[Music] want to get ready for the next session. And this for this one, we have a fireside chat with Frederri who's one of the co-founders of Nosis. And we're going to talk about something super interesting that you may have seen on her social feeds this week. And we're going to talk about all things Circle. So, please give her a big round of applause.
[Applause] Welcome. Thank you for having me. Um, there's a lot of cool things here that I think are being experimented on uh for with circles. But what I want to do is want to just have everybody else also be on the same page here. So my first question to you is uh could you give us kind of oneline sentence on what circles is and uh kind of what is kind of this category of personal currencies?
Yeah, absolutely. Um circles is the answer to the question what would money look like if you invented it with today's technology. So kind of if you look if you look at the world of currencies out there um all of them most of them kind of have existed for hundreds of years and they exist on technology um that's basically hundred hundreds of years old and uh with modern day cryptography um you can actually make money that works way better for you in a globalized world. So what are the properties here of of this modern money and uh and where does it kind of excel and what does it kind of replace from the the current money that we're aware of? Yeah, I think kind of like the first thing that kind of like you have to understand is um the way that money kind of comes into the world today.
Okay. So um money is actually made by banks and central banks. So 95% of all money is created against credit by retail banks and then kind of it it's deleted again off the books when the when the um debt is repaid like if you pay back your mortgage for instance. This is actually pretty profitable business. This is why why banks have historically been pretty good investments.
So the return on equity for banks is around 12% because of this. Um, and it kind of historically this made a lot of sense to kind of delegate this money issuance obligation to banks because you needed a trusted intermediary for this. But with kind of modern-day public private key cryptography, we don't we no longer need this uh intermediary and we can kind of move the level of money issuance that kind of society has so far given to the banks down to the individual people. So kind of the the profits that kind of banks create from this privilege of money creation should directly go to the people instead of the banks. But it puts the onus on all the people to figure out how to do any sort of reconciliation of any dispute management which is I think what usually banks end up doing because there's in a way authority here.
Oh this is different. So kind of that that's kind of the settlement right. So kind of I'm talking about purely the issuance. So kind of like I'm not saying that kind of like there's no place for banks. I'm just saying that banks should not be in the in the business of issuing money.
So what are the steps involved to get started with creating your own personal currencies? And I guess like what is step zero of circle? Yeah. So step zero circles is kind of like you you actually sign up. Um and what that allows you to do is to kind of uh to create 24 circles per day for the rest of your life.
Um in order to kind of make this um attractive for late comers as well. Um there is a demorage um on all circles balances. So kind of all circles balances decrease by 7% per year. Um this is kind of this is kind of like looking at inflation that we have today turning it turning it on its head. Okay.
So kind of instead of letting people issue more than one circle and per per hour in 10 years time we say okay the one circle per hour stays but kind of all money kind of loses value gradually over time. Um that's that are kind of the two issuance rules of circles. And then the third rule that's extremely important is everyone issues their own personal currency. Okay? So I issue 24 Friica circles a day and you issue 24 cartic circles a day.
Um and they are not inherently funible kind of to make them interchangeable. You actually have to trust each other. Okay. So kind of I know Kartik. He's with ETH global.
I've met him many times. So kind of we have a trust connection. Um but say there's someone I don't know maybe with someone from your team. Okay. Um and obviously you have a trust connection with them.
So I could send you money directly. I could send you circles directly because you accept my circles but they don't accept my circles. Right? So kind of what the protocol then does is it takes say 10 of my circles and sends them to you and you're happy to hold them because we trust each other and then it takes 10 of your circles and sends it to your teammate. Um and they're happy to have your circles because they trust you, right?
So kind of you have a comprehensive list of all the accounts whose circles you're willing to hold just as um just as you hold your own. Um, and that kind of creates this distributed web of trust that kind of lets you um send money in a percolative fashion through the network. And just to be clear in this example, you're saying that the protocol is routing money from you to my team member through me because of this path dependence. But you're not saying that this is the only way now I can send money because I now need to involve somebody else who is the connection. No, no.
So basically this is done behind the scenes. It's fully abstracted away from you and it's a way of kind of um of solving the civil problem that that Marak talked about earlier, right? So kind of like because on this protocol there is no administrator, right? There's no one who kind of decides this is Cartek. He he he clearly is a human being.
We'll give him an account. Um so because we don't have someone or we don't want to have someone who has that level of authority on the on the protocol um we need to find a different way of solving this problem and the way we kind of solve the civil problem is by um having everyone curate their local environment of the network and you are heavily incentivized to do so and do so diligently because if you trust someone who has five accounts or kind of who has a bot network. Um, no one else will want their circles, but you're allowing them to exchange their circles for yours, right? So, kind of you will end up with their circles that no one else wants to accept, right? So, obviously, you have to make it easy for people to understand who's who are kind of who are the people draining their circles and kind of like who are the circles that are basically deemed worthless by the network and so on.
So kind of you want to make this a good user experience, but ultimately it's on every participant's um shoulders to kind of curate their local network and say whose circles they are willing to hold. Thanks for that. That makes a lot of sense. But my natural question there is there's actually a lot more cons than there are pros of this because as an example um not just just just the web of trust model for for interactions because most of our transactions are with people that we don't necessarily know on a day-to-day. So what happens in those scenarios if I just go to a restaurant and I need to pay in in this currency um I either have to find a connection or I hope that they are part of the network.
Uh what would happen in those scenarios? So so you're completely right. So liquidity between you and an arbitrary participant is not guaranteed. That's kind of the downside of this per permissionless architecture. there are ways to kind of make it more likely that there will be liquidity between you and someone else.
Um and that is a um layer in between or on top of circles um called groups. So everyone can register a group um so for instance we spoke with Mark yesterday and we are doing a self group on circuits. So kind of what that means is everyone um who has a self profile can become a member of that self group um and then um you can exchange the your circles for the group circles. So in this case this would be self suckers and the the store the coffee shop that you would be um going to might say okay it really sucks that there are some people who can't pay me and thus can't buy coffee here so I will just start accepting self circles as well because I know Mark is a good engineer distribution is what they optimize for then exactly so mark is a good engineer we believe in this but so basically we don't want to prescribe one way of kind of proving ing your identity. Um, and you can also have a world coin group on top of um on top of circles.
You can have a bride ID group, a proof of humanity group. So kind of in a way it's a way of of aggregating all of these into one um network that um kind of allows to kind of create a federation of global more paths. Yeah. Yeah. Um I guess in this exact look in just in these scenarios um you also made an interesting point saying that these are not fungeible.
So how does pricing work uh in practice for a different person's token and means of exchange for payments or any sort of uh yeah just accountability of what's being traded and for how much. Yeah, that is an excellent question. So at um kind of on the face of it, one circle is one circle, right? So kind of like if I route my payment through you um kind of it will be one for one. What but what actually happens is especially if you have groups and you have groups that are more widely accepted than other groups these group tokens and these group for these group tokens um kind of they have other advantages other than that kind of that make they make routing easier.
So you can also provide liquidity for them easily. So kind of like you have um a well understood price. So kind of for an individual cycle circles to kind of have a well understood price you'd actually have to provide liquidity in some sense for it. So kind of yeah so I don't expect kind of like all eight billion people in the world to kind of maintain their own personal balancer pool. Um so kind of but group currencies will make this very apparent that some group currencies are worth more than other group currencies and the way that this will play out in the network is that there will be liquidity fragmentation in some sense.
So kind of there will be um kind of you will always be able to kind of send funds from a um more expensive part of the network to a less expensive part of the network but not vice versa. Um so kind of this this will happen. Um and kind of this is why I said there will be a confederation of currencies. So kind of these will kind of but these are these can move. So kind of it it fully depends on the connectivity and the the individual balances of the people.
So this is very much something that can change over time. It's not prescribed. It's not in the in the connectivity of the network alone. It's also in the balances. But yeah but you don't enforce any kind of uh restrictions on kind of how this should behave.
No, basically it's it's it's market forces, which makes sense in in this world. You kind of you kind of need this. Uh but I guess if I'm understanding this right, like I it seems like it's actually super cool that he's pointed out the self example with groups, but um we've obviously seen attempts for simplifying this with civil resistant protocols and services out there. Um, and a lot of them kind of do anywhere from pro proof of personhood to just kind of we'll use like five other social signals to uh to kind of say this is you are that unique person. Um, I don't think this is like a choice between either or, right?
Like I don't need to have my biometrics to determine that I'm a human being and you should trust me versus having a chain of trust. Um, these are very complimentary. Is that a good way to think about this or how do you see this in the broader landscape of uh proof of personhood situations? Yeah, absolutely. These are 100% complimentary.
So kind of like circles is extremely agnostic as to kind of how you prove how and whether you prove your personhood. So it's on your local neighborhood alone and on this additional layer of the groups and kind of having this as a plugandplay modular system. I think this is something that um um bestows the most value on society. Um and we kind of have we hold as a core belief that um the um the system kind of creating this identity network should not be owned by any one nation or political block or corporation. There should be no premine on this.
So kind of in order for something to kind of belong belong to everyone, it really has to belong to no one. So this is why kind of circles is kind of flat rate of this extremely this is extremely um flat substrate. How are people using this right now? We we literally launched it um last week. So this is but that's like the the V2es but from like it still has been out for for a while.
It's kind of it it first launched in October of 2020. Um and there was a huge uptick in uh in registrations. Um people loved it because um I mean we all know this um lots of people out there kind of have the feeling that somehow this the cards kind of the deck is stacked against them, right? So kind of that they have no way of succeeding in the economy despite the fact that they're kind of doing their very best. Um and kind of explaining them that kind of that there are there are mechanisms at play that do kind of um uh put them on the back foot.
That's extremely powerful. Another thing is kind of the the the predominance of the dollar. So kind of in the absence of a truly global world currency kind of we have defaulted to using the dollar for international transactions right so kind of 50% of global trade is actually denominated in dollars um and this bestows an enormous advantage on the US economy and kind of explaining to people that kind of this um this is a way of um addressing that problem and kind of talking kind of kind of seeding in their mind that kind of money is a technology. So money is which is a hard thing to have people unlearn. Absolutely.
Absolutely. So when you when you ask people what's what's your big what's your biggest issue with money? They always say I don't have enough enough. They never say oh the issuance doesn't really work for me. Right.
Um so kind of get getting kind of that um get getting that boot out there that money is a protocol and we are the architects. we as society can can um can uh have a say or have a say on how the next version of it works. That's really powerful. And despite the fact that four years ago, you couldn't actually do many things with it. There were local cooperatives where you could buy things with circles and so on.
Um but the there wasn't kind of the hundreds of thousands of people who who signed up. Um, for most of them this was more of kind of a cognitive paradigm shift rather than something that they could actually use. And now with kind of the new app that kind of abstracts all of the technology away from you um that kind of lets you do it um kind of with QR codes and kind of like it's pretty simple. I can sign you up later if if you're interested. Um uh kind of I think we're at a point where we can get actual normies to use it.
um and benefit from it. That's awesome. I mean, you already said you have 100 over 100,000 people signed up or lined up to uh to sign up, which is uh which is pretty pretty good for a few days. Um in this world, is it important then to have stability on how much a circle is worth because you have to still balance it relative to something unless until you hit sort of a threshold where everything can be um denominated in a circle um or the token itself, right? Um, so how do we think about price and the utility of it if it's going to be potentially volatile?
Yeah, I mean that's that's an extremely good point. Um, so we can't put a price on it, right? Because there are market forces and kind of like we don't have bags deep enough to kind of uh kind of keep it at a certain price, right? So the question is how do you go about this? How do you kind of make using circles attractive despite the fact that you don't always know how much it's going to be worth then and there?
Because I mean so the idea is I mean in a way kind of money has the ultimate cold start problem, right? Kind of like getting people to kind of adopt free money kind of on the spending side. Super easy. That's kind of like you don't need a marketing department for that. But kind of getting people to accept free money in exchange for goods goods and services that they're providing.
That's the hard part, right? So, kind of the way that that kind of will bootstrap this is by allow by allowing co-ayments. Um, so that you can say, okay, this costs $5 or it costs $3 and 20 circles. Um, and then you can also kind of say, okay, but I will also only accept um certain group circles. So for instance, I know that Prague has a problem with um tourism um and kind of as like any beautiful city where there's lots of tourists who are typically are happy to kind of spend money where locals aren't.
So kind of maybe um a uh a tourist is happy to kind of spend €7 on a beer, but a Czech person very much is not. So you could say the beer costs €7 or it cost or it costs €350 plus 20 I'm a citizen of Prague circles. Okay. And that gives you a way of of kind of giving those choice. Yeah.
Giving those Prague circles a real value. It's still good for the person selling the beer because kind of when kind of like in wholesale the three the beer does not cost them 350 either. But kind of that's kind of you you kind of um uh you kind of it's a way for them to kind of adapt to different willingnesses to pay. And for us it's a way of um of making sure that these circuits have a really tangible value. How or what's the incentive for people to onboard their own friends to increase the size of the user base?
because I guess the reason why I ask is and I know we're over time so I'll just ask this one side question and I have my my last question to you but the reason I bring it up is because you have to create this two-sided marketplace on somebody has to accept it for me to have a bigger incentive to to get more people on boarded so I have anywhere from more pats to just a way to think about pricing it um but I can also do nothing um because that's my default as a abstract count and and that kind of prevents both sides from growing uh the the acceptance and the the initial user base. So, how do you sort of get people to care more about hey, let's bring on everybody, you know, so that we can make this a thing and and do you I know it's not been a long time yet, but have you already seen challenges around um how people are reacting to this? By and large, people are reacting incredibly positively. So kind of I mean it may also be this crowd that's awesome but um in that's the early adopters they will absolutely be but but yeah but by and large kind of people are really enthusiastic about um the uh the concept um will it be difficult to kind of grow? Um, I don't think so because it's also good for you if your social network grows, right?
At least at least as long as kind of you you um trust trustworthy individuals. Um, it means there's more liquidity for your circuits because they can be routed via all of these people. So it mi it makes them acceptable in more places because the parts of the network that are linked by your your new trust connections those were previously inaccessible to the liquidity of your circus. So kind of having a robust network is very much in your best interest. That makes a lot of sense.
Um, and I guess Leslie, you can already hint at that, but how can people uh get uh signed up and and ready for uh the V2? Yeah, absolutely. So, you go to metry.xyz, that's me t i.xyz.
Um, and you download the app. It's a progressive web app. Um, you have to register. Um, and then you have to find someone here to invite you who's already a member. If you can't find someone, come to me.
I'll be here all day. Um, I'll invite all of you. Um and uh then you go off trusting people you know building your local network and um you're part of the circles movement. The second part sounds uh easy which is great. Amazing.
Well, thank you so much for uh giving us an overview of circles and uh I'm going to sign up right after this. Thank you. Thank you. [Music]
Automatic transcript — names and jargon may be misspelled.