Tristan Terry was Aura Ventures’ representative on the latest installment of the Antler Investment Committee
Lygon - Investment Notes
We believe blockchain will be one of the most disruptive technologies since the start of the Internet
At Aura Ventures, we believe blockchain will be one of the most disruptive technologies since the start of the Internet. In many ways, it can be classified as a new class of computers that offer the same fundamental capabilities as today’s computers (computation, storage, and networking).
Bitcoin was developed as an electronic cash system that would allow people to make direct payments between themselves without the need for a third-party intermediary. The protocol relies on existing technologies such as peer-to-peer networking and digital cryptography but also introduced a new technology: blockchain. This technology uses clever incentives to ensure an autonomous but absolutely reliable accounting of transactions was possible in an open-source, intermediary-free system (100% decentralized). Together, these technologies meant that everyone using Bitcoin could be sure of one tamper-proof version of the truth, resulting in unwavering trust in the currency.
But the object of interest for any new application of blockchain isn’t limited to Bitcoin or other cryptocurrencies as a fiat but rather to the underlying technology’s ability to enable shared list-keeping. That is, blockchain creates a viable, decentralized record of transactions – the distributed ledger – which allows the substitution of a single, inviolable master database for large numbers of proprietary ones. In theory, shared list-keeping is highly desirable for several reasons:
it is much easier to deal with one list than thousands;
they are significantly less expensive to build and maintain;
sharing one list means that all participants must have agreed upfront on how data should be structured and stored which has the added benefits of built-in standardization and interoperability;
a blockchain-based system is essentially indestructible as the ledgers are distributed over a vast number of nodes (unless every node was destroyed, there will always be a valid version of the ledger available somewhere); and
they are extremely secure as blockchain ledgers are cryptographically sealed.
Now consider what banks are and what they actually do. Banks arose from the need for trusted intermediaries to help people protect and transact with their money. From the world’s first bankers with their paper ledgers to today’s highly complex financial system with its millions upon millions of databases, banks have fulfilled this role among other things by being the reliable and discreet keepers of lists. The current paradigm involves each bank keeping its own records in the form of proprietary lists: all the bank accounts in the world, all the credit cards, mortgage and securities accounts, and names of people, organisations, and other assets associated with these accounts. As one could imagine, this information is duplicated across the entire financial system and creates a system that is complex, highly redundant, and very expensive to maintain. Thus, it would appear as though blockchain has an inherent application as the infrastructure for tomorrow’s banks.
Founded in 2019, Lygon is a first-to-market blockchain-based platform (in Australia) that was created from a consortium involving Westpac, Commonwealth Bank, ANZ, Scentre Group, and IBM to bring centuries-old paper-based processes into the modern world by digitising the paperwork, processes, and the legalities behind financial agreements (starting with bank guarantees).
With Lygon, the issuance process can be 10x faster, more transparent, more secure, less costly, and more environmentally friendly! Conversations between applicants, beneficiaries and issuers can take place digitally and when all parties come to an agreement, they are stored on a distributed ledger as a standardized contract that can tell all parties the “who, what, when, where” of a particular agreement in a readable, trusted way.
Led by Justin Amos, Lygon is only getting started as it embarks on the path to deploy an end-to-end digital solution for processing, storing and accessing contracts to the broader financial services industry. We’re excited to lead the company’s Pre-Series A round as its first external investor and look forward to supporting Lygon’s ambition to lead the industry into the blockchain era.
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