Transcriptions:
Daniel Wolf: (
All right. Let's jump right in everybody. Welcome to the metaverse. I am Daniel Wolf. I like star Trek. I'm not gonna talk about that anymore. I want to kick off this conversation. I usually rush through the introductions because I figure you want to know what people have to say and not like where they went to high school but I do want each of you to introduce yourselves not just your backgrounds but what is your relationship to the metaverse? So Sankaet, why don't we start with you since you're sitting closest? You're the bravest.
Sankaet Pathak: (
Hey everyone. I am Sankaet, I'm the founder and CEO of synapse. If you don't know us, we're banking as a service provider based in the US and we provide, deposit, credit and crypto solutions to FinTech companies. How this is relevant for us? We've been actually front and center, around a lot of on ramp off ramp on crypto and also some really creative, stable coin custody and lending solutions. Maybe that would help.
Josh Li: (
Hi everyone. I'm Josh Li. I'm the chief business officer for Roxe. We are a blockchain based payment network and we provide our partners to drive banks, payment companies within companies with a cross border payment service. That's super fast, super inexpensive, people get mint market, wholesale FX rates and on the metaverse something that we are truly excited about. We think that's the future. So it's starting to develop solutions that adopt our blockchain based payment platform for companies to use the metaverse.
Lois Tullo: (
Hi, I'm Lois Tullo and I wanna be a millennial. So my students at York University, I learn a lot from them about the metaverse. I teach risk management. I write about risk management at the global risk Institute and my area of research is around digital currency and I am the chief risk and compliance officer for yams tech and we develop,, crypto arbitrage bots of which the metaverse coins are a lot of the ones that we trade in because there's a lot of volatility.
Sankaet Pathak: (
Gen Z is just two things, loose pants and TikTok.
Daniel Wolf: (
So, my perception of the metaverses everybody here has heard is just, I put on my VR headset, I play some kind of game or, I go to a concert or a standup comedy show and sit in the audience with several avatars and because it's virtual, we can heckle all we want and the performer doesn't hear any of it. I'm starting as more of these conversations take place, I'm starting to feel like my perception of the metaverse is kind of limited. So what exactly is the metaverse, certainly as it's relevant to this audience here.
Sankaet Pathak: (
I think it's all definitional at the end of the day. The way I would define it's a very immersive digital experience, where people are spending a good portion of their life, which after COVID has started to happen more and more with work and also recreation with Fortnite, right? So I think those are probably really good high level definitions. Sometimes we conflate that with defi but metaverse doesn't have to be defi and just be immersive digital experiences.
Josh Li: (
Okay. Good. That I think to add on top of that immersive digital experience are only two key attributes. I think one is the ability for people to gather together and share, interact with each other and the second is the ability to create content together because that's what the hallmark, otherwise like zoom meeting is kind of interactive and whatever but it doesn't have that shared content creation element of it.
Lois Tullo: (
I would agree and just add on to that community and just the dialogue and people that you know and know you as who you wish you were so an alternate reality for yourself but then on the other side of it, it is the owners and creators and not all metaverses are created equally. Some are owned by corporations where others are set up by Dows or decentral autonomous organizations and are actually owned by the members of those metaverses. So depending on which kind of metaverse from a corporate standpoint, it can have a very different flavor and feel.
Daniel Wolf: (
Okay. And the interesting thing is from the VR perspective, since you can't see a keyboard or anything, a lot of that communication is verbal and I think that's something very different from the way we communicate, not just on the internet these days but also with our phones with texting, it's rude to call somebody now, which I'm on board with that but it forces us to have like a more human interaction, even though the person we're looking at may be Shaggy from Scooby Doo and not actually like what they look like in real life. So what I wanna ask of course, relevant to this audience is so once we're in the metaverse, whether it's VR, augmented reality, something else, immersive, why do we need a different way to make payments?
Sankaet Pathak: (
Well. So, there are two interesting opportunities. The first one is most of our wealth is in Fiat today, which doesn't interface well with the digital experiences because web two was not built with the payment ecosystem in mind. So you have your counterparty risk, you have traditional financial infrastructure, both of them sitting outside of the entire internet protocol and the first big opportunity is people now wanna buy things that are in the metaverse, right? So NFTs is a really good example of this. If you all play fortnight, another attribute of being a gen Z buying tokens various kind of skins is a good example of this, just to be able to conduct that commerce, you need to be able to do payments. So that's the first piece. The second group that we've seen recently that we've been intrigued and excited by is there's also a higher and higher appetite for people to not have their primary mode of funding sitting in traditional banks.
Sankaet Pathak: (
These are folks that have some kind of wealth that exists in the metaverse, maybe because they own a lot of crypto, maybe because they own a lot of NFT and they wanna be able to interface and use those rails in the real world and the biggest uniting factor for this is global banking, which is you're trying to have similar experiences as someone would have in the US if you're playing fortnight. If you live in Brazil, which is the second biggest market for Fortnite, So how do you unify and build experiences where people who have their wealth or assets in either one of those buckets can move back and forth very easily and that's creating in my opinion like the biggest opportunity right now.
Josh Li: (
Along with that, I think there are few key trends that we see. So one is the whole P2P that people pay each other through Venmo and so on. So that has lend itself to a new paradigm shift. So I think a long time ago, I used to remember, if I have to pay my daughter's classmates parent for something I'd write a check. These days, it's Venmo, right? In the metaverse the whole idea of paying somebody very easily will lend itself to constantly more interaction selling of digital goods among each other. Another is the movement from an account based society to a token based society. So you still need to have the initial account to deposit fiat into but once you convert down to tokens, like I was saying tokens are really the means of which people are trading and buying things.
Josh Li: (
And then the last thing is with this new technology, you're able to do micro payments. So fractional pieces of a token and so imagine the world where I could buy a in game good for a certain price in the future, it could be led to metering or a continuous payment where as I'm using this in game good, I'm paying fraction, fraction a bit of it just while I'm using it and if I'm happy with this good, I wanna buy a different weapon, I could use another one for rent and I'm paying that fraction portion of that. So I think some of these trends in the metaverse is leading to new payment structures to support that.
Lois Tullo: (
So I'll build on that from again, the back end. And if you think of the creators of these universes, some just started off as a hobby but others, it is actually a business. And so how are they going to get paid or remunerated for their business? So, most of the universes, they have created their own coin of which then in order to participate in or to buy land and then it also gives away to enumerate the founders of that as the coins go up. So if you think of sandbox as sand and sort of an interesting story, I had a side conversation with someone else and what if they weren't in yet and I am not providing advice, I'm just pointing out that the whole crypto market is down right now.
Lois Tullo: (
And the metaverse coins are actually down significantly more than the large coins, which are Bitcoin and Ethereum and she said, well, are they all trading Ethereum? No, that is the platform or the rail of which the metaverse coins are built upon. So when you're looking at sand or manna or AXI, it is built upon different block chains and so when you think about the interoperability of that and that is something that is not yet there. So if you go into sandbox, versus if you go into decentral land, you cannot share your skins or your NFTs between those and as well, there's not interoperability between the currencies yet. So, it does have some advantages over the Fiat that you can't go in and pay digitally but it's not there yet either.
Daniel Wolf: (
So, one of the things that we've kind of touched on is the concept of the avatar and in the fortnight example, I don't know if anybody has played this game or have kids who play this game but it is you can be pretty much anybody that they could buy a license for. You could be Boba Fett, you could be Superman, you could be Hawkeye, there's just so many to choose from. I can't even think but obviously you're not playing against the real Superman, Henry Cavill is, well, actually Henry Cavill might be playing Fortnite big game Fort he play. Does he play himself as Superman? I don't know. That's a good question. What I think, if I find Superman in there, I'll ask, I don't know how you would ask but he would probably just wipe the floor with me but nine times out of 10, that will not be Henry Cavill.
Daniel Wolf: (
That will be somebody else pretending to be Superman or Batman or Harley Quinn and where I'm going with this is basically the question of identity and like, even outside of this context, we live in an era where, Mark Hamill ages but Luke Skywalker doesn't and there's so much in the virtual world or in media where, what we see is not what's real and if I'm in a VR headset, I can't pull out my driver's license to prove who I am or my passport or what have you and like I said, you have this thing on, so if I haven't memorized my credit card number, I'm not typing that in. So how do we address this issue of identity? When so much of what we see about somebody in this space is artificial.
Sankaet Pathak: (
I personally think these are two different problems. The first one is an underlying identification of who owns the resource and then what resource do you wanna extend out as in who do you want to pretend to be? It's fine. We already do that in our natural world by wearing clothes that we wear, the personality we have, like me making jokes is just a way of me extending myself in a specific way. I don't think that's necessarily the issue. I do think there would be types of use cases. Banking is a really good one where you can do real damage or there's propensity to do some kind of damage where you would wanna be able to track down who essentially is the owner and operator of this resource.
Sankaet Pathak: (
So I do think it's more important for us to be able to have an underlying mechanism that helps us identify like a Mac address and an IP address, the true ownership token of who the person is. This is what they're trying to do. So if some bad action occurs depending on the magnitude and scope of it, it could be something as simple as we ban them from coming in. It could be something more serious where the government or police gets involved but I think there are different abstractions and layers of identity, which is very separate from the character you wish to play. I feel like the character you wish to play is totally fine by the time you have some counterparty that is underwritten you for the level of experience and exposure it could very well be you play fortnight and you don't have to have anything other than somebody's IP address but then you start doing commerce on fortnight and you have to go through registration process. So, there are a bunch of these different abstractions that we've built out on web two that probably would extend into metaverse as well. Which usually people use it as a knock, which is you can pretend to be somebody else. You can also do that on the regular internet. So I don't think that necessarily is.
Daniel Wolf: (
I know a lot of us do pretend to be other people and any other thoughts on identity? What you said before is an interesting point that a lot of what is developed already for vetting people's identity and whatnot for payments can apply to the metaverse.
Sankaet Pathak: (
I think It works.
Daniel Wolf: (
Then what is different? What elements does this new platform introduce that we, or new variables?
Sankaet Pathak: (
I don't think it needs to but please.
Josh Li: (
I do think that because it's a new platform and with new platform, there's always opportunities for new entrances to come in. So I do think that there needs to be one institution that knows who that person is in the real world and can vouch for his or her identity, especially if you're gonna to have any money transactions of any sort. But once you have that and then gets converted to tokens, then it's kind of anonymous. I could trade with somebody using tokens. I don't need to verify that person's ID or driver's license or anything like that. So it needs to be one trusted institution that verifies identity. Once we have that, then it can all just be tokenized and trading of tokens.
Lois Tullo: (
My take on that is, that it's not just a metaverse problem but it is a wider both crypto problem and other digital assets and there has been huge strides made in combating anti money laundering and terrorist financing. Chain analysis is the most famous of the firms. There is identified wallets that not to do transactions with and on our bot trading, that's what we have built into the algorithm. So if you're looking at doing an arbitrage trade, we will not trade with any of the identified wallets, but it's a huge problem because once you do get into the metaverse, there is not that definition. The whole attraction of the metaverse is that pseudo anonymity, people who are in the metaverse, especially if you think of this is primarily attracted to the under 25 age group, they have no appetite for being identified. They don't even keep their cameras on
Sankaet Pathak: (
Is an identity, a relatively new concept in human civilization. Anyways, like we historically used to rely on trust.
Lois Tullo: (
Cash. When you use cash, your identity is not verified.
Sankaet Pathak: (
I feel like we have relatively good solutions for identity for the problems it needs to solve. I do think bad actors, you need to catch and constantly iterate but I'm thinking we need something revolutionary. I think what I'd like to see rather in the metaverse restored is a trust score, which is how trusted are you by your community and people around you and based on that, a new person getting infused into your bus can decide for themselves, like how much do they really wanna interact and how safe and comfortable they do. They feel sharing money or other resources with you.
Daniel Wolf: (
So, as we get out of our crystal balls now, what is on your wish list as this kind of digital ecosystem develops? What do you want to see happen to make payments more secure, to address issues of identity to the extent that we need to do anything different? Maybe less of a crystal ball and more of a wish list?
Sankaet Pathak: (
Wishlist, I assume means optimism.
Daniel Wolf: (
If you could shape the metaverse, if you were in command of this immersive internet, what would you like to see happen on the commerce side that isn't happening already?
Sankaet Pathak: (
I think equity is the biggest thing. You have a level playing field in, let's take Fortnite as an example, if you're in the US or if you're in another country TikTok in a way is a big democratizer of just how people consume content and create content. Those people should be paid fairly and equally today, you don't get paid unless you have a US bank account for TikTok. So I think one of the biggest things that I'm really excited about is in COVID in some way, accelerated this, you can live anywhere. You can be in any country, but still get paid about the same for the work you're doing. A big piece, ironically, that's getting in the way right now is giving these people access to bank accounts in a country like America, right? That's what it really comes down to if the whole industry came together and figured out a way to be able to onboard people that don't live here properly as well. I think that is a massive opportunity for unlocking equality of wealth across the world in a very very meaningful way.
Daniel Wolf: (
Okay
Josh Li: (
I think one thing that Lois touched upon is each of these owners come corporations own a different metaverse, right now is closed. They have very structured rules around it. I think one thing that would propel the growth of the metaverse industry is that the more industry standards and incentive structures for all these different corporations to allow content creators and owners of items in that world to be able to interoperate and port that over to another metaverse cause then somebody says, okay, if I invest the time to build as elaborate mansion, and I wanna be able to now go to another metaverse and I can put that over. I think that would just spur on the whole acceleration of the adoption of the industry,
Daniel Wolf: (
Lois, your crystal ball.
Lois Tullo: (
Well, both technology and regulation working together because what we've seen so far is that the technology and adoption outruns the regulation and so that we are always catching up. Even though even on the crypto side, the amount of bad actors is 0.05% of the value transaction, which if we look at anti-money laundering on Fiat is significantly more but there needs to be that education that goes along because the technology is running faster and faster as we move to web three and 5g and as all of those work together, I just see the regulation falling further and further behind. I'm from Canada and or even further, we're gonna see that commerce move to sites. London is the defi site. There are, Gibraltar in Singapore and we are going to lose out on those opportunities.
Daniel Wolf: (
Okay. Just a few minutes left before the refreshment break, does anybody have any questions for any of us up here? Preferably questions about Star Trek. Star Wars. I'll take Star Wars also. Oh, we have a hand.
Audience 1: (
So like a lot of
Daniel Wolf: (
One second. Can you please wait for the mic?
Audience 1: (
Thanks. Like a lot of new technologies, well I have two questions first, if I think about the metaverse as an extension of the internet but an internet in different environments than we imagine on our phone or our laptop. Is there anything wrong with that thought process? I guess it's maybe not always connected. Sometimes they're cut off. Is that one of the thoughts? That's question one, then question two, I have kids like many people here, they go into the VR, they buy stuff with my credit card today. So therefore there's this new metaverse where they're living a life inside of their VR and they have to buy things like they would on the laptop or the phone, if it's swords or outfits or whatever they're buying, they're buying new metaverse stuff in a metaverse slash the internet with an old fashioned chase credit card. So I guess that works now. So how do you all view that as a metaverse opportunity payments, just the old fashioned stuff in the new environment. Then my third, just to wrap it up business to business in the metaverse right now, it's all really consumer oriented. I happen to be in business to business payments. So what are your thoughts on business to business in metaverse?
Sankaet Pathak: (
I think it's all definitional on the first question, right? Like I'm of the opinion, even TikTok is the metaverse because some people spend their entire life literally making money and consuming TikTok on a constant basis. A good way to think about this is like what is the fidelity and resolution? Some of them are very low fidelity. Some of them are very immersive in high fidelity. I don't think anything's high fidelity yet. We're like medium, right? Because you cannot really feel or touch and other sensations just yet. So I feel like the first one is just like definitional the second one from my opinion, that I'd love others to be able to chime in as well. I think the question was, how do you get people off something like chase credit card being connected or why?
Sankaet Pathak: (
Well, a couple of our customers focus on just this problem, the very narrow problem we were talking about. So copper and gravy stack two good examples of this. They pretty much build teen banking and kid banking. Then a lot of the use cases that are emerging over there are responsible spending for kids around digital assets but this is high level in economics problem, which is when you have enough assets in the non-traditional environment. What is that amount? I don't think anybody really knows but there is a clip point after which circulation becomes more easy and prominent versus influx. Right now we're in the phase where there's tons of traffic in on ramp and off ramp and relatively small traffic in commerce within. So, but you have to cross that threshold.
Audience 1: (
Using regular commerce to buy a bunch of club paneling outfits.
Sankaet Pathak: (
Yep.
Audience 1: (
Whatever that we buy. You're saying a summary of the assets of all those virtual assets that metaverse what we don't have given.
Sankaet Pathak: (
There is a theoretical limit after which you will have enough assets in circulation that there would be an economic incentive to recirculate them were not there yet. In most cases.
Daniel Wolf: (
I'm also thinking of this as like the walled garden sort of thing, like iPhone versus Android. Everything you do on iPhone has to come from Apple's app store but Android lets you side load. So, like I said, as I have one of those VR headsets. So I know that I put in my credit card and I can buy anything I want there. But as new platforms emerge there may be new elements inserted, maybe the ability to port certain things or what have you, that the curator of the walled garden may not approve of. That's when it opens up opportunities for new and more democratized types of payments.
Josh Li: (
Also, it comes back to the content creation, things of value like robots is a great example. So if you create a robot environment and you have people subscribe to that game. They're willing to pay for that. Now the creators are getting paid in something that's in game but imagine a world where in the future a lot more younger people and even to adults, we all like to go to costume parties as well or role play games or all kinds of parties where we're have a persona, right? So we enjoy that as for entertainment. Now, people who create those immersive worlds, create content for that world. If they have a way to get payment in the metaverse itself, if they have a way to translate that into the real world, convert some of that into real world dollars, they can make a living out of that. Then, you wouldn't have to need real world financial services products to then translate to buying things in the metaverse because they can get paid in the metaverse itself. Now they're translating the other way out. So really depends on the value creation. When the tipping point at which more content is created in the metaverse versus the real world, that's when I think of a tipping point.
Audience 1: (
Metaverse allows you to take money out like camera. If you have bunch of points in robots you use, you could use an OCT back to credit card to take that money.
Daniel Wolf: (
Can we make this the final question? Because we're super low on time.
Lois Tullo: (
Okay. So to your first question about the difference between just the web two and web three, it's really centralized versus decentralized. If you think of web two as the web of information where web three is the web of value and that people hold value individually and we have moved away from that centralization to your second question, yes. If you look at the metaverse coins, then you can take that coin out into say your meta mass wallet and then you can trade it or you can convert it back into Fiat. So yes, you will have people that are actually working and in my job I can get paid in Bitcoin or I can get paid in cash. So there's gonna be as sort of more of the population moves into users of that. We're now in one in 10 are using the metaverse over the next sort of five years, I see that moving to one in four. So, that adoption is ever growing and that's gonna push. For parents, forget it. We're always gonna be funding.
Daniel Wolf: (
Thank you everyone for your participation. Thank you all for joining us in this conversation. We're gonna take a short refreshment break and aim to be back here around 10:30. So that gets us back on track with our timing and I'll stop talking so you can all take your snacks. Thanks everyone.