Hey again everybody, it’s me Adam Chapnick with the Security Token Academy. We are here in Los Angeles at CIS 2019, and we are here with friend of the show and returning champion, Ami Ben David. Thanks for being with us.
Okay, so you’re here talking about some controversial, perhaps, topic. Everybody’s going to get to hear in a minute, but we are going to get a preview, I hope, right now. What sort of wisdom are you going to drop on everybody?
I have a presentation that I’m doing on the main stage soon called ‘Long the Bankers.’ It’s a little bit controversial because the crypto people are always talking about long Bitcoin and ‘Short the Bankers.’
And in turn taking the intermediaries out and so on.
But, I’m talking about security tokens. That’s my expertise.
And, digital security, security tokens and this is a market with potential that is much bigger than the crypto market potential, and it’s more boring. It’s securities.
And, it’s more boring!
Yeah, it’s more boring. The big money in this environment is not with the crowdfunding, it’s not with those people in the crypto days got excited about something that can go up and down. It’s about more stable investors and the big money, the big capital, the trillions of dollars are managed by
Institution investors community.
And, who’s in the way to the institution investor community. That’s the banks.
I’m talking about specifically investment banks.
Broker dealers and people like that. And, I think for digital securities ecosystem to grow, we need them at the heart of this movement.
Rather than being pushed away.
Well we at the Security Token Academy are very pro that message. I don’t know if I mentioned you have sort of very OG credit in the community with SPiCE VC and tokenizing that fund early. When you say something it comes with some gravitas. I just want to point that out to everybody. Given that your ‘Long the Bankers,’ I know that you’re in another fairly new endeavor. You want to tell us what that is?
Yes, I’ve been working on a project called Ownera. It started actually here in this conference six months ago, when I presented the concept as an idea, and it evolved into a project ... a foundation that we’re now starting. The idea behind Ownera is to build a new blockchain, a new network, blockchain, for security token, designed for institutional investors, for bankers, and for people like that so we can actually reach the scale.
How so? What makes it particular to bankers? What does it consist of?
It’s what I would call institutional grade. So Ethereum is not institutional grade.
Bankers would not use that. So what we’re using, we’re building it onto of something called Hyperledger Fabric. Hyperledger Fabric is usually used for private network, but we are actually turning it around and making it into a public network.
It includes everything you need for doing security token out of the box, so the privacy is there, regulation compliance is there, everything is already there, so it’s building blocks of security. It has one other critical element and that critical element is that the tokens on Ownera carry their value with them.
Unlike other security tokens.
So, does that mean no wallet? Is that what that means?
No, what it means is security tokens today are only a trading element, but the value that they represent is outside the blockchain.
Oh I see, yes.
It’s completely off-chain. So you can be trading tokens from one hand to another.
But, the value is on somebody’s website.
Which can be change, it’s not immutable. Nobody checks it and so on so there’s a problem here where practically every insurer can say whatever, it’s not enough scrutiny. Very, very hard to find information. So, if a token starts to move from one end to the other, the tenth person trying to find the token is going to have a hard time finding out, what is the value that they’re buying.
Imagine you bought Bitcoin and the value of the Bitcoin was on some document in somebody’s servers, you wouldn’t by Bitcoin.
Bitcoin is self-contained value.
You want to do the same for security tokens.
So, we invented concept called KYA. KYA is ‘Know Your Asset.’
‘Know Your Asset.’
The same way that KYC, ‘Know Your Client’ is the identity of a person, KYA is ‘Know Your Asset’ is the identity of the asset. And, with KYA you have all the legal documents relating to the asset. Explaining what the asset is, what the rights of the token holder are. All of this is being packaged and added to the token, incorporated into the token so it goes with the token on the blockchain. It’s immutable, nobody can change it, nobody can play with it.
Because the token buyer, you can look at it and see exactly what you’re buying. That’s the first layer. The second layer is where the bankers come in ... because we think it’s not enough to have just the information, it needs to be verified. Can you do your own KYC? Can you say I’m not a thief? You can’t, somebody needs to look at it.
The same way when you’re doing KYA, and you’re saying things about your asset, we want to have underwriters look at the asset and verify it.
Yes. Would it be fair to say that that would be CYA for KYA?
Might be, yes.
I had to state that was necessary. Alright please.
Now you have copyright on that.
So, in a way the nodes on Ownera are called underwriting nodes.
What they do is they bring up assets that they actually believe in. They do the KYA for them, they trust them. Let’s say you have a big bank, which is an underwriting node on Ownera taking a big asset, uploading it, verifying the KYA so a user buying the token, doesn’t matter where, when, what time of day or night.
They can look at it and see two things. First, a big bank looked at it and approved it, and two here’s the full information that nobody can mess with, with all the legal signature that give me rights.
So they can be reassured that it’s theirs in the value, and that’s institutional grade.
It is, and it’s funny the best ideas always seem so intuitive and so oh I can’t believe that doesn’t already exist, and that’s what this sounds like, so that’s I’d say a good sign. What’s the roadmap for this, what’s happening with Ownera?
We’re now building, we’re doing some technology basically. As I said originally Hyperledger Fabric was built for private networks, so we’re not expanding it to be a public network.
We’re putting up tokens, tokens support in it. We’re making the KYA part that is incorporated into the token itself on the chain. All this is the work that we’re doing now. But, we have an advantage, we’re not starting from scratch. Hyperledger is a big platform.
Nodes that want to use it can get a Hyperledger server from IBM or Microsoft or Google or Amazon, so it’s very institutional grade. We gain a lot of traction by choosing a good foundation, but there’s still a lot to build.
Wow. Okay. And when do you imagine this might actually become first adopted?
We are able to show a first test proof of concept today.
Oh! Okay. Today!
Yeah because six months ago we put up the idea, it’s time [00:07:30] to show that it can be done.
Fantastic. Well thanks so much for sharing with us, all of this exciting news. You’ll have to come back and let us know how it is going.
Thank you Ami.
Thank you very much.
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