The Vietnam-based company said it has received an undisclosed amount for its fifth funding round

Base.vn, a Vietnamese Software-as-a-Service (SaaS) platform, announced that it has raised an undisclosed amount of Series A funding from Nextrans, a Korean venture capitalist.

Previously, Base had raised US$1.7 million in a pre-Series A round by four other VCs: Beenext, Alpha JWC Ventures, VIISA, and 500Startups.

Nextrans has more than US$400 million in fund, investing in around 60 companies that are mostly based in the US and Korea. In Vietnam, Nextrans was the investor in Luxstay, Jamja or EcoTruck.

Regarding its decision to invest in Base.vn, Nextrans said that it has reviewed 600 companies in different sectors for two years and found 10 more “enterprise-based solutions.”

Also Read: Spanish on-demand laundry startup Mr Jeff expands to Singapore

Base was founded in 2016 by Stanford University alumni Pham Kim Hung.

It claims to be the first SaaS platform in the region that helps enterprise streamline activities with features such as Base E-hiring (an applicant tracking system), Base Wework (a task and project management platform), and Base Request (internal request management).

“Our ultimate goal is to bring quality products that have great impact and values in enterprises’ growth. With the funding, the more important things are the values that we can generate towards our customers,” said Base Co-founder and CEO Hung Pham.

Base said it aims for international investment funds with extensive experience in SaaS to work with the company to become the leading SaaS platform in the region.

Its applications have been used daily by more than 1,000 customers in Vietnam in different industries including banking-finance, e-commerce, F&B, and education.

The company plans to raise its next round of funding in late 2019.

 

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Strategic capital is essential for startups to achieve sustainable long-term growth

Smart capital, simply put, refers to the investment that brings along additional value such as knowledge, relationships, potential partnerships in addition to cash. In an economy where connectivity is becoming increasingly important and prevalent, smart capital is becoming more and more crucial for businesses to flourish.

Specifically in Southeast Asia, relationships are the backbone of business partnerships and dealings. Connections that investors may have can be equally or even more important than the cash they can deliver. For the growing number of startups, getting plugged into the ecosystem is imperative for their growth – to connect with suppliers, customers as well as forming strategic partnerships with other companies.

On the other hand, investors are also seeking investment opportunities where they can provide more than just cash. Ultimately, they want to be confident of getting the highest return possible.

Also Read: 10 reasons why businesses need to get involved with their communities

Many funds such as VCs focus in certain spaces, allowing them to gain expertise and build connections among their investments. The rise of Corporate VCs (CVC) also points to the importance of providing smart capital, where large corporates buy smaller companies to improve their businesses.

PE firms buy companies that fit into their investment portfolio intending to restructure them to prepare them for more significant exits such as IPO and M&A.

Understanding the Southeast Asia investment market

While the global investment community has been eyeing the Southeast market for some time, the business landscape is still generally considered risky with political instability and underdeveloped infrastructure to support startups, except for countries like Singapore. As such, the majority of investments still come from PE firms that deal with companies that have already established some market success.

The number of VC and CVC investments have also increased in recent years with the booming technology industry providing an array of diverse solutions. However, in 2018, most of the funding in Southeast Asia is to later stage companies such as Grab, Lazada, Go-Jek, Tokopedia and Sea Group.

Smaller VC firms still face strong headwinds in finding capital for riskier start-ups. Investors are in high demand in Southeast Asia. Companies and funds face difficulty in raising capital due to the risky nature of investments in Southeast Asia despite the high growth potential.

Investors in developed countries such as the United States and China tend to behave differently from those in Southeast Asia.

Due to the significantly larger pool of investors and the size of the domestic markets, it is common for startups, especially those with proven track records, to be selective when it comes to receiving investments. As the investment landscape in Southeast Asia is still considered relatively new, it will be the startups who are chasing for funds rather than the other way round.

Understanding investors

As shown in the above image, investors of different types of funds do have different goals for their investments. Even angel investors have different goals such as retirement, partnerships with the existing portfolio and personal financial goals. Having aligned expectations as investors is important to avoid being pressed by the investors for quick financial returns when the business is premature for its intended exit.

Smart capital can also be disruptive when investors have different strategies from the management. This could result in conflict, wrong decisions and could even lead to failure. Discussing strategy must be on the agenda when seeking smart capital to align the vision so that stakeholders can support one another to execute the business plan effectively.

Also Read: What you need to know before taking Venture (or Vulture?) Capital

Another way to understand investors is through the way they conduct their due diligence. It reflects the attitude and culture of the investors. For example, if you are raising your first round of investment and was hammered with questions on detailed five-year financial projections, you will know that the investor may not be comfortable with the early-stage investment.

Managing expectations

Discussing what parties want out of the investment is important to lay out duties and timelines to obligations. This ensures that investors do deliver on what they promise to provide for the business, providing clarity for the investors to carry out specific action plans. It also assures investors on when and how the company intends to fulfill its financial obligations (e.g. expected to start distributing dividends in Year 3.. Do not just ask for investors’ help without telling them what you can provide them. 

Providing alternatives

Risk is a huge concern in Southeat Asia for any investor. Creating alternatives and other options may pose a higher level of risk for the business, but it increases the chances of securing investments in this underdeveloped economy.

Structured finance can be used to compensate investors when certain key objectives are not met by the stipulated timeline. Royalties can also be used as sweeteners to pay investors based on business performance rather than fixed amounts like dividends.

As the bond market in Southeast Asia develops, companies can also consider convertible notes. This allows investors to invest through debt, which is less risky, with the option to switch to equity to capitalise on higher returns – should the business succeed.

There are many different ways that investment deals can be structured to reduce the risk of investors. The business should consider how they can meet the interests of investors by reducing risk to gain funding. While this may not be optimal for businesses, it is necessary for the near future as investors continue to remain wary in the region.

Conclusion

The Southeast Asia economy remains a difficult but a blooming space for businesses to grow as competition is stiff while capital is sparse. Yet capital remains a crucial aspect for businesses to operate and grow, with strategic partners being necessary for acceleration into complex markets. To compete for smart capital, businesses must do better than simply boasting large returns, but learn how to manage risk for investors.
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Editor’s note: e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

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The National University of Singapore’s entrepreneurial arm, NUS Enterprise, and Singapore Airlines (SIA)’s joint initiative is called the SIA Accelerator Programme

SIA Accelerator Programme, the accelerator programme initiated by NUS Enterprise and Singapore Airlines (SIA), has announced five startups graduates from its inaugural batch.

The accelerator is a joint effort to boost the travel sector and its customer experience as well as open up new business opportunities for aspiring startups.

The 10-week initiative took place in an incubation space at NUS Enterprise’s The Hangar and SIA’s KrisLab in January this year.

Participants were tasked with presenting solutions for tech and airlines problems identified by SIA. These problems include onboard food wastage, offline and online integration in-flight shopping, revenue maximisation, to seat capacity optimisation.

NUS Enterprise coached the participants to identify their target customers, the right tech solutions, and product-market fit, as well as business model viability.

Some of the programme’s participants include the winners of Singapore Airlines’ annual AppChallenge. AppChallenge is a digital hackathon for aviation innovation run by SIA in conjunction with NUS Enterprise which was launched in June this year.

All solutions will be presented during the Innovfest Unbound 2019 that kicks off on June 27. Innovfest Unbound is an innovation festival organised by NUS Enterprise and Unbound, held in Singapore.

Also Read: Event tech platform PouchNATION raises Series B round from Traveloka and SPH Ventures

The five startups graduates from the accelerator programme are:

• airfree, an in-flight shopping marketplace that allows online shopping mid-flight and items collection upon landing with 50 times less bandwidth than regular e-commerce websites allowing faster browsing. Last month, the startup raised US$2.9 million in funding from Shiseido, Starbucks accelerator, and angel investors.
• F5Shift, a digitised data-tracking on in-flight food wastage by capturing images of F&B wastage via cameras processed by its cloud-based, machine learning models that can detect the food item and the source of meal that results in the wastage, presented in web dashboard to help airlines optimise meal plans and reduces waste.
• Migacore, a data science startup that uses contextual data to improve demand forecasting for travel by capturing online signals from news portals and social media to gauge travel intents. This will help airlines to respond with better flight schedules and overall revenue management.
• Travelsel, a smart destination platform that facilitates the distribution of in-market products through airlines, hotel, and other retail channels, providing retailers with a platform to publish, build, sell ticket product and product bundles, all in media-rich content.
• Volantio, a startup that seeks to optimise seat capacity to help airlines increase revenue and avoid overbooking flights, using a cloud-based capacity optimisation platform called Yana. Yana automatically makes these passengers offers to switch to other flights in an overbooking situation with offers include vouchers for future travel, loyalty points, or upgrades.

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Neuron will operate its patented commercial N3 scooters, which have 12-inch tyres and a 21 centimetre-wide floorboard to provide more stability and comfort 

Singapore startup Neuron Mobility has announced that it has been selected by Brisbane City Council to operate a majority of its 600 e-scooters in the capital city of Queensland.

The company said in a press release that it beat nine other global and local operators, including California-based Lime Scooters (which will operate the remaining 400 devices in the city) to win this partnership.

The e-scooter addition is a part of the Brisbane Clean, Green, Sustainable 2017-2031 initiative, the city’s efforts to improve its sustainability.

Neuron Mobility said that it will operate its patented commercial N3 scooters, making Brisbane the first city to experience the commercial-grade version of the vehicle — along with Darwin City which has partnered with Neuron for a 12-month trial programme.

The N3 scooter is developed with 12-inch tyres and a 21 centimetre-wide floorboard to provide more stability and comfort to riders, claims the company. It also features a GPS-enabled parking indicator on the handlebar display to help guide riders to designated parking zones.

Also Read: NUS Enterprise, Singapore Airlines introduce five startups from SIA Accelerator

Neuron has a dedicated operations team on-ground that handles daily maintenance, hourly demand rebalancing, and battery swapping of the scooters so they will have a consistent supply and to allow responsible parking.

“We believe that there’s an ongoing paradigm shift in urban transportation that will shape the future of mobility. This partnership with Brisbane City Council is in line with our goal to bring the best micromobility services to the Asia Pacific region,” said Zachary Wang, CEO of Neuron Mobility.

Recently, the company also tied up with Payap University in Chiang Mai, Thailand to promote the use of clean energy mobility solutions.

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Brands need to think differently if they want to successfully shape their narrative in the age of social media

In this era of hyper-connectivity and intense social scrutiny, many brands are turning to storytelling as a way to gain more eyeballs.

But gone are the days where people naively believe anything companies tell them.

So what does storytelling really mean, and why does the traditional story arc not work for brands?

Endings don’t feel real

Our first counter with a traditional story arc is when we were young, when grandparents told us life stories, or when we read Enid Blyton books.

As we grew up, we consumed novels and movies — most of which used the same story arc.

Here’s how a traditional story arc goes: there’s a beginning (exposition), middle (rising action, climax) and ending (falling action, resolution).

But does the story really end there?

If you think back carefully, you’ll realise that these stories always take on a fairytale-like quality.

Why?

Because endings don’t feel real. I believe that as humans, we are hardwired to seek patterns and answers, but not necessarily endings.

We intuitively seek continuity.

Boy meets girl. Boy likes girl but there’s an obstacle. Problem is overcome and they live happily ever after, galloping off on a shiny white horse into the beautiful sunset. Cue credits.

What does this mean for brands?

In Marty Neumier’s book The Brand Flip, he writes about how the rise of social media has placed customers in a position of power to shape brands and ‘draw meaning from it’.

In other words: ‘Your brand isn’t what you say it is. It’s what they say it is.’

Source

Stories are ways to frame our perspective of the world and how others see us.

So how can companies create a narrative framework that continuously engages people?

The new story arc model

Often, companies approach brand stories as a linear, closed narrative — with a beginning, middle, and ending — about how the company was founded, its journey to success, blah blah blah.

But the irony is, the traditional story arc doesn’t create conversations with people.

And in this new world where customers take charge, such company-centric narratives are a big fail for engagement.

The best brand stories are open-ended, tributaries of ideas and aspirations that continue from the source.

Here’s how a brand story arc could potentially look like:

Pardon the terrible sketch

How the new story arc translates into a brand story (Case study: Patagonia)

It’s no longer about your company, but your customers.

Here are a couple of ways to kick start the brand story ideation:

1. What is your company’s Big Idea?

Is there a purpose that your company exists for, beyond making money?

In this new world of gluten-free food, environmental consciousness, hipster-ness, and ethical values, people buy into big ideas and aspirations.

Like what Marty Neumier wrote: “They [people] no longer buy brands. They join brands.”

For example, outdoor brand Patagonia is known for their commitment to providing solutions to environmental crises, while running a sustainable business.

But most importantly, their mission isn’t just idle chatter. They walk the talk with their company policies. That’s what makes it so inspiring.

People want to tell great stories about themselves. They want to be heard, seen, and understood.

Patagonia has created a strong brand which resonates with not just with hardcore nature lovers looking for ways to reduce their carbon footprint, but also people who aspire and look up to these ideas.

Source

When someone buys a product or uses a service, they are creating a story about themselves.

However, companies need to understand that at this point, their brand is out of their hands, and completely within the control of customers.

This is where sincerity and good, honest company practices come in.

Because at the end of the day, all people want to be is the hero of their stories.

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Photo by Raj Eiamworakul on Unsplash

e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

This article was first published on e27 on April 27, 2018

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Kopi Kenangan wants to fill in the gap between high-priced coffee served at international coffee chains and the instant coffee sold at street stalls

Startup of the Month returned this month with Kopi Kenangan as its winner!

Kopi Kenangan is a tech-enabled coffee chain founded to “fill the gap between the high-priced coffee served at international coffee chains and the instant coffee sold at many street stalls.”

The company has recently made headline with its US$20 million funding round from Sequoia India, following a US$8 million funding round it announced in October last year.

It has also grown from just 16 stores in October 2018 to 80 stores in eight cities today.

Claiming itself to be a profitable business, Kopi Kenangan has plans to open 150 outlets by the end of this year and expand to 1,000 stores throughout Indonesia by 2021. It even mentioned a plan to expand to other Southeast Asian markets.

As a runner up, e27 readers have voted for BrideStory, an Indonesian wedding marketplace platform.

Together with sister company ParentStory, a children activity marketplace, the company has recently been acquired by Indonesian e-commerce and fintech giant Tokopedia.

Congratulations to both companies, and thank you for your participation in the poll!

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Image Credit: Kopi Kenangan

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Warburg Pincus China-SEA II will focus on investing across consumer and services, healthcare, real estate, financial services, and TMT

Warburg Pincus, a leading global private equity firm focused on growth investing, has made the final close of its second fund targeting Southeast Asia and China.

A US$4.25 billion companion fund,Warburg Pincus China-SEA II will invest in its portfolio companies in these regions alongside Warburg Pincus Global Growth — a US$14.8 billion global, growth-focused private equity fund that closed in late 2018.

Warburg Pincus China-SEA II is also the successor to Warburg Pincus China, a US$2.2 billion companion fund that closed in December 2016. Within China, Warburg Pincus is known as Hua Ping.

The Warburg Pincus China-SEA II fund was launched in January 2019, targeting a fund size of US$3.5 billion, and received commitments in excess of the US$4.25 billion.

Also Read: How to get smart capital in Southeast Asia

Warburg Pincus China-Southeast Asia’s Limited Partners include existing investors in Warburg Pincus’s current funds as well as new investors to the firm. The investors represent a diversified mix of leading public and private pension funds, sovereign wealth funds, insurance companies, endowments, foundations, fund of funds, family offices and high-net-worth individuals.

This new fund will continue Warburg Pincus’ thesis-driven, sector-focused approach to growth investing in China and Southeast Asia, partnering with entrepreneurs and management teams to build companies of scale and sustainable value. It will focus on investing across five sectors — consumer and services, healthcare, real estate, financial services, and technology, media and telecommunications (TMT).

Charles R. Kaye and Joseph P. Landy, Co-CEOs of Warburg Pincus, said in a joint statement: “We have now invested more than US$11 billion into more than 120 companies in China and Southeast Asia, generating significant returns and distributions for our investors. The strong demand for Warburg Pincus China-Southeast Asia II reflects our established track record, our talented investment team, and the opportunities our Limited Partners see for growth investing in China and Southeast Asia.”

Also Read: 5 Singapore startups that could be the next industry darling

Warburg Pincus’s select current investments in China and Southeast Asia include Amcare, ANE Logistics, Ant Financial, ARA, China Kidswant, D&J China, ESR Group, Go-Jek, Hygeia, Jinxin Fertility, Liepin, Mofang, NIO, Vincom Retail, Yuanfudao, and ZTO Express.

Jeff Perlman, Managing Director and Head of Southeast Asia, added: “In recent years, from our Singapore base, Warburg Pincus has become one of the largest and most active investors in Southeast Asia, with a particular emphasis on Vietnam, Indonesia and Singapore. Southeast Asia is a large and growing market for us, exhibiting many of the strong investment themes and trends which have driven our China business over the last 25 years. This new fund, along with our growing team in Singapore and our recent successes in the region, will allow us to build our franchise further in Southeast Asia.”

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Compared to other players in the market, we have an atypical strategy for achieving our significant growth and scale-up

Since its founding seven years ago, Bukalapak has scaled up more than 6,000x in the past five years alone, rapidly outpacing various established players in the Indonesian market and becoming one of the largest e-commerce in Southeast Asia with over US$1 billion in annual transactions and  over 2 billion monthly views from nearly 70 million visitors.

Compared to other players in the market, we have an atypical strategy for achieving our significant growth and scale-up. Rather than spending senseless amounts of promotions or massive subsidies to acquire unsustainable traffic/activations, we focus on doing hundreds of growth hack experiments and countless incremental improvements to increase the quality and experience of using our product and service.

This strategy relies heavily on having a robust top-class engineering team that can scale up rapidly to keep up with the rapid growth. As we scale up, we found out that scaling up an engineering team is not just about adding more engineers to the team, but also about building the right kind of culture and organization that is capable of supporting productive collaboration and knowledge-sharing between hundreds of engineers.

This focus on scaling up our engineering team begun 18 months ago when Bukalapak asked me to join the management team as VP of Engineering. At that time, we had started to experience growing pains and bottlenecks as we scale beyond our first couple dozen engineers. In this post, I am going to share my personal experience in leading and transforming the engineering team at Bukalapak to achieve its current scalability.

Metrics for engineering scalability

One of the first things I established during my first month at Bukalapak is finding the set of metrics that we can use to objectively measure the overall productivity of our engineering team as we transform our development process. After thorough engagement with dozens of engineers and stakeholders, our consensus converged towards the following set of metrics: team size, development velocity, and engineering quality. We believe any strategy toward achieving excellent engineering scalability will need to track, focus, and maintain a healthy balance between these three metrics.

Team Size Metric

This metric is probably the easiest to track and measure. We simply define this metric as the number of engineers within our engineering team. Scaling up this metric requires us to identify bottlenecks in our recruiting pipeline while keeping a careful balance between hiring the right talent and our growth demands.

Development Velocity Metric

We chose this metric so that we can have visibility regarding whether our development output is slowing down due to numerous bottleneck or not. Since we use Scrum, we can define this metric as the total number of stories (including bug-fix stories) deployed to production during a specific period. The complexity for each story may vary, but we found out that when sampling across the entire group of teams, individual or seasonal variance tends to smooth out and we got a pretty reliable metric for the total velocity for the engineering team.

Engineering Quality Metric

Sole focus on velocity will be detrimental if we do not also take into account the quality of the output that we deliver to production. We define this metric as the number of emergency-level incidents or bugs occurring in production. Concurrently, we also devise a strategy to triage and estimate the impact of each production incidents and map them into several existing severity levels. Due to the wealth of data that we collect in production, in most cases, we can use those data to estimate the impact of each incident with a reasonable accuracy and within minutes from being aware of the issue.

One year’s worth of data

We meticulously log and track the above metrics on a weekly basis, making it easy for us to see the progression of our engineering team and compare the data from time to time. The following chart shows one year worth of said data, aggregated by month and using first month’s data as the general baseline.

In the first few months of our transformation, we can see the rapid growth in total velocity as we address the lowest hanging fruits in our laundry list of productivity bottlenecks. We are also delighted to know that can maintain our productivity afterward, even as the size of our team more than doubled.

Perhaps the most satisfying data in the chart is the emergency incidents, where we manage to bring it lower than before even as our total velocity nearly tripled. There is a genuine truth to the adage that the more complex a system is, the more bugs it has.

We had quite a concern in the second month when we observed that as our total velocity grows, the number of emergency incidents caused by our bugs also increased linearly. Fortunately, we were able to deploy various quality improvements and painstakingly beat this number down month by month. After twelve months, from the ratio of incidents per story, we manage to increase our engineering quality by 10x.

What did we do?

There is no silver bullet behind our scale up. It was a continuous process and teamwork over the span of more than one year where we execute dozens of action plans to eliminate productivity bottlenecks, streamline our development process, and empower people more in giving them the necessary support and trust for them to work efficiently.

That being said, there are several action plans that stand out above the rest and have more significant impact compared to the rest:

Foster a healthy sharing, helping, and learning culture. This was something already prominent in our culture when I joined Bukalapak, all we need to do was to provide a framework that can nurture this culture. For example, we built a chat bot and created a Telegram group where people can give virtual points — called high-fives — to each other as a measure of thanks for helping them out at work.

We also encouraged various knowledge & learning guilds to form and self-organize. Guilds are internal communities centered on a particular work-related domain that anyone can join to learn together and took turns to present exciting topics with each other. Anyone can initiate any guild, provided that there is enough level of interest for the subject. So far we have dozens of guilds already popping up by itself, covering topics ranging from Artificial Intelligence to Agile Methodologies to Software Craftsmanship.

Daily release trains. Since early on, we already have the capability to deploy or rollback our services to production on a moment’s notice and with zero downtime, and we sometimes do so more than a hundred times per day across all of our services. Switching to fixed release trains, thrice a day, is actually putting the brakes on our deployment frequency, but at the benefit of having more stable release checks and easier rollback in case that release went haywire.

Canary release. For each daily release, we first deploy the release to a small subset of users, less than one per cent out of the overall user base, and observe whether there are any spikes in resource usage or errors caused by that release. If the release is problematic, we can rollback that release within minutes. Our services are entirely stateless, so we had to devise a way to emulate sticky sessions in our load balancer. The adoption of canary releases is the primary cause of the significant drop of emergency incidents at M9 in the chart above.

More real-time monitoring and alerting. We already have various technical-level instrumentation and monitoring in place, but those monitoring cannot capture mistakes in our logic or presentation layer. For example, if we can gather and monitor transaction data in real-time, we will know within minutes if there is a bug in our checkout system if the number of transactions dropped precipitously. Over the past year, we have worked together with the data science team to collect billions of data points per day and build thousands of high-level data visualizations that can give us glanceable insight into the health of our system.

Use consistent development methodology. When we started our transformation, all of the product teams do not have any agreed upon development methodology, every one of them is free to define their own, or even decide not to adopt any methodology at all. The result was, predictably, quite chaotic, and it is especially hard to align any plans that require cross-team collaborations.

We decided to adopt Scrum as our methodology, mainly for the sake of better planning, predictability, cross-team alignment, and task organization, but we alter several of its practices since we deem Scrum as is to be too rigid for the rapidly changing competitive landscape of e-commerce. These alterations are inspired by the eight years of Scrum practice at bol.com, my previous place of work, which also happens to be the largest e-commerce in Benelux region.

So what’s next for Bukalapak Engineering?

Development process improvement is a continuously ongoing challenge, and we will undoubtedly keep a close eye on our engineering scalability metrics to project our scale up capacity and capture emerging bottlenecks early on.

Right now we are adopting the model of independent cross-functional teams that are empowered to a significant degree and given an enormous amount of trust and freedom to execute their vision.

This model works well even at our current size of nearly 300 engineers, but we foresee a scalability horizon looming within a couple of years as we yet again double the size of our engineering team. There are other possible models that we can explore and experiment with, and we will share an update about this in the future.

One more thing …

We are still scaling up the team and continue to hire top tech talents that can help us connect and empower the economy of millions of Indonesians. Our tech talents are a diverse mix of talents from all over Indonesia and dozens of former Indonesian diaspora overseas, many returning home for good to join us here at Bukalapak due to our purpose and culture.

Part of the reason why we can provide an exciting home for our talents, and for our diaspora to return home to, is our strong focus in building healthy tech culture by amalgamating various cultures and best practices from all over the world, gained through our ex-diaspora talents.

Interested in joining and helping us improve the economic prosperity for millions of Indonesians? Take a look at our StackOverflow page and send us your CV. 🙂

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Editor’s note: e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

 

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The hacker got through by exploiting a vulnerability in its risk control team’s second review process to access the personal funds of about 90 users

Bitrue, Singapore-based cryptocurrency exchange, on Thursday revealed that it lost about US$4.5 million worth of XRP (valued at US$0.488) and US$237,500 in ADA (valued at $0.095) coins following a major hacking attack.

The time of the breach was at 1 am GMT+8, as reported by Cointelegraph.

The company explained in its official Twitter account that the hacker got through by “exploiting a vulnerability in our Risk Control team’s 2nd review process to access the personal funds of about 90 Bitrue users”. Bitrue claimed that the breach was immediately noticed and the hacker’s activity was swiftly suspended.

Bitrue then proceeded to notify Huobi, Bittrex, and ChangeNOW (the receiving exchanges of the incoming ill-gotten funds), and credited them with helping freeze the relevant transactions and accounts, before releasing a statement to assure users that their personal funds are insured. Bitrue said that “those affected by this breach will have their funds replaced by us as soon as possible”.

Despite the hack, the crypto exchange said it will still go ahead with its plans to go live with its service functionality as soon as possible. The log-in and trading support are expected to relaunch soon, but the withdrawal function will remain offline for now.

To maintain transparency, Bitrue has provided a link to trace the flow of funds on the XRP block explorer for the public. The Singaporean authorities have also been notified to help to identify the hacker.

Also Read: Go-Jek investor Warburg Pincus sets up new US$4.25B fund for China, Southeast Asia

In 2019 alone, there have been a total of seven hackings into crypto exchanges prior to Bitrue.

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Crypto tokens can be fungible and non-fungible and understanding the difference is crucial to navigating the blockchain

(Editor’s note: This is an article from our archives which we think is still relevant)

Cryptocurrencies and crypto tokens (simply tokens) have now become household names.

Although these two digital products have gained a lot of popularity lately, few people understand the difference between the two, and they mistakenly use them interchangeably.

For the record, cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency.

Tokens, on the other hand, are a special kind of virtual currency tokens that reside on their own blockchains and represent an asset or utility, according to Investopedia. Tokens are usually defined for use on top of a particular blockchain like Ethereum.

Tokens are what we talk about nowadays in the context of ICOs, and the idea is that the platform itself provides the launchpad for all these tokens, without needing them to create their own individual blockchains.

Tokens can provide certain utility, as if they were the “currency” inside that particular platform or economy, and these are called “utility tokens”. In any such case, tokens are the fuel (the “gas”) or the price to access the protocols or perform an action.

They can also in some way be equity-linked or even debt-linked. Most tokens today are built on top of the Ethereum blockchain and comply with what’s called the ERC20 standard. Owning a token is equal to holding something which could potentially be very valuable over time in that ecosystem.

The era of tokenisation

We are experiencing the movement of #TokenizeEverything and finding digital twins for any item that exists in the real world. In the real world, not all things are commodities that have fungibility (interchangeability). Although all items belong to a category, they are not homogeneous and can be very different.

Non-fungibility and the uniqueness of each token then has an impact on its desirability — perceived or real valued. Therefore it’s a logical consequence that the blockchain space started with fungible assets, and it now is extending into non-fungible tokens (NFTs) or tokens that are not interchangeable/replaceable.

To understand the concept of NFTs, we need to first understand the difference between the words ‘fungible’ and ‘non-fungible’.

“Fungibility” in a traditional sense means that any asset or item is equal and exchangeable to any other item or asset. The classic case is fiat currencies, wherein any denomination of, suppose USD, is exchangeable to any other denomination of USD. In the case of blockchain tokens, the classic ERC20 tokens are considered to be fungible, i.e. they can be exchanged with each other freely.

‘Non-fungible’, on the other hand, means ‘that cannot be replaced’ or ‘not interchangeable’. Two items may look identical, but each has its own unique information or attributes that make them irreplaceable or impossible to swap.

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A real-life example is a flight ticket. While two plane tickets look identical, they cannot be exchanged with another similar ticket. Each has different passenger names, destinations, departure times and seat numbers. Interchanging them will have serious consequences.

Both the ERC20 and ERC721 tokens represent different use cases and hence one of them cannot replace the other, in fact, they will complement each other in the long term.

Importance and relevance of NFTs

NFTs are an important development in the blockchain space. As mentioned above, NFTs are markers or tokens for unique assets that can’t be duplicated. The control is in the hands of the owner and not the software developer when NFTs are used.

Their applications are endless. As we’ve entered a hyper digital age, blockchain-based NFTs offer a solution for cryptographically creating a unique digital item, e.g. a football card of Cristiano Ronaldo with only 100 of them being produced. The NFT guarantees that the “card” can’t be copied and shared unless the NFT itself is traded. It enables the verification of authenticity and ownership of an asset without requiring a central authority. They can be used to move ownership of diamonds, gemstone, limited edition gold coin or bar, art pieces, instantly on the blockchain network.

NFTs are also transformational in the gaming world. Imagine games like Pokemon Go, that took the world by storm. In a non-fungible token sense, each Pokemon would have a unique ID to it, and would be stored on the blockchain.

The most popular use case is CryptoKitties. It is a game centred around ‘breedable’ and collectible creatures, called CryptoKitties. Each cat is one-of-a-kind and 100 per cent owned by you; it cannot be replicated, taken away, or destroyed.

Decentraland is another success story in the NFT space. Decentraland is a virtual platform owned by users, who can grab a VR headset or use their web browser and become completely immersed in a 3D, interactive world. Here, the user can purchase land through the Ethereum blockchain, creating an immutable record of ownership. With full control over their land, users can create unique experiences; they can go to a casino, watch live music, attend a workshop, shop with friends, start a business, test drive a car, visit an underwater resort — all within a 360-degree, virtual world.

Non-fungible tokens potentially have a lot more applications. For example, they could  store the authenticity of real world assets like art. A non-fungible token could be created and tied to a real-world asset, such as a priceless piece of art.

In this way, the authenticity of the artwork would be immutable and infinitely more secure. There would be no way for forgers to counterfeit the art. In the same way, non-fungible tokens could be used to store birth certificates, identities and other unique information.

Manufacturing and supply chain are the other important industry verticals where NFTs can be used. If products are assigned an NFT at the point of manufacturing, their tracking and ownership can be easily carried out, during the supply-chain cycle and beyond.

Incorporating NFTs in some identity management solutions can also be quite useful. For instance, issuing tokens for entrance into sensitive facilities/institutions can be facilitated with NFTs.

All in all, the issuance, tracking, and storing of securities can be very easily managed using NFTs. Presently, large and highly ‘available’ databases are used to track issued securities that are connected to a number of other institutions like banks that need that information. Even the process of data collation and auditing of these assets can be made more efficient by using NFTs.

Having said that, NFTs are not meant to replace fungible cryptocurrencies like Bitcoin or Ethereum. Fungible tokens will continue to stay and people will continue to use them as a transaction token. However, what will drive a NFT in the coming years is the fact that real world assets and its unique digital representation and identity can now be on the blockchain.

How NFTs will impact various industries

Although NTFs will simply be a different digital asset class category, its impact on the application infrastructure will be wide reaching. NFTs have already taken the crypto world by storm. Several ICOs have already considered, or are considering to use NFTs, to supplement their tradeable ERC20 tokens.

Similarly to how security tokens are impacting change, NFTs will have an impact on the workflow and value assessments across the industry — from exchanges to wallets to marketplaces.

As usability improves, the idea of a deed to a real-estate property could become passé. The deed will be the NFT.

Of course, losing the private keys to access that NFT is a problem, so workarounds still need to be figured out, but the opportunities for bringing offline verification into the blockchain realm opens up endless possibilities, e.g. vehicle sales via NFTs, real-estate, rare pieces of digital art (paintings, photographs, music), etc.

NFTs will also open up the realm of asset tokenisation even further.

There is a nascent but growing field of activity around NFTs in financing. In the case of raising funds (via security tokens or utility tokens) for ICOs where the underlying assets have some uniqueness, NFTs make sense.

There is also talk about Initial Debt Offerings (IDOs), whereby the projects can crowdfund via unique debt-contracts represented by NFTs. Each layer of debt or each slug of equity in a stack may be better traded and recorded with NFTs.

Limitations of NFTs

NFTs are still a nascent technology standard, and the adoption is not widespread. In addition, the ability to “marry” an NFT to a physical object —  for example a QR code sticker or a wrapper like a smart container — is still too simple and prone to failure. Until better solutions are mature, the NFT market will be limited to more digitally native assets.

Another key challenge is the extra effort and understanding needed to create its adoption. However, one good news is also the emergence of platforms like 0xcert which allow for plug-and-play creation of NFTs, making experimentation easier.

Moving Forward

Last two years have seen the fungible token standards raise billions of dollars of capital and trade these tokens are crypto currencies.

The way the crypto markets are questioned right now and dropped in value will demand crypto assets that represent tangible value to keep the market interested and prove the blockchain applications.

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This will be the next wave in crypto markets as people see NFTs as something of unique and tangible value which can be brought onto, and traded in, the blockchain. There will definitely be a lot more ICOs adapting NFT standards vs fungible tokens standards.

NFTs need the right environment to be deployed. While gaming is a different industry altogether, real world assets often function in mission critical environment and cannot compromise on security, scalability and immutability.

NFTs are an extension of the token economy that has the potential not only to achieve mass adoption of blockchain and cryptocurrency, but also significantly expand the market from utility tokens and payment tokens to object oriented.
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[e27 talked to many cryptocurrency and blockchain experts, including Pankaj Jain (formerly with 500 Startups), Shaun Djie (Co-founder of Digix), Gaurang Torvekar (Co-founder and CEO of Indorse), Philipp Pieper (Partner at Swarm Fund), Atul Khekade (Co-founder of XinFin), Karan Bharadwaj (former CTO at XinFin), Jehan Chu (Co-founder of Kenetic Capital), Nitin Sharma (angel investor), and Sandeep Phogat (Founder and CEO of Panaesha Capital) for this article. We would like to thank them for their expertise.]

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