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CRYPTOCURRENCY + THE TOKEN ECONOMY
Global digital currencies, tokenization and cryptoassets. Where is the economy headed with Bitcoin, Ethereum, security tokens, and utility tokens?
“When we talk about securities tokens, that you openly can talk about a financial return because you’re investing in a product or a business with the expectation of financial return. When we talk about utility tokens and utility token sales, we’re talking about purchasing tokens in order to access or use a product or service so there shouldn’t be any expectation for financial return.”
Richard McBeath, VP of Marketing for Masterworks shares his story and the innovative project he’s working on involving tokenizing securities, specifically artwork, on a blockchain.
Have you ever wondered what’s it must be like to own a Picasso or a Monet or an Andy Warhol painting? Up till now, only the wealthiest people in the world have been able to afford the kind of artworks created by the masters. But with blockchain technology taking the securities world by storm, all that’s about to change.
Masterworks is tokenizing artworks. So, if you’ve ever dreamed of owning a piece of history, a famous work of art or a painting by a worldwide renowned artist, then you can.
And as a fractional owner of a Monet, I won’t exactly be able to hang said artwork on my wall at home. I will, however, be able to access the high-end art market and invest in an asset class that’s only been available, up till now, to the ultra-wealthy.
So, what are the advantages of putting artwork on a blockchain? Richard talks to me about blockchain’s transparency being one of the attractive features. Also, the ability to increase market participation and mass adoption is exciting, because as high end as this market is, it’s record keeping is archaic. Ownership records are still mostly kept on paper.
Despite the fine art market being an investment choice for the uber riche, it’s been slow to change. Perhaps those with old money are not always open to new technologies.
Historically the art market is a $60 billion+ market in terms of its sales form the major action house, so there are advantages to being able to open it up to a broader market. Masterworks is applying for an SEC regulation A+ qualification in order to allow for both accredited and non-accredited investors to be able to own a piece of art in their collection.
Founder Scott Lynn is an internet entrepreneur whose businesses are valued at over a billion dollars and he has a personal knowledge of the art world, having acquired many high-end artworks for years,
Richard hails from Australia, but has also lived in England, Dubai and now Los Angeles and he talks about what it’s like to “shoot out the door with a one-way ticket”. He says fear can be a barrier but that there is a great expanse of opportunity, especially since the world is very different in various countries and communities around the world.
035. Thinking Differently + Tokenizing a Digital Encyclopedia with Everipedia Co-Founder Sam Kazemian
“I think that this space, particularly Blockchain generates a lot of actual prosperity by bringing markets to things that weren’t possible before. We’re building an encyclopedia that’s not owned by anyone… other people have a stake in collectively owning the governance and the profit and the value that’s generated out of this and before blockchain that literally wasn’t possible.”
Sam Kazemian is one of the co-founders of Everipedia, which is basically like Wikipedia, decentralized. Wikipedia, like most things on the internet, is becoming outdated because people like Sam are recognizing that there’s way more value to the internet than what we’ve been accessing up till now. So Everipedia is tokenizing the value of their encyclopedia of information. IQ tokens are earned by anyone who wants to generate or curate the information on this new monetized digital encyclopedia.
Why not be paid for creating content, approving edits or for selling services on the network?
It’s the Proof of Stake model. When someone wants to use the site, they stake tokens. If they do good work then they earn IQ tokens that are printed, (in the same way that Bitcoin miners earn Bitcoin). The idea behind the staking tokens is that if more and more people are joining the network, more invest in the system and remove the tokens from use, which means there’s less liquidity, so the price should increase.
Everipedia did an airdrop of about $50 million worth of IQ tokens to EOS holders. They chose to give away tokens to help incentivize more users and build the community. They chose not to do an ICO because they received $30 million of funding from Block.one.
One of the most interesting things that I learned from talking to Sam was how he got his start in Bitcoin. From mining in college housing to trading and looking at all sides of blockchain technology. Sam didn’t come from a developer background. He studied philosophy and neuroscience at UCLA and it was those philosophy courses that really helped him to think differently.
So how important is thinking differently? Isn’t it the only way to do something that’s never been done before?
We get into the ideas of reasoning in philosophy and the philosophy of blockchain technology and how he’s created something that’s never been done before.
• Sam believes stable coins are what people should be watching out for
• The most challenging time in the life of a startup is not the beginning, it’s when it comes time to buckle down and do the work with no spotlight
• ETH and EOS and their supporters can be friends
• Having a constrained view is a barrier to growth
• Doing something completely different can lead to changing the world
“There’s lots of evidence today that online and in our digital lives, which is increasingly most of our lives these days, there’s just a whole bunch of things that are broken. Things that we’ve accepted as normal. Things that we’ve come to see as the status quo. And, nobody’s questioned is it ok that I have to make the trade-off of free online services for personal private data.”
Matthew Spoke, Founder of Aion, talks to me about the original intentions of the internet. It started off as a peer to peer and it became centralized. But, blockchain technology is levelling the playing field and anyone can have the opportunity to sell a successful product or service and Matt says we can all collectively can own the next version of the internet.
What does it mean now that the internet can become decentralized? What will it mean when greater financial democracy is accessible around the world. What will it mean for government policy as the technology that crosses borders becomes mainstream?
“Decentralized networks are the future infrastructure of the world.” So where is the world headed?
“People are asking what’s the killer app of decentralization? It’s not really an app, it’s a social structure. It’s re-evaluating how we make decisions and how we coordinate with people”
Decentralization is democratizing opportunity.
He says, often we don’t talk about crypto in the right context. Instead of talking about what crypto allows to be built, we too often talk about market caps and speculation. But “crypto is the economic engine that makes these networks possible and if that’s true, than there’s no financial cap”.
So the executive chairman of Cisco valued the internet as worth $19 trillion, but Matt says that that figure doesn’t factor in the value of what’s being transferred over the internet. So the decentralized internet, the internet of value, web 3.0 will be worth even more.
We also get into how Matt went from being an employee at Deloitte to leading an R+D team focussed on Bitcoin and the underlying technology to leaving and co-founding his own successful and thriving blockchain company, even though he says at the time, taking the leap was “terrifying”.
One of the topics he believes isn’t addressed head on enough in this space is around for-profit crypto companies and their driving motivations. He believes there’s a conflict of interest that’s inherent in having token holders like share holders. For this reason, Aion decided to become the Aion Foundation and focus on serving “the most important stakeholder, which to us was the user of our software” as opposed to optimizing how they do things for shareholders whose expectations are driven by expectations around revenues and profits.”
He goes on to say, “This an industry that is almost exclusively open source software so it’s not necessarily monetizable at the protocol level.”
And it was just one of the fun questions I ask at the end of the interview, but I asked him about what character trait he would recommend someone have who’s starting out. And his answer made me realize that they were qualities he must have to have gotten to where his is from where he was.
He said that these days it’s not about one skill. Now you’ve got to have the desire to constantly be learning and upgrading your skills, so what’s really important is adaptability and to be able to constantly evolve.
“It’s not something that’s localized. This is something that’s so global now. The Russian government is having crypto classes in all their universities in their curriculum. We have all the best schools in the United States. If you think about it, this technology is scaling, and you see the first crypto exchange open in Uganda just two, three months ago. It’s the next revolution, and my interest has been how do we get more women engaged from the beginning so we’re not left out.”
Anu Bhardwaj is the founder of Women Investing In Women Digital, and the State of Women Radio + TV network whose experience, before starting her own company, was in private equity and venture capital including collaborating with the U.S. Department of Commerce, the International Trade Administration, and the U.S Embassies of many countries around the globe.
And given that her work in global women’s issues & investing for women takes her to countries far and wide, it’s no surprise that I caught up with her remotely while she was in New York, having just gotten off of a plane from events in Sydney and Melboune, Australia. Anu was a guest judge on a show called That StartUp Show.
Anu is excited about the potential for global adoption of cryptocurrencies because it would give people all over the world in different countries with varying degrees of financial security and government accountability, alternatives, which she says gives people more of a voice. Cryptocurrencies can help to democratizing financial access, open up investment opportunities and give people choice.
Anu also believes in blockchain technology for its transparency and trust and is an active Angel Investor in some exciting StartUps out of Canada.
“With regards to blockchain technologies. I definitely think that as there’s more adoption, we will see better and more seamless, more transparent technologies coming forward. I think right now, the knowledge is in the hands of a few, but as we start to see more people reaping the benefits, I think more people will start to engage.”
Anu was honoured with one of the “Top 10 Frontier Women” awards, an award given by 5th Element Group’s Decade of Women campaign in partnership with the United Nations.
When I asked her why she believes in investing in women, she explained that women reinvest in their families and in their communities more often than men do and they share what they learn because women are natural communicators, generally, so she believes that the return on investing in women is exponential.
Speaking of supporting women, Anu also has a site called Qrypto Queens. They’re hosting a beach party in November, all about blockchain technology called Blockchain on the Beach.
When I asked Anu about her advice to young women, she mention confidence and within that, the ability to take risks and then to keep an open mind and to learn, and it is apparent that Anu has all of those qualities and more.
“You have people trying to take advantage of the fundraising mechanism that is an ICO without having a real business. They’re more excited about raising the money and then figuring it out. That’s a lot of the people. A lot of the people that have ICOed will not stay standing. It will be just like the dot com explosion.”
Hartej had read Satoshi’s White Paper back in 2011 but he spent a lot of time in the space without creating his own place in it. Now he and his Hosho co-founder Yo Sub Kwan have founded a company that fulfills a huge need, and one that (especially for how much money is at stake) really isn’t being taken seriously – and that’s blockchain security.
What’s the point in creating smart contracts if they can be easily compromised? Who cares if blockchains are immutable, trustless, unhackable if the contracts running on top of them can be breached?
And, how is world-wide adoption ever going to happen if news headlines keep scaring people away with stories of another exchange that just got hacked out of millions of dollars?
I talk to Hartej about Hosho and blockchain security and we also get into tokenization and how there are a whole bunch of people who seem to want to tokenize anything and everything, when maybe tokens should really have nothing to do with it.
His advice is to build a real business and there are places where tokens make sense, like in the world of gaming. Or in a place where you can have peer to peer markets, like in underdeveloped markets that would allow an artist to have access to the internet and sell music there.
Hartej goes into what Hosho can do with smart contract auditing and checking security vulnerabilities including with penetration checks for exchanges. Because when it comes to cryptocurrency exchanges being secure, it really only takes one toke that isn’t secure for there to be a critical vulnerability. Because if one coin can be hacked, and exchanged for Bitcoin, or fiat currency, then the whole exchange is at risk.
He talks about the history of Paul Graham in Silicon Valley and the key to a Startup being a Startup is growth. Hartej mentions the Y Combinator program and that there are essays there that all entrepreneurs should read.
When it comes to startups vs big Fortune 500 companies, Hartej talks about the fact that the Fortune 500 companies are in the space but they’re working on research and development. They’re behind where the early investors were years ago but they’re working on it.
And before we get into our Five Fun Questions, I asked him what use case he’s excited about seeing in the blockchain space in the next 5 years. His answer? Healthcare. How much data do we have on our body right now, about what’s going on with our body? And what if we could cater how we live, eat, sleep, exercise according to what our doctor recommends based on our body weight, resting heart rate, average heart rate, blood pressure, activity habits, blood sugar levels and on and on. It is amazing to think about where the technology we have now with our health data in our wearables will be in the next 5 years and what that could mean for our health.
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“You had the birth of bitcoin and all proliferation of really re-evaluating what is value, what is money and how does that get distributed and can tech help to actually democratize? I think these are questions that are challenging existing institutions and models and frankly, I think given the right circumstances, it’s a very healthy thing that’s going on”
Then her personal interest turned professional when she was at CME group and was given the go ahead to dive deep into research and development on Bitcoin. As Head of Digitization Sandra brought together a group of like-minded financial wizards that would help launch Bitcoin into the mainstream in a big way. They did their due diligence, dotted Is and crossed Ts and paved the way for CME Group to introduce Bitcoin futures at the end of 2017.
Then after all that R+D into Bitcoin and blockchain use cases, after talking with hundreds of startups and tech entrepreneurs about where blockchain was going, Sandra made a conscious choice and took a big step in leaving the banking industry to put her time and energy focused in a new direction.
She’s partnered with MIT entrepreneur in residence Julius Akinyemi and managing UWIN Corp with the goal of affecting change and using blockchain technology to democratize financial access in developing communities.
For an American, and a Yale grad, who spent most of her career in London, what an about face to be working on technology projects with farmers in Cameroon, or growers in Mauritius. Sandra shares some of the reasons behind why there’s such a need for digitization in these communities and why blockchain’s the way to go.
And one of her big questions that she’s putting to the test is, ‘can you make money and help other people as well?’
When we get back to talking about Bitcoin. Sandra’s perspective is that it’s here to stay, and apart from its current scalability issues, she talked about how it’s becoming easier and easier for us to adopt, trade and use.
We also get into tokenization and a very cool real estate example that explains why tokenization can make so much sense in a theoretical and practical way.
And before I ask Sandra my Five Fun Questions, she shares another project that she has on the go called “Proof of Art” helping independent artists, filmmakers, musicians and creative people so that they can focus on the creative side and leave the business aspect of making a living to those who excel in business.
“There’s just no running away from economics. Even if you don’t care about economics, you make economic decisions each day and those decisions are going to have consequences.”
Why is caring about economics important? Because whether we like it or not, we’re making economic choices every day. We may be choosing what to buy or how much to save. Consciously or unconsciously we choose what to spend our money on and how much of it to spend, whether we save some or go into debt, whether we invest in stocks or put all of our money in cash under a mattress. All of these choices are choices – and Andrei’s primary goal for us as consumers is that if we’re going to be making these choices, we might be better off, making educated ones.
When it comes to investing in cryptos, Andrei has some really sage advice around how and where he invests and why he thinks Bitcoin is a smart asset. We also talk about ICOs and pump and dump schemes and what he has to watch out for when it comes to his YouTube videos around these kinds of cryptos.
And although the focus of our interview was on financial planning, investing and economic preparedness, Andrei talks about his quick success as an entrepreneur until he hit his rock bottom. He shares what it was that helped him get back on his feet and what he thinks it takes to find success ultimately.
Andrei hails from Romania, so from his perspective, where there weren’t a lot of opportunities for him in the offline world.
He shared a great story about imagining we were from a country like Syria and that with our hard-earned family wealth, we owned a house and a car, but needed to flee the country. We wouldn’t be able to take our house, and probably wouldn’t be able to get the car out either, but we would be able to cross borders with zero issues with Bitcoin. All we would need to do is remember a few simple words in order to carry it with us.
Andrei’s excels in financial education. We discuss his book “The Age of Anomaly: Spotting Financial Storms in a Sea of Uncertainty”
and his incredibly clever short animated videos on his YouTube Channel “One Minute Economics” and he shares the reason why he wrote his book with a great analogy. Imagine you’re in a car speeding down a road headed toward a brick wall. Why is there a brick wall at the end of this road you ask? I have no idea. But back to the car, if we put the brakes on too soon, we’ll be OK. We may be far from the wall, but our spleen will still be in place. If we hit the brakes too late… well, we get spleen soup all over the sidewalk. Andrei wants to save a lot of spleens. He just wants us to think about the decisions we’re making and educate ourselves and he’s figured out a way to make important concepts digestible and easy to understand.
Andrei’s book is on sale for only 99 cents USD on Amazon.com this week! Plus he’s giving away a whole Bitcoin and some other amazing prizes. Check out this page for more info: http://oneminuteeconomics.com/
“The blockchain technology, in its basis, the ability to transfer native digital assets from one place to another in an extremely easy way, enables the world, the capital markets, to truly become global.”
When Yoni Assia, Founder and CEO of eToro found out about Bitcoin, he realized that it was going to change how financial services work and effectively, change the world economy. His love of financial markets and technology have always been intertwined, and when he learned about Bitcoin and blockchain technology, he found a way to bring those two passions together in one platform, called eToro where social media meets online trading.
Yoni realized that we all have to need to connect. Before the days of the internet the way people connected with each other came from our nationality or culture and where we were born, but the internet has no political boundaries, and communities are formed over the internet based on common interests.
Now with blockchain technology, like-minded individuals are able to connect in new ways, in a truly global economy.
Yoni thinks that the jury is still out as to whether or not Bitcoin will be used as a medium of exchange. And he said it remains to be seen if it will be like digital gold or silver or copper. But says it has the kind of brand awareness of Coca-cola, McDonald’s or Google!
And we discuss how people can now start to connect economically and create communities through a value system of shared ideas. Some are Bitcoin Maximalists. Some hodl Ethereum and support smart contracts and it’s Turing completeness.
Yoni talks about his passion project, The Good Dollar involving Universal Basic Income on top of crypto, helping the billions of unbanked join the global economy. His vision involves distributing wealth on a blockchain.
When we forecast into the future, Yoni believes that the blockchain revolution is as big as the internet and potentially as big as electricity as an innovation.
He says, “Most assets will be registered on global blockchains and people will be able to transfer ownership in both physical and digital assets electronically.” But, when will this happen and how is a much bigger question and the answer is — slower than innovative blockchain front-runners had been hoping for.
A great example he uses to help to put things into perspective is about VOIP. All communication is done through Voice Over Internet Protocol now. It seemed inevitable. But, he explains that Skype has not become the largest telephone company in the world. Why not? Because there were big, powerful companies with a lot of money and a lot at stake who were able to use the technology for their benefit. And Yoni believes the same will be true of the technology and innovations we’re seeing now.
He anticipates national blockchains connected to our digital IDs and that there will be some governance around how citizens are required to use their national blockchains.
As the information age is expanding and billions of people are becoming connected to an economy, that economy is becoming more global and less political, although how much less political remains to be seen.
“This is a technology (Bitcoin blockchain tech) that is going to make the world a better place. I do have a world view that making the world a better place is something to live for.” ~Paul Snow
Paul Snow, didn’t imagine that his part in making the world a better place would begin with inadvertently funding his retirement! But back in 2011, when Paul invested in Bitcoin, that’s what he did.
With a Master’s degree in Computer Science and Electrical Engineering from Texas A+M University, he heard about Bitcoin, believed in the technology and personally invested in it.
Two years later, he sat down with his wife and shared the good news — that they’re retirement was paid for! Imagine!
Then his journey into the technology behind bitcoin really began.
Paul founded Factom, a protocol layer over the Bitcoin Blockchain. He organized and chairs the annual Texas Bitcoin Conference which he also co-founded. And he promotes making the world a better place through decentralization and blockchain technology.
I had the opportunity to meet Paul in person in New York City this past May and I will tell you, he’s one of the rock stars of the crypto world. I share a quick story of running into one of his fans.
Paul and I talk about the three things that a blockchain is great for, we get into the history of land titling in the United States and how Factom may be helping with land title registration in Honduras, and we get into other use cases with some amazing stories and brilliant analogies.
As a newbie to the blockchain ecosystem, I tend to hang onto every word as I hear some new terms I maybe haven’t heard before, or a clearer explanation as to how blockchain operates and what it’s potential is.
Paul really dives deep into not only what Factom is capable of, but also what blockchain can do in a theoretical capacity.
Wait till he starts talking about the Tsunami on its way! He’s got some big ideas about where our economy may be headed.
Some of the highlights from our conversation include:
Three things that a blockchain give you:
- Immutable Record
- Time stamp so that it cannot be changed or modified
- Messaging component, so others are notified (therefore transparency) actions are open
Paul talks about blockchain tech enabling traction with business process that have to do with anything litigious, since legal processes are incredibly time consuming, like arguing about a timeline. With blockchain there will be a record with an unchangeable timestamp, so there all of that time will be eliminated.
He explains that blockchain tech is great for foreclosure management and loan origination, auditing of data.
Fully implemented, blockchain processes will be nearly instantaneous.
Paul goes into detail about land ownership and the 21 Characteristics of Property as he has read about in reference to Hernando do Soto’s book.Hernando do Soto, Peruvian Economist
Book — The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (2000)
He goes into the history of land titling in the US and how it got started and where things got tricky. And, he explains how property rights differ in developing countries and how blockchain can help toward more secure land titles, an easier process, and greater wealth.
Paul also goes into the difference between Bitcoin and paper money/fiat currency/USD and how these two forms of currency are very very different, and what that looks like, using the example of how North Korea is utilizing each.
Now for the Tsunami analogy, banks failing, and talk of a recession recovery based off of crypto and the strong crypto companies of today.
Lastly, he shares with us, his views on narrowing the income gap, distributing value and says:
“the only distributed financial autonomous world is the crypto world”.