“When I went to my first Bitcoin conference, I got goosebumps the way I did when I first logged onto the Internet.”
Jalak Jobanputra is the founding partner of Future Perfect Ventures, an early-stage venture capital fund focused on decentralized technology with an emphasis on blockchain tech and crypto assets.
Bitcoin, crypto assets and decentralized technology mark a revolution akin to the Internet. The use of computer networks on the blockchain created greater financial access for communities around the world. Unbanked or under-banked communities like many Kenya can now store and exchange money, through Bitcoin or other crypto assets, across the globe instantaneously without a central intermediary. The restrictions inherent in centrally-controlled fiat currency leave millions without access to financial systems. “In Africa, we have so many unbanked or under-banked people. Just like they never had landline phones, they’re never going to have a banking relationship like we do.”
Bitcoin and other crypto assets have recently seen a surge in adoption from hedge funds and corporation mangers who see this revolutionary decentralized technology as a hedge against inflation. Stimulus and money-printing brought on by the pandemic has accelerated this adoption and seen Bitcoin’s value skyrocket. The Internet-native generation will ensure Bitcoin and crypto assets’ inevitable mainstream integration as these digitally fluent groups discover greater financial independence.
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SPEAKER
Jalak Jobanputra
Founding Partner
Future\Perfect Ventures
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello everyone, and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology, and public policy. SALT Talks are a digital interview series that we launched in 2020 with leading investors, creators, and thinkers. Our goal on these SALT Talks, the same as our goal at our SALT conferences, which our guest, we had the pleasure of hosting at our SALT Abu Dhabi conference in 2019, but our goal is to provide a window into the mind of subject matter experts as well as provide a platform for what we think are big ideas that are shaping the future.
John Darsie: (00:47)
We're very excited today to welcome to the latest episode of our digital asset series with someone who is a pioneer in the space before, quote, it was cool. Her name is Jalak Jobanputra, and I'm going to read a little bit more about her bio before we welcome her onto the camera. Jalak is the founding partner of Future Perfect Ventures, which is an early stage venture capital fund focused on decentralized technology with a focus on blockchain, tech, and crypto assets. FPV was the first venture fund worldwide formed with a thesis on decentralization, and the portfolio includes companies like Abra, Blockstream, BitPesa, The Graph, Everledger, and Blockchain.
John Darsie: (01:30)
In 2017, Jalak was cited as a top five investor powering the blockchain boom, and Crunchbase noted that FPV was one of the top VC funds in blockchain, as I mentioned before, quote, before it was cool. In May of 2018, Jalak was awarded Microsoft's VC Trailblazer Award for her early and bold investments into the sector. She has also been awarded among institutional investor's most powerful fintech deal-makers for the past three years with prior exits, including Ariba which was sold to SAP; Yodlee, which IPO'd; TxVia, which was sold to Google; Viacore, which was sold to IBM; and Schoolnet, which was sold to Pearson.
John Darsie: (02:17)
Previously Jalak was the director of emerging market mobile investments at the Omidyar Network, which was a fund launched by Pierre Omidyar, the co-founder of eBay. Previous to that, she served in a number of different roles related to software and fintech. She graduated magna cum laude from the University of Pennsylvania with a bachelor's in economics with a concentration in finance from the Wharton School of Business and a BA in communications from the Annenberg School at UPenn. She also received her MBA from the Kellogg School of Management at Northwestern University outside of Chicago.
John Darsie: (02:52)
Jalak, welcome to SALT Talks [inaudible 00:02:54] we're able to get to know you. You've obviously been very early to the digital asset space, so congratulations on that. But where we like to start every one of these talks is a little bit in your own words about your personal background. Obviously I read a lot of your bio there, but something that wasn't in your bio about your personal background and how you got to where you are today. And also, what was your a-ha or eureka moment as it relates to digital assets and Bitcoin? That's something we like to ask everybody. Everybody goes on a journey from skeptic to believer. So, as part of a brief introduction about your personal background, can you describe how you found digital assets and how you became such a ardent believer in the space?
Jalak Jobanputra: (03:33)
Yes. Well, it's great to be here. Thanks for having me. My personal background is very much related to why I got into Bitcoin and crypto back in 2013. I was born in Nairobi and came to the US when I was young and grew up going back to Africa and India. I'm of Indian origin. And this was in the 1980s when these countries were not as developed as they are now. There was really no connectivity. You actually had to wait for a phone line outside to be able to call outside of the village or even the city.
Jalak Jobanputra: (04:15)
So, that was really very much on my mind as I started my career and I started off on Wall Street doing tech telecom on media investment banking in the mid '90s. Was very fascinated by this new thing called the internet in 1995 when I saw the Netscape IPO happen. And I started thinking back to those childhood memories of that connectivity that the internet could enable and since then has certainly enabled, and we now have six billion mobile phones around the world. A lot of these countries all around Africa, India, Asia, Southeast Asia, Latina America have leapfrogged. They never went to the telephone lines; they went straight to mobile. And then Kenya, where I was born, was kind of ground zero for mobile money and E-Mpesa.
Jalak Jobanputra: (05:11)
So, when I decided to start my venture fund in 2013, as part of my exploration, I was thinking about what was next. Yes, we saw the internet. We saw mobile, cloud computing, all of these kind of infrastructure investments and connectivity. And I felt like we were primed for a next wave of technology evolution and revolution that was going to take advantage of that connectivity but create new business models. I was thinking of artificial intelligence, Internet of Things, these sensors that now cost cents and microprocessors that now enable our smartphones to have more processing power than NASA had when we put a man on the moon. I was at Intel Capital in the late '90s out in Silicon Valley. So, very familiar with Moore's law and semiconductor industry and how we were going to be able to do a lot of things that were not previously possible when we didn't have these vast processors.
Jalak Jobanputra: (06:18)
So, Bitcoin was on my list of exploration, and when I went to my first Bitcoin conference I just got goosebumps the way I did when I first logged into the internet in 1994. I really became fascinated by this idea of being able to use this network of computers, this connectivity that I just described, to enable transactions instantaneously across boarders and with no intermediaries. So, just thinking about going back to Africa where we have so many unbanked, under-banked people. Just like they never had landline phones, they're never going to have a banking relationship the way we do in the United States or people do in Europe.
Jalak Jobanputra: (07:13)
And I felt like Bitcoin was the first real technology that I had seen that enabled people to transact with each other with no central intermediary that was taking out fees. It's really those fees and the cost of infrastructure build-out that has kept a lot of companies and banks from actually serving these populations. So, I was instantly sold. I was instantly sold on Bitcoin. I instantly bought some Bitcoin and-
John Darsie: (07:53)
Why didn't you call me?
Jalak Jobanputra: (07:53)
... made the underlying blockchain technology the underlying thesis of Future Perfect Ventures when I launched it the next year.
John Darsie: (08:03)
Right. No, that's fascinating. And I want to keep going down the Bitcoin rabbit hole before we talk about this broader decentralization movement. So, you wrote a piece. It was published in Recode. It was first published on your blog in 2017. It's pinned to the top of your Twitter profile. Bitcoin at that time was at $10,000 per coin. You talked about how it was going to revolutionize money. You talked a little bit about the outline of that thesis, but could you go through that thesis again, about why you think it's revolutionizing money? And did you expect the story in terms of price appreciation of Bitcoin to play out this quickly, or how has the last three years played out relative to your expectations?
Jalak Jobanputra: (08:45)
Yeah. It has happened very quickly, and I think the excitement and the fact that this is opensource code where anybody, anywhere in the world can build upon this underlying technology is what's helped make it move so quickly, in terms of the underlying technology. Then certainly from a financial perspective and a store of value narrative, we've seen so many macro events that have led to some of the recent price appreciation we've seen where it's now over $50,000.
Jalak Jobanputra: (09:21)
So, in some ways, it has happened very quickly. In other ways, a lot of people who haven't been in this sector for a while don't realize that back in 2014 to 2016 it didn't really do much. And then we had the big run up in 2017 and a big crash right after that. The sector was pretty much forgotten by I'd say folks who were looking at it from a macro standpoint or some of the retail investors, but slowly the building continued to happen by the entrepreneurs and the technologists, the people who were sold on this idea of this borderless system of transactions.
Jalak Jobanputra: (10:08)
Now, this goes back to that thesis of revolutionizing money. If you look at money, it's a transaction mechanism, and the history of money goes through barter and objects and gold, and just fiat as we know it hasn't really existed that long. If you take a step back and think about money that way and you think about the fact that we're still transacting with these pieces of paper that cost more to produce or these coins that cost more to produce than their actual face value, and they're getting devalued by monetary policy and government controls and politics, the idea that computers and a network of computers can provide the next generation of money to us or that ability to transact is really kind of a no-brainer in my mind.
John Darsie: (11:12)
Right.
Jalak Jobanputra: (11:13)
And that's why I think its appealed to internet natives, the generation that doesn't understand why we can't go to a bank 24/7, why we can't transact over the weekends through our banks. I mean, it's silly how we have so much stuff on-demand, but our monetary system is not. And they certainly lived through 2008 and saw how much the banks actually control the money that we work really hard for.
Jalak Jobanputra: (11:49)
And those in emerging markets and where I'm from, it's also I'd say been a no-brainer for longer than a lot of folks in the United States have come along with this concept, because they are used to governments that will put controls on how much money they can move out of the country. We saw that with China. That's why China was an early adopter of the technology. India, demonetization a few years ago, where the government basically said certain bank notes were deemed illegal tender, and the price of Bitcoin at that time went much higher in India than it was in the rest of the world, and we're seeing that happen in Nigeria today when the government of Nigeria recently reiterated that they did not support cryptocurrency.
John Darsie: (12:43)
Right.
Jalak Jobanputra: (12:45)
So, what we've seen around the world is ... And going back to the connectivity I mentioned, now that the world is connected, people can see what's happening in the rest of the world. The genie can't go back in the bottle. And that's why we're seeing exponential growth in the sector. So, we're seeing it now from the institutional level, which is fairly new. So, I'd say the developed world institutions have really kind of caught onto this concept only in the last 6 to 12 months. But we've slowly seen this grassroots support of Bitcoin for many years, and that's been building over time.
John Darsie: (13:29)
Right. So, you referenced that 2017 rally that took Bitcoin up to almost $20,000 per coin, but then we saw it fall back to around 3,000 and change. I think obviously there was a lot of public interest in Bitcoin at the time that receded, and people sort of wrote it off as a pump-and-dump scheme or some type of Ponzi scheme, given that extreme volatility that we saw.
John Darsie: (13:54)
We're now seeing Bitcoin ramp in an even more extreme, rapid way in 2020 and 2021. Why is this rally potentially different than the rally then we saw in 2017? Do you think realized volatility will continue to fall, which it has been lower actually during this rally that it has been over previous cycles in its history? So, do you expect volatility to fall? Do you expect people to have to just weather that volatility? Or, why is it different this time around?
Jalak Jobanputra: (14:24)
Yeah, I think it's night and day, the 2017 rally and what we've seen in 2020 and 2021. And I view it very similar to what we saw in 1999 with the internet. I was out in the Valley, as I said, investing for Intel Capital, and I was in the belly of the beast when we were seeing companies going public on very little, just frenzy around any company that had a dot com next to it. And we saw that in 2017 with the initial coin offerings. Ethereum went public that year. They issued their token, and there was a huge run-up. So, everybody was looking for the next Ethereum.
Jalak Jobanputra: (15:14)
Companies, teams, existent or not, were putting up websites and collecting money from investors that were hoping to get into the next Ethereum or Bitcoin. So, that was very similar to companies just adding dot com. There were a number of companies that just added blockchain to their name, and they had the same experience. History does rhyme, and we saw that in 2017. Then there's the inevitable crash, because most of these companies really had no there there. There wasn't really anything behind what they were doing.
Jalak Jobanputra: (15:56)
And any company like Ethereum, it takes time to build technology that's going to scale, that's going to be adopted. So, with Bitcoin, we've seen increasing scalability, number of transactions. As more people come onto the network, it becomes more stable, more decentralized. So, we've seen that progression, but there was still a lot of questions back then on not only the underlying technology but then all this confusion around these kind of new companies that didn't really have any technology.
Jalak Jobanputra: (16:38)
Then the inevitable crash happened. Some speculators made a lot of money and they disappeared, and then the real builders stayed. What I've seen as an early stage investor, a lot of entrepreneurs that I invested in 10, 20 years ago started becoming really fascinated by the concept of decentralization and what it could mean, and they started getting into this space. And to me, that is the biggest leading indicator of whether any new technology has staying power too, can that technology attract beyond just the early adopters. So, we've seen that happen in a big way over the last three years.
Jalak Jobanputra: (17:22)
Then what's happened on a macro level, we've seen all the stimulus in the era of COVID, concerns about future inflation, government policies, kind of all the reasons that Bitcoin appealed to so many in those emerging markets. We've now seen a lot of hedge fund managers, corporations really looking for a hedge against inflation as well as a search for yield. So, we're going to continue to see that, because I don't see that macro environment really changing.
John Darsie: (18:02)
How much of your bull case right now for Bitcoin is just that the technology is so compelling that its rise was inevitable, and how much of it is based on that macro backdrop that you talked about? Is the macro backdrop with all the money-printing and the growth of the money supply just accelerating what was an inevitable rise of decentralized technology and blockchains, or how do you look at that puzzle?
Jalak Jobanputra: (18:28)
Yeah. I feel like a lot has been turbocharged as far as looking at technology and our thesis. If you look at Bitcoin from a store of value, as an investible asset, that narrative has certainly been given a boost by what we've seen on the macro environment. Bitcoin was really created as an exchange of value or to be an exchange of value. That has morphed into more of a store of value. Now that doesn't mean that it can't eventually be used as an exchange of value or that there's certain regions in the world or certain populations around the world that won't use it that way. We're certainly investing in solutions that can enable that.
Jalak Jobanputra: (19:20)
But I think, if you just look at it as it's come into its own, as the store of value this year ... Now, I was holding it well before this happened, because I believe that it was going to have value in some form or another. The problem with a lot of entrepreneurs sometimes is they have a vision of the world, and, I mean, that's not necessarily a problem. That's what helps them create the technology. But then they become these maximalists who believe that is the only way that technology can be used. And my belief as an investor is that you have to put the technology out there, and then you have to take feedback and see how people use it.
Jalak Jobanputra: (20:10)
I first encountered that when I spent time in Africa amongst women. I spent a summer before I joined Intel after business school training women entrepreneurs in rural areas all over Tanzania. I lived in Dar es Salaam. And this is pre-internet. They had mobile phones, but they didn't have internet connectivity through their mobile phones. It was fascinating what they would use those phones for, and I can guarantee no one in the US was thinking of the usage the same way, and we've seen that with WhatsApp and a number of other applications that took hold in some of these markets. So, I just believe that-
John Darsie: (20:56)
Yeah, what a perfect storm.
Jalak Jobanputra: (21:00)
... you can't create a technology and then dictate how people use it. So, this year has been fascinating to see what Bitcoin has become to most of the world. But I believe that the technology was strong, and the whole idea of crypto economics, which is to me just part of the genius behind the Bitcoin blockchain or blockchain technology and crypto assets in general, and that's what really allows verification of transactions without intermediaries, is the fact that the system is incentivized to stay honest and to keep creating value. It's in some ways so simple, but it's technically very complex. But I felt like this was going to be used in some form or another, and so I've been a holder since 2013 and believe it going to continue to [crosstalk 00:21:58]
John Darsie: (21:58)
HODL-er, HODL-er.
Jalak Jobanputra: (21:59)
Yes. I didn't want to go too into stuff like that.
John Darsie: (22:02)
Didn't get into the [inaudible 00:22:02] But you talked about how the genie is sort of out of the bottle. You still see some countries make noise about potentially Bitcoin. Like you mentioned, people that grew up in countries that have hyperinflation, whether it be Argentina or countries in Africa that experienced these bouts of hyperinflation, the story resonates with them in a very real way. But how likely do you think it is that someone like India, who is talking about it now, the potential for banning Bitcoin, how likely do you think it is that they do ban Bitcoin?
John Darsie: (22:35)
Is Bitcoin bannable? Let's say the United States and India and China and Germany decide that, you know what, we're printing all this money, we're creating this hyperinflationary environment. We can't allow something like Bitcoin to be out there. We're going to ban Bitcoin from existing. We're going to prevent at least people in our country from owning Bitcoin, make it illegal. Is Bitcoin bannable? What would that look like if countries went out there and tried to ban it, or is it past the point of no return now where it's going to find a place to live?
Jalak Jobanputra: (23:07)
Well, we've seen this happen over the years. China did this in 2017, I believe. I don't remember the exact year. People continued to access these networks through VPNs. If you actually were in China, you realized that there was a lot of mining happening. So, the reality on the ground was very different than the narrative.
Jalak Jobanputra: (23:30)
India effectively did that. We are an investor in a company called Unocoin, which was the first crypto exchange in India. We invested in the company in early 2017, and later that year India basically banned any banks from banking crypto-related companies. People became really concerned, the average population, the retail investors, and effectively almost shut down the crypto market in India. But what happens behind the scenes is the entrepreneurs, the people who care deeply about the ethos of monetary sovereignty and see that happen, they continue to build. Unocoin led a Supreme Court challenge, which overturned that ban last ... Or, it was actually earlier, early 2020. I've lost track of time.
John Darsie: (24:35)
Yeah, time is like a flat circle at this point.
Jalak Jobanputra: (24:38)
And the market's grown significantly since then. Now India is once again saying that they're going to or threatening to ban. Now my theory on all of this is a lot of these countries want to figure out what their central bank digital currencies are going to look like, because they are threatened by an alternative to their central bank currency, and they want to figure out a system where they can offer digital versions of their currency and then figure out how something like Bitcoin or independent cryptos would fit into that system.
John Darsie: (25:17)
How would they fit into that system? We ask that frequently on these talks about, in a world where there's US dollar built on the blockchain, there's a yuan, there's a ... Currencies around the world have their own central bank digital currencies. How does Bitcoin fit into that? Is it a threat? Is it accretive to Bitcoin? How does it live in that world?
Jalak Jobanputra: (25:38)
Well, I personally believe it's accretive to Bitcoin. I have this investment thesis that I've always had, is that no income bank is safe. So, you look at Blockbuster back in the day who said that no one was going to actually watch movies through the internet. It just wasn't going to happen. Either from a technical or a user perspective, they wouldn't do that. So, central banks I believe haven't thought that there was any threat to their power, and Bitcoin and then companies like Facebook saying that they're going to issue their own digital currency kind of changed the central bank perspective on that.
Jalak Jobanputra: (26:28)
So, again, going back to once people feel like they've had exposure to something and it's taken away from them, they are hyper-aware of that. If they never had exposure, then they don't know what they're missing. But we've now gotten to the point where most populations around the world have had some exposure, have heard about this, and have also seen their own governments, how they're acting versus other ... We've seen it here in the US in the last few months. So, I believe that central banks are going to have to have policies that take into account that there are competitors to their fiat currencies and offer value back.
Jalak Jobanputra: (27:13)
Now, there's always a threat that they can try to shut off access. I think one of the biggest threats is taxation and how they tax cryptos. So, those are very real threats, but I think we also, and governments, need to also be aware that people have power. And we look at GameStop and what just happened, and it may all seem unrelated, but I think that shows that the grassroots movement, retail investors, people in the ground that now have access to more information than ever will rise up if they feel threatened, and especially if they feel that their hard-earned money and livelihood is at stake.
John Darsie: (28:01)
All right. So, I want you to pretend like you're the PR representative for Satoshi Nakamoto, and you're going to talk to the Indian government. You live in Miami. You actually [inaudible 00:28:11] investors and entrepreneurs that have moved to Miami. But the mayor of Miami, Francis Suarez, has been very proactive in pulling people from Silicon Valley by being very pro-business, pro-tech, and most recently pro-Bitcoin and trying to create a regulatory framework and an environment that's conducive to iterating in terms of blockchain and Bitcoin.
John Darsie: (28:34)
So, if you were to talk to the government of India and you said, "You know what? Rather than banning Bitcoin, how about you embrace Bitcoin and you create an ecosystem that's conducive to innovation within the block chain space?" Why would that be such a powerful thing for a country to go all in on Bitcoin? There's been some prominent voices in the VC community who have written about this, but I think it's an interesting topic and would love your perspective on it.
Jalak Jobanputra: (28:58)
Well, I think it's a proxy for innovation in general, and if you look at countries like India, Kenya ... And let me just tell a little story about Kenya and my interaction with the central bank governor of Kenya. I'm an investor in a company called Bitpesa. I was one of their founding investors in 2014. They're now called Aza. They're the first company to look at using the Bitcoin blockchain as a back end for financial transactions, both at the institutional and retail level, both within the continent of Africa and then across continents.
Jalak Jobanputra: (29:42)
And the idea there was right now the banking system, the correspondent banking system, requires many, many different banks to get involved, which add fees and layers of fees where a transaction from Kenya to the Ivory Coast can cost up to 20% of the transaction, which even for institutions is something that they don't want to do. So, being able to just reduce that to one transaction in and out of a Bitcoin or any other crypto and provide that liquidity and do it in an instantaneous way with lower fees, they've seen tremendous growth over especially the last year.
Jalak Jobanputra: (30:24)
I once asked the central bank governor out there, "Why are you so threatened by Bitpesa?" Because they were. They tried to shut it down initially. Now they're working with the company, as are many other countries within Africa, but they ... He had a point, where he said, "We're just being accepted into the global monetary system, and we can't afford any missteps. We're being watched by everybody." And it provided perspective. For all of these emerging markets, they need to make sure that their monetary policy is sound, but I think this is an opportunity for especially India to take the lead and also, along those lines, not only take the lead but leapfrog. I've been-
John Darsie: (31:25)
You've been banging that drum?
Jalak Jobanputra: (31:27)
I'm sorry?
John Darsie: (31:29)
You've been banging that drum?
Jalak Jobanputra: (31:30)
Yes. Yes. I've been a big India bull for ... I mean, I started investing in India in 1999 when I was at Intel. One of my companies there IPO'd. India's certainly been through many challenges. It can be very bureaucratic. Some of the policies just don't make sense. But I think, given what we're seeing right now with China and COVID and some of the supply chain disruptions we saw by reliance on just one country and one region, India's really had an opportunity and stepped up to that opportunity on the supply chain side. A lot more businesses, including Apple is now doing more manufacturing there.
Jalak Jobanputra: (32:17)
And I think we can move that to then looking at money and then looking at fintech and taking a leadership role, and India has an opportunity to do that. Now that doesn't mean they don't issue their digital rupee, but they could be a model of how the rupee can interact with a currency that is independent of any other controls or reliance on the dollar. And I'm a US citizen. I'm an immigrant. I'm a big fan of the US. It's been great to me. But I also think that dependence on any one country, and we've seen this, is not a good thing. That's why we're investing in decentralization.
Jalak Jobanputra: (33:07)
The whole concept of Bitcoin and blockchain tech is no single point of failure. So, India has an opportunity to not only further their own goals of being a major player, and I believe they already are, but maybe the foremost player on the world's stage by really looking at the intersection of a digital currency as well as decentralized currency, and there's an incredible amount of talent there. It's a very entrepreneurial country. So, I think it has all the makings and ability to do this.
Jalak Jobanputra: (33:46)
Another point is that they were the first country to have a digital identity system. When I was at Omidyar, I worked on this project with the Indian government. And a lot of people thought there is no way that you're going to be able to get people in rural areas, farmers, people who weren't literate to actually buy into this system of this digital identity. But once these people saw that they were able to get their government subsidies, payments through this digital system, they all signed up, and it actually ended up being very efficient. Almost the whole country is now on this digital identity system. So, that's another infrastructure layer that can underpin a blended monetary system.
John Darsie: (34:46)
Let's talk more about that. It was actually my next question, because I think it's a fascinating topic, especially in the midst of a global pandemic, especially in the midst of a vaccine rollout where we're trying to track who's vaccinated, who's not vaccinated, who is at risk, who's eligible for the vaccine. A digital identity network would obviously solve a lot of those issues and make it much more organized. Where are we in the United States around that idea of digital identity? We had an Israeli entrepreneur and doctor on SALT Talks recently talking about how they have a digital identity system in Israel and it's been very helpful for vaccine rollout, and they've rolled out the vaccine very effectively.
John Darsie: (35:26)
But let's think very futuristically here. If the United States did roll out a digital identity system, every child that's born gets cataloged in this system, they're tracking different elements of your life, your finances, what could the world look like if we had a truly robust digital identity system?
Jalak Jobanputra: (35:45)
I think there's tremendous potential obviously if that were to happen. The challenge is the privacy implications around that. And the United States is a place where you can't track people the same way you can in a place like Singapore or Israel.
John Darsie: (36:04)
Right.
Jalak Jobanputra: (36:05)
If you look at COVID response, Taiwan, basically your phone could be tracked and, if you didn't answer your phone or if they thought you left your home, you would have the police come to your place. So, I think there are certainly privacy implications around identity systems, and in some ways we're beyond that point, but in other ways, if you start pushing it too much, people are [crosstalk 00:36:37]
John Darsie: (36:36)
Right. Yeah. People think they're not being tracked in the United States when they probably are and they just realize it yet.
Jalak Jobanputra: (36:43)
They are. I mean, they are, but they aren't in the same overt way. Otherwise, our response in COVID would have been very, very different.
Jalak Jobanputra: (36:53)
Now where I think blockchain technology and technology in general really could play a role here is the concept of things like homomorphic encryption of zero-knowledge proofs. To kind of put it in layman's terms, these are technologies that allow you to create identifiers without revealing the underlying information.
John Darsie: (37:17)
It's encrypted in some way.
Jalak Jobanputra: (37:18)
Yeah. Yeah. And we're investors in a number of early stage companies working on these technologies, and that's where you can still preserve some of the procedure, or you can decide you want to give up some of that privacy maybe in return for certain services, that "if I was able to get the vaccine sooner, I may be willing to give up my date of birth and my address, which otherwise I wouldn't have to give up." So, I think there are ways, and I've been really fascinated by this topic of data and data availability and data privacy, and the technology is now allowing for more granularity here in how we divide up data. There's been no pressure for companies like Google and Facebook to adopt any of these, but we are now seeing a big pushback around the business models, around data collection.
Jalak Jobanputra: (38:20)
One of the reasons I got really interested in decentralization was this whole idea of I could actually own my data, hold it in a wallet, and then permission it out whichever way I want to, and it's not that different, say, than Bitcoin where I hold a private key to my Bitcoin, I can release it when it gets matched with a public key. And you can do that. You can look at a Bitcoin as just any piece of data, and you can do it with your health care data, you can do it with your credentialing. So, it's kind of mind-blowing all the business models that can emerge from this underlying technology, and I think identity is a big piece of it. The challenge is, when you start to cross borders, there are different policies around data, and how do you reconcile that, and I do believe technology will allow us to do that soon.
John Darsie: (39:19)
Yeah. In some ways, you could view the aggregation of data as being sort of Big Brother, but in a lot of ways it empowers the individual to own their own data. So, Facebook or Google, their product is built on top of our data. The market cap of those companies is based on the fact that our data is extremely valuable. So, why should we not be empowered to decide how that data is used and be able to monetize it? It's a fascinating topic. Maybe the company you're invested in ... I have a friend who started a similar company. I don't know if it's the same one or not, but we can sync up offline about that.
John Darsie: (39:52)
But I want to talk about non-fungible tokens for a second. So, my brother is a big sports card collector, which has been good for him, because we're in the middle of a boom in terms of the prices of sports cards and trading cards and other scarce assets. But non-fungible tokens, one application for them has been NBA Top Shots, for example. So, basically you can collect digital highlights from NBA games. Could you talk about, for people who are less familiar with what's happening in the space, what they are and why they're interesting from a blockchain, decentralization perspective?
Jalak Jobanputra: (40:28)
Yeah. And this is one of the areas we've been most interested in also. I'm very into art. I actually did collect baseball cards, believe or not, when I was younger.
John Darsie: (40:41)
There you go.
Jalak Jobanputra: (40:41)
I was a big baseball fan. But it seems like basketball is really where a lot of the value creation as been.
Jalak Jobanputra: (40:50)
So, there's this concept of assigning value to an asset that then it could be a physical asset or it could be a digital asset, but then could be tracked, and the provenance of that particular asset can be tracked. So, you can start looking at ... Say you take a baseball card, and it's verified that that I own this baseball card, and how many editions of it are out there are part of the dataset, what condition it is in, how many times it's changed hands. All of that is part of the dataset, and then that can be valued in a marketplace, say, a digital marketplace, and traded.
Jalak Jobanputra: (41:45)
Now the whole thing can be traded, or we can just trade an interest in that particular asset. So, I could say, "I want to sell off 10% of it," and then people who are interested in or if they think it's going to appreciate, just like anything, they would invest their capital in it or crypto in it. If I decide to sell the entire asset, it gets distributed accordingly. So, it enables a lot of micro marketplaces to take hold.
Jalak Jobanputra: (42:27)
Also an investor in a company called Everledger. They put diamond provenance information on the blockchain starting in 2015. They've started working with brands and retailers who want to issue digital versions of clothes that people then can collect. They can potentially use it on gaming sites or they can just collect it with the idea that it's going to be worth something down the road. There also may be a physical asset that is linked to that digital asset. So, there are so many potential opportunities around these digitized tokens that can be tied to real-world, physical assets, or they can just reside in the digital world.
Jalak Jobanputra: (43:16)
And any creator who thinks that their work is worth something ... So, digital art. They can create 10 versions of an art piece, issue it, and right now any artist has to go through galleries. There's a huge supply chain, value chain that exists in the art world. And this is, again, very similar to Bitcoin. It's a currency that can exchange hands directly between people without banks, and this is the idea around any assets, and it's happening a lot around sports memorabilia, whether it's physical or purely digital. It's happening a lot around the art world. So, it's kind of wide open. We're in very, very early days, but I do think the sports world has been leaders in taking advantage of or thinking about the opportunity.
Jalak Jobanputra: (44:24)
You can also potentially tie an experience to a token. So, if a sports athlete wants to issue a card of himself, he can also say, "Well, the first 10 people who purchase this, or if you purchase it above a certain price, you get access to an experience." That experience could then become tradable. So, again, this idea of granularity around assets and programming assets and then price discovery and value discovery, I don't think we've seen the beginnings of [crosstalk 00:45:04]
John Darsie: (45:04)
Right. You just came up with a great idea for the next iteration of Cameo. I don't know if you're familiar with that platform, but you could create scarcity for the ability to get a unique experience or a unique message from a celebrity. It's a fascinating concept. And just intellectually, some people say, "Well, digital art. That doesn't make any sense to me. It lives on the internet. It's not like a painting you can hang on your wall." And I just say, somebody could forge a physical painting the same way that there could be illegal replication of digital art or digital trading cards or whatever it may be.
John Darsie: (45:41)
And money is the same thing. Money is only as valuable as a society and as a globe that we decide it as. So, I don't see any reason why digital art, digital money, or digital collectibles is really any different in a digital native world than physical items. You could argue as well that it's significantly more valuable. Some people say gold and Bitcoin are going to reach parity in terms of being a store of value, but then other people say, "Well, why stop there? There's no reason why Bitcoin can't dramatically exceed gold's market cap."
John Darsie: (46:15)
So, Jalak, it's been fascinating talking to you. Hopefully we can have another appearance from you at one of our SALT conferences in the future in person, once that becomes safe again. But I'm jealous of you being down in Miami. As I mentioned before we started, I was down in South Florida for a good part of the beginning of this year, but as I look outside my window, it's snow. I'm jealous. But congratulations on all your success and being so early to the space
Jalak Jobanputra: (46:41)
Thanks for having me. It's exciting times in Miami too with what the mayor is doing and a lot of crypto folks and tech folks down here.
John Darsie: (46:51)
Yep, absolutely. I'll definitely be down before long to soak up some of that sunshine. And thank you everybody for tuning in to today's SALT Talk as well to learn more about this digital asset space. We think that's very important that you have an open mind about what's happening in the world, or else you're going to get left behind. You still see derision from some of the old guard around what's happening with Bitcoin and decentralization. So, it's good to open your mind and learn about these topics.
John Darsie: (47:17)
Just a reminder, if you missed any part of this episode or any of our previous episodes, including episodes with a variety of thought leaders in the blockchain/crypto universe, you can access them all on our website at SALT.org/talks. Also, we're on social media. Please follow us on Twitter: @SALTConference. You can follow Jalak on Twitter as well where she's a fantastic follow. But we're also active on Instagram, LinkedIn, and Facebook as well.
John Darsie: (47:43)
And please spread the word. We love spreading these message. These educational segments that we do on SALT Talks, we love broadening our community and broadening their message. But on behalf of the entire SALT team, this is John Darsie signing off from SALT Talks for today. We hope to see you back here soon.
