3 Ways Crypto Will Change Banking and Investing Forever - TOKEN2049 Dubai 2024

all right good afternoon you're all doing great uh managing through all this content I've been watching a lot of it it's a lot to absorb so in that vein I have two goals in 10 minutes the first is to make all of you look really really smart at dinner parties so I'm going to give you like a five minute set of tools that you can use to actually explain to people why they should give a about all this stuff that all these crazy Tech Bros keep um djenting on and the second of course is to get you all super excited about uh what we just announced at Abra all right and that's the so the price of admission is becoming really really smart at a dinner party let's see uh if if we can accomplish that so the premise of this is that the banking system is really screwed and there might be a way to fix it so everything on this slide you all already know I don't need to read it to you but I actually think the single biggest problem with the banking system today is the big lie and the big lie is that when you give a dollar to a bank that dollar becomes a liability on the bank's balance sheet so think about that for a second you've effectively Lent somebody a dollar and they are now are going to leverage themselves using the liability they just created all right if you don't appreciate how messed up that is in a system where every single government is so over in debt that they have zero chance of paying it back then I don't know what else to tell you okay but that is by far the biggest problem with the banking system today all the problems listed here those are the things on the surface that we see every day I'm sure you've all tried to send a wire I'm sure that's always gone incredibly well I'm sure you've always tried to access a person at a bank at 8:00 p.m. at night I'm sure that's always gone incredibly well I'm sure you've all tried to start a wire a bank wire at 300 p.m. on a Saturday and that's gone incredibly well etc etc okay but again even with all of that nonsense and oh and by the way um you know City Bank in um you know in Germany is a completely different company from City Bank in the US because banks have borders today all right but even with all of that even if you fixed all of that if you don't fix the liability problem you haven't fixed banking all right so can crypto fix this obviously I believe the answer is yes because I wouldn't be here if I didn't uh and I would have called the talk something else and and so I'm going to give it to you now and then I'll take a step back and then I'll give you the three the three tools I promise that will make you all look Smart in 5 minutes at a dinner party we're going to talk about real world assets decentralized Finance right and and then I this idea of becoming your own bank all right so real world assets the idea this is the most overused expression in crypto right now especially in Silicon Valley where VCS are looking for the next thing so let me make it really simple why should you care about this idea of tokenizing real world Assets in the short term I believe it comes down to one thing and that is the ability to create collateral that is useful in lending that's it there are other things that are going to matter long term but just forget about them for a second if you can tokenize real estate if you can tokenize a dollar if you can tokenize a treasury right you now have collateral that can easily be leveraged and used for a loan okay why is Bitcoin listed on this slide when I'm talking about real world assets well I actually believe that Bitcoin is the ultimate real world asset when it comes to lending it's the most pristine asset we've ever had it's the only asset on this slide that wouldn't require a court to adjudicate its use via a token right because it doesn't have any component in the physical world other than the key uh that you would be holding to actually prove ownership of of that Bitcoin but the most important Point here is this idea that you now have collateral that you can use right in a way that doesn't require you know some uh third party uh to go out to a house and create value and you know what's it what is it worth um and or different Financial systems to actually Leverage The collateral you can actually create a normalized standard to use real world assets as collateral this leads to part two what are you going to do with those real world assets that you've tokenized okay well this is where defi Right comes in so we now have the collateral how do I use my tokenized collateral to borrow or or earn yield right I want to take my tokenized property and earn yield on it I want to take my Bitcoin and earn yield on it what D5 basically is again all the complexity aside it is basically a Marketplace it's a marketplace with no off switch to no the the marketplace with no off switch basically does three things for you easily and it's we're adding more things to the to the list every day the first is it lets you lend into a pool and earn yield back meaning you get back more than what you lend in the second thing is take the collateral that we just talked about on the previous slide could be Bitcoin could be other cryptocurrencies could be tokenized assets right use them as collateral and take other assets out of the system usually at a significantly lower value than what you put in right but the reason you would do that is is because you still own the underlying collateral right you don't want to sell your Bitcoin you don't want to sell your house you don't want to sell your ethereum you just want more assets U that you can use in the meantime while you're still gaining value usually what you want to do is you want to deposit an appreciating asset Bitcoin and you want to borrow out in a in a depreciating asset the US dollar or any fiat currency for that matter okay so this market and then and then of course the third thing being able to swap between assets converting one to token to another this is the Dex component of of defi that you've all heard about there's a lot more to it but if you just think about it that way it's a marketplace with no off switch that allows me to do those three things you're going to look really smart and you're going to be right okay all right so that's number two and and so what is really happening and if you want to go a step deeper you don't have to but if you want to go a step deeper what's really happening behind the scenes when we talk about this marketplace with no off switch so this is where we talk about software that's not running on a centralized server which is what a smart contract is okay all this basically defi stuff decentralized Finance means that we're taking all of the banking services let's call it a stack of services the banking stack and we're reproducing it using this software that has no off switch that's what we mean by defi so if people say I don't really understand what defi means I understand that you have a Marketplace but why do they call it defi that's why it's decentralized software that basically reproduces each component of the banking stack and there's 100,000 boots out there of people trying to reproduce each component of the banking stack in a different way using defi in particular what we're trying to do uh dozens of companies is earn yield using Defi and what that basically means again it's very very simple it all sounds complicated cuz we create fancy terms your basic Al taking a token of Type X Bitcoin ethereum tokenized dollar uh tokenized treasury tokenized real estate you're putting it into a pool and when you take it out you have more than what you started with right if you have if you deposit Bitcoin you get more Bitcoin out depending upon how long you lent the Bitcoin into the smart contract that I talked about earlier okay that's it and and what and how is that happening how am I ending up with more more Bitcoin because somebody else borrowed that Bitcoin at the same time not exactly that Bitcoin but but but Bitcoin and then paid interest back into the the pool that gave you then your yield back and of course the opposite is happening if they're borrowing they're paying the interest on the loan okay so that's part two right the third part is and I think this is the most important part to dealing with the banking system this is that part about how do I address the fact that we're all basically liabilities On A bank's balance sheet right uh that's the part that if we can fix that I think we have Paradise when it comes to money right and this is the idea that you can literally become your own bank now that doesn't require that there's no third party it turns out right but there's a spectrum of what I mean by that which I'll I'll explain so yes many of us have Hardware wallets that we can put in a drawer it's not very useful other than the fact that we know it's there it's very hard to earn yield it's very hard to lend uh it's hard to borrow but you know it's there what if you want to take advantage of all the services I've been talking about and still be your own bank that's where the Next Generation technology has really um come uh I think to fruition now right you can use uh multi-party computation other Technologies doesn't matter what's happening behind the scenes but what matters is is that each client at a bank or at a Securities uh broker or or uh other type of fiduciary can actually get their own Vault right which means that the assets that the third party is managing are no longer liabilities on their balance sheets I hope this makes sense this is this is a huge idea that is so simple uh and it happens in the equities world all the time wealthy people create what are called managed accounts and they get to hold their stocks off the balance sheet of the broker or the adviser but this is possible in crypto Now using this new MPC technology and other Technologies actually as well but you can access defi access U lending and borrowing and uh other services using third parties right and still maintain title to your assets right so those are the three things that I think really matter and I'm I'm going to show you how at Abra we're basically leveraging all three of those Concepts so Abra has been around for a little under 10 years uh we're a venture back company originally based out of San Francisco now San Francisco New York uh we've got uh actually staff all over the world now um traditionally uh we were involved in in in trading and and Money Transfer and now we're doing uh Asset Management as well which we have scaled as a new business very very quickly uh we've processed billions of dollars of Trades both for consumers as as well as institutions and uh we think that our ability to safely uh and um conveniently provide access to these Services is really our Edge and and why we've managed to survive when when so many companies that were trying to do this over the last Market run um you know where many people are trying still trying to get their money out of bankruptcy that's the reason why Abra has uh been able to survive uh here's some of our investors our largest shareholders include uh American Express uh first round Capital uh panta uh you know you can see them all here so so we have a fantastic uh investor group um Global as well all right so Abra basically has two lines of business we have a wealth management business and we announced yesterday uh that we were the first company in the United States to just receive SEC approval to launch separately managed accounts globally United States based but we're launching it globally to access defi yield lending uh staking uh it's it's borrowing etc etc so again that means Visa what I was talking about before that you now have a way to access yield and borrowing and investing in crypto that is not a liability to the third party's balance sheet okay this is the first time that a company is legally able to do that in the United States that's not a bank okay and then on the trading side if you have a a hedge fund uh crypto ATM network a mining company uh we process uh transactions through our Prime broker which is the second piece of our our business for all of the largest institutions in the world including some of the new US ETFs and uh to the tune of of billions of dollars we're one of the few companies in the world that can do post-trade post trade settlement so you can actually get credit in order to trade with so if any of that is of interest to you uh and and feel free to use uh all the party tricks that you just learned to look smart at dinner parties but if you want to learn more you can um send an email uh or you know sign up at abra.

com and and we'll get back in touch thanks for your time and uh really have a great week and stay dry all right thanks everyone