Tokenizing the Physical World

[Music] hello and welcome to everyone i hope you have managed to reach the next next event the schedule you know if you are still appearing in the previous event we won't be seeing your question so p please make sure that you are now under the keynote by atomize so welcome to atomize we have tim and marco here they will be talking about tokenizing the physical world we already had an exciting conversation this morning about tokenizing everything so we are continuing now i'm now going to give the word to marco welcome on stage marco and enjoy the keynote thank you very much let me see if everybody sees the presentation perfect marco perfect so uh welcome everybody first of all thank you for the to the organizer to having us here um a brief introduction it's uh marco cross the ceo of atomize uh speaking to you and tim harmy tim harvey advisor of global political fund and uh today the topic is tokenizing the physical world as you see in the entry uh we also then have again us two today here together presenting because of a very simple reason to make tokenization and commodity happening you need the old world in the new world i'm representing the new world as atomize and team representing the old world but also with uh with a glimpse of new new worlds which is the global palladium fund who enters the new world as well let me let me start by saying uh commodities and tokenization uh what a success story to get there it's very difficult it's uh we have to solve complex matter that needs to be addressed solved and implemented especially around the supply chain management of the commodity business where you have different businesses different contracts that are governed along different countries so if you think about jurisdictions a very difficult cross-border here as a key word but also different big organization that needs to be convinced that distributed data technology is the future and also within a market that is constantly moving demand and supply change dynamically changes every week every month and within such an environment the new technology might certainly be a game changer for us so both uh both tim and i see this as a game changer for the commodity basis the distributed digital technology uh additional topics that needs to be solved in order to get there beside the cross-cross-border issues besides the different the size of the organizations there are plenty of taxes legal in the regulatory matters which are not kind of uh easy to solve but rather difficult once done then we have a kind of open open way open highway to then execute our our innovations but to get there that's a long that's a long journey what we also can see is that if this journey is achieved that this might revolutionize the supply chain management and creates new way how to transact amongst the commodity business along the supply chain and also on the investment side if we then add esg components into a transactional view of the hyperledger fabric of distributed ledger technology then we can also improve by adding whatever sort of information to a transaction and certainly esg component might then enhance the future view of this this economy of this business hi marco garcia already said ceo of atomize in switzerland atomize is a company sitting in zhuk in switzerland based or kind of digitizing and tokenizing the physical world in two areas one is a supply chain management including everything related to esg topics and on the investment side of the commodity business where we have different products that can be brought in the futures case into the market also if whenever possible and link that to esg components we use as you can see here a hypollegia fabric as our surrounding technology which uh is tweaked exactly to the needs of this business so there is a propriety platform that we have created in order to support the whole business supply chain and today with me i have team tim harvey as i already anticipated that is coming from the old world and i could convince him a couple of years ago to join us in that journey and to bring his expertise into play and and connect the old world and the new world but let's have tim also introduce himself uh to you so hello team i'm thank you very much indeed and uh thank you to the organizer of this wonderful event and it's great to be here today with all of you um my name is tim harvey i'm um advisor and head of business development for the global palladium fund global palladium fund is also based in switzerland and we basically enable our users be they investors or um commercial users to access the metals markets the metals markets are actually quite complicated and hard to access you have to be a member of an association you need to be a bank you need to have warehousing you need to have all of these things to be able to access the spot markets what we mean by spot market is the market which actually reflects the physical price of the metal in your hand today so if you look at things like the oil market they talk about the spot market but actually it's physically impossible for you to invest into oil unless you've got your own super tanker offshore europe where you can deliver the metal at any one given sorry the oil at any one given moment but when it comes to metals it is far easier because metals are very easy to store however it doesn't matter that they're easier to store than oil that's still quite complicated and this is why gpf is really interested in the blockchain and tokenization and how we can use tokenization and blockchain to make the lives of our investors and our commercial users so much easier and i'll be talking a little bit more about that over the next few minutes but in the meantime let me hand back to marco thank you team so as i said a couple of minutes before we have two areas where we concentrate our business one is one is the supply chain management the other is the investment side of commodity market business both connected to esg but if you go one step deeper now in the supply chain management so what is what is the real game changer here with dlt technology so what we can achieve is that we can create a so-called signitude of information throughout along the supply chain where we can attach track and place information proof of problems additional esg components quality assurance audit report into a transaction so we have built our platform transactional waste so a transaction means delivery versus payment and every transaction delivery versus payment will have an invoice we'll have a bill and attach that transaction on the blockchain we can store whatever kind of information are deemed to be stored in that transaction that permits us to have a signitude of information which is in addition to have it simple to have it kind of a significant information you can also have it mutable so means the data stored on that distributed ledger piece of technology it can't be changed in other words it can it's it's also some kind of security over that blp and it reduce also certain kind of disintermediation means we reduce kind of middlemans who needs to be involved here to make make this happen at the end of our presentation we have an example we show the old and the new world how these intermediation might be visible explained to you but this is very important because that brings bring data and documentation authenticity into a next level so it brings us not only on reconciliation streamlining of processes but also kind of the data itself and the contract into a uniqueness so back in time sometimes you have the last contact which is signed on one end but not sending the other with us i think you have to see the total information we always can check what is the latest information what is the latest content with this also reduce paperwork and interaction on daily operations in other words if you need to look at what is what is governing who is owner of that piece of information which at the end is linked to a real world asset you can look into that vlp technology piece and you see it's either with with the with the prior deliverer or it's with you and you have all the information attached here so means that you also have back office a middle office interaction which is a benefit to your business to produce certain costs which is also beneficial for daily operations and gives somehow a certain flexibility on our operation of optionality in making decision of when a metal piece is part of a supply chain and when it can be used for investment purposes that's also a an idea that we brought forward within our platform that we can switch from industrial uh that's the supply chain management into investment area where you have the metaphor investment purposes so you can have kind of a switch on and switch off of this of this state and because it's a kind of connected into a big marketplace it allows them additional participants to be part of it so you can add a bank if a bank is needed you can add a warehouse provider if such is needed and you can add any sort of client and investors depending on the needs of the issuer so that's somehow what what our platform brings us as with it in a nutshell we can put some benefits over that over that piece of technology and it's not only the technology that that is the benefit but also what it comes along so the technology drives a little bit the reshapement of the processes it reshapes the the supply chain shapes how people act between each other so the technology is not per se the winning argument but it creates uh new ways how to transact as i already said at the beginning so just summarizing it gives you certain access to institutional storage where the one platinum can record that uh in in a in a distributed edge technology piece which which is in our case the hyperledger fabric so you can prove that you have metal in this in a so-called storage sitting somewhere in switzerland and so it gives you then access not only to the storage but also to the prices attached to that storage which is institutional grade prices and methods you can have a certain degree increase we are not aiming to to be in a kind of uh exchange like lme we are not aiming to be in the sport market we are somehow in between an alternative way how you can manage your commodity business and where you can combine industrial investment participants and create a certain liquidity amongst certain parties who are interested to follow that that root this also leads us to an efficiency increase as a utilization in one platform this intermediation already said but also reduce certain counterparty and operational risk why because we create a so-called pre-funding environment where you when you transact with another party that transaction already is secured by money sitting in a bank account so in other words to deliver business payment and our patent happens with a pre-funded bank transaction means that the counterparty and and the billing proceeds near near real time which allows us to switch from metals to metals within certain uh not milliseconds but kind of within minutes but sometimes in the old world is kind of lagging behind because of t plus one t plus two transaction time and the last one is it creates certain transparencies and as i already said esg data can be attached to any kind of transaction but also it gives kind of the information in the documentation another level of transparency which is kind of also very important if we look into auditability review and reconciliation matters that that's in a nutshell the the industrial the industrial supply chain side of our business and i would like to hand over to team to explain us the investment side of our business that also has a certain kind of innovation benefits and also our view into the future thanks marco um on the investment side we're getting some questions coming in as well what we'll try and do is build the answers into the answers we give as well um but what we've created what we're looking to create with gpf is the ability to trade the in and marco made reference to this already to trade the institutional spot price so if you're looking at something on copper or nickel for example then we would use the lme spot price to actually uh reflect the value of the token or the physical metal that you're holding digitally that's really important because if you're accessing the lme spot price you actually need a license from the lme you need to be using lme good delivery metal you need to be ster storing with the ability to move uh off warrant to on warrant within a within an lme warehouse so you're actually already part of the infrastructure of the global institutional marketplace for nikola copper the same goes for precious metals be it the lbma the london bullion market association which basically is the global standard for gold and silver around the world or the lppm which stands for the london platinum palladium market and the lppm is obviously for platinum group metals exactly what gold and silver are for the rbma so basically from a pricing point of view we take the institutional global spot price so if it's a base metal copper or nickel potentially cobalt or something like that we're looking at the lme the london metal exchange price um why is tokenization so important to the physical world well if you look at the lme for example the lme takes its routes back to 1571 and the coffee shops of london where you used to draw a circle on the floor of one of the coffee shops and anybody standing within that circle wanted to trade copper um it was formulized in 1877 with the creation of the lme the london metal exchange and effectively it was potentially maybe it was the first step in globalization it was saying that if you want to access our market you must make sure that the copy you're delivering is to this standard and the fact that if you're a supplier to the lme you've been pre-approved to deliver the metal we know who you are etc etc and maybe this is you know some of the lessons that we can take with tokenization of making sure as marco said with hyperledger fabric that you know who your counterparties are so when it comes to the tokenization of commodities particularly from an investment point of view knowing your counterparties is incredibly important other reasons for doing tokenization of metal is proof of geographical location we live in a world now where investors and commercial users of metal are very concerned as to carbon footprint if to make sure there's no slavery issues no child labor issues etc we can use the blockchain to actually confirm to investors and to users that the metal they're using has no child labor no slavery issues or the carbon footprint of the metals so being conflict-free free or as we say on this slide carbon neutral this helps investors drive the transition to a net zero carbon economy because if i want to invest into copper for example copper being very very important to the generating of net zero carbon power if you want to have a wind turbine you can't have it without copper because that is the very essence of how you generate electricity you can't have hydropower without copper because it works on exactly the same principle as wind power you can't store this power effectively without nickel for example cobalt is also a key component in battery technology so all of these metals people are interested in because of the drive to a net zero carbon economy so cobalt says obviously if anybody who's been reading the news knows there's been conflict uh issues with cobalt and being able to prove the geographical location of your cobalt obviously means you are outside of a conflict zone and things like that which means anybody can happily and freely use your metal without concerns that something's going to come back and bite them in the future so from that's very much from the investors point of view because investors by their very nature probably have investors sitting behind them and some of them may be in our audience if you invest into a pension fund or something like that then you've seen the dramatic growth in the opportunities you have to invest into esg structure products environmental social and governance products ten years ago this really wasn't an issue but it just shows you how quickly the world changes because now this is the major issue and this is something that all investors are concerned about but let me pause there and hand back to marco marco thank you tim i think to summarize what what we said and also your example uh we have put together an old innovation view of of this exact uh example that you proposed the the exchange traded commodity business where you have here on the left side how it is structured in the old world where you see different participants somehow connected somewhat disconnected so you you have different systems that interact with each other you have different reconciliation of businesses sometimes pay person still works sometimes even facts uh still is needed just just to open and close a packet so a fax transaction today sometimes you need to find the provider who still provides you faxes but in certain occasions this is the reality on the left side and what our vision is on the right side is to kind of have a distributed ledger to have a secure mutable environment where we can concentrate the signitude of information means all the contacts all the needed documentation that reconciliation within one place distributed to make it secure and where you have still the client still the commodity provider still the token issuer these parties still needed them but if you wish then you can attach additional participants or you can have a bank attached to it but the essence is that that hyperledger fabric in the in the blockchain or dlt distributed ledger technology gives you the opportunity to attach a lot of information within one transaction um maybe i also asked my team to give us kind of three major topics that he would see in in the in the new vision of the new world that helps in regards of of the investment side of things especially in this business here which is the exchange traded commodity business that makes makes the division real thanks marco i think um and to answer another question which we've had um you know this overlaps the old world and the new world and whether you're selling an investment structure onto a stock exchange or if you're selling a token the actual proof of ownership is pretty much exactly the same how we how we create the metal token that for uh an investor or for a commercial user is we take the data which is available by that i mean if you're looking at a pressure a bar of gold or silver or platinum or palladium every single bar is unique it has a unique identifier which is actually put on it by the smelter of the bar so nothing to do with gpf it's actually the smelter that actually puts the number on that bar when the bar lands for the very first time at the lbma or the lppm it is the member bank which is responsible for weighing that bar and for assessing that bar and then they're putting the weight stamps onto that bar not the refiner so that's the kind of the belt and braces of the actual identifiers that go onto bars when you're looking at things like base metals it's similar different but similar because there you're looking at things like cathodes so you're it's um because of the value of base metals is nowhere near as large as that of precious metals um there's no shortage of checks but the actual way of recording the data maybe it isn't stamped into the bar maybe it's attached by hologram or something like that so you take that data and you record that data into the blockchain so let's look at what we then do as marco said these three key things so taking the identifiers recording those into the blockchain that now to use a word markers already used gives the investor or the user an immutable record of ownership because that cathode that bar belongs to that investor because they can see the actual unique identifiers which have been recorded if you look at a step two i suppose would be the esg impact this has on the metal there's a product available in the market today only for institutional investors but it is available that basically neutralizes the carbon impact of the nickel the investor or the user is actually acquired this is done by the miner who actually runs this project they generate carbon certificates internally by reducing their carbon footprint every year and this project's been running since 2013 and includes one of the big four accounting firms one of europe's largest um largest environmental consultancies and also includes the nickel institute and the um the international association of platinum and palladium miners so it's a project that's already been running for eight years and very very recently this year they issued the first product using all of the data that is being uh collected and of course with the blockchain i can now take that data and that carbon credit and i can attach it to that pile of or bundle of nickel and that's unique because now i can prove to an investor using blockchain or a or or a commercial user that that metal is carbon neutral even if the metal is used by a battery manufacturer to and that battery is then sold to volkswagen tesla hyundai whoever it is because of the record in blockchain even though the metal no longer exists you can still prove that the metal that went into that car was carbon neutral so that's definitely number two and i think number three is um ease of trading that or to be able to exchange ownership and the fact that you as an owner you know exactly the quality of the metal you're going to receive and on which date so i think it is basically it is the immutable record it is the esg quality um and it is the uh the actual ability to transfer ownership because when you transfer ownership of one of the tokens that gps has been working on you're not just getting metal you're getting metal which is uh the global standard traded at the global price and custodied globally as well at institutional custody rates so this gives you access not just to institutional quality institutional pricing it's giving you actually access to institutional storage costs as well marco thank you very much and and i think that somehow coming to a kind of a summary in regards of the connect the connection we have in order to make this happen so we have uh the biggest biggest companies within this project you can see some some commentary of big names here and what is out in the press on our landing page you can also see the banks the warehouses and and the industry player we are working with so big names that can make this happen for one and maybe not the sole reason but one of the reason is because they are the first in the supply chain so the the beauty of our project is we are we are closely connected to the mining companies who are the first in the supply chain and connecting that with esg data will guarantee us that throughout the supply chain everything starts with us that's that's why we believe i strongly believe that atomize can write a success story and that combining that with the industrial investment side of the commodity business in connected into one marketplace and platform uh somehow this this reflects our vision the esg data connected to it that is kind of the additional target that we want to have and it makes the whole scenery perfect that was our keynote speech and now i can you can open up for questions i don't see the questions now on the screen because i am i'm the presenter but maybe yeah i can see a question here from and uh victoria jump in and um tell us to be quiet whenever you want but uh yeah i think maybe if you want to take one question we'll just take this question from uh juan david um if the token is based on the metal number bar what does this mean uh is it not going to be used by that's the whole point actually because if you've bought a physically backed product you have had a direct impact on the supply and demand of the metal you wouldn't really want a product that does not actually put the metal away if you've put the metal away you physically own that product it's yours um i think it's really important to understand that if you haven't done that you've effectively bought a note and what is by what is backing the note is it a bank balance sheet whose balance sheet is being used to back the token so physical storage of your in metal be it as a user or as an investor is really really important and i think marco that's it maybe to add that uh that we as atomize have always uh we are met with custodian and tokenize that information uh so in any case we have always kind of a big four looking into what is the real world there what is exist and what is the reflected digital twin of that piece of metal in the blockchain we have also now landing page uh an audit report on our very first transaction just to complete yeah victoria back to you thank you so much tim and marco very interesting keynote and for the audience if you want to know more about the project atomize please reach out to them either via the people tabs they have several members there or if not uh in the booth or if not through the website thank you very much tim thank you very much marco and now thank you thank you now let's continue with the next panel discussion please go to the schedule tab and and go into the next panel discussion thank you guys bye [Music] you