An Exclusive Interview with ex-Goldman Sachs banker, Peter Fedchenkov

As blockchain and ICO are extremely popular and interesting topics, we interviewed an ex-Goldman Sachs banker, Peter Fedchenkov, who is also a co-founder and CEO of INS.



As an ex-Goldman Sachs banker and financial professional, could you briefly tell beginners why so many startups are connecting disrupting ideas with blockchain? Does blockchain make these ideas more profitable?

Like many groundbreaking technologies in the past, blockchain is currently going through the “hype” stage of its evolution. In the same way, a few years ago, everyone was enamoured with big data and marrying it with business in every way possible. Moreover, people who saw a few scrolls of an Excel spreadsheet and misinterpreted them as “big.” data.Today, big data has become an important part of many services and products, but in a more technologically-mature and business savvy way.

People have started to apply critical thinking. This is what happens with blockchain now - most people, including executives and investors, feel it could transform everything; from the way dental clinics are run to public notaries to gold mining. Few people understand what blockchain really is, and even fewer people know how it works from the technical standpoint. Profitability is important; and with the right design and implementation, blockchain-powered businesses could save costs and decrease risks. However, what excites me the most is not the cutting of costs but the opportunity to build something entirely new.

How do you see blockchain technology evolving in the next 5 years from now?

There will be a lot of disappointment when we realise that distributed systems - systems without a central counterparty - are not always better or more efficient. Many of the proposed startup ideas will fail as they force blockchain into their business models to appeal to investors and attract more funds. The market will cool down. However, we’ll see some great companies born out of the current blockchain hype, and I mean great, transforming, companies like Google and Facebook that made possible things we couldn’t do before. Companies are founded by visionaries who understand the power of blockchain, smart contracts, cryptocurrencies, and also importantly, their limitations.

Blockchain will power a significant portion of the economy and the daily services, but consumers would not necessarily have to know it or be crypto-enthusiasts to use it; the same way we pay with our credit cards today without knowing how this whole complex payment infrastructure works and what technologies they run on. Blockchain, in essence, is a B2B technology aimed to power great applications, not to be understood by a Main Street customer.



More and more startups are joining the ICO world. It looks like there is this major shift happening in the startup world. There are already tons of cryptocurrencies launched. Do you think that the ICO world will get as crowded as the App Store? What is your opinion about it?

ICOs today is similar to the way stocks used to be in the early 20th century before the advent of the regulations, including the Securities and Exchange Act of 1933. They are not transparent; token holder rights could be abused, the market is full of nefarious actors, scam coins, and a lot of uncertainty. At the same time, it presents a lot of opportunities for those who are in early. Like a Wild West of investing.

The regulation will come, and the market will clear from those who cannot (or would not want) to comply. I think the regulators would impose certain rules on crypto-exchanges the same way today’s stock exchanges work. If you want your token listed, you’ll have to do XYZ to comply, maybe even submit some form of audited financial statements. However, you can’t stop ICOs, same way as it is with Uber, Airbnb, and other services that were born out of disruption - you can dial for the government and try to stop or regulate them. However, there is just so much demand from both sides of the marketplace, it eventually spreads out and wins.

ICOs revolutionized the way companies attract capital. They also revolutionized the way consumers became part of companies and their decision-making processes. We have had shareholders and debtholders who have legal claims on company’s assets; now, we have token holders who have very different and exciting relationships with companies.

What is the benefit of having many different cryptocurrencies? Can these cryptocurrencies somehow overcome the existing world currencies? And most importantly; can millennials fully adapt to cryptocurrency usage?

The availability of numerous currencies, including cryptocurrencies, is the reason very few of us hold US dollars, Euros or Japanese yen in our wallets at once, and we use just a handful of credit cards to spare us from the cross-currency payment dance in a seamless way. For instance, I don’t understand how VISA or MasterCard works, but I can use these cards without knowing the operation behind them. This is what I believe will happen with the cryptocurrencies - we’ll see companies creating solid infrastructures to own and use them in seamless ways.

An average user might not even know he is holding a cryptocurrency. This is the way to go if we want to increase adoption outside of the techie bubble. This is what we are doing at INS - we don’t expect our customers to be proficient with tokens and cryptocurrencies; instead, we want them to be able to easily earn and spend rewards sponsored by grocery manufacturers without thinking of exchanges, wallets, and hash functions.

You are helping people purchase directly from manufacturers. That makes sense. But why did you decide to do it via blockchain, what’s the logic behind it?

We are building a decentralized marketplace that connects grocery manufacturers, consumers, and third-party fulfilment providers. We want to give power back to the manufacturers and consumers and facilitate the flow of goods through independent logistics operators. INS will not decide which producers get access to the system, at what price they sell, or how they reward customers. Our key role is to build a platform that facilitates interaction.

The blockchain is an ideal fit for this model since it allows one to record the flow of goods and sync the parties together. Importantly, we also enable manufacturers to run bespoke loyalty programs directed at consumers and run on smart contracts. Smart contracts support any logic they want to code in the reward - once the customer has met the conditions, the system unlocks INS tokens as a reward. INS tokens could be further spent on the platform to buy groceries or be sold on an exchange. Blockchain enables us to trim costs; it shortens the supply chain and creates a decentralised environment with more options and lower prices than traditional retail.

Is it possible for Fortune 500 companies to lose their value in the near future to ICO companies?

Large companies will inevitably incur some losses. The classic theory of disruption by Professor Clayton Christensen of Harvard Business School explains it all. Blockchain related businesses are at the same exact stage where digital cameras were in the late 90s. They offer exciting benefits for the few who are in the know but have fewer features and lower adoption. With time, the technology will mature, develop further, and become a crucial part of today’s businesses, just as digital was to film back in the days. With that being said, the new technology almost always increases the pie. The shares of the pie are still to be divided and time will tell who will emerge as new leaders