J. Robles, III
Dear Community,

In September’s letter, we will be covering several themes:
  • Compliant Digital Currency Exchanges
  • Cross-Border Payments as a Blockchain Killer App
  • ABRA — the Blockchain-Based “Uber of Cross-Border Payments & Global Banking”
  • Visa, Capital One, NASDAQ, Citibank, Pantera, and Others Invest $30 Million into Blockchain Development Startup Chain, Inc.
  • Blockchain Venture Investment Trackers


The New York State digital currency regulation, dubbed the “BitLicense”, has been recently finalized.

Some major digital currency exchanges — Bitstamp, Coinbase, ItBit, etc. — have applied for the BitLicense. Some companies like Bitfinex, OKCoin, and Kraken have not and are instead withdrawing service for New York customers.

What we’re seeing is that the industry may be permanently bifurcating into compliant companies — those which value consumer safety — and non compliant companies — companies that are instead settling for the fringes.

Although the requirements of the BitLicense are not as favorable for digital currency tech innovation as hoped, they are a major step in legitimizing and making safer digital currency for the mainstream. We expect traditional financiers to be more comfortable in investing in bitcoin and the digital currency industry in general as a result of the BitLicense’s institution.


What constitutes a “killer app”? One definition is “a feature, function, or application of a new technology or product that is presented as virtually indispensable or much superior to rival products”.

Are blockchain-based cross-border payment services superior to rival, legacy cross-border payment products and services? In the most critical ways, i.e., fees and transaction times, yes.

Are they becoming “virtually indispensable”? As blockchain-based cross-border payments services are gaining traction, there will be no going back from the additional 5-10% sent back home or 4-5x reduction in a small-to-medium sized business’ (SMB) international payment costs as a result of blockchain tech.

Are cross-border payments one of the Blockchain’s killer apps? We think so. Several blockchain-based cross-border payments companies have seen tremendous growth, year-to-date:

Some perspective on cross-border payments, traditional versus blockchain-based:

In the sense of evolution, the Blockchain is a truly emergent thing — entirely different relative to its predecessors, yet hugely disruptive at performing the same functions. The recent rise to prominence of digital currency and blockchain technology has marked a shift away from traditional cross-border payments.

Digital currency and blockchain tech enable unprecedented cost savings and efficiency, orders of magnitude better than the next best technology, product, or service. According to average fees and transaction times for conducting legacy and blockchain-based cross-border payments, legacy cross-border payments require 250x higher fees for transactions that clear 576x longer relative to those that are blockchain-based.

We anticipated the “blockchain experiments” and investments into the space that legacy payments companies and banks have been publicizing as of late. Aside from displacing their back offices much like how automation replaced human assembly lines, these legacy companies find great value in the blockchain-based cross-border payment cost savings.

Before the year’s end, we expect to see substantially increased venture investment aimed at fostering blockchain-based cross-border payments services. Cross-border payments represents a several trillion dollar industry, where the adoption of blockchains will capture and generate significantly more value.

Cross-border payments is one of the killer apps of blockchain technology. Let’s take a deeper look at why.


Worldwide, a quarter of a billion people migrate annually, many migrating to send money back home from countries with better working conditions and pay. The World Bank estimates that $584 billion was remitted in 2014 alone.

In 2013, one of every six working-age Mexican citizens lived in the United States.

In 2012, the Commission on Filipinos Overseas estimated that approximately 10.5 million Filipinos worked abroad. This is one out of every ten working-age citizen. On average, Filipino migrants remitted about 82,000 pesos in 2011, 80% of the average income of the Philippines (102,240 pesos, according to the International Labor Organization in 2012), representing roughly 10% of the Philippine GDP.

“Blind taste test” the average remitting migrant. On one hand, pay the entirety of one month’s wages — income for which they’ve toiled away on a field or at a factory — in order to send the other 11 months’ wages back home. On the other hand, pay a week’s wages in order to send the other 51 weeks’ wages back home — no strings attached. No rational person would choose legacy remittance services over blockchain-based remittance.

7-12% on the dollar for legacy remittance, versus 3% or less using blockchain-based services. Paying one month’s wages versus a week’s or less to remit a year’s worth of income. For the average remitting migrant, who understands all too well the precious value and limited supply of their blood, sweat, and tears, the economics of traditional remittance versus blockchain=based remittance are clear.

But remittance is just one type of the cross-border payment.

B2B Payments

The correspondent banking industry today is exactly the way the Medicis set it up in the 14th century.
The Medicis used the power of the newly-invented double-entry accounting system to build a cross-border banking empire. The Medicis invented nostro and vostro accounts.  Banks still use this double-entry system to keep track of who owns what. The words in English illustrate how direct it is:  Nostro means “ours” in Italian and Vostro “yours”. The Bitcoin ledger is the 21st century version. A two-column spreadsheet with who owns what. 12 million rows – one for each person who owns bitcoin. The second column has how many they own. That column totals 14 million bitcoins today. Very clear public record of who owns what which does not require paying a third-party to keep those accounts.

In order to move money internationally, businesses are subject to the individually varying rules, fee schedules, and priorities of the myriad of 3rd-parties that comprise the legacy correspondent banking scheme. More often than not, this means longer times for payment to reach its destination and higher fees for processing that payment in practice.

The fees, transaction times, and opacity that is considered business-as-usual for the legacy correspondent banking system is stifling for small-to-medium-sized businesses (SMBs), especially in light of the fast-paced nature of Internet-age commerce.

Like how VoIP (Voice over Internet Protocol) disrupted cross-border telephony, Bitcoin will bring huge savings and improved service in cross-border payments.

Bitcoin will do to payments what VoIP did to telephony. Technically, we could call Bitcoin “MoIP”, or “Money over Internet Protocol”. Bitcoin has revolutionized how consumers move money to each other and is just beginning to have an impact on business-to-business payments. Just as VoIP became popular with SMBs through cost savings and simplicity, Bitcoin will do the same through cost savings, speed, and transparency.

When it comes to running a business, there are only a few, simple criteria an executive considers before adopting a new service:
  • Do we have a need? Is the need great enough?
  • Does it fulfill its value proposition?
  • Is this product or service reputable, trustworthy?
A “yes” to all these questions generally means its smart business to adopt.
  • Do we have a need for blockchain-based cross-border payments? Is the need great enough? It’s trivial knowledge that businesses need to make money. It follows that there is also a need for anything that can make them more money. Blockchain-based cross-border payment services like Align Commerce (a Pantera portfolio company) can save companies 4-5x what they normally spend on cross-border payments as a result of utilizing the Blockchain. The lack of transparency when conducting legacy cross-border B2B payments is also a major pain point for SMBs, which utilization of the Blockchain also ameliorates.
  • Do blockchain-based cross-border payments fulfill their value proposition? By now, there should be no question whether blockchain-based payments fulfill their value proposition. Hundreds of millions of digital currency transactions have so far taken place across borders, for pennies on the dollar in fees, and virtually instantaneously, without issue. Blockchain-based cross-border payment services are able to process payments for half the cost, in half the time relative to legacy solutions.
  • Is blockchain technology reputable, trustworthy? The technology, as a codebase, is incorruptible. The cryptography protecting bitcoin addresses (which “store” the bitcoin for the user) would require more energy than is available in the known universe to crack. Malicious attacks on the network are so unfeasible, they may as well be impossible. Also, nearly three-quarters of a billion venture investment have been invested into the industry surrounding it, implicitly testifying to the network’s security and the faith others have in its integrity.
For the first half of 2015, thousands of small-to-medium-sized businesses conducting a similar introspection have made the move to blockchain-based cross-border payments. For many of these companies, which are at a stage where the devil’s in the details on the road to success — where every bit of cost savings is of substantial importance — halving the cost of international supplier payments is a godsend. If making a switch reduces the cost of cross-border payments by 4-5x, with no downside, for any small-to-medium sized business owner, it’s a no brainer to make the change.

Expect the growth of the blockchain-based cross-border payments sector to be explosive within the next two years, with companies like Align Commerce leading the way.


Recently, Pantera has invested in the Series A funding round of ABRA, a blockchain-based remittance and cross-border payments platform, which has raised $14 million to date.

Global smartphone penetration for the developed and developing worlds combined is estimated to exceed five billion people by 2017. 95% of global consumer transactions, by count, are still through cash. Consumers pay $50 billion in remittances fees with top remittance destinations including India, China, Philippines, Mexico, and Nigeria.  Domestic money transfer volume in the U.S., India, and China is now in the tens of billions of dollars per year and growing, with untold billions in domestic transfer fees.

The timing is right for replicating the M-PESA model at a global scale and in a decentralized way. 
ABRA’s mission is to replace bank-driven financial inclusion with user-driven financial inclusion by making cash mobile and through utilization of the Blockchain.

ABRA is a mobile application for digitally managing, transferring, and storing money. Much akin to how Uber recruits drivers to achieve decentralized ride-sharing, ABRA recruits individuals as “tellers” to achieve decentralized banking. These tellers act as “human ATMs” to enable digital-to-paper money withdrawals and paper-to-digital deposits, thereby solving the last obstacle preventing entirely mobile-based banking.

The consumer’s private keys are stored directly on their mobile device, achieving decentralization.

The company is currently in private beta with launch scheduled soon.

How It Works

Users deposit their local currency through an ABRA teller. A simplified example:
  • Alice wishes to fund her account with 100 USD.
  • Alice finds Bob — an ABRA teller — through the ABRA mobile application
  • Alice gives Bob 4690 Philippine pesos in paper.
  • Bob accepts the cash then makes a transfer from his ABRA application on his phone to Alice’s application.
  • Alice is credited with 100 USD in her ABRA digital wallet and Bob’s digital wallet balance is reduced by 100 USD.

In the background, the transfer is actually happening using Bitcoin, but the Bitcoin are protected from volatility using a “forward contract”. The forward contract allows the funds on the wallet to be stored for days or weeks, enabling Alice to store wealth on her phone without a bank account.

ABRA is one of the first apps to completely black-box its use of the Bitcoin blockchain as a payment layer, a product positioning move that helps avoid any unnecessary confusion among users, better allowing them to experience the benefits of the application without the burden of an in-depth understanding of the underlying tech.


The ABRA management team is highly experienced, led by CEO Bill Barhydt who was previously the Founder & CEO of Boom Financial, the world’s first cross-border mobile banking service. Bill raised over $50 million of venture financing for the company and built tremendous business development partnerships while navigating challenging regulatory waters. Bill brought Pete Kelly from Boom Financial as his co-founder and hired Daryl Puryear, formerly VP of Engineering at Motif Investing and Lead Software Developer at, as his CTO.


With ABRA, people can now send or receive digital cash, peer-to-peer, to any smartphone in the world, without the exorbitant fees, waiting several business days for processing, the elaborate, opaque correspondent banking process of sending money cross-borders, or the non-trivial banking challenges facing members of the developing world. And, for the first time ever, people can upload or download paper money without needing to visit an ATM or bank branch.

There is no need for traditional money-service businesses in a shared economy taking a decentralized approach to money services.


We’re excited to announce that portfolio company Chain — the blockchain development startup — has raised a $30 million Series C with participation from VISA, Capital One, Citibank, NASDAQ, Fiserv, Orange Telecom, and Pantera.

This investment from VISA, Capital One, Citibank, and the others represents yet another milestone for the digital currency/blockchain technology industry — explicit recognition from the leaders of traditional payments and finance that the blockchain opportunity must be pursued.

Chain recently partnered with the NASDAQ exchange to produce the world’s first blockchain-based private equities market. NASDAQ’s Blockchain Initiative, as it has been dubbed, seeks to utilize the Open Assets protocol, a widely accepted standard of asset issuance, transfer, and management on the Bitcoin blockchain (also known as the “colored coins” protocol), in order to provide more efficient, more trustworthy, and longer lasting pre-IPO securities. NASDAQ’s Blockchain Initiative marks some of Wall Street’s first steps towards upgrading into Internet Age commerce from the legacy, outdated, clunky payment and financial systems of day’s past.

Chain is already doing product development and research in a similar manner for a myriad of other Wall Street institutions, as blockchains are becoming more and more of a staple in lieu of outdated financial technologies. These institutions have sought out Chain’s solutions for the substantial cost savings that blockchain technology enable.

Read more about the fundraising round in the Wall Street Journal article.


During the second week of July, 2015 year to date Bitcoin venture investment exceeded 2014’s total Bitcoin venture investment. Should the remainder of the year follow a similar rate, we’re on track for $1 billion in Bitcoin venture investment in 2015. 
For perspective, $1 billion Bitcoin venture investment in 2015 would be better funding than the retail, semiconductor, electronics, networking, business services, healthcare services, and telecommunications industry categories last year.

So far, the blockchain industry is the fastest growing venture investment sector of 2015.

Interesting times,

We will be visiting several cities over the next few months to discuss the blockchain and digital currency industries. Some of our dates include:
  • September 21-24, Hong Kong
  • September 28-30, Monaco
  • September 30, Zurich
  • October 1-2, Moscow
  • October 3-4, St. Petersburg
  • October 4-9, Hong Kong
  • October 14-15, New York City
  • October 25-29, Las Vegas
  • December 3-6, Miami
  • December 13-17, San Diego
If you are interested in a meeting, please contact Pantera’s investor relations team at 415-360-3600 or via

The BitFlash is our weekly curation of the blockchain industry’s best articles, charts, opinions, and websites (you can subscribe at Below are some of its recent, standout entries:

9/9/15: Wall Street's First Bitcoin Forays: Buy or Build

Excerpts: "It’s too big to ignore. That’s one thing the big financial companies seem to agree on when they look at the distributed ledger technology that underlies Bitcoin. Beyond that, however, their approaches vary. Some are investing in Silicon Valley startups, in effect buying themselves a front-row view–and maybe an option–on innovation. Others are setting up their own experiments with the technology or conducting joint tests with the startups...." [Forbes

9/1/15: Single-Family Offices Are Showing Increasing Interest in Digital Currencies

Excerpts: "Based on a series of exploratory studies over the last five years of single-family offices with assets of US$500 million or more, there are clear indications that the ultra-wealthy are showing a growing interest in the field. In 2011, less than five percent of a sample of 44 single-family offices said they were interested in cryptocurrencies. Only about two percent of them were using or trading cryptocurrencies, and none of them were investing in any type of company involved with cryptocurrencies.

"Two years later, single-family offices are getting involved. In a survey of 31 single-family offices, slightly more than 15 percent said they are interested in the field. More than five percent of them were already involved either using or trading cryptocurrencies. And, a similar percentage was funding start-up cryptocurrency companies.

"The appeal of cryptocurrencies continues to grow in 2015. Based on a survey of 36 single-family offices, about a quarter of them are involved or considering becoming involved with cryptocurrencies. Close to ten percent of them were using or trading cryptocurrencies. Nearly 15 percent of these single-family offices had invested in cryptocurrencies companies in one way or another...." [Forbes]

9/1/15: U.K. Government Exploring Use of Blockchain for Recordkeeping

Excerpts: "The UK government is exploring the use of blockchain technology in a bid to improve the transparency and accuracy of its record keeping.

"In a post on the blog of the Government Digital Service, a unit of the UK Cabinet Office, technical architect Paul Downey explains that his team has been examining registers – how they are currently formatted and managed, and how they could potentially be improved through the use of a blockchain.
"A spokesperson for the UK Digital Currency Association lauded the government's initiative in exploring such concepts. They went on to say there is 'no better way' to deliver a public register than through a blockchain. These can be used to transparently record public lists of data, 'from land registries to licensed pub landlords'.

"The spokesperson concluded, 'In the developing world, the blockchain is a necessity to regularise title and ownership; in the developed, it is all about efficiency and ease of access.'" [CoinDesk

8/31/15: Interpol Creates Digital Currency for Law Enforcement Education Purposes

Excerpts: "...A part of the agency’s in-house forensic tools is its own virtual currency, which can be used in a simulation-based training game.

"'It’s a virtual world that we have created, and personnel can come and operate these things and learn by operating them,' IGCI director of cyber innovation and outreach Madan Mohan Oberoi told the newspaper during the security trade event Interpol World.

"'We felt that these things, if you try to teach people from a policing background through PowerPoint presentations, it doesn’t make too much sense. Let them play around and learn more....'" [Forbes]

8/31/15: UK Banking Giant Barclays to Allow Charities to Accept Bitcoin

Excerpts: "Barclays has announced it will take its first steps toward supporting the use of bitcoin as an alternative payment method by allowing charities to accept donations in the digital currency.

"In a new article in The Sunday Times, the multinational financial services firm hinted that it had entered into a partnership with an unnamed 'bitcoin exchange or spending platform', and that it would seek to begin a formal rollout of the service by 2016...." [CoinDesk]

8/31/15: Goldman Analyst: Blockchain Tech Will Change Asset Ownership

Excerpts: "...In a podcast released this summer and highlighted by a recent New York Times piece, global investment research analyst Heath Terry addressed both bitcoin and the blockchain, praising the distributed ledger as a technology that would have 'massive implications' for asset and ownership transfer.

"'We're first pitch, first inning in terms of seeing how companies are going to use the technology," Terry said. 'It's fascinating in really early stages, but it's hard to see a world where blockchain technology doesn't change the way we think about asset ownership....'" [CoinDesk]

8/31/15: USAA: Bitcoin and Blockchain are FinTech Game-Changers

Excerpts: "Vic Pascucci is quick to use the phrase 'game changer' when talking about bitcoin and blockchain technology.

"The current USAA head of corporate development and board member at its portfolio startups including Saffron, andAutomatic Labs says he hasn't seen many technologies that meet this description during his nearly 20 years in the VC sector.

"Bitcoin and the blockchain, in his opinion, are very different than other areas of interest for the insurance, investing, and banking firm, founded in 1922. 'I've been working in technology since the early 1990s, I never thought I'd see something as big as the Internet,' Pascucci, who has been with USAA since he joined as legal counsel for its technology team in 2006, said in interview...." [CoinDesk]

8/25/15: $30mm Deal Made by Overstock CEO Patrick Byrne "Plugs" Bitcoin Technology into Wall Street

Excerpts: "Patrick Byrne, the founder of, today announced the acquisition of a broker-dealer firm built deep into the DNA of Wall Street. When the technology at the center of the acquisition is switched on, Byrne said, it will mark the first time the decentralized ledger behind bitcoin is plugged directly into Wall Street.

"'Basically, it’s the wormhole. It’s the connection between the two universes,' Byrne told the New York Business Journal in a phone call today. 'All the stuff we’ve built can now be accessed directly by people with a Bloomberg terminal, people with an eTrade account....'" [New York Business Journal]

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