Peter Grosskopf Web3 and the Future of Banking

Crypto and Blockchain have been around for quite a few years. The first wave of adoption was led by trading companies like centralized exchanges as crypto currencies became a means of speculation. Still. Blockchain was invented for transacting money or value. Nowadays there is a second wave happening with Decentralized Finance. Blockchains are now used to deliver financial services end-to-end in a new decentralized way. Web3 as a broader topic offers a big opportunity to make digital ecosystems converge, moving finance, identity, social networks and creator economy out of their silos, to become one big global digital decentralized economy. The talk gives insights to the current state.

Foreign er co-founder and c2o from unstoppable finance he has a bank background and he knows both sides the technology one and the entrepreneurial one he was at solaris bank he was at the burger stuttgart the first digital exchange as a regulated digital exchange in germany very exciting what he will tell us to get the ultimate money here’s peter grosskopf

There he is hey all right wow it’s an amazing too to be here so i think i don’t know when when i’ve been the last time at the mexico um so pleasure pressure to be here and to speak and it’s also cool that today we have to stage here to talk about web free blockchain defined all the new stuff which is which is coming up and i’m speaking about d5 so decent that’s

Finance and the future of banking i was already introduced but i also introduced myself again so i’m peter i’m originally also from the rhine area here so also cool to to see a few friends here um so i’m a developer from from my origins uh software development company in the early days moved to berlin eight years ago and somehow slipped into the finance space and

So i always say if you play with the wrong kids on the schoolyards suddenly new things happen and so this brought me into into the into the final space i was able to uh to be one of the co-founders of solaris bank kind of joined as one of five five the first five people in the company and we built up a bank came into the crypto space end of 2016. um also really

Thinking about so if people can have the bank in their pocket by by owning a non-costality wallet so what happens with banks and what happens to you to the to the financial service companies um and i wanted to work full-time in crypto that brought me to brothership cards and now we um started with unstoppable finance a new company a year ago and we want to bring

D5 to the masses and what diva is i’m going to explain in the in the next minutes so while we are all here um so we all know in the meanwhile that the invention of the internet has been one of the uh has been one of the most disruptional events in the in the past decades kind of almost um yeah it changed a lot of industries and a lot of companies and um with

Web free and with blockchain we’re now facing a comparable situation again which is very likely also changing a lot of industries is also called the internet of information so it’s about kind of displaying information building applications but with um with blockchain and with with web free we’re now able to um also have the internet of values which means that

You can transfer value from from one person to another and have like a full infrastructure for that also when when talking in the comparison or about the comparison of of the internet and now the blockchain area um so in the http um so in the kind of internet protocol um there is also one uh kind of so there’s one standard included which is about payment which

Has never been implemented anywhere and now with with the internet of failure we’re now seeing kind of the implementation for transferring value through the internet so um as this is a as this is an online marketing conference and it’s it’s likely that there are some people in the audience who don’t know much about blockchain and what it actually is um so i want

To give a definition about it so i’m a developer so for me it’s a it’s a decentralized database um of transactions um and so what’s so new about it um so you have to imagine so if you’re running in your in your company a database it’s in the data center you have to the data under your control it’s kind of the full governance is under under your control um in in

The blockchain it’s a little bit different because um the nodes of the of the database are are maintained by people that you don’t know so which which means so if you want to trust the data that are in this in this database you have to trust these people that you don’t know and that’s kind of the that’s kind of the twist the twist here and blockchain in the end is

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Like a like a mix of mathematics of technology cryptography and and also game theory to incentivize these these maintainers of the of the nodes in a way that they don’t change the data that they don’t manipulate and in the end you can trust the whole system and it’s um so the bitcoin kick this uh this development off um and with ethereum we we now have a have a

Blockchain for quite a few years where you also can build applications on top um and um with the with the relation to to finance um most banks run the core banking systems which is kind of the account keeping system where all the other people and customers have their accounts um the blockchain is kind of a global core banking system that which is not controlled

By anyone where everybody can create an account without an intermediaries or without a bank and if people can now use this this global database and build applications on top so for example in the financial services that’s so that’s really uh it’s really groundbreaking because um also in the financial service you never had a global infrastructure before and now

You can really really make transactions and build applications that run globally uh fully standardized and and everyone can access them but um so now talking about about reps free um the division is actually much bigger and um and so for me it’s also um not only a technology introduction it’s um it’s really a paradigm shift that might also disrupt a lot of web 2

Companies and maybe also a few companies that that are here in the advertising space um because also just from comparing the the few versions of the web when the web was was invented it was meant for like a means of information so um mostly from the academic space and people wanted to um kind of download information and share share share data across across the

Globe and was really fully decentralized um because the because the idea of the internet was also to be kind of um yeah kind of like a resistant to a nuclear war um so that’s kind of so as it decentralized there are many many nodes and servers running it um so if there would be a like a nuclear explosion somewhere so the the internet would survive with the web 2 um

Kind of um popping up over over the past 10 15 years that the internet came a little bit more centralized because um mostly web 2 companies like facebook google are kind of the gateway for us so we’re able to create identities and the login and we’re using these platforms these platforms collect a lot of data about us and and monetize the data with with advertising

Um and with web 3 we’re now kind of facing a new development where potentially the internet becomes more decentralized again because potentially with with web free technology the users are also able to to monetize their data themselves and as we’re on the advertising company advertising conference here um just to give you one example um the let’s assume there’s

There’s a website owner and having having traffic data and um like in the traditional sense would make a cooperation with with like an advertising company and so this advertising company would monetize that that data and find kind of the right the right people to to feel attractive from from the website and in the web free idea you could for example haven’t have

An oracle which is like a service exporting the data from the service publishing it to a decentralized marketplace and the bidding and finding the advertisers could happen on this on this decentralized marketplace as well so therefore um and in the end it’s fully automized it’s uh it’s a global infrastructure um it’s definitely still in its infancy so um kind of

The scalability is maybe a little bit lacking so that real-time bidding is is not possible yet but people are working on making the blockchains more and more performance so i’m a pretty pretty optimistic that also the advertising space will get a new wave of disruption over the over the next five to ten years so we all know this quote software is eating the world

From andresen horowitz and 11 years later we’ve seen how amazon revolutionized the retail business and how spotify revolutionized the music industry at the end everything became better faster more usable and more digital but um also having worked in the financial services space for quite a while now from my perspective the own the industry that did not change much

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Is the is the financial services and banking industry and how does it look today um i don’t want you to go into too much detail but for me there’s like one one thing really remarkable so i think every one of us is using whatsapp for for more than 10 years already and so we are used to have real-time information kind of sending messages to people and the the data

Arrives in real time but when it comes to banking we it’s kind of real-time uh real-time transactions are still not the default so even in many banks you have to pay extra for for making a real-time payment and um so this to me really shows how how slow the the space moves um also many banks have been surprised when the fintech movement came came up because the

Idea of the fintech was to provide financial services in a better more usable and more uh yeah customer customer centric way um and uh yeah but i think the the banks have always been to just though to really react and and find their own solutions so that they started to partner with fintechs and there’s just a few banks really able to to to be really digital and

Furthermore we’ve seen all the all the scandals happening so the i think the wirecard scandal is known to every one of us from x as well and um the i think the the problem is um as long as there’s people working on banks and potentially also criminals working in banks like in the case of wirecards it’s very difficult to come up with regulation and with rules to

To really find them and from my point of view what i’m talking about today is also a solution to um to really build a much better financial service system also with less manipulation so when talking about blockchains there have been and from my point of view two waves um that that we’ve seen so far so or maybe let’s start with with phase zero um blockchain that

The bitcoin blockchain was the was the first blockchain that that went public the idea was to to run a decentralized peer-to-peer payment system which has no intermediary kind of like as the access control um but what happened afterwards people figured out that the the bitcoin price was rising all the time and there were a few new cryptocurrencies um that uh have

Seen the same development so people wanted to trade it and that’s to me the first the first wave of crypto where it’s about crypto assets about cryptocurrency and trading them on exchanges and in the meanwhile we we see a lot of companies for example coinbase kraken but also the brazil stuttgart projects where it’s like centralized companies it works almost like a

Bank or like a stock exchange and people sign up there and are able to to trade cryptocurrencies furthermore you can use tokenization which means that you can kind of create assets on the blockchain that you then can transfer through the blockchain and these these assets can also have a like a relation to real world assets i think this this wave is almost maturing

So a few weeks ago a few months ago we’ve seen the mika regulation being introduced which which is the idea to have a unified you your white regulation for all of these centralized services that that people can can use to me it’s yeah it’s an interesting development but um so what i’m really curious and interested about is the second wave of crypto where it’s

Not about trading crypto assets where it’s more about consuming financial services and that’s that’s a huge difference because imagine that um you can kind of consume financial services which is everything that you get from a bank for example a loan earning interest rates having an asset manager but also marketplaces and exchanges imagine that you can use these

Kind of services and consume them from non-banks and and in the end that’s now what what happens what happens with d5 so what’s default actually decentralized finance um so my definition is that it’s financial services offered through smart contracts on the blockchain um what’s so what’s so cool about it um it’s permissionless so there’s no gatekeeper there’s

No bouncer like in bear kind so where selects you can who can go in and who might not go in um and so everyone can use it globally um there’s it’s highly interoperable um the the banking industry really took years to introduce the psd2 so we’re just like an open banking standard so that um that banks have to provide apis so that’s um for example fintechs can use

These apis to to build financial services on top in d5 you kind of have this by design so because the smart contract is in the end the public public endpoint or public api so that everyone can use and we see in defy that many projects are using each other for example lending protocols using a decent plus exchange for for liquidations and that’s uh 100 optimized and

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Integrated um without kind of promoting these standards furthermore it’s super transparent so the transactions are transparent to everyone to other tests and also the source code is available and and displayable for for everyone so auditors can have a look and make sure that that these services are built the right way and um and also speaking about regulation and

Also the traditional finance space what i like about about e5 is that once you wrote a smart contract and it’s kind of deployed so installed on on the blockchain then you can’t change it anymore and um so from my point of view it’s solving the dilemma of regulators worldwide um because most of the of the scandals that we’ve seen for example wirecut has been have

Been caused by by peoples by by humans doing manipulation in the background and it’s very difficult to detect them and imagine if financial services are 100 offered by machines the machine always does what’s what’s written in the in the code and follows the rules and doesn’t uh whatever uh yeah have an interest to manipulate and therefore from my point of view

It’s a really a solution to solve the dilemma of the regulator as well worldwide um yeah so i think i already talked about what you can get from from d5 so it’s exchanges it’s uh it’s payment systems it’s asset managers so almost anything that you that you get from a bank you can also also get in in the default space and how do you get access in the end you need

To open or need to create a non-pustodial wallet so which means you create a private key that gives you access to your account on the blockchain and and then the the world is completely open open for you and so why do i believe that the non-custodial wallets are so important um in the end they will become the super apps of tomorrow because so this idea of having

A private key and assigning transactions can be used for logins for digital identities and the various services also beyond the financial space and there’s also the reason why we with ultimate sort of the company that i found it are creating a non-custodial wallet which makes it very easy to invest into d5 and yeah with with this with this wallet we want to bring

D5 to the masses so i i’m a little bit late so my final thoughts um so maybe a few things to remember um d5 to me is kind of fintech 2.0 because the fintech one day when they started they wanted to disrupt the banks but in the end they didn’t because they ended up with corporations and with with d5 we are now building the full stack kind of the whole infrastructure

Of financial services and the transactional layer completely from the scratch and potentially also without banks and any intermediaries so therefore it’s a groundbreaking innovation d5 scales massively because um as i said if you run for example in exchange it’s just code um it’s a machine delivering it in the end you only need developers who are developing them

And you see a comparison here of the new york stock exchange and uni swap which are kind of in the same business and and the revenue per employee in d5 is much higher and because it’s 100 optimized yeah and so to to conclude um maybe you gotta get a glimpse um so why i’m so so motivated to be a builder in this space um so due to this uh yeah the the properties of

Being permissionless so open to everyone it’s a global infrastructure it’s 100 automized and and people are building with a massive speed um and i really believe that with the components that we’re already seeing in defy it’s possible to build the best financial service and banking ecosystem in the human history and uh that’s uh why we’re doing it thank you for

For listening um so if you want to know more about us so you can definitely follow us on twitter you can also follow me on twitter and add me on linkedin so if you have questions so we’re really happy to to promote for for the space and and help people to to get started so if you have questions you can definitely talk to me or contact me on these channels thank you foreign

Transcribed from video
Peter Grosskopf – Web3 and the Future of Banking By w3_fund