Follow Our Podcast
Recent Episodes
A massive boost to the financial system
New technology offers a massive boost to the resiliency, accessibility and transparency of the financial system, says Alex Batlin, CEO of Trustology, our guest in the latest New Money Review podcast. Centralisation and its drawbacks “If you have centralisation, you have risk. There’s always a trade-off between the efficiencies of centralisation and the risk of a single point of failure.” “If you submit a transaction to a central database, it’s very difficult for either party to prove who made the transaction. Was it the service provider who is responsible for entering the record of the transaction? Or was it the end-user? The end-user can claim there was an error and blame the database operator. This is why I got excited by blockchain. In blockchain, users sign transactions cryptographically with private keys only they possess. This gives the properties of non-repudiation and integrity: you can prove the transaction has been signed by that individual.” “So far, settlement has always been done by a central authority. Therefore, you need to trust that authority. Two parties who don’t know each other are not prepared to hand over money to each other, but they are prepared to hand it to a third party like BNY Mellon.” Blockchain and smart contracts replace trusted third parties “Because blockchain is decentralised, it’s extremely resilient.” “Blockchain enables you to create a trusted third party virtually, by means of a smart contract. We’ve never had this before.” “Under blockchain, there is no trusted third party in the traditional sense—an entity who does things for you. The trusted third party becomes the smart contract. So now you need to trust two things: that the network of transaction verifiers which powers the smart contracts is performing as wanted; that the code of the smart contract is correct.” Blockchain gives massive cost savings “To issue a new utility token to power a network you’re launching, you can write a smart contract on ethereum using the ERC-20 standard. You can buy that off-the-shelf for £25 and deploy it on the blockchain for less than a pound. You now have a global token that can be used anywhere. In the old financial system, to issue a security you have to talk to DTCC, the custodians, investment banks and broker-dealers. This would all cost millions of dollars. It’s a completely different cost profile.” “You can put a lot of business logic in a token to guarantee that only the right people are allowed to use it. And baking the logic into the token is a lot more efficient than relying on third parties to enforce rules.” The new settlement paradigm “Once you’ve issued the token, if you want to swap it for something else, say ether, you can also do this by means of a smart contract, rather than using a settlement agent.” “Currently, most securities settlements are batch-based. It can take as long as five days to settle a transaction, for example. In ethereum, most settlements take place within 20-30 seconds. Some people like the old system because it allows them free credit in the period before they have to settle.” Positive outcomes “We are massively improving the resiliency and auditability of the financial system.” “The technology is global and instantly accessible to anyone. That will lead to global liquidity pools, where the real power is going to be.”
Big Brother hasn't won—yet
Governments and big tech firms now observe all our activity online and can both predict and influence our behaviour. But some technologists are fighting back against the assumption that these unaccountable powers have the right to spy on us—and, in extremis, to take extrajudicial and violent actions against those they consider enemies. In an exclusive interview for the latest New Money Review podcast, Dave Hrycyszyn, co-founder and chief technology officer at Nym, talks about the battle for internet privacy in an era of mass surveillance. Hrycyszyn has founded, built and sold several technology companies. Most recently, he was chief executive at Chainspace, a company acquired by Facebook in 2019 as part of its controversial project to develop a new internet currency called Libra. Late last summer Hrycyszyn joined Nym, a project focused on developing better privacy technology for users of the internet. According to Nym, the prospect of having any privacy online is disappearing at an alarming pace. It points out that even privacy-focused digital messenger services like Signal, which encrypt the contents of chats, can do nothing to prevent metadata—which identify the timing, sender and receiver of a message—from being exploited by powerful third parties. In a world of big data, says Nym, this metadata is even likely to be more valuable than the contents of messages itself. This is because metadata can be used by sophisticated analytical systems, such as those run by government spy agencies and large tech firms—to determine the nature of your social relationships and thus predict your personal behaviour to a high degree of confidence. According to Nym, the technology necessary to guarantee online privacy has remained underdeveloped because of historical limitations in computing, networking, research and funding. But, the firm believes, it’s now possible to overcome these limits and deploy technology that provides strong privacy guarantees, avoids trusted third parties, and is resistant to surveillance. In a wide-ranging interview with New Money Review editor Paul Amery, Hrycyszyn talks about the technological challenges involved in ensuring internet privacy, the pros and cons of full online anonymity and Nym’s ambitions to provide a broad range of privacy tools, starting with those for cryptocurrency transactions. Here are some excerpts from the discussion: Privacy and the internet “Some of the privacy problems of the internet have been solved. Others are still to play for.” “If you own the physical infrastructure that underlies the internet—the linked computers and the wires between them—you can spy on what’s going on. Technologies like SSL can put a layer of armour around that connection. But it doesn’t protect against metadata.” “For the foreseeable future, a large fraction of our communication is going take place over computer networks. So the question of the balance to be struck between surveillance and privacy is going to be a live one for a very long time.” Metadata and Big Brother “The metadata is the set of information about the internet conversation: the time it took place, who it was sent from and to, and so on. You can infer things from the network traffic.” “When the idea of a global passive adversary was first described to me, 15 to 20 years ago, I thought, ‘This is crazy, no one can possibly do that’. But as a result of the Snowden leaks, we know that this is in operation right now.” “A privacy technology like TOR can be deanonymized if you can link both ends of the connection that’s being made between your computer and another computer. If a global passive adversary is recording the whole internet, it’s very clear who was talking to whom.” “I’m not a fundamentalist about internet privacy. But after the Snowden revelations, I had a real sense that the social contract had been broken. And it had been broken by the global passive adversary. We find that people at the NSA are now saying things like, ‘We kill people based on metadata’.” Fighting back with mixnets “A mixnet is a way to defeat the global passive adversary. It chops up your network traffic into layer-encrypted packets that are sent to a mixnode to be mixed with other people’s packets, then to two more mixnodes to be mixed again. It’s the strongest network anonymity technology we know about.” “If you don’t have network-level privacy, you’re lost from the beginning.” On Nym “Our first goal is to anonymise the world’s cryptocurrency transactions. That should give us enough of a base of users. But our ultimate ambitions are much bigger than that.” “We are not tied to any particular blockchain. We’re attempting to build an incentivised infrastructure that will allow people, through micropayments, to pay for privacy-preserving systems.” “Our token-anonymising technology could be used to anonymise things like medical records.” “The idea is to have an incentivised system where, as a node operator, you are rewarded for taking actions that help people’s privacy, but you are penalised for poor quality of service.”
The spirit of innovation
Money is undergoing unprecedented change: around the world, we see new ways of paying each other, new stores of value, new ways of recording economic activity and new forms of exchange. But how surprising is this period of upheaval? From the wheel to the loom, the steam engine to electricity and the computer, human history has witnessed regular, intense bouts of technological progress. Are there particular factors that lead to a spirit of innovation? Anton Howes, our guest on the latest New Money Review podcast, is well-placed to answer that question. Anton is historian-in-residence at the UK’s Royal Society for the encouragement of arts, manufactures and commerce, which is nearly 270 years old. Before that he was a lecturer in economic history at King's College London. His specialist subject is the three-century period of English history when the country switched from being a ‘godforsaken backwater’ off the north-west coast of continental Europe to playing the leading global role in the industrial revolution. Listen to the podcast to hear Anton’s views on the following topics. What is innovation? Why Elizabethan England lagged in agriculture and industry How an ‘improving mentality’ came to England Institutional support for innovation The role of royal monopolies and early corporations Great exhibitions, world fairs and international competition Copyrights, patents and innovation
China's blockchain--for whose benefit?
Everyone outside the country is expecting the arrival of China’s new sovereign digital currency. President Xi has recently been singing the praises of blockchain technology, the infrastructure for the new money. But how the story of China’s blockchain plays out is likely to depend on internal political struggles, says Scott Weatherill, our guest on the latest episode of the New Money Review podcast. According to Weatherill, chief risk manager, Japan for cryptocurrency market maker B2C2, the version that’s about to be introduced for China’s 1.4 billion people should be seen as part of a new anti-corruption drive by Xi. That’s because the new blockchain will enable the state to supervise every single financial transaction in the country. “This is all coming from Xi’s push to enact very difficult reforms that are going to cost a lot of elites in China a lot of money,” Weatherill says. Beijing knows what it has to do to rebalance the economy, says our interviewee—it needs to move the country away from too heavy a reliance on investment and get ballooning internal debts under control. The central authorities might also reap a political dividend. “The idea is transfer wealth from local governments and local elites back to blue collar workers and the poorest people,” Weatherill says. But Xi is facing political obstacles. “Why can’t they do it? Because there are vested interests throughout the various layers in the state-owned enterprises in China’s state capitalist system,” Weatherill says. The discussion then moves on to cryptocurrencies’ role in helping capital move out of China, bitcoin’s liquidity and market prospects for 2020.
What is money laundering?
Neil Walsh, head of the Cybercrime, Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Department at the United Nations, gives an exclusive interview to New Money Review. Our discussion covers: What is money laundering? How much money laundering is there globally? What is the difference between the UN and the FATF when it comes to perceived illicit financial activity? The relationship between crime, terrorism and cryptocurrency How have governments responded to the invention of cryptocurrencies? How significant is the role of cryptocurrencies in money laundering and terrorist financing? Efforts to improve the transparency of ownership of companies and trusts Is the UK an example of best practices in money laundering or the main global promoter of financial secrecy? On competition amongst jurisdictions to offer financial secrecy via corporate and trust structures What is the role of NGOs and journalists in helping to combat money laundering and cybercrime? Dealing with the kidnapping of cryptocurrency tycoons Successes in combatting online child sexual abuse
POWERED BY BLUBRRY
