Transcriber: Nhung Nguyen Reviewer: An Nguyen
(Applause)
Trust! Trust is essential for us.
Do you tell someone a secret you do not trust?
Do you work for a company you do not trust?
Do you have a bank account with a bank you do not trust?
I hope that all of you here can say: “Yes, we trust them. Definitely!”
But not everyone in the world can say this.
2.8 billion adults in this world are underbanked.
This means that they do not have a bank account,
or that they only have very limited access to financial services.
And many people out there do not trust their bank.
But the system of the financial services is heavily built on the trust.
And even if you trust your bank, do you trust the bank of your bank?
The case we have out there is that our system is built on trust
and our trust in intermediaries.
Trust in intermediaries we do not even know.
And that’s good that it was built like that.
Then because we found the Internet,
it wouldn’t have been possible to send money from a country to another one,
because how should that have worked
with this system that is out there at the moment
and is up and running for many many years.
We have a solution.
But thanks to the Internet, and thanks to a new technology
that is up and since 2009 running without a single failure,
we have found a solution that it can drastically change.
Today I would like to explain to you
how the existing financial system works in a nutshell?
How the new technology will work?
And why the new way will be way better for all of us?
Let’s us speak about Peter.
Peter lives in Zurich, and Maria lives in Los Angeles.
Peter owns Maria 100$, and he would like to send them to her.
Because they can not meet in person, he uses his bank account.
So, he logs in in his online bank, and he sends the money to Maria.
Is it that easy so we have just bank A and bank B involved?
Definitely not!
As mentioned, the system is built on trust in intermediaries,
so we have minimum two and up to five more banks involved in a single transaction,
from Switzerland to Los Angeles.
And the crazy thing, it takes up to three days,
and cost in average about 20$ or more.
So to send money from Switzerland to Los Angeles: three days, 20$.
If I would like to send her a message, Peter to Maria, it works easy.
He takes out his phone and he calls her, or he send her a WhatsApp.
So we have the Internet for communication, for data and everything
but not for financial services.
Banks block us.
Banks are expensive, and banks do what they like to do,
and they would like to keep that power.
But thanks to this new technology,
it will change.
And if they fight this, they will not win this fight.
But why is it that strict?
And why do we have that central intermediaries in between?
If we look at the system, it’s logical.
Because the bank in Switzerland does not know the bank in Los Angeles.
So how should it be able to communicate with them?
And how should it be able to send money to them?
That’s why we need these central counterparts in between where banks trust.
So in this example, these four banks are connected to a correspondent bank,
and if they would like to send money, from A to B,
they always have to go through this bank,
and this bank takes care of the transaction,
takes care of the general ledger and knows which bank owes which bank how much.
But what happened if this bank goes out of business?
That’s the single point of failure we have in the existing systems.
If one of these hundreds of central custodians goes out of business,
we have a problem, and many banks, possibly even we will lose a lot of money.
And that’s definitely not necessary anymore nowadays.
So again, if we look how this transaction works,
we can go in a plane in Zurich fly to Los Angeles,
and 12 and a half hours later,
we are there.
But our transaction is a two-stop flight.
Do we like that? Definitely not!
Why should our money like that?
So in this example as you can see this money starts in Switzerland,
stops somewhere in Europe, stops in New York
and finally arrives three days later in Los Angeles.
That’s definitely not a way how it should be done.
And there is out there a new technology, as mentioned up and running since 2009,
24/7 without a single failure.
And is it therefore simple or definitely not?
That’s an example to explain how this new technology in the back would look like.
But again, we can simplify that
because it’s easy simple example
where everyone in the infrastructure is connected with each others.
If Peter would like to send money to Maria directly, he can do that.
If he would like to send this to a bank, he can also do that.
He is connected to every single participant,
peer-to-peer in the system.
And the great thing is
if Peter goes out of business, we do not care,
because all other participants have taken care of the transaction,
know who has how much money, know who has sent to who how much money.
And this technology is the blockchain.
We heard a lot about this in the news, about Bitcoin and all the other stuffs.
And yes, Bitcoin is an amazing use case of the blockchain,
but it’s just a use case and we will see way more out there;
and there is already way more out there.
So I would now like to explain to you how it works in the blockchain technology.
So Peter logs in in his laptop and only needs to know Maria’s wallet address.
This wallet address is nothing different of an existing bank account number.
It’s a number of a lot of signs.
And he will put it in, and will send her the money.
And it arrives there.
No intermediary is involved in this transaction.
Very simple!
Yes, for the user, it’s very simple.
But what happens in between or in the back it’s definitely way more complicated.
But again, back to the system.
On the left side, we have this centralize system;
that if this one little house makes a mistake, everyone looses money.
And on the right side, we have a system
where everyone is connected with each other.
And if someone stops doing business, we do not even care.
Because every transaction already happened
and nothing can be lost, because it already transferred.
To explain to you in a little bit more detail how it works,
I really like to use the example of a train.
So every transaction is some kind of a passenger.
They walk in the train station and wait for the wagon for the train.
And finally, the new wagon arrives.
This wagon in the blockchain world would be a block.
The company who is responsible for this wagon is a mining company.
And they decide which transactions they would like to take with them.
Who pays the highest fee? Who has the good amount?
Who has a right size of a transaction that it fits in this wagon?
So they pick the transactions, to take them in the wagon.
And then they check everything, and if it’s fine,
the transaction in the block will be approved,
and the new ones will be added.
For example in the Bitcoin blockchain,
that’s something that’s happening every 10 minutes.
Every 10 minutes, we have the full settlement of all these transactions,
and they really move from A to B.
It’s like if you would pick physical gold
to bring it to your friend in Los Angeles.
It’s not only in a booking system a number it’s really there and it has moved.
Nothing can be lost.
But how is a block or a wagon verified?
Also there we have an amazing technology behind where we can see--
that again this wagon comes;
the mining company decides which transactions they would like to take.
They check everything but then the amazing thing happens.
They broadcast this block to the blockchain.
And every single participant acts as like a conductor.
They check if these transactions are right
If enough money is in this account?
If the transactions paid the right fee?
And if it should happen what’s written there?
And they will verify it.
So we have hundreds or thousands,
and in the future possibly millions of participants
that will verify a transaction,
and therefore again, compare it.
One single regulated company compared to a whole environment,
a whole decentralized infrastructure that verifies transactions.
Isn’t that way better?
And this wagon will be added day by day.
Every 10 minutes for example in the Bitcoin blockchain.
In other blockchains, it takes way longer or is way faster.
Compared to the use case, different block time--
so different times when we add new wagons are necessary.
That’s growing and growing and growing.
This train will never stop to grow.
And the amazing thing is that’s what you can see here:
Every single transaction is still in this wagon.
And we can check them.
Next to the trust in the technology
and not in a centralized counterpart anymore,
we have transparency.
We can check what someone tells us.
If someone tells us nowadays:
“Look! Here is a print screen of my online banking.
I have 10 million in my bank account.”
We cannot verify that.
Thanks to the blockchain technology, we can tell him:
“Yes, sir! Show me your address.”
And I can verify it.
So we will go in a decentralized financial system;
where transparency is next to trust, something of the most essential things.
And if you go back to the world map, how would such a transaction work?
You can send money from South America to Russia,
from Australia to Switzerland.
You can do whatever you like, and the amazing thing: 24/7.
If Sunday morning, 2 o’clock, you would like to send money to your friend,
you can do it.
Nowadays, you have to wait until Monday, the bank opens again,
and the payment infrastructure is up and running, and the money will be moved.
The blockchain technology enables us to have a system that is up and running 24/7,
where we have way more trust in the system because the technology itself,
and not some shady centralized counterparties take care of transactions.
And we have a way bigger transparency,
and therefore illegit and illegal things cannot happen that easily anymore.
The best thing behind this: You can decide how you would like to do it.
You can decide if you would like to open your own bank account, your own wallet,
or if you would like to do it with a bank.
So if you still trust your bank,
in the future, they will use the blockchain technology,
and you will use them.
You will not see the difference, only that you can send money 24/7
But if you do not trust your bank or there is no trustworthy player in your region,
you can open your account with another player or do it by yourself.
You have the economical freedom to be your own bank if you like.
And wouldn’t that be great to get that kind of freedom?
For everything we have that freedom,
or for a lot of things we have that freedom.
But nowadays, not for our financial assets.
Thank you very much. It was a pleasure to speak to you.
(Applause)