Opalesque Roundtable Series MIAMI opalesque.com Editor ’s Note Sovereignty, the End Game of Global Currencies, and Will There Be 20,000 Nations? In the future, every stock, every bond, every currency, every commodity and more assets will be digitized and cryptographically secured on a blockchain. But, not only that: whoever is first to issue the digital currency has the chance to usurp the dollar as the global World Reserve Currency. At the moment, only 8% of global trade is United States based, but a staggering 60% of global trade is priced in dollars. This touches the question of sovereignty and global dominance. The US may therefore have a digital currency quicker than we think. China has been working on a Central Bank Digital Currency since 2014, and so in the West some say maybe Libra isn't that bad an idea ... However, while we are still in the protocol consolidation stage when it comes to the question of the future of money, this group believes that after a number of transitions, a non-fiat-backed digital currency will ultimately be the winner in this end game of global currencies. “Every single thing is being disintermediated” There is an undisputed movement towards using blockchain and cryptocurrency along with hard assets in an alternative form of monetary instrument. With that, the current world order how assets and value are stored and transacted and how marketplaces operate will go through revolutionary changes. Blockchain is basically a new structure of solving problems through autonomous software with an unprecedented ability to incentivize networks. The technology is an evolution of computing power that’s been happening on a 14-year cycle since the 1950s. We saw the mainframe in '54, the microchip in '68, the personal computer in '82, the Internet in '96, the Mobilenet in 2010, and for 2024 Mark Yusko predicts the emergence of the “Trustnet” where the blockchain network and DLT technology allows us to trust one another in transactions without an intermediary or third party. If you take a look at what’s happening to society, every single thing is being disintermediated – from retail sales, to travel agents, to real estate brokers, to wealth managers…to absolutely every single thing. As you get more and more artificial intelligence built into more and more marketplaces, with more and more assets and products and services available online, the world turns upside down, with most profound consequences. The following experts participated at the Opalesque Miami Digital Assets & Cryptocurrency Roundtable, sponsored by the Miami Downtown Development Authority: 1. David S. Rose, Founder & Executive Chairman, Gust 2. Evan Malanga, Director, Securitize 3. Gary R Markham, CEO, aXpire 4. Gregory Keough, Founder, Blockchain Credit Partners 5. Marcelo Sampaio, Co-Founder & CEO, Hashdex 6. Mark Yusko, Founder, CEO and CIO, Morgan Creek Capital Management The group also discussed: • The future of marketplaces. How Millennials will select a deal or an investment and how this will change finance. Where disintermediation will take us. (How) can financial advisors charge high fees in the future? ( page 22 -25 ) • Decentralized Finance & the Digital Divide. What will be the first real killer app for blockchain? ( page 22 -24 , 26 -28 ) • Of the 775 fiat currencies that existed, not one has held its value over the test of time. Is Bitcoin the solution for this monetary challenge? Why a 98.5% loss in value is the best actual use case of a fiat currency ( page 8 -11 ). Why cryptocurrencies need their “Netscape moment” (page 20 ) • Why Libra is not a cryptocurrency and almost not even a digital currency, but essentially a money market fund ( page 19 ) • Could we have like 20,000 (or more) nations in the future? How and why Technological Singularity will change the world (page 21) 2 OPALESQUE ROUNDTABLE SERIES 2020 | MIAMI Enjoy! Matthias Knab [email protected] Participant Profiles (LEFT TO RIGHT): Matthias Knab, David S. Rose, Mark Yusko, Evan Malanga, Gary Markham, Marcelo Sampaio, Gregory Keough 3 OPALESQUE ROUNDTABLE SERIES 2020 | MIAMI Introduction Mark Yusko Mark Yusko, I am the CEO, CIO and Founder of Morgan Creek Capital Management. We are a Morgan Creek Capital Management Registered Investment Advisor based in North Carolina with offices in New York and Shanghai. We started Morgan Creek 15 years ago with the aim of bringing the Endowment model of investing to other investors like smaller Endowments and Foundations, high-net-worth individuals and families. We built products over time to serve our clients primarily focused on manager of manager programs, co-investments and direct investing. We offer private investment funds of funds, venture capital funds of funds, and hedge funds of funds, co-investment funds and direct investment vehicles. A couple of years ago we started Morgan Creek Digital, which is an operating subsidiary of Morgan Creek Capital, to provide direct venture capital funds focused on Blockchain technology infrastructure investments. Our clients were also interested in investing directly in cryptocurrencies, so we did a joint venture with Bitwise to launch the Morgan Creek Bitwise Digital Asset Index Fund last year. Gregory Keough My name is Greg Keough, I am the Founder of Blockchain Credit Partners. We are using Blockchain Credit Partners blockchain tokenization to bring first lien senior secured hard assets on to the blockchain to provide high-yield. I have been basically a Fintech entrepreneur for most of my life. I have mostly run venture or PE backed startups but also had one corporate gig where I was brought in to be the CEO for a joint venture owned by MasterCard and Telefónica where I ran all their mobile financial services globally. About four years ago I got into what then led us to Blockchain Credit Partners. We developed a new type of loan product called the Car Equity Line of Credit which basically is solving the problem of about 40% of the middle-class people in the United States what are kind of liquid asset poor –- if they miss a paycheck, it hurts them, and about 25% of folks who make $100- 150,000 a year can’t come up with $2,000 in 30 days. We decided to develop an entirely digital product to solve that and built a company called Finova Financial. It’s been around for four years or so, funded out of Silicon Valley. We are in essence a lender with a first lien senior secured position in your auto and it provides high-yield. And now Blockchain Credit Partners has actually taken this asset class, tokenizing it and putting it on the blockchain to provide high-yield through this format to a broader audience. Previously we got our lending capital, about $100 million from a group led by the former President of Apollo and former execs from Goldman Sachs and Apollo who wanted consistent income through secured high yield. Blockchain Credit Partners is now tokenizing this asset class and making this collateralized yield more available to the general public. Evan Malanga My name is Evan Malanga, I am the Director of Business Development at Securitize. Securitize is Securitize a software platform designed to modernize capital markets. Our services give issuers the ability to automate investor on-boarding (i.e., KYC/AML) through multiple jurisdictions simultaneously, issue debt or equity securities with embedded compliance and post-issuance easily manage the lifecycle of those assets and investors. Additionally, Securitize’s registration with the SEC as a transfer agent which allows us to process corporate actions such as capital distributions, voting, and enable secondary market liquidity on behalf of our customers. To date, the company supports over 60 issuers ranging from real estate to investment funds. Personally, I started my career in the military, I spent five years in the U.S. Army and then left to get my MBA at Columbia Business School. Post-graduation I have worked in investment banking, private equity consulting and got the blockchain bug and left wall street to join Securitize. 4 OPALESQUE ROUNDTABLE SERIES 2020 | MIAMI Gary Markham I am Gary Markham, CEO of aXpire. aXpire was a spin-out from a company I have been running aXpire for about 15 years in the Fintech space – litigation, vendor management, e-procurement. I got the blockchain bug around 2016-2017. aXpire works with hedge funds, asset managers, wealth managers. We provide mid office, back office, allocation, apportionment, record management, which we stamp on to a private blockchain. We have also got interests in other blockchain related infrastructures. One is around digital assets – we call it digital shares – providing what we like to see as a full end-to-end ecosystem for the onboarding or the interface between funds versus investors, but also the issuance and secondary market trading as well. At least for now, licensing is quite a challenge in the current environment, so we are looking at how we can set that up with the FSA in the UK, for example. We are also working with wealth managers in New York to build out private labeled versions of this application. We are seeing definitely an uptick in appetite for this type of what I call “exotic alt”, certainly from family offices, high-net-worth individuals and others in the space that are looking for something that’s outside of the norm. David S. Rose My name is David S. Rose. I’m the Managing Partner of Rose Tech Ventures and the CEO of the Rose Tech Ventures financial technology platform, Gust. I am a serial entrepreneur and an active early stage FinTech investor. I started my first company in elementary school and have founded half a dozen others— several of them venture-backed—since the early 1990s.