The New Financial System Decentralized Transcript Transcript

Speaker 1: (00:10)
Um, my name is Greg made, I'm the director of the OACD. I'm responsible for, um, finance and enterprise affairs. I've been there a year. Prior to that, I was the chairman of Australian securities commission and, uh, and also the chairman of IOSCO, which is international organization of securities commissions. And before that I was an investment banker on wall street for 30 years. So I've gone on both sides of the street. Um, so one of the things that the OEC D that I'm responsible for is blockchain policy and we've just set up a blockchain policy center. So it's an area of interest to us, uh, on the issue here of decentralization and finance happening. Um, I think, well, we've actually, it started, if you think about really before blockchain is platforms of things like P2P lending. Okay. And I think blockchain is somewhat accelerated it frankly, um, at the OACD we acknowledged the trend and really what we're aiming to do is to help governments respond to the opportunities and challenges.

Speaker 1: (01:09)
Uh, and to that end, uh, in September we had a blockchain policy forum and we had something like 1200 attendees, uh, from 60 countries, uh, from both industry and policy makers. And we had interestingly 25,000 people online. So there's a lot of interest in this, uh, this area. Um, but our priority is to cut through the hype and to make a sober assessment of really what the opportunities and challenges are. So we have actually done a series of reports on blockchain, blockchain, ICO, which we released last week looking at blockchain in equity markets, uh, looking at in transport, um, you know, really just examining it in a number of different areas. So, you know, based in a reports analysis to date, we've seen a technology that I think is very much in its infancy. Uh, there's, there's plenty of use cases and pilots, but there's very few, if any, commercially scaled solutions.

Speaker 1: (02:08)
And I'll probably make just two brief points. One, blockchain and DLT are responding to an enabling demand for de-centralization. They're not driving it. There's a demand. This is demand driven. Okay. So businesses and consumers want more efficient ways of doing things. And often that comes also from a deficiency in trust in the financial systems intermediaries. That's the first point. The second point is that the totally decentralized control by everyone and no one blockchain networks which have sort of come to dominate the debate like Bitcoin and other cryptocurrencies are probably not where the future of block chain lies at all. That's my view. And I've been looking at this for a number of years now, but as as a a market regulator and now they always say D and I think after all, you know, you think about Bitcoin and others, you know, other, other cryptocurrencies that don't anything behind them other than user demand.

Speaker 1: (03:02)
Um, I think largely today what they largely based on is expectations of future value. Uh, and put it another way, just meet a speculation. So, um, when it comes to cryptocurrencies, the one thing I think that is very interesting is the prospect of central bank digital currencies. I think they offer many benefits and I think they will appeal to much more mainstream use without the downsides. Another sort of, if you want drew to that. I think stable coin, uh, you know, basically tokenized, um, Thea currencies I think is an interesting phenomena if they're properly structured. But I, I must say, you know, I do agree with professor [inaudible] that, you know, I do see it, um, uh, the central bank digital currencies, it's really just frankly a matter of time. It's something that central bank, uh, central banks had been looking at for a number of years, five years.

Speaker 1: (03:52)
And I know from my time co-chairing CPNI Oscoe, which is central bank payment systems and market regulators. It's not something new for them in terms of looking at it, but that doesn't mean that blockchain has no place in the financial sector. Uh, black shine, you know, can be instant. It can be pre programmable and it can be predictable. And I see a lot of potential efficiency gains, uh, but I think it's still, um, I think it's one of its benefits is that it is really a good way to govern interactions between parties such as, uh, competitors or where they don't perfectly trust one another. Uh, but what that means is that it's all about the governance of blockchain and DLT networks, which I think becomes sort of, if you're going to have trust, you've actually got to have good governance. And that's really central important.

Speaker 1: (04:40)
So blockchains in finance are going to be more centralized then basically big, slow open networks which rely on, uh, uh, mechanisms to sort of between anonymous parties. I think what we need to do is start paying attention as to who owns and controls the networks and what decision making protocols are and whether they actually do what they climb. Cause I think this is actually a lot of gaps. So on that frankly. Um, but at the end of the day, uh, blockchain may well be a glorified spreadsheet as professor Ruby only cited in his article. And actually, yes. Um, but, um, I don't think, but is that, uh, I don't think that's a, I'm actually praising, you know, um, it's, it's, but that's not a bad thing. Okay. Because in a data driven digital economies, most of the economic value will come in some form of glorified spreadsheets, some, some Connor or another.

Speaker 1: (05:37)
So, but you know, we think about it might be a spreadsheet, but, or where you might describe that, but it's got pretty good enhancements when you think about basically the big thing for spreadsheet often is the fact you can't trace what changes have occurred in it with basically a blockchain. Basically you can actually follow the changes that have occurred in it. Secondly, we know that with the encryption it's trusted, it's trusted, it's a trusted spreadsheet. So, you know, I think the two arguments there are reconcilable frankly, and as we know, it just is, has potential to be such a powerful tool. And I think we've, you know, we've just got to make sure that we remain realistic about what it can or it might do. Okay. So, you know, I think it has still has, we're in a very, I think, you know, as many people say, I think we're very much in a journey. Uh, people would not be spending billions of dollars developing new blockchain business models. And I can tell you if there wasn't something there in terms of efficiency. So, you know, I think it's going to evolve. Uh, I think the next two years I think are going to be, we are going to see probably of evolution of more, um, Skylar juices like the Australian stock exchange clearing and settlement system, but it's just going to take time.

Speaker 2: (06:51)
Um, Lawrence White from George Mason university. Uh, the, the question our panel is supposed to address is, is dent decentralized currency and financial system viable. And I may be the only one here, but my answer is yes. I think we have plenty of historical evidence on that. I mentioned last night that, uh, my research, uh, prior to the invention of Bitcoin was on private decentralized currency systems. Uh, in an era before there were central banks. Uh, and the systems were competitive and they were stable, uh, in countries that had, um, just a minimum of, uh, legal restrictions on. So in particular, I studied the system in Scotland. Other people have studied Canada, Sweden, a number of other places, Switzerland that had very successful what were called free banking systems. So we can have a decentralized system that there was a, a common monetary standard, but it was not issued by any one party. Right? The production of gold is distributed around the world. No one party controls it. So that makes it a decentralized system. And then the banking systems on top of that were decentralized. Commercial banks issued their own claims to gold in the form of bank notes.

Speaker 3: (08:10)
Mmm.

Speaker 2: (08:11)
It developed into a very sophisticated system. Uh, wiring money began under the gold standard. In fact, it was the killer application of Telegraph, uh, to move claims to gold instantly from city to city. So there's, there's no technological barrier presented by the monetary standard being a commodity rather than being a Fiat unit or being a cryptocurrency. So I naturally took great interest in the development of cryptocurrencies because here's, uh, a political monetary unit again,

Speaker 3: (08:48)
uh, [inaudible]

Speaker 2: (08:50)
coming on the scene. And the question is, will it attract users? And it's a very difficult thing to launch a new currency and attract a critical mass of users because there's a massive network effect in everybody being on the same monetary standard. And that's why it became a worldwide gold standard because it paid more and more countries to join in. So it's going to be very difficult to shift to one world monetary standard, uh, from where we are today. Uh, there in a sense, too many competitors to be the new standard. Uh, no, one of them is Bitcoin. Of course it's ahead in the cryptocurrency space, but compared to a Fiat currencies at its peak, uh, it at one point reached number six, uh, among world currencies, but of course it's much lower now.

Speaker 3: (09:47)
[inaudible]

Speaker 2: (09:48)
so because of the incumbency advantage of a existing Fiat money units, I don't think we're going to move to a decentralized system unless the public demands it, unless there's a political demand for it. Uh, and if we look at where countries have changed their monetary standard without the government, uh, sanctioning it, it, it's in cases where there's a hyperinflation, people will dollarize themselves, but it takes a very high inflation rate for people to make it worthwhile to, you know, be an early adopter when you want to use the money that everybody else is using. Uh, so absent a, some kind of hyperinflationary or at least chronically high inflationary crisis among the Fiat currencies. Uh, I don't see spontaneous adoption, but in a sense that's a good thing. So as long as central banks control themselves, they can maintain their market share. But I think it's important to maintain openness to competition among currencies.

Speaker 2: (10:50)
So in any country, not only should you be allowed to use the government's currency, but the currency of any other government, uh, around the world, you should be free to use gold backed currency. You should be free to use cryptocurrency, uh, and let the superior system when, if there are other features besides having commonness be having a critical mass that are more important to people, for example, privacy, then let them express that preference in the market. Um, and I think generally in the, in the debate over a crypto currency, there's kind of been two extremes. Uh, there's been, uh, the famous phrase attributed to Paul Krugman, Bitcoin is evil. Uh, and the phrase, uh, associated with professor Roubini Bitcoin is a mother of all scams. I think that's a little too negative. I think some of you may agree that it's a little too negative. On the other hand, I have my friends on Twitter who are Bitcoin maximalists whose motto is Bitcoin is flawless and even its mechanism for correcting its flaws is flawless.

Speaker 2: (12:00)
It's so flawless. Well I think, uh, actually the, the alt coins are the newer second generation, third generation cryptocurrencies actually do offer improvements on the protocol, but they're at a disadvantage because Bitcoin has a much larger mass of users right now. So I think we need the, the truth is somewhere in between those two extremes. The truth is we don't know what the best money going forward is going to be unless we conduct the experiment and let there be competition among various models and let people sort themselves out. I don't think we're in danger of sort of tipping a radically from currency to currency because there is this important network property of being on the same monetary standard. But central banks should face competition, uh, for they have to maintain their dominant position by earning it. I think that's the important lesson

Speaker 4: (12:57)
I do. I do. This is your slide is some centralization issue, but do you comment on this?

Speaker 2: (13:03)
Well, so this slide was a critique of central bank, digital currencies, so-called central bank retail deposits, and just making the point that if all the retail deposits are in the central bank, then all the loan decisions are in the central bank and that's not something I think we want a central banks currently invest in treasury bills and mortgage back securities in the U S more broadly in some other countries, but we don't want those kind of allocation decisions being made privately. We want business loans being funded through the intermediation system in a decentralized competitive way so that if you want to start a business, you don't go to the ER or you want a loan to finance your business, it's already up and running. You don't go to the central bank with your hat in your hand and if they turn you down, that's it. You want to be able to shop around among different retail banks, so any central bank retail deposit system that doesn't preserve that kind of competition in intermediation is very dangerous.

Speaker 5: (14:15)
Yeah. Let me first before I say what I want to say as well to [inaudible]. First of all, I agree with everything you get. You said accessible. The last point, you know, and uh, that is uh, you know, the fact that there is a central bank digital currency as a mean, that all the other businesses including particular credit or location, it's going to be taken over by the central bank. It is, all those activities are going to remain within the private banking system and the private banking system as will pointed out [inaudible] longtime friend and a [inaudible] to read to that I saw you go up. So it's like a child to me, eh, eh, so, eh, eh, eh, eh, eh, the, eh, eh, all those other activities except the one of eh, just uh, providing the means of exchange are going to remain within private institutions and in their own banking system, which led but may not be attainable, eh, politically speaking immediately, but maybe 10, 20, 30 years, God knows when nobody knows, eh, maybe attainable at some point, which is the most efficient one.

Speaker 5: (15:41)
Then there's going to be a complete separation between the business for providing a stable nice of payment in terms of a purchasing basket that people care about, not in terms of gold or silver or diamonds or all sorts of gimmicks of this, of this type that were good at the time. At the time. I think actually in the 18th century because all the sophistication of the financial networks that we have today did not exist. And people did know about it, but eh, you know, so they, so they, they, they use gold because it was rare. I think. Like that is what, this is what nature sort of provided virtually as a safeguard because it was rare because it was very hard to actually dig the gold and things like that. So it was a natural limit. Now instead they said, you know, this limit is imposed today by the miners of Bitcoin, by having, by issuing it one slope at the beginning, eh, you know, eh, eh, fixed amount and letting him know, if you believe that, uh, you know, that, uh, you know, this amount is going to be fixed forever.

Speaker 5: (16:55)
Well no. Is it going to be fixed for who knows what that is? No, government is going to last for forever. Is there any private entity that is going to last forever? Now I think, you know, we heard a lot of arguments here about eh, eh, you know, Y eh, you know, a central banks, uh, you know, could be manipulated the store, they could be in a meeting, manipulated politically, uh, and, uh, the risk pressure, political pressure on set for bags. It's also to the risk police were Porsche or these were, they also checks and balances. What are the checks and balances on those say 150 minus of Bitcoin, eh, that, eh, hold to some statistics about eh, eh, subject like between 30 and 60% of the total supply of Bitcoins in the world. Who knows who there are, who knows what the, who, who they are. We don't even know their identities. They are not elected. They are not under any kind of supervision. So there are risks though. And I'm told by one by one of the guys here who comes on the technical side that, uh, both the, you know, the blockchain can also be hacked. Okay. Can be hacked. [inaudible]

Speaker 5: (18:27)
it is, uh, you know, maybe difficult but not impossible. There's a small probability that it does happen. So there are risks here. There is the, I think it's very dangerous and you said it yourself, you know the truth there. On the one hand, you have those, eh, eh, you know, those, uh, uh, [inaudible] of, you know, of this music knowledge and fucking like that the thing that is going to solve all the four walls of the world. This is nonsense. On the other hand, you have all those, let's say they say that, uh, eh, you know, that this is really just a water the or something like that. This is also exaggerated to a large extent. The truth is in between. So this brings me to really to the relay point that I wanted to make. And that is from a welfare point of view. And I think as an economist, I think about the welfare of the entire society.

Speaker 5: (19:31)
Is the room both for supply of eh, eh, eh, no. First of all, let me go out warranty. I think that the big competitive advantage of the blockchain technology and all those FinTech and things like that is not so much in the area of supplies and alternative to fire money, whether it is in the form of paper or in the form of digital currencies. I think it is in the form of actually providing easier access to banking services in countries in which most of the population doesn't have easy, easy access for credit like China, like Africa and things like that. This is a tremendous revolution for those countries and we will come from the developed world. We don't appreciate it, but this is really for them a major kind of thing. And this is going to have I think very important repercussions in the world that this is one thing to look that is, that is very important.

Speaker 5: (20:42)
But also, you know, it's also, it is also going to make the business of eh, eh, transacting in all sorts of financial assets, risky assets, and so on, much more efficient and also, eh, the costs are going to come down. So I think this is another thing, eh, eh, eh, in terms of, eh, so, but it does offer, eh, uh, you know, providing a safe means of payment, eh, that has those three characteristics, you know, stable, uh, and a numeraire and universally acceptable and things like that. Eh, uh, you know, the seems that a central bank money, and I agree with that with the wheel, eh, you really dominates everything else. And, uh, my advice to, uh, you know, to, to, uh, you know, to those people that deal with those things, which is most of the audience over here is you put your energy mostly in this direction, rather the direction of replacing, eh, you know, the miss of payment.

Speaker 5: (21:56)
Because this is where your comparative advantages, uh, you have the competitive advantages in all those other types of other types of things. Eh, eh, this is, you know, 1.2, that's a group, eh, with the separation, eh, number two, eh, is, has to do also with the, with the, remember that the technology, you know, that is, there are risks in the technology, eh, you know, somebody being completely anonymous may have some advantages, but, uh, as the [inaudible] said, you know, no government is going to tolerate complete along on a nymity for good reason. He gave, because you know, this is going to be basically the first that are going to use that as a way to using that are basically, eh, you know, the underground, the economy and things like that. And we see that the, uh, the, the, the tendency in the world is towards having a tighter, uh, it's a, you know, tighter restrictions on the, eh, eh, on abiding with tax laws.

Speaker 5: (23:10)
And there is much more exchange of information, eh, even between banks, you know, banks of course, to existing banks, our course to actually, eh, task, meeting formation and so on. So, and I think to a large extent, this is adjusted by the, you know, sort of, they justified the trend. Now this brings me to the question of what are desirable, the desirable limits, eh, between the activity of eh, eh, you know, often central bank, initially currency and between, uh, eh, the road, the private, eh, the Euro private digital currency, providing some sort of means of payment. I think that, you know, they, they, they form a word for point of view. Eh, they could coexist, eh, one with the other and, uh, various ways, which one can, eh, eh, conceive off, many of which have been discussed by the wheel. Now, what are the main advantage of a private digital currency?

Speaker 5: (24:23)
Eh, eh, eh, eh, you know, there are very cost effective, uh, particularly as far as far as conduction circumstance. Uh, but, uh, you know, but, but this kind of thing can also really be, uh, received for a central bank digital currency. So again, the central bank digital currency here dominates, eh, where, where the competitive, where the, I think, uh, eh, there is a benefit to welfare benefit, general word for benefit of eh, eh, eh, of the activities of eh, eh, blockchain based or some other system based, uh, private, uh, companies is the competition to banks, eh, you know, banks today, uh, basically, uh, taking huge commissions, particularly, particularly as far as uh, eh, converting money from one currency to another currency commission of 1%, 2% or something like that. And, uh, I think many of those companies that provides the provided means of payment that doesn't, it is not necessarily linked to a particular currency that can be redeemed very fast at low cost for familiar, that is going to bypass, eh, a lot of those, eh, eh, which I think are to a large extent, monopoly rents of the banking system.

Speaker 5: (26:04)
Many of us banks are really reaping, eh, eh, you know, monopoly rents. And, uh, I think this is a, you know, this is an advantage. And, uh, uh, okay. So basically, and then I mentioned already, you know, the, the, the, I think this was the most important thing, the access that you know, you don't with, uh, you know, in China and in Africa and in many other countries where there is a large fraction of people that don't, they've never had a bank accountant who were excluded basically from the financial market. They finally have a, an access to financial markets. And as a, uh, not only the financial markets, they also have, they were excluded from credit. And I think of people in India, people in India, you know that people, the very poor people who have a small business, very, very minute business to make a, you know, who have hardly any money to buy, eh, to, to buy the goods that they have to sell during the day.

Speaker 5: (27:06)
They don't get their dog, they cannot get your credit. Today we did these new pints of money, private money they can, they have access to some very low, but for them, very meaningful amount of credit. And this I think is a, an achievement of those private money. So I think know there is room for both, uh, you know, there is looming, particularly in, you know, in counselors that are developed like a United States, Europe, very sophisticated financial markets and so on. I agree completely with what we are. We are saying that it goes to other countries, eh, eh, you know, those, eh, eh, you know, the, the, the development of lost, uh, private monies that are based on digital technologies is really a big benefit. The big benefit, uh, for those, for those populations. Now, whether ultimately they're going to be carousel for bank or something like that remains to be seen. Maybe they will, maybe it's a good year. Maybe, you know, we see what happens. I mean, in the future. Well, I have another completely different segment of things to say, but man, maybe I'll leave it for later this time. So I'll stop here.

Speaker 4: (28:31)
Thanks Alex. Uh, hi team. Uh, thanks. Thanks for having me. Thanks. Uh, sound is good. So, uh, we are discussing, uh, viability of decentralized financial system who will benefit, who will lose and how it shall be managed, especially how supplies should be measured. What are your thoughts on this?

Speaker 6: (28:57)
Well, I think everybody benefits. Um, having an economy that is, um, much more frictionless, much more global, a much more open, the decentralized technology is going to be, um, uh, very, uh, fundamental to this. I think we've got an opportunity now, um, to make a great leap where humanity can make this great, great leap forward. And, uh, and, and we, we, um, and starting with Bitcoin and the associated technologies, um, they have now made it so that, uh, we have a global currency. I mean we've, we've got great communications across borders, but now we've got a global currency and it's the beginning of us thinking about the globe as one world. Um, I think we've, we've always thought in terms of tribalism or, or five terms or, um, geographic borders and suddenly there's this new opportunity to at least starting with a currency with Bitcoin.

Speaker 6: (30:13)
Uh, have a currency that is global and open and, um, not tied to any, uh, geographic territory. And then the other kind of great thing about it is think of all the friction that happens when you do any kind of business cross border. There's the customs, there are, um, uh, their, their currency transfer, uh, payments. There are, uh, the banks take something that, I mean we, um, friction in commerce creates, um, less, well, less friction and commerce creates more wealth for our society and more, uh, liquidity creates more wealth for a society. And we have, uh, one of the great opportunities in the history of the world to, uh, to create a much, a much more frictionless currency and, um, a much better way of doing business. Um, and that, that opens up the world in a, in a lot of different ways. And when you talk about winners and losers, I, I think that temporarily, um, people are going to have to adapt and change just as they are.

Speaker 6: (31:40)
I mean, I think one way of looking at it as like a AI is going to take everybody's job. All of our jobs, every single thing that we do that is mundane, and we do it over and over again, artificial intelligence is going to take that job. And, uh, and if that's the case, we're going to be in a, um, in a world where we have to start to think a little more creatively, a little bit more, um, openly. But the good news is that those mundane jobs are going to be done by robots and, and computers. And we're not going to really need to do them. And, uh, but they will still get done. And so that allows us the freedom to think and create and drive progress forward. So this is, this is really the great, is our great opportunity. And those governments or banks or whatever that are, that are resisting this major change are, uh, are, are putting, um, speed bumps, uh, in the way of progress and you, and a major transformation of humanity. Uh, so, so looking at it as winners and losers, we all win with better technology.

Speaker 4: (33:06)
That's a Samsung Nouriel Roubini. Uh, it's, uh, just presented, uh, that, uh, central banks can, uh, manage, uh, millions of accounts directly without private banks because of artificial intelligence. Uh, and there is no need in blockchain. So, uh, customers can open accounts in central banks and transmit to money, uh, within the central bank. So there is no this problem of layers. Uh, what do you think about this?

Speaker 7: (33:41)
Right.

Speaker 6: (33:42)
So, um, I think the world moves away from centralized banks. I think the world moves toward decentralized currencies. Um, they, there are going to be, um, uh, so the centralized banks and, and the, I mean, I S I think you're still thinking in terms of of five terms and tribalism and, and geographic borders where, where we now have the ability, uh, to transcend those borders and to create a, uh, a world that is much more open and dynamic and, uh, and free of that, uh, free of the, the friction that's created by individual countries, each having different regulations. I actually think those countries have to, um, are going to have to compete for you and me. They're going to have to compete for all the great entrepreneurs of the world. They're going to have to compete for all the great, um, the all the capital of the world.

Speaker 6: (34:48)
They're going to have to compete for all the great minds of the world. And, and in order to compete, they need to start thinking in terms of how do I serve my people rather than how do I control and regulate my people. Um, you know, finance started in China and it was got to be a $10 billion business. And China said, we're, we're restricting Bitcoin, we're regulating Bitcoin. We're creating a, uh, a situation. It's very difficult for anybody to trade Bitcoin. And so finance just moved. Uh, they just moved to Singapore and then Singapore started to get a little heavy handed and they moved to Malta. I, I get the feeling that these governments are necessarily, um, they think that they're still sort of controlling a geographic area. Uh, but I, or some of them do, some are recognizing that this is a major opportunity and they're opening their minds.

Speaker 6: (35:55)
Uh, Japan for instance, uh, said, uh, Bitcoin is a national currency and here's how you do an ICO. And they are attracting all the great entrepreneurs because they know that this is an opportunity. And they're thinking, Hey, 40 years from now, we, we think this is bigger than the internet. 40 years from now, the big winners, the big economic winners of the world, or they're going to be the ones that open up and, uh, and, and start thinking of the world as you know, one globe. And, uh, and, and think about this, the Estonian government came up with this idea of the governance and it's this, you can, you can take, um, you can become, I'm a virtual resident of Estonia. The prime minister of Estonia came to Draper university and said, here, um, you're the third virtual resident of Astonia. He was in the Silicon Valley when he gave me that.

Speaker 6: (36:59)
I didn't have to go to Estonia to get my virtual residency. So he realized that people are mobile and that geographic borders are not as important as they were when, when we had limited resources and we all had to fight against each other. So for those limited resources, um, now he's thinking, Hey, I'm going to come compete, uh, cross border, uh, to provide the best government services available in the world. So he's looking at government the way a business looks at their, um, looks at their customer and saying, Hey, what can we provide to these people? And, and a business is not limited by geographic borders. A business can go, can permeate all the borders. Um, I can use Uber almost anywhere. I can. Uh, I can, uh, Skype to you and almost anywhere. And [inaudible]. And so, um, governments have been very slow to recognize that this is an open world and you and most of government services can be provided virtually. Um, even security, uh, with all the cameras around government services can be provided, uh, virtually. So you can get your medical insurance that could easily be provided by somebody outside of your borders. Um, your pension or your social security could easily be provided by somebody outside of your borders. And I believe that there are going to be governments that are created that don't actually even have a landmass,

Speaker 8: (38:44)
uh,

Speaker 6: (38:45)
but they're going to be able to provide things like very low cost healthcare and um, and new con, new forms of insurance. And,

Speaker 8: (38:55)
uh, uh,

Speaker 6: (38:57)
this is, this is, um, this is one of those times that, um, and I know there's some great EQ and economists on the panel here. Um, this is one of those times where, uh, the economy can take a step function up and the global economy I believe, can, um, can grow at an unprecedented rate,

Speaker 8: (39:21)
uh,

Speaker 6: (39:22)
as long as w and at least it will grow at that unprecedented rate, uh, in, in the regions where governments are recognizing that they have to, uh, perform to attract people.

Speaker 9: (39:41)
Thank you. Any comments? Hold on to it. Yes, please. Can I make some observations? Because I think there's a lot of confusion and misunderstanding. No. First of all, everybody's in favor of a competition in the provision of financial services. And I'm, the only bond I made was, there are some benefits. If you ever send a bank digital currency of having one piece, we're very small piece 1% of the financial services having a common numeraire unit that would count a means of payments. They will store a value in purchasing power of a goods and services is already, now we have a, you know, Fiat currencies, now you're going to make it digital. Everything else can be private and it'll be remaining private and competitive. And actually that's going to avoid if you have an auto banking. Many of our problems that we exist today have a fractional reverse banking system.

Speaker 9: (40:34)
So nobody disagrees with private competition. So you have just one piece payment system might have some economies of scale of having it, and you don't need 100,000 workers. You may need a thousand of them in the central bank or less without maybe nobody. So it's, it's gonna be much more efficient in that garden one. Secondly, I think there is a lot of, uh, how to say nonsense about these things, about this centralization from blockchain or crypto. First observation. Uh, Vitalik Buterin will create the, the Ethereum says there is an consistently need. You cannot have at the same time scalability, decentralization and security. That's a fundamental TRM. A Bitcoin might be a decentralize but it's not scalable. Five transactions per second and every solution so far that has been discussed that provides scalability leads to massive concentration when you got to move from proof of work to prove a stake actually love massive concentration.

Speaker 9: (41:31)
Uh, so that's a fundamental. So I think there is a lot of delusion in talking about decentralization is now going to occur. Secondly, there's a lot of talk about the centralization but in crypto there is no decentralization. The minors are all centralized, half a dozen of them control already. All of the mining of Bitcoin eater and nothing else. And by the way most of them are in countries like China, Belarus, Russia that are becoming national security problems for the white house. Serious issues about that. So there's massive concentration and once you're moving to proof of stake actually is going to be much worse because the more you have stake, the more you have oligopoly, concentration, monopoly. So you have massive concentration, massive centralization of mining. You have massive centralization of all the exchanges. 99% of all transaction in crypto occur in centralized exchanges. They've tried hundreds of these decentralized exchanges that all going bust, completely going bust.

Speaker 9: (42:31)
None of them is going to ever survive in a rough format. I'm not going to go into the technique as a tale. You have massive centralization of wealth. You know the concentration of inequality in crypto is worse than North Korea. North Korea has a Gini coefficient of point 84 in Bitcoin is, pardon 86 okay, so worse than North Korea. Okay. So I speak about decentralization and your massive centralization also of developer. You know, developers are police, prosecutor and judge, right? When something goes wrong with their contracts, they change. The code called is not low. And the smart contracts I need, our contracts are smart. They're full of bags and they're going to stay like this. So talking about the centralization is just total bullshit. Centralization of mining, centralization of exchanges, centralization of wild, centralization of development. Vitalik. Buterin is benevolent dictator for life of either. Okay. Benevolent dictator.

Speaker 9: (43:31)
So it is the same thing. When you want to change the code, you change it. Come on, let's, let's, let's not joke, you're police, prosecutor, judge and everything. Okay. So, so it's, it's nonsense. It's total nonsense is fully centralized system and the EcoSys, the tree, the size you cannot do, the system is scalable. That is, the centralized is not going to happen and it's impossible. And, and on blockchain, the realities that people, I've realized there is no government, no private company, no bank, no charity, no nonprofit is going to put on a public distributed permission, less trustless ledger, all their PNL, all the balance sheet, all the transactions, everything with customers, suppliers and you name it. And by the way, you know, officially is private, but you know, if I'll call a buys, you know, four times aluminium doesn't take a genius to know that behind these Alcoa, even if it's unquote private, so everything is private and becomes public.

Speaker 9: (44:34)
Even if you don't know who's behind that public key or private key in your name, it's okay. So it's all going to be public. And the reality is that then everybody has realized that. And all these things about DLT, corporate DLT, or blockchain, so on have nothing, nothing to do with blockchain. Nothing. They are all private. There is nothing is public. They're all permissions. There is nothing. These permissionless, they're all having somebody who was a trusted authority that decides which transaction is right and which one is not, is not based on a trustless out taking the Asian system, these proof of work group of [inaudible] or whatever, they're all centralize. They're not distributed. There is no reason to have all your P and L all your balance sheet on 100,000 computers, 1 million computers. It's a waste of energy is a waste of computing space. Why would anybody want to do it?

Speaker 9: (45:29)
So he's fully centralized. So what's blockchain about it? There is nothing about it is blockchain is just a gimmick is a label. These are not blockchain. They are essentially centralize that amazes that glorified spreadsheets. So stop calling them blockchain. They have not in blockchain. Okay, so let's not kill each other. This is not blockchain and nobody's going to do it. And by the way, people talk about how well you can do for social thing, for the poor people, for social development, for whatever in poor countries and so on. As I pointed out, there are billions of people in Africa, in China, in India, we can make payment transaction and soon enough landing micropayments using systems that like highly pay. We chat Bay PMI sees that UPI system, M-Pesa that are used by billions of people. You can do bids on transaction, have nothing to blockchain, so you want to bank the unbanked is already done in China is already done.

Speaker 9: (46:27)
He has already done everywhere in Africa. Why you need a crypto? Why do you need blockchain? It's already done. The system will have digital, they work perfectly fine that are almost costless. Okay, that's disgusting. Let's not, let's not intimidate bullshit about stuff. So I feel like a team fits. Samsung was a study of 43 43 blockchain experiments in this kind of stuff of social development. Africa pull the pantries and bank of these 43 case study, how many of them are working successful? Zero. Zero. Okay. 43 examples of trying to apply to what you applied. Not a single one of them is working because it's never going to work. We have two minutes before the next panel team.

Speaker 10: (47:19)
So I heard the same kind of pessimism and led idealism

Speaker 9: (47:25)
from people when we saw the internet come. Why do we need this internet

Speaker 6: (47:30)
thing? Why do we need this ridiculous,

Speaker 8: (47:34)
no, no, no, but you want internet.

Speaker 6: (47:42)
1 billion people were using is okay after the meat on a counter and our love seven Batterson's syllable with the lightning networks. It is embarrassing. All these technologies are starting to happen. You're just saying, well, what is it now? Why? Why do we want a currency that's tied to a political force when we can have one that is open and transparent and yes, de-centralized. Uh, it's true that a theory IOM is centralized. It is not true that Bitcoin is decentralized. It is a centralized, Bitcoin is decentralized open. It's competitive. You can create your own mining system. Uh, you can use [inaudible] and the mining is going to move along Moore's law. It's going to commoditize and anybody can come in with a faster, cheaper computer and go and compete with, with whoever's doing all the mining. I think yours here, I think you're doing a horrible service for humanity and I think you really need to start thinking optimistically of what this could do for society.

Speaker 6: (48:56)
Not, not, let's, let's just sit in the past and live the way we've always lived. You've got to start thinking, Hey, the world's going to be awesome. Let's make it awesome. And it can be with all these great entrepreneurs that are pursuing these great projects that are going to make it so that we are all much, much better off society. You think, Oh yeah, everything's fine. I don't think it's all fine. I think there are a lot of great things that can happen because technology moves it forward and, and uh, you know, the, the attitude of just leaving it all, Oh, this is horrible. Why don't we, I, that slows down. You can always, if you can look up your technology that knows all this nonsense, but nine [inaudible] 10 years, you know, sorry, can I vote to be too? So it's time for the next panel about the impact for image and content. [inaudible] was my thesis supervisor, so I'm going to alternate using the situations as Twitter.

Speaker 1: (50:06)
One comment, um, just in terms of scalability, there's just two points. One, um, ripple actually basically uses distributed ledger and as you know, uh, you know, they're now processing, uh, at this stage, significant volumes of transactions. And what's significant about ripple is that basically the, uh, you know, comparing to Swift as a method of transfer where it was three days, you can now do a transfer in one minute. Um, and secondly, the cost of that is less than 10 cents compared to 10 to $17 for a transaction with traditional using Swift. So there's an example where, and it's a mission, it's a permission blockchain system. It's correct. So, but that's a practical, you know, and that's many major banks are now using more and more using ripple. The second thing is in clearing and settlement. Um, the DTTC, as you may know, basically try re recently tested, um, clearing us equities, uh, in within the day.

Speaker 1: (51:11)
And they successfully did 25,000 transactions a second now in the U S equity market. Now they basically need to do about a hundred thousand transactions a second to actually replace it. But the key point I'm making is that it, it, it was basically scalable and the Australian stock exchange similarly, um, uh, tasting in a, and they, they're targeting similar, similar volumes around at the moment that they're testing is about, um, I think 25,000 as well. So it is a journey and I think with permissioned distributed ledgers, I think there is a big future and it is about saving money and it's fast. So just to put it in perspective, yeah,

Speaker 6: (51:52)
I mean, the, the lightning network is, um, is going to be faster than the visa network. So, um, you know, these things are, the lightning network just goes on Bitcoin and it's going to be faster than the visa network. So we, we, um, we really, all of these problems are being solved by entrepreneurs, and it's, uh, you know, five, 10 years from now, you're gonna, you're gonna, we're gonna all be using crypto. Even you

Speaker 7: (52:20)
[inaudible].