 So hello everybody. Thank you. Thank you for for being here. My name is John Lillich So today, we'll talk a little bit. We'll sort of dive a little bit deeper into Cryptocurrencies crypto assets. We'll try to understand it in a much Let's say broader financial context If you're on Twitter, feel free to add me I've got some slides. I won't go through all of them, but we'll kind of like touch upon some of the main points So many of you have probably seen this but it's just a little bit of context on like how big money is how big sort of You know the financial context relative to where we are with Bitcoin, although this is quite a while ago But you can see there's a sort of an ever-growing cascading set of opportunities for crypto assets to Play you know play a role Okay, so this is an interesting slide because my interpretation of it is basically There's really no way to guess the price of Bitcoin or any of this stuff. It's sort of very often uncorrelated to You know traditional assets where they might have some Indicators in the economy that kind of determine price With Bitcoin and crypto You know this stuff is still very volatile and oftentimes it's extremely difficult to sort of predict what What the price could be? So many of you or some of you perhaps have heard of this notion of an ICO Or a token sale and these are basically sort of issuance of crypto assets That can sort of take on many different forms and so if you have an interesting software project and maybe there is a an application that you're building and Critical to that application is the utility or the function functionality of a token You can sort of sell that token on Ethereum You can collect Ether and in this way we have this sort of equity crowdfunding Model and it's sort of eating the world right now It's it's definitely changing the way we allocate capital particularly in the past where you would sort of have to go to a Silicon Valley venture capitalists and like beg for money So there's a few different kinds of tokens Maybe some of you are familiar with protocol tokens. So these are things like Ethereum or things like ad chain representing Protocols like token curated registries Utility tokens are tokens that sort of are necessary to the functionality of a particular piece of software There's a really interesting prediction market called gnosis and in order to sort of like Gain wisdom from the crowd and use the application. You need the token and then of course security tokens This is kind of the thing I want to highlight a little bit in this discussion So securities are financial instruments that are issued typically by very large financial institutions and These instruments sort of have an expectation of profit and You can you can sort of purchase these instruments And and so this is kind of the derivative the securities market if you will The security token market has yet to really take hold But my contention here would be that if you're thinking about crypto assets from an investor perspective or if you're an entrepreneur think deeply about how the traditional financial system works how traditional assets work and Potentially how those can be replicated on blockchain and the reason you'd want to do that is because Like if you think about Bitcoin, the reason Bitcoin is yours is because you have custody of the private key Likewise, if you think about complex financial instruments, why wouldn't you want to have custody over that? Like why would you want to leave it in the hands of Lehman brothers or Bear Stearns or something? And So when you're kind of designing utility tokens, there's a few different things to consider governance being one of the key issues surrounding this ecosystem right now as far as Exactly how the community interacts with various elements of your project Okay, so there's obviously been a lot of news about You know these massive token sales generating tremendous amounts of money my contention would be that And and there's a variety there's a spectrum of opinions on it some are sort of like well This is ridiculous and others are really embracing what's happening My contention would be again if you think deeply about these things the history of investing in tech has always been pretty ugly there's always been sort of venture capital allocated into tech where Effectively capital was misappropriated or investments failed the same thing happens quite often in this case However, because it's on the blockchain. It's all very public. It's all very public and because it's public you sort of can't run and hide and Because it's in public then you know the ecosystem evolves very very quickly So we're seeing tremendous evolution and I would say progress and on many fronts Okay, so these are some of the like ones in the past the theory and being kind of the first significant if you will ICO and There's been other since that have sort of done spectacularly well These are just a few of them. I think the IOTA guy was just on stage earlier Of course, there's a lot of different interest institutionally empty gox was a really famous kind of example here in Japan coin check Recently also became famous You know, these are just some of the exchanges Okay, so thinking about derivatives and And so diving deep, you know more, you know deeper into this conversation beyond just okay Well, what is a Bitcoin? I have a Bitcoin the price goes up. I can make some money. I can sort of like transact with it Thinking much deeper beyond that and saying well, what if there are financial opportunities that I can invest in? where I Potentially have a yield. Okay, so imagine a scenario where Let's take a developing country like the Philippines for example where real estate is growing very very quickly And you wanted to sort of get a Exposure to that well right now that would be very very difficult using traditional financial instruments There would be a series of friction points along the way that would make that sort of difficult But but if you could imagine in the near in the very near term Tokenizing so creating crypto assets that represent ownership in a building let's say or represent Ownership or a claim to the yield generated the income generated from a property So imagine a private invest private real estate investment fund owning a lot of assets a lot of properties those properties generate revenue The revenue from from those properties is converted into ether Ether is put in a smart contract and then you know that those sets of properties can issue their own tokens And if you have a token you can then withdraw your share of the ether or the yield So this is a this is this is sort of like an opportunity to go beyond just Holding and speculating tokens and getting into a position where you can generate yield Okay, so you get return on your investment in addition to holding the tokens And there's a bunch of projects and a lot of really cool stuff happening variable is a really interesting sort of peer-to-peer Decentralized platform where you can kind of like trade a lot of these Derivative crypto assets Decentralized exchanges are going to be an important element of the of the coming sort of You know crypto asset web 3 future We have seen obviously here in Japan most recently with coin check and around the world in other places where the you know Sort of centralized exchanges have been compromised. I have to give a lot of credit to the guys at coin check I actually know them. They like had the money and paid it back, which is amazing And it's a testament to how well their business was doing but as we sort of You know evolve as this ecosystem Proliferates around the world. It's very important that we have Decentralized exchanges where users retain custody of their asset at all times like you don't relinquish custody to an exchange And trust them to sort of not get hacked or breached So regulatory stuff and I'll go through these slides pretty quickly So there's there's a lot of sort of existing laws and and some of those are difficult to navigate and maybe Well, obviously weren't really constructed with crypto assets in mind But that is changing and we're seeing regulatory change here in Japan obviously the FSA and other You know regulators have issued licenses and guidelines and this is sort of happening around the world The SEC the United States is actively Sort of making comments and taking action and then of course you've got different jurisdictions around the world that are Really competing to attract business most recently Binance, which is a very large exchange out of China moved to Malta Because they had favorable sort of regulatory conditions and so as this And so if you're thinking about it from an investor perspective Understanding the regulatory kind of landscape and as it shifts is very important because that's going to be the the determining factor for when Securities on the blockchain become much more ubiquitous So these are just some of the places I was talking about. There's a bunch of stuff happening around the world We'll skip this stuff This is sort of Gibraltar Gibraltar is interesting. It's a it's an interesting framework They're really kind of innovating on the regulatory side and We'll kind of skip through some of this This is called the Brooklyn project and the reason I'm kind of spending some time on the regulatory side of it Is because again, I want to like emphasize how important Understanding what is happening on the regulatory side is going to be as far as investors being able to make smart determinations about You know, which which assets and which products they want to they want to sort of invest in You're going to see derivatives and securities on the blockchain issued by groups that either follow regulatory Guidelines or don't and the ones that don't are likely to be very very high risk That's why it's that's why it's important to kind of at least have a sense for all this stuff in Brooklyn We along with a bunch of others kicked off a process It's a sort of collaborative effort between many different groups many different regulators and we're hoping to sort of help construct guidelines for how to deal with these things okay, so Thinking about Exchanges again coin check was a big deal here in Japan and it's had tremendous impact already There's massive regulatory change coming the industry is changing very quickly here in Japan. So from a security perspective You know, you will see more regulation and you will see more institutional participation For example, I wouldn't be surprised if you see soft bank investment or some other major kind of institution like that Either launch an exchange or heavily get involved in in this space very very soon And then, you know trust and security is another big one So if you're an investor and you're thinking about these things and you're using some of these services You should deeply kind of you know, you should you should be very skeptical and you and and deeply think about What kind of security measures are these exchanges using particularly on the cold storage side? Okay, so This is really interesting if any of you are entrepreneurs and if you're thinking about okay, how do I get involved? how do I Participate and maybe some of you have financial backgrounds. Maybe some of you don't maybe some of your software engineers So the first first place I would really think about is vault management. So this is this is sort of like you know, you've got a bunch of crypto assets and You know, there's a bunch of services around that that Entrepreneurs can provide to help kind of like collateralize those assets for example Token ETFs and index funds are going to be really interesting. There's a couple guys in the US the Winklevoss twins kind of funny guys And they tried to launch an ETF, but they were sort of rejected. I think the reason they were rejected was because they Really kind of totally miscalculated how to go about doing something like that I think going public first and then talking to the regulator later was a terrible mistake I'm not sure they're the brightest guys, but you will see more and more ETFs coming up and then of course fiat token services So One of the things to look for that that'll be really interesting is when nation-states start tokenizing fiat So fiat is like Japanese yen or US dollars. I mean the traditional money as we understand it so you can imagine a scenario where Either a bank or a nation-state or perhaps an entrepreneur that works with the commercial bank sort of puts some let's say Japanese yen in an account and then issues tokens against those yen and now this becomes type of tokenized fiat the reason that's really important is because it sort of creates a pathway in and out of the crypto fiat world So Hosting ICOs and token trading You're gonna see more and more of these ICOs or token sales again as investors I would deeply deeply think about particularly on the security side who is sort of You know following regulatory guidelines and who isn't because that's gonna be a determination That's gonna help you determine sort of your risk profile So This is what I'm talking about when I say the tokenization of like the rest of the kind of global economy Which is much much bigger than than we realize. I mean the derivative market We actually don't know how big it is. It could be 700 billion to 1.4 quadrillion dollars like we don't actually know it's a massive Excuse me and then of course public equities fixed income derivatives real estate etc Infrastructure is another really interesting one. So Japan has I guess mega solar projects And so if some of you are entrepreneurs in the renewable space You can imagine kind of like doing an ICO to finance the development of a mega solar project Of which you get paid in yen Through these power purchasing agreements and you could like convert that yen into ether and distribute it out to the people That participated in your ICO and and if you think about capital allocation and raising capital in a traditional sense That can be quite hard at times But you know this sort of tokenizing You know this this would be a tokenized security that this model could potentially be extremely attractive not only here in Japan But around the world This is sort of less interesting maybe I'll skip through that But if anyone wants to take a picture, it's just kind of an arcade rough architecture diagram to give you an idea of How these things could work? You know so again thinking about potential opportunities value proposit like again Just think deeply about these things If you need some help and guidance around how to structure your thoughts, you know This kind of information is available online, but as the secure it you know as securities go on the blockchain You're going to see a tremendous tremendous influx of capital And many more sophisticated investors Particularly people that are in the traditional finance world and so as maybe recreational investors or new investors You know you want to really Set yourself up for success by deeply thinking about these things You know token analysis you can sort of do you know business review reputation overview technical review You could also do like a legal review So, you know whenever you see a project And maybe you're thinking about investing Don't just rely on what your buddy told you or what you see on like telegram This is another one you can you can sort of like take a picture if you want but on the crypto cash side I won't go too deep into that. You can sort of see how these things could work Token-based ETFs and index funds again, you can take a picture. It'll give you it'll give you a sense I've only got a minute and a half. So I won't go too deep into it Vault management also you can kind of get a sense So decentralized securities depository again CESD's we think are going to be a big deal I'm seeing a lot of pictures. That's good stuff. Okay, so that's me on Twitter if you want to find me And then I guess you know before before we wrap this up You know, I I think it's important to understand where we started where we are and kind of where we're headed Where we started was out of necessity If you think about something like Ethereum or even before that something like Bitcoin nobody would have ever given you permission to make Bitcoin Okay Yet it was totally necessary. It was like Fundamentally an element that has sort of changed the world as Bitcoin Performed beautifully as it sort of maintained its sort of structure Doing this one simple thing we started thinking about well How can we do other things in this blockchain context and so Ethereum emerged and and post Ethereum? We're starting to see Sort of that evolution continue things like DFINITY are coming etc And along the way people have been able to participate in this ecosystem Obviously with ICOs a direct participation. This is going to transfer You know, this is going to continue into the security space and I think it's one of the most exciting opportunities of our time So I definitely welcome it and hope you will too. So thank you very much