Strate to blockchain

Con­sen­sys envoy and ex Strate head says blockchain is a no-brainer if SA wants to pre­vent re­peats of re­cent fraud cases

Financial Mail - - PROFILE - Nick Hed­ley hed­leyn@bdfm.co.za

A small spell­ing mis­take gifted the for­mer CEO of Strate, SA’S cen­tral se­cu­ri­ties de­pos­i­tory, her new job as am­bas­sador for New York­based blockchain firm Con­sen­sys.

Uruguay-born Mon­ica Singer headed Strate for 18 years, in­tro­duc­ing elec­tronic set­tle­ments to the coun­try’s fi­nan­cial mar­kets. But she left the com­pany when the board — per­haps un­der­stand­ably — wouldn’t lis­ten to her pleas to re­vamp its busi­ness model and shift all pro­cesses onto blockchain.

Blockchain refers to the de­cen­tralised, pub­lic ledger sys­tem that records trans­ac­tions. In Singer’s eyes, the tech­nol­ogy “will change ev­ery­thing”.

What is frus­trat­ing her is that, just as it was when the in­ter­net was first launched, most or­gan­i­sa­tions in SA are keep­ing a safe dis­tance.

After leav­ing Strate, Singer planned on set­ting up her own blockchain con­sul­tancy, but things took a cu­ri­ous turn when a re­porter asked her in an in­ter­view which fin­tech com­pa­nies she’d most like to work with.

She said “Con­sen­sus” — the chain of blockchain con­fer­ences and events that had stirred some­thing in her ear­lier in 2017 — but the jour­nal­ist wrote “Con­sen­sys”, mis­tak­enly as­sum­ing that she was re­fer­ring to the start-up founded by Joseph Lu­bin, the Cana­dian en­tre­pre­neur be­hind the ethereum cryp­tocur­rency.

A week later, Singer, who’s also a for­mer World Bank con­sul­tant and di­rec­tor at the SA In­sti­tute of Char­tered Ac­coun­tants, was speak­ing to Lu­bin him­self on a sur­prise call. Not know­ing who he was or the real pur­pose of the call, she says she “ram­bled on” for an hour, telling him what she knew about smart con­tracts and all things blockchain, and cut­ting him off when­ever he tried to in­ter­ject.

Deeply re­gret­ting her blun­der when she found out, she asked for a sec­ond shot and was shortly after given the task of build­ing Con­sen­sys’s SA busi­ness.

“I feel 20 again,” says Singer, who 36 years ago fol­lowed her hus­band-to-be to SA from

Uruguay. Save for a stint with the World Bank in Wash­ing­ton, she spent most of the time since then in Johannesburg be­fore Con­sen­sys took her to Cape Town in late 2017.

Time has hardly soft­ened her Span­ish ac­cent or her South Amer­i­can pas­sion, but it has shat­tered her prior views on the fi­nan­cial and au­dit­ing in­dus­tries, sec­tors she now deems “to­tally bro­ken”. Hav­ing risen to promi­nence in both, she clearly means it when she says blockchain will rip the foun­da­tion from be­neath their feet.

In blockchain-based ac­count­ing a real-time shared-records sys­tem lets au­di­tors, the tax­man and reg­u­la­tors view and val­i­date ledger en­tries as they hap­pen.

Singer says blockchain-based ac­count­ing is a no-brainer if SA doesn’t want re­peats of the Stein­hoff or VBS Bank fraud cases.

That’s why peo­ple who have cho­sen to study ac­count­ing have made a short-sighted mis­take, in her opin­ion. “In the fu­ture, we won’t be able to work with­out know­ing how to code,” she says, adding that a re­vamp of school cur­ric­ula is des­per­ately needed.

Stock ex­changes, costly and out­dated, will find new list­ings “dry up” as com­pa­nies turn to sleeker fundrais­ing mech­a­nisms like ini­tial coin of­fer­ings (ICOS), she pre­dicts.

Else­where, the le­gal pro­fes­sion, par­tic­u­larly con­tract law, will face a sim­i­lar revo­lu­tion, she says.

In a ren­tal agree­ment, all pay­ments can be au­to­mat­i­cally en­forced, while if a ten­ant breaks the agree­ment, the tech­nol­ogy can even be pro­grammed to lock the per­son out of the premises. This could be a game-changer for large listed land­lords, she says.

But most peo­ple aren’t yet con­vinced by her seem­ingly out­landish pre­dic­tions — at least in her adop­tive coun­try. She ac­knowl­edges that she sounds like a mad prophet to many com­pa­nies she meets. “SA is so far be­hind,” she laments, cit­ing the fact that gov­ern­ments in Dubai and Europe have committed to shift all pro­cesses onto the blockchain to raise lev­els of trans­parency and ef­fi­ciency and to stamp out fraud.

But SA is not de­void of pi­o­neers. One is Con­sen­sys-backed Ujo Mu­sic, which has built a plat­form that al­lows mu­si­cians to li­cense their songs au­to­mat­i­cally through ethereum.

The tech­nol­ogy cuts out the mid­dle­men, lets artists be paid im­me­di­ately and re­duces bar­ri­ers to en­try.

Mean­while, The Sun Ex­change, a Cape Town-based blockchain start-up that lets in­di­vid­u­als buy into so­lar projects, has al­ready in­stalled a num­ber of so­lar plants and is run­ning an ICO. The start-up lets in­di­vid­u­als buy so­lar pan­els or in­di­vid­ual cells and then lease them to end users, who do not pay up­front costs but rather monthly rentals. In­vestors can re­ceive their ren­tal in­come in rands or bit­coin, and elec­tric­ity costs on the sys­tem rise in line with in­fla­tion each year.

Singer even sees blockchain help­ing refugees, by al­low­ing them to store ver­i­fied per­sonal de­tails, in­clud­ing aca­demic qual­i­fi­ca­tions, safely on the blockchain so that these can be re­trieved in their host coun­try. The tech­nol­ogy will shake up the non­profit world, cut­ting out mid­dle­men and al­low­ing donors to track where their funds end up.

In other words, no in­dus­try will be un­touched, says Singer.

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