There is still uncertainty in the market, but this does not change the fact that cryptocurrencies will revolutionize numerous industries. As part of my series “Real World Applications of Cryptocurrencies”, and follow-up from my previous post on Video Game Virtual Goods, which you can find here, I will be discussing how Retirement Plans will be disrupted by the emergence of the blockchain and cryptocurrencies.
Retirement Plans — Auctus (AUC)
Most individuals pay contributions to build up a pool of funds, in order to provide an steady income during retirement. The retirement plan industry may not be the fanciest one out there, but it’s massive — according to a 2017 Willis Watson Tower report, the global institutional pension fund assets in 22 major markets were estimated at $36.4 trillion. Despite how enormous this market is, there are a number of drawbacks in this sector, including:
- Centralized — Members’ sensitive personal and financial data are stored in centralized systems. This increases the risk of security breaches and data manipulation. Over the years, we have seen very high profile data breaches compromising personal information.
- Fraud —I cannot emphasize enough how serious, and frequent, fraudulent activity has been in the industry over the past few years. Despite it being heavily regulated, there are still numerous reports of pension scams, in both developed and developing countries. Just recently, in the UK, as many as 245 people have lost an average of 55,000 GBP each, after falling victim to a series of pension scams. The BBC has an informative article about it here.
- Outdated Infrastructure — Although a lot of retirement plan providers have existed for many years and have a rich history, most lack innovation and flexibility. Over the past few years, peoples’ lifestyles have changed. People change employers more often and move jurisdictions more frequently; something the current systems are not set-up to accommodate for, i.e. easily moving funds from one provider to another.
- Inadequate Communication — Usually this is a major friction point between providers and members; members only get infrequent updates (i.e. a yearly report) and many times lack transparency. This leads members having a sense of not having control of their retirement savings.
- No/Reduced Payouts — The current centralized systems have great risks that could lead to reduced or no payouts. For example, in 2013, there was a “haircut” of 47.5% on Cypriot bank accounts holding 100,000 EUR or more in the country’s two largest banks. This directly impacted pension funds as their deposits were levied and consequently couldn’t payout their members.
- Operational Costs — Expanding on the inadequate communication point from above, more often than not, members are not aware of all costs involved. They might be aware of asset management fees, but there are many more they aren’t aware of (and probably haven’t been informed about). These may include, transaction fees, administration and reporting costs and many more. This leads to reduced net investment returns and a lower accumulation of funds to be distributed during retirement.
Enter Auctus (AUC).
Auctus’ mission is to put retirement savers back in control of their retirement plan, by offering access to a global investment platform that allows users to create optimized portfolios of bonds, stocks and cryptocurrencies, by providing the information needed to take well informed decisions, by using blockchain to increase transparency and automation, and ultimately increasing trust towards the chosen retirement plan.
Auctus is building the worlds’ first retirement plan platform, based on the Ethereum blockchain. The platform allows retirement savers to create diversified portfolios, consisting of traditional (tokenized) asset classes and cryptocurrencies. Using a variety of sources (financial experts and robo-advisors), it provides retirement savers with all necessary information to take well-informed decisions for their retirement investment plans.
The platform will provide specialized portfolio management services. It will also allow an aggregated view of all retirement savings (i.e. containing IRA/401k plans, voluntary traditional retirement plans, cryptocurrency wallets, etc.). By having everything aggregated in one place, it allows retirement savers to take well informed decisions and plan professional long-term strategies. You can find more details about the platform, here. You can also try a demo, here.
Auctus aims to solve (and improve on) the issues discussed previously, in the following ways:
- Transparency — By moving onto the Ethereum blockchain, the project inherently becomes more transparent, solving a number of issues along with it. Firstly, financial expert suggested portfolio allocation and robo-advisor predictions will be permanently recorded which makes them easily accessible and open for comparison. Secondly, this increased transparency will allow retirement savers to know exactly the costs involved.
- Governance —Since everything is programmed into smart contracts, regulators, and others, can easily run audits and participants of the platform can gain influence in the decision-making process_._
- Safety — Auctus will provide immunity against fraud as smart contracts on the blockchain can be audited and expose fraudulent activity much easier than current means. Additionally, due to its decentralized nature, data stored on the blockchain will be much more secure than centralized databases.
- Globally Community Driven — By having a global platform, this will enable sharing of products and ideas from all around the world whilst still adhering to local customs or laws. Regardless of where you reside, you will be able to create or purchase tools and advice without any middlemen in-between.
Below you can find an excellent short video from the Auctus team, giving an overview of the project.
How are the AUC Tokens used?
AUC tokens will be mainly used for a couple of reasons:
- Access and platform usage — In order to use the Auctus Platform (i.e. create an account, start saving for a retirement, etc.) users will need to hold a certain amount of AUC in escrow using the platform’s smart contracts.
- Platform Currency — Tailored recommendations (how much to invest and asset allocation) from human experts and robo-advisors will be payable using AUC. Additionally, services and tools (i.e. video consultancies and platform plugins) can be negotiated using AUC.
The illustration below shows how the tokens are used on the platform.
Auctus has not launched their token yet. You can only purchase Auctus Tokens (AUC) during their Initial Coin Offering (ICO) which is dated for the 27th of March. You can find more information about their token sale and sign-up for their ICO, here.
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BTC: 395JpxqaQLVYP2cP4uVMDBPPArdtdKBfZkBCH: 181FSPLrFWVK3Tpfmev678pLrUa2KPeoFhLTC: LgJw5vJo2ExXFTQaWuLJVbRtqDiscXNG7UETH: 0x4c7195E074cf0Ab6F77Bdb7C97Fd2567066Bb712NANO: xrb_1q8ejx1ifrfss4bh7raieieybnqoy4ocwzf8dn4zh3gj1rq9a1pgs9ipq4h7XLM: GB64FOA63UN4OBRF76JPCVVVFZ424U4CD2AQCJXJY5SY7IX7GRWHWYLSNEO/GAS: Af1igVZ5GP6VDBE1MWdM9ovSeVq7wCs3zA**IOTA**: QNRFWZROPTRTZRGOYGAPXCKOFMNANIZIMYJASSDEMUIGZXUSB9EYDAJM9EFDGZZDOGOBQPTGRCLQIXPAI
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