How Banking Industry is rapidly changing.

COVID – 19 Has forced a lot of companies in the new unknown. We are largely working from home as we try to adapt with new normal. A lot of companies have found innovative ways in terms of providing services to their clients.

Banking industry is no different and are they are as well trying different ways to solve challenges for their customers.  We can witness a lot of innovations in the financial sector. There is a big push towards DeFi (Decentralized Finance ) which at least on paper sounds promising.

In the same context Albert Castellana Chief Product Officer at Radix talks to Pramod Dhakal at Hitechies and shares his point of view on how he sees the evolution. 


Transcript of this conversation

[00:00:00 – 00:10:48]

Pramod Dhakal: Where are you based?

Albert Castellana: Well, I’m based in Andorra, you know it’s like super tiny country between France and Spain and I’ve been here for a while, right now I’m in Spain just you know, because of well, being in the mountains for the corona viruses has been pretty long. So now here right in the bay, like on the beach is much comfortable for a couple weeks at least. How about you?

Pramod Dhakal: Yeah, I’m based in Belgium.

Albert Castellana: That’s good, how are things there?

Pramod Dhakal: Well, it’s already been like few months now you know, I’m working from home. Let’s say it’s starting to get somewhat like a new normal but people are not let’s say openly meeting each other yet, we have a fear somehow we are in that mindset now then as soon as someone sneezes or some someone coughs, we are like ‘ohh’ we have that kind of expression now and I guess more and more we should get used to that expression because sadly that’s the way we are get used to reacting to people you know, so that’s the way you know it has been going for the last few months, going forward it’s going to be the same until we have the cure for that. So, how about your end, is it any different in the context of your work situation and in the context of how the business is operating at the moment.

Albert Castellana: Well, there’s a few changes right but at the same time we have been on like in adjustment with this environment for quite a while right, so right now we’ve got about 17 people working in different places and we have always had this type of structure right, like you get used to being remote, you try to like to overcome the challenges of being remote, so remote work is good but has a lot of challenges, you need to find a way so that everyone can be always up to speed with things and that’s something that for sure takes some work but you know I think that one positive thing of these crisis is that pretty much every single company is learning to do that is stopping to fear that right, so I think that this is going to give so much freedom to everyone. To us, it’s been not that much of a change as I say, I think that it’s going to be like for me for example, on the kind of the business development front, that’s a little bit different, you don’t have like events to go, you don’t have like mediums to like meetings to go to physically, it’s more like very quick meetings, very like the pace is totally different even though we like we’ve been remote for a while, but yeah it’s totally different that’s the thing but we’ll have to get used to it for now right. So I just hope that that we can get back to some sort of normality rather soon but it’s okay we’re all in the same boat.

Pramod Dhakal: And how about the company itself Radix, like what is it doing at the moment?

Albert Castellana: So Radix is a company that was funded in 2012, by a guy called Don Hughes, he was basically trying to find the problems that block chain has, so you look into bit coin, you see the type of through put they has like seven transactions per second, then he started trying to break it into pieces like trying to what if already we had a bigger block size, what if we had a different data structure, he started iterating on that to find how to overcome this problem. Basically last year, we actually got the milestone where we actually created a network, a DLT that could scale to basically 1.4 million transactions per second, which was basically running the entire bit coin block chain in about like a few minutes right,  like I think like 10 minutes, but the thing here as well is like where does adoption come from and up until now it’s been very hard to see what adoption was coming from, we’ve been trying different approaches like from gaming healthcare like different things we’ve seen in this industry and one thing that has become clear like at least in the last maybe a year and a half two years, is that actually we already have an existing customer base that can find product market fit for what we’re building which is the DEFI ecosystem. So the idea basically is, can we actually give another turn on the on the financial system, can we try to reduce redundancies can we try to avoid some well problems that have been so far and basically, what this means is moving from a handcrafted financial system to kind of an industrial financial system, a place where basically anyone can just come in and can just build their own tools, can just like create like light modifications of some things that are already standardized to work like that and it actually means that, like well basically it democratizes the access to these tools. We’re seeing already like on ether which is clearly the biggest platform for DEFI right now, how all these different applications are starting to explode in usage, it’s still very much focused to the crypto ecosystem, so basically the people that already are in the ecosystem, not so much for the people outside of it but you’re actually seeing some tools as well trying to capture the attention from people outside. All these things however are still very much constrained by the technology, so it’s not good if you actually get adoption and you can scale to more than a few tens of transactions per second. So, what we’re trying to do is we’re trying to keep in mind that the goal is actually what we need to do is, we need to uh offer to the world these DeFi tools that allows them to have access to financial products that until now we’re not available for them right, while at the same time solving the fundamental bottleneck right now, which is scalability right. So having those things in mind at the same time that’s why we have on the scalability front have developed a new type of consensus algorithm, well it’s like an evolution of one consensus algorithm called Hot Stuff and we’ve basically developed the way that we’re going to be starting this consensus algorithm so that it can actually scale to billions of people, right the idea here is that you can’t have everything happening on a single network, it has to happen like on a on a fractured network which we call Shards right, you don’t want every single transaction in the world to be happening and being recorded and validated by exactly the same number of notes, you want them to be sharing the load and basically having some of them be taking care of some transactions, some others taking some transactions others but this is something that is going to take some time. So in the meantime that’s what we’re doing is, we’re trying to find which is the way that we can actually have the biggest impact to the DEFI ecosystem right and it’s based on, we know some of the building blocks that are necessary right, so we know that we need some type of like representation of steady value right. So we need some stable coin in the platform we need a way so that people can exchange between them, so we need stuff like the innovations are on constant function market makers we’re very much close to well understanding what’s happening in that front and like we’re very close as well to that ecosystem, we just started this a podcast called the DeFi Download, where we basically like bringing a lot of people together, like just to discuss all these different matters and try to explain how well the DEFI world will be affecting the traditional world right. And yeah, we’re basically very much on that front there’s quite on a lot going on, we’ve got as i said before 17 people just focused on breaking these two challenges, so DEFI, how to actually get traction in that front and then, scalability how to solve this this big problem.

Pramod Dhakal: Earlier you mentioned about the adoption rate, why do you think this traditional banking system are still reluctant or maybe not coming forward towards the adoption files faster enough?

Albert Castellana: I think that it’s still very early right, so a very important piece here is well trust obviously right and you are trusting not the companies that are providing these products here you’re pretty much trusting the technology that these products are being built on right. I know that a bank has a very large ID team that’s trying to make sure that it’s not hack able, it’s not reachable like you know that there’s a lot of controls put in place on the ID front, on the compliance front for example that make sure that I can’t lose the money I have in those in those products. At the same time here we’re in a nascent space, where everything is still being built like we’re talking, like you know just like less than a decade to build all these different things and at a very high rate right, which means that you’re going to be failing very fast and you’re going to have to be iterating very fast as well, so just you know we have to move fast, iterate fast and try to fail fast, so that you can keep iterating on those failures. For us, a very big component here is security and that’s why for example; when we’re looking to how to build on Radix the way we’ve like designed this is, so that there’s a finite state machine model which basically means that we provide and allow third-party developers will allow third-party developers to develop building blocks that then can be standardized and used by everybody right and this basically means, that you can easily uh trust something that has already been standardized because you don’t have to be copying it in a different instance of it and changing that in order to create your own product. So for example; if you look into the example of a token right on Ethereum, every time that you want to develop a token, you have to well create a copy of the ERC20 contract, right that’s the standard, that’s very much the standardized, very much well understood but at the same time when you look into other products that are not so well understood, that opens a lot of well problematic, like problems that can appear in terms of bugs for example; so that’s why we’ve seen problems like for example the Dao, you know which was one of the biggest like one of the other one, where basically a small coding error can actually make people lose you know millions of millions of dollars right.

[00:10:48 – 00:20:36]

So all these things has reduced stress and where we have to go is to a point where like all these institutions can trust the systems know that there’s not going to be like a small bag in the code that will make their money just be vanished, and what we’re talking in these platforms is basically a very big honeypot right, you must take care of security all the time you must make sure that nobody is going to be losing money and that’s that has to be like the number one priority. But at the same time it just takes time for companies to trust in a new technology such as this one right. So it’s not surprising to me, I think it’s just like a matter of time, I think that what’s important right now is that we keep it iterating here and we keep trying to to figure out what the problems are and in the meantime of course there’s a lot of opportunity right, there’s a lot of new concepts being built, there’s a lot of new designs that have very special properties and that’s what I find most interesting just kind of understanding these properties, understanding where are we going and trying to see how we can use this to actually you know like drive adoption right.

Pramod Dhakal: When you look at the client that they’re who are consuming your services at the moment, I’m sure over the years you would have gathered data that would give you some indication of different challenges that you know you might face in the future. Can you elaborate where you feel like; okay this is the area we need to keep on improving?

Albert Castellana: Absolutely, I think that usability is a big, like work to be done in this space like right now, we’ve got a lot of different wallets that are trying to make that that much better ultimately you have to take control of your keys right your like your private keys there’s some people that know how to use hardware wallets but that’s not something that’s very user friendly right, like it’s very difficult to get my grandmother to understand how to use a hardware wallet for example. So like try I think that in the future we’re going to see a lot of different innovations to try to lower the barrier in that front but like, for example for the treatment of keys. Another one for me very important is the fees and it’s very much related with the throughput the problem here is that if you really have a network that is bottle necked where that has a lot of value that wants to move very quickly but at the same time doesn’t have enough space bandwidth to move then basically the cost of using the network actually starts to become very large right like right now, for example; we know that like the crypto currency market like market cup hasn’t is nowhere near the thought that you do in 2017 right, so the kind of the attention on to it is not as big as back then, it will get back up I think but at that point that means that the fees will have a bigger impact that they have right now, and right now just you know if you want to trade on some of these decentralized exchanges, you’re actually like easily spending a dollar and a half, two dollars, even three dollars just to do a very simple exchange right. So the fees are actually becoming pretty much unbearable for a lot of users that that maybe if you have like a few hundred dollars on crypto, you don’t want to spend like a few of them just you know doing a trade right. So that’s one of the things that we want to focus as well, so like alongside with the throughput, we want to make sure that fees remain low and then basically that you always have the best liquidity possible. So the thing is you’ve got mainly three things that we believe that will make DEFI grow right and Radix wants to focus on those three things. One of them is access right, we need to make sure that we’ve got a very user-centric vertically integrated approach, we need to make sure that ramping assets for example is very simple what i said before right so we need those stable coins on the platform. At the same time, if you don’t have anything to do with that so if you don’t have like an exchange where you can actually go and do that then you don’t have liquidity like you can’t do anything with it for example right if you want to be trading right, so liquidity is another one that we think is key here. We will be building as I said like a constant function market maker that will allow people to trade very easily between them, that’s something that we believe will have a lot of innovations in the coming years right, and we really want to make sure that basically anyone that’s on the platform that has access to the platform has access as well to this to this liquidity right. Finally the other one is just choice right, we need to make sure that people have the choice to use all these different products that we’re that we’re building right and that’s where the standardized components come in like we need to make it so that people can easily move from one to the other it, can easily compose them right so one of the things that to me is mostly most exciting about DEFI is the way that developers anywhere in the world can just speak like pieces from other people’s work and just put them together to create new things right, so I can just go and borrow here to get I can just create a stable coin here to then you know borrow uh some money from it like there’s a lot of things that can be done here that that can’t be done in the traditional system, because you did like all these all these companies they don’t have an open API right, they are not they actually require very cumbersome contracts and very cumbersome deals and very they have very closed systems that don’t allow people to compose things between them. So yeah, I think that with these three things we’re going to see some like the type of innovation that will make it so that you know users actually don’t have them that’s problem to come anymore right, I’m not saying the DEFI will be for like immediately for those type of users, I think that people will be building very quickly towards that direction right and that’s where we’re going to focus basically.

Pramod DhakalYeah I mean, like you said you know usability is going to be a key, one of the things that you uh pointed out pretty interesting it’s like, there’s a large segment of people who do not understand this space at all or they don’t want to even know, let’s put it this way. I’m only sort of going to give an example, like you gave an example of your grandmother but at the same time I would like to give you an example of my own dad, like if I explain that like there’s a there’s a bit coin which is you know basically it goes into half every four hour years of school then how do I explain those people, how do I say like you know it’s something that would that would become into half?

Albert Castellana:  Yeah, so I got into this phase in 2013 right. I started looking like at that point it was actually very difficult even for me to really grasp my head around like the whole concept but actually like I come to a complete conclusion after like basically telling this to like you like fiving this to a lot of people but actually it’s not even that necessary right, like you know that you’ve got a scare supply like for example everybody understands, how to use the internet but not how it works, so most of the questions that a lot of people have, it’s just like you know those are very low level technical questions right. If I want to explain mining the way I do it basically is it say you know you’ve got a thousand people in the room trying to convince each other that the transactions that they’re proposing are correct right, so what do you do you just tell them a rule right you just say; everybody shut up and only stick if you find like you you’re clicking like a timer or something that that a random a random number generation system that just gives you like 18 zeros at the beginning right and then you can talk right, until then you’re just completely quiet right, but actually that’s a lot of like waste as well right like the amount of energy that you have to spend to do that right to be clicking to get you know 18 zeros on a random number that’s very high right. So I’m very much excited as well about all the innovations that we’re seeing around that front for example the proof of stake innovation right which actually completely changes the model but actually I think it aligns more than incentives with everyone in the system right. So for example, radix is going to be a proof of stake system not in the consensus algorithm but on the sable prevention mechanism, so basically, how do I actually know who is in this room right we say a thousand people but what’s stopping someone to just come in with you know a million people into this room, well in this room there’s not space for a million people right. Like it was just like on the internet there’s room for as many people as you want so something like proof of stake where you know basically the amount of coins that you have given you the voting power to see which transactions are valid or not right, that’s I think a very simple way and very a very aligned way for everyone to be able to participate there. It’s just like just depends on the level that we’re talking here right.

[00:20:36 – 00:29:41]

Pramod DhakalYou know, I had a good session with one of the other leaders in this particular space of a particular company and he said like promote maybe like he echoed what you said maybe there’s no need to explain them, maybe we should talk about value right if you say, okay you know instead of talking about these jargons that even we struggle to explain to someone and I think we should just talk about the value that it delivers right, maybe we talk about efficiency and we talk about things that are going to help us to send money to up person to person and maybe we should talk in those lines where we are just talking about value and that helps perhaps you know that’s what he came down to. What do you say about that?

Albert Castellana: No, I completely agree, it’s like I said with the internet everybody knows how to use it but they don’t know how it works and here they don’t know how to use it, yet I mean I think that a lot of people know that they can send money with this, that’s something that I think is very well known right very few of them know that; oh you know if I’m actually holding these assets maybe I can you know get a loan on putting them as a collateral for example, my bank doesn’t allow me to put bit coin and get a loan right, but thanks to this new like system the default space that the tools that the default space is bringing with it, i can do this new thing that until I couldn’t do right. After all we’re talking here about the internet of value, we’re talking how will you know even machines like trade between themselves, how am I going to be streamed money, how can I know that you know the rules of the system won’t change because there’s a small line in the contract that I haven’t been able to read. Now here, you potentially have those small lines in like, aka packs right but at the same time those are publicly accessible to everybody. So they can be audited, they can be checked at least you know that like well everyone’s using actually the same building blocks not kind of different right. So the standardization of that if right now I get a mortgage my bank’s contract will look totally different than your bank’s contract right, so what are the those difference will they be able to understand that, here it’s much easier to understand. So again the barrier of entry will be lowered very much right. One thing that I’m super interested about is like, basically all the front-facing stuff right, so you’re going to see a lot of different wallets, maybe they won’t call themselves wallets but basically applications they’re just like connecting to DeFi and allowing people to just you know hey you give me your dollars and I’m going to give you yield for those dollars they are insured, they are properly coasted it, right but actually what I’m doing underneath to provide you those dollars I’m not printing anything I’m just going and borrowing it to someone that has the demand for that, why do they have the demand because there’s things that they can do, that they can’t do on the traditional space right, which is basically for example getting a loan on their bit coin, a lot of people that have bit coin they want to kind of you know they don’t want to sell their positions but they need the liquidity right now right, so through this mechanism and basically paying a little bit more interest than they would be paying to a bank which doesn’t want that those bit coins just Colorado actually, so that’s how these applications can provide better deals, even better returns that other traditional companies can right. So is those inefficiencies is those things that because of well different type of fears and different type of regulations which are absolutely necessary but at the same time makes things much slower to move can be done. I think that what’s going to have I mean I think that adoption still will take a little while there’s still like I said a lot of risk here right like there’s a lot of bugs that keep coming out, a lot of different approaches that keep coming up but it’s good like, what we need right now is just to be iterating as much as possible trying to find out what works, what doesn’t work, what are the best like, it’s good that we’re learning by doing instead of just you know, like I see for example; in the in the health space where you know finding a vaccine for the corona virus just takes forever because of the regulations which of course they have to be there, we don’t want bad vaccines to be distributed all over the place right, but for sure as well stop some type of innovation, here you’re not harming anyone, just people that want to use those tools they understand that they are under risk and we must explain that that’s the case, we just must work as much as we can to reduce that risk. Like I said for example with us just trying to make it so that you have a set of building blocks that are super well tested right, instead of allowing anyone to come and like develop their own, which we will allow to as well but at the beginning, we need the fundamentals right, we need the fundamental building blocks that allow people to do those things in a standard that is fashion like for example a token, so if i want to create a token and it’s basically just like well in this case an API call, it’s just much easier for any developer to use which actually reduces the friction as well, just allows anyone to come in and use this technology rather than spend months of you know of learning curve to understand a total new technology. So it’s a lot of different things like we’ll see on the technical space of innovation, on lower level like with scalability for example the new programming models are coming up, there’s this space is very broad and it’s just getting even broader every day, there’s so much innovation in every single layer.

Pramod Dhakal: One thing that I’m quite curious about this loan and banking and so forth, when I’m staying home now you know I think I asked this to previous guests as well, when I’m home now, I’m doing a lot of things that let’s say buying online and so forth and I’m kind of thinking when would be that moment when I can literally buy a house from home just sitting at home?

Albert Castellana: So the question for the house is a bit special right, so if you’re talking about you want to buy like real estate right yes you want to buy property not to live in right, I would say like maybe you can buy a fraction of it right that’s something that can that I already know that there’s some companies are actually working on that right basically what you have is basically a company that owns this property or like a part of this property, amazingly tokenizes those that part of the property right, that doesn’t mean that the notary that you can skip going to the notary if you actually want to you know own that house to the law right you as a person right and I think that that’s very long way off basically like the governments have to migrate their existing systems which if someone is very slow to move, will always have to be the government basically just the risk is too big right and so I think that at the same time there’s a lot of components in here like, for example; you going to the notary to buy the house well the notary is actually making sure that you’re not being you know forced into something that you are who you say you are right, there’s a lot of things there that governance wants to let go and i don’t think that that tokenizing it will be helping there you know. So as an investment yeah, I think that there’s ways that you can kind of use that, as proper ownership I don’t see that coming anytime soon.

Pramod DhakalBecause I was thinking right so as we are, as you said we are tokenizing those contracts let’s say if we are able to do that and perhaps like you said government is going to be a crucial there but I’m also thinking, I’m sure from the banking perspective the traditional bankers, just to even get to the loan right, so just to even get to the loan not to even buy the house right a lot of times there is a lot of manual work involved. I’m more in line with how the traditional banking is still in that, let’s say traditional thought where they are not even recognizing that something like issuing a loan can take x amount of time, perhaps where for a home buying home it might be applied because you have regulations and whatnot but just to get a maybe personal loan or maybe car loan.

[00:29:41 – 00:39:20]

Albert Castellana: There’s different things though right, the reason why they take so long, I mean there’s many, many reasons but for sure one is that whatever you put as lateral normally is not liquid, normally you don’t have a liquid asset that you can already put there, so if you get a mortgage on a house and you may be like put the houses like as part of the of the mortgage, they won’t be able to sell it easily right it will take some time there’s going to be some loss the faster that they actually try to sell the house. The thing here is that you can you actually have assets that are highly liquid basically you can sell a bit coin at any point in time without the doubt that you’re going to be able to sell it right, that’s a very big difference here that I’m afraid that they can’t easily solve most of the assets that you will be getting like a loan from won’t be liquid. For those who are like, I don’t know there’s regulations, there’s the detective like the you know operations problems of that the way that they move the money, like we’re talking about like the banking sector is built upon layers and layers and layers that have been built over the last 20-30 years right of code, most of them can’t be touched, like it’s very difficult for them to jump into the middle of their banking core and changing things here and there because, well basically the people that build that actually left the company maybe 10 years ago, probably like technologies have changed a lot as well so it’s very hard to hire people that like those technologies. So what I was talking about before about the compensability, so being able to get you know your company is offered is offering this financial service this company, my company is offering another financial service someone can just come in and just use both of us companies in one single transaction, imagine how you would have to do this in the traditional world. First of all you’ll need a lot of contracts between ones and the others and KYC double and like there’s going to be a lot of problems in there right a lot of lawyers involved as well. At the same time if you actually want to make it programmatic, so that you can actually one single transaction do this you actually need a very close integration between all these different parties right so you need in this case one bank and you know these are the financial company and their APIs need to be very closely integrated so that someone can actually do a transaction between those two. So it’s kind of like the internet right you know that on the internet you’ve got APIs, you’ve got like URLs where you just write something and after writing something and clicking enter, you’re going to get the time, what time is it now right so you pop one API like one URL that you that you click on and that gives you the time right now. So in a similar fashion here everyone will be able to do that putting together, I just don’t know how the traditional financial system can actually achieve that, I don’t think that that’s doable like on the fundamentals of the technology that it’s built on you know.

Pramod Dhakal: Perhaps that’s accurate because the other way around perhaps could be that they acquire someone who is up and coming right, so that could be one of the alternative route to for them.

Albert Castellana:  Yeah, I think it’s a very common tactic for them as well right, I think that most like a lot of them must be thinking precisely that it’s like you know, like they have large amounts of cars that they can spend into buying  Fintech companies for example right and I see that as a good thing like that actually makes it more, how do you call it basically, will help this innovation right you know that you can build something that you can sell to a bank it will be for the for the betterment of the bank but actually it’s for the betterment of everybody. So just right now, just today for example; I opened an account in a bank and what the process was you know upload just a couple photos of my id card and then a video call with one of their agents right, that took me less than less than 10 minutes for sure right instead of having to go there physically and everything, I’m sure that there’s quite a few startups that are like just involved in that process right or maybe they built it themselves but like it’s good to see how the Fintech world is actually pushing the traditional you know companies to be advancing much better. I think that a lot of people absolutely trust this bank that I just got the account on and I’m very happy for them that they will be able to have you know a better service from now on, so I see it as a very good thing anyway, that’s what I mean.

Pramod Dhakal: Yeah and as we are looking into this particular space you know, I’m looking at this particular time like the covid situation and I am a consultant for a financial institution as well as well as insurance. So I’m sort of thinking the amount of call that is received by the insurance company at this point in time and I was talking to some of the leaders from America and then they sort of you know started using AI for a more or less AI enabled conversational you know Chabot you know, let’s yeah so they say it helps them and perhaps this is also one way to say that; you know we are trying to at least answer some of the common questions from our customers using some of the tools as such like AI and robotics and whatnot, and how do you see this kind of technology playing a role in future especially in the banking sector?

Albert Castellana: So, it’s clear that improvement that this causes is massive for the for the user experience right like I said today just like setting up this account in less than 10 minutes, it’s ridiculous right, if you compare it to what was on like a year ago or like three years ago, it’s a very big change. At the same time like I can’t even imagine the type of information that these companies will be getting from this, as you know well insurance companies can actually learn a lot from when they all are based on data right and basically having a chat bot that actually can guide the conversation into telling the information that that you want to understand, for sure will be better as well for these businesses. I think that there’s a balance to strike there and clearly there’s a lot of like companies that have abused the power of information I think, especially when they’re like well basically painting themselves as you know, I’m a friendly chat bot and I’m actually just trying to find a way to see what should I do with you if I should like drop you as a customer or not. So I think that AI will have massive challenges in the very short future stuff like for example; well deep fakes for example I think will be a very big challenge right. So I like with upcoming elections and upcoming like all the things that will happen in the next few years will be quite bizarre to the eyes of today. I just hope that we find that this balance, that we find the balance where we’ve got something that’s fair to everyone, that’s morally correct and at the same time profitable and I think that’s something that’s like people need to work to achieve all together, it’s difficult I feel like there should be more concern in the in the public to understand what this actually means right, it’s like all these applications for example to get to age yourself, so you know you take a photo and they send you a photo of yourselves being, it’s just a massive way to get information from people give me your name, give me your email, take a photo and now I’ve got everything I need to actually be like doing a lot of things and I think that that’s very interesting, I just like in that mix of things that I hope will happen is it’s like people will become more conscious about this, people will see that you know maybe not everything I see on the internet is something I should be trusting but maybe I should not be sharing everything on the internet but it’s very difficult because here you’ve got like the utility of being of using these systems at the same time right, like it’s just so much so convenient to use all these things. So yeah I think as we move forward we’ll need to be relying on technology even more and more I’m not against that I just hope that as a society will learn how to deal with that in a responsible fashion.

Pramod Dhakal: If I think about privacy of course there’s this as soon as you are exposed to the internet or through any kind of devices that that you have you are prone to such issues right you are exposed to the internet, your data can be manipulated and so forth and how do you see that this particular challenge can be addressed by block chain as a as a technology?

[00:39:20 – 00:50:45]

Albert Castellana: So I think that the first blocker in my mind there is actually throughput again, so the more information you want to store the faster you want to store it like for these systems to be viable, they actually have to be taking care of a lot of data, and the more there’s lower the system and the more expensive in terms of fees for example the less you can actually do this right. At the same time I think that in the future we’re going to see systems where you know well let’s put it differently, I think that this technology has absolutely improved and improved a lot of people’s understanding of the concept like cryptography but now a lot of people understand what a private key is and like a public key is right, people understand how one thing becomes the other like and then; oh I have an address and I know that I’m the only one that has access to this address but I think that it’s actually something that probably my mother understands now and probably she didn’t just you know just a few years ago. So that’s the start right we’re learning that right now, it’s very difficult to manage the keys but in the future I think it will become easier, as the keys are more easy to manage then that means that you know there’s going to be already implicit like more privacy just in the communications between people, we’re seeing a lot of efforts from so many different companies trying to make sure that that communications are encrypted at least between peers, I think that’s a very good advancement. I think for me that like the problem of deep fakes will be like a next level problem of this will which will completely change how people see, what they share on the internet, so the more I share about myself the more the easier it is for robots basically to just come in and create assets from me. I can just you know make a video a 3d video of me saying whatever stupid thing, I think that people will be very much reluctant to do this and then I’m very interested and basically, there’s a couple but there’s a couple of projects that are looking into making sure that every well if you have your key you have you’re the only one that has access to your data right. One of them for example is called orbit, which is basically you have your kind of personal space that’s based on Yuki right, so you’ve got your like your digital space and then everything you do everything you do kind of in the internet is being stored in your space, you’re the only one that has access to that but then if someone requests some of this information you know, then they just exactly ask for that information and potentially that those calculations can be done in your space without being able to take out the information outside of your space. So there’s things like that it’s just so early and so difficult to explain and so difficult to create actual businesses around this at this point in time I think, just because people don’t see the need of it right but I think that very soon we’re going to see like reasons to see this a little bit more. There’s a book by Neil Stephenson called The Fall and it really focuses on this, there’s like the deep and how it will be changing the phase of the internet it’s very interesting. I think that that’s one of my biggest concerns like for the next three years for sure.

Pramod Dhakal: So interesting and fascinating especially in the financial sector that you cannot you cannot just ignore the development that is happening at the moment and yet you know, if you’re not curious about that then perhaps you don’t know anything. So as soon as you have some curiosity there then you get to know quite a bit and then the information is too much to handle right, so it’s interesting the way the development is happening.

Albert Castellana: It’s going to take time but like what 20 25 years ago, nobody was using a smartphone right, we didn’t have Google maps right, so people learn very quickly it’s just that we see the live in real time right, but if we think like what will people understand about cryptography in 10 years, well it’s going to be much more understanding that we have right now right and I think that crypto is the thing that’s actually fostering that the most right. Yeah so I see this as a very good thing it’s just like I said we’re just seeing it in real time. So it just seems like it’s moving slow but actually if you look it back as I said 20 years or 10 years it’s so different.

Pramod DhakalYeah especially, you know, I’m from the era where we didn’t used to have internet and then I have a daughter who said to me; like Dad, like what was the IPhone version when you were like 2 or 3, so and I’m saying like there was even before that like you know if you think about the time like we got to the internet and it was so interesting right like we used to get the internet even though there are like only few web pages but we used to scroll around those pages and then I used to feel so great about that right and my mom used to swear at me for the bills and so forth, so that used to be that is the days right.

Albert Castellana:  I think 5g as well will be a massive thing here right and what privacy as well basically with 5g like, companies will know exactly where you are all the time right oh he stopped for five seconds in front of the shop right, so I think advertising will change greatly as well like yeah, I think that that will have a very big impact on privacy right, so hopefully we’re going to see devices that take care of that a little bit more. Right now like companies that have access to this data know a lot about you right and they can easily sell this because well probably you didn’t even like well know that you signed up for anything around any of those things right and I feel like for sure there has to be more regulation on that like for, I’m quite comfortable that euro like the European like area has the GDPR stuff you know, it makes me a little bit more comfortable knowing that for sure at least they have to remain conscious of what they’re doing with the data that they collect from me. But it will always be about what type of utility, what type of convenience I get of doing one thing or the other and if you want to have all the other services that 5g will bring with it you will probably have to be subduing some of that you know privacy for it so yeah.

Pramod Dhakal: And talking about all this different development, I’m sure there are a lot of startups that are there they are doing some interesting stuff, do you want to talk about any particular startup you feel like hot they are doing something very interesting?

Albert Castellana: To me a very, very interesting one is called then, which is a protocol that basically communicates protocols right, so if I want to send my bit coin to Ethereum right now, there’s uh very few ways to do that right so normally I would just be trusting someone to be like holding those bit coins and then post like kind of creating them a representation of them on another ledger, that’s very good and that’s very useful, at the same time it’s still very much centralized right, what run is doing is they’re basically making it so that the entire network, their network is sharing the keys between them in a secure fashion, so that you cannot just have the representation of the bit coin but you actually know that, well for sure there’s one bit coin there right 100%, you don’t need any auditing companies. So I think that’s going to bring a lot of changes to the industry, you’ve got that well if they can communicate enough protocols and then you can basically send ether to radix for example, then there’s so many different things and so much innovations that you’re going to be able to do because then the. So developers until now build on one platform and another based on the capital in that platform, if I’m if I’m a developer and I have to choose between building here or there I will normally choose where the user base is because that will be my customer base but with innovation such as this then it’s more about the technology, so if you actually need throughput and if you actually need low fees and if you actually like this programming environment that radix is giving for you then it’s going to be very easy for you to use the DeFi, to kind of offer to your users the DeFi applications that radix will have on top through basically just sending assets from one to the other right, so that’s to me a very big innovation, that’s going to be like massively disrupting to the industry. They launched this thing called RAM BTC which for now it just takes bit coin and like kind of converts it to Ethereum right but that basically will make it very easy for anyone to deposit their PTC into the DeFi space which right now they couldn’t do freely right or they had to be very much controlled. I think that in the next few months as well, we’re going to see a lot of innovation around staking for example, we’re working on a couple of projects around this because we think that the kind of limitations that you’ve got right now when you’re staking a coin are very big right, so first of all you have to have your tokens locked up but you can move them for a little bit for quite a while that means that either there’s like a minimum like time that you have to have them there or actually if you move them you’re going to like completely lose your like your rewards, at the same time there’s like minimum thresholds that allow you to participate only if you have this many coins for example, I don’t think that that’s very fair to a lot of people you know as just like the various too high and so we’re looking into ways that we can actually kind of improve this and like again democratize the staking, just basically like unleashing it so we’re working on this right now we also have an announcement on this front but there’s really like a lot of things that I’m pretty interested like very interested.

[00:50:45 – 01:04:44]

Another one for example is constant function market makers, for those of you know it’s like you’ve got until now, you’re used to exchanges that are order book based right like; oh I want to buy at this price this much right and someone either takes my offer I have to be taking the offer of someone else right. So the thing here is that if you change that model to a model where there’s no such thing as orders but basically just people that pull together their funds and other people can just come in take either one of those sites, pay a fee for that exchange and basically the business model for the people that are providing liquidity is just the fees that coming, that creates very highly liquid markets right just makes it so much easier like the user experience on this is so much better instead of having to basically wait for orders to hit right. That’s something that there has been a lot of evolutions on like, if you look into the biggest DeFi applications right now like the number one would be UNI swap, which is this one and another one precisely is it would be curve right which basically takes two stable coins, which in theory they should have kind of the same value right, which means that if people come and take my coin or like if people come and take USDD or take USDC from my pool right it doesn’t really matter because it always should be about a dollar right but I’m always getting those fees right and this basically means that now you have a huge market like with highly liquid assets that you can change from one to the other because you just have to pay the fee, which in this case is like 0.3 or something for trade right. So they’re not that cheap yet, they will I think it will become much cheaper at the same time like the liquidity it’s getting sufficient now and it will be much bigger in the long run, there’s still some innovations there like there’s the problem of impermanent loss for example which I believe it’s a very big problem and that’s something we’re looking into and there’s some projects as well like Bangkok for example, that has basically maybe not solved it but reduced it to a way that now a lot of people will that until now couldn’t participate because of this problem, so permanent loss is basically as I’m offering my tokens to for the people to take them right to like I’m offering my tokens so that I’m enabling this market but other people can just come in and buy them from me right, which means that i don’t have them anymore and therefore if the price goes up, I just feel like i missed out because you know I sold them before, so it’s just like a way to sell them on the way up right, so yeah there’s some innovations on that front I think that will change a lot of things as well. So these three things I think for me are the key right now.

Pramod Dhakal: What was the third one you said?

Albert Castellana: The banker, so union swap is a very simple constant function market maker which basically says; you know you have to put 50-50 in dollar value right so you put you know one ether and 200 USDC right for example and then anyone can come in and buy your ether and just you know put 200 USDC on top and there’s some sleep edge there right so it depends on the size of the pool the amount of sleep that any trader will get right but they have made it so that the waiting is not fifth bunker has made it so that the weighting is not 50 50 but it’s a dynamic rating,  so depending on the price and how much is moving it will be kind of weighing the pull more towards one side or the other, it’s pretty like complex system but I think that’s precisely what has been held like holding this part of the industry back a little bit. I think that that will be very interesting so like a combination of those two basically means that you can now well basically trade anything on anything with high liquidity, right you can trade bit coin on ethereum with a massive liquidity and knowing that the fees will be rather low and the slippers will be very low as well, right so maybe you’re paying maybe a little bit more in fees right like on exchanges like not point two percent instead of here like northward three but at the same time this leap age will be so low in the long run that it’s probably going to be just, you know I think actually beating the centralized exchanges. Like to me the experience of going to a centralized exchange right now, it’s something that i dread very much, it’s just difficult to you know oh I have to send the funds from my hardware wallet to here, I have to wait then; okay now I’ll go I’ll put some orders here and there right now they have to hit or I’m going to be paying much more in fees, it’s just too many steps right, we’re here is like I connect my hardware wallet in a few clicks, I’m done basically so yeah much more user friendly.

Pramod Dhakal: It’s interesting though the one that you just described I think the bank or I guess, I’m just like quickly going over it and trying to see like what it offers because I’m also curious about buying bit coin and so forth but even though I didn’t make any money there and maybe I started when it was already you know in the in the slump or something you know.

Albert Castellana: There is a lot of innovation right like, you’ve got companies like for example that has I think it’s over 2 million users right now, right so they’re very much focused on adoption right like can we get a lot of because I think that a big blocker for a lot of people is; okay I’m going to send my money here I’m going to buy this thing called bit coin but actually what can I do with it right and the answer of; oh you can actually spend it so you know that it may be going up or down in price, so it’s kind of an investment for them but actually you can easily spend it with a card I think that is just like so much simpler for people to understand and to accept right. So they’re building so much stuff, they’re just building you know an exchange and the wallet like a non-custodial wallet, they’re building their own block chain basically they’re doing a lot of things on that front, I’m very impressed with their work, like I said there’s a lot of different things going on in different layers right so you’ve got more than some they’re more going to the adoptions and they’re trying to get, for example kind of adoption on the third world for example right like in like hybrid inflation countries for example, there’s just so much going on right now. I’m very looking forward to seeing as well what Libra will be doing right, that will be a very big game changer regardless of like kind of the science that they can deploy about like you know, like they’re taking some compromises here there but they’ve been very smart in the way that they have approached this and for sure will be a very good driver for the industry right, so that will make a lot of people understand what a private key is right so, very excited about that though.

Pramod Dhakal: And what do you think about something like revolt and they have been in in the existence for quite some time now, at least there’s a big buzz around their startup as well how do you see them themselves positioning and with all the new innovations going forward?

Albert Castellana: So the thing that they’ve done really well is, they’ve captured the user base right they already have those users by saying that this you know this card is for traveling for example or this this card is for savings for example, they have a very big user base and that that really understands what they’re trying to do right. To be honest I don’t know how they’re going to be adopting like these new opportunities right, so for example are they going to be integrating with DeFi to provide more yield to their users may be right. I think that given their well they have a very big like focused light on them right a lot of regulations, the regulators are looking at the way that they do things, so I don’t know to what extent they will be able to actually be aggressive on that front right, while companies that kind of crypto native companies are already built like understanding that type of regulation right. So I don’t know I’m pretty sure that there will be well like soonest will they will start to kind of leveraging these new opportunities I don’t know to how much of a rise they are right stuff like robin hood for example is actually doing a very good job they’re starting to like well it’s a very big on ramp for crypto, for a lot of people right just like so much like so convenient to a lot of people, so very happy about it, I think that for now it’s probably the thing that has been pushing the like the traditional finance the most right like I think that without the revolution of the world we wouldn’t have this 10-minute process to sign up on my traditional bank so we’ll see, let’s see how it plays out.

Pramod Dhakal I see revolt as more of a upgrade version of the traditional banking system more modern but yet you know it’s not decentralized finance I would say, they still need to do a catch up there and I’m definitely looking forward to uh new innovations that would actually say okay this is actually disruptive, we cannot definitely say you know let’s say companies like N26 and rival are yet disruptive.

Albert Castellana: Yeah it’s going to be quite mind-boggling the pace that would still they will be having to adapt or potentially be disrupted, like for most of the people like these are completely new companies right but this is like growing so fast and they already there’s already something chasing them no like. I think i would revert back to what I said before about the bank like the traditional banking, I agree with you, I think it is like upgraded traditional banking but at the same time I just think that all these tools will just make the traditional banking better you know I don’t think that we need to be killing the traditional banking, like I said a lot of people need that trust need that and a whole holding, my grandmother doesn’t want to have a you know a ledger basically right at her wallet, my mother wants to have someone that you know speaks her language that she can go to and say; hey I missed the key for this and like this can be recovered no problem. So I think that it’s a very big value for a lot of people that we can’t lose and they would just be profiting from this which is good, like I said it was just driving more innovation.

Pramod Dhakal: And how do you see the future of radix?

Albert Castellana: Right now what we’re trying to do is we’re trying to see how to capture this this this adoption right so we’re very much focused on how we can actually build something that will drive these demand for applications that have a real utility. So that’s where defect comes in right so trying to build these building blocks that everyone can then easily use and compose between them, so that people can actually basically make business out of that’s we believe a very strong driver right, like we want everyone to be able to make business out of building on radix, we’re working very hard to launch as soon as possible, very soon there’s going to be news on that front and in the meantime we’re basically focused on understanding how can we do it to kind of lower the bridge right that’s kind of what I said about for example that the staking right. So if you have a way so that you can basically have a better way of staking assets, you have a way that allows them to be liquid, that allows them to be tradable, that allows them to be used in DeFi for example, right we think that that’s actually something that a lot of people are already in the industry will really want to use, it’s something that in the way that we’re proposing this hasn’t that doesn’t exist yet right, so it’s pretty much like the way to make sure like it’s basically a vehicle so that we can actually set the world’s emotion to get you know the adoption for radix in the long run. But it’s something that that it’s a marathon right like you have to have a very long term strategy to be able to drive, to get there you need the technology to be in place, need the products to be in place, so that you can actually be uh capturing the like the user’s interest not for speculative reasons but actually for real usage right and that’s what we’re focused on right now, that’s what we’re trying to build and achieve now.

Pramod DhakalSo Albert, I think that’s pretty much for this particular session. First of all, thank you so much for joining this session.

Albert Castellana: Thank you Pramod, thank you.

Pramod Dhakal: It was quite wonderful conversations and then you are quite knowledgeable and I get to learn a lot from you. I look forward to talking to you again in the future, hopefully we have new things to talk about at that point in time.

Albert Castellana:  I’m sure, there’s just so much stuff going on just like yeah we’re giving the loop and thank you very much for having me here, looking forward to talking to you again.


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