Securing The Future of Money - John Connolly (Elliptic) - TOKEN2049 London

hey guys so it's 4 40 on friday how am i going to keep you interested so there are no slides nothing to read um so i'm new to this industry uh i'm an ex-telco guy and i got drawn in on this the promise of the interface of finance and i loved listening earlier to what was said and it was really interesting because this is about predicting the future you know the secure in the future and that is a mugs game so the example used open source one the internet played out on monday two billion people went down on a centralized platform uh we went from national oligopolies and telecoms where you could only bring down about 60 million people at a time to one central service that brought down two billion people when whatsapp went down it is very very hard to predict how things will play out i loved the thesis when i was early in telecoms that it was going to be massive decentralization and that many roses would bloom that it would empower many people didn't necessarily work out that way the economy everything is much better but it didn't play out that way and so i'm very wary of saying uh this is how the future of money will be but there are some things that i believe will be true regardless one of those things it's a natural thing that everything gets unbundled and it gets rebundled again fundamental needs will always remain and one of those fundamental needs is trust trust is always needed it's not going to go away so what do elliptic do what am i selling what does every point i make lead to why why ultimately will it kind of build to a crescendo and say use our products well we're in the ledger intelligence base the crypto risk space most of you will know us from an aml compliance counter terrorist financing perspective more simply we can tell you is it naughty is it nice should i be dealing with it if i deal with it will i get in trouble will i not get in trouble and i'm aware that i went to the pre-event drinks that i'm sort of like either loved or hated depending on your view we are either you know here to destroy the revolution or we're here to enable the revolution and virtually every graph i've seen today has had just a huge hockey stick going up up and to the right and that makes perfect sense and what does that take to get that huge hockey stick what does that take you can't be on the periphery you can't be dealing with people who deeply understand things no you've got to get into the mainstream in the mainstream is where all of those rising to 20 30 of all capitalized assets that is the mainstream that's where i would love to see this go into the mainstream and that's painful sometimes i remember the first time i saw someone using a computer who didn't know how to access the command line and it upset me i was like you shouldn't be allowed you shouldn't be allowed to use that wonderful device without actually understanding how it works but the way that it became mainstream was that it got completely away from that and the same thing will be true of crypto for it to go mainstream it's going to have to engage mainstream assets mainstream people and a key part of that is going to be regulation so the first thing i'd say is regulation is good not bad if you want to end up on the far right hand of that chart the true mass adoption regulation will be your friend okay if you don't want to go truly mass market if you want to stay in the periphery i think there's a beautiful quote earlier if you want to be on coconut island fine you know go to coconut island stay in the periphery but if you want to become part of the mainstream you've got to meet people halfway you've got to meet people halfway you've got to go from where it is now into the mainstream and that requires regulation regulation is good not bad it is not against you it will enable you to become truly mainstream the next point i'd make is don't leave it too late i hear people saying we're not regulated yet we don't need to do something and then at the same time people complain about uninvited unenlightened regulation you need to start acting in a prudent way that lets regulators look at you and think you know what i can leave them alone okay if you're in the playground playing with knives expect a teacher to come out and say okay we're banning knives okay and but don't go oh but we wouldn't play with the knife sorry you know like you know behave in the manner you would expect to build a sustainable business and then show that to regulators so when they come to see what needs to be done to make a market act in a way that can go mainstream they see good behavior okay so don't play to the edges and to the extremes and do nothing and then complain if someone comes in and does something too draconian engage with it before it becomes a tick box make sure you're doing it for good commercial reasons there are good commercial reasons to understand risk full stop make sure you fully understand the risk before somebody makes it a mandatory thing the next thing that i'd say is if regulation is good and you should embrace risk management long before someone makes it mandatory the last thing then is use it to your commercial advantage compliance is a significant cost it is a traditional it's a significant cost in traditional finance it will be a traditional significant cost in the future too if you go with a solution that is just for a tick box it will not be designed to optimize your operational costs get in bed with somebody you never guess who i'd recommend but get in bed with a solution that actually gives you a cost advantage that actually gives you a brand advantage because going forward when hyper profitability sort of comes down and things actually go into more mainstream more competitive environments making sure that you can manage compliance costs in a sustainable way will be differentiating making sure that you can actually offer an experience to consumers to institutions to anyone that is fast and efficient will make a huge difference so just please make sure you do that the number of people who i see who come to us very late in their commercial journey is like terrifying it's quite it's quite scary how how late in the chain it gets considered it should be considered very very early on i'm saying that for the industry's benefit and please do view regulation as a positive embrace with it early help inform the regulatory environment that you would like to have and then if you're going to do it do it in a way that gives you a commercial advantage for the future um we can open up the questions keep you awake for those of you who are still here and let's go with questions and see if there's anything anyone would like to know we lost our he's gone to the toilet probably wasn't expecting it my mic my mic oh there we go there we go thanks very much for turning me up i really appreciate that any questions who's uh who's first oh come on surely because throw me a bone throw me a bone give me a question a nice one come on there you go lady up the front hi there you go thank you what's your view on decentral on regulating decentralized finance how can it be achieved without actually impeding the industry yeah so um it's interesting in that ultimately um making things safe making things trustworthy i think will be to the net benefit of the industry now you can move to a position where you don't facilitate that and try and stay away from it or you can actively embrace it when it comes to building any technology you can decide to make it in such a way that it can actively embrace meeting societal needs or not so it's perfectly within the gift of those who build technologies to either be friendly to society's needs or not friendly or friendly to some aspects of society's needs first first versus others so there's nothing inherently in d5 that makes it outside the world of regulation and when people come up and they build competing platforms and one is more compatible with going mainstream the one that is more compatible with going mainstream will win and and that'll just be how it plays out it's you know like you can do whatever you want with technology the question is whether you use that technology to lean into a regulatory framework a legal framework or a societal framework or not so i think the schemes and i i'm fabulously excited by i mean they're sending a future presentation that's wonderfully exciting really really really really cool stuff great conversation um it can either be decided to go down that route or not but it is doable it's 100 doable the question is do they want to do it or don't they want to do it and for me that's down to do you want to actually get to the far right hand side of the graph or do you want to slip back down towards the left excellent any more questions for for john one more come on what else have we got what else have we got oh here we go excellent sir thank you um so what about completely decentralized infrastructure with pseudonymous teams and completely evading regulation yeah you you can set up a bank that doesn't do any doesn't do anything today using old technology there's there's there's nothing inherent in the technology and that that is new to that that would just be a choice to do that and so you can do that and they exist already today like you already have you know privacy coins that don't enable that sorry or enable that but that's not where the majority of the capital will go you know and it's where the majority of the capital will go is where the majority of investors will go the majority of people will go if you have an ambition to change the world if you want to engage the unbanked if you want to engage the disenfranchised if you want to take the trillions of money from people who are already wealthy and get them slightly better returns you're going to build something that can embrace them you can of course build something that doesn't embrace them now there's a more much more interesting thing than about legal lie legal liability okay i i use an example joking at drinks i said i could build a drone put guns on top of it and code it to shoot anything above 36 degrees celsius i'd call the software in a smart contract and then i'd unleash it pretty quickly somebody's going to figure out how to address that in some way shape or form they're going to figure out who should be held liable for those actions you know society has open eyes it will figure out a way to promote the good and to demote the bad and those who are seeking capital will figure out a way to come up with schemes that promote the good and demote the bad so but from a technology perspective you could do stuff ages ago like mondex most people don't remember mondex true peer-to-peer digital cash you know would and you could transfer it without any central authority that existed back in the 80s you know the the challenge is how do you get something to be mass adopted and that requires much more than technology and i think that ability to embrace the mainstream is what that will make that work i think um i think that's it john uh thanks so much for coming down and presented all thank you very much really big fans of elliptic and what you guys are doing here so thank you very much big round of applause for john please thank you