BBW25 - Day 2 - Keynote: The New Digital Cash Economy

My kind of basic intro is my name is Joel Valenuela. I've been in the crypto space roughly I was 13 years or so and I've been for the last decade I have not earned uh fiat currency. I've just only earned crypto to kind of that was sort of the original purpose of cryptocurrency was as a currency as a replacement for current finan the current financial system. And so I kind of decided, well, let me try to while I have flexibility in my life, let me try to kind of find um the edges of where this works and where this doesn't and just work backwards from there about run into problems, workshop it, and see if I can do something to actually further the acceptance and usage of this currency. Now, um, where we're going today is on a trip to, if this thing ever works, um, the new digital cash economy.

And so, basically, um, we're at an interesting point today where cryptocurrency has done all kinds of different things. Oh, you want to give me a different one?

Yeah, thank you. I mean, that that did work. It was just a little slow. Maybe a 10-minute block time on that one. But so uh right now pretty much everything except money is getting attention in the crypto world.

You know I mean obviously AI is the big thing of today uh but there's so many other things and when we get to payments payments has been almost entirely overshadowed by stable coins which is a very necessary step in the evolution of the space and the evolution of money and payments etc. But it's sort of a little bit of a detour to where we're going because what we did with the beginning of cryptocurrency is we sort of reinvented money from the ground up and got it pretty far and then sort of left it on the side as like a side project to finish while we took detours into well let's use these new cool digital rails to use the old money which is fiat currency which is you know the banking system. So let's go down a little quick history of basically money and a lot of this is from the sovereignty perspective as in the maximum individual sovereignty and we'll kind of get to where we are and then hit the missing piece why we hit the detour a little bit. So bear with me on this one. So first of all um where should I point this when I oops I there we go.

So let's start at the beginning, right? It is shown the gold coins part, right? Nice. So obviously we I didn't go as far back as sea shells. I'm sorry.

Barters and sea shell whatever. But at some point we figured out that there was a a precious scarce metal that then you could use to store value and exchange for goods and services. And the invention of coins made it into the coin part of it is the trade clearing mechanism of it because you could just say here's some gold. Okay, what am I going to do with this? Is it is it gold?

Do I know it's gold? How much is it for? All that information is just not there. You have to go get your scales out. By the way, I do know people that do this.

There's some people in the fringe the fringe side of the precious metals community that do actually bring gold scales and test and stuff when doing some trades, but it's few and far between, right? So, the coin stamping of it that says here's the mint so you can trust who made it. This is the exact amount and you just look at the coin. You have all the information you need to make this transfer. And so the next thing we went after that is we went to some to paper bills which is known as cash today where now you don't have to actually carry the gold with you where if you want to pay for a big purchase you have this you know all these gold bars in your arms.

It's a little you know it's like me carrying all my coffee cups to the car every morning. It's like you then just have a nice neat stack of pieces of paper that say exactly what this is, how much it's for. You can do small purchases without like I actually do have a small one gram of gold that someone paid me for something in a few years ago and I can imagine just trying to trade with it and it's like $50 US worth I think. So like how do I shave off a little flake of that for coffee? You don't do that.

That's where paper bills come in. Now paper bills of course made things much more efficient but technology doesn't always go in a linear progression. We unfortunately lost a bit of sovereignty here where now the underlying money behind these bills is not yours anymore. It's held in a bank, a custodian somewhere and the paper bills say are IUs for that. It says this is I own this much gold and then you trade it in.

And this works so far as no one's trying to deny you your money. So, if you have a pile of gold coins and someone gets mad at you, someone in government or banks or whatever, they have to find you and your stash of gold coins to take your money away. But under this system, the paper bill system, the much more efficient system, by the way, you they can just go to the bank and say, "Yeah, that guy, don't let him get his money." And then now if he tries to redeem the paper bills for real gold, it doesn't work. So we introduce this counterparty risk which now erodess our sovereignty a little bit.

So next we go on so credit cards right or digital you know low-level digital fiat payments. So now we have kind of the the next level of this where now you can trans you don't have to be in person and be like here you go here's a a stack of paper to transact. You can transact over you know old school over the phone. Who here ever read out a credit card number over the phone? Anyone?

A few people. No one who's significantly young in this room has ever done this. I have though, unfortunately. Maybe dating myself a bit. But you can basically transact across great distances in exact amounts.

You don't like your card doesn't get diminished when you like use it a bunch of times. You don't like, all right, I have this big stack of cards and now they go down as I use them. It's just one card. You don't have to make change. It's all super efficient.

Well, super efficient. No, more efficient. But now you have even more counterparty risk where now there's a it's you don't have the actual token, the actual money where under the gold example, the gold the gold certificate example. It would be kind of difficult to be like, look, that guy, don't let him to redeem his gold, but then he still has the gold certificates. He can still trade with those and no one can kind of stop them.

At this point, you can kind of censor the person at the source where they're saying, "Hey, this guy with his name on this car, don't let him use it and then it's just kind of over." So, we had this big bump in efficiency, but then we had this dip in sovereignty. And so, that's kind of the old fiat system up until 2008, 2009. Kind of recaped everything until then. So the next thing is kind of the beginning of where we came here, which is the invention of Bitcoin.

Now I'm going to refer to Bitcoin as it is today here. Bitcoin did sort of go through a little bit of a metamorphosis over the years, but basically what Bitcoin does is digitizes a goldlike system where now you have money that you can it does the same basic things of gold as in you can actually own it. You can store it yourself. No one can confiscate it from you, etc. Everything's, you know, the verifiable, it's, you know, limited, sound money, all this stuff.

And some big efficiency gains are you can actually hold it yourself and you don't have to like dig a big hole in your basement or something. You don't have to have carry something heavy around. You can also transmit it anywhere in the world. And so you have all these efficiency gains. Uh typically people who use Bitcoin as their base money today will have that and they will use other layers whether it's a like a debit card or something or a lightning service provider if they're doing that way or whatever else as a proxy to kind of spend it.

So, we're kind of getting into the modern version of paper bills to a certain extent where you do have gold or digital gold and then you have some sort of a a trusted mechanism to transact with it a lot of cases. Uh but you still did have that that savings yourself. So, we may we advance things to a certain degree especially because in the old days when you had a bank full of gold, you don't know if they have your gold. you think they do. And then you have other people you trust to go in and do audits.

They go check out, oh, are all the let me count the bars. Let me test them. Are they all still there? Do we still have gold in Fort Knox? And so with something like Bitcoin, you can verify the supply.

You can say this address that we know is associated with these people has this much. Every we have thousands of computers all over the world. Everyone runs that just says, "Yeah, we verify that to be correct." And as soon as the money is not there, everyone knows the planet knows. So it's a big move forward.

It's still it's not all the way. So now let's go to kind of the more original Bitcoin vision or kind of more represented or something like that by something like say Bitcoin Cash where now we have the actual transaction method able to be used by just about everyone where you have your digital gold thing, you have your verifiability, you have your scarcity, you have all this but you can also just send it to pay for everyday things. I could go say, "Hey, I want to buy coffee." And then, "All right, you get a QR code, you scan it, you send it, you know, like $2 worth of whatever, or $5 if you got my fancy tastes." And then it works.

It just There you go. You don't need to trust a bank or an intermediary or anything. Yay. Everything's great. There's still ways we can evolve past that.

some of the things that aren't necessarily included in this this evolution of money, the 2009 Bitcoin, the 2017 Bitcoin Cash, it's a Litecoin, whatever you want to call it. Uh first of all is settlement because in the early days um people mostly trusted unconfirmed transactions. So, if I send you like $5 of Bitcoin, Bitcoin Cash, whatever it is, it'll show up on your app, your computer, your wallet, your phone, you'll see it, but it won't be guaranteed to be yours yet. Usually, you have to wait for it to be included in a block, for example. And not a lot of times does this get reversed, but it can be reversed.

And it's not guaranteed final. Like does any has anyone ever deposited a significant sum of money like 10,000 USD worth or more onto a cryptocurrency exchange and the exchanges credited you before it was confirmed before there was a single confirmation. Has that ever happened to anyone? Yeah. They're not messing around.

They as much as they'd like to see a a customer be happy to have everything instant, they have to make sure it's actually secure. So one thing is instant settlement. There's no you have to wait for settlement or you have to introduce other things in between such as for example there's some approaches which are like double spend proofs which allow a merchant to look and see if there's been an attempted reversal of the transaction. Um there's a a good pretty cool company out of New York called Flexa that collateralizes payments. So basically they say it's good right now.

if something happens with the payment, we will cover it. And so there's some mechanisms of making sure that the payment actually goes through and you can trust it instantly, but it's it's still a second layer. It's not it's still a second item. It's not included in the actual network itself. So then we go to 2017, 2018, 2019 era Dash where a lot of these kinds of things that now we would have to trust a third party with or another company or another technology are baked into the protocol itself.

Notably instant transaction settlement. And this was when the feature was sort of debuted in 2014. This was like a really big deal. Now it's starting to become a lot more common. It's still not universal, but it's a little bit more common that when you send a crypto transaction, it within a second or two, you don't never have to worry about it again.

And sometimes you still have to worry about like an exchange. Oh, let's wait 10 minutes before, but usually it's not that bad. So now you don't have to trust anyone else to actually verify that your payment went through and worked and you can just walk away from it. Also um in the early days because of Bitcoin's pseudonymous nature people assumed it was private and then blockchain analysis came around a lot of other things and in 2014 there was a few coins that came out that added some privacy features. Dash is one of these to add basic confidentiality to your payments and something that's being worked on.

There's a million different projects working on uh kind of improving this and on a personal note I think that in the next five years uh strong privacy is going to be like a bare minimum for anyone trying to do any kind of payments whatsoever. But so we still have this like basic part where we still have a couple things that are sort of left to trusted third parties in some ways and that's usually the communication of the transaction details. So, if I wanted to send someone a transaction, uh, how would I do that? Anyone ever sent raise your hand, someone who's sent and received crypto peerto-peer before? I'm going to pick on you.

How How does that work? Like, if I wanted to send you some money, what would what would your next step be?

And how would you do that? Yeah. So you share it with me. So have you ever done this via Twitter DM? So there's a lot of cases where in order to make a payment, make a transaction, you still have to communicate in some other way.

And like in person, it's a lot easier because you can just say, "Here, here's my QR code." That completes the number. When you're messaging with someone, you're like, "Hey, I forgot to pay you back for XYZ. Okay, well, let me send you an address and then pay me back $5 worth of whatever." And that that communication stuff can happen over a trusted rail of some kind.

It's kind of that last little bit before we can sort of start to communicate freely. And then you enter the what's the transaction details, etc. in a spreadsheet for example or you know there's some other technologies that help you keep that accounting what it was it for etc but so and this is something that was sort of started to be envisioned many years ago with Dash something called Dash evolution which add usernames contact list encrypted metadata invoicing all this kind of stuff to the actual payments itself took a very long time to come out but now it's out and so for people who use the basic Dash wallets, you have this ability to just add someone as a friend and just send payments. And so that part, the how do you resolve who you're sending to and without getting an npm package to like substitute a hacker address too soon. Um anyway, so that part is kind of taken care of and so now we have everything fixed.

Now we have a new better form of money that works really efficiently and you don't have to trust third parties for anything. So, let's all use this, right? Like everyone is everyone living on crypto now. You, me, a couple other people, but pretty much no. So, what's the missing piece?

Uh, the missing piece is the economy. So, when we think about this, who here gets paid 100% in cryptocurrency of any kind? One, two, three, four. Um, who who gets paid 100% in crypto cryptocurrency? That does not include any stable coins whatsoever.

One, two, three. So, most people get paid in some kind of a fiat currency. So, that's where we have this whole split economy thing. And this is one of those adoption hurdles where your taxes, assuming people pay taxes, right? Most people tend to because they don't like like prison that much.

Uh that those are in dollars, euros, whatever. Those are in fiat currency and therefore everything else is like their your rent is your bills, your expenses, everything is kind of in that. So if you get paid in fiat as they call it, why would you then trade it all for crypto, hang out with a you like it's your better better money, but then you have to then resell it or spend it or trade it to fiat currency or a fiat currency rail to then pay your your expenses. It doesn't make sense that when everything comes in with fiat to have it go to crypto and then just go back out. you kind of want to keep it in the same economy, the same uh circular economy as it were.

Now, of course, if you get paid entirely in crypto, which is great. That's one of the reasons I chose to do this for myself is so I could start learning these pain points of like where do you run into the the barriers? And so for me, I'm sort of forced to then bridge to whatever fiat currency thing that I need to pay. So, for example, I pay my bills through a bill pay service. they send out a bank wire to pay a bill for me and I send them crypto and there you go.

That's how it works. But it's still this like friction in passing back into the fiat world because it's all it's kind of different worlds here. So um and if we noticed in the crypto ecosystem, that's one of the reasons why crypto payments have been taken over by stable coins because stable coins are still this fiat currency banking system to a certain degree. And so people are in this world. their economy is entirely dollar-based.

And so even if these are digital dollars on decentralized rails, they still need dollars to run their economy. And that's one of those big sort of barriers between getting cryptocurrency into the mainstream across not just payments, but other things as well. Because now if you want to run like run an NFT business or something and probably no one does that anymore, but you want to have a real world asset business whatever you have a lot of expenses and things that are on chain but then that's a silo. So you earn fiat currency, you spend it on your employees, you spend it on whatever other bills, and then all of that has to you just convert whatever you need to into gas fees, you know, gas to actually pay for the thing you do on chain and then you kind of go back. So you still have this split economy here.

So when you start to create a true digital cash economy is when you have an integrated economy which means let's say you mint an NFT and you you spend say soul let's just use Salana as as the example. You spend soul on the gas fee to mint the NFT. Someone trades it on a marketplace for soul. you get sold back from that and then your expenses in minting more of these things are also in soul and then okay well what do I do I'm going to do some crazy DeFi stuff I'm going to provide liquidity here I'm going to you know yield farm there I'm going to do whatever else and that's all in that same ecosystem so now you do have a integrated in this example Salana based economy that is just all on the same token all in the same ecosystem has nothing to do with fiat until now you have to go into the the real world, the meat space as I call it, where now you have to pay your real rent, you have to buy real food and you have to do all that kind of stuff and they don't take Salana as far as I know. If someone does, let me know.

I'd be very interested to know. But if you if they take it in that you do have to still have you have to have some sort of a bridging mechanism to go over. And so these integrated economies are a little bit still like silos. And so that's where kind of the next step comes in. And this is something that we're kind of, you know, we're hopefully as a whole space we're going to start working towards.

So that's kind of my idea for the digital cash economy. You have money, crypto, you have decentralized sound money that's fully sovereign that you only own and can actually used to pay for real goods and services in the real world, which is kind of again maybe a pain in the ass because that's not what anything's denominated in. You have to talk to companies that'll do bill pay for you. You have to go to a merchant that has a an auto conversion. So when you pay with crypto, then it goes into fiat in their bank account.

there's some friction, but the impetus to get you into the into this digital cash economy is then the actual digital side of the economy where now you have goods and services and things that are completely digital. And so for example um if you if a coffee shop again canal like coffee and need it to survive um if they want to do their rewards points on a blockchain like say the Dash chain now they have Dash denominated gas fees to do this. Now they receive their economy in transacting in rewards points where it's like oh you get 500 points for every pumpkin latte you get. It's almost that season by the way. get ready for pumpkin season.

Uh you have those 500 reward points on the chain and so they have an incentive to want to now use the base currency that's not in the fiat economy. If you have say real world asset like you have the deed to your Tesla which also mints electronic keys to actually start it that you can send to your friends and family and their phone or whatever. If that's all in chain, then all of a sudden in order to trade these on a marketplace, so you know, a digital dealership as it were, even though it's a real world asset, a real world vehicle, now all of a sudden you have that as well. And so you, as we start to transition to the digital goods economy, like digital data storage, as everything starts to go onchain, you have everything tokenized onchain, etc. And that's where you make that's where your business lives where your life your livelihood lives is in trading these digital goods and services paying for storage for your applications not to like Amazon AWS but like storing it on the Dash Evolution network for example when you used to have all that now your income's from there your expenses are from there and now you're going to stitch that together with the real the meat space the real world and so to sort of summarize this long rambling thought story also known as a presentation.

Um, what I would kind of say is the the real future where we start to see synergy in the blockchain space is in this marriage between the digital economy and the real economy in ways that does not directly involve the legacy financial system like fiat, stable coins, banks, etc. this integrated circular digital economy that then bleeds into the real world and vice versa. That's where you really start to see the the synergies happen. So, I want to just leave you guys with that to think about because it's a it'll you'll start to see it pop up over the the next few years as you start to see more and more examples of ecosystems that blend the two and become a complete circular digital cash economy. And so I assume everyone here is kind of in the greater crypto space.

A lot of people don't spend crypto. So my last little thing I'll just leave you with is a slide of um things to do where you can actually pay for almost everything in crypto. You got bill pay up the top. I don't know if you can see on those screens. Um hit me up for any of this if you don't manage to take a picture or whatever.

You got instant gift cards, which are just a very small way of like bridging where let's say you go to Starbucks, you 879 order, you buy an 879 gift card instantly and redeem it instantly. It's basically like paying at Starbucks, etc. And then travel is good. A lot of people have to travel, get hotels, etc. And just down at the bottom as well, the two Dash wallets for Android and iOS.

I would download those, get a username. there's some spending tools right in there that let you spend again with sometimes discounts like five to 10% at real world places um around the US and expanding globally afterwards. So now that you have that little key there of how do you stitch your crypto, your digital world, your whatever into your real world, uh that's when you start to experience those synergies. So I would encourage everyone to start participating at least a little bit in the digital cash economy today. Thanks very much.