Alternative investments have become a standard within the portfolios of many investors. The market hit record numbers in 2016 and shows no signs of slowing down. But investing still requires intermediaries and centralized exchanges.
Enter blockchain technology, which allows for decentralized fintech solutions and distributed ledgers, removing the intermediary and providing new ways to invest.
A fintech company that offers investors a transparent process to access trusted alternative investment opportunities, DarcMatter has developed a blockchain-powered distributed ledger to provide enhanced transparency, security, and trust to the alternative investment industry and the global financial market.
Established by Return on Change Inc., with headquarters in New York and development teams in Kiev, Shanghai, and Seoul, the DarcMatter platform is one of those rare birds — a blockchain technology product that exists. Its recent DMC token ICO had a hard cap of $35 million.
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DarcMatter provides a user-friendly platform that connects funds managers that are actively raising capital with individuals or institutional investors around the world, allowing them to access and execute documents and invest in alternative fund products. The focus is on increasing transparency and time and cost efficiencies through blockchain technology.
“For the investor or LP user, once they have completed their registration and profile, they are permitted to visit the Browse Investments page, which contains all of the funds that DarcMatter currently has live on the platform,” DarcMatter cofounder and CEO Sang H. Lee told me. “The investor can use filters to sort the fund opportunities based on their interest. For example, if they are looking for private equity funds, they can sort by that fund type, along with many other options to assist the user in browsing opportunities of interest.”
Once an investor finds a fund of interest, they can access everything they need to execute their investment, including background information, statistics on the fund, and details of its managing members.
“As a next step, the investor can visit the data room for the fund to request access to all fund documentation,” Lee said. “When an investor is ready to invest, they click the ‘I’m Interested!’ button on DarcMatter to trigger the subscription process, which includes digital execution of documentation and transaction capabilities that move the investor’s funds from one account to the fund manager, in order to secure their investment into the fund.”
The simplification here is apparent. In traditional alternative investment markets, there are still a significant number of tasks that require manual attention. Many of these tasks also need the participation of numerous intermediaries to provide compliance, security, and transparency. DarcMatter’s solution is to incorporate a blockchain-based distributed ledger that removes opacity.
“Blockchain has provided some core technological solutions that allow the participants in the industry to operate more efficiently than currently,” Lee said. “In an industry where many intermediaries, and their fees, are built into processes as a matter of verification or for security reasons, blockchain brings to light whether or not these intermediaries are required to get the job done — or rather, if there are fintech solutions that can serve the same purpose.”
In other words, blockchain offers everything needed to make investments as transparent and secure as possible.
“The core tenants of the blockchain, such as a distributed immutable ledger and consensus, make it inherently impossible to commit [the] fraudulent activities that continue to plague the industry globally and allow the participants in the industry to have a direct role in creating transparency and security,” Lee said. “At DarcMatter, we see it as the next step to pushing our fintech vision forward and getting our DarcMatter community accustomed to how the blockchain can work as a part of their investment and capital-raising process.”
The DMC token that underpins DarcMatter’s platform is used to unlock and consummate the smart contracts for investment completion. And DarcMatter’s permissioned blockchain, a type of private blockchain, allows for high levels of discretion and privacy that are required by investors and the marketplace in general. Also, the use of blockchain technology opens up the opportunity for cross-border investments.
So what’s next for DarcMatter?
“We are excited about our future in fintech,” Lee said. “Of particular importance for DarcMatter is the release and integration of key blockchain features into the already operational platform to aid in the investment process. As a part of this growth, our current platform will evolve into an even more active, robust, and widespread ecosystem, where investors and investment providers will contribute to the blockchain and its various benefits. We will continuously invest in growing a global community with offices in Shanghai, Hong Kong, and Seoul. Additionally, with the blockchain ecosystem, we will also have a new-found focus on growing our developer community to contribute smart contracts and innovations for all participants continuously.”
