August 3, 2015
Let’s Talk Payments had the opportunity to interview Managing Partner at Equibit, Chris Horlacher. Chris is an expert in business strategy, transformation and process improvement. Over the course of his career he has been instrumental in numerous successful multi-million dollar start-ups and strategic initiatives. He is a consultant to SME's and large enterprises in the realms of finance, accounting, operations, tax, regulatory compliance, technology and risk management. Chris possesses Chartered Accountant and Chartered Professional Accountant designations and is certified by the Canadian Securities Institute as a partner, director and chief financial officer.
LTP: What is the vision of Equibit?
I’ve always been the kind of person whose first instinct when faced with large, institutionalized inefficiencies or other problems is to always throw out the existing framework and start over from scratch. It’s a strategy that’s served me well in my consulting career and the philosophy that gave rise to Equibit. That’s what Equibit is all about, a fresh start and a clean slate. We set out to create something that would completely replace the foundational infrastructure of the securities system, a system now over a century old. Our hope is that it becomes the fertile ground where future industrial and economic growth can take place. In an age where the mobility and accessibility of capital is becoming more and more challenging, Equibit represents a restoration of the investment industry to its pioneering roots but with all the advantages of the modern age. We see Equibit as an evolution of the securities industry towards a more efficient, transparent and participative solution to the problem of allocating capital.
LTP: How to do you see the equity trading market evolving over the next 5 years with new solutions such as digital securities and mobile based solutions coming up in the market?
This is a very exciting but scary time, I imagine, for many CEO’s in the financial services industry. They’re faced with an extremely disruptive and esoteric technology where small groups of outsiders are building programs that can wipe out their entire business model. How they react to it over the next 5 years will determine their viability as a business going forward in to the 21st century. In a lot of ways we’re back to the late 1980’s where a wave of computerization and automation changed manufacturing forever. Now it’s the financial services industry’s turn.
Investors and consumers will ultimately be the main beneficiaries of these innovations. The cost of financial services will be brought down immensely and made more accessible. New pools of capital will open up to be used for financing and finding investors from all over the world will become easier than ever before. We truly are on a new technological frontier and it’s hard to say exactly where it’s taking us.
LTP: What are the key challenges faced by the securities industry and how does your solution address these pain points?
The main challenge was that there were too many hands in the pot. What I mean by that is an unusually large number of different kinds of firms needed to come together to form the securities industry. This evolved out of a pre-computer world where all documents were physical, manual, and extremely numerous. So certain firms specialized in doing certain things with the mountain of securities documents. Then came computers and now those documents were digital (for the most part) but centralized, so the actors stayed the same and for the most part so did the fees. It became extremely profitable operating a securities depository or transfer agent, who more or less make bookkeeping entries and handle shareholder communications on behalf of issuing companies. The model itself was the challenge. Equibit represents a totally new model that automates tasks investors are currently paying billions each year to have performed.
LTP: What according to you is the key USP of blockchain which helps you solve the problem at hand? What other use cases do you plan to include using blockchain?
The revolution introduced by blockchain technology was the ability for a decentralized network of computers to agree on the state of a shared file at any given moment, and granting users a financial incentive to power the network and maintain its integrity. Now that we have that, the number of ways this could be applied is really beyond the imagination of one single person. Wherever we find a register of pretty much any kind of information we find a potential place to apply blockchain technology. It may not always be appropriate or advantageous to do so, but those decisions will be borne out in the marketplace as companies make their plays to advance whatever industry they choose to target. Equibit in particular uses several blockchains, each for monetary, securities, and communications transactions. Each one is needed to complete the whole experience of owning or issuing equity.
LTP: Can you brief us about your product/service and its working?
Equibit is a blockchain-based securities register allowing for efficient management of OTC equity, warrants, partnership units and more. The app will include a shareholder communications system, as well as the ability to easily issue BTC-denominated dividends and distributions to holders of equity; jobs typically performed through transfer agents and central depositories at great cost to issuers and brokers. It’s a complete solution for individuals and companies wanting to buy, create, and sell equity units.
LTP: How big is your company now? Where do you operate currently and what other geographical regions do you plan to expand your services to?
The company currently consists of the five partners on our website and a few volunteers. We’re made up of both Americans and Canadians who love blockchain technology and want to see it succeed all over the world.
LTP: How many customers do you have and can you give us an indication of the size of transactions which happen through your platform and your business model?
As the product hasn’t launched yet we have no users at the moment. As far as any transaction size over the Equibit system… we could potentially see some pretty big ones. Just read the financial news and you’ll see no end of multi-billion dollar company purchases that could be executed practically for free on the Equibit system. We’re really focused on developing the application and getting the Equibit network up, which will be a huge achievement for the company. After network genesis we have a number of other ideas already to provide services to network participants, which will likely be delivered through an Equibit user association we’ll be creating shortly after launching the app.