Living the Promise of Crypto

Transcript

Right. Hello everyone. Thank you for joining. Um for those who don't know me, uh I'm Deepesh I lead the consumer business unit of Gnosis. Um we're trying to bring um Circles to the world. Um it's a monetary protocol that brings sovereign money to the world. Um before this I was part of the founding team at Gnosis Pay. Um so I've spent the last 3 years spending a lot of time thinking and executing around money and payments both from the traditional finance side uh and the more crypto native side.

Um today instead of talking about the product or making it a more technical talk, I wanted to take a step back and remind ourselves on what is the original promise of crypto? Why are we all here? And how have we fared so far in the next like in the 17 years from the birth of it in some sense, right? How did it all start? Um 1980s, a small group of um researchers programmers cryptographers libertarians privacy advocates kind of came together um to think about several ideas.

Few of them core beliefs being money should work like information on the internet, right? Permissionless and global. Um internet native money should not have or not need any trusted third parties to hold and move money. Money should not be censored. And lastly, underneath all of this, we should defend privacy and autonomy as much as possible. It's been decades of ideas that has led to this moment here, right? And this is just a timeline. I'm probably not even doing justice to all the work that has been done.

I started in 1983, but I know like there were many early ideas around community money and sovereign money way before that. But this kind of gives you a rough picture of the key moments in my opinion. All of this tried to answer one question. Right? Can money be held and moved without a trusted intermediary? Can it be done without a central institution? Can it be done without a bank or a financial institution? Right? And 2008, of course we had a big breakthrough, right? When Satoshi kind of launched the white paper and we finally had the Genesis block in 2009 for the ones that remember.

And there was one thing that was very interesting that was mentioned on the block notes was Chancellor on the brink of second bailout for banks. This is the Times from the UK. And of course this is the time during the 2008 financial crisis. This was yet another time that consumer money was used to save the banks. This wasn't a one-off grievance, right? This has happened time and time again. Most recently being the SVB bank crisis, if you guys remember in 2023.

Government stepped in yet again to bail out the banks and the uninsured depositors. I can remember a time in Cyprus in 2013, I think, when well, the money system collapsed and they did a bail-in, not a bailout. So depositors in banks who had more than 100,000 euros in savings were asked to compensate for this loss. About 50% of their money was taken away or confiscated to cover for the loss of the banks.

So, this has happened time and time again. And this was a kind of a pivotal moment, right? Because it solved two things. It solved the double spending problem. Um in a nutshell, it removed the need for having any kind of central intermediary or having to trust anyone. Right? And next, it kind of had a fixed supply, so no one could just simply print money inflate away all the debt and the losses that people made. But, it became a great store of value, as you guys probably already know here.

But, it failed as stable everyday money. Fast forward to today, where are we? Like, how much progress have we done? It's been 17 years. A lot has happened, but I'm going to focus on the very recent past, which is stable coins. Well, they're awesome, no? Um they're growing like crazy. Um they help with cross-border payments. They make things so much more borderless. They help people in weaker countries and currencies to save in dollars, stronger currency.

They help with faster settlement. Um they're in general great. People love it. 99% of stablecoin value today is dollar denominated. But, this is not self-sovereign money. Stablecoins are simply tokenized access to someone else's sovereign money. And as stablecoins kind of grow, more governments kind of adopt them, more institutions adopt them, regulators adopt them, they inherit the same weaknesses that crypto set out to kind of solve.

They're simply accelerating the same problem that we tried to solve through the launch of Bitcoin. Stablecoins solve friction and inconvenience. They don't solve the problem of dependence. When you use stablecoins, you are still dependent on the monetary system of the United States, for example, right? You still have issuer risk. You can use a self-custodial wallet. And you can have USDC, USDT on it, but that is not sovereign money.

Circle or Tether can very much freeze those assets even on a self-custodial wallet. Right? So, while self-custody is necessary, it's not sufficient. And don't get me wrong, stablecoins are awesome. They're not bad. They're simply incomplete. In my view, they're just a side effect of this awesome technology that we brought to this world, right? But this is not why crypto started in the first place.

It was meant to empower people with more financial sovereignty. Who are these people? They're the over-controlled, the oppressed, the excluded, the people that are disillusioned, right? The ones that the system is watching too closely, or the ones that the system forgot to recognize altogether, right? It's the ones for whom the system is weaponized against them. Right? What do the faces of this dependence look like, right? Let's talk about the ones that are oppressed. Think about people in Lebanon, right?

The depositors had their savings completely frozen. Think about Afghanistan, where women are blocked from even holding bank accounts. Think about refugees whose financial identity is lost the moment they cross the border. Think about the people that are de-banked just because they don't look good to the traditional systems. Think about protesters. Think about sex workers. Um, an example from India comes to mind, which is my home country. In 2017, we had demonetization. About 86% of cash across the country was voided overnight.

You know, and in crypto circles, we regard cash very highly, you know, like that you control it. Not really. And then, on the other side, we have the disillusioned right? Um, this is the quiet dependence, right? These could be people in fairly developed economies, fairly stable economies in the West, right? People who are holding stablecoins on their wallets, for example. They're quietly being diluted by inflation from a dollar system they don't control or they didn't even vote for, right?

Think communities across the world, remote regions, um, who have a lot of value to give, but they don't have access to a lot of fiat liquidity. Those are the people that also have lost lost trust in the system, right? An example from Kenya comes to mind. There's the Saraku community, roughly 50,000 people. They don't have a lot of access to the Kenyan fiat. So, they use a voucher system. So, dependence isn't just being shut out or oppressed, right? It's also being diluted by a system you can't opt out of or you didn't vote for.

So, what's the dream? The dream is money that is self-sovereign, money that is stable, money that is private, and money that is widely accepted. This seems very easy to say, but it's a very very non-trivial problem to solve. No single money so far has solved this problem. Let's look at the notable attempts, right? Bitcoin. It is self-sovereign, it is unstable, it is not private, and it is not really widely accepted, right?

Let's look at the privacy coins that came uh in the 2010s. We had Monero, we had Zcash that's been making a lot of noise. It is self-sovereign, it is private, but they're not stable or widely accepted. >> [snorts] >> Then we have dollar stable coins that I spoke about. They are very stable, they're very widely accepted, widely adopted, but they're not self-sovereign. They're not private. We had very interesting experiments with decentralized stable coins. Think um coins that are backed by crypto collateral instead of um stable coins or like uh fiat. Um notable examples being liquidity uh liquidity and Rai.

Um they're self-sovereign, stable, not private, and didn't get a lot of adoption. And then lastly, we've had experiments around community money. And of course, one notable one here is Circles where people issue their own money and communities can also issue their own money um collateralized by this personal issuance by people. It is self-sovereign. It's not that stable. It's not yet private, and we still haven't had enough uh wide adoption for this.

Right? The thing is a lot of these properties have a lot of tension against each other. When you try to bring something self-sovereign, it directly has a tension against stability. Right? When you try to bring something private to the world, it directly has a problem with regulations. Um it's not an easy problem to solve. And in my view, widely accepted, the last property so far has been the hardest to solve. I feel crypto teams can, if not already, have solved the first three problems to a fair extent.

But the last one is mostly a distribution and a coordination problem. And it's something historically most crypto teams have either under invested in, not focused on enough, or haven't simply been good at. And it's not an easy problem. Right? Um and so what are we doing at Gnosis for this? Well, we are launching the new Gnosis app. It's um social money app that brings circles to the world. Circles is a protocol that Paul in the next talk is going to talk more about and how it works and how the community vision comes to life.

Gnosis app is built for the sovereignty seekers. Built for the people that really need help. Built for the people that need to reduce dependence to centralized systems in their lives. Not built for the masses. And by no means we've solved the problem of dream dream money yet, but it is one step forward. And lastly, it is my personal mission to bring this dream money to the world to empower people with more financial sovereignty.

So, find me or find me after the talk, reach out to me on Telegram if you have ideas, if you want to back me, support me, or chat with me. Thank you so much, and thank you again. >> [applause] >> Any questions? No questions. Thank you. Looks like I was perfect.