Part 2 of 3 — Dan de Sa: On the Future of Finance
Last week, we covered the state of CoinMirror and how the project is adapting to the “crypto winter.” In this second leg of the three-part interview series, we get to know how Dan and the CoinMirror team aim to shape the Future of Finance.
Can you share some thoughts on the Future of Finance and where we are headed?
Dan: We believe the Future of Finance will be firmly rooted in the blockchain. Almost anything that can be tokenized will be tokenized. How this future plays out and whether or not we can fulfill the promise of this technology, remains to be seen. Everyone knows that the Internet has been an enormous democratizing force that connected the world in unimaginable ways. Nonetheless, we have seen how the beauty of this technology can be corrupted as a handful of giants consolidate power and monetize our digital lives and data. The power and promise of the blockchain is analogous, and the path we end up following depends entirely on the stakeholders who build in this space. Will we port over legacy practices of the fiat financial world? Or will we redistribute some of the incumbents’ power and fulfill the promise of democratized access and investing? In addition to the ubiquitous issues I mentioned in the first interview, a critical juncture in the developmental history of this space lies at the nexus of consumer protections balanced against democratized access. Simply slapping accredited investor thresholds onto this new method of investing, does not make sense. Blockchain-based assets enable new means of assessing the appropriate level of financial contributions that an individual can make. We have to recognize that there is a fundamental hypocrisy in certain regulatory approaches — we want to protect the little investor which can limit access to high-yield investment opportunities, yet we legally allow anyone to gamble away their house or child’s college fund in casinos across the world. We have to ask ourselves why this happens, what the new transparency of the blockchain might enable in terms of consumer protections and accurate judgement of available risk capital, and as a company focused on financial inclusion and democratized access, what our role at CoinMirror is.
This all must be balanced with the reality of dealing with regulatory agencies who sincerely have the noble intention of protecting consumers. We are so fortunate to have Rick Chen’s experience and wisdom to guide the CoinMirror team. When Rick co-founded and built Pozible there were no crowdfunding laws. Over lengthy dialogues, Rick and his team shaped crowdfunding regulations in SE Asia and Australia. These are the type of conversations that all BUIDL-ers should be having.
The Future of Finance will likely end up being built on numerous blockchains. We have already seen the emergence of Security Token Offerings (STOs), various methods of STO/Utility hybrid models, and so much more. In addition to this futuristic method of capital raising (and potentially corporate governance), there is also a coming wave of real-world assets and commodities that will leverage tokenization on both private and public blockchains. In the next few years, the already bewildering array of tokens in this space will be dwarfed by a Cambrian Explosion orders of magnitude larger than what we have seen thus far.
How can any person possibly navigate this minefield that is quickly filling with complex products that only financial services professionals can understand. Are we really going to just port over legacy practices onto the blockchain? This is a model where the wealthiest individuals and LPs have access to every asset class and risk profile, and as we move down the chain, we get ETFs and mutual funds for some people, and then literally no opportunities for those at the bottom. What was the point of this entire space if it just to rebuild what we have on blockchains? That cannot be all there is.
Our mantra at CoinMirror has always been to ‘Fulfill the Promise of Democratized Investing.’ Going back to the message that Satoshi hashed on to the first BTC block, the ethos of this movement has always been about giving power back to the people and leveling the playing field. The idea of token offerings means that fundamentally, in theory, anyone and everyone can participate in this space. While working in VC, I was all too aware of the difficulties of not only sourcing high quality investment opportunities, but gaining access to the round of financing. This was usually achieved through leveraging the clubby network of top tier VCs and sharing deal-flow, strategy etc. In theory, tokenized investing has solved this problem, however all too quickly the same barriers to entry surrounding traditional capital raising have entered into this nascent space and unless we do something about it, the promise of what could be, will quickly turn into a massive missed opportunity for the general public.
I’ll conclude with a short sentence from Why Nation’s Fail. It is not a profound insight, but viewed through the lens of what this technology can achieve, I believe all BUIDL-ers must realize the opportunity and challenges before us.
“The powerful and the rest of society will often disagree about which set of institutions remain in place and which ones should be changed.”
Decentralization offers a chance to remake some key institutions and practices, it will be a conscious choice by those working in this space to fulfill this potential.
In the third segment of this series, Dan will discuss some strategies for how we can help turn funds invested via the CoinMirror platform into ‘value add’ money that can compete with well-connected investors and go a bit deeper on the challenges we face on the path to fulfilling the promise of a democratized Web 3.0.
