Discussion from the Global Investor’s Conference: The Future of Assets is Digital (Part 2)

Featuring Gregg Kidd (GlobaliD), JP Thieriot (Uphold), Matthew Le Merle (Fifth Era), and Jamie Finn (Securitize)

by Karim Nurani, Chief Strategy Officer, Linqto

What is the distinctive contribution your company is making to this dialogue?

JP stated in response that what “differentiates us” at Uphold is “our ability to basically act as a platform as opposed to a single retail-oriented property.”  He cited the example of how Linqto, represented by panelist Bill Sarris, was in the process of “building a wallet on top of Uphold” on their existing platform.  In this way, Uphold is “following a stripe, a path to the future.”  JP indicated that Uphold is also “driving third party ecosystems that are not today served by the banking system.”  He cited as an analogy the Brave ecosystem which “proposes to reorganize the way money moves between advertisers and publishers and users of the internet.”  He explained that “there just isn’t another platform out there that can handle the complexity, handle the millions of constituents in those three buckets around the world.”  Drawing a comparison to his own company of Uphold, JP relayed that the team hopes to also serve three distinct buckets, and it has done already done so.  JP’s team uses “a platform approach where app developers and fintech partners can leverage Uphold’s reach through licensed relationships with banks and financial services partners around the world.” (Europe Limited 2020)

Bill brought up the distinctive contribution of Linqto, a private investing platform, stating that “we concentrate on equity transaction[s] in the private markets, making accessible, affordable liquid investments available to our accredited investors around the world.”  Overall, “Linqto has removed the friction” of “processing equity transactions in private markets.”  Specifically, Bill and his company have built a Know Your Customer (KYC)/ Anti-Money Laundering (AML) validation process, alongside panelist Gregg Kid, which confirms whether individuals are accredited investors, as defined per federal regulation.  Echoing Jamie’s earlier comment, Bill reminded the panel that “people like to have that piece of paper,” so his platform “didn’t remove it from them” but rather “only removed the friction of it.”  As the potential investor goes through the process of each digital form, Bill and his team “know all the information that’s needed” to create the necessary agreements and their system “automatically generate[s] the membership certificate” to “show that they have ownership.”  Through “digitizing the documentation process,” Linqto has made it possible so the process is “all done without friction” and “have removed the paper need.”  In addition, Bill released the newsworthy comment that he and his team are “in the midst of integrating the Uphold wallet link so that investors will be able to transact using any of the 27 Fiat or 30 crypto currencies on our platform.”

As for the well-known Gregg Kid, he depicted the current moment in time as the “Copernicus issue,” asserting that, “for a long time before Copernicus, people thought that the sun revolved around the earth.”  In this way, he stated, people have believed for a long time that “your identity belongs to a government, or a corporation, [it] might be a bank, it might be Facebook, [it] might be any of those.” But the “inversion” that his team is proposing is that “your identity belongs to you” and the “Earth revolves around the Sun” and in this case, according to Gregg, “you are the sun.”  At GlobaliD, his team proposes that “it is your ability to attach any source of assets you want to your identity and do with them what you want.”  Simply because your “assets sit on this server or that server controlled by this country or that company” that “shouldn’t get in the way of doing what you want with your assets within the law.”  Focusing on identity before ownership, his team is “pioneering that concept that you get an identity first, and then you’re a user of all of these other systems, you don’t own them.”  Whether its “porting your reputation from Airbnb…or porting your money from Wells Fargo” you have the liberty to do so, but “if you change your mind” and want to “use Uphold” or move to another platform, “you can take your assets with you wherever you go.”  In summary, Gregg said, “portability to us, is the big differentiator.”  His company can “support all identity platforms” and “would connect to all asset sources,” offering that, in summary, “we’re neutral.”

Along the same lines of portability, Jamie explained that Securitize is “entirely focused on helping companies create digital assets that are fully portable.”  His platform allows companies to “put [assets] on a marketplace like Uphold,” or “list them in different places,” and “have them on different kind[s] of sites as they see fit.”  Allowing for independent use of funds, users of Securitize can “own them in their wallet and trade them with other people directly.”  His platform allows “everybody to easily be able to transfer these assets between any wallet really on any marketplace.”  Overall, Jamie expressed, “our role is really to help people create those assets and help them manage them in a compliant way.” 

As an example of the efficiency of moving assets digitally, Matthew brought up an example of when he and his co-founder and wife, Allison, needed to move money from the UK to the US in order to make some investments.  He recalled how “we brought some of it through the banking system.  It took three days to clear we were pretty pleased with that.”  But, they also “put some into SFOX and asked SFOX to bring it home, and it arrived in seconds.”

A modern-day gold rush

As a historical comparison, Matthew brought up the Gold Rush in California in the late 1800s.  “And we know, in the Gold Rush,” Matthew started, “you had a choice.” You could, “Jump off your ship, get your pick, go up to the mountains and mine for gold.”  “Or conversely,” you could “sell those picks and shovels to the miners that we’re heading up to the gold rush.”

Comparing the present moment to that of the gold rush, he said, “right now you’ve got a choice” as well.  On the one hand, “You can invest in the equity of businesses like Uphold, Securitize, Global ID and Linqto that are building out the infrastructure.” These are the modern-day picks and shovels. “Or,” Matthew submitted, “you can invest directly into the crypto-monies and the crypto-assets themselves.”  Which would be the modern-day version of gold.

He asked the panel, “If you could only do one – would you invest in the assets and monies being enabled by the infrastructure companies? Or would you invest directly into the infrastructure companies?”

Remember the Gold Rush. Would you rather invest in the picks and shovels (the infrastructure) or the gold (cryptocurrencies) itself?

“So, I always believe that’s a false dichotomy,” Gregg countered, admitting “I’m a risk man” and “I always have to spread my bets.”  He further stated that the “only principle of risk is diversification.”  Nonetheless, “I think it’s more exciting to be invested in the infrastructure companies,” he admitted, “because that’s the long play.”  He explained that “you’re investing in a team of people and you get some satisfaction from that.” Describing investing in cryptocurrencies as more “like the lottery,” he said that, “I don’t get as much deep satisfaction” as with supporting a team, although “I don’t mind holding a winning lottery ticket sometimes.”

JP, on the other hand, answered, “I think the answer today is definitively picks and shovels.”  He acknowledged that “the best time to have invested in gold, in this case, Bitcoin, or XRP, would have been 2013.” Adding that “there’s just not the need for it,” since there is a consistent list of “top 10 cryptos.”  He further predicted that even if “stable coins and other asset-backed things might crack that list,” even then, “in terms of new units of account that are actually novel and different” he just doesn’t “see that happening.” He concluded that the time for investing in cryptocurrency is “in the past.”

Bill echoed the same sentiment, stating that “I’m probably on the same side as Gregg and JP with this.”  Stating that “XRP would have been a great investment, if you were Gregg Kidd or Ripple Labs itself, when they got in early enough.”  But, “right now, I’d prefer Ripple itself.”  Bill further stated that XRP will “be the first major digital assets company to go public, as Brad Garlinghouse announced at Davos” concluding, “so I’m on that side of the coin, so to speak.”

Jamie agreed firstly with the other two panelists, confessing, “being that I’m in a picks and shovels company, I’m sort of biased that way.” However, adding another relevant take, he offered, “I think that yield is something that investors are looking for today” and that “there’s ways to get yield from crypto and digital income, digital assets, which I think is really interesting,” affirming the value of cryptocurrency itself.  Jamie believes “we’re going to see a lot of investment in that yield area over the next year or so.”  Nonetheless, he wrapped up his comments stating, “you need picks and shovels in order to generate yield, so, I’m going to go with picks and shovels.”

Bibliography

Europe Limited, Uphold. “Our Company.” About Us, Uphold, 2020, uphold.com/en/about-us/company.

Linqto, Director. Digital Assets v2 with Greg Kidd and JP Thieriot. YouTube, Linqto, 8 July 2020, www.youtube.com/watch?v=qmmBKMYJFDk&t=875s.