LONDON, UK — Participants at the second Crypto, Fintech & Banking Meetup at LIBF last week wanted to know more about bitcoin limits, tokenization and what the blockchain tax looks like.
Together with the London Institute of Banking & Finance (LIBF) and LendIt Fintech, a group of newcomers and Web3 experts have come together to share their knowledge.
Bo Bruskern, CEO of LendIt Fintech, opened the session. He discussed plans for LendIt Fintech, including the flagship event Merge October 17-18, 2022, the premier conference and expo dedicated to the impact of Web3 on financial institutions and how to leverage this change to gain competitive advantage.
He introduced the guest speaker Connor Svensson, founder and CEO of blockchain technology company Web3 Labs and host of the Blockchain Innovators podcast. Svensson is also the author of The Blockchain Innovator’s Handbook: A leader’s guide to understanding, adopting and succeeding with this disruptive technology.
Brustkern was eager to create an environment that embraced a pragmatic view of Web3, promoted education, and positioned discussion as “conversation rather than lecture.”
Svensson explained that Ethereum emerged due to the limitations of bitcoin. Ethereum, like bitcoin, is built on blockchain technology – essentially a distributed computer network that records all cryptocurrency transactions. But unlike bitcoin, people can build applications on top of Ethereum, such as tokens, and smart contract applications like DeFi and NFT, so it works better for an IT environment.
So, when bitcoin was created, there was not much competition, whereas now the environment is more competitive.
Even for Web3 pundits like Svensson, it can be hard to keep up, though he points out that Ethereum still has a “first-mover advantage,” and other currencies haven’t yet done enough to change people’s interest.
Brustkern added a definition of layers as understanding Ethereum would not be complete without it.
He told the public to think of blockchain as public ledgers collecting information in the form of data. Humans are layer zero; The core blockchain architecture is called layer one. Layer two networks can be thought of as overlay networks. A layer two solution (ethereum) integrates a third-party programming language into the leading blockchain network.
The layer one solution (bitcoin) modifies the base protocol, while the layer two supports the base protocol with off-chain solutions or protocols. The ultimate goal is to make the user’s experience seamless, so they don’t even think about those layers in the background.
Tokenization (emerging markets)
When discussing tokenization, Svensson recalls a tweet he once read: “Tokens are to Web3 what the Internet was to Web One.”
He said the purpose of utility tokens is to appreciate. This value is created by the usefulness, objectives and underlying cash flows.
The ultimate goal of a utility token goes beyond the individual to further the achievement of an external good, bringing benefits to many people, he said. And although there is a lot of speculation, the purpose of a token is to represent something like membership, ownership of artwork, or could in the future represent the deed of ownership, etc. .
When you think of emerging markets like LatAm or war-torn regions like Ukraine, you can see the innovation happening in how tokens can democratize finance for these populations. For example, Svensson said that one of his employees who fled Ukraine does not have a bank account in his country of residence but is paid by Binance.
Brustkern added that Colombia’s economic situation is another example. Allowing people around the world to have flexibility in where they store their money could reduce corruption and protect them from inflation.
Brustkern also said that this tokenization could be “a renaissance” for the music industry, allowing artists to have more power and benefit from their output.
Brustkern and Svensson both pointed out that cutting out the middleman is the biggest benefit and opportunity for creators. Additionally, there were explanations of custodial and non-custodial wallets.
Taxation and regulation
Brustkern said, “taxing the blockchain is super easy” because there are many apps that allow users to calculate their crypto tax, which makes it easier for HMRC or IRS to work because everything is recorded on the blockchain.
Countries have different approaches to welcoming fintech. The UK looks more welcoming with the introduction of the Kalifa Review, the launch of a government that supports NFTs (Royal Mint) and a pragmatic approach from the FCA. In contrast, the US is more cautious, giving the UK a temporary competitive advantage.
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Helen Femi Williams is a freelance journalist and podcaster interested in fintech, politics, economics and their intersections.
Prior to this role, she worked as an innovation consultant developing insurtech and fintech products and ideas for brands, startups and large corporations. She studied International Relations at the University of Nottingham (UK and Malaysia).