner, the smart contract will automatically return the money.     The Blockchain is proving its usefulness in other areas, as we speak: • Food supply: IBM has created the Food Trust, a Blockchain mechanism tracking the route of food from source to consumer. It is a medical revolution because, in the case of E. coli or salmonella infections, the source of the infection is located immediately, while in the past, expensive investigations were required which took several weeks. • P2P Energy Trading: new forms of energy, such as solar, are decentralized, and production is fluctuating. Within a particular time, the solar panels of a house can produce more energy than necessary so that the house owner will sell it back to the network. I do not need to go into technical details because it is evident at first glance that such a situation fits perfectly within the Blockchain universe, which was carefully assessed by a startup called WePower. • Mining of precious stones: as their origin is critical, the Blockchain helps to certify the source. For example, that's what Everledger does. • Freight transport: Walmart Canada uses Blockchain for managing highly complex supply chains, which rely on dozens of transportation companies. Blockchain technologies have created an ecosystem called by specialists DeFi (Decentralized Finance) in the capital markets. It includes not only cryptocurrencies but also the three segments mentioned above. Soon, the technology can be applied to loans, real estate transactions or insurance. I have already mentioned its benefits.                      

A bit of history

  To me, the history of the Blockchain seems like clear proof that this technology boasts a vast area of applicability. Generally, Blockchain’s start date is associated with the birth of Bitcoin. This may be due to the mysterious character Satoshi Nakamoto, who proposed the Bitcoin architecture in 2008 on a specialized forum, and who is said to be a pseudonym, a real person or a group of people. But Nakamoto only gave the name of the technology. The concern for a secure, timestamped database is much older than that. Among others, Scott Stornetta, a Bell researcher, was concerned in the late 1980s with an unalterable database, starting with a scandal in the scientific world, in which another researcher had modified the data on which a study was based. To understand what it is about, for example, the Excel file fields are straightforward to alter because this is an intrinsic feature of the program. Together with Stuart Haber, also a cryptographer at Bell, Stornetta developed a theoretical proposal based on which such databases could be integrated into a computer, focused on timestamping and published in 1991. The idea would be used by Satoshi Nakamoto when he created the first cryptocurrency some 18 years later.                    

Key terms recap

  At this point, a small recap dictionary will help you better understand the structure of a blockchain-based capital market. I have prepared fewer academic definitions, opting instead for easier-to-understand explanations. • Automated Market Makers (AMM): automated players from the financial markets, having the role of ensuring liquidity (assets required for transactions) and setting sell and buy prices, just like stock exchanges do in the case of traditional shares. • Assets (assets): a broad category of properties with financial value, which includes anything that can be converted at some point into money, from shares to the actual money existing in the accounts. The difference between assets (assets) and securities (securities) is that the former instead reflect the property, and the latter, its convertible aspect in cash (liquidity). • Blockchain: Decentralized database, distributed on several computers connected to the Internet (nodes), in the form of blocks of information. Compared to classic databases, this architecture is redundant (blocks are replicated in several places), almost impossible to falsify and has timestamps (timestamping: date, day, time etc.) on all its blocks, meaning that the records implicitly contain their provenance. Cryptocurrencies are not the only application of Blockchain. • Cryptocurrency (crypto, cryptocurrency): digital asset / alternative currency (virtual), quoted, traded and distributed based on Blockchain. It is also called an altcoin. Cryptocurrencies differ from traditional currencies by decentralized management (there is no central bank to issue them) and the absolute confidentiality of the owners’ names. The prefix "crypto" comes from "cryptography" or encryption of owners’ names and other sensitive data. • Decentralized finance (DeFi): the new decentralized, global and cross-border architecture of financial markets, based on the exact characteristics of the Blockchain. • Distributed ledger: a term that includes Blockchain but is not identical to it, referring to an accounting register distributed in several electronic sources. • Fork: a software term characteristic for the open-source/free software movement. At a given moment, a program or operating system is divided into two distinct pieces, at the initiative of a part of the developers working. Because cryptocurrencies are based mainly on software and an open-source philosophy, they also split, at different times, into different variants. One of the most famous forks is the one in which Bitcoin Cash split in 2017 from Bitcoin. • Liquidity: the characteristic of a market/segment referring to the ease of trading. Two categories of valuable shares can have very different liquidity on the same stock exchange, meaning that some are traded much more than others. • P2P (Peer-to-Peer or P2P): feature of a network architecture that has influenced the Blockchain architecture. In peer-to-peer, transfers take place between peers and not between a server and a user/client. The category includes Blockchain, but also Bittorent class technologies, which refer to simply transferring files. • Securities: class of convertible assets - and converted into money. These can be participation in companies (equities - of which the shares are part), tradable debts (debts) or derivatives (values resulting from different assets, such as futures contracts or stock options).                    

The future of Blockchain

  In the following episodes of this series, I intend to detail more aspects of the technology that I consider revolutionary. I will review, for example, Automated Market Makers, a growing market, and the specifics of millennial consumers, for whom the idea of Blockchain seems - and is - explicitly created. I will also talk about the uses from the stage of proof of concept or in development. Even if they might not have an immediate practical use, I consider the information about these things as a matter of general culture, without which the future will catch us unprepared. You can follow me on Twitter and LinkedIn!

The fintech group that I founded and manage, Key Way Group, currently has operations in several major European markets and the Middle East. However, I kept a good part of my operations in Romania, not only because it seems perfectly normal to me to pay taxes in the country where I grew up and where I received my education, but also because Romania offers essential advantages for entrepreneurs. Here are some of them:

1.  Low taxes

  For startups, the most crucial tax is the profit tax. In Romania, its value is set at 16%, well below that of developed European economies, such as France, where the same tax reaches 32%. The European average is 21%. Romania also offers an excellent facility for startups: the revenue tax, set between 1-3% and applicable to micro-enterprises. In other words, it applies to companies with a turnover of fewer than one million euros and a maximum of nine employees, a category in which most of our startups fall into.  

2.  Human Resources

                      On several other occasions, I've mentioned the tremendous professional abilities of Romanian Millennials (people under 40). In many cases, they took advantage of multinational giants' experience and organizational culture that also operate in Romania. I would only mention two soft skills these people possess: fluency in multiple foreign languages and solid digital literacy (computer use), but there are many others.  

3.  Economy

  Romania's economy is also under constant pressure from COVID, but to a lesser degree than other stronger economies. The hopes of a speedy recovery can surely benefit from prudent budgetary measures taken by the last two governments. Also, Romania is said to benefit from substantial funding from the European Union Resilience Fund, amounting to almost 80 billion euros. This money will be used for infrastructure projects and digitalization and "green" projects, future-proof industries in which startups are well represented.  

4.  The E.U Context

  We, Romanians, stopped noticing the implicit advantages of having an EU company. But for an investor outside the European Union, an EU-registered company can bring numerous tax and customs benefits, together with other advantages. Moreover, in recent years, Romania has had a clear pro-European route, including the trend towards digitalization, fiscal stability, and a transparent business environment. Even if our country does not fit perfectly in some of these trends, for now, the trend for the coming years is evident.  

5.  Connectivity

  It is a well-known fact that Romania is at the top of broadband connection speeds, but it also leads to more subtle indicators such as latency or Internet stability. Mobile Internet is ubiquitous, with major providers in Romania offering 5G services, unlike their Western countries' counterparts. These benefits become crucial in the context of remote work imposed by the pandemic. And remote work is self-evident for most technology-oriented startups with global ambitions.  

6.  Bureaucracy

                    The bureaucracy is an old problem in Romania, but things appear to have improved. Strangely, it seems that bureaucracy was also one of the first victims of COVID. For example, the Trade Register discovered to its amazement that it could function excellent online, as well as other institutions with which companies and entrepreneurs interact. In the private sector, banks, which in any case had already started to eliminate their physical presence, have increased the pace of diversifying and updating their online platforms. The same thing is taking place in countless other public and private segments.  

7.  Hospitality

  Bucharest, Timisoara or Cluj was among the top cities in the world where expats can live well. Rents are moderate compared to the big European capitals, the services are acceptable, and the odds of meeting someone who knows at least a few words in English are very high. Before the pandemic, the major Romanian cities also offered attractive and not very expensive nightlife. The former halls of communist factories were turning into business incubators/coworking spaces at an increased rate. Subsequently, the isolation forced on us by the pandemic tended to nullify these benefits but was quickly sweetened by more prompt delivery companies than in other European capitals. Romania's high COVID vaccination rate also means safer business over the next months, during which possible entrepreneurship plans in Romania could become a reality. Within such a period, a significant part of the population will be immunized, turning Romania into a far more interesting country than others in terms of health risks.  

Conclusions

  Sure, not everything is perfect in Romania. I also mentioned on another occasion that startups would find it more difficult to find local financing sources because investors with high financial resources come from more conservative areas than those specific to startups, such as real estate. But nothing will stop an ambitious entrepreneur from seeking funding - remotely or even by physical travel - especially from a European capital relatively close to where they are located. I have been doing this since the time I was working to grow other people's businesses, and the success I achieved was primarily based on this easy-to-implement strategy. You can follow me on Twitter and LinkedIn!