Unleash the Power of Blockchain - Michael Jackson (Concordium) - TOKEN2049 London

hi everybody nice to see you welcome to stage two where it's all happening i hear thank you for coming thank you for listening where's my clicker here i'm going to talk to you a little bit about a project called concordium a new layer one blockchain we're talking about and that sounds pretty tedious i think there's lots of new layer one block chains around there are lots of people talking about id base in a permissionless blockchain and i want to think about why we're doing this why we're here today and where did it all begin in our world many of us came from this white paper satoshi's white paper which we read way back in the day and we talked about the peer-to-peer version of electronic cash allowing online payments from one party to another without going through a financial institution and what was the attraction of that back then it wasn't just that it was private that wasn't really the point the point it was not going through a financial institution because financial institutions get in the way they cause cost they don't necessarily add value they give complications and they give censorship and we don't necessarily like all that and the censorship is coming from groups like this this is a group of regulators we see today they're standing in the way of that vision as we see it this is the sri lankan board of regulators which is a a nice diverse group of people as you see all thinking the same way with the same history and in europe we're a long way from sri lanka but we're moving into something micah the market in crypto asset regulation there's 5 400 people in paris writing crypto asset regulation today and they're beginning on this this chart which you can find on the internet you can't read it up here but they're asking every single functionality of the new financial system to be regulated just like the old one and that's great and why are they doing it are they doing it to stop us are they doing it to stop shadowy supercoders nah not really they don't really hate us they don't really hate supercoders they have a job to do and we don't like the sec right or maybe we do but they talk about different things because the mission of the sec is to protect investors what the regulators want to do is protect investors protect the consumer protect the consumer against cheats protect the consumer against themselves and they want to find they want to promote this market environment this is from their own mission statement worthy of the public's trust they want a financial system we can trust and that's great so how do we build trust how do we build trust indeed we build trust through id we build trust through identity we build trust through um knowing who we're dealing with knowing who the counterparty is and in the blockchain world we have to build trust on the protocol itself and what you're doing with it so in concordia we've we've run up a new blockchain we launched the main net back in in may last year various key aspects of that and you can read all about it somewhere else identity at the protocol layer a sharding solution smart contract solution that we all know fast secure consensus varying and varying in in in finalization time depending on the condition of the network for example stable transaction fees something we all hate on ethereum why are we paying 180 yesterday for transactions for minting when you should be paying a cent proof of stake of course energy efficient an id which we're going to talk more about now we have three different components and i draw this little picture here because i'll bring this out this is the university in in denmark the university of all house where they've been researching into cryptography and network security for for hundreds of years hundreds of years now but tens of years you can say um our cto in concordium he was one of the original designers zero knowledge proof concepts his work is used in some of the protocols today not our own product our protocol but others others you'll know zero knowledge proof is really important component of cryptography which when i went to school it didn't exist this was sort of founded in the beginning of the 2000s and if you've been if you're older than that you didn't even know that it existed it's kind of weird we have something we call global id which i'll get to in a second a little bit more and something called identity objects how do these combine to give trust in a financial system that a regulator can like in cryptography we trust we have to trust cryptography if cryptography isn't working today nothing that we do works we have no security in any of our electronic systems at some level we have to trust security we need privacy without anonymity transactions today need to be private transactions on credit cards and banks or whatever they have to be private i sit on the board of a bank if i tell you that you're a customer who made a transaction with you i go to jail well whatever but i get in trouble right we expect our transactions to be private but we don't like anonymity right i want to know who my counterparty is i want to know what's going on in general in society anonymous isn't isn't great today in the future we need audit and compliance and concordium i'm going to present to you today is the only public permissionless blockchain that assists businesses in complying with these regulations and regulations are kind of tedious i'll talk a little bit about this in detail and then go on to a more fundamental concept this is our global id every single account on concordium has a globalize has an id associated with it verified by an independent third party so when you talk about id and centralized id you think about a big database and databases are horrible right we don't like databases people hack databases it's all wrong what we have is id providers who issue id identity objects we call them to you you verify against them with parameters you choose the person you want to do it and it's the self-sovereign identity held in your wallet encrypted only you know about that but when i want to transact with you i maybe want some information about you but i don't want to see your entire driver's license or your entire passport or your entire anything i just want to know are you over 18 do you have these competencies do you live in the united states or do not live in the united states and all of these things and zero knowledge proofs allow me to ask you those questions you answer affirmatively or negatively and i can be confident in that answer he says yes i'm over 18 because this identity provider this system says so and i believe in that system and you go okay that's fine that's good off we go we can do that for businesses we can do it with persons we can do it with devices and we can do it with product and that's what i want to come to in a second user decides what's there you can put it on the chain but not on chain most of this is of course off chain you don't want your identity on chain for now or for the future and different policies around that on chain identity system you open an account you go through it an important part of this is our anonymity revocation system anonymity revocation system where with the right legal framework the authorities in a country could go to the identity provider in the country to get the attributes of the person because not we don't just trust in cryptography somehow we do trust in our legal system we have to believe in that to some extent to live what does an identity object look like associated with every transaction there's a table of different things you can put on there you can't read it but it's first name and last name and document type and whatever but where this gets more interesting is when we start to look at more than the identity of people it gets interesting when we start to look at the identity of other aspects self-sovereign identities one thing it's permissionless our foundation has nothing to do with it aside from basically approving the identity provider in the first place no honeypot on chain off change setup getting from the smart contract where this gets interesting is other attributes beyond your name and address and your passport right if you're dealing in the financial system today kyc isn't just i got your name and address so many people in crypto think it is it's just your name and address we're done no you have to know what's going on with people in the financial system today you have to so when you're buying a derivative or a product or a trading product you have to the issuer of that product or the seller of that product needs to be sure that you're competent to buy that product and today they take you through an interview i went through one yesterday on the phone believe it or not where the guy said do you know about this you know about that you know about the other i went yes yes yes yes yes yes yes boom thank you now you can buy this thing it was great right completely useless completely useless but everybody's boxes were ticked imagine if you have the smart contract today that's only accessible by people who've been through a training program it sounds very formalistic but if you want to buy this derivative you have to have been through a training program that you understand this and a training program could be whatever a form on the internet it could be whatever certification you get an identity object for the contract not for you but for the smart contract it's working the other way around but sorry this is for you this is for you your suitability here we can broaden that into the smart contract itself right we could have a smart contract which is regulatory compliant what do i mean by that well let's look let's just look at this if i want to issue a derivative today i have to comply with the rules in this book eu securities and financial market regulation right this isn't just name and address this is 1041 pages of closely written text that everybody like me who issues these things needs to understand and you can tell by how used it is how much it's been read right i mean who's going to read 1040 pages of this nobody but they are going to develop a training course that proves or a certification system that proves that the smart contract can work this way and this is one of the challenges within d5 today right one of the major challenges we have is that there isn't really a central counterparty to go after but the regulators and who are entrusted with preserving the financial system they want to know that it's working properly and they've got this kind of how do we do that maybe you do it by having approved smart contracts maybe you do it with you know certic instead of auditing the smart contract for for bugs or what a functionality or whatever they're auditing it for for compliance with the rules so you can put something like this together and i think this is really the future of of d5 and a distributed finance system where so much of the finance system is that is managed today by people by individuals who are in rooms doing not a lot um following procedures and making mistakes computer code is really good at not making mistakes at least if it's coded right so we're not going to get compliance breaches we're not we're not going to get audit breaches put all these together and you can get an environment where smart contracts only functioning with accounts with correct credentials and zero knowledge proves to account specific to each interaction so the so the contract the smart contract doesn't need to know about you it needs to know you're qualified and that you're able to participate with it i don't really care that you call michael that doesn't really matter right i can be a non one two three four five it doesn't really matter just need to know what's going on and are you qualified to do that and that's the identity framework that we're bringing into concordium so when we start we're talking about an identity blockchain for enterprise it sounds really like on one side of the boring scale and then on the um on the other side we've got probably the most advanced d5 framework that exists by combining all these elements we think with concordium you can comply with the law globally we think d5 products coming out of that can do that and why globally because the rules are different in every single country just as this book is the eu financial market regulation there's another book for america there's another book for singapore there's another book for australia there's another book for that i mean it's hard right and you see on here what europe i mean when you're running global product which which i've done for years it's really really difficult to get compliance or get get get happy in every country using these frameworks we can do that with concordium and i think helping defy to comply with the law is the route to the new financial system it's the brighter more efficient financial future that was available to all acceptable to all which actually goes all the way back to the promise or the or the wish of satoshi of the wish of the bitcoin white paper which is again what what drew most of us into this today we'd like to talk about this a little bit final slide here concordium regulated defy lab we're not just concordiums a foundation we've tokens today uh valued three billion the company we raised money of course from investors and whatever and a lot of that money we're putting into now a regulated defy lab we're developing the we want you we want everybody to develop our decentralized regulatory compliant financial future we believe indeed fires of the financial future we're bringing 10 million of grants today funded by the concordia foundation and our industrial partners we've teamed up with a lot of the old-fashioned i'm afraid financial institutes but they're very interested in in helping accelerate their own demise by giving money into this system which is which is great maybe they'll even learn and we're bringing our own expertise if you look at the concordia homepage of the team the people associated with us we have a long history in in in financial services in legal in regulatory and audit but we also our founder lasaya he was the founder of something called saxo bank which was one of the very first currency traders on the internet way back in 1996 or something and he sees this so he's been through the whole journey of running a a slightly regulated for foreign x trading business which was you know back in the day probably more akin to legalized gambling than it was to a financial service so he's gone all the way through that journey and now we're starting again at the beginning of this and we know that journey and we want to help everybody bring it and we want people you guys everybody else everybody in the internet thank you very much to bring some product leadership to join us and help to bring the compliant financial future thank you very much wow wow michael you completely uh underestimated that presentation that was absolutely kick-ass excellent presentation you played a stormer on that thank you so much for those great slides you are the first man that i've ever seen bring a book on stage at a cryptocurrency conference so there should be an award for that right who wants it um how can we find more about concordia and about you or what what's the different links absolutely if you look at michael jackson on the internet you won't find much about me you have to be a bit more specific um hiding in the forest concordium.com is the project name we're based in switzerland uh operations of course around the world as these decentralized projects are um yeah look on there get in touch with us uh join us for the um for the for the defy lab we'd really love to do that we're gonna be pushing it much more today's the first time we've mentioned it we're going to have a lot of material about that going forward we look forward to welcoming people physically into our into our lab it's kind of a weird idea but physically into that and part of that is going to be having training and people and experts who actually understand about this stuff who's worked through this stuff for for years and years and years and can help put the two worlds together i think it's absolutely amazingly exciting that we can bring the world of crypto the world of defy to give cheaper financial products more efficient financial products compliant financial products that can satisfy regulators that can make sure the consumer the user is secure and i think that's should be a wish of all of us yeah that's that's an awesome mission maybe we'll open up the floor for some questions we have a few minutes anyone like to ask accordion any questions about how the industry how they see it maybe i'll kick it off um oh this gentleman here yes sir in the case of certification based usage will developers who are used to not having to do any of that at the moment just pick the ecosystem or the tool that accompanies a test that they perceive to be the the least arduous excuse me the least arduous and therefore it kind of collapses into the same case of the telephone where you have the tick box thing and it becomes as meaningless yeah of course because you're always going to take the path of last resist at least resistance when you want to develop something and and people will see all these this stuff as resistance it makes it more difficult to get my product out i think that's the job of a good sort of audit competence or checking competence today is is is to do that work properly we see that in other industries i mean most of the financial products today are self-certified by the institute that's doing it and and if they don't comply with these 1040 pages of rules then they get into trouble so you have this balance you don't of course you're not going to spend even you know even the banks today we're not spending more money than we have to to to do this stuff because who wants to gold plated it's it's really complicated so yes that's right um but the closer you are to the edge the more likely you are to be not compliant but i want what i want to hope what i dream of at least is our our regulators take this stuff and understand that it's a little bit of a different way of working because you don't really i want to remove the counterparty side of it to some level so you've not got the developer the developer is doing the code it's certified kind of independently and then it then it all works i think that's that feels like the right way to do it and it's not the way they're used to doing it it's not the way they're used to doing it i had a discussion last night with somebody on the regulatory side who said um he actually said to me but who's clearing the transaction right who's clearing the bitcoin transaction the crypto transaction the financial transaction and we all know there's nobody's clearing that's what the blockchain does that's what the consensus of the blockchain does and and that level of knowledge from somebody at a in the crypto department at a bank at a research department of a bank whose name you i won't embarrass you with them with is shocking so the financial institution side is way behind on this and we can educate what an opportunity we have i mean we've got the whole world of finance one of the largest industries in the world we can produce product for these people that that will work properly in the future i think we're building with a few of us here really this is tiny and we always say you know it's we're not too early in crypto and i think that's there thanks yeah that's a very valid point and uh an unbelievable opportunity for the builders out there to be that have we got any more questions thank you hi um how does concordium solve the famous trilemma problem i mean for for us to build future finance on blockchain the the blockchain system should be scalable secure and decentralized there is no one actually in the industry still found solution um there are some solutions like sharding but unless these shards speak to each other we cannot talk about this for building finance on blockchain so how conquered you bring solution to this problem i think it's eminently possible to build finance on on top of blockchain the whole consensus structure is what trusts i mean the financial system is based upon trust it's what you have to have it's what it was built for in even you go back to the the early days in venice in siena in wherever of original banking it was based in trust um and in in code we trust as somebody said once i mean cryptography we trust and we have to take those personal trust relationships and build them into the you know the system into the into the code into the we trust in physics we trust in cryptography we have to and i think that allows us to do that it's a difficult i mean it's it's a journey for sure it's a journey we're 10 years into this journey and we've got nowhere in in reality i mean how much of the world's wealth is in crypto i mean none in reality how much of the world's transactions transactions are going through crypto very very few and how much of the world's trading is going through crypto even financial trading very little right so we've got to build that trust up but i think that putting these structures together helps towards that trust framework and that's what that's what we want to do we want you to be able to trust in us that would be nice and build your projects on us any other questions from michael gentleman here at the back uh hi um you were talking about just now how regulators are really clueless on uh you know how to regulate this this industry and this product sounds like it's based on complying with regulation that hasn't been built yet so how do you think regulators can build that framework without hindering innovation and hindering the future use of crypto and blockchain yeah i think we've got a great opportunity um i showed at the beginning that slide on on mica which is the crypto asset regulation for europe which is being developed now um the process of that is is that's been written now that'll come into some within europe into this european directive the european directive will then be implemented in the member states of the european union and the ea and what have you if we get into the crypto asset framework the directive then we're home because then it's implemented everywhere else yeah it takes time but i mean everything takes time right nothing happens overnight it reminds me like i come from the the telecoms industry and way back in 2001 we got stuff written into the european telecoms directive just some very few words very few changes that made it less prescriptive less technology dependent more purpose focused that enabled voice over ip to happen if we hadn't put those 10 words into that framework in 2001 our lockdown would have been without zoom without teams without skype it would have been really rather boring maybe it would have been more fun i don't know but and and those few words can influence regulators tremendously by directing the rule and i think that's the job that we all have to do now is to try and influence these people to do the right thing and in europe regulators tend to be quite technocratic they're they're they're intelligent they want the right solution in america we heard earlier that chap before lauren before he's talking about the us situation and they are um a lot more political their political appointees in some of these environments and there's a lot more lobbying a lot more whatever so we read all this in the newspaper in our in our newsletters and things because they're american focused but i think the european side is a really nice angle to go at and i think we should all be doing that talking to our regulators and saying you know educating them about this but you know but also other concepts around what i'm talking about obviously this isn't you know i'm speaking about this there are other solutions of course but we should be doing that and i'd encourage anybody to do it it's not hopeless i would say that we can all do that i mean i was i was doing this european directive stuff 20 years ago when i was a lot younger than i am now and it's actually quite easy because nobody else bothers so one sec let me uh get you the mic so everybody can hear your excellent question i know you've been waiting all right thank you um how you deal with not just the regulators but also the lobbying efforts that usually go in front of those discussions you have with regulators i know about one specific project the lobby lobsters that does it for the s for the u.s but i don't know too many projects that do this in europe yeah we're very poor at lobbying in europe i mean there isn't in america there's a whole lobbyist industry it's a it's a multi-trillion dollar industry i mean first time i ever went to america i was completely shocked because it was like you want to see the senator it's fine 50 grand boom hillary's on your you get 10 minutes with hillary it costs you 50 grand it's easy nice photo lovely you don't get that in europe and in fact if you try and offer them 50 grand you go to jail in europe right so it's not the right approach i think you just have to be part of the dialogue these guys are out there they're technicians and they're technical call it technicians but the technocrats who are writing the laws the rules the regulations they're in the community they're listening they're interested in this stuff they know it's the future i mean they read they're not they're not idiots they're certainly not idiots they're very very intelligent people well-trained legally background financial background i mean you read this stuff it's it's it's it's kind of boring but i mean it's it's not unintelligent and i think in involving a dialogue between two intelligent people is a really really good way to do it but there isn't a formal lobby organization maybe we should have that maybe we should have a european crypto lobby framework we're we're weak at it in general as an industry thank you