Crypto's Confidence Chasm - TOKEN2049 Singapore 2022

good morning everyone um I guess it's nice to see so many people I think it's fair to say that yesterday was um extremely busy quite manic so I think it's quite nice that today's calmed down a little bit uh certainly for some of us who are going to be Manning the stands my name is Declan Hannan I work for a technology company called coin cover that provides Theft Protection Services um to ensure people are prevented and protected against loss now I'm not going to be talking much about our technology in this presentation but I do hope you'll meet us at our stand just behind the stage and speak to myself and colleague my colleague Ryan at some point throughout the day now I'm going to be talking about potentially quite a uh controversial topic the image problem that crypto has as an industry and I think there's a lot of people who would argue there isn't an image problem I mean I think there is and I'm really going to be taking the opportunity to walk you through it so I'll be touching upon why I think there's a bit of an image problem uh the current landscape of threats that it exists and this might be a little bit different from so many of the talks and speeches that you'll be listening to um yesterday and today what you'll be hearing is about all of these fantastic opportunities right uh the amazing Innovations the Marvels that are going to Skyrocket uh crypto and all of this is true but I do think we also have to acknowledge the fact that there are a significant number of risks and threats that could potentially slow down that drive to mass adoption because ultimately the vision of crypto is that globally there is an Embrace of blockchain technology and that is used by the masses to bank the unbanked and I think if we can identify some of the issues um that could potentially slow this down as an industry we can move forwards far more efficiently now when it comes to the image problem itself I guess perhaps the easiest way to sum it up would be safety or a perceived lack of safety now I always try to think of uh relevant or close to you know relevant or recent examples when I'm giving talks uh you know to audiences and in our industry it's not very difficult to find them and that's because it's an industry that's moving so fast and evolving so quickly that often it's very difficult to keep up with all of the changes that are taking place now the one of the examples I'll use is actually somebody who's pretty crypto aware so not a new entrant to the industry not somebody who um should have known better um you know it was the CEO of defiance now you know only recently he was hacked for 1.8 million dollars and when I dug a little bit deeper to try and understand why what had happened is he'd seen a link that he believed to be from one of his companies he'd clicked it and as a consequence of that the hackers have been able to gain access to his computer now this is where it gets a bit interesting right because this is someone who knows the industry very well he knows what their threats are but clearly his private key was stored on that computer because they were then able to drain that wallet and take those assets only four days ago another example um it was that an article was published around the creators of the Mev Bots that they built a back door that would allow them to drain wallets six users while it's already had already been drained at ease but there's still another 13 000 users that are potentially at risk now the creators have completely disappeared from the internet but the fact is that those risks still exist so that's one of the key areas I'm going to be talking about but there are a couple of other areas that I think are important as well you know skepticism amongst governments and financial institutions now whenever I say this particular one I often get well why do we care why does it matter I think the real point is that it exists you know and the factor means that there is skepticism and ultimately skepticism from you know nation states and from large financial institutions are potentially going to create barriers again to that mass adoption and Global use of you know of crypto as a currency and then finally lack of Regulation now this is a particularly contentious point right because there is this a valid argument that a lack of Regulation creates a free a free economy that can grow and um expand far more quickly but I think we also have to highlight that that's a lack of Regulation can also create a potential risk for the citizens that are operating with the currencies but if we take a step back a second and we think about hacks as a whole some of you might be a bit surprised but the number on the screen behind me right a 185 percent increase uh in hacks and loss throughout 2021 now when I see a number like that I guess the question I have to ask is why is our industry particularly easy to hack do we have no interest in security industry well no of course we do and actually to hack these companies which are typically smaller exchanges is not an easy thing to do it requires a significant level of investment a large number of people and a huge amount of time so why is it that we're seeing an increase in hacks more and more and more even in 2022 there's been over 72 already this year well actually if you take a step back you start to see the bigger picture the crypto industry as a whole is still for all intensive purposes relatively new it's a startup industry right certainly when you compare it to more traditional sectors like banking you know if you compare it to someone like the Bank of America whose CSO has an unlimited cyber security budget you start to understand not that crypto is necessarily unsecure it's just not as mature and I think that's a really really key distinction right because you know when you look at even many of the companies in the room here some who would have unfortunately been victims of hacks themselves it's not because of a lack of awareness or a lack of security or lack of interest is because actually they're not prepared as a company or an institution to be hit by nation-states like North Korea which can be risk and result in massive losses But ultimately who are the victims of these hacks it's the users it's the retail it's the everyday person who's investing their crypto you know right now even now in the United States there's a thousand people that are suing coinbase because they were hacked and they had their accounts in infiltrated and their funds stolen now coinbase are turning around saying whoa whoa whoa hang on guys we won't act our technology wasn't breached you were hacked this is your problem I mean we take a fee when you complete a transaction but you were hacked it's your problem now if you actually think about what the implications of that are what that does is send a very clear message only invest what you're willing to lose and I'm going to say that one again because actually for me that's probably the most important statement I'll make throughout the entire presentation people will only invest what they are willing to lose now that for me flies directly in the face of banking the unbanked of having a global rollout of crypto that supports a global economy you know you can't ask people to do that you can't ask the billions of people around the world to do it if they're not willing if they're only willing to put in what they're willing to lose and I think as an industry we should be able to identify those issues and try to solve them together you know the youth founder said this year that crypto has been brilliant in allowing the well capitalized to become even more well capitalized and again for me that's a far cry away from the vision of banking the unbanked servicing those who can't be serviced currently and I think as an industry we need to try and Tackle those issues together then of course it's the institutions you know if we want crypto to be taken seriously by the institutions if we want them to adopt and drive the mass adoption of blockchain Technology then we have to alleviate their fears and we have to solve that issue around Mass adoption because their biggest issue isn't volatility volatility is expected especially over the last 12 months right um you know volatility is something they can deal with and build into their risk portfolios no their biggest concern is security and that kind of takes us to the technology itself you know one of the Fantastic things about blockchain technology and about the crypto industry as a whole is that it's very leveling as an individual when I open my wallet largely the technology being used is quite similar to that of a corporate and you know and you hear well the blockchain's very secure it can't be hacked yes it is but people are not right you know these unique fantastic fallible individuals will always be susceptible to being hacked and ultimately that issue is not going to necessarily go go away but what we can do is try to make it easier to prevent people being hacked by acknowledging some of the problems that exist within our industry and that kind of brings it quite nicely on to loss itself because hacking is of course a major issue within our industry but so is lost in general it's estimated that 20 of all Bitcoin is already gone forever not the sounds of a scalable solution if we want it to be adopted by the masses you know once crypto is gone it is gone and I think we need to work to ensure that certainly individuals that start to enter the market have much better support and means to recover Assets in the event that they potentially lose or forget their private keys I'm sure you've all heard about the guy James in Cardiff who threw away two hard drives uh you know with over 500 million dollars worth of bitcoin on he's still petitioning Cardiff Council three years on he actually thinks he knows where these hard drives are inside the skip he's got a team he's and on a budget of 11 million pounds to get this back but it would have been better if he had a means to recover in the first place right and again these are these are issues that we need to tack them we need to be able to solve now the quote you see behind me is from a gentleman called Stefan Thomas he also lost quite a few million pounds um through crypto but he started to challenge the status quo uh you know and it's a message I hear all the time right be your own bank fantastic right be your own bank sounds like a very um very um Illuminating kind of principle to have but let's actually break that down a little bit more what does it mean to be your own bank you know let's forget uh the AML and fraud implications that are needed for a minute I'll give you an example right so I flew into Singapore on Monday I landed at 5am after a 13-hour flight uh I download the grab app because that seems to be the way everybody gets around here in Singapore my car's declined I'm like okay I know there's money there uh I get a notification in my app your card's being frozen why is that well you're in a country you've never been in before at a time you shoot a fraud intensive purposes be in bed um we don't know it's you and it's on the app you've never used before so I go through and I scan my face which looks absolutely knackered uh luckily it still picks it up it unlocks the card and everything's okay but none of that exists in our industry and even if it does and it's starting to emerge do individuals really want to be responsible for all of that themselves no they don't right and even if there's individuals that do the masses certainly don't the billions of people around the planet don't and I think that's something that you know we do need to acknowledge being your own bank is a fantastic principle but it's not necessarily going to drive scalability and growth and it's certainly not going to help us with security and again I reference James from Cardiff you know by being his own bank he's lost all of his assets and I think that's something we have to acknowledge and be aware of now the other problem with being your own bank is it does create some sub I would say verticals but they're not Services right crypto Hunters there was a great article on the BBC um where this lady had lost access to her wallet and these two very intelligent techie guys came in and somehow managed to recover her key and it sounded like a fantastic story until you read the small print right all she had to do was give away 20 of everything she earned I was like well it would have been better she'd had a mechanism to actually recover that in the first place and then you can go one step further the crypto hypnotists lie on a sofa for an hour talk about your first pet your first school girlfriend uh you know your favorite color and suddenly your private key will pop into your head and they can recover it for you now obviously I you know I use that as Jess but actually these are services that genuinely exist and for me that highlights a fundamental issue that we need to solve right if these services are growing in popularity which they are then we need to have a mechanism in place which can actually protect people from losing access to their keys and funds in the first place now we all know there's quite a few methods in which you can store your keys right and and they work but there's still a fundamental problem you know private key see phrases they sound fantastic but life tends to have a way of impacting you and your least expect it fire theft damage right all of these expose huge amounts of assets to potential permanent loss and then of course there's other areas which I don't think gets talked about enough like succession planning right you know we want crypto to be adopted by the masses well the masses aren't all 20-something people very young and technologically aware there's actually a large number of Elder elderly people now entering this um the industry who are buying crypto for their grandchildren and their children as an investment right how do we ensure that succession planning is in place to protect them and their Investments going forwards that brings me quite nicely on to uh the final point that I highlighted earlier on um you know in the presentation the Brewing regulatory storm now I'm going to briefly kind of talk you over what I found out certainly over the last kind of week or so in regards to the specific point one of the not so fun things about coming to Singapore for this conference was a 13-hour flight but the 13-hour flight gave me a great opportunity to actually read the European regulation that's been proposed around crypto and what was very interesting about this is that it was very very very heavily focused on anti-money laundering and ensuring that the proceeds of crypto could not be used to fund cyber crime now these are two by the way very laudable laudable areas that we need to cover but they're actually referenced 16 times can anybody guess how many times the protection of individuals from being hacked was mentioned in that regulation four and that for me whilst more than zero uh you know still highlights a very interesting area as to where the industry is going to be going to you know so I I'm aware that I'm running out of time but I hope that highlights some of the challenges and how we can potentially face that ultimately the mission statement here at coin cover is to make crypto safe for everybody to hold and use we provide Theft Protection technology and also private key backup and Recovery Services I hope to be able to speak to some of you over our stand over there and thank you very much for listening