Good morning. We are going to learn some advanced topics in reaction engineering as part of this particular course. You have already learnt basic aspects of reaction engineering, where we talk about what is reaction kinetics, what is its role in reactor design or simulations for, then how to come up with a rate law based on the laboratory data that is given, what are the effects of heat transfer, like for example, like these reactions exothermic or endothermic. So, how the temperature would change and accordingly how the reactor design will get affected. So, there are so many basic aspects of reaction engineering that you have learnt in the first part of this course. So, in the second part we are going to look at, we are going to go next step, where we talk about what is the role of catalyst and if the catalyst is in solid form, how the reactor design will get affected, what are the different procedures to take into account effect of or the presence of the catalyst. Then if the flow patterns are non-ideal, how do we deal with them? There are many other possibilities where one reactant is sitting in one phase that is say gas phase and the other reactant is in liquid phase and they are going to react either in liquid or gas phase, then in that case how do we do the reactor design? Like for example, we have a multi phase case where two reactants are sitting in two phases, like how to account for something called as mass transfer effects. So, in this particular course we are going to look at all these additional effects that will come in while dealing with reactor design. So, let me go back and talk about what is reaction engineering. So, normally what we deal with is the reactor design. So, that is at the centre reactor design or it can be simulation as well. So, reactor design needs some input and where it comes from the main input is the reaction kinetics is a reaction kinetics. Now, this reaction kinetics we can derive it from laboratory data or it can be based on some theoretical aspects like for example, density functional theory or then you have some additional effects of this reaction kinetics. If the reactions are taking place in multi phase systems, this reaction kinetics that is normally R is equal to say minus k C A or something which will not remain as it is because it will be affected by something called as mass transfer effects. This is something that you have not done in reaction engineering part one. Then apart from this you may have heat effects as well. So, you may have energy effects or heat effects where the reaction is affected by the heat evolved or heat absorbed. So, the temperature of the reaction reactor may change and you as you know rate of the reaction increases exponentially with temperature and that is why we need to take into consideration the change in temperature. So, heat effects what else then they can be pressure drop. So, pressure drop in the reactor especially in the case of gas phase reactions if there is a change in pressure drop then there is a change in concentration and that will again affect the rate of reaction. So, delta P is again very important what we need to do here is to write a momentum balance take into consideration the frictional pressure drop and so on. In the case of gas phase reaction is very important. Anything else we have something called as non-ideal flow patterns. This is what you are going to learn at later stage in this particular course non-ideal flow patterns. Now, most of the reactors that you have studied in the part one of reaction engineering course they are ideal reactors. So, they are a CSTR or plug flow reactor where we assume certain flow pattern and accordingly define the concentration in the reactor. For example, CSTR the concentration is uniform everywhere it is constant does not change with respect to spatial coordinate. Whereas, in plug flow reactor it changes from in lead to outlet, but there is no back mixing that we assume and we assume that the concentration profile or the velocity profile along the radial direction is uniform. So, these are the assumptions which make the reactors ideal in the sense we assume that the behavior is specific, but in reality it may not be that way. So, in reality the flow patterns may be non-ideal depending on the internals. For example, in the packed bed reactor you have channeling in a CSTR you have stagnant pockets. So, all these effects are to be considered while designing the reactor. So, if you see reaction engineering it is all reactor design and around which you have so many effects. And what you have learned in reaction engineering one is the reaction kinetics for simple reactions for say homogeneous reactions r is equal to minus k C A or C A C B or C A raise to n C B raise to m and so on. So, this is what you have learned what reaction kinetics is all about and how to design an ideal reactor based on the reaction kinetics given. Now, you may have multiple reactions also you may have heat effects also. So, this is what you have learned to some extent in part one. Then you have learned in this one also in part one and to some extent how to design a reactor for these particular cases, but when it and of course probably the pressure drop constraints. So, these three things you have already taken into account while designing the reactor you know the procedure how to design the reactor. But now what you are going to look at is the effect of mass transfer if the reactants are sitting in two different phases or product comes out of the reaction phase the multi phase effects or if the catalyst that you are using is in solid phase or in a different phase. So, you have mass transfer effects then you may have the flow pattern effects where there is a non-ideality. So, it does not follow ideal CSTR or plug flow reactor. So, these are the things that we will learn in this particular course. Now in case or in the case of mass transfer effects you may have the reactants sitting in two phases or you may have even the catalyst sitting in a separate phase. And this forms almost 25 to 30 percent of this course the catalytic reactions and catalytic reactors. In fact, you will see industrial reactors almost all of them are catalytic react very few reactions are uncatalyzed reactions. And in these catalytic reactors most of the reactors are where the catalyst is used in the solid form. So, which is which forms a separate phase most of the times the reactions are taking place or the reactants and products are in either gas or liquid phases. Whereas, a solid catalyst phase is a solid phase. So, we need to consider the mass transfer effects apart from that there are so many other aspects to be learned in catalysis. So, what we are going to start now in today's lecture is the first part of this course that is catalysis catalysis and catalytic reactors. What do we learn in this course? First we know what we try and understand what is catalysis? What are catalysts? Something that you already know, but then we just try and review that information in context of reactor design. Then different steps involved in catalysis when a reaction takes place on the catalyst. What else? Rate law from the data laboratory data. Now, again this is something that you learn before as well, but now the rate law will be different if you are using a catalyst. The rate law will have a different expression. A normal expression is R is equal to minus KCA whereas, in the case of catalytic reaction there are so many steps that are taking place while the reaction is happening. So, in that case the rate law would have a different form. So, you are going to spend some time understanding what kind of rate equation one can encounter in catalytic reactions especially when the catalyst is solid. Then catalyst has again a very important, I would say property or it is not a property as such, but then there is something that is undesired where when the catalysis is happening. What is that? It is catalytic deactivation or is the catalyst deactivation. If a catalyst is solid then the catalytic sites they are deactivated during the course of the reaction and the many reactions where the deactivation rate is much faster than the actual reaction. So, in that case how to deal with deactivation. So, catalyst deactivation and the last one of course is the design of catalytic reactors. So, these are the different things that we are going to learn as part of this particular chapter. So, let us start with what is catalyst? Very simple, most of you know about it. What is catalyst? Catalyst is a substance that increases the rate of the reaction, but is not consumed during the reaction, does not undergo a change, but increases the rate. It may undergo a change temporarily, but at the end of the reaction you see the catalyst is coming out in a form that you are already started with. Of course, deactivation is a different thing, but otherwise if the deactivation is not taking place the catalyst comes out of the reactor as such. Catalyst remains in the reactor as it is in the form that we already taken. So, what is it doing? It is increasing the rate of the reaction and there are many types of catalysts. It can be homogeneous and it can be heterogeneous depending on what is the phase in which it is. If it is in the same phase as the reaction mixture, same phase then it is homogeneous. If it is in different phase then it is heterogeneous. So, as an example if you have a solid catalyst which is catalyzing the reactions of the reactants which are present in gas or liquid phase say for example, ion exchange resin for esterification reaction which is a liquid phase reaction. Fluid catalytic cracking zeolites they are used for catalyzing hydrocarbons cracking which is a gas phase mixture. So, that is heterogeneous reactions and as I said before the heterogeneous reactions are quite common in chemical industry. There are many advantages of heterogeneous reactions. What are the advantages? Why we prefer heterogeneous catalysts over homogeneous? Of course, not that see there are many other reactions also still practicing industry with homogeneous catalysts, but the drive is towards developing a heterogeneous catalyst for a given reactions because there are many engineering benefits if we use heterogeneous reactions. So, before we go into details of the catalysts let us try to understand what are the advantages of heterogeneous catalyst. As I said it is mostly in a different phase and most of the reactions it is solid and reactants and products are sitting in either gas or liquid phases. So, the heterogeneous catalysts the advantages are first of all you do not need catalyst separation or catalyst separation is easy. If it is a fixed bed reactor the catalyst remains in the reactor and we do not need to separate it. Whereas, in the case of homogeneous catalysts it goes with the reaction mixture and we need to separate it. So, you have disposal problems also in the case of homogeneous catalyst. So, this separation is easy sometimes you have you avoid disposal issues or there is less load on the effluent treatment. If the catalyst is corrosive for example, sulphuric acid it is liquid phase catalyst it corrodes the material of construction whereas, if you immobilize those acid sites on solids and if you have acid catalysts in the solid forms is zeolite or ion exchange resin. In that case it does not come in contact with the material of construction. So, corrosion problems are avoided. So, you get rid of corrosion problems and the material cost goes down. So, like this the many advantages apart from sometimes you may get enhancement in selectivity and rates. So, these are only practical advantages from process point of view whereas, sometimes you get advantages in terms of selectivity yield or the performance. So, in the case of heterogeneous catalysts I will just continue. There may be a rate enhancement not always in fact, some most of times it goes down, but still we prefer it because there are many other engineering benefits, but sometimes I can increase the rate more than that it is a selectivity towards a particular product that goes up. I can design a catalyst as per my requirement and get higher selectivity. We will talk about it later more. So, these are the advantages of heterogeneous catalysts. So, I will just quickly revise what we have learned. First I told you what is the importance of learning mass transfer effects and non-ideal flow patterns which is going to constitute major portion of this particular course from reaction engineering point of view from reacted design point of view. Then I told you the importance of catalyst most of the times the catalyst is present in another phase. So, which makes it heterogeneous and because of that there are many aspects need to be studied while designing the reactor. So, in this particular chapter we are going to learn what is catalyst? What are the different steps involved when reaction happens on the catalyst surface? Coming up with a rate law based on the laboratory data which is a natural extension of what we have learned in reaction engineering 1, but now for catalytic reactions then catalyst deactivation and catalytic reactor design. Now, what is catalyst is a substance that increases the rate of reaction, but does not undergo a change it and may undergo a change during the course of reaction, but at the end of the reaction it comes out as it is that is nothing, but the catalyst and catalyst can be homogeneous or heterogeneous and heterogeneous catalyst are advantages because of no disposal problem separation is easy no corrosion issues sometimes you may get higher rate and it can be designed appropriately to increase the selectivity towards a particular component. So, let us go ahead and try understand what catalyst is. So, if you see a normal reaction say path of the reaction on one side you have reactants on the other side you have products and this is energy. This is a very famous plot that you have learned long back let us try and understand it again. You start from somewhere here that is where your reactants are the energy level goes up and then comes down and this is where your product is and this is where your reactants are. Now, it needs to go up and then it comes down what is it. So, it goes to a transition a peak will be obtained at which you have an intermediate form which has a very high energy it is not stable there. So, it rolls down and attains a stable value where your product is. So, what is this called as this is nothing but activation energy delta E of the reaction and this particular energy level is very important this particular energy level. This can be either above this point or it can be below this point depending on depending on whether the reaction is exothermic or endothermic and the way I have shown here this reaction is this reaction is endothermic. Why because this difference the energy difference here to here is positive. So, I have there is a net absorption of energy by the reactions because of which it becomes endothermic. If this point goes down further compared to the reactants then it is exothermic and this is nothing but a transition state where you have some intermediate form. So, every reaction either it is catalytic or non catalytic it has this energy curve or energy diagram where you have transition from reactants to product through an intermediate stage which is at high energy level. So, I need to provide this much energy. So, that it goes here and then comes down. So, that the reaction takes place and this energy level comes because of the molecules they have this energy that energy comes because of the temperature. Now, if I use the catalyst what happens to this particular graph or before that the rate of the reaction would depend on which factor it will depend on this activation energy higher the activation energy lower is the rate. So, as simple as that and you have learned something called as Arrhenius law or Arrhenius equation where we say that R is equal to k C A or minus k C A right this k the rate constant depends on temperature right. We will talk about it more later, but this rate constant depends on temperature is the temperature increases then the rate constant increases and higher the activation energy higher is the sensitivity of this rate constant to the change in temperature. So, if you increase temperature the rate increases and for higher activation energy the rate would be lower right. So, now you tell me if I use a catalyst what happens to this particular graph if I use a catalyst this activation energy is going to go down because the rate increases right. So, you may have a different graph for a catalytic reaction. So, what is catalyst doing catalyst is changing the path. So, now the transition state here is different from the transition state here the intermediate formed here that may be t 1 and this is different from t 1. So, you have a different intermediate which has less energy compared to the earlier one right and because of that the activation energy has reduced. So, the rate increases what will happen to this catalyst cannot change this always remember that most of the time we just concentrate on this, but forget this this comes out of thermodynamics this comes out of thermodynamics and this is not decided by the catalyst. This means this energy level the heat of reaction catalyst cannot change the heat of reaction catalyst cannot make endothermic reaction and exothermic reaction. So, that is the property of the reaction catalyst only changes the path it only changes the activation energy and it only changes the rate it will not change the equilibrium always remember that. So, the rate of the reaction is changed by the catalyst by virtue of reduction in activation energy. So, we have learned what is catalyst. So, in this we had considered the rate law which is nothing, but r a is equal to minus k c a the c a can be c a raise to n c b whatever depending on the type of reaction and stoichiometry. Now, this k is a rate constant. So, let us have a closer look at this rate constant this is nothing, but k 0 exponential minus e by r t or delta e by r t into c a. So, what is this k is equal to k 0 exponential minus delta e by r t this is Arrhenius equation. So, as you see from this equation sorry this is minus yeah. So, from this equation the rate is proportional to temperature that means if I increase the temperature rate increases it appears in denominator, but this is negative and the sensitivity of the rate constant depends on this factor that is delta e activation energy alright and this is what you have already learned Arrhenius law. Now, let us get back to the catalyst at I was telling you about the types of catalyst the different types of catalyst homogenous and heterogeneous. Most of the times the homogenous catalyst like whatever you have learned so far like we can directly extend that analysis to homogenous catalyst whereas, for heterogeneous catalyst the things may change. Now, what are the different types of heterogeneous catalyst heterogeneous catalyst again they come in different forms. So, one of them is a porous catalyst. Now, what is porous catalyst is a very important concept we need to understand it at in detail. Now, if I see a single particle of the catalyst this is a catalyst particle. Now, the size or dimension of this particle can be in the order of 1 millimeter or even less than that can be of the order of few microns.  How do I get this surface area? Now, it is a porous catalyst. So, it will have pores inside. Now, what are pores? Let me draw them. Now, this red ones are the solid this is a solid space. This is a solid phase and the space between these red matrices these are nothing but pores. The typical pore size can be of the order of few angstroms say 10 angstroms 20 angstroms or it can be nanometers 1 nanometer or so. So, this is open this is open to the reaction mixture. So, what happens is the reactant molecules say A is a reactant that goes inside through this pores and then the so much surface available inside the catalyst particle and on this surface there are catalytic sites which are responsible for catalysis on which the reaction takes place and then the product will come out say B. So, you may have reaction taking place A going to B. So, A goes inside it diffuses through these pores. There are catalytic sites present we will talk more about the catalytic sites on which the reaction takes place. So, I was talking about this transition state intermediate north all that will happen inside the catalyst or rather inside a pores and the products will be formed here. So, this are small tiny reactors on where in the reaction would take place and the product will come out. So, slowly I am we are developing a picture about how the catalysis happens. What are the different steps I am not told you all the steps, but you can understand diffusion reaction and the product coming out, but more than that there are other steps as well we will come to that. Now, so what is happening here now you as I said so much surface area available can you imagine the order of magnitude of the surface area. This surface area can be as high as say 1000 meter square per gram can you imagine.  So, I am not necessary that every time you get this much surface area depends on the material, but just to give you some idea I wrote this number it can be 500 it can be 200 it can be even 10 also. But a porous catalyst are the materials which provide very large for surface area in a small amount in a small volume and that is a main advantage of using porous catalyst for catalysis. Now, where are the sides present sides are inside. So, if you take example of say zeolites which are alumina silicates the sides are inside. So, say acid catalysis by zeolites the H plus or protons are present here of course, there are small amounts of sides on the external surface as well, but these sides the number is much lower compared to what you have inside. So, the surface area is mainly inside external surface area is much smaller compared to inside if the catalyst particle size is of the order of few millimeters. So, if you go to nano level then that case the external surface area also increases and it becomes comparable with the surface area inside a pores, but we are not talking about that surface area or that particle size most of the times the catalyst particle size is of the order of few millimeters or probably less than a millimeter, but not less than 0.1, 0.01 millimeter. So, in that particular range it is the interior surface area which is important. So, the best example of the porous catalyst is zeolites and which are used in many applications say catalytic cracking of hydrocarbons in refinery. So, this is one type of catalyst porous catalyst then there are other forms of catalyst they are supported catalyst. Now, what are supported catalyst the same thing a porous material which is non catalytic in nature otherwise same porous material, but that is not acting as a catalyst. Now, the main catalytic species the component is different and not this material say for example, alumina or silica activated carbon these are the materials which are porous in nature, but may not be the good catalyst for the reaction, but I still use these materials because they have the property to provide so much surface area. Now, I use them as supports I use them as supports supports for what supports for the catalyst. Now, for example, I have platinum being used as a catalyst what I will do is I will disperse or I will put this platinum on the support at various locations. So, how is this catalyst different from the earlier one the earlier one was the porous catalyst porous material itself acts as a catalyst the sides are part and parcel of that material itself. Now, what I am doing here is I am putting catalyst on a support that means the material which is porous in nature is support otherwise non catalytic on which I am putting this catalytic species. How to do it is something not of concern at present, but then if I am able to put this catalytic species on the surface say platinum, ruthenium, nickel whatever cobalt, iron which are all good catalyst see the D block elements transition metals they are good catalyst because of their variable valency that we know. So, we are able to put them on the porous support and because of which I get so much surface area and many atoms of the catalytic species are available for the reaction. So, these are supported catalyst and quite common in industry many supported catalyst as I said like all this metals when supported on alumina, silica, carbon they are all supported catalyst. The third type of catalyst gauze or foil the reaction is so fast that I do not need to expose the metal ions to that extent. So, even if I take a wire or a gauze that is good enough to catalyze the reaction. The catalyst is so active that even the external the atoms present on the external surface of the catalyst they are able to catalyze the reaction fast. So, I do not need to go for a porous material. So, these are called as monolith catalyst. So, example is of course, this oxidation of ammonia to nitric acid they use platinum gauze oxidation of ethanol to acetaldehyde they use silver gauze why gauze and why not supported on something because I do not need very large surface area catalyst itself is very active only the atoms which are present on the external surface of the wire or gauze are good enough for catalysis. So, monoliths these are non porous and non supported. So, these are different forms of catalyst. So, how do we define catalysis or how do we compare different catalysts? How does the reaction take place on the catalyst surface when the reactant molecule approaches the catalyst that is something we have to learn now. Now, let us look at the catalyst surface. So, what I am going to do is I am just going to magnify that pore on molecular level. So, as I said like we have this pores inside a catalyst these are the pores inside a catalyst. Now, I am going to just magnify this. So, I will have a pore through which the reactant is flowing and of course the product is also flowing in the sense through diffusion there is no velocity inside because the concentration gradient they would be a flow. Now, this if you just look at this surface now I am going to magnify this further I am just going to open this. So, I will have a surface or which A is going to react because it will come in contact with A with surface rather A will come in contact with surface. Now, on surface what do you have on surface you have catalytic sides what are these sides remember I had shown those metals supported on the catalyst. So, typically if you have a supported catalyst then you will have a sides present. If you have wire gauze or if you do not have supported catalyst the porous material itself acts as a catalyst in that case which what are the sides. So, it is hypothesized that in such cases sides are nothing but those places where there are defects or irregularities or which the activity is very high compared to other atoms. So, these are the sides. So, in general whether the catalyst is porous or non porous supported or non supported on the surface on the surface I have some places where the catalytic activity is more. And that is where the reaction is going to take place. So, A is going to get adsorbed it has to get adsorbed on the surface. So, that you have an intermediate form and then the reaction takes place. So, adsorption is a very important phenomena as far as heterogeneous catalysis is concerned catalysis with solids is concerned. We need to understand adsorption in detail in a normal reaction without a solid catalyst adsorption is not important. Whereas, for heterogeneous catalyst this is an important step in catalysis. Now, we have learned what is adsorption adsorption is of two types it can be physical adsorption it can be chemical adsorption. This is because of van der Waals forces and other long range forces. And this is mainly because of strong interactions bond formations. So, it is more like reaction whereas, this is a kind of affinity it is more like condensation a gas molecule is going on solid changing its phase. So, whatever heat is released heat of condensation is the heat of physical adsorption whereas, in this case it is much more than that it is more like a reaction is a bond formation. So, heat evolved here is say less than 10 kilo calorie per mole whereas, in this case it is much higher than 10 kilo calorie it can be even of the order of 100 kilo calories this is chemical adsorption. And what we are looking at as far as catalysis with solids is concerned is the chemical adsorption. Where the substrate or the reactant will form a bond with the catalyst will form a bond with catalyst. So, these are the two types of adsorptions physical and chemical. So, what is going to happen on the catalyst surface is for example, I have a catalytic site and there is a reactant which is coming to the surface. So, it is going to get adsorbed on it it is going to get adsorbed on it. So, it is going to form a complex. So, this is s it is going to form a complex. So, the reaction can be represented or the step can be represented at a plus s gives a s adsorption. And there is this interaction through the bond formation of course, it may be unstable and may break within no time. So, it is possible that this is just a transition state or intermediate stage and further the reaction will take place to form a product which is say b or c whatever ok.


One more minute maybe or half So let me start by saying welcome to the first call this This in 2023 a lot of things have gone down a lot of very interesting and very almost existential crisis have erupted in banking as this Seems to be the norm every 10 years or so And there is a theses by mince key which says that there is an instability in Capital markets financial markets instability theses Which you know he did a lot of work on many years ago, but Obviously some of this Presentation that you're about to see is addressing that instability in the heart of the system in some ways anyway and Two things one is we are operating under the Linux Foundation code of conduct Which says that you can disagree with the whatever the speaker says But you can't be disagreeable That is the first thing You can have a nice sort of Debate about things but don't descend into You know being one of our Evolutionary ancestors The other the other Well descend or ascend I don't know what what that is at this moment, but the other code of conduct thing is that we are operating also under the You know trust a loss of United States, which or wherever you are that means You know, we are obviously not conducting these Under a cloak of secrecy so that we can take over the world this this are the two things and without Holding you guys up too much more We are going to go straight to Tony and Tony will Tell me to make up, you know do the presentation I'll share my screen and he'll ask me to advance or retreat or whatever number of you know the Share number this sorry the The slide number he'll he'll tell me to go to the other Point is he's You know, he's busy in many ways so He is going to be able to answer your questions when When you when you ask him But we are gonna have like let's say 10 or 15 minutes of questions After his presentation or even more maybe an open discussion would be a better way to move this conversation forward Since Tony is involved in this up to his neck.  Sure? Thank you all right and Please excuse me if I'm Using Libre office instead of Microsoft all good. Oh, this is not it Sorry, this is this is fine. Isn't it? It takes a Let me see why is it showing up on the Google Chrome? The question I need I need to you know how it is Yeah technology Google Chrome this is the Libre office and I'll go into the slideshow part of it You can see you can all see it now, right? Yeah looks good Okay, so Please Tony Yeah, thank you very much for the introduction people and Thanks everyone for for joining today I'm glad I'm glad we've got an intimate small group because we can have a conversation and get everyone involved in the conversation And you'll excuse me if I have I have a little coal so I make sneeze from time to time If I do so rather than subject you to my sneezing I'm just gonna like the screen goes blank for a second and It just it's just I've turned off my camera in order to sneeze And But otherwise looking forward to the conversation. So to introduce myself I'm Tony McLaughlin. I work in the payments business at Citibank I've been working in payments for 30 years with Citibank since 2004 but previously with HSBC AP and Amro Bank in the Netherlands and also in Barclays and Yeah, I've been at a very very career always in in payments and so The perspective that I will share today comes from you know from that background as being a practitioner in the in the payment space So in this Discussion today, I'll try I'll try to share with you You know what my journey has been Through this through this space what which conclusions that I've reached And as VPN, I think alluded to There's no reason why you should You know feeling to agree with my conclusions I'd be very happy for further to be significant levels of challenge and disagreement about the conclusions I'll try to state my assumptions and my biases, you know clearly and hopefully Demonstrate that my conclusions do flow logically from You know my observations and my and my starting position So with all those caveats, you know VPN said that I'm a managing director of Citibank So I'll have lots of constraints that try to find them try to find my constraints So I mean I'll try to speak as openly as possible And answer the questions as directly as I possibly can So let's go to the first the first page VPN if you don't mind the next slide so And I've been I've been I've been following the development of You know cryptocurrencies and blockchains almost from the beginning When I first read the Bitcoin white paper many years ago, I thought it was a staggering You know work it really challenged some of my my Assumptions my fundamental assumptions about what money is and what money should be And ever since then and you've all lived this journey as well But there's been this Thesis that I developed which I call the sometimes called the tokenization thesis or the DLT thesis, which is You know, some people would have you believe that in the future And all or much of the financial system is going to move towards this kind of technology Indeed You know large parts of the digital economy might move towards the adoption of this kind of technology And that thesis is something that I am very interested in and very interested in testing that thesis And I can certainly see That there are attributes of the technology which are which are advantageous But but one thing that I've never been comfortable with is Almost positioning the technology as the antithesis of the traditional financial system now I'm perfectly aware That the ideology in the Bitcoin white paper is About really decoupling money from the nation state and I guess the founding Belief is that you can't trust governments with money and Therefore there should be some kind of digital money which is independent from the nation state and Independent from, you know rent seeking intermediaries such as the commercial banks and others So I understand that being the origin original ideology and clearly there's a huge amount of The technical design in in Bitcoin and thereafter in Ethereum Which is designed to bring out about this You know trustless way of people interacting. I see that as baked in very very deeply into the Into the philosophy of of blockchains but nevertheless, there are aspects of the traditional financial system that I think Do have value and should be preserved and so the work that that I'm engaged in is Is is really to ask the following question. Is there is there an intersection? Is there an intersection a Kind of super set of benefits where we take the the best of blockchain and Again coming to that list of what is the best of blockchain is is is subjective but can Can we take the best of blockchain the best of banking and combine them in such a way that we get the best of both worlds and At the same time perhaps Emilia rate or eliminate the downsides of of each so that's the If you like that's the space that I am exploring is that potential that potential intersection So if we just move on deep into the next slide and that you'll just give me a Small break to go off screen for a second and and sneeze. I'll be back with you for the next slide in about one second Okay, sneezing sneezing break over. Thank you for bearing with me so in order to Elaborate on this idea further about examining this intersection. I want to double click into the world of money and It's start by reflecting that We we are living at a remarkable time in the history of money where Physical money that we've had for thousands of years is coming to an end and in the future all money will be digital but as we embark on that journey the question is well, what type of digital money will we be using and To my way of thinking again as a payments person I can see five alternative types of money of digital money and They're listed on this page and sometimes for dramatic effect I Like to think about it as a good old format format war. I go to good old-fashioned format war and This format war is probably the most consequential we'll ever experience in our lifetime much more important than VHS versus beta max or Nokia versus Apple or you know Kodak versus Digital photography etc That this format war For money is really foundational to the whole economic system Because you know money serves such a vital purpose in enabling commercial transactions to take place to be agreed for the whole price discovery system to work for the execution of commercial agreements and the Settlement of the obligations that arise in those commercial agreements. I can't think of any format war That's more important than that this race between different types of digital money Now the way in which I categorize The different types of digital money come from the bankers perspective So when I think about money The the first reality of money for me as a banker is that money is a liability meaning in and this is the traditional sense of money that the money in your bank account Is your asset, but it's the bank's liability So you're essentially making this kind of loan to the bank and the bank promises to give you the money back Whenever you demand it and so you have counterparty risk against the bank and So I categorize money in terms of the kinds of liability it represents. That's that's the that's the base You know nature of of money Well, it certainly was until Bitcoin came along But let's start walking through these five different alternatives The first alternative is is central bank money Now, I'm sure all of you have some central bank money, but only in physical form up So you've got some notes and some coins but the the the CBDC wave the the massive number of projects by central banks looking at central bank digital currency Really represents the ability for economic actors like you or I to have an account of the central bank and the type of money that we would be hoping we would be holding in those wallets is Central bank money namely a liability of the nation state a full faith and credit of the sovereign That's an interesting type of money because if the sovereign owes you the money, there's no counterparty risk and secondly When transactions are made within central bank money, they usually have this Attribute called finality of settlement, which is that the transactions cannot be unwound through bankruptcy proceedings so central bank money is Compelling type of money in today's economic system your you or I we can have access to the paper form But we can't have access to the digital form City bank and commercial banks. We've got Accounts at the bank of England the Federal Reserve already. So we already have access to those reserves so the question here is is why shouldn't everyone have access to central bank money and and then it's worth thinking about What kind of economic system do we end up with if the majority of people decide to keep their money at the central bank? So I'll leave that question hanging for a second for the purposes of getting through the five different alternatives but the first alternative is Central bank money in digital form the second alternative is the You know, it is the blockbuster. It's the Kodak. It's the incumbent which is commercial bank money When you or I think about how much money we've got we're thinking about how much money we have on the balance sheet of a commercial bank and Recent events have uncovered some of the nature of those liabilities but commercial bank money is by far the dominant form of digital money on the planet today and Again, it's a liability of a commercial bank and commercial banks have counterparty risk So it's not a risk-free form of money and the fact that those counterparty risk against the commercial bank is Not a bug of the system. It's a feature Sorry deep in if you just stay back to the previous spot in place Your finger clicked for some reason. Oh, so this is the right one So, yeah, the the fact that there's counterparty risk against the commercial bank is not a bug. It's a feature and The reason for that feature is what we call money our deposits on account of a commercial bank are the raw material for the creation of of risk assets and Risk assets obviously come with with risk So if a bank gets its assets out of the balance sheet wrong then the bank is at risk of the If the borrowers don't pay the money back So commercial bank money and moves around in increasingly instant ways Most countries have developed instant payment schemes You know visa mastercard keep getting better Believe it or not Swift keeps getting better. I can give you some evidence of Swift getting better through Swift GPI So the plumbing for commercial bank money is getting better and better But the question is is it enough is are the improvements taking place in the commercial banking system enough To meet the challenge of of digital payments the third type of money is Issued by a regulated non-bank so think of this as being paypal type money and the fact is that over the past 10 years There's been a lot of talk about crypto, but all the action has been in this type of money You know, literally hundreds of millions of customers and businesses around the world are using PayPal Or Paytm in India has hundreds of millions of customers Alipay WeChat pay Mercado Pago M. Pesa. I could go on and on regulated non-banks issuing Virtual representations of fiat currency now those monies When you give your money to a regulated non-bank into their wallet That regulated non-bank puts the money into a commercial bank So it kind of ends up being back in the commercial banking system But you have a liability You hold a liability of a regulated non-bank So that's what electronic money is Now I'm going to pause here for a second Because the three types of money that we've just described is is one family unit and That family unit is the sovereign currency system Because whether the money is issued by the central bank The commercial bank or the electronic money institution There those liabilities those types of money are all authorized by the nation state They're issued under license by the nation state and in fact, they've got a common core which is It's a promise to pay you back your money on demand at par value meaning one to one in national currency units And if you think about it the whole structure of financial regulation Is designed to make sure that those promises are kept And that you get your money back So this is the sovereign currency system made up of central bank money commercial bank money and e-money issued by regulated non-banks Now then along came the novel forms of money starting with bitcoin the public cryptocurrencies And bitcoin is a radical is a radical notion. I mean, maybe Bitcoin, Ethereum, whatever. What have you these are a very radical notion because your bitcoin says Money doesn't belong to the nation state You can't trust nation states with money The digital world needs a digital native form of money which is not subject to the rent seeking behavior of intermediaries and can flow frictionlessly across computer networks And that's the that's the thesis of of bitcoin and and money should not be a function of trust So we have to build some kind of infrastructure where we know what everyone has got in their wallets but no one needs to trust each other and hence a lot of the um, the machinery of bitcoin is constructed around delivering on that on that thesis and delivering on that ideology And and therefore bitcoin clearly is not a liability Because you if you want to have a trust less um economic system You don't build it upon someone's prop one person's promise to pay another person um bitcoin therefore is a kind of commodity form of money and at the at the moment the accounting treatment of bitcoin is actually as an intangible asset now you can argue whether That accounting treatment is warranted or not, but that's currently the accounting treatment that people have to use when they put bitcoin for example on their corporate balance sheets is accounted for as an intangible asset It's accounted for largely in the same way as goodwill is accounted for Um, which means it's it's subject to impairment accounting Um, which is why you essentially you don't market to market You kind of market to the lowest value that it's achieved in the previous reporting period so bitcoin Hasn't become Uh, you know the peer-to-peer method of payment. It hasn't primarily become a method of payment or medium of exchange It's become this kind of speculative asset Um, not the original intention as you know of the the designers of bitcoin, which is essentially to build a payment system And It you know, it is where it is, you know, some some countries obviously like El Salvador have have made it legal tender We're currently in crypto winter. So You know, who knows what the what the future path of Of bitcoin price will be and whether it will ever become a mass market method of payment but in the meantime Due to that lack of stability and the the volatility of bitcoin prices Along came the stable coins and the stable coins Are this kind of we are, you know, kind of weird frankenstein's monster Which is a combination of the the crypto technology But slaving that technology to the the values created by the fiat currency system So pegging these instruments to the us dollar and other fiat currencies Which again, if you go back to the original Bitcoin ideology seems a A strange place to reach if you're a if you're a bitcoin maximalist But what are the stable coins? Well, again They they're meant to trade at par value on exchanges. They're meant to Stay at one to one Are they a liability? You know, good question. If you hold a tether token Do you have a contract with tether? If you have a usdc token, do you have a contract with circle? I you know, some some of the holders perhaps do you can you can sign up They've got their terms of conditions, which tells you the redeemability Um, but it's not like it's not the same kind of legal relationship That you have with other issuers of electronic money like if you've got a paypal account You've actually got a contract with paypal. It says that they'll pay you the money back if you've got a bank account You've got a contract with the bank that says you'll pay them. They'll pay you the money back So the stable coins at the moment are outside of the regulatory perimeter Not clearly regulated And are controversial for a number of reasons one of which is stable coin issuers do not know the end user And so how does a stable coin issuer know for example That the instrument that they have issued is not being used by Russian to avoid us actions in the context of the ukraine war and the the russian aggression against ukraine so These are the runners and riders in this in this great game. These are the contestants in the most consequential format war we'll ever see in our lives because think about the Think about the the contestants in the field You've got the central banks competing against the commercial banks competing against the fintechs competing against the crypto map crypto community competing against potentially the big techs and what they're all seeking to do is capture those transactions provide The method of payment that will be most suited to this rapidly burgeoning digital economy And the to me again from a banker's perspective The the bright dividing line here is between sovereign forms of money and non sovereign forms of money You know bitcoin ethereum stable coins. They are not issued under license by the nation state And and here comes the real question. This is where I have to put my cards on the table It's this question which was put in my mind by reading the bitcoin white paper originally Is money The prerogative of the nation state Should the nation state have a monopoly over the issuance of money and the granting of licenses to other people who are able to issue money And my answer and this is just my personal answer And I would say this is my personal answer and my answer from a professional perspective is that Money is the prerogative of the nation state And the reason being is that it's one of the monopolies That citizens grant to the nation state as part of the social contract So in the same way that we grant the nation state the monopoly over creating law And the same way that we give the nation state monopoly over essentially violence through the military and the police That money is one of those natural monopolies of the nation state and therefore You know each of us has to answer that question and and that also I think helps to Show the reason why the Libra proposal was so unacceptable to nation states You know before Libra came along central bankers didn't really care too much about bitcoin They didn't think it fulfilled the functions of money But then Libra came along and Libra Was something remarkable in in terms of the audacity of the proposal It was essentially saying that a big tech company could have its own central bank and its own sovereign currency Bringing to itself the an an important instrument of national power And that's the reason why nation states Bulked at that idea rejected the the concept and that's the reason why Libra and dm Um, you know suffered the fate that it did But no matter where you are on that ideological debate is money a prerogative the prerogative of the nation state yes or no one other clear dividing line on this page Is that the novel forms of money the bitcoins and the ethereum's and the stable coins Are are utilizing a particular substrate Are utilizing different varieties of blockchain And the sovereign currency system is not The sovereign currency system If you think about the structure of the databases So think about this if you're if you're visiting the earth from if you're an alien visitor to the earth And you're investigating our banking system you look down on the earth and you see There are about let's say 25,000 institutions 25,000 banks around the world And each of those 25,000 banks has their own data center And within those data centers they have their own database So that's the structure of databases in the existing banking system And then you will further observe That those banks make payments to each other by sending electronic messages And essentially what the messages are the swift messages the visa messages the a ch messages There are messages moving between different bank databases asking each other to make debits and credits On separate ledgers And you contrast that to the the blockchain ecosystem And you come to some interesting conclusions and the conclusion I come to again coming back to the original Discussion around the tokenization thesis the question for me is Is there is the resynthesis? Is there a synthesis between the sovereign currency system And the best of blockchain Now if you're a crypto maximalist you're screaming at this point you're in a rage. I apologize But I'm going to continue I'm going to continue down this path and again feel free when I finalize my comments to To let rip so if you don't mind going to the next page so um I believe that there could be a thesis I could be a synthesis between The sovereign currency system and the blockchain And and what would that look like and well it would look like it would not look like cbdc Cbdc you have to understand in the context of Libra Um central banks didn't like Libra and they don't want any challenge to the sovereign currency You also fully recognize that The money issued by the the central bank To the to the citizenry Is being used less and less And that's why the thought process is well, let's have a cbdc. Let's put central bank money in digital digital form And that's one way of protecting the sovereign currency system Well to to my mind That's a very narrow frame Of analysis because the fact is that most economic actors don't only use central bank liabilities They don't only use central bank money for most of us We use commercial bank money or PayPal money It's all regulated. It's all sovereign. It's all a liability of a regulated institution and and the question that I asked myself was If we're going to adopt blockchain technology in the Sovereign currency system, why would we limit the scope to central bank money? And so the idea of regulated liability network is You have to imagine that there is uh, some kind of shared ledger some kind of blockchain And in that blockchain What kind of money do you put in it? And the money that you put in it if you care about upgrading the sovereign currency system is Central bank money commercial bank money and e-money And in the future if stable coins are properly regulated, you could even imagine stable coins being in that network So the regulated liability network is the idea of A common infrastructure a common substrate that can process the liabilities of different regulated institutions But it's important to Understand that this is this is as much a legal structure As it is a technology infrastructure So this shared ledger this blockchain Needs to operate in the context of what's known as a financial What's known as a financial market infrastructure? A financial market infrastructure is a regulated value transfer system And the reason why it needs to be inside an fmi is because this thing this Payment system needs to be able to achieve finality of settlement And finality of settlement is a legal construct It's not a technology construct construct. It's a legal construct and that legal construct is brought to life within an fmi So In blockchain land. I know that a lot of people have this phrase which is code is law And it isn't you know law is law And so if we're trying to bring together the sovereign currency system and blockchain technology We've got to bring together the code and the law to make Um, you know make a unit make a structure that works together hand in hand the technology and the law So this is the the idea of the regulated liability network What it really is is a change of the structure of the databases so Just you know go with me on this journey in the 19th century You had lots of different banks and they had paper ledgers So if you went to that bank and you gave them your deposit They would write in their ledger i.o john smith a hundred dollars And then in the 20th century computers were invented relational databases were invented and so Each of those institutions they scrapped their paper ledgers and migrated their record keeping into Data centers and relational databases in those data centers So that's when you you get this market structure or this database structure where You've got 20 25 000 banks on the planet And every one of them have got their own data center and inside those data centers are their proprietary books and records And that's where we are today and then payments are made by sending messages between those different islands of data In this concept of a regulated liability network We have a shared ledger And and that's the that's the key difference between What we have today and what we have in regulated liability network is a common substrate Which contains tokens That represent the liabilities of the participating institutions and all of those all of the participating institutions are regulated So there's no bitcoin on this network. I'm afraid there's no unregulated stable coins Everything is a liability of a regulated institution And then if we move to the next slide and this will be the wrap up. I'll I'll tell you about The the proof of concept we're doing in the us. We're doing proof of concepts of this idea in other places as well But before christmas, we announced a 12 week proof of concept That's involving um 10 of the largest banks in the us. My slides have gone a bit crazy. The names of the institutions are not appearing You can find them on the internet because the crash release was issued I put them out on the on my You know email It's okay It's fine. Good. It's fine. I mean basically we've got 10 of the largest institutions in the us. We've got the new york Fed innovation center participating in simulated transactions on this regulated liability network concept um, I cannot give you a preview of the The results, but they will be coming out in early may and I think we've made some very interest We've drawn some very interesting conclusions about this paradigm shift from moving from a situation where everyone's working on their own proprietary ledger and database to having this shared space And we've explored the possibilities of using this shared space For for the settlement of transactions between the participating institutions There may be further work for the proofs of concepts. We'll talk about that in the papers when they're when they're published Um, but I guess if I if I can summarize You know what we've been Trying to do in this work Is to ask yourselves whether we can take shared ledger blockchain technology and apply it to the regulated financial system In a way that upgrades national currency now. I I perfectly understand that there may be people on this call Who don't think that's a valid project who might think it's a frankenstein's monster Who think that actually we need an alternative to the sovereign currency system And not an upgrade to the sovereign currency system Um, but that's not my that's not the plow. That's not the furrow that I'm plowing. That's not the direction that I'm I'm working on As you might understand I have been working for a bank um, but I I do think there's more to be investigated into this intersection between The the best that blockchain has to offer and the good parts of the banking system And I think with that I've spoken for long enough and I'm happy to Um, open this up to questions and comments and you'll excuse me for one second if I turn off the camera and Have a sneeze just a second But you can turn off Tony's When Tony's sneezing You guys should prepare your questions and of course do not hesitate to ask any questions And when the questions from the audience are exhausted when and if I obviously will intervene and ask some questions but I wait for you my co-participants To drive this forward And and feel free to turn off the presentation now and if people feel like coming on camera to ask a question then That would be nice to see you All right here. Uh, looks like bobby's raised her hand I'm going to turn turn off the um presentation Um stopping the share And I can see now the whole Panoply of participants jim and bobby bobby, please Hi everybody, um, I just want to say this is a lot to get your head around It's a magnificent concept huge My question, um, I guess might be a little preliminary but that central Blockchain that everybody's going to be registering the liabilities on how do you see that being governed? Yeah, that's a great question bobby. Um It would have to be governed within and within the context of an fmi Um, there are other large-scale fmi's out there For example, there is um continuous link settlement is a good example. Um, there are many others And those fmi's have to follow rules called the principles for financial market infrastructures That covers the the full gamut of requirements. So the governance is kind of The guidelines for the governance is set up in the principles for financial market infrastructures um now Um The scheme that we imagine is a multi currency scheme So we'd have to be we'd have to have a college of regulators meaning multiple regulators working on it Um, but that's that's a scenario that we've already seen In the example of cls, which is an fmi In the foreign exchange market Now money is asked a question on chat Uh assuming all uh legal technological hurdles are met When would you think a first commercial test net could be built? Um, we've I mean, we haven't got anything live yet. We've got sandboxes. Um, I would say within about three years I mean building an fmi takes uh, it takes years He's talking about a commercial test net. He is he's not even asking about a A commercial test net in the sense. Yeah more than just the participants Who are now registered? I am speaking for money, but I think that's where he's going meaning I know that he you know, he operates a company that has That you know, a small player but very significant player Otis digital and uh, you know, he's been building stuff So he wants to participate obviously If such players have to enter the market, I have to test This concept they have to be allowed in because the 10 biggest banks by themselves Or the 10 biggest players in the payment space Probably will make some Basic mistakes. Let me put that right Yeah, I'm sure you're I'm sure you're correct and um, I think in future stages of work We'll try to be more inclusive of um, other technology partners and other ecosystem partners um, I think very importantly At the moment the sandbox that we've created is based upon a private permission ledger now Look, I think um, this is one of the fundamental questions which is Can we get to the stage where? Regulated business operates on a public network And this is going to be a journey If you think about this from a bank perspective Then using a public network like ethereum Is evaluated like an outsourcing So, you know, if you if you imagine if let's say that you're sitting in city bank in the it department and you say Hey, you know what it wouldn't be great if we closed down all of our data centers and we used aws Then Yeah, it might it might be great. You might save half of the costs of running the bank Um, but you have to go through something called third party risk assessment And you have to figure out whether you can you can move your applications onto aws in a safe in a safe manner so at the moment It's very hard to see how a network like ethereum would Pass muster on on third party risk management or outsourcing requirements that a regulated bank has um, but nevertheless that the question is Imagine in the future that you know real business Migrates to ethereum. I mean be real b2b business and it becomes a commerce platform And in in that future the the money needs to be where the Where the clients are the money needs to be where the transactions are where the real transactions are and so my personal view is that we're at this stage where Private permission is Safer play for the for the banks to investigate in but probably at some point in the future It needs to migrate to to public networks, but there is a point at one major major issue I mean can can you imagine Can you imagine That it's acceptable it would be acceptable for a bank like city bank to be on ethereum And for city bank to be paying gas fees That end up with a north korean validator I mean absolutely not Absolutely. Yeah. Yeah. I mean, I don't think he's asking that question. It's just a very simple thing, which is Basically, when will a commercial testament be available not ethereum not, you know, we're not talking about Public versus private or anything like that. I mean, he's just talking about his own Reality, which is he could but he could contribute Yeah to this In the regulated space, but since he's a small player He you know, anyway, we can go to the other question. Yeah, this is the question that If anyone's interested to know more then please have a look at the white paper of the regulated liability network dot org Has the white paper and reach out to me and we can discuss potential future collaboration but I thought it was I thought it was important to And use that opportunity to to point out that this leap to public chain for the regulated sector Is quite difficult to achieve true um now Jim Mason who now I believe works for dtcc Is raised his hand, but he has also Pushed out a couple, you know a few questions Here, I think the one question is can you discuss the difference between the digital asset? You know prototypes on the fmi's versus the unregulated Define networks of today, but before we go there. Let me tell you that digital assets Was the one who contributed the name hyper ledger Because When they first formed it was, you know, they acquired a company with the name hyper ledger And hyper ledger itself I mean digital assets were a member of hyper ledger, and I don't know whether they still are but group masters was One of our prime movers right in the beginning. So I just wanted to remind you that we have impeccable Credential impeccable sort of provenance Uh, and maybe you didn't know this but this is what why I'm saying it but anyway going back to the Uh difference between the dam product types on fmi's versus the unregulated defi networks today Yeah, Jim, I don't want to make the same mistake and and not answer your question Do you want to do want to ask a question? Yeah, sure, uh, so I've sat on both sides of this So, you know, the defi world has been around a lot longer than I've been in it I'll say so my my nephew's actually a committer on the bitcoin network He actually writes the libraries for them. Um, so, you know, that's so in our own family were split. Let's put it that way It's it's like a personal war. I don't give him Christmas gifts. He doesn't give me Christmas. So we're we're fair that way Yeah What's but you've made a few points and I've been in this space and I probably spend most of my day every day working in this space and What's there multiple I'll put initiatives that are going on and rln is one of them obviously the cvdc multi cvdc Sorry swift cvdc project last year was another one too and there's other ones as well But but I will say what one of the things that separated rln in my mind from some of the others I think the concepts behind it weren't so different than the other ones What really separated it was more how it's evolved as a model So to me and I I missed the first part of the session here Maybe you might have pointed that out a little bit But I think one of the things about rln that's different is yes, you know City was alcohol prime driver to the whole thing But you've evolved it to the point that it's an independent organization Which is really one of the critical things That's needed if there's 10 critical success factors to make this thing happen, right? That was one of them. And so, um, you know, that's that's a very good foundation To build on going forward. So you're you're right that you're wrapping up your First phase poc this month and you'll have results in may and kind of like the swiftening I'm sure there'll be additional phases on it and back to Manny's point. I'm sure later phases will look for broader participation as well And it's not a quick thing But if I had to as a Like somebody who sits on the sideline and watching football games and placing bets My bet is it's living in the world of regulated finance It's infinitely easier to take regulated finance and make it efficient and a more open model Easily than it is to go the opposite route and try to make bitcoin I'll put regulatory compliant every jurisdiction that it participates in and offer all the flexibility For settlement and participation I think I have to give Jim his own presentation Yeah, do so You know one of the so I could be being gone No, no, um, because he hasn't asked the question. That's why I'm saying that No, I'm sorry useful. I was pushing back front. Tony actually specifically around the evolution of the rln model itself because I think that's actually a pretty important thing and I I I'm sort of grading it in my opinion. That's more of an a model Approach to the problem than some of the other projects that have been trying to do the same thing So if I actually looked and said here's Libra and here's rln I would say wow What a difference in terms of the establishment of a foundation that could move forward versus one that sort of never had a real shot My dad of the box Yeah, that's true. Jim and um, I'll share with you a small it shouldn't really be a secret but And you know ever ever since the even before even before blockchain came along You will you will not imagine you cannot believe the number of approaches and pitches that I've gotten over the years where The core pitches this Hey, wouldn't it be great if everyone in the world used my platform? How how how much efficiency there would be if only everyone would use my platform? And here's the hundred reasons why my platform is the best And you know when you when you lead with that argument, which is hey, wouldn't it be great if everyone used my platform? um, that that's not the roads to adoption and so In rln in rln the road that rln is designed to maximize adoption and that's why rln is technologically neutral the rln concept could work on um any Private or public dlt the rln concept frankly can work on an oracle database Because really what we're seeing is let's have a shared ledger And that can be implemented in many ways so that so one critical thing is Adoption is the whole of the law yeah Absolutely, and so the funny part of it is there are all these what I call Different dimensions to in a sense the monetary challenge if you will For everything for assets settlement the whole thing all these different dimensions You've mentioned some of the dimensions here the other thing that's really interesting too And we're doing the same thing is everywhere I go All I do is I rip out what I call technology So the stupid thing is I'm a dlt architect. Now, what do I do all day long? Say tony give me that paper Get rid of dlt what but it is no no we're gonna throw it out So I'm the one I'm like a dlt policeman here. So no we can't use I don't use the term hyper ledger I don't use dlt all that stuff stricken from all these documents. They're going but but but I'm like no I am with dlt cop here And so the the reason I'm getting rid of it is we have to be as you say capability focused not technology focused And so I I say things like if you want to put in the concept of shared ledger That can be implemented anywhere you want and it can actually have multiple interpretations But when you start telling me it's dlt you've locked me into something that shouldn't be there So that's a cop is issue tickets to people who are violating Protocol on that stuff We've got a meeting of mines Jim and I think also if you're if you're a dtcc then Let's have a chat because one of the future directions for our own is multi asset and We're very interested in things like the triparty repo market. So Maybe we should have an offline chat Sure, so thank you It looks like mark is mark liberati who's Probably from the other end of spectrum But he's definitely Got a question and I wanted to give him a chance Mark Yeah Thank you. Thank you for being and thank you cheney very much for this presentation I was just thinking I'm in a bit building on Which I'm just said on the capability functionality looking at these other sort of big picture Digital initiatives that really could you know to align with what you're trying to overall accomplish and I was thinking particularly about self-solving identity Decentralized identity digital identity in general Yeah, sort of how you're taking this into your Into your plan going forward over. Thank you mark. That's a that's a great a great question and one of the So one of the things that is in the design of rln is there are no bearer bearer instruments um I don't like In the in the financial system We've been trying to get rid of bearer instruments for the past few decades Um, if you want to know about the danger, I think the best illustration of the danger of bearer instruments is the movie diehard Um, you know, if you think about the end of the movie diehard where this guy who was pretending to be a terrorist He was just the thief and he was breaking into the safe the What was it the nakamoto tower? I can't remember but anyway inside the inside that safe were a bunch of bearer instruments And that just illustrates that criminals will do whatever it takes To get their hands on bearer instruments so in in rln, we don't have bearer instruments the The tokens represent the liability of an institution towards their own client Now the only way we can break out of that paradigm Is if we have the solutions that you're talking about mark in terms of the self-sovereign identity to verify credentials I believe that that's something that jp morgan used in their project guardian in in singapore um, but if there's a if let me just make it very clear If city bank were to issue a token on ethereum It cannot be that that token is used by a russian to avoid sanctions. It cannot be And that's the danger. I think with the current paradigm of stable coins the issuers do not know the end user And and that is a very dangerous. That's an extremely dangerous situation to be in We are talking about bearer instruments the most Commonly used bearer instruments to avoid all this is the u.s. Dollar And in fact, there are Off the coin off the notes in circulation Maybe 60 to 70 of them are outside The u.s. And probably being used In in certain ways Yeah I've got a response to that point because I hear that point a lot, but there's a Hold on. Hold on before before we go on I'm going to say that we can extend this call by a few more minutes uh, unless somebody else Comes along to claim this very spot. So go go ahead try Yeah, I mean I hear that I hear that counter argument a lot And it there's a But there's a clear difference and the clear difference is that the u.s. Dollar is issued by the nation state And presumably they know what they're doing when they issue that instrument now The the nation state Well, hold on. Let me let me complete. Let me complete my thought The the nation state Issues the instruments that it wants to issue under their sovereign right to do so But what you can't have Is a private mint coming along without a license and issuing their own u.s. Dollars um in the same way that And I'll give you this this, uh, you know tech just because you can do something from a technology perspective Doesn't mean it's legal. So when laser photocopiers were invented It made copying u.s. Dollars easier It didn't make copying u.s. Dollars legal And so a dlt Is a kind of digital printing press It might enable you to print your own u.s. Dollars, but it doesn't make it legal true um What I was saying when I said no, I'm sorry, uh, I interrupted you but what I'm saying is basically These are emergent defects Nobody knew that the u.s. Dollar issued in whatever started issuing, uh, you know 1930 1930. Yeah Yes, before that there were you know a wide variety of them But nobody even uh posted to that 60 percent of that would be so similarly I think that the the thing with technology or the thing with something that is out of the box is that It possesses emergent properties Yeah, and and we cannot sitting here say what what is the so that's why I said no Because yeah, I think that uh, anyway, uh, so I think Money is asked the question again about About jpm coin, which you just briefly touched upon guardian thing Uh, and I had written about it when it first came out. Maybe it was What 2017 2018 2017? Yeah I mean jp morgan, I I really acknowledged their contribution with you know Because they actually took the trouble to do the basic work on quorum and jp morgan coin They've they've they've done a lot of developments on that but At the end of the day A coin issued by a single bank is a casino chip Meaning it only or A disneyland token if you like Meaning it only works within one institution And that's not a market structure that is uh, it's desirable So you can you can think about our len being a multi bank jp morgan coin Or an interoperable network of of coins that are like jp morgan coin But it cannot be the end destination To have each bank issue their own coin as a proprietary instrument So we have um A couple of other Questions, but mostly around the same or similar type of deal, uh, so the The thing about Um, you know the bright line between these two um Types of systems. This is me now asking a question. Yeah, which is uh My observation is that stablecoins really are a uh frankincense monster like you said So in a sense it is the bridge between Between the undead and the dead and the living Yeah, or the Whatever whatever whatever bright line you want to uh want to draw if this is some kind of a Some arch over these two types of systems So in a sense, I I feel that there is a continuum being created not not a compartmentalized system, but Some are more like the others than the other, you know, some of them, you know, so yeah, it's a You're You're right, but you know, obviously in the crypto winter you had the resurgence of the of the bitcoin maximalists and um, I have to say I mean I kind of respect more the people who are in firmly in one camp or another You know, if you go back to the the original bitcoin white paper where it envisages a world without intermediaries I mean is the crypto ecosystem a world without intermediaries? It is not. I mean Talk about rent seeking Yeah, you know intermediaries so I think I've got I've got more time for the actually I've got I've got more time for the bitcoin maximalists Sorry, hold on. Hold on Hold on, uh, journey. I think I for some strange reason muted you No, that's so that's quite okay. It's another you you've got the power No, no, no you that's censorship and this is against the philosophy um But look, I was just saying that I've got more time for the For the folks who are ideologically pure in this and if you believe In the bitcoin thesis or the, you know, Vitalik's vision for ethereum then At least that's driven by a kind of intellectual purity and it's not just about making not just about making money um, so I'd rather people were in I think some of these things in the middle are frankenstein's monsters that cannot be saved um And yeah, that's my that's my view on that one um, well, I have to counter with with something which says that Engineering is all about compromises in the end Because it's not the the purists uh, cannot exist in a dirty world because the world is not You know, it's organic and it doesn't mean that there's something lacking in the world But it's just that it is it is not a mental construct and abstract But that's true. That's true. But some some hybrids work in the world and some hybrids don't You know, I duck I duck and uh, you know a duck and a goose may be able to Produce a successful offspring, but I can't a dog can't Yes, that's true. Um, now the other Thing is you said that the ultimate, uh, you know counterparty is central bank Um, it depends on which central bank Yeah, central bank of zimbabwe is a little less of a Sound counterparty than Yeah, say the central bank Uh the of britain Yeah, you know again shades of You know not like a white but gray That may that may be so but you but What what right do outsiders have to impose? Uh, or provide an alternative to to to the citizens of zimbabwe The the the citizens of zimbabwe and the government of zimbabwe is sovereign in their own jurisdiction And so what right does an outsider say hey? I'm going to provide an alternative form of money to the citizens of zimbabwe Now the the zimbabwe government like them or not Um have the perfect sovereign right to resist attempts for their for their currency to be debased And uh, you know, so so I you know, I would I would respect the the sovereign rights of um any nation states to um enforce Enforce their sovereignty That's true, but the citizens of zimbabwe obviously uh will find other methods to uh either store their value or to make payments Because they do not you know, it's it's in the end. It's a rule of law question And it's whether you trust your counterparty whether you are inside the country A citizen of that country or not Yeah, they'll they'll you know, so there's more adoption for example for bitcoin in They say in Nigeria in Africa In general because of the quality of governance Yeah, because the citizens are Bound to do this they they don't mind bending the law to so again coming back to practical reality Yeah, it's a concrete thing Yeah, so we might end in another four or five minutes, but If you have uh, you know, if before you close I would uh Urge you to have either you or somebody else present on this finished prototype finished, uh, you know, our land findings on this channel if possible Other than that, you know, does anybody else have any other questions? um, I do see Some people talking about Uh, you know, mostly it's not questions. It's statements, but that's fine um Dan You have something to ask Please you haven't unmuted then Sorry about that. Uh, so, uh, interesting very interesting talk. Thank you very much um Curious so from looking at this from capital markets perspective, uh, obviously settlement payment is critical, but So much of capital markets is really shared ledger In odyssey drivers are a great example collateral another It goes on settlement of securities and so on and curious whether So there's an obvious use case for shared ledger um in capital markets Whether people are ready to acknowledge it or not um curious if there's been the beginnings of um Prototyping thinking about how this might evolve um In that way, it's it, you know similarly constrained market. We don't let everybody play Yeah, absolutely. Dan, you know, I I would say that um Again adoption is the whole of the law So So many so many of these Um proposed ecosystems like I mean we we just saw trade, you know trade lens Collapse and Other projects have collapsed so so many of these projects come down not to technology but to adopt to adoption sure And and I and I think whenever you lead with technology and whenever you turn up to an adoption fight with a technology knife You lose Yeah So capital markets have is obviously one where You know Number one you get loads of different technologies driving Which are you know, which are vested interests trying to establish their new infrastructure Thanks nothing So You know clearly I guess the industry has to drive. I was I think you can translate my question is city would be a material participant in the industry driving Are you aware of those kinds of initiatives which Look like they could be the source of some momentum Yeah, I mean I I would look for the use cases that have the biggest potential delta benefit So in rln phase one, it's cross border payments in us dollars in rln phase two It may be triparty repo. It may be intraday repo. It may be intraday effect swaps um, so I I I tend to focus on the On the places where there's the biggest potential delta delta benefit And when you see these reports coming out in in may you tell me if we've identified the big delta benefit I think we have I think we have Last question would obviously be one. I think I'd see derivatives in other Yeah, but please let you know that let's have a conversation offline take it forward Uh, the last question from uh money Who has got his hand raised so I'm going to defer to his question right now Yeah, um, hi, johnny. Thank you again The just want to one clarification with respect to jp morgan coin versus the recent paper on deposit coin Yeah, what's the nuance between those two? I I think simply that jp morgan coin is an instance of a deposit coin You know that that paper on deposit tokens was written by oliver wyman with jp morgan and I think what they were doing was promoting the idea of a token that represents a bank deposit So it's just the generalization of the jp morgan coin And rln is a generalization of the jp of the jp morgan coin concept as well Um, so yeah, that's the that's the that's the context for that one Yeah, we definitely would like to follow up with you as we've been pointed out. We have been working on on security tokens Regulated security tokens for the past four or four and a half years working with players We'd like to you know show what you have and how we can you know be a participant in in your future Absolutely, please please reach out. I mean, I think one if I can just close on this one final comment Which I I think is a is a deep and important point which is a legal instrument Is independent from the technology used to represent it So again in the 19th century, we wrote down these legal instruments on bits of paper And then in the 20th century, we wrote them on relational databases And in the 21st century century, we might write them on a different kind of database, which is a shared ledger But through that through that technology progression, the legal instrument is the same Is the is identical And there's no reason that you need different rules for putting a legal instrument onto a different technology. So Again, I think one of the one of the ways you synthesize between these worlds Is you move beyond this idea that code is law. It's not law is law and code is code And we have to find the synthesis between them. That's how we move forward On that wonderful note We go back to the Sumerians with their marks on the clay tablets which represented the first ledger and then We also come to the code is law and our thesis my thesis which I've sort of put forth as a paper is If code is law, then law should be code Using an autonomous system to control another autonomous system is a very old engineering concept the governance of uh, you know car speeds to You know all kinds of stuff. So, you know, including today's circuit breakers in equity markets, they are all Automated, I mean no human can react in the Speed at which so we have a whole thesis on that money and I also have written a pretty comprehensive paper on CBDCs, okay, and And furthermore, we created in in 2020 a wholesale CBDC in hyper ledger labs called etalar Okay, which which was presented to you know bank of england world bank And they all thought it was fantastic. But of course we are just small players. So You know, it just fell by the wayside But it is still alive and we are going to take it forward probably but Thank you, Tony for showing up and You know in the midst of a great personal Struggle, yeah Yeah, and it's very great to hear you and You know have this discussion this debate Yeah, hopefully by May or June You know, you can also send a Delegate, but someone has accomplished as you Thank you. We've been I appreciate the opportunity and thanks everyone for the engaging discussion Thank you very much very much. Appreciate it. I enjoyed the session. Thank you Thank you, and this recording will be available both On our site and on youtube Normally it's streamed, but Today we couldn't do it Thank you. Thank you again. Bye