Meet ‘The Finternet’ (Breakpoint 2024)

0:00Hey, everyone. As you know, Solana is one of the ecosystems I'm the most interested in. I've been incredibly bullish. I love to see the vibrancy of what is happening in the space. Unfortunately, I couldn't make Breakpoint this year, but the stories have been amazing. I heard the talks are incredible, and we're really proud of Real Vision to give you talks from Solana Breakpoint 2024 in Singapore. I really hope you enjoy them.

0:37it's truly an honor to be with all of you today and i'm really grateful i have a chance to share the finternet with this audience uh let me dial back a bit and talk a bit about the journey and why are we talking to people building on you know blockchains and a lot of this infrastructure Over the last decade and a half, we've been building identity systems that are used by 1.5 billion people across the world, 1.4 billion in India, and really it was a journey of giving people agency over their digital identity, giving them an attestation back. We then architected a payments protocol called the Unified Payment Interface, which was a way to transact value from one store to any other that is used 500 million times a day by 500 million people.

1:26And then we built a data sharing system. You know, again, much of what the crypto ecosystem talks about as giving control of data back to individuals. And that has over 2 billion financial accounts live. None of this uses a blockchain, but very quickly over the last 3-4 years, what we realized is we were building highly purpose-specific infrastructure. And when you build purpose-specific infrastructure within the financial system, It did one thing and did it really well, but when we wanted to extend it to a larger universe of developers, larger universe of entrepreneurs, different types of asset classes, different countries, this is where it became really, really difficult.

2:09You had very high transaction costs. These were siloed systems. It was difficult to achieve interoperability. It was difficult to have composability between different asset classes. And so over the last few years, we started to look at, you know, how do we reimagine this? And so we came from the traditional financial world and started to look at the cryptographic developments that were happening. And about a few months back, me and my colleagues, Nanda Nilekeni, Pramod Verma, and Augustin Carstens from the Bank for International Settlements, released a paper in Washington, D.C. known as the Finternet.

2:48And there's a second follow-up paper that you should also take a look at and read about on FinternetLab.io. But the core idea behind the Finternet is, one, how do we give every individual and every business a complete agency over any asset that they have? These might be regulated assets like money, publicly listed securities. Might be registered assets like land, vehicles. It might be attested assets like carbon credits by a third-party auditor, so on and so forth, or user-controlled assets like NFTs. So how do you give people control? How do you do that in a manner that is unified for them rather than having to go to different places, different silos?

3:31And how do we build that on the back of highly universal infrastructure, but the flows, depending on the asset type, may be governed and may be regulated? And so if I walk you through very quickly the high-level architecture behind this internet, central to it is putting individuals and businesses in the focus, in the center of all of these activities. Second, they should have the ability to use a diverse range of applications that are out there. So these are technology companies building out these different front-end experiences. This is where a lot of the traditional institutions come in. these might be commercial banks, central banks, private companies that you've started, asset managers, they should have the ability to tokenize and issue electronic representations back to these individuals.

4:20And when they tokenize and create these electronic representations, they may, depending on the type of asset, continue to be in control of the flow to set certain limits, KYC norms, capital control norms, flow limits, so on and so forth. And so, therefore, token managers play a vital role, even when you think about recoverability, consumer protection, dispute resolution. And so, this is really a way to bring a lot of the, to use the vocabulary here, real-world assets on-chain. And when it comes on-chain, we have been big believers in it being issued straight to the user, and they could host that on any universal ledger that they may have.

5:02these ledgers would fundamentally be interoperable with each other, so we don't expect the whole world to be building on one ledger infrastructure. They're going to build and tokenize on multiple, and therefore those multiple ledgers should be interoperable. And these assets should be different types. It might be, as you see here, regulated assets, registered assets, so on and so forth. And you may have different third parties getting added to the flow. these might be escrow providers, insurers, guarantors, basically adding additional trust every time a particular transaction happens. And all of this happens within the confines of a well-governed framework.

5:41In our view, a lot of the existing laws, regulations can be leveraged. People may create additional enhancements to this. And so the real idea is how do we accelerate the transition towards a user-centric digital economy? How do we leverage the cryptographic primitives that are coming out because, for example, digital signatures allow you to have portability, the ledger infrastructure allows you to work across different asset classes and still have finality of settlements, so on and so forth. So I'd highly urge you to, you know, take a look at the work that's happening in FinternetLab.io, read the papers, and do reach out.

6:19There's a lot of work that each of you are doing at different parts of the stack that can actually fit into the Finternet, as we call it. So thank you so much. I had five minutes, so it's a brief overview of the Finternet and look forward to hearing from a bunch of you again. Take care.