Blockchain Insider Ep. 28. Where now for Ripple & Blockchain gets all Zuck'ed up


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ST:  We are here at 11FS Headquarters in London WeWork for Episode 28 of Blockchain Insider. Today, we bring you Mark Zuckerberg studies the benefits of decentralisation for Facebook, Visa drops crypto debit cards in Europe, and we bring you a fantastic interview. Now, on with the news.

[Break]

ST:  Hey, Colin, good to have you back. How is the G-Sass?

CP:  It's good to be back, although I don't know how good. It's quite cold here.

ST:  Well, you know, it's not quite France, it's not quite a field, but it's nice to see you in person.

CP:  There are no fields here, that is disappointing.

ST:  [Laughter] there are no fields, but I do have to let listeners know that today's episode of Blockchain Insider is brought to you by Corda. Corda is an opensource blockchain platform that allows businesses to transact directly, in strict privacy, using smart contracts. Corda enables complex transactions, using real assets, and legally binding agreements, without the need of a trusted intermediary. Corda is the result of a collaborative effort, led by R3, with over 160 of the world's largest banks and technology partners. It's ready to build on today, and the financial community is deploying Corda to manage their agreements, and move assets globally. You can transform your business ecosystem, with a platform selected by the world's largest institutions to build their future on. Go to Corda.net to learn more. Big, big bit of news this week, Colin. I think the first one we're going to get to, before we get to the-, to some of the Ripple stuff, which I can feel you itching, itching to get to. I actually think the number one story this week was Mark Zuckerberg, deciding to 'fix' Facebook, by 'studying' decentralisation. So, every year, Mark Zuckerberg has a challenge he sets himself, the things he's going to study and learn. And in 2016, it was AI. In 2017, he was going to go around the US and meet real people, I think he figured out-, and people thought that was his presidential run, that was coming, but-, and-, and in 2018, it's decentralisation, and decentralised technologies. And I think, I'd been-, I remember, I was on stage with Vitalik at some SWIFT event in 2015, and I-, I asked him the question, 'Why aren't we seeing west coast tech adopt this stuff?' and his view was, it kind of goes against their business model. Like, they-, they centralise data, they centralise knowledge, and they-, they advertise against that. But actually, with Facebook having issues around reputation, around identity, around real or fake news, is studying decentralisation something that's going to help with that?

CP:  I think it's a really good question, and it's interesting to see him put it out there. One thing that I thought was really funny in this whole story is, somebody wrote on Twitter, earlier this week, on the back of this article, 'It's funny that Mark Zuckerberg knows that he can't say the word Bitcoin, without making the Winklevoss twins infinite times richer than they already are, from buying Bitcoin very early on-,

ST:  So, if you've not watched The Social Network movie, go watch that movie to learn more, Patrick, I'm looking at you, because I know you haven't seen a lot of movies [laughter]. So, one of our Assistant Producers has not seen The Social Network, and our Producer, Ollie, is pulling an angry face right now, so, yeah.

CP:  So, we're going to have a movie night to night, then.

ST:  Yeah, movie night is coming.

CP:  [Laughter]. Um, it's great to see that Facebook is-, is trying to look at new technologies, I'm not at all surprised that they're looking at new technologies. It feels like maybe Mark Zuckerberg just spent too much time watching Silicon Valley, the TV show, because obviously this was the plot in the last season, of decentralised internet. Maybe he sees something, and doesn't want to say cryptocurrency, I don't know, but, at the end of the day, this is an incredibly powerful company that has more technical knowledge than pretty much anybody, maybe they rival Google, maybe it's more, maybe it's less, I don't know, but if they do start to get involved with decentralised technologies, what that means, and potentially blockchain and cryptocurrencies, we should at least look forward to cool technology coming out.

ST:  One of the interesting things about the whole permissionless blockchain space has been that these projects have been global in nature, and anybody, anywhere in the world, could do them, and they were seen as a-, as a force that changes the world. Much like the early days of the internet. It was a lot of cryptographers, and cypher punks, who came together and said, 'This will change the relationship of the citizen with-, with society.' And we're seeing the same sort of thing, again. As the internet got co-opted by big commerce, it-, it kind of became centralised, and it kind of became a commercial vehicle, and so now, this, sort of, pendulum is starting to swing back the other way, but then as it-, as it's done that, as this cypher punk movement hits its peak with-, with cryptocurrency prices, as they are, then you see the, sort of, west coast tech scene, which, let's face it, is stocked with some world-class engineers, has been holding world-class engineers for some time, who probably, off the side of their desk, have been playing with this stuff. There's a lot of internal demand, I think, to start working with it. There's an interesting quote he comes out with here. 'A lot of us got in to technology because we believe it can be a decentralising force that puts more power in people's hands. The first four words of Facebook's mission have always been, 'Give people the power.' Back in the 1990s and 2000s, most people believed technology would be a decentralising force, but today, many people have lost faith in that promise, with the rise of a small number of big tech companies, and governments using technology to watch their citizens. Many people now believe technology only centralises power, rather than decentralises it. There are important countertrends, like encryptions and cryptocurrency, that take that power away.' So, it's an interesting-, and he finishes off, 'This will be a serious year of self-improvement, and I'm looking forward to learning how we can fix these issues together.' If he studied AI in 2016, and, arguably, AI has been the hottest thing in tech since then, to me, it's interesting that decentralisation is now the thing that Zuckerberg's studying. I don't know that Facebook necessarily are the ones that-, that do anything amazing with it, but it's a real signal to me, of maturity, that these people-, these companies that would only focus on what will solve their problems, are now focusing in this space. And actually, I did wonder why-, why is this a banking conversation? Why is it a financial services conversation? Surely it should be a west coast tech conversation. And I think now it is.

CP:  But let's even bring it back to that. I mean, we've been talking about banks and distributed ledger technology, and how these things can help their costs, and all that great things, but now you have a company that is one of the most advanced companies, we talked about their technology, but they make a tonne of money. They're driving new business models that didn't exist 15 years ago, and they're trying to say, 'Right, our business model is being challenged after only 15 years,' and we're talking about entrenched players in financial technology-, or, sorry, in financial services, that are looking at financial technology potentially doing that. These guys are moving so much quicker, and maybe they're going to come eat your lunch, if you're a bank trying to do these things slower, and they say, 'Boom-,' all of a sudden, Facebook Coin now exists, and you can pay people anywhere in the world, and you just plug it in.

ST:  I don't buy that. I-, I disagree quite heartily, because the thing that Facebook did is they capitalised on a business model that goes all the way back to 1993. In '93, a company called GNN was the first company in the world to support online content with advertising, and from that genesis, which was Tim O'Reilly, Seth Godin, and Lisa Gansky. Those three people invented a business model that now supports Google and Facebook, as arguably being, hoard data so that I can sell advertising, and, in 2011, The Economist said data is the new oil. You just need to look at the market cap of the world's ten biggest companies, and how many of them hoard data, with the exception of Apple, who basically sell devices, pretty devices, hoarding data is the business model. But, there's only so much data you can ever hoard as one centralised company. What if-, if I was able to decentralise data, like a Filecoin, like an IPFS, and then empower you, as an individual, to be in control of it, but push my algorithm to you. So, my algorithms can now move to wherever the data is. Then, me as an algorithm producer, as a social network, I am then competing, my ad tech is competing wherever the data goes. But I might actually solve some of the privacy issues. Maybe that's a utopia, maybe that's a dream, maybe it won't happen, but I sort of see the logic the likes of Zuck are getting at, and it was really when Cheryl Sandberg arrived at Facebook that it turned from being an idealistic, 'We're never going to do ads, hell no, we won't IPO,' into a very hardnosed commercial business. I wonder what happens after decentralisation goes from, 'Hell no, we won't do anything commercial,' in to, 'Actually, this needs to be commercial'?

CP:  Absolutely.

ST:  So, speaking of hardnosed and commercial [laughter] The New York Times has a story about the rise of a Bitcoin competitor, called Ripple, and if you go back to a number of shows, even the very first show we did, of Blockchain Insider, we had-, one of the specials, right at the back of our iTunes feed, we had Stefan Thomas, the CTO of Ripple, talk a lot about why they have XRP, and what is Ripple, and why is Ripple, so, do check that out, by all means, to hear from them directly. But, this Bitcoin competitor, Ripple, has created wealth to rival Mark Zuckerberg himself, Colin.

CP:  Indeed. This is surprising, considering, as we said, Mark Zuckerberg runs a highly profitable company, and-, and Ripple does not yet, as far as we know. It's a privately held company. Ripple, of course, for those that aren't aware has, much like Bitcoin, its own cryptocurrency. Unlike Bitcoin, it is managed by this company that is still relatively centralised. They do some things to decentralise their own networks, but, at the end of the day, they control it, or companies that they've onboarded control it.

ST:  So, Ripple Labs Inc. has been funded by a number of venture capitalists, to develop the Ripple Labs, or a Rippled set of, and I'm probably naming the products wrong, so apologies to any-, any Ripple fans out there, but a set of technologies. And so they've done, actually, two things. The development of the Interledger Protocol, which is this open protocol that is allowing you to connect different types of ledgers together, used by everybody, from the Gates Foundation, to Ripple themselves, to connect legacy ledgers, telcos, banks, and it's a really interesting idea, working with W3C, opensource, open standards, but actually, probably not decentralised, just a-, just an interesting project.

CP:  Very interesting projects. Ripple is doing tonnes of cool things, a lot of it's focused around payments, and, as we said, it is decentralised on some levels, it's very different on some of the more underlying technology.

ST:  But let's talk about that decentralisation, because Richard Brown, the CTO of R3, always talks about centralisation and decentralisation as a continuum, and we often talk about Bitcoin being, everybody can have a copy of all of the data, and anyone can, effectively, be a miner. It's a competition. And so there's this truly permissionless network, in that sense. Now, how it evolves, because of the economic incentives, and the centralisation of mining, is a different thing. Rather than that, kind of, consensus algorithm, proof of work, the consensus for Ripple is quite different. I pick 200 unique node list validators, who I trust not to collude. So, I basically pick 200 nodes. I say, 'These 200 nodes have to validate all of my transactions, and I trust that they won't collude against me as an individual.' Which, rather than anybody can go compete, it's these arbitrary 200. And I can-, I can pick who those 200 are, but the reality is, the only people really operating those nodes is Ripple, themselves. So, de facto, it's centralised. Of course, Ripple would then argue, 'But anybody can run one, it just happens that nobody is. We're trying to encourage anybody to run one of these nodes, it just so happens nobody is yet.'

CP:  It so happens, but you also need to go through an onboarding process, which is very different from Bitcoin, where, literally, as you said, anybody can join. And it's not just the security and making sure that my transactions go through, or don't go through, it's also the notion, in Bitcoin, we talk about how there will only ever be 21 million Bitcoin. The fact is, if everybody thinks that, and everybody's running it, and anybody can come in and validate these things, that's a-, that's a relatively strong promise. This is a digital medium, and you can copy things, just like you can copy emails and send them off, or you can copy files. That notion of saying, 'Well, there only will be this fixed number,' is a difficult thing. Now, if Ripple makes that same promise, we have to trust Ripple, and maybe the other consortium members that have made that promise as well, that there will be, I think it's 100 billion Ripple. But, what's really interesting in this whole story is-, is not just that Ripple has built this payment system that is not shares, although it's completely under the control, it may, depending on some court cases that happened a couple of years ago, it may be a money transmitter, under US laws, but what was really interesting is the price just went bananas. I think Brad Garlinghouse, the CEO, put out a note saying, at one point this year, it was up to $3.5 dollars, or so, from a fraction of a penny, so it was like a 5900% increase in 12 months. 5900%. Massive. And he's been, kind of, cheerleading this thing, the whole way around. One of the original co-founders was worth, at one point, this last week, $59 billion?

ST:  But were they worth it? Or is that paper value? Because if they were to sell their XRP, surely the price-, and this is kind of the concern. So, Ripple have come out to the market and said, 'We're going to sell XRP at this pace,' because, actually, there's a lot of people concerned in the market that Ripple have so many of these XRP coins, that if they were to suddenly sell them, they would-, they would change the price overnight. They can manipulate this market, because they have the majority of this thing that people want, that now has-, has real monetary value.

CP:  Yeah, and I think that-, that's an important distinction that you made. It is-, it is paper value. One could make the same argument about Mark Zuckerberg, if he started selling off Facebook shares, as well-,

ST:  Fair, very true.

CP:  But, where it stood, the market value, times the number of Ripples in existence, Chris Larsen, the-, one of the co-founders of Ripple, was richer than Mark Zuckerberg, at least on paper, at one point last week. So, where I was really worried about this thing is, I've been watching crypto markets quite closely for the last few years, I was really interested last week, because of how I see Ripple marketed. We talked a bit about this on last week's show, I'm not-, I'm not giving investment advice, that's not our business on this show, but personally, I-, I've found it a very complex thing to understand exactly what they're selling. I've been working in banking for the last few years, I think I have a fairly good grasp, maybe I'm not an expert, but I have a fairly good grasp of how banking works. A lot of people are trying to sell this as different things, Ripple's put out a lot of information. What they haven't done is told people that there's a risk that these things may go down, and they've been down 40% in the last three or four days. And there's a lot of people who are going out and buying these things on credit cards. They're going out, and they're borrowing money to buy Ripples, that have dropped 40% in the last three or four days. This is an absolute atrocity, I think. People are going to be, potentially, not being able to pay their mortgage, their credit card bills, not being able to eat. This is really dangerous, and we've talked about this on this show. When you buy a cryptocurrency, whether it's a Bitcoin, whether it's Tether, whether it's Ripple, whether it's anything else, you're going to the casino in Las Vegas. Don't put money that you can't afford to lose 100% of. And what I find really dangerous here is that Ripple can control these currencies, they can put things in, like our vesting periods, and they can manipulate the price, and it appears that they have done. And they've made promises, and say, 'We're dealing with Western Union, we're dealing with three of the five largest banks in the world,' which make the prices go through the roof, because everybody thinks, 'We're going to get rich.'

ST:  And there are a number of reporters, and so there's this great piece, as well, by Ryan Selkis, on his Medium blog, called 'I See You, $XRP', where he does, I think, try and take as much of a balanced approach as he can. He tries to make the argument for-, for why people see Ripple may be a competitor to SWIFT, so, SWIFT being the interbank network in which all major transactions happen. So, if I'm going to try and send money to Australia, what actually happens is, I tell my bank to send money to the customer in Australia's bank, and they figure it out through SWIFT. And the idea being, well, actually that's slow, it's expensive, sometimes that payment can take days, it can take weeks, it can cost between $30 and $50, to me, as a consumer, to get that done. So, something that replaces that, and worked like email, wouldn't that be great? And, by the way, this coin is-, is kind of going to be what fuels it. I think that's-, that's part of the-, that's the really high-level view of it. There's a lot more complexity to it than that, and I think people-, people do make different arguments, and the Ripple argument is much more nuanced.

CP:  But let's talk about that SWIFT point just for a second. I-, I put out a tweet earlier this week, and was talking a bit about this. Right now, the market cap is about $3 billion for XRPs, the Ripple currency. SWIFT's profits last years were $29 million. That's 100 times more than SWIFT's profits.

ST:  So, if you were to replace SWIFT, you would potentially make 100x less per year in profit than the valuation. So, you've basically got 100x PE ratio.

CP:  If-, if you held $1 worth of XRP, and it were to return in the same way that SWIFT did, you would earn 1 penny per year. So, it would take you 100 years to recoup your investment, if nothing else changed.

ST:  That's-, mic drop [laugher]. I think there's-, there's little else to say on top of that. But, of course, look, the-, the company has had a number of narratives, I think Marcus Treacher, Stefan Thomas, I think a lot of these folks that are there, and-, will admit freely that the company that told the story in 2015 is a different company telling a story in 2018. I think they've learned a lot along the way, and I think what they're telling now is-, is something quite different. They have a product that works, ostensibly for, I think probably Tier 2 financial institutions. My own background is I worked in a-, in a bank, I know a lot of people who worked in banks, and you've got to consider that what is-, how does payments work, when you're doing SWIFT? Right? So, you've got to think, a bank, right now, is a glorified spreadsheet. Right at its very core, it's got-, whose-, which accounts-, you know, who are my customers, and what is their balance? And who are your customers, and what is their balance? In other words, yours and mine. In the banking parlance, this is nostro vostro. My customers have this much, your customers have that much. I have this much, you have that much. And what we do is, we effectively send emails to each other, to say, 'I'm going to send you this much,' and you go, 'Great, I've received your message, go ahead and send me that much.' And then what I do, is I change my spreadsheet to say, 'I have done that.' And then what I do is I send you an email going, 'I've done it,' and you go, 'Great, I've done it, too.' That's basically how SWIFT works. But, the interesting part about that is, the SWIFT part is just sending the email. What Ripple have done is replaced sending the email. What they haven't done is replaced the bit inside the bank. And the problem is, the bit inside the bank is the bit that's slow. So, if I don't replace the bit inside the bank, I haven't replaced the cost for the bank. If I don't replace the bit inside the bank, I haven't made the transaction go faster. If I don't replace the bit inside the bank, I haven't solved the problem. And the other problem is, one of the frontloaded costs is around anti-money-laundering. So, we've seen a bunch of banks have big fines around money-laundering. So, if I go to receive some money from you, you're a bank in Mexico, you send me some money, I'm a bank in the UK, I have to know that that's not from a Mexican drug cartel. The only way I can know that, because I'm not on the ground in Mexico, is if you, the bank in Mexico, actually know who your customer is. The only way I can know that you know who your customer is, is by flying a team of my compliance specialists to sit with your compliance specialists once a year, to watch you do your job. I am reliant on your controls. Ripple does not solve that, and that is the biggest cost in all of banking, is KYC AML. Not-, not in all of banking, in all of payments. That's-, that's where the cost comes from. So, there's a big truism in building any startup, or building any company, which is, solve a customer problem. And I think there are customers that can be solved with what is effectively moving IOUs around a closed network-, well, not a closed network, a semi-closed network, that has an interesting way of moving-, moving those IOUs around. For example, if I am a corporate, and I have a large amount of cash, let's say I'm one of the world's largest technology companies. If I have to move that between banks, I'm paying a lot of SWIFT fees. If I can move IOUs around, and I can account for that, on a Ripple-like network, that's a really interesting proposition. So, by no means am I saying that Ripple's useless, but I do think some of the speculation and the hype that's driven the price, I've seen tweets saying, 'Oh, the banksters are here, this is bankster coin.' I don't know that that's well-informed, from having seen what I've seen, working in financial services.

CP:  I-, I would agree with that. And I think the-, the notion that Ripple can become its own reserve currency amongst the banks is wrong from the people supporting XRP, Ripples, it's wrong from people calling it the Bankster coin, because, as you said, it doesn't make sense. But I think the-, the challenge I would issue, to Ripple, the company, is, warn people that are buying your XRP currency of the risk. I'm looking at your website right now. All you say is, 'We're committed to the long-term health and stability.' You don't put any normal risk disclosures that any investment would have.

ST:  And, for a long time, Ripple have said, 'We're a technology company, we just produce technology,' but there is only one issuer of XRP.

CP:  And, the words, 'We are committed to the long-term health and stability of XRP markets,' sounds a whole lot like investment, and it sounds a whole lot like, well, I won't say scam, because I think that that word's overused in this space, but it sounds a whole lot like something that you can't necessarily deliver upon, and, if I were a securities regulator looking at this, I would be asking Brad Garlinghouse, and the rest of the team, a lot of questions about what it is they're doing, what it is they're promising to the market, and retail investors, and I would tell them to knock it off. But, it could potentially hurt a whole lot of people that have been in this at a higher price than it is today.

ST:  And I think that would be a real shame, to-, to not take your advice there, Colin. Because, if Ripple were to deliver on their promise of making it so that I can move money around the world in real-time, what problems could I solve? Well, I could immediately solve problems for big companies, but who cares about that? I could, potentially, make a massive difference to people who work in a developed country, who send money home. There are a lot of people, we have some that work in our company, who send a large percentage of their salary home, because, where they come from, they're not making a lot of money, and most of that is gouged in fees. There is an extreme-, like, if I'm sending, I don't know, $500, and $50 to $60 are taken in fees, that makes a real difference, to the people who are at home. Being able to solve that problem is phenomenal, and I think I would support any movement to solve that problem, and what Ripple have done with Interledger, and the Gates Foundation, is to be commended. It's absolutely fantastic work. There is real promise inside that organisation, but I do think that-, that we should see a change in narrative.

CP:  Absolutely, and-, and hopefully a little bit of respect and responsibility for this €3 billion that they've got floating around in the market, and they don't really even know who holds these things.

ST:  Yeah, it's-, it's challenging, and I-, and I guess, if you float them out there, and you've got exchanges, maybe it's on the exchanges, you can't expect Ripple to do all of it, but some sensible noises would be nice. Okay. So, in a similar vein, there's an organisation called TSSB, who have ordered the cancel of a BitConnect token sale. So, the-, this is the Texas regulator, and they've ordered BitConnect to just stop. 'Call off your token sale.' So, they are the Texas Securities Board, and they've ordered BitConnect to just stop. According to the news release on the website, BitConnect was claiming to offer tokens with 100% annual returns, which the TSSB determined qualifies unregistered securities, and they were looking to promote its token, which the Texas agency deemed qualify agents who are not registered to sell securities. Sales agents were targeting Texas residents, as well as residents of other states. So, a bit of, like, regulators coming type-, type stuff. But it's-, it's often on this smaller scale, they've not gone after the big names yet.

CP:  Well, I-, I think BitConnect was-, was a very easy one to come after. It was interesting to see that the State of Texas decided it was going to be a first mover on this. We've talked a lot about the SEC, we've talked about the FCA, amongst others, looking at these things. Let's not forget that in-, in the United States, each individual state has its own financial regulator, which multiplies the likelihood that, if you do something wrong, at least in the United States, by 50 times. So, if you were operating what this was, and what they called this, which appeared to be a Ponzi scheme of some sorts, making promises, and paying previous investors with new investment money, it will be very difficult to deliver any kind of return. This is very akin to what Bernie Madoff was promising, back in the day.

ST:  Wow. I find this sort of stuff immensely frustrating, because, the amount of people I come across in the crypto asset and DLT communities, who are trying to build things for customers, that are trying to solve real problems, that are hampered by regulatory uncertainty, or just a mood music that is, 'Hey, these things are all scams,' is really frustrating, because these people are trying to do great things. They're trying to do good things. And then you get something like this, that's an obvious scam, that-, that potentially could damage the whole market, and I find that frustrating.

CP:  Well, what I thought was even more frustrating about the whole thing is, after this was released, the price still pumped.

ST:  And so we-, we've got to talk a little bit about pump and dump schemes there. We mentioned briefly, in my predictions from 2018, in the last episode, on Episode 27, that these pump and dump rings seem to be operating with impunity, they seem to be able to pump any old coin they want. There's very little sophistication, in terms of infiltrating these organisations, it's not seen as any sort of financial crime, and it's all happened very, very quickly. And it's gone from being a, this little corner of the internet, to being a really significant business, and now, the-, the punters are here, people who are, you know, kind of-, this is a big conversation. This is-, this is headline news on-, on any news channel you can think of. Real people will lose real money because of this stuff.

CP:  Absolutely, and not-, not just people in cryptocurrencies, I mean, if some of these things start going bad, people won't pay-, as we said earlier, won't pay their mortgages, won't pay their credit cards, which can have a knock-on effect to people that aren't even touching Bitcoin today, or these other cryptocurrencies. So, I mean, what is it? People are-, in an in-crowd, generally what happens is they go in and they buy a particular cryptocurrency, generally in a single exchange, usually look for things like, the price hasn't moved much lately, or is quite low compared to historical prices, relatively low volumes, meaning not very many are trading back and forth, over a given day or a week. They'll buy a significant sum of them, they'll get their friends in to buy a significant sum of them. Generally, they-, they coalesce through things like Telegram groups, or WhatsApp, or wherever else. And then they'll start pushing this, in concert, on things like Facebook, things like Twitter, and other people start to go, 'Ooh, this is interesting, and the prices might start to go up,' and when you have low volumes, it's pretty easy to bid up a price, and when you see the price has now doubled, tripled, quadrupled, you go, 'Well, I want in on that.' And you keep buying it until the early guys, who had a lot more than anybody has bought in later, at a higher price, start dumping them. Start selling them off. And then the price comes right back down. Think, like, you go up the side of the Eiffel Tower and drop right back down.

ST:  Yeah. That is the classic pump and dump, and real people will lose out. And when I say real people, I mean, people who don't have the shoulders to absorb those losses. People for whom losing that money is a serious consequence. And-, and I hate to, kind of, have such a down tone on it, but there's a lot of people who I respect in this market who are, kind of, talking about this in these terms lately, it's getting quite worrying, and my fear is that this, kind of, becomes a thing that unpicks the whole house of cards for the crypto asset prices, which then, potentially, damages innovation, and that's my real worry. Because, if we were to do that, we'd miss-, miss a real opportunity.

CP:  But can I be really cynical, and say, in the last six months or so, I have not seen anything produced out of the cryptocurrency markets that doesn't resemble a pump and dump?

ST:  Well. So, next story, Visa have dropped several debit cards that were directly funded from cryptocurrency. So, this is a story in CNBC, and, Colin, what's this one about?

CP:  So, what's happened in the last several months is, a lot of people have been talking, there was a lot of ICOs that focused on this, talking about offering holders of cryptocurrencies, Bitcoins, LiteCoins, everything else you can imagine, the ability to spend those in your normal transactions, generally through MasterCards, or through Visas. So, you could go in, buy your Bitcoin, transfer them to another account, where you could walk in to pay your restaurant bill using cryptocurrencies, which is quite cool, for a lot of people who actually want to use these and spend them. Visa was one of the larger producers of them, there was a company underneath it, and apologies, I can't remember the name of it-,

ST:  WaveCrest.

CP:  WaveCrest, there we go, that would allow a company to pass through, and allow you to spend your money at the restaurant. Um-,

ST:  So, this works if you're a, kind of, crypto rich individual, you've got a whole bunch of Bitcoin, you wan to avoid the banking system, because, 'Screw dem banksters, I'm living in crypto, and the future's coming, and I've got my debit card now, and I can spend crypto.' Or it's just convenient, because actually, you know, like, moving money between Bitcoin and banks sucks, and banks haven't made it easy, and it hasn't been brought in to the light, in a simple way. So, WaveCrest are one of these organisations, there are a number of them. If you're looking to launch a debit card, or a prepaid card, you would go to them and say, 'I would like to set this programme up,' and they will help you, and a lot of fintech startups have used organisations like WaveCrest to launch-, launch their products. But companies like Bitwala, Cryptopay, Wirex and TenX, they-, they have all been affected by this. So, this is-, this is quite significant.

CP:  They've all been affected by this, and I think there's-, there's millions of dollars that were attached to prepaid cards that, I don't know what's going to happen with them anymore, but at least they can't be spent out in the normal way. So, this is a big hit to people that have been proposing cryptocurrencies as a payment mechanism, that did rely on this. Now, we could question that and say, 'Well, if you have this peer to peer payment system, why do you even need Visa, or MasterCard, or anybody else? Why don't you just bypass that inconvenience?' The fact is, this is infrastructure the world isn't ready for. It's-, it's like the idea of-, electric cars are a great idea, but if you live in the countryside, where are you going to plug it in, when you're driving from Point A to Point B? Infrastructure really matters, and Visa and MasterCard happen to be some of the biggest infrastructure players, that the normal person would touch, that exist in the financial services market.

ST:  So, for a long time, Visa and MasterCard talked about, what they actually sold was their brand, and access. Visa is second only to Red Bull, for having the largest percentage of revenue spent on marketing. They-, they are 100% about brand awareness. You do not struggle to recognise the Visa logo, they sell access. And so, the flip side of that is, if you break their rules, that can be really powerful, and those rules are actually set by the people that own Visa, and Visa is now a PLC, but still has a lot of shareholders that are banks, but this is an organisation that has influenced, and has been influenced, by governments. So, this-, I think this could be seen as an instrument of, 'Hey, the-, the illuminati are fighting back against the crypto-, crypto world, and, oh, look how bad governments are,' but I actually think this is far simpler than that. I get the sense that there's a lot of organisations that probably needed to do a bit more due diligence and homework, and be more accessible to the likes of WaveCrest and Visa, rather than just coming along and saying, 'Ah, there's my supplier, I'm just going to make this work,' you actually go have a conversation, and you figure out, 'Okay, here-, let's figure out how we make this work properly.' And generally, it's just like, do your homework, guys.

CP:  Mm-hm.

ST:  Fintech startups, I come from that background, have had to do this, and a lot of them fall by the wayside because they didn't get compliance right, and compliance is just public opinion. Compliance is just what customers want. Compliance is just solving a customer problem, and either you can do it the crap way that big banks do it, or you can do it an elegant way, like a fintech startup does, but you gotta do it.

CP:  Yeah. The think that surprised me most about this, because I used to work in a company that literally was employed by MasterCard to go out and find companies that were selling online using MasterCard, and find out what they were doing, if it fit in to things, was blacklisted, or was whitelisted, and we were fairly efficient on it. I had to go through and look through the Nordic markets, to find this stuff, but that was ten years ago, and we had to look at it-, it was relatively automatic. The fact that it took them this long to figure out people were using cryptocurrencies, which are very clearly in their black area, is kind of ridiculous, really [laughter].

ST:  But also, like, I-, I do have an issue with just outright bans. I'd prefer a conversation, which is, 'Hey, we know you're doing this, come have a chat about how we do it properly.' I think the outright ban that financial institutions, and anybody in financial markets, tends to do, is-, is this blunt instrument, that actually isn't in customers' interests, and that-, that really concerns me. So, as Visa has dropped debit cards, some exchanges are dropping users. So, story from Coin Telegraph, where Binance, Bitfinex, Bittrex, are temporarily saying no to new users. So, for anybody who listened to last week's show, on Episode 27, we had Pete Rizzo, and I think he was paraphrasing somebody, when he said, the market cap of many of the cryptocurrencies, or Bitcoin, is up, what, 20x in the last year, but is the infrastructure up 20x? And this may be a symptom of that, Colin.

CP:  It may be, and, you know, if anybody's been using Kraken, obviously we're based in Europe, they-, they trade in euros, so it is quite a popular option, at least where we are. I know in-, in other markets, it may be less so, because they're more dollar-based, or another cryptocurrency-, or, sorry, another fiat currency, I don't even know what we're talking about, as far as currency anymore-,

ST:  [Laughter].

CP:  Bitfinex is actually the largest in the world, Bittrex, I think, is third or fourth, depending on how you count. Binance is a bit smaller, but is relatively new, and has had massive growth. It's interesting to see that they're closing off, and not taking on new users. Kraken, of course, had to rejig some of the things, because it became more or less unusable, over the last few months [laughter] so, there are-, there is rampant speculation in the cryptocurrency space, that maybe there's been a hack, maybe there's been money loss, because the commonality between all these things is they happen to use Tether, which we haven't talked too much about on this show, but is a-, a currency that is pegged to the dollar-,

ST:  Mm.

CP:  And a lot of people speculated that there may not actually be dollars behind it. So, Bitfinex is a big shareholder in the company that backs Tether. Whether-, whether that's the case, or whether there are too many users, remains to be seen, but I know a lot of companies, Coinbase has been very open about it, have seen huge influxes. I-, I was talking to Simon this morning, I came over on a flight, and in the flight magazine, I saw seven advertisements for cryptocurrencies. So, to say that people are interested in cryptocurrencies is a bit of an understatement. I'll let you know, tomorrow, on my next flight, how many I see in the next magazine [laughter].

ST:  Yeah, well, I think as those centralised exchanges are struggling, the decentralised exchange, Radar Relay, did nearly 10 times their daily volume, to hit a record $2 million, in the last day, according to 0xtracker.com, and this is a tweet from Meltem Demirors, of Digital Currency Group, '24 hours later, they're about to cross $10 million.' So, this is-, this is, like, J curve growth for a decentralised exchange, and decentralised exchanges have been mooted, for quite some time, as being the solution to what a lot of people have had issues with, in terms of how are these things going to scale, but decentralisation is something that's arguably slower than centralisation. Do they solve some of the problems? Or do they just make it easier to do pump and dumps? I think there's-, there's a real set of ethical questions, there's a real set of technical questions, but, regardless, that's a heck of a move, and I think a lot of people have been watching and waiting for decentralised exchanges to become a thing. I think they just became a thing.

CP:  I-, I think they did, but let's-, let's not forget the-, the undertone of what happened a few weeks ago, with EtherDelta, which was one of the larger decentralised exchanges, which got hacked. But what's really interesting about this new exchange, about Radar Relay, is that it uses something 0x, which is a new infrastructure layer, on top of Ethereum, that allows them to be more efficient. Whether it is, I don't know, $10 million is still very small, by the volumes we see in these markets. Cryptocurrencies today, as we're staring at them, is about $45 billion trading, so, you know, going from $2 million to $10 million in a day is great. It's still a drop in-, a drop in the ocean.

ST:  If your fees are basis points, that's-, yeah, it's still not incredible, but let's see how that growth continues, and let's see if we can reach out to some of the folks at 0x, because I want to learn more about that, for sure.

CP:  Really interesting project.

ST:  Absolutely. So, like Visa, there's a story on CCN.com about how the Bank of England have, quote, 'Dropped their own plans for a cryptocurrency, fearing instability.' I don't know how true this one is, I'm not familiar with the publication CCN, but they have a lot of popups coming at me right now, my adblocker's going crazy-,

CP:  [Laughter] they have been around for a while, but yeah, you can question a lot of what they put out.

ST:  But, um, this is actually according to FT Advisor, the bank began researching cryptocurrencies in 2015, and was considering launching its own. I don't know that that's true. I know the Bank of England did put out a working paper on the benefits of central bank issued digital currency, which suggested that-, a 100% hypothetical, research-based paper, suggested that a 3% uplift in GDP could be possible, if we moved away from parking bonds as collateral at central banks, and, instead, central banks issued this-, this digital token, and were pushing those across the balance sheet. It was done through maths and economics, it was 100%, kind of, just theory, and the Bank of England has looked at, also, at distributed ledger as having some benefits in terms of resilience, and for backup and disaster recovery, but they've never had any plans to-, to my sources, anyway, of launching their own cryptocurrency. But we have seen reports about other parts of the world, potentially a CryptoRuble, potentially the PBOC launching their own. I wonder how much of this is optics, and how much of this is really true.

CP:  Ah, I think it probably falls in the optics. But, can I say, while we're talking about bankers, Jamie Dimon doesn't think that Bitcoin's a scam, or he at least regrets saying it now.

ST:  I think he regrets saying it, just from how many people must have given him stick. I think just don't talk about Bitcoin anymore, Jamie, please. Like-,

CP:  I think that's kind of it. He says he's still disinterested, right? So, I mean, that's kind of the best you can get.

ST:  I think he's just grandpa on a rocking chair that's, you know, got some opinions that probably should-, should stay clear of the whiskey cabinet, you know?

CP:  [Laughter] oh, that's quote of the day.

ST:  [Laughter]. So, to be fair to the guy, he runs one of the world's largest organisations, and does-, and does a pretty good job with it, so who am I to comment? But anyway, if-, if you've been curious about NEO, NEO is the so-called Ethereum of China, they're holding their first ever developer conference in San Francisco, at the Intercontinental Hotel, on the 30th and 31st of January, and the first 50 listeners of Blockchain Insider can get an exclusive 15% discount on tickets, by entering the code INSIDE. You know, like you walk inside some places, Colin? You-, you're good at that. That's-, that's INSIDE. Go to devcon.neo.org to find out more about the event, and register today. Alright, so, Colin, there's a whole bunch of stories here that-, I mean, there's just so much news this week. Let's just blast through them and, like, almost have one-word answers. This could be fun.

CP:  Let's do it.

ST:  Alright. So, Qtum partners with Baofeng, to become bigger than Bitcoin and Ethereum. Does anybody know who Baofeng are? This is on Payment Week.

CP:  One-word answer. No.

ST:  So, this-, this-, alright, so, Qtum, the blockchain application partner, has partnered with the Chinese video portal giant, to help achieve the world's first blockchain consensus network, and build the most decentralised blockchain node network. I'm going to have to get on to WeChat and ask some people what's going on with this one, because I confess fully, I don't understand it, and I need to understand it more.

CP:  This was the one that PwC did audits for, and they were like, marketing that around as, 'This is proof that we are the greatest blockchain ever.'

ST:  Interesting.

CP:  There's your one-word answer.

ST:  Are we in a bubble, Colin? Because, right now, there's an organisation called Dentacoin, a dentistry-based crypto coin that's just shot up by 900%.

CP:  Good question. Brush your teeth. The best advice I can give you, it's not financial, but definitely brush your teeth.

ST:  Brush your teeth before bed, kids, and maybe you'll gain 900% of a coin.

CP:  [Laughter].

ST:  [Laughter] that's bringing smiles to investors, without question, that was a story from Bitcoinist. BloombergQuint.com, Bitcoin Miners are Shifting Outside China Amid a Clampdown. This could be quite serious.

CP:  Yeah, apparently they're going to Canada.

ST:  Ah, blame Canada. Those guys had it right all along. A story on TechCrunch, Telegram plans a multibillion-dollar ICO for their chat cryptocurrency. We saw this with KIK, now Telegram are giving it a go. Telegram, of course, are the home of lots of conversations for the people who care about privacy, and also, potentially-,

CP:  Pump and dumps.

ST:  Pump and dump schemes. So-,

CP:  It makes sense! [Laughter]. But it's kind of (? 43.09), isn't it?

ST:  They're-, they're playing to their audience, for sure, but I'd love to see if there's-, there's something real there, I'm not convinced there is. There's a story on CoinDesk, about what crypto didn't give us in 2017, I'm not sure, Colin, have you seen this one?

CP:  I-, I have only cursorily glanced over it, it's a long article. We didn't see mass adoption, we didn't see clear distinction between blockchains, tokens and cryptocurrencies, I absolutely agree. We've not seen self-regulation yet take hold, although I know a few people in this room that are looking at that, so if you're interested in that, reach out to us, and we don't have inter-chain interoperability.

ST:  And there's a lot of people working on that, there are projects out there-,

CP:  Including Ripple-,

ST:  Yeah.

CP:  Congratulations Ripple, on most things.

ST:  Yeah, Interledger is a very interesting project, without question. Cosmos, Polkadot, there's a whole bunch of them, and I'm sure I'm forgetting a whole bunch, as well. There's an Indian lawyer who's filed a petition demanding cryptocurrency regulation, because petitions work-,

CP:  [Laughter].

ST:  There's a story on HowStuffWorks, 'Blockchain Technology Ready to Disrupt the World'. Don't know about that.

CP:  Do you think it was the Tapscotts who wrote that?

ST:  [Laughter]. And the Observer, 'How I Fell for the Blockchain Gold Rush', and, last but not least, a story on Business Wire, just in, Kodak stock, Kodak are back, they're back from forgetting about digital cameras, they've announced they're launching a cryptocurrency, because 2018, like-,

CP:  Why not take a punt? Come on.

ST:  Yeah. Thanks to Gary Fagan for bringing that to our attention. Don't forget, listeners, you can let us know what you think about any of the stories, or just what's going on in the crypto markets, by getting in touch on Twitter @BChainInsider, or you can get in touch with Colin, directly, the G-Sass himself, @ColinGPlatt, or myself, @SYTaylor, if you want to pick up with us personally. You can also head over to FintechInsiderNews.com, that's FintechInsiderNews.com, all the stories we post and talk about-, all the stories we talk about, even, are posted on FintechInsiderNews.com, so, get involved in the discussion. And you can drop us an email at podcasts@11FS.com. We'd love to hear from you, because, my god, there's a lot going on right now. 11FS, the company that brings you this podcast, are a challenger agency who help banks, asset managers, or anybody with a challenge in blockchain or DLT, to achieve more. If you want to understand how to commercialise this stuff, what to commercialise, what not to commercialise, what's ready, what's not ready, then get in touch. Or, if you just want a speaker for your next event, podcasts@11FS.com. Alright. Now for our interview, I caught up with Ville Sointu, the Head of DLT and Blockchain at Nordea, and we talk about we.trade, the consortium.

[Break]

ST:  Great, so, we are here, once again, Colin G Platt joins me for an interview with Ville from Nordea. Ville, how are you, sir?

VS:  Hey, I'm good. How about you?

ST:  I'm not too bad. So, tell listeners a little bit about who you are, who you work for, what do you do?

VS:  Right. So, my name's Ville Sointu, I'm the Head of DLT and Blockchain in Nordea Bank. For those of you who don't know, Nordea Bank is the largest bank in the Nordic and Baltic regions, we have about 11 million customers, and about 30,000 employees. So, we're well-known in the Nordics, for sure. I run the DLT and Blockchain team, inside Nordea, which has been a-, a two and a half year exercise for Nordea. I joined the team as the leader in June last year. So, that's me.

ST:  You joined in June last year. What were you doing before you joined Nordea?

VS:  Yeah, I have about 15 years, give or take, of experience in fintech. I think I started 2002, I started working with e-banking, mobile banking, then moved on to mobile payments, you know, spent around a decade trying to convince everybody that, you know, the utopia-, the utopia of mobile financial services is just around the corner. And then, you know, after a decade of doing that, I-, I figured out that, okay, I might need to go to a place where it actually makes a difference, so, in 2012, I-, I started working with mobile money, in emerging markets. And, funnily enough, that led me in to blockchain, because the-, back in 2013, I kind of got the idea, or we got the idea, where I was working back then, that we might use blockchain and Bitcoin as-, as kind of an interoperability tool, for these closed group mobile money systems, and, ever since, I've been working with DLT and blockchain. Finally, I got, in 2017, after, you know, concluding a lot of prototyping, research, and POCs, but very little production deployments, for technical and regulatory reasons, of course, I got the chance to join Nordea, and that's-, that's what I've been doing for the past six, seven months now, leading the team here, finally getting something tangible done, I hope.

ST:  I love the sound of getting things tangible done.

CP:  Can I pick up on that point? So, you-, you were talking about lots of legal, regulatory headaches before. Are you seeing that happening, now that these things are starting to lift? Or is it that you've gotten better at figuring out how to get around those problems?

VS:  I think, you know, the-, the hype has gone away, a little bit, especially on the DLT and the enterprise side, right? So, you know, finally, you know, the banks have started to recruit people, and, you know, have people inside their organisations that actually understand this stuff now, and, you know-, you know, distinguishing between the public blockchain, and enterprise blockchain, has helped a lot in these conversations, and starting to map this-, kind of, this technology in to actual regulation or law, and, you know, even business, is starting to happen right now, and I think, you know, we're seeing the move away from this POC phase, and, kind of, trying to, kind of, find the first things that they can actually kick out the door, hopefully, starting now this year, which is what we're doing, at least.

ST:  So, when we talk about getting out of proof of concepts, moving from the lab in to production, what do you think about as being the key use cases, and what are you doing at Nordea to get that done?

VS:  Yeah, I think, you know, we-, we made a couple of announcements. In December, we announced that we joined we.trade consortium, which used to be called the Digital Trade Chain, and this, you know, trade finance being one of the, kind of, obvious use cases for DLT, kind of felt it was, kind of, a really good case for us to take forward, as a first candidate, as well. And-, and this-, what makes a difference, I think, in DTC, or we.trade, is the, kind of, clear focus on-, on business case, and having a really, kind of, clearly defined minimum product we can actually get delivered. And I think this focus is what distinguishes this we.trade quite  clearly from, maybe, the other, kind of, exercises in the same space. It's-, it's not-, it's nothing fancy, but you have to really start from something-, something tangible, that you can really, kind of, get in to-, in to production, and I think this focus and focus on governance and execution is really a standout feature of we.trade.

ST:  So, tell me the we.trade story. Let's take it back to basics. Who is it for, and why-, why would they want it, versus what they've to today?

VS:  Sure. So, in very short, we.trade is a-, is a platform for SME sellers and buyers in the European market. So, it facilitates trade between SMEs, for importers and exporters, and creates trust between these entities that was not there before. This is less of a problem for large corporations, obviously, you know, they can-, they can have multiple tools to, kind of, create trust between the seller and the buyer, but for the SMEs the, you know, the small brewers, and, you know, small wine merchants, this-, this really doesn't exist. There are no tools that we can, even as Nordea, offer today, for our SME customers, to facilitate trade across Europe. And this is what we.trade does. We basically share the KYC information, or KYC-, the fact that KYC exists, and the customer relationship exists, between the consortium banks, and this creates trust, quite simply put.

ST:  So, you talk about a consortium of banks, you talked about a business case. Is a big consortium of banks the right bunch of people to be doing this for small businesses? Are the interests aligned? And secondly, is the technology enabling a business case that wasn't available before?

VS:  For us, at least, it is. I mean, the-, really, we-, you know, the existing systems don't really scale down that-, that well. So, for example, for us, we're opening up a whole new segment of customers, in terms of SMEs. So, the-, the fact that we can offer the ability to remove the prepayment condition that's usually existing between SMEs in the European market, is a new-, a completely new product we can offer in the Nordics. And this opens up new business. I think, you know, more than half of the existing trade of these customers is actually based on prepayment and, you know.

ST:  Wow. So, talk me through that. Talk me through what prepayment is, and why it's a pain point for those customers.

VS:  Sure. So, if I'm a-, if I'm a small-, a small to medium sized enterprise, for example, in my home country, Finland, selling boots to, let's say, France, the only way that I can actually ship that product to this, you know, buyer in France, is that I actually get the full prepayment. That's-, that's just the unfortunate reality, because you cannot really trust, you don't know who is on the other side, not really. So, this prepayment condition really is a pain point, because this prepayment, of course, also, kind of, makes it less likely for the buyer to, you know, pay, because if they also don't trust the seller, especially if it's a first-time transaction that you're doing between these entities. So, if we can  remove this trust barrier, and then offer simple financing and credit products on top of that, it becomes a really, completely new untapped market that we're hoping to, kind of, address now.

ST:  So, you talked about-, so, that's the business case, I guess, for the small businesses, but you talked about it having a business case, I guess, for the banks, as well. How do you see that, kind of, evolving beyond where it is today, and getting in to production and scale? And could you have just used a traditional technology for this?

VS:  Oh yes, absolutely. I think, you know, one of the-, one of the, kind of, misconceptions of a lot of these enterprise blockchain and DLT cases is that, you know, this cannot be done with anything else. No, I mean, you know, you could build a centralised platform to do the exact same thing. But the difference is in governance, and what-, what I think is-, in building the network, and making the network scale. Because, even though we, right now, we are just nine banks, we are opening this up for other banks, as well, and we have-, we are lining up candidates to onboard in to the platform, or in to the network, as well. And, you know, DLT makes it possible for us to build these nodes, for the new banks, and deploy them, and the banks will control their own data, they have all the privacy that is necessary for-, for making this work, and that-, that would be exponentially hard to do, and scale, with a traditional solution. But yeah, I mean, you could do it with a centralised platform. You could build a Facebook of SMEs, I guess, for-, for Europe, but getting banks and SMEs to participate, that would be much harder than now, we can actually guarantee the privacy and trust between all the participants.

ST:  So, governance is the key. I guess my question then is, what does this look like for the small business? Do they end up with, kind of, a new website where they've got a new product that they buy from the likes of a Nordea? And how do you see that evolving in the coming years? Because it-, it's going to be, like, a new product you guys offer, but other banks on the other side need to offer it. Is that something that's still a bit of a Catch-22?

VS:  Well, I think, you know, we start from the basics. You offer a web application that, you know, SMEs can use to log in and find these buyers and sellers from this Yellow Pages application, so, you know, for-, for them, actually, they don't even need to understand that it's a blockchain, or it's a DLT, or decentralised. They don't need to understand anything about the architecture, or how do we connect these buyers and sellers. It just looks like a fancy webpage, with great usability. So, I mean, that's the key. I mean, you know, having this simple application, and then offering the, you know, different kind of form factors, tablets, iPhones, mobile applications, to use that application with, is key, and less focus on what is the technology behind it. Obviously, we are looking in to ways how this scales in the future. Right now, we are focusing on just building a very simple web application, like I said, but in the future, we might end up in a proposition that is more API-based and, you know, we basically become an infrastructure layer. But right now, like I said, for the first product out, later this year, we will have a single web app, just to make this thing work.

ST:  Interesting. So, what would you say to a Head of Trade at another bank, that, you know, was thinking about joining this network, and it might help grow the network? Or a Head of Product, or, you know, somebody who's a small business owner? What would you say to them for why you think this is valuable, and why you think the network is-, is of value?

VS:  I think, you know, what really caught us was basically understanding how much of your SME business, or your SMEs today, are using prepayment, and then asking the-, asking the SME, 'How much business do you think you are losing, because of the prepayment condition?' And I think that, kind of, connects to a lot of-, a lot of our customers, at least. We spent a lot of time talking to our SME customers about, you know, this proposition, and the-, and the feedback has been overwhelmingly positive. So, what I would suggest for a Head of Trade at a bank is to go talk to your SMEs, ask these questions. You know, and then-, then look at your numbers, and you will probably understand whether you want to join or not, quite quickly.

CP:  I think you made a really interesting point in that last part. A lot of banks, kind of, come at this and say, you know, 'We're going to do this DLT project, or this innovation project, because it'll help us.' But it's very rare, and I think you made a very good point, to go out and talk to your clients, and say, 'Well, what actually makes your life better?' And that's-, that's a big differentiation factor here. Can you talk a bit more about how you might see this platform after you deliver the first thing? Is the intention to grow, kind of, sideways, and take in bigger clients beyond the SME sector? Or is it to say, 'We can do other things in addition to trade finance'?

VS:  I think ,you know, the first thing that we're going to do, once we ship the first product, is to start onboarding more banks. So, we want to, kind of, proliferate, especially in Europe, so that, you know, our customers, here in the Nordics, can find their counterparties in other countries. Now, with the existing consortium of nine banks, we cover Europe quite nicely, but, obviously, we are looking forward to onboarding other banks, as well, including the Nordics. I mean, there's-, you know, even, you know, pan-Nordic trade for, you know, customers, other than our own, is quite significant. So, we're looking forward to getting that done, as well. So, yes, getting more banks involved, seeing what works, and then, kind of, iterating on the existing product, taking it step by step, I think that's what we want to do. Of course, you know, further down the line, you know, we're looking in to, how can we, you know, start creating interoperability with the various other projects out there? How can we, you know, see what is the, kind of, global vision for we.trade, and how do we actually scale this to be a global platform? But that's way down the line. I think, you know, what we are really focused on in the immediate future right now is just trying to make this thing work, and then, kind of, trying to iterate on the stuff that works.

CP:  Making it work. Music to my ears.

ST:  I often hear people say that DLT is fantastic, but is it going to work in a world where trade finance is all paper-based. I guess with we.trade, are you creating an alternate universe, in which all of the trades are 100% digital, and-, and they've, kind of, never existed in paper? What-, what does that look like, and is that how you've solved that problem?

VS:  Well, we, of course, hope that everything will be digitised, but, you know, we've-, we've done a lot of work, and other projects, as well, and, you know, I think a lot of the, kind of, preconditions of this project seems to be that, you know, the entire world is digitised, before you can actually get anything out of the door. This is not the case here. This is a very simple thing, where we create a contractual relationship on the blockchain between the buyer and the seller, relying on the KYC infrastructure of both banks, so, sellers' and buyers' banks. And, you know, beyond that, whatever necessary paperwork is necessary, because it is a lot, still, it's just there. I mean, this is-, this is the way, you know, it has always been, and that's the-, it's going to slowly move to digital, but that's not going to be a condition for our success. And-, and this-, this reliance on a full digitalisation of complex supply chains, for example, cannot be a precondition, as far as we're concerned. But, of course, as soon as that happens, we can start adding interesting features in to our-, our chain, as well, which is tracking the supply chain, you know, the-, including the customs, the logistics companies, the shipping companies, and everything related to the automated supply chain. So, when-, once that happens, yes, it's going to be fantastic. But is that going to stop us from deploying this year? No. 

ST:  Do you see a risk of lots of different people doing lots of different supply chain and trade finance projects? Because, I mean, on Episode 14, we talked to the guys at Sweetbridge, who have some very interesting partners, and some very interesting projects. I'm aware that the Hyperledger team have been working with the likes of Walmart, Maersk have been working with some really interesting organisations like Guardtime and EY. There's just so many initiatives out there. Do you see these things converging, or being competitive in the future?

VS:  Well, it's too early for competition, to simply put. I mean, you know, I think, you know, everything that's happening in this space is fantastic. I mean, like I said, we've looked in to several of these projects, and there's a lot of good work done by these projects. And we really don't see competition, at this point. I think we're going to start talking about, kind of, convergence and interoperability down the line, but I think, you know, there's so much space out there, for all these projects to exist, and learn from each other, as well, that it's-, it's just way too early to talk about competition. That's not the way we see it, at least.

ST:  Cool. Alright, well, Ville, that's all the questions I had. I guess, from my perspective, where can people find out more about you, what it is you're doing at Nordea, and what should people be looking out for?

VS:  Sure. You can look at insights.nordea.com, for all the cool stuff that we're doing in transaction banking. It includes trade finance, PSD2, Open Banking, and of course our AI work, that we're doing. For, personally, myself, I'm on Twitter, @Ville_S, and you can follow me there. I don't tweet that much, but I'm trying to learn.

ST:  Ah, we'll-, we'll get you tweeting, and we'll definitely spam you with all of our 11FS accounts in the near future.

VS:  Looking forward to it.

ST:  Listeners, I encourage that. Ville, thank you for being with us on Blockchain Insider.

VS:  Thank you very much.

ST:  A big thank you to Ville, and, of course, my regular co-host, Colin G Platt. Thank you for being with us.

CP:  Thanks for having me again in this country.

ST:  We-, we keep letting you in-,

CP:  I don't know why.

ST:  It's too much sass, as well as the amazing production team here at 11FS. We've got Laura Watkins, our Producer, Michael Bailey, our Editor. Ollie's in the room today, as well-,

CP:  Ollie's in the house!

ST:  Ollie in the house, and, of course, Patrick, our Assistant Producer. Thank you for listening, if you like what you heard, please subscribe to our podcast. Leave us a review on iTunes, I can't tell you how much those reviews help us. Even if you just like the Colin G-Sass, or you-, you want to hear more about a certain thing, let us know what it is. Spread the word, tell all your friends and colleagues to listen, too, and we'll have more blockchain Insider next week. Goodbye.

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