This is How India Got its First Live Blockchain Platform
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There are hundreds of blockchain companies cropping up in India and around the globe. Very few, amongst them have managed to develop a proof of concept (PoC) around the technology to impress the economists of the world. While there are handfuls of start-ups that moved up in the ladder and have more than PoC or pilot program to boost.
One such fintech company is US-based MonetaGo. The startup has recently launched India’s first blockchain solution for Trade Receivables Discounting System (TReDS) Exchanges, which includes SIDBI-NSE owned RXIL, Axis Bank’s A.TReDS and Mynd Solution-lead M1xchange.
In a conversation with Entrepreneur Media, Jesse Chenard, CEO and Co-founder MonetaGo, shares how he grabbed his first break away from his homeland in India.
Closed Door for Cryptos
In the early 2013 Chenard, a US-based serial entrepreneur was helping his friend to set up a cryptocurrency based company. That’s when he went on to thinking how can one use the digital currency as an intermediary between two different fiat currency for money transactions and conversions.
This prompted him to start MonetaGo in mid-2014 with Patrick Manasse and Tad Davis. The trio started building compliance programs to understand money service based business and different regulations that serve the financial standards around the world.
While pitching the idea, the startup got very far in discussions with many banks such as Barclays with the potential of using the technology. But since the idea involved use of cryptocurrency, everyone acted cautiously.
During the same, the noise about blockchain and the technology’s capabilities beyond bitcoin started building up in India and the banks along with the Reserve Bank of India (RBI) started taking a lot of interest in the subject.
“This is when Montego got a chance to work on the RBI-led white paper with other peers on the use case of the technology. They said we cannot look into Bitcoins or any digital currency. So, that kind of let us on the path of self-discovery on how can we use the blockchain and who would be interested in it,” shared Chenard.
The company was not keen on building massive consortium which would spin out a bunch of proof of concepts, the co-founder then narrowed down the potential participants to enter into an alliance which help them to go live with a solution.
Chenard says, “We explored from KYC solution to cross-border payment to complex works concepts like trade finance. And that's when we started talking to the TREDs exchanges and saw an opportunity introduce the solution to their platforms.”
The Tech Side
The TReDS platforms wanted to cancel out double invoice factoring and were looking to communicate amongst them in such a way that it enabled them to share information without giving away the details.
Elaborating how blockchain solved the above problem, Kashinath Katakdhond, MD & CEO, RXIL said, the technology provides us with a shared immutable ledger for registering the history of financing of invoices across TReDS platform. It also helps us to prevent system risk arising from multiple financing of the same invoice across TReDS platform.”
The technology used in the TREDS network is based on Hyperledger fabric and without the usage of any cryptocurrency. Explaining the process, Chenard added, “We ran these details with algorithms, which produces fingerprints. We registered this on the blockchain which means nobody can really go and reverse engineer those hashes and figure out the details. It is a novel and efficient way to identify assets which maintain also the privacy concerns.”
This can have a much wider usage if adopted by other financial institutions (factors like banks and NBFCs) as well. “If financiers choose to join this network and we can have the integration with GSTN data, Invoice Discounting will be the most preferred way of financing receivables in the days to come,” Kalyan Basu, Managing Director and Chief Operating Officer, A.TReDS told Entrepreneur Media.
Now that Montego has gained experience on how the Indian financial services sector operates, the fintech startup is looking to go a mile beyond.
“We are in talks with other financial institutions in the country to introduce similar platform on their work system and hence, we are looking to raise funds from an Indian venture capitalist,” Chenard said without disclosing much on the fundraising.