The Power of Blockchain for Social Good: How Technology Drives Change

The Power of Blockchain for Social Good: How Technology Drives Change

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Hi Ricardo, thank you very much for this space and for being in this session. from the Teach For Good Series I am very happy to have you and to have you as my guest. the opportunity to talk to you, to hear about your experience.

and your ideas around this topic. So this is a short interview, a little bit to tell us about your trajectory and how you got here. to this world of technology, how you started working with blockchain, Maybe for mortals, what is blockchain, right? Very simply put to start if you want with these two questions.

Sure, thank you very much Nelly for the invitation, a pleasure to be with your audience and if you want I'll tell you a little bit about how I got here. to the topic of blockchain and from there I explain what blockchain is. My background is in economics and I started my professional career in social development and later on I received the invitation to join the Technology Area of the Tax Administration System. here in Mexico, the agency that collects taxes, and there I was at the General Administration of Communications and Information Technology in the financial area. evaluating technology projects and from then on I always kept my eye on the ball to everything that was happening in the technology field and it was in 2015.

where I joined the Ministry of Finance here in Mexico, in the agency. which is in charge of protecting the bank savings of the depositors, it is the insurance deposit insurance, known as IPAB in Mexico, in the Instituto para the Protection of Bank Savings, and there I was in charge of analyzing best practices for the insurance practices in the world; then I did various analyses and from there I analyzed a lot of journalistic notes, a lot of papers that published the deposit insurance in the world. and then they started talking about Bitcoin, I think they started talking about Bitcoin. About crypto but bitcoin had the biggest focus around 2015-2016.

In 2017 I stopped reading it and wanted to know a little bit more in practical terms. and that's where a friend who was studying for his Ph.D. in computer science and with a group of friends in general when he crossed a bitcoin. started to be worth more than an ounce of gold--we're talking around March, April 2017--I said okay, well that's enough theory, I want to know how it works. and it was there, where like everybody else I started -I hope it will be like that with everybody else-.

I went a little bit at a time making small purchases at that time it was about 5 dollars. and through that experience of making purchases through those exchangers where you exchange traditional money or so called fiat money, you exchange it for crypto, because the experience becomes more than grounded, more in the flesh. Then you have the necessary incentives to learn more, to educate yourself. because finally it's your money that it takes a lot of hard work to earn it and that's where really caught my attention, the truth is that for me, being an economist was to discover a lot of the scaffolding that is not always seen with macro theories, with the micro theories it sounds very nice, very elegant, very complex all mathematical models to explain why we act the way we act, why we consume what we consume, why companies produce what they produce, why we claim to save, why we invest, etc, well it sounds very elegant but when you go to the fine scaffolding you see a complexity that is not necessarily in a bachelor's degree even I think. that even in a master's degree you don't notice it, you study it; and that's where it coincided that there were some cutbacks, some changes in the government and I said well, come in at a very good time and I decided to partner with this friend who had explained to me about bitcoin and with my wife we also partnered, we did a blockchain consultancy.

And that's when I really got into it, that's when I'm talking about November 2017. and it was very interesting there with that consultancy, we worked for the Costa Rican government, for the German Cooperation Agency, some universities in Mexico, we provided training to companies in Mexico as well as to the Coffee Agency in Costa Rica. because they wanted to trace their coffee so they could get better prices, they did not want to compete with Colombia in quantity, they wanted to compete in terms of quality.

with some stamps that had some relationship or that they could support. better said in blockchain technology was very interesting. In this consultancy we worked for a long time from 2017 to September 2019. In 2019, I accompany my wife. to do a course in the Netherlands and there it was held in August 2019. Blockchain Week in Berlin and a proposal from the founders was going to be presented.

of Ava Labs, which is the company that develops the Avalanche technology and I said, because it's an opportunity that doesn't come along every day. I was in Holland, to Berlin is that it was relatively easy to go--easier than moving from Mexico. I said I'm already here in Europe and that's where I met the founder. of Ava Labs; I had already had interaction with the Avalanche community through Ava Labs.

Telegram; a couple of months before I had already been collaborating, doing some translations, mentioning some possible use cases in Latin America or the Spanish community. and that's where I was invited to join then as community manager for the Spanish community and I said: -Well, I think it's an interesting proposal. And that's it, I came back from that Berlin trip. It was a very good Blockchain Week from Berlin, I came back with work and this is when we already took on that consultancy.

each one decided to go in a different direction and from September 2019 onwards I was part of that of Ava Labs and have been here participating with the community in Spanish, I am currently focused more on business development; that is, identifying use cases. in people who are interested, companies, governments, corporations that want to know about crypto, about web 3, incorporate it into their processes. That's my back story, so I won't bore you. I'm going to jump into what blockchain is.

And blockchain is this whole consensus of computers being able to agree without there being a single point. of failure; i.e., digital money has been around since the 1970s-80s. What is the problem? That your always to transfer value from one person to another, from one person to a bank, etc. there always has to be an intermediary,

someone always has to be validating that I have sufficient funds. and that they are credited to the other person; let's say it was always needed. that intermediary to settle the issue of the double expense, i.e. that I am not paying it with the same dollar to Nelly. and with the same dollar to Arturo, right? But that there is always someone in the middle who is vouching that I have the resources that I claim to have, that I am making the payments with the resources that I hold. And what does blockchain solve? It solves those two issues: 1.

That banks have always been a source of attack because if you hack into a bank because you can get away with the 0's and 1's that represent money, digital money and that it becomes more competitive, more open to transfer value; is very similar to what we experienced with the internet when we had these corporations. very hierarchical and when there were many barriers to entry to access and to disseminate information; internet arrives and the barriers to entry for accessing and disseminating information fall down. because it democratizes this access to information is very similar, now we are doing it. with value, with money, but not only with money as we know it, whether it's dollar, peso, quetzal, or whatever, but also with everything. what can be represented digitally, i.e.: stocks, derivatives, options,

everything that would be brought on the stock exchange; because the stock exchange is also an entity. that performs these same tasks of verifying that what I say that I have actually exists and that it functions as this intermediary that provides certainty. With blockchain is also building all of that scaffolding that does not require that there is an intermediary, but only relies on mathematics and protocols. in blockchain consensus.

So without going so much into the technical part let's say. which are those 2 pillars that are the foundation of blockchain, which is, that value can be transferred. without the need to have intermediaries, how you can democratize both the access to financial services without the need for an intermediary.

And let's say the addendum to this would be that there is no single point of failure, no longer hackable. banks, that it is a very latent risk that the banks are hacked. and with blockchain that does not exist because it is a distributed system where they are copies, are not going to be infinite but multiple copies of the same databases. that attests to what I am transferring from one person to another, from a person to an institution, etc., there is certainty and that for the first time we are seeing that you can send remittances without intermediaries that are taking 10-12% of the remittances. of the value of those remittances to give a very concrete example.

Right and in all these years you've seen, examples to inspire you from the use of blockchain for the improvement of people's quality of life for impact. social and economic because blockchain is normally seen as something elitist or very separate. or very much of one group, but I'm sure there are many use cases.

of this technology that can translate into benefits and further dissemination. for everybody, right? Sure, absolutely. There's definitely a lot of, I'm going to go back to 2018. when we worked with the German Cooperation Agency. and the Costa Rican Coffee Institute. Which allows you to do blockchain is to certify mathematically and computationally that something is unique and that it can be to give traceability to that asset, i.e., that I can tokenize a coffee harvest.

and that gives certainty to a buyer in Germany, to a buyer in Germany. in Japan, to a buyer in Korea; that this coffee through of a QR code has all the information of who planted it, in what condition it was planted, in what condition it was planted. and all this source of information that is being incorporated into it.

and so not only trusting a certification let's say given by a third party but trusting in the information that the same producer is warning in this blockchain. Where am I going? To that use case for example, what I'm looking for. is that Costa Rican coffee growers could get a higher premium. for their harvest. Why? Because the QR code was going to have their bags.

of coffee for export to Germany especially and to Asia were going to contain all of the the information--as I told you--who was producing it, under what conditions it was produced and that I could verify them if you wanted to travel to Costa Rica to know what plot he had been on and where he had come from. So it's a case, maybe that compared to the medium sounds very romantic but that in technological terms does not imply a major challenge, it can be done without major problem. That's one of the interesting examples but there are also other examples like the theme of the remittances, that there are already remittances, there are circuits in corridors. obviously I am more familiar with the Mexico-United States corridor- where they may be sending remittances. and saving the 10-12% that the traditional media are charging them. They may be buying gift cards from Amazon in the U.S. and they send them to you.

such as bought with crypto and those gift cards they can buy them. for any goods or services that are within Amazon; not just Amazon. to say one, there are solutions like Bitrefill or Cryptorefill that give you from airtime, also towards other supermarkets even I saw that Soriana was already around, some other supermarkets. So you are already buying skipping all the intermediaries that are going to give you as well. a punished exchange rate.

Also the issue of remittances is a case of very particular with a lot of potential for all the functions, for all the volume. that is being done; so this is a subject where the challenge is is to educate the migrants who send remittances to their families. But I insist, technically the products are already there, we just need to make them known. these alternatives and little by little some supermarkets, some commercial chains are doing it. and that little by little they are giving these alternatives and they are quite interesting.

And finally, just to mention three great products or services that are being built. that have an impact that improves people's quality of life, is in Latin America this issue of a very strong lack of financial inclusion. and very large. 1 out of every 2 adult inhabitants of this country does not have access to financial services and on the other hand there are 110 cellular phone lines.

for every 100 inhabitants; so if you put these numbers together, it turns out that if you have a wallet on your phone and you receive in that wallet crypto, you can be having access to financial services because of this whole layer that's called decentralized finance, that are called DeFi and you can have access to financial savings services, lending, credit; and obviously the penetration that has been had not as big as we would like, but wow DeFi's been in the market for 3 years now and that maybe the people that use it--especially these unbanked people has been given by not buying bitcoin maybe, not buying some crypto. As in the case of Avalanche but through buying the calls. stablecoins that is USDT, USDC, Celo Dollar and more.

Those are ways in which maybe in Mexico because we have been fortunate enough to have had the fortune. "to have" a more or less stable currency, saving in dollars has not been the best strategy for Mexicans, because wow, in 10 years it has been devaluated 50% of the currency but if you compare it with Argentina, with Venezuela, with other economies. of the region people are really safeguarding their financial integrity through saving in dollars, right? Because if you save in Argentinean pesos or you save in bolivares it is totally diluted by inflation. So in Mexico we are in a situation like a happy problem that the currency has remained more or less stable. I remember in 2010 it was more or less around 10 pesos to the dollar, now we are around 20 and what are many going to say: Hey, it's been devalued by 50%.

Yes, in the last 10 years. Devaluations that you have on a monthly basis in other economies and that has made these ecosystems to develop much faster. So I would say, yes, In the case of Mexico it is a very particular one because we have a remittance corridor. but a currency in which it is a little bit paradoxical but it turns out that the people do trust the peso compared to the Argentine peso, to the Venezuelan bolivars. It's an amalgamation that occurs in Latin America but I believe gives at least the alternatives so that people who are not banked can save. and I believe that in the next couple of years they are going to be given a lot of alternatives, a lot of ease for the people who receive remittances, who want to save, to be able to and who are not banked have alternatives where they can really sit down with their cell phones.

very comfortable to be saving, investing or even giving or lending money. when we know that there's this gap with traditional banking, where the person who is unbanked doesn't feel comfortable going to a bank for different social, cultural, anthropological reasons, yes we want to see it that way and that these tools that in Mexico are given with the tandas which are these community savings, collective savings, you can do it within blockchain with your cell phone. without you realizing that there's all this complexity of this technology behind it.

It's a process that's going to happen, a natural process referring back to. to this 2010 when you were teaching your parents, your aunts and uncles or older people to teach them how to use WhatsApp was super complicated or to send a sms (maybe in 2010 it was already a bit simple). Or send a video.

Or send a video and now every day they send you the piolin. and you didn't have to show them anything about what's behind it. WhatsApp, they just open their WhatsApp and they're exchanging information; this is going to be given over time, I would estimate--this is a personal assessment--that in the next couple of years we could be having this same facility to exchange value. through the cell phone as it was between 2010 and 2015, this explosion Where all of a sudden it was very complicated to teach older people how to use WhatsApp.

now where they are administrators of the family group. and they're spamming them all day long. Yeah, hey and I have to ask although I know blockchain is a much bigger world than cryptocurrencies. but I have to ask about Terra, Axie Infinity, the Ethereum crash and Bitcoin. So what do you think is going on? The crisis, which we are also seeing in the stock market -there is also a crisis in the U.S. stock market.

and other countries in Latin America - so it is not an exclusive issue for crypto but definitely the drops, almost 50% that it's had are worrisome. Many are saying this is the end of cryptocurrencies. and this is the case of Terra, Axie Infinity that I am concerned to say.

Which is what's here, which is what's going on, also the world of NFTs, the Blockchain. So I ask you Do you think that these are natural expressions of any financial system where also the dollars Every financial system has its ups and downs, its problems? That's a very good question I think it's a must ask, that most people have. that doubt, that you have to zoom out a little bit to see it. at 10,000 feet what's going on because we're at 10,000 feet. in a super complex global context, we are in the middle or it looked like it was already over the pandemic but we're still, we don't know what's going on with the pandemic; hopefully we're ending the pandemic but in 2020 as a response to the pandemic. approximately 30% of the dollars that exist today.

were printed out of thin air in 2020. When you ask a fellow economist or the average person: Hey But what's the dollar at, What's the backing on it? I think each person is going to have a different answer--exaggeration. but the truth is there are a lot of different answers; there are people who will tell you it's backeted or it's backed by gold, that ended in 1971; it's only backed by gold. of the confidence of the people with a whole synergy around the so-called petrodollars. where in 1971 it was given de facto from the U.S. government where it could not deliver to him the gold that was backed to certain dollars held by France and he said: I cannot give you the gold they mention, that amount of dollars which you want.

and they make a de facto default like Argentina, like Venezuela, which is not much talked about. but there it was. Apparently in 1971 only through the great engine of the global economy which is oil because there is this stability let's say of the dollar. So coming with the history, all of a sudden you can see the money supply. of the United States, you can see from 2008 onwards, the little machine starts of making money as our grandparents or our parents used to say; I got to hear about the in the race, because in the little money making machine they started to print more dollars "digitally printed" and that which has its peak in 2020 how to answer to the pandemic, where the U.S. government prints an unsustainable amount of dollars.

It's a very broad macro complexity and what bitcoin has as its origin in 2018. the response to the global crisis caused by debt mismanagement, credit mismanagement, rating agency mismanagement, 253. that were certifying AAA grade, junk bonds. Bitcoin comes to be like this answer of a money that doesn't depend on the government.

It's very interesting because always the economy orthodox, non-classical economics tells you that markets are competitive and markets are competitive. through supply and demand are going to arrive at efficient outcomes, what the market is like for what you want: cars, computers, food, whatever. and it turns out that the money market which is the most important market, is not in a competitive market but is an imposition of the government. and this, let's say, is one of the visions that bitcoin has. but that in economics as Hayek mentioned it or as Friedman also mentioned that the government should not have a monopoly on money, money should emerge.

as a result of these efficient markets where for a very long time the money that emerged most strongly or as a result of the markets was gold; gold was that commodity that helped to back money, paper money. Let's say we're in a super complex time where these bitcoin cycles. we've seen it in 2013, we've seen it in 2018, now it's 2022 accentuated. With this macro complexity. In 2018 the crash that bitcoin had as well.

I think it was 70-80% then those are cycles that bitcoin has. because of the structure itself, because of the money supply that it has every 4 years. is offered at half, each bitcoin mines one block every 10 minutes. and 50 bitcoins were issued every 10 minutes at the beginning, 4 years later were 25, then 12.5 and now we are at 6.75. Right now we're precisely at the halfway point, the last halving or the last reduction. in your monetary rate which is done every 10 minutes was in 2020, -more or less if I remember correctly it was around April 2020-->00:32:52,000.

now we are in the middle and in 2024 approximately in May or June it's given this new reduction in its money supply so that in the year 2140 we will have only 21 million bitcoins and let's say the perfect storm is happening now with half of the way between this halving where there was a bull market and now is kind of in the middle with a lot of uncertainty, accentuated by all the macroeconomic uncertainty; how well you were mentioning it hasn't just been crypto, you can look at Netflix stock, Airbnb stock, Zoom tech stock, everything is losing 70-80%. Relative to their highs 4 or 5 months ago. And lastly to mention the topic.

of Terra--which I think is very important to mention--Terra was a coin. that was called Algorific, that is, that only through the supply or purchase of the of another currency, which in this case is Luna, it seems to me, maintained the parity 1 to 1 with the dollar. Algorithmic currencies historically have not worked.

but under sufficient or the right conditions they could be an answer. be an answer in the medium to long term. There are other Stablecoins such as Tether and USDT which have dollar backing, in commercial paper, bonds, etc.; USDC the same, which is audited. more clearly than Tether, there are other currencies like Dai that have their backing. in bitcoin in Ethereum that let's say not only have this algorithm but they have assets. behind how celo dollar and other algorithmic currencies, unfortunately in the case of Terra it was a bad design--in my point of view--at the time a lot of people was investing with Terra but let's say it's a design problem where it was giving returns of 20% per year, it's a very high return where he couldn't maintain its 1 to 1 parity.

Obviously there may be other attempts where maybe with a much lower yield with a much clearer treasury or where Terra made it into the Top 10 in market capitalization where they could be managed in a less aggressive and less risky way, I think it would be desirable to have other conditions. I insist, algorithmic currencies I think can be interesting but always. knowing that there is an important risk there compared to other currencies, for example that have 1 to 1 backing such as TeTher or USDC above all, I think it would be a case-by-case or case-by-case basis or specific cases. so that informed decisions can be made because unfortunately a lot of people thought it was dollars. as is and unfortunately they invested more than they were willing to lose.

because they thought it was the dollar as-is and it wasn't and it would close this frame let's say by recalling with one of the first recommendations that I was given and that I try to pass on as well: Never put more money than you are willing to lose in crypto. Once you have some experience, you know a little more detail, let's say the fine mesh of each protocol, well everybody does with their money. what he wants, but let's say don't give money to another person. to manage it for you, don't invest more than you're willing to lose. and to keep abreast of the protocols that are working. to be more efficient, to bring more access to financial services in an environment that is like ours in Latin America where we have a lot of challenges.

Hey and last but not least to close What is that future that you dream about, if I told you that there is a magic wand and considering the patterns, your experience and what you've seen and evolution that you're observing in technology, what would be that ideal future for you? Yes, I think as I was commenting on the topic of how we now transmit information, how we share it, how it's democratized. I mean, in my case it still touched me. go to the library, check out the books, read sources, see what the reference was, go to the bibliographic index cards, etc. and now with Google or any search engine you

can find to the information you need instantly. This transformation that has taken place in the industry information where there were hierarchical structures with high barriers to entry. such as television stations, newspapers, radio, and that all of a sudden, all of a sudden when the internet came along you will remember "the internet is a nest of pornography, it's a nest of scams, I don't know what" because we have already seen that it is not so; technology as such can be used for good or evil; I mean airplanes. you can use it for transportation or for something like 9/11. It's going to be the same with the so-called web 3, it's going to be very simple.

for people to exchange value without your bank saying you can only do those transfers. from 9 am to 5 pm Monday through Friday or send me such a paper. to make this transfer. The future that I envision, I don't know 2025, that the penetration that messengers like Telegram, WhatsApp or social networks where you exchange information will have with your circle of friends, acquaintances and strangers too, why not? I think it's going to happen that way for example, in the case of the NFTs was something very interesting where the art sector, artists had a very serious problem because they never saw royalties in their pocket, if they took a work of art out, and from the secondary market they missed it; so now with music NFTs, art NFTs, digital art NFTs, tokenization. of traditional art how it happened in Avalanche with a Banksy with a real painting. that was tokenized and they put 10,000 particles of that painting up for sale, because now the artists have no problem to have access to financing.

or on the other hand once they create their art, all the secondary market they're going to get royalties; so that boom that was in 2021 especially, now there's going to be a whole very interesting wave coming--that you mentioned. in the last question and I didn't touch it--for example the Axie case. the whole gaming thing that in blockchain Axie was the first successful case. which was called click earn, obviously being the first one. you had certain areas of opportunity that as the technology evolves, you had certain areas of opportunity that as the technology evolves because now they're not these boring games where you have to spend time and be clicking to get rewards; where it's going to be games like the traditional games.

where you have fun and additionally you're going to be earning the items, the items in that game--I'm not that much of a gamer--but that the casquito, that the sword, that the suit, they're already going to be yours; so you're going to be paying and they're going to be yours. Actually with traditional gaming you can't, you buy it. but you can actually get out of there and you're going to be able to get to this topic.

of a gaming where you own, of those digital assets and I've got the topic also from metaverse, it's very interesting I think it's very green, very immature. but it is bringing the attention of a lot of people, a lot of corporations; traditional industry that was reluctant to the issue of blockchain, reluctant to the issue of NTFs, reluctant to the issue of blockchain, reluctant to the issue of NTFs. of crypto when they were told about metaverse it made a little bit more sense to them. I think there is a little bit more legal certainty on the metaverse issue, So I think that in the future it is going to be a very important aspect. in this interplay of metaverses, digital assets, blockchain and crypto where as you may recall from 2005 to 2020 with the theme of exchanging messages, exchanging information, accessing information, etc.

it's going to be the same thing now with digital goods and assets call it dollar, call it money, call it bitcoin, call it game caps, call it game swords, call it whatever you want to call it; all that amalgamation that is billions of dollars that are just sitting there idle. or with lots and lots of frictions for their exchange are going to be on blockchain with ease very similar to what we have now to exchange information. So we are at the same time super interesting, how nice and what a pleasure it is to meet people like you.

who are in this, who are learning, sharing, collaborating and above all creating. Thank you very much Ricardo for your interview, for your words and for sharing. a little bit of how much you know about this subject.

No on the contrary, thank you very much to you and anything else I'm on Twitter as @RicardOrukay the Blackchain where I work @avalanche_esp also on Twitter, we'll be very happy to be exchanging opinions Thank you very much Nelly! Thank you.

2022-07-24 17:38

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