The Next Wave Podcast

Ep 14: Thomas Borrel, CPO of Polymath, on security tokens, stimulus, and the future of crypto

April 24, 2020 The Next Wave Podcast
The Next Wave Podcast
Ep 14: Thomas Borrel, CPO of Polymath, on security tokens, stimulus, and the future of crypto
Show Notes Transcript

Our guest this week is Thomas Borrel, Chief Product Officer at Polymath, the securities token platform. Thomas tells us all about security tokens and shares his thoughts on the state of crypto, the stimulus, and more. 

Dean Nelson:

was this.

Thomas Borrel:

So I met them. The first I look at them was late 2017. And then we met early 2018.

Dean Nelson:

Gotcha. Okay.

James Thomason:

Yeah. Before that, you were at Blue cat.

Thomas Borrel:

Before that was a stream, I was at extreme before extreme I was at Blue cat networks, I was a blue cat from like, 2010 to 2016. And so that was a phenomenal startup, it was a great organization to the to be a part of, then I went back to a bigger company. In my sort of 25 ish years career, I've worked for a very small company, they're a big company and navigated between the two went through a few acquisitions, both on the buy side and on the sell side. So it's, there's something about the nimbleness of small organizations, and also that sort of innate desire that I have to propel larger organizations into something a little more modern. And that means a lot of effort.

James Thomason:

We always call extreme networks box affectionately, the Barney boxes because they were purple and green after the daytime kids programming here. You'll Barney live you you

Dean Nelson:

make great. We get very technical this show. Yeah, it's for your kids. Yeah, that's right. And by the way, I was a Sun Microsystems for like, 17 years, two different stints. And I think I might overlap with you there. We bought a lot of extreme equipment. And we deployed this across everything from engineering labs, to data centers, right. And I kind of think globally and I did a number of massive projects. Just rolling that out. Then I went to a startup company and rolled in back into that was called Allegro networks, and that was in 2000. So lots of experience with extreme I love that product. Great team. So

Thomas Borrel:

yeah, it is it is a great team. I mean, when I was There the last time was for a couple of years. And we went through a series of acquisition. And the company grew and continues to grow, which is great to see. But yeah, so early 2018, I met Trevor and Chris fell in love with the problem, and basically went home that night and left the next day to go join Polymath and haven't looked back since. Yeah.

James Thomason:

You weren't you were convinced. Yeah. To convince Yeah,

Brad Kirby:

you can imagine our quick pitch on edge X was quite easy. with James, john and either and with him, kind of gets it pretty quickly.

James Thomason:

Yeah, I would say one of the one of the fastest pitches we ever had to do is like, okay, yeah, you guys are making nano servers at the edge you're going to do serverless on top of blockchain makes total sense. Okay, moving on. How can I help

Dean Nelson:

the next? You know, you talked about the forking of this. And it reminds me of source code, and how people will take this standard and then now fork it off into their own thing. But they really don't merge back in people have this stuff. And it continues to develop on its own little life. Is that the similar thing that you just talked about a way that traditional Ethereum and and other stuff went?

Thomas Borrel:

Yeah, you could look at it this way. Right. So effectively, you had two teams, that the whole reason for that fork event to happen was two teams fundamentally disagreeing on what the next step was going to be. And they each decided to go and maintain their own version of it

Dean Nelson:

sounds like open source.

Thomas Borrel:

Yeah, you can I mean, yes, all those projects are open source, right? You know, including ours. So yes, it's very similar. It's very similar.

Dean Nelson:

Yeah. And the value of it, though, you just talked about the implications of having two different streams out there, right, are two different tokens? Right. So how do they reconcile that? Have you seen any of that happening? Or is it just that they're both diluted? That's a rabbit question.

Thomas Borrel:

Yeah. So that's, that's a great question. And, you know, I'm gonna have to give you the legal answer, which is,

Dean Nelson:

I see that.

Thomas Borrel:

And so it depends. There's a few approaches that can be taken. Interestingly, now, this is something that we're going to see as aetherium is in the process of upgrading towards its version two, which is a proof of stake, consensus protocol. So high level proof of work relies on brute force mathematical computation to secure the chain, proof of stake relies on the block producers staking a certain amount of cryptocurrency, to say, I will stake that amount of money that what I do is according to the rules of the chain, and if someone finds out that they have not, they can get what's called slashed, which is the stake can be destroyed. So they effectively lose a monetary value out of misbehaving.

Dean Nelson:

So that's the governance there that if they don't play by the rules, they can lose their investment.

Thomas Borrel:

Yeah, that's one part of the governance and you know, obviously, for the for the blockchain purists that are listening today. It's bigger than that more complicated than that, but just for the sake of keeping it simple,

Dean Nelson:

yes, of my simple mind think

Brad Kirby:

Bitcoin is forked over 100 times. So and there's been some pretty nasty battles in the last last year, there was an interesting one that we will not go into, because it was quite the drama continues to Are you sure you don't

Dean Nelson:

want to go into that? I think our listeners would love to hear the details, but I understand legal answer,

Brad Kirby:

Craig right. That's all I gotta say. Okay, great. Satoshi. Nakamoto. So we call right. You mentioned him

Dean Nelson:

Right, right. Right. Right. So Toshi.

Brad Kirby:

So you got Bitcoin SV and Bitcoin ABC? Who is Toshi? Satoshi Nakamoto.

Dean Nelson:

Who is this guy? Okay. Or girl? That's true. All right. I think as a group, that's my opinion. But

Thomas Borrel:

there's lots of theories there. That could be a whole podcast. And that could be a whole series of podcasts in and out of itself.

Dean Nelson:

It could be a mini series,

Brad Kirby:

I could see a video already, right. Just that fork alone could be a miniseries like the drama with it. So.

James Thomason:

So there's so much good conspiracy theory on blockchain, too. I mean, we maybe we should do that blockchain conspiracy theory show. I

Dean Nelson:

would love that. Yeah, we call it game of coins.

Brad Kirby:

That's what it means to be gonna get into it a little bit later when we talk about stable coins just a little bit, but okay, I'm excited. Well, hey,

Dean Nelson:

could you talk to us about your role as CTO? Yeah, definitely. So and this is not c threepio. It's not c threepio. Okay, that's, what's it? What's the CBO for everyone else? Yeah. So

Thomas Borrel:

what's the CPOE CPOE stands for Chief Product officer. So it basically my day to day is I look at you know, strategically where we need to go as a company, make sure that we continue to understand the problem and find the best solution for it. So it's about driving product requirements, and engineering to the execution of those solving those problems. So I have a team of product managers that are extremely talented that are there to have that day to day interaction as well with us of the chain. Prospective issuers, service providers, exchanges, custodians, transfer agents, broker dealers. It's better, to really understand whether day to day is like make sure that we understand the problem really well. There's some interaction with regulators, with lawyers as well to make sure we understand how the regulation is transforming as well. Because you know, everything we do is subject to those regulations. So making sure that everything is aligned and in check, but it's basically you know, if I were to summarize the role, it's about formulating the strategy for Polymath, and then working with the team to execute on that strategy.

Brad Kirby:

Okay, so I think to sum it up, Polymath is really solving for the financial capital markets supply chain. And I have some background in this. So I just wanted to share a story about I won't say which company but once had to take $2 billion of paper certificates from New York to Canada on a plane and literally carry it to a bank to get an actual signature guarantee and then go to a world markets cage to get a medallion guaranteed.

James Thomason:

Narrow shares.

Brad Kirby:

bearer shares if they were not bearer shares, that actually physically withdraw them.

Dean Nelson:

Wait, Brett, Brett, you're telling me that you walk you got on a plane with like a briefcase, and, and handcuffs with $2 billion worth Oh, that's

Brad Kirby:

the thing, right? Like you think you need handcuffs, armored guard, but, I mean, they were named if someone took them, they're not gonna be able to transfer them. The narco doesn't actually have any value to that person because they're not bearer shares, or shares and bearer bonds and bear securities are a whole different ballgame. And a lot of banks are not dealing with those anymore. But they do still exist. They are still sitting in safes and places I can promise you that. And that's all I'm gonna say.

James Thomason:

I don't want to get that's all I got to say about that. Probably Spoken like a man who's been in those saves.

Brad Kirby:

I did, I did acid recovery to light and Cayman Islands for three years after 2008 did a little standard, FDNY Mellon, and then that Brookfield asset management, a number of roles, and I was assigning officer a Bama as a parent company, and they had about 10,000 subsidiaries. So it was, it was certainly a lot of share transfers a lot of a lot of paperwork. So I see the value of this through and through because it's it's a massive undertaking. There's massive costs, and there's a ton of intermediaries. And that's why security settlements moving from t plus three to t plus two is such a big deal, because there's so much red tape, so

Dean Nelson:

Oh, yeah. T three plus t plus two, what the hell does that mean, Brad. So

Brad Kirby:

it means that if you buy if you buy a share on the New York Stock Exchange, you'll have money in a brokerage account. But the actual settlement doesn't happen until three days later, right? Because it takes time I see move the cat, and three and you have transfer agents, you have intermediaries and brokers. And sometimes you have custodian sub custodians. So there's there's this whole web of service providers that are taking a clip along the way and not not to not to like try to that that's what we're trying to do is disintermediate financial intermediaries to an extent and make the system more efficient, and more accessible. That's how my vision I'm not gonna speak for Polymath per se. But I think it's fairly aligned in terms of making capital markets more efficient. And certainly trying to eliminate some of that friction that we see today.

Thomas Borrel:

The efficiency and the automation is definitely a core benefit that we see with the chain, when you talk about that clearing and settlement and going from t plus three to t plus two. So three days after the trade to two days after the trade, that was a lengthy process. When you look at security tokens, you can take that to a T plus zero. So effectively, that an atomic operation, a t plus seconds, exactly where it should be, it ends up being an atomic operation. I mean, that's the way it should be. Not for everything, there's still certain sort of instruments where it makes sense to have a little bit of time. But I think what we've seen as the greatest benefit, like the biggest problem that can be solved with blockchain and with security tokens is if you think about the type of instruments that are available today, for investors to buy, it is effectively limited by the systems that are in place. And so if we look at sort of the two and a half years that we've been working in the security token space, it started very early with private companies looking to tokenize themselves. And the thesis there was, if it's a token, it's going to be much easier to find investors and you're going to have exchanges that list a token, you're going to have more liquidity. In reality, what has happened is, there was effectively an asset that was inherently illiquid for a reason that went and got tokenized to get more liquidity, but the core reason wasn't addressed, which is that lack of liquidity had to do with information asymmetry, lack of information for investors to make a buy or sell decision. And so we've seen sort of a moderate success in private enterprise like in private placements, in terms of what we're seeing more And more right now is fixed income type assets. And so the benefit there with those fixed income assets is when it comes time to do capital distribution. When maturity is reached, you can automate all that process significantly. So you're going to have what's referred to DVP said delivery versus payment. So I want to buy a token, that happens instantly. And it happens atomically. So a lot of the systems that have been put in place, were there to limit the counterparty risk, effectively protecting the buy side and the sell side, from the bad actor in the other seat. Right? So if I'm going to buy 100, chairs from Brad, for example, how do I know Brad has 200 chairs he wants to sell me and how does Brad know I have the money. And so you had that series of intermediaries that got there to say, I will guarantee that you'll get your shares and he'll get his money and everything will happen in the context of a token, what you can do, and particularly with digital money, which I'm sure what we'll be talking about is it's still a hot, it's a very hot topic. But with digital monies, you can make that entire transaction atomic, which is you have a smart contract, you have a piece of code that says, put the money here, put the tokens there, the shares there, and I will make sure that there's enough money, there's enough shares, and I will make that exchange that trade, I will conclude that trade for everyone. And so that's where we see an opportunity, which is you have financial products that simply could not exist. Because of the time it takes to clear and settle the trade all the intermediaries that are in place that can now be completely automated, made far less expensive to create and maintain. So all of a sudden go from completely impossible to absolutely possible. And so it all comes down to the imagination of all those asset issuers right now they have another tool to create new assets that have features that deliver that automation and that efficiency.

James Thomason:

We're starting to see some really cool developments. I think anyway, and current market circumstances probably make this interesting for a few viewers. I don't know if you can comment on this, Tomas. But there's new tokens out there like Paxos gold, for example, which is a digital token that represents a ounce of physical gold. So there's somewhere in a Brinks vault in London, there's a serialized gold bar. So this token represents one ounce of that, I believe, 500 ounce gold bar that's sitting in a Brinks vault. And that's a good example of the kind of thing that would have been impossible previously without crypto because we have, we have extreme exchange traded funds and trust, for example, that are backed by physical gold. So they operate as a fund you deposit US dollars, purchase the fund on the open exchange, and then they go buy gold with it. But this is different. This is an entitlement to a physical

Brad Kirby:

asset. While the Paxos standard also has a USD stable coin that has been approved to trade actual securities on the New York Stock Exchange. with certain brokers, I think they're still in a demo phase with Credit Suisse. And UBS, I think that they're looking at trading, and actually using those dollars to settle securities on the exchange. So there's, there's that aspect of it, which is that's just the stable coin side of it.

James Thomason:

Tomas. Are these guys competitors? Or frenemies?

Thomas Borrel:

No, actually, they're completely complimentary to what we do. In fact, they're a key contributor to that end to end chain. So earlier on, we were talking about DVP delivery versus payment and automating that DVP while having a stable coin allows participants to do that without any risk of volatility. So today, you could buy and sell an asset using ether, which is the cryptocurrency on the Ethereum blockchain. But that asset is very volatile, the price is changing quite a bit. And so the benefit of stable coins there is when I buy a security token, for example, as a as an investor, if I put $100, the asset issuer knows that they're going to receive $100, and that they can keep them it's not by the time they get it and they trade it now it's worth 95, or it's worth 105 is still $100 Rand, if you're doing any type of capital distribution, dividends distribution being one example, then you can do that using stable coins as well. So company x sends me that dividends, let's say they owe me $10,000 in dividends, I don't want to take on volatility risk on that amount. Neither does the issuer. So those stable coins are very beneficial. And in terms of the gold backed tokens, we're seeing some of them as well. They're effectively a very simple way or a simpler way to give investors exposure to the asset. In a tokenized form, it becomes signal nificantly easier for investors and prospective investors to get access to the asset effectively make an investment in gold for example, and get exposure to the price increase of gold should that price go up?

James Thomason:

Fascinating.

Brad Kirby:

So just to look at the overall architecture, I want to just point out something about the Bank of International Settlements, which is effectively the Central Bank of central banks. They issued a report last month that talked about central bank digital currency. So if you think about currency, central banks have been looking at digital currency, which includes potentially stable coins are a blockchain based currency, as well as not blockchain based so tokenize Central Bank currency like the US dollar. So that's what really developed this week was considering issuing that on blockchain on Ethereum. It's been tossed around a little bit, but theory was actually in the original proposal. So the US has historically said, We don't need to issue on blockchain, we have 20% cash, we're going to keep printing cash, we don't need it. Whereas a country like Sweden, you know, the Riksbank, like thermals cash, they don't have cash. So they're actually a great use case. And they're probably going to have their own central bank, digital currency on blockchain by 2022. So probably one of the first ones to be really fully functional. And then you see a lot of developing countries like Cambodia, and I think 60% of central banks globally are looking at issuing their own central bank digital currency and counting.

James Thomason:

Now, this was big news this week. Right, Brad? Just to back up a second that the legislation you're talking about is the $2 trillion stimulus package. The original version of that bill, when it came out included language about digital dollars and digital wallets, which I think took a lot of people took me by surprise, I assume it took a lot of people by surprise, but maybe not. You saw my reaction. Yeah, Tomas. What did you think when that information became available?

Thomas Borrel:

Well, I was Yeah, I was certainly big news. The dialogue around central bank, digital currency is one that has been going on for a while, but I think was very interesting is the impact that Libra has actually had on that whole narrative. So if you go back to sort of early 2019, there wasn't a whole lot of at least open and public discussion around central bank issued digital currency. And then Libra, you know, the project Libra was was announced what they were going to do with their own blockchain. And as a result of that the dialogue shifted right, I think it was a wake up call for a lot of governments that a private entity could reach billions of people. And they could put digital money in their hands so they could buy and sell and pay each other back whatever the case may be, there would be some very practical aspects to that, obviously, some risks as well, particularly around anti money laundering. So F ATF had a big discussion about that. But it certainly sparked a very big conversation in the US and outside of the US as well. So seeing this in the initial bill was obviously very exciting. Although when you look at the efforts involved in launching a chain, and we're kind of at the forefront of that, you know, you would hope that that stimulus package is going to be available quickly. And imagining like doing this on an existing chain could be very fast, it could be done tomorrow, doing this on a new chain would obviously be far more complicated.

Dean Nelson:

So a lot more risk in doing that right within the timeframe,

Thomas Borrel:

I would not necessarily call it a lot more risk, actually. I mean, the fact that it was on the bill, we were all hopeful, but also conscious that the likelihood of this happening was very, very low. Given the narrative that we've seen coming out of the Libra hearings, for example, are coming out of VIPs. There was a g7 report on stable coins that came out it was another big bank made national settlement report that came out maybe a couple of months prior to that one. And you know, the short version of it was central bank issued digital currency as a sort of stable coins, international stable coins are a threat to the world stability, essentially.

Dean Nelson:

So guys who keep talking about a lot of different acronyms for the people that have never heard of this term, what is Libra?

Brad Kirby:

So Libra is Facebook's attempt at a stable coin backed by a basket of currencies. Now what they did, Libra was an actual nonprofit foundation and they combined 30 major organizations like Visa, MasterCard, Uber, Lyft stripe square, Andreessen services in their Union Square ventures, pretty much friends and family of Mark Zuckerberg, no offense, but it was you get like I was there tying the lines together and and they said that everyone they kind of made it played it out that this was already a foundation and everyone had chipped in $10 million. There was probably only three or four actual blockchain companies and bison trails was one and anchorage and bison It only raised 5 million at the time. So I didn't understand how they were contributing 10 million until visa funded them with 40 million a couple days after that. So effectively, this whole proposal, and the white paper that they released was pretty widely thought as ill conceived, because of the interactions that Facebook has had with us regulators and European regulators and global regulators that they don't have trust over privacy. So think about what

James Thomason:

Facebook doesn't have trust over privacy. So folks are brought to Cambridge Analytica cryptocurrency

Brad Kirby:

so stunning. So let's take all the social data and all the financial data to billion users. And that sounds like Armageddon, from a regulator perspective, especially when they're still trying to get up to speed on the actual technology. Now, I felt they were much better prepared in the summer and after than they were the year before, which most people wouldn't have necessarily listened to. But a year before they were just learning what is Bitcoin? What is blockchain? And the Senate and Congress really were just in their infancy. But I think today they have a much better understanding, which is why you're seeing them propose this, I think they do actually have some knowledge. They do have teams, and they there are companies around it. So that leads into Tomasson, what you did working with Congress, and maybe your perspective on Libra, and how it plays in to central bank's effectively trying to mitigate the threat of a social media company, replacing the US dollar.

James Thomason:

Wow.

Thomas Borrel:

problem, the problem that Libra can solve is real, right? You think remittance, for example is a big one. So there is a real problem that needs to be solved there. Our experience actually was rather interesting, because last year, as you indicated, there were Libra hearings, both at senate and Congress. And so said it wasn't on the Tuesday, Congress was on the Wednesday. And we're actually on the hill through the Chamber of digital commerce for a blockchain day on the Thursday. So basically, right after right on the heels of both those hearings. So it was very interesting to see the level of conversations. And there were teams that we interacted with that had a very deep understanding of blockchain. Great questions on privacy, great questions on identity, and solving, you know, identity problems as well, because that's a risk that a lot see from an AML anti money laundering perspective. But the depth of some of the question was absolutely incredible. So, you know, what we see from an impact perspective, when we look at the impact that Libra has had is it's changed the conversation, it accelerated the conversation a lot. I think it's surfaced, what the real problem is, from a monetary perspective and flow of money across borders, and how that can be challenging and expensive to do that. But you have a private organization that is saying, I will solve that problem. And that organization can reach 2 billion people on the planet. It doesn't go unnoticed. And so there was a great deal of education that happened on the hill, for sure. And across all central banks. There were some earlier projects where central banks were involved. You had project Jasper in Canada, you had project oben, in Singapore, they were all with central banks and big banks. But I think this fundamentally changed the lawmakers perspective on digital assets.

Dean Nelson:

So that's encouraging that it actually changed the lawmakers perspective and that there were deep technical questions that were happening, right to give context, that's very different than the other. The other things we've seen play out on the on the world stage there. But I have a fun little story on this about Libra. So David Marcus, you know, David, yes. So David Marcus, for the people that didn't know before, he was the CEO of PayPal, when eBay Inc, right and included PayPal and StubHub and eBay overall. And I remember, he's a great guy, and I was working with eBay at that time. And he shocked everybody and said, You know what, I'm going to step back. And he moved to Facebook. And everybody was surprised about that. He said, You know, I really miss I miss these small teams. So he went over and started running a little software team called messenger. And it turned into this, you know, how many, you know, billion people right or more now on this platform, and then he goes back and as a co creator of Libra, right? It's like, it was really funny how somebody goes from a CEO level, etc, and then goes back into what he really loves to do, which is create, develop new things, right, but who would have thought Libra would be one of those things that comes out of this?

Thomas Borrel:

Yeah, for sure. And yeah, adoption, he certainly knows a thing or two about adoption. And

Brad Kirby:

so I'm gonna flip the coin on this. Because Do you know what colibra is doing?

Dean Nelson:

Have you heard of colibra? colibra? No. Sounds interesting. It's

Brad Kirby:

the actual wallet that is wholly owned by Facebook. Okay, that is where the money is made. That is when transactions happen. Libra was the nonprofit foundation that was running the blockchain. So some of these companies like 75% have dropped out, like anybody that was had any kind of intelligence dropped out.

Dean Nelson:

Now, and that was primarily because

Brad Kirby:

control is Facebook is they backed away from Libra entirely and said, Oh, this is going to be independent of us. But we're gonna still run Libra. So there's a bit of a conspiracy theory here because I watched David Marcus. Both days, I actually watched it on repeat. So I watched 12 hours on day one and 12 hours on day two, I was just typing furiously. I was on I was with through me and a few others that will remain nameless, but we were losing our minds. It was mind blowing the way he was answering the questions and explain what till I was a bit of a, I explained couldn't believe that all of these large organizations explain the questions now how

Dean Nelson:

he was answering was blowing your mind.

Brad Kirby:

I was on Twitter messaging questions to them. And then some of them actually got asked. He was just just avoidance. Like, it's just like, yeah, just he's great. Like, it's a he's great in front of the Senate and Congress, because it keeps it open. Zuckerberg came out and said, we're gonna do whatever it takes to work with regulators. Sure. And shocker Berg got in front of them. And they said, Oh, well, you know, maybe we'll have to shut it down. And then they shifted, and so can't be part of Libra kaliba. Right. So look, we're not actually running the cryptocurrency. We're just, we're just a service provider.

James Thomason:

Great. And again, 99.999% of Americans have no idea about any of that, and particularly won't be able to figure out the technology. Tomas, I wonder things have changed recently in the financial world as a result of the COVID crisis. And we were talking a little earlier about gold backed assets, gold back tokens. There's some folks out there who are getting scared, very scared, we were discussing earlier that it's impossible right now, basically, to buy physical gold or, or platinum or silver, there's a real rush to quality assets in these kind of panics. And part of the rush right now is people are afraid that the US dollar is going to crash because there's unprecedented money printing going on. So to give listeners an idea, the widely hailed economic stimulus that took place in the Great Depression was about 3% of gross domestic product. So in totality of all the stimulus that we did was about 3%. The size of the stimulus that we have done in the last month is already well over 30% of gross domestic product in the United States. So it is a massive, unprecedented amounts of government intervention into the financial markets. And as you've seen on no doubt on television and other media outlets, the Fed is as an open wallet, they have an unlimited ability to print money and buy assets with it through the repo markets and others. And minor conspiracy theorists can't help but wonder if this is not a moment in time where we might actually be able to get off of the Fiat dollar. Because if the pessimistic scenarios of this play out, and I should say there is an optimistic scenario where this sort of graceful unwinding and deleveraging that was attempted in the previous financial crisis of 2008 910, which didn't fully work, obviously, because we re inflated the asset price bubble. But the pessimistic scenarios are that the dollar loses 70% of its value over the next five years, kind of the way that did in the 1970s events were a period of stagflation. And there's a real risk that the US dollar isn't a reserve currency. So a preemptive strike might logically be for the United States to move the world towards $1 that no one can control it, because I think there's a real risk that we're reaching the end of the debt based inflationary fiat currency, monetary system. Right. And I think certainly a lot of hope, I think if Satoshi Nakamoto, the plurality that is Satoshi could speak, they would say that the impetus behind Bitcoin was to do precisely that right to create a currency that could not be controlled by any government entity. That story goes right to the heart of what cryptocurrency was, at least some of us What do you think is going to happen? Now? Are we going to end up originally gonna have digital wallets a year from now?

Thomas Borrel:

That's a great question. You know, I'm not sure I'm fully equipped to go into the depth of an answer that you might be looking for. But, you know, back to the point you were making, I think you're right, Bitcoin was all about not having a monetary policy. No one can control it, like no single entity can control it. Will the US move to that? I would say that would be I would be very surprised if that were the case. There is still part of the sovereignty of a country used to control their own monetary policy. And so you're changing that would be I would think, to be good jump to make at this point, no matter how troubling these times are, at this point, in terms of all of us having digital wallets. There's certainly a part of me that would hope that happens. Right that really looks forward to that day. Well, we can all have digital wallets with central bank issued digital currencies. And because, you know, it makes what we do both as Polymath and as individuals so much easier than it is today. Right? If you think about you know that delivery versus payment, having central bank issued digital currency, you can automate all of that. If you think about sending money to friends and family, it makes it significantly easier as well. There are some private entities that have solved this problem or have solved it at a sort of smaller scale. But in terms of all of us having a digital wallet by 2021, I would say, as much as it pains me to say it, I would say it's very unlikely. Would I love to be wrong? Absolutely, I would love to be wrong.

Dean Nelson:

They'll be very different polygons as well.

James Thomason:

The Matrix trilogy, the Matrix trilogy, the robots, after the human beings have scorched the sky in order to stop the robots from their access to solar energy, I guess it's at the end when Agent Smith is taking over the system. And the being that is the rest of the matrix, or the collective says there are extremes which we are willing to tolerate, conditions of living, which we're willing to tolerate an order so that, in other words will destroy the matrix before will allow Smith to take over. I kind of feel that way about the US dollar, if the United States was in a scenario where it was going to lose its status as the reserve currency, let's say because China and Russia and 29 other nations, let's say federate on a different standard and try to become a reserve currency, Isn't it better to have a currency that no one can control? no government can control than to allow a economic and political adversary to become a reserve currency. So that really is the existential catalyst. Right.

Brad Kirby:

But I guarantee you, you're not going to get for chairman of the Federal Reserve to agree with you. I mean, I think their number one priority. But one interesting point you've mentioned in China is that was one of the big headlines after Libra was the the People's Bank of China, their central bank, announced that they were really moving their central bank digital currency forward. And even president g talks about all we need to build on blockchain. So they were really, really pushing. Lieber really drove China to focus on that. So in terms of being pre emptive, this is probably behind the curve. But I agree with you, I understand your theory, it could make sense, but it's kind of like giving up. And

Dean Nelson:

so I think what we need here is this generations, Alexander Hamilton, he needs to come back and take this thing forward and write 40 of these documents that that actually make us make the change, so that we truly can get to a digital wallet. So Tomas, we're nearing the end of our show here. And we usually have our guests give us some predictions about what they see coming in the future. So not to put you on the spot. But take the next five years. What do you see, we just talked about one that potentially could be challenging, but what do you see coming?

Thomas Borrel:

Oh, that's, that's interesting. So what do I see coming in the next five years, digitization continuing to increase? I think, you know, from a digital money perspective, it's going to have to happen, you know, when we all look at our wallets, right now, we have more credit cards, and we have cash. In fact, interestingly enough, right now, you cannot buy anything with cash stores will not take cash, because you could potentially transfer the virus from one individual to another. So I'm wondering how much of a behavioral change this is going to drive as well, because you know, anyone who went to the bank and withdrew some cash today, can't use it for some time. And so how is that going to affect how we operate? From the payment systems perspective, we're all familiar with quite a few around credit cards and the likes, but what happens behind the scene could be tokenized, without any of us noticing this. And I think that would be a great starting point for blockchain that can then tie into central bank issued digital currencies. And so you know, from a prediction standpoint, yes, that's, I could see this happening over the next sort of five years. You know, I think data itself and particularly around medical data, I think we're all going to come out of this pandemic, looking at data very differently, and particularly, medical data very differently, particularly on the travel side as well. There's been some interesting discussions around government bodies getting access to everyone's GPS data, so they know who you've been in contact with, and being able to use that to better control the pandemic. The question is, once the pandemic is squashed, do we stop getting that data? Or do we say, well, let's keep getting that data so we can be more proactive. And so I think there's another opportunity there around sharing of information in a controlled manner, and developing systems that leverage technology like blockchain, for example, but they don't necessarily have to be on blockchain. For people to have a more self sovereign access. To the data and be able to share some information without sharing everything, you know, the common use case to give an example, right? The common use case of that is, if I want to go buy liquor, for example, in the US, right, I need to be above a certain age. And how I prove that is by showing my driver's license. Well, do they need to know what my addresses? Do? They need to know how old I am? No, they just need to know that I've crossed the threshold. And so being able to do that, being able to share some information around where we have been for the purposes of looking at like pandemic type information or medical information, can see some technology being developed to address that sovereignty of the data. So privacy, preserving access to data, self sovereign data, still answering some of the needs that I think a situation like the one we're facing right now,

Brad Kirby:

surprising when we get charged billions of dollars for sharing GPS data.

Thomas Borrel:

Yeah, that's one. That's one way to look at it. We mentioned on a previous podcast. Yeah, our topics. So that's one way to look at it. I think there's, there's an opportunity for additional use cases. I think, you know, too. I think blockchain would be a great bedrock for this. Absolutely. But I think going back to problem solving, I think it's going to come down to how can the industry in general deliver control of the data to the the owners of that data, while still responding to some of the needs of government? Yeah. Okay.

Brad Kirby:

Well, that's, that's great. So I think we really appreciate you coming on the show. I

Dean Nelson:

think that wraps it up. And it's a great discussion. One thing that came out of this for me in this conversation, Tomas, is that Alexander Hamilton was kind of the father of our financial system in the formation of our new country. And it seems like we're in a similar state where we need to rethink how the financial systems are done. And you know, this whole tokenization and using blockchain to have some way to manage this currency elements needs to be rethought. And perhaps this is the time that that actually happens. So thank you for the insight.

Thomas Borrel:

Thank you. It was it was great to be on the show. So thank you very much for for having me. That was great. I enjoyed it.

James Thomason:

Thank you so much. fascinating discussion. Wonderful. This week's episode of the next wave is sponsored by infrastructure masons uniting builders of the digital age. Learn how you can participate by joining imasons at imasons.org that's imasons.org. And by EDJ the infinite edge cloud for al the things build planet scale apps with EDJX using an ultra low latency edge cloud, visit E JX on the web at edx.io th t's Edjx.io.