Insights from UN Blockchain for Impact Summit 2019

By Fusion Product Officer John Liu

I had the pleasure of being a panelist at the Blockchain For Impact 2019 Summit hosted at the United Nations on June 4th, 2019. The summit, organized by UN Blockchain Commission for Sustainable Development (BCSD), brought together over 400 global nonprofits, world leaders and ministers, international diplomats, tech companies large and startup, and financial institutions.

I interacted with innovators and leaders from all over the world, from different industries, with different roles, and left more determined than ever to build solutions with impact.

Through the summit, I learned of innovative companies such as Carmen Benitez’s Fetch Blockchain, leading to discussions on how to leverage Fetch’s land title registration technology with projects Fusion have developing in the Middle East to meet the UN Sustainable Development Goals (SDGs).

Joaquin Lopez, CEO of i4SD, and the moderator of my panel, and I had great conversations over the past few weeks while preparing for the panel, which resulted in a collaboration between i4SD with Fusion.

This type of collaboration, with determination and urgency to build, was the purpose of the summit. So, congratulations and thanks to the organizers of BFI — your summit was a great success.

From Awareness to Action

The biggest takeaway was laid out in the opening remarks by Robert Skinner and emphasized throughout the day by Amir Dossal: They want to build real solutions, and it was an open and urgent call to engage the UN to meet the SDGs. The SDGs are a $30 trillion opportunity (according to UNDP) and UN themselves are not satisfied at current pace of progress. In 2018, UN was focused on awareness. In 2019, UN is focused on outcome. Outside of building technology solutions, I personally am going to volunteer and help in any form of blockchain education that is needed by the organization.

So Many SDGs, so Little Time

As a product professional, prioritization and execution are constantly on my mind. Thus, I’m happy that, true to the focus on “action”, the question posed by the committee to attendees and panelists was: of the 17 SDGs are, which ones are the most impactful?

Quite a few panelists felt that SDG 17 (partnerships) was the most important. Neck-and-neck was SDG 10 (inequality), as shown by the number of panels discussing the very real problem of inequality for women. On the topic of inequality, I’ve made sure in my past organizations to create a diverse team so I was feeling rather pleased at myself. However, when I heard stats that less than 2% of startups funded in US are led by women, and less than 0.5% in UK — I realized how little of the problem I understood. Congratulations to all the impressive women I met and heard from on the panels, and what you have achieved.

Which do I feel is most important SDG? Given my financial background, I am biased but I feel that it is SDG 8 (Work + Economic Growth). Why? Money is not the solution to everything, but it is required to solve basic problems and meeting the other SDGs! Education, infrastructure, health, all the innovative/impactful projects to give people means to participate in the global economy — they require money to build. With proper economic growth and investments, countries can make quantum leaps to make up for past missteps.

Public and Private, Hand-in-Hand

To achieve the SDGs, the collaboration between public and private sector was a recurring theme of the summit. For achieving the SDGs, government buy-in is needed to create the regulatory help, the country-level transformation but private organizations are needed for the innovation. I’m happy to say that Fusion is a firm believer of this collaboration — we want to advance blockchain and digital economy, but not with the “us versus them” mentality.

A great example of fruitful collaboration between government and private was presented in the panel “Federal Government Embrace Blockchain Technology. The story of two governments: Liechtenstein & Marshall Islands”.

Thomas Naegele, President of the Crypto Country Association of Liechtenstein, discussed how collaboration between government, banks, and lawyers was necessary for establishing Liechtenstein’s Blockchain Act. As the group came to the decision that the token economy was a way to digitize every asset, they set out creating an encompassing, flexible, and protective legal framework.

The highlight for me was this statement, which shows how much they get the “right way” to digitize:

“Whatever right that exists in our framework can be presented by a token. If you have ownership rights, you can represent them in the token…and then easily transfer the token from A to B.” — Thomas Naegele, President of the Crypto Country Association of Liechtenstein

This statement shows an asset-first type of mentality, which brings transparency into asset life-cycle, makes it easy to manage ownership, and makes interoperability easy. Side note: I recently met Yuval Rooz, CEO of Digital Assets, who has made very good points to be “workflow/process based”, as shown by their DAML solution. I am still learning, but there seems to be a good path forward to combine the two views, where 1+1 = 3.

Barak Ben-ezer, founder of SOV.global, followed with a great overview of the world’s first legal tender AND cryptocurrency, the SOV. Of the world’s 2,700+ crypto tokens, as of this writing, not a single one is a legal tender so the SOV is really a game changer.

“Crypto is an island, a growing island, that is completely disjoined from the mainland of banks and fiat payment systems. If we want to have impact on a global scale, it is by connecting the island to the mainland.” — Barak Ben-ezer, founder of SOV.global.

The government of Marshall Islands and Barak’s private company partnered to create this exact bridge, the SOV. It’s not a security, commodity, property — it’s legally recognized worldwide as a tender.

Do I believe the SOV, the first bridge of legal tender + digital currency will work? Yes, is the short answer. Within Marshall island, it’s an easy yes of course. That’s the beauty of having government collaboration. Small countries are able to act in “agile” manner and are blazing the trail for digital economy. However, it will take time for the world to catch up.

I am very excited about SOV and have reached out to Barak to learn more how Fusion can work with SOV, such as issuing bonds or creating FX forwards for trade financing, topics which I am quite passionate about.

How Fintech helps with SDGs

So, how can Fintech (in particular, blockchain + digital assets + IOT + AI) help achieve these SDGs? My distillation of the many topics and examples given:

1. Real-time sharing and transparency of data: much of the problems with SDG, actually any problem today, starts with data. Messy or lack of data make any subsequent attempts to innovate or even just operate, a hard or impossible task.

2. Creating Digital IDs: Everything starts with identity. If a person has no documented identity, how can they qualify for aid, for banks, for jobs? How can they claim they own a piece of land? How can governments keep track of who they are giving aid out to? Also, I am talking about Digital ID of everything. As you may have heard from me previously, I think every asset — such as property, cars, companies — all should have their own Digital ID and be properly represented as a token.

3. Preventing fraud: with points 1 and 2, we solve one of the biggest issues today holding back realizing of SDGs — Fraud. Fraud siphons resources away from those who need it the most and worse, shuts down funding avenues as donors/investors don’t trust that they are getting a “ROI” — either financially or in the form of social impact.

4. Access to financial resources: Whether it’s mobile banking for the unbanked, drastically cheaper and faster remittance, removal of expensive no-value add middle-men/manual processes, removal of fraud, new business models, new avenues of funding — it’s all about getting resources from those who want to deploy/invest to those who need it.

Fusion, Bonds and the SDGs

Fusion is Fintech, so what roles does Fusion play in realizing SDGs? As a blockchain protocol we can realize all the benefits of transparency, immutability, and digital assets. And of course, interoperability, which was brought up multiple times throughout the summit, is right up Fusion’s alley.

But I want to focus on bond issuance, not just because I spent 9 years trading bonds at hedge funds, but also because it was my focus in the panel “Blockchain, Infrastructure, and the SDGs”.

I came to blockchain because of the inefficiencies of the bond market (sadly, it wasn’t because I bought bitcoin at $0.03). Fusion’s time-value tools caught my interest initially as application to bonds and other derivatives, and then broadening to countless applications of time-based transactions.

The topic of my discussion in the panel centered around how bonds can be issued with efficiency, transparency, and innovative payout structures. If resources (in this case, money) can get to where they are needed faster, we help fulfill SDG 8 (work + economic growth), which in turn, helps fulfill so many other SDGs.

To showcase how efficiently and transparently funds can be raised, I used Fusion’s token raise as an example:

1. Fusion was able to raise $110 million dollars (of which it returned $60 million) through an open auction system for a total cost of just $15k, or 1.3 basis points. That’s easily 1/20th the cost of the most efficient investment grade bond raises (~25 basis points). Money was returned and settled in just under 2 hours post auction close, compared with 1 day for settlement of US Treasuries and 2 days for corporate bonds.

2. All transactions, from interest to allocation, were fully audited and wallets which participated in the token sale were easily categorized by geography.

For the final point of innovative payout structures, I used the collaboration of i4SD and Fusion as an example. By combining Internet of Things with Internet of Value, we will raise funds for projects bringing energy and water to South East Asia and sub-Saharan Africa by connecting Smart Meters and mobile payment to blockchain. On the blockchain, we will issue bonds, with full and real-time transparency into where funds are deployed and pay back investors with a portion of the mobile payments, again in real-time. I look forward to sharing more in the coming months as the project develops, and am happy to say that Joaquin and I squeezed in an ideation session before he headed off to Uganda for a month a mere two days after the summit.

Looking Forward to Summit 2020

The summit itself was jam packed with over 25 highly informative events. The diverse mix of attendees made it hard to manage content depth (e.g., high-level “we want to change the world” vs. informative “this is what we should do”), so I don’t envy the organizers’ task. As mentioned at the beginning of this article, based on the relationships that were built alone, the summit itself was already a great success.

My constructive feedback on the summit: while many points were laid out, we weren’t able to get as deep. My suggestion to the BFI team in 2020 is to cut topics by 1/3rd, add a few breaks in between to account for time slippage, and devote more time to deeper educational sessions, like “how to digitize assets properly with adequate time” and have time for Q&A after each session.

In the meantime, we’ll be building solutions, meeting the summit’s call to action. I’ll end with a quote from one of the first panels:

“We went through globalization, and now whether we want it or not, we are going through digitization of economy” — H.E. Mrs. Isabelle F. Picco of Monaco