The Integrity Economy: Why Digital Trust is the New Global Currency | EBC12

From Cardano, we are pleased to welcome Frederick Greg Ards. Thank you. Yes. Nice to see you, but thank you. I think he completely overestimated me.

That was a great opening speech. How do you lift that, right? So, you know, I'll give you a quick answer in 2 seconds about what we're going to talk about, and then you can leave the room and have a beer or something, right? But my hypothesis is very strong. The leaders of the next decade will compete for the integrity of the entire digital ecosystem.

So let's go back and see what we're doing today, shall we ? So today we call PwC or BDO, who are here , or someone like that, and we say, "Can you check if my infrastructure and my financial system are okay?" And then you sign and then you leave, right? And then we'll have to trust that . But the attack vectors and cost of attacking infrastructure have just dropped exponentially.

This means that we can all now apply some kind of AI model to attack digital infrastructure, and most of our lives and most of our businesses, most of our critical infrastructure, whatever it is, right? It is now under attack. Right? So, it's not...you probably heard that today, right?

I mean, we're going to tokenize repositories, we're going to tokenize stocks, we, you know, it all comes down to tokenization, right? I'm going to argue that the winner of the next blockchain boom is the economy, right? Not who tokenizes the next asset. This is not it. The winner will be those who build trust in the infrastructure behind the project, allowing users, consumers, regulators, the military, and anyone else, to go in and verify that that infrastructure is trustworthy.

And that means it will allow you to create new businesses and use AI, it will allow you to be quantum secure, protect your ecosystem and protect your infrastructure with the same technologies that are attacking you, right? So, every year there is a publication from the World Economic Forum, which I pay a lot of attention to. I also participated in its creation. So, a big caveat. And if you look at this year, right?

What they were really saying was that in the short term, the biggest global risk we face today is not so much about who is killing whom, not the next pandemic, not armed conflict between states, or cybersecurity. This is actually misinformation and false information. Now this is really really important because we said before: you know, in blockchain we trust, you know, but I can verify but I can verify . Remember this? There was a big slogan for Bitcoin: trust, but verify.

Now the problem we see today is that most people can't even check anymore. No one uses public infrastructure in a way that you can test it at the level you need. What that means is that this idea that you can now replace very key pieces of information at a speed that you've never been able to do before is going to destroy your brand, it's going to destroy your company, it's going to destroy you as a person. So it's not so much about whether my Twitter profile will be hacked, but rather what are you doing as a company? If you're one of the most important big brands in the world, I saw the FC Barcelona team FC Barcelona team sitting here, right sitting here, right ?

When this brand is under attack, yes is under attack, yes , there are a billion people who trust FC trust FC Barcelona, ​​right? But how do you protect yourself, right? And that's why FC Barcelona has people working in blockchain, because they understood that critical infrastructure protects these fans, right? It's not just about engaging fans, it's also about how we defend something like this . Which brings us to where we are today are today , right?

And this is what institutional-level trust is . Isn't that right? This is essentially . Isn't that right? This is essentially identification, accountability, auditability, and cross-border provisioning.

For those of you, like me, who stayed up all night debating the Clarity Act in the USA, this is a prime example. We don't have a clear structure in the US, do we ? That means we have no auditability, we have no accountability, and we have no way to passport our way of thinking from Europe and Asia to the US, or how the US can import it or export it to the rest of the world, right? So, this is how we create islands, but technology is not an island. She doesn't respect the border, does she ?

It crosses it, and these attacks are not just directed at state actors, they come across multiple vectors, right? So when we look at this, it means that the new global currency has to be integrity. Is n't that right? And integrity is even harder to define than trust to define than trust , right? Because what does integrity mean?

And I just stole what Wikipedia says, because I still trust Wikipedia more than any artificial intelligence models, right? And it's really about inaction under pressure. You remain whole and unconquered by external forces. And when we look specifically at businesses that scale, for example, we have plastic here in the room, right? Who is doing amazing work in refugee camps, but also amazing work here in the European Union on recycling things.

But if their infrastructure is under attack, right? Since you need to verify how this plastic is being recycled, they need to be on the best way to protect it, and it's permissionless blockchain , right? Whether it's Cardano or something else, that's another topic else, that's another topic , right? But we are seeing more and more companies that have to compete with big global brands that are choosing infrastructure where integrity is built into the foundation and at the management level. Now there is a huge economic potential, isn't there?

So we believe, and all the world leaders in consulting believe, that we're talking about a 13% increase in GDP per 13% increase in GDP per country if we have integrity built into the identity stack. So if we just get to a state where we have a digital identity, we can agree on something that can be managed, right? We can get 13% We can get 13% GDP growth. And I just got back from a meeting with some European parliamentarians. You know, they understand that.

Everyone wants 13% GDP growth, right? So suddenly we can talk about it. When we talk about the number of transactions per second, well, nobody cares, right? We're talking about job creation , growth, being able to check with our constituents how money is being spent, well, that's what people want, right? So, if you take one photo today, this is this slide, right?

This is what slide, right? This is what we believe the infrastructure will be, not only for business, but for all targeted operating models. So, first of all, everyone dreams of this universal intelligence, right? The idea that I have an artificial intelligence that actually knows everything about my medical records, everything about my dating history, everything about me as an economist, and then it can act on my behalf with my permission to improve my life, right? This is the idea being promoted.

And I think we are moving towards that . Whether it will be self-developing and other things is not the main thing, right? This is the best version of me, you can remember everything I did from the moment I was born, when I came out of my mother's womb, to where I am today in my business life. It will probably make me live 20 years longer, it will help me make better economic decisions. But for this to work But for this to work , it has to be in addition to digital payments and programmable value, right?

These are not the tokens you hear about today when you hear about RWAs, because these are SPVs that have certain rights to something that you can't even claim, right? It's about having real rights, right? Then you need authoritative registries and data exchanges, and that's where the banks and exchanges are headed, you know, the big four, some of these really big trust brands. They will be the new generation of oracles. They will be a protective element that says, "I know the data of 5 million of my customers, and I can confirm that this is what is behind it."

This unlocks the zero- disclosure proof, right? This unlocks the compression. There's going to be a whole new role in how to verify data without actually revealing it, because you need these verified brands. Then you have digital identification, because nothing above that works without proper digital identification. And this is not something developed by a blockchain company.

Sorry if you're here right now, but that's just not the case. This is what is compatible and already works today. We think the winner is something called GLEIF. This is the standard for identifying a legal entity, right? Which now works with all banks.

But it could also be other universal standards. We are approaching the agent standard of artificial intelligence in terms of identification. Last but not least, you need a place where you can do these handshakes, an immutable data layer, a fabric where you can sign these things, where we agree that this is all the truth, and we agree to the rules of the game during the game, and those rules cannot change. And it's called blockchain. This means we're moving into a situation where we have an event, something happens, we have proof of that event that's locked away in a data structure, right?

And anyone who has permission, either because they are a customer, or have received some kind of permission, or it's just an open model, can check it out. And imagine how great it would be if your AI agent could work with verified data. So it's not just presenting something presenting something that looks like the truth, but you can actually know that he's taking something that works with proven data, right? The likelihood that you will get a good answer becomes much higher. Now we can talk about operational impact, right?

And it is huge. When you get to this situation, right? We're talking about being able to save and build the economy in a way we couldn't before. A lot of people are talking about us moving towards D2 or D3, right? So only China and the US remain.

I mean, the rest of the world has a chance if they look at this kind of resilient infrastructure because it allows us to collaborate without being part of a particular alliance because we're looking at the same symmetric data layer. And we can add these exponential models on top of that, which will allow us to come together as businesses, as people, as countries on issues that we believe in, whether it's trade or security. Regarding the legacy systems we have today we have today , most of you who work in asset management and banking , where I come from, right? We have one big problem. We are constantly trying to restore what is.

We do not replace. OK? And this can work to a certain extent. And that's probably why you see stablecoins growing so much, right? Because it is an algorithmic enforcement of matching rules.

There is no person in the middle. As long as you have a human in the middle, costs increase, uncertainty increases about how decisions are made , right? And you patch your infrastructure. By patching your infrastructure, you have more attack vectors. With more attack vectors, someone with a few tokens in their hands will find a way to get there.

According to IBM, the average visitor to your infrastructure, let's call him an unwanted guest, right? I'm talking about a cyberattack now. They are in your system for 18 months before you detect them. It's been over a year. That's pretty creepy, isn't it?

This means we're no longer talking about databases, you know, that haven't been hacked yet. We're just talking about whether you found out whether they were there for 5 months, 6 months, 12 months or 18 months, right? That's what we're talking about now. I work with large reinsurance companies, and they tell me, "We refuse to write policies for banks in case of data loss." So much personal data is being stolen from banks these days , isn't it?

And with that comes money, and then assets go, right? The fact that reinsurance companies refuse to cover the policies of insurance companies that should cover it for banks. This means that it goes directly to the balance sheet. This is the level we are talking about now . So we believe that regulation equals infrastructure, which equals market confidence, right?

And that's why this new, um, MiCA 2.0, which is currently in the consultation stage, that's why we were very supportive of the Clarity Act, which didn't pass, which was also expected not to pass, right? But we need to get to the point where not only can villains use this type of architecture, but we can use it to create blockchain for the benefit of humanity and humanity for the benefit of humanity. It's about business development. It's about creating a better world, not about giving a few people the tools to destroy our world.

It's about cooperation. So where are we now, right? We see a lot of capital and technological innovation being invested in pilot projects. And in particular, everything related to artificial intelligence and blockchain is still getting a lot of funding, right? But because we don't have a good level of identification and verification, it all stops there and never scales.

Fortunately, we have created an open model that essentially allows you to take the best of both worlds. So, first of all worlds. So, first of all , we have a company called Veridian that you're currently raising funds for. It allows you to manage identifiers, everything from your freezer to your satellite that you send all the way to the highest level of institutional identification called the LEI. I've talked about this before talked about this before , right?

And the other part is that we don't think it's for everyone, but now we have the ability to put all financial data on a blockchain that's EU GDPR compliant, audited by all the major auditors. So instead of them going in and doing spot checks, they can do an architecture check, and now you can provide it to your customers if you're raising funds, or you can provide it to the people who are overseeing your business model, whether you're raising a new regulatory license regulatory license , you can give them a cryptographic key cryptographic key , and they can unlock it, and they can verify everything on the chain. Not just 10 transactions or something like that . I mean everything. Some of you will say, everything.

Some of you will say, "Ah, that's too transparent, isn't it?" But this is where you can control how transparent you want to be. But the point is, if the cost of transparency goes down to zero and you control everything, it benefits everyone. And I think that will create a world where we're no longer optimizing arbitrarily for the next dividend, for the next earnings session, right? We will actually start to care about what business model we interact with.

It will no longer be a pension fund that already organizes general meetings, who will be the chairman, and what the strategy is. We, as investors, we as people, will be able to verify where this jacket came from. Do you know what they do in terms of bonuses and salaries? Do they really recycle plastic? Go back to the plastic sky and talk to them, okay?

Because there's so much greenwashing going on, right? And most people are so scared right now because they thought they were buying ESG credits and they put them on their balance sheet, and it turns out it's a double dip, right? So these ESG right? So these ESG credits were sold to five different companies, and if you're working with a big brand now, you have an AI agent, an AI agent can figure out that this was most likely included in your balance sheet, and you thought it was fine, but it was included in five others. So now we, as regular people with a few tokens, can check this out, right?

But fortunately, we have blockchain. So, this part of the LEI has leaked through the TradFi financial markets. So today we already have 272 trillion. So it's not volume, right? This is the market capitalization of financial markets, which is already covered by this standard for legal entity identifiers, and now this is moving to vLEI, which stands for quantum security, right?

And when we look at physical goods, they have less than 1% adoption. And do you know what they still use? Paper and signatures. Not very effective, is it? And if you look at the cryptocurrency markets, right?

If one of you is the CEO of a cryptocurrency exchange , right? You have an LEI number and you work with fiat data with an LEI, so you're in the middle, right? But everything you do in cryptocurrency, you leave outside, right? So, this just shows some of the growth opportunities growth opportunities that there really are when we start thinking about the fact that digital identity doesn't necessarily have to be on the blockchain. It has to be verified outside the blockchain, but you have a choice, but you also have a revenue model hosted on the blockchain.

So the decision that faces anyone who runs a company, whether it's a big company or a small company, is really whether you're going to continue this Rubik's Cube where you add new colors and you transform it and you make it really pretty, or are you going to think about trust in design in a way that you don't have to manage risk much later, right? So, we believe that the future is called trust through architecture. The winner will be the one who thinks about how to ensure the integrity of the entire ecosystem in such a way that transparency is almost zero. You can have external trust bodies, such as the trust bodies, such as the Big Four or a major bank, that will audit your entire architecture, but only for the people you allow them to do so. This gives you the ability to control it.

Thank you very much for being here. Thanks for listening, and have a nice day, huh?