Add Chris Horlacher’s name to the list of entrepreneurs whose experience working with outdated technologies motivated them to use technology to create a better way.
Mr. Horlacher is the president and CEO of the Equibit Group, the creators of Equibit, a decentralized securities platform company that integrates multiple blockchains into a single application, allowing issuers and investors to manage their relationship in a secure and decentralized manner.
A few years ago Mr. Horlacher had the opportunity to be the CFO of a stock brokerage that was expanding into Canada. Part of his job was to build up the back office and take care of the administration there.
“I was pretty shocked by how dated and byzantine the whole set up was,” Mr. Horlacher said.
The few dominant players had been entrenched for three or four decades with little change in their technology and little incentive to change. Yet at the same time blockchain technology was beginning to emerge and Mr. Horlacher said he quickly saw its potential beyond just serving as a money register.
As Bitcoin’s market cap grew and more investors became interested in backing companies in the space, Mr. Horlacher began to develop his vision of a blockchain-based issuance and settlement platform for a peer-to-peer debt and equity marketplace in earnest.
No matter what part of the business you are in, at the end of the day you are maintaining a record of the assets you manage, usually in a central location that leaves you vulnerable, Mr. Horlacher said.
“Rather than be centralized with good security, disburse the risk amongst hundreds, thousands, and even millions of machines in competition to secure it.” Mr. Horlacher said.
“People are compensated by the network protocol for honest work.”
Enter the Equibit Group, where Issuers and investors can instantly and cheaply transfer title to tokens called equibits without using transfer agents or depositories. Trading can occur anytime, anywhere, with settlement times of less than 10 minutes in many cases.
“Brokers, exchanges and investors have all been beholden to depositors and transfer agents at high costs,” Mr. Horlacher said. “This is a great area for disruption because the blockchain is good at doing what agencies do but it’s faster, more secure, more efficient.”
Investors are protected against loss by having the option to recycle their securities into blank equibits, which can be used for new transaction fees or creating new issuances, Mr. Horlacher said. The Equibit blockchain uses strong encryption that fosters the creation of unforgeable securities and an incorruptible chain of custody.
“It’s a very good system,” Mr. Horlacher said. “You cannot override or circumvent what the system said reality is.”
Communication is also simplified in many ways on the Equibit platform, Mr. Horlacher said. Market information is stored publicly and available to anyone on the network. Investor messaging, including private voting capability, is facilitated through a P2P communications protocol. Earnings distributions are easily sent and AML/KYC requirements are fulfilled as trusted network actors can quickly and accurately verify investor status.
A large brokerage can amass fees in the tens of millions of dollars in some areas but with the Equibit, those fees can be cut in more than half, Mr. Horlacher said. A shorter settlement cycle solves problems such as who gets the dividend should it be paid when the trade is in limbo.
Mr. Horlacher said an important pillar of the Equibit philosophy is properly incentivizing and rewarding people for contributing to the system. Utility tokens encourage people to provide their infrastructure to the network, and as they do tokens are spontaneously generated.
“We’re incentivizing people to add transactions to blockchain. They are rewarded for honest work.”