Crypto - Digital Money 2.0

foreign [Music] to be here with all of you and to participate in the launch of the Falcon economy and I've wanted to share with you a couple of new ideas that I think will rock this space and have never been presented publicly before and one of them let's see I've got some slides here is related to payments which is Far and Away bigger than you know crypto there's an awful lot of money made every year in payments and what I'll be talking about is what I consider to be Far and Away the world's best money this is a new form of money that I've just created and uh in partnership with the Swiss National Bank and it's being tested uh out in in with in partnership with the bank for international settlements and it's that was only announced last week on Thursday and you can read the technical paper that's co-authored between myself and uh Thomas Moser who's a member of the board of the Swiss National Bank and it's online now also on charm.com and it's been in the media so it has three fundamental advantages compared to any other payment system and one of those the first one is from the original ecash the blind signatures you know that in in 95 1995 my former company digicash issued ecash with Deutsche Bank in Deutsche marks at that time and we did that through the blind signature technology which I had proposed in 1982. this is the first electronic money ever and blind signatures are very protective of individuals because when you obtain money through a blind signature process from a bank say you yourself make up the serial number of the money and you hide it in a cryptographic envelope that only you know the key to you give it to the bank they digital sign it to validate it and they return it to you and through the power of homomorphic encryption you're able to remove the envelope while leaving the serial number in place so now you have valid money with a serial number that no one else knows so no one can take that money from you because they don't know which money you have and when you spend it no one can see that it was you spending it but you always have the ability to prove or show who it was that received the money from you which is really nice for the owner of the money so those those are the properties from the original blind signatures in ecat the original ecash those are preserved in ecash 2.0 then it has also the best of the properties of crypto these days because you have the key and only you have the key that allows you to access your money and this was also true uh back with the originally cash but this ecash 2.0 is also blockchain compatible and we'll see that that means it can work with liquefinity and liquefinity is a truly disruptive technology which I will reveal Here For the First Time publicly in a few minutes um and another advantage that ecash2 has over other Payment Systems is that like blockchains the total amount of money issued is transparently visible that's something that gives a lot of confidence in cryptocurrencies and and so we I'm pleased that it that property is retained now the third nice thing about ecash 2.

0 is that it has some properties that no other payment system has ever had in fact the inalienable privacy is a whole new concept that was launched with ecash 2.0 and basically we'll see in a minute but it allows the individual to prevent their money from being uh stolen or used without their permission if it keeps your privacy inalienable from you your privacy cannot be taken away from you under any circumstance that's a powerful protection that's new it's a new kind of identification technology and the the other thing is just of course very important to central banks is the Quantum resistance if you're building a money electronic money for the future you you want it to be Quantum resistant against counterfeiting and and of course people want their money to be Quantum resistant against theft and ecash 2.0 has that in the strongest possible way so it you hear Quantum resistant some people say you don't need it yet some people say you know they have it but there's really two kinds there's the really the real strong kind that governments use and there's the kind that governments tell you to use we have here the kind that they use the the absolute strongest possible type of cryptography so this is a what you want to build a new kind of money on so very briefly I'm not going to explain it in detail sorry for the formulas but if you're familiar with the original ecash you'll find these illustrations in the article linked to on the bis site but this is the blind signature process in numbers uh this is the inalienable privacy protocol and you if you have a minute to look at this you'll see that what's happening is that the person is proving to the bank that the person really does know they were secret passphrase they really have committed it to memory this process proves that to the bank so no third party could actually be behind the scenes knowing your key and forcing you to to to or tricking you into participating here is an actual proof that that you as a physical person know this secret and that's what makes the privacy and the and the traceability of the money inalienable from you because no one can take that knowledge away from you and here you've you've proven that you have it one of the features of that's wanted in retail cbdc now don't forget ecash 2.0 is a superior wholesale cbdc as well as retail but in retail central banks often want the commercial Banks to be the intermediary and deal with with the public and so these you get these kind of uh what's sometimes referred to as indirect and these illustrations uh show that if you're in the business you'll you'll appreciate this uh and let me just show you one last picture and I'm sorry for the formulas and it's a little bit fancy looking but basically I I don't I don't think oh this laser pointer is it sort of works you see essentially the quantum resistant comes from the fact that hash images are posted to a blockchain uh when you make the withdrawal and then when you make the uh payment they're kind of crossed off the list and that's but but that posting goes through a mixed Network so XX Network which I founded which is live you know globally it's a superior blockchain because it has uh can demonstrated 3500 transactions a second running on small computers it um has built in this high-speed low latency mixing and the posting of those uh hash images as we call them on the blockchain is what maintains the uh transparency of the total amount issued and provides the quantum resistance but because it goes through the mix Network the Privacy is maintained this is that's cryptographer speak but you can read the article it really written in part by the director of his National Bank you'll see it's it's pretty intelligible um so let me just turn now to liquefinity this is something that's not been disclosed until this conference here and you know as people tell me it's a big deal because not only can it be used for payments which is clearly a big deal but can also be used for other kinds of of trading any kind of Exchange so if liquifinity had been available this FTX could not have happened right this is it allows trading and exchange of currencies without custody or settlement risk this is huge this is a profound change in financial services and it's it's real it and I'm going to show you a little bit about how it works it's compatible with ecash 2.0 so let just real quick here's an example suppose that Bobby has a Bitcoin and Elliott has some eth and they want to do an atomic swap they want to trade them without involving any third parties and so they just want to do it phone to phone and and those blockchains don't want them to do it there's no cooperation there's no smart contracts there's no third parties just Bobby and Elliott so they they create these digital vaults as is shown here uh it's this is a metaphor of course just it's just a uh uh uh place where the the currency exists on chain and then they all right basically create a bunch of keys that would allow a majority of a set of parties to refund the money out of the vaults in case the counterparty does not proceed and consummate the transaction this is just a special backup thing that can only be done to unlock the money back to the party that that placed it in the vault the other thing that's done is a set of keys are created and hidden in them neither party knows where as a result of the cryptographic protocol are two matching keys all the other keys in the set don't match only two match and that but they don't know which two so what happens is that they start testing and they just say oh let's see is key number one match nope key number two nope key number three nope ah but when they send key number four those match and when they match that unlocks the vaults to move the money to the counterparty and so in the end Bobby has gets the eve and Elliott gets the Bitcoin so that's an atomic swap so this is the a way to do Financial uh transactions sorry where there's no counter there's no uh custody there's no third party custody there's no uh and there's no settlement risk because when the transaction occurs during during the the payment itself or the swap of like uh to come to like to to cryptocurrencies or it could be uh equities or Commodities that are uh recorded on chain or uh the the the it it clears and settles at the same moment so there's no settlement risk unlike all the major exchanges today which all have Global uh meltdown as their you know outcome for possible settlement uh uh risks so this is a a better way to do all kinds of transactions and in particular for payments it's a a way to do them so that imagine say uh here we issued a an ecash 2.

0 world's best money and people wanted them to exchange it with cryptocurrencies globally and use it that would all be possible if other entities issue stable coins and Global currencies they could interoperate through liquefinity with with the uh AGM so uh this is a very exciting possibility thank you so much [Applause]