[Music]
hi everyone um so we're here to talk to
you today about the computable economy
and real world assets and um how this
can unlock um exponential
wealth okay
um so my name is Justin Bannon and uh
I'm a founder of uh a couple of real
world asset protocols boson protocol and
also feron
protocol yeah hi everyone I'm Jason pots
um founder of the blockchain Innovation
Hub at rmit University in Melbourne and
a crypto
Economist so the talk we're going to
give today is based on uh academic paper
that we wrote ear ear this year on the
computable
economy so to start if we look at the
history of uh the economy um and we go
back say to the Stone Age we see this um
pretty significant um growth in human
wealth and if we if we zoom in a bit on
that uh
optick what you see is in the last 3 or
400 years this real Str strong
exponential growth in in human wealth
and the question is what's caused
that yeah so um what we want to do is to
tell a story of how economies have
evolved and what this means for you know
what crypto is bringing into this story
and we've got a we've got a narrative
that argues that we are going through a
revolution at the moment of a very
particular sort so um origin of wealth
um the standard story we know about this
is new technologies so you know once
upon a time this was fire and then you
know steel and steam and and and you
know we gradually worked their way
through a sort of sequence of hundreds
and thousands of you know new Industrial
Technologies that gave us the modern
economy and that's you know that's the
story of long run economic growth is is
fundamental new Industrial Technologies
but there's a second sort of technology
that is often overlooked and it's it's
this is the one that we want to sort of
try and um help you to understand stand
here and this is the technology of
Institutions um institutions are a
coordination technology um the very
first one that fundamentally gave us
modern economies um 7,000 years ago was
writing writing enables people who don't
know each other to coordinate in space
and time by you know recording facts
about who owns what or whose cow is that
or who who's who owes me some honey and
that sort of beginning of writing um you
know 7,000 years ago as the beginning of
history and modern economies um First
Institutional technology was a
revolution in terms of human human
welfare um what other big institutional
Technologies we've had um joint stock
company 14th century 15th century um
created the idea of sort of organization
of of of the corporate form to gather
resources together um we've heard
institutions in timekeeping and so on
with universal clocks um working their
way through we've had Revolutions in um
in in democracy and sort of
recordkeeping of of of ownership and
identity and other sorts of fundamental
protocols but this the story that we
have is
that Industrial Technologies or
technological change you fundamentally
driven driven by research and
development um is is the main
explanation for that that hockey stick
rise but the reason it keeps going up
the reason we keep getting new and new
levels of of of of of growth is
that these sort of institutional
Technologies provide sort of languages
and coordination mechanisms to to to to
create new generations of coordination
technology and what we are going through
now the sort of the the crypto
Revolution that's being powered up by Ai
and all of these other digital
Technologies is a fundamental new type
of economy um we've called it a
computable economy um we distinguish
this from an industri industrial economy
where all the fundamental institutions
of an industrial economy were done by
government um in terms of recordkeeping
in terms of you know fundamental asset
Registries and the money and so on um so
this idea of this is where're up to now
in terms of a new um institutional
technological Revolution to create a new
type of economy that fundamentally Works
digitally fundamentally Works globally
um we haven't seen a revolution like
this for for hundreds of years um that's
the nature of thech techological change
we're seeing now the the sort of the way
we want to frame this is this sort of
computable economy Revolution which is
an Institutional technology Revolution
made possible by a series of other
Technologies you know computers and so
on um what is going on is this is a
continuation of the evolution of compute
in the universe um we described the
evolution of economies in beginning you
know beginning sort of 7,000 years ago
through to to the present as a series of
Step changes as we moved up the in the
institutional technology stack from
written language through to to to
coordination so on all the way through
that process has been going on for
millions and billions of years and the
the way to think about this is that
every so often on The evolutionary
trajectory we get these huge
breakthroughs these fundamental shifts
in terms of the underlying sort of
language um of of of evolution um
evolutionary um biologists call these
meta you know meta system Transitions
and the idea is is that a digital
economy is the latest phase of a meta of
a metasystem transition where we're able
to finally sort of start to write um all
of the things in an economy um into to
be able to sort of interact with each
other now what that
means um is that the the where we are
now in terms of evolutionary um in terms
of the evolution of economies in terms
of institutional evolution is at this
this a new transition in terms of
creating a new computable substrate and
this idea of economies um are not like
you know economies have computers in
them but fundamentally economies are
computers they're they're ways of
computing sort of resources together um
to create economic value markets do that
um organizations do that protocols and
platforms do that as well
and the sort of the next step in terms
of how economies are going to develop
and evolve is to really sort of push
what we can do with that with that
compute level
Justin so if we if we unpack um the
nature of this computable economy let's
first look at
computers so I mean computers will
transmit store and receive data in a
highly reliable way um and and computers
will also run programs so if you if you
run the the program 1+ one it will
always equal two and because of this
sort of reliability and the the
determinism of computers you can build
highly complex applications on top of
them and if you look at this you know
our modern sort of uh internet and
digital economy that's that sort of
evidence of that however if we look at
at sort of today's economy um what we
find is that if we want to sort of
transmit value um often what we have to
do is transmit via intermediaries like
banks for example and the these
intermediaries introduce um sort
of risk of default they introduce fees
they're slow um and also you know if you
want to sort of store and retrieve value
we have the have the similar problems
and so also when you want to run
economic Pro uh programs on on uh the
the current economy we do this by having
a contract so let's say you know you you
have a contract with someone to provide
a service and they don't provide that
service what do you do well you have to
take them to court this is slow it's
expensive and it's fuzzy so instead of
having this sort of deterministic and
reliable substrate we have a sort of a
fuzzy unreliable substrate and that
really limits the complexity of
applications that you can build on top
um and
our claim is that with a with a a
computable economy when we're building
an economy on this fundamentally more
reliable substrate of of blockchains you
get some properties that are much closer
to a computer than today's economy so
you know smart contracts can enable the
transmission of value in a in a very
reliable way um when we want to store
and receive value it's possible to do
this in a way that is reliable but that
requires re Ires a particular type of of
of uh uh procedure for tokenizing uh
these assets and we'll we'll get into
that in a second but it is possible to
do that and so um with with this kind of
combination of properties it's possible
to run economic programs on a blockchain
substrate that give this kind of
reliability and determinism that that
you that you don't get within today's
economy and the result of that is
enabling much greater complexity to be
built on this this
substrate um so here's our claim is that
you know blockchain technology enables a
new computable economy and unlocks
exponential wealth through increased
complexity but the condition is that
we've got to tokenize all forms of
capital all assets with with the same
strong commitments um and so what we
mean by strong commitments are that you
know all the assets that we tokenize and
bring on train on chain need to be uh
Trust minimized secure and verifiable
ownership and enforced by
cryptography um and so you know most
assets the the current onchain assets
have these properties inherently and
there are many many assets from things
like debt Equity that where they can be
transferred entirely on chain and will
will then have these these kind of
properties of strong commitments but
there are always a class of assets that
will have a physical residue physical
assets and these can't entirely be um
represented on
chain so there's a couple of problems
with physical assets one is this
physical asset Oracle problem so if I
tokenize my car and you buy the token
how can you be sure that you'll actually
get the car and then this kind of fair
exchange problem of how how do we ensure
that the exchange that's happened is is
fair until the quality and terms agreed
um and so you'll find there are a number
of generic um solutions for tokenizing
physical assets so the first one is this
kind of centralized model where you will
have a trusted entity um that will that
will hold the assets um and issue a
token the problem with this is it has
exactly the same problems as the as the
today's economy where we're trusting
centralized entities and that doesn't
have sufficient reliability for for us
to kind of have have this kind of
computable economy and then there are
there are two other methods so one is
where you lock up funds um and and for
for this uh method it's very transaction
cost efficient because a protocol can
just lock up the funds at very very low
cost but it's Capital inefficient um and
so this tends to work for sort of low to
medium value items that you would
usually use someone like Amazon or Ebay
for um but it wouldn't work for very
high value items
um and then secondly the other method is
to lock up the actual physical asset and
here we have I mean it that's more
costly because you're going to be using
um physical entities to to do this but
the capital efficiency is much greater
because you can release the funds
immediately upon
wome okay thank you all right um why is
this a good thing why are we sort of
excited about this idea of a sort of
Step change in economic Evolution and
the question we sort of want to address
here is what is the argument for why we
might expect that hockey stick just to
keep going up like what is the what what
is the argument for why we' expect to
see further and further growth and you
know the the counterargument here is
well you know limited resources and
finite planet and you know post
capitalism and you know it can't keep
growing forever but the claim here is it
could and not in the sense of you know
more and more resource intensity type of
growth what we're just describing is not
economic growth what we're describing is
economic evolution in the sense that the
fundamental coordinating mechanisms of
an economy just get better and better in
terms of processing distributed
information and this is a sort of
crucial Insight is that you ask what are
what is an economy um an economy is a
way that a bunch of humans come together
and create resources and and and and and
provision each other um you know we use
it for making stuff and doing stuff but
we also use economies to organizing and
growing knowledge um economies are the
basic mechanism by which we organize our
resources for Innovation and our
resources for um you know protection of
environment and just all of the things
that we want to do collectively and that
notion of economies as coordination
mechanisms is the key thing we want to
sort of emphasize here that what just
happened with the sort of digital crypto
distributed computable economy is that
we've got a step change in our ability
to coordinate
our you know our Collective actions
together and that that shift what does
that mean it means that we can start
solving much harder problems so
industrial capitalism what did it do um
you know many things but one of the main
things that it sort of did was it lifted
a sort of medieval Society you know
particularly in one part of the world
and then gradually spread around the
world out of poverty it was a poverty
alleviation mechanism that it's not
complete it's got a long way to go yet
um it's caused some new problems um in
in that process around um you know
ecological sustainability but it was a
mechanism that enabled you know a group
of humans that got bigger and bigger and
bigger to solve some fundamental
problems economies are knowledge solving
mechanisms um what we can start to do
now if if we can if we can if we can
sort of digitally connect all of the
things in the world bring them online um
enable them to become visible to to a
mechanism we can start to solve a lot
harder problems so challenges around um
dealing with externalities a sort of the
climate change problem a lot of
ecological problems you know a lot of
just fundamental things that we're
currently relying on governments to do
or trying to sort of re-engineer human
belief systems and so on we're using
cultural mechanisms or political
mechanisms to solve which you know we're
making some progress with that but it's
not um it's nothing compared to the to
the power of sort of being able to
harness economic mechanisms to solve
that so one of the sort of you know the
reason that we see this this sort of
optimistic sort of argument about why
this Curve will continue to rise not
because of you know economies keep
growing forever but economies evolve to
take on and start to solve much much
harder and and deeper problems so um
problems around um internalizing
externalities um classic eological type
problems um Step changes in in
Innovation um particularly around sort
of a lot of biomedical type problems um
and opportunities is just that ability
to bring more and more resources to
connect sort of capital around the world
into sort of taking these these things
on where at the moment the only
mechanism we really have for doing that
are either large corporations or or
governments or various sort of
coalitions on that again it's kind of an
okay solution it sort of works sometimes
but it's nowhere near as powerful as it
could be and it's this it's this sort of
argument that the more we can do this
the more we can sort of drive real world
assets on chain um the more sort of we
can we can start to bring just
information from all you know from a
full stack of information onto sort of
trying to sort of solve these types of
problems so that's the argument for for
why a computable economy is is good um
why this is something sort of
aspirational that we want to work
towards um why the sort of next sort of
continuation of that hockey stick isn't
isn't more and more industrial growth or
or post capitalist growth it's using
global economic systems to solve even
hard
and more General sort of problem so
that's that's where we find ourselves um
that's why we're sort of excited about
this this this direction of of what what
this type of institutional Revolution
toward um computable economies can bring
thank you all right that's awesome let's
go to the Q&A session guys so please
scan the QR code here and ask the
question it's going to pop up on the
screen and you guys here we go let's
fast let's go to first let's go for the
first
one Wonder answer I'll take that one
thank you um so the sort of Economics
that we're dealing with here um is not
traditional sort of neoclassical
economics um the the the reason for that
is that what we're sort of driving to is
is is far more um institutional
economics information economics um
mechanism design and trying to sort
of understand what we can do with that
as a um to design sort of global
internet-based digital economic systems
where what we're fundamentally engaged
in right now is this new opportunity to
essentially design Economic Institutions
from scratch um these need to be
integrated with economies as they
currently exist we'll use a lot of
Institutions that that we've had from
industrial economies to carry over for
that but there's an enormous opportunity
here to to just massively increase this
the scale and scope of things that are
in the economy and the first step to
that is basically um identification
attaching data to these things enabling
to be bought online that process of
bringing um much more of the stuff in
the world the stuff that we care about
and want to organize and try and sort of
Shepherd and so on um in into the
economy so industrial economies did that
in a big way from from feudalism to sort
of modern capitalism that was a 600 year
old process of bringing a bunch of stuff
into into the economies um turning it
into Capital but a bunch of stuff got
left out of that um and critically envir
a lot of resources a lot of sort of um
problems that we we a lot of sort of
factors of production weren't sort of
part of that so I think you know there's
a there's a new opportunity here to
create a new type of Economics so you
know we've called it computable
economics for a computable economy um
but that's the that's the sort of
challenge that we're trying to we're
trying to meet here all right we have
like one extra minute for your guys to
answer the question so don't don't be
too rushed we have time all right let's
go to the second question which one you
want to answer first um yeah I can
definitely put the the presentation uh
online I'll uh put it on the boson
protocol website so boson
protocol. um we'll have that up later
today yeah all right uh is the
presentation is publicly available for
people yes all right cool let me Mark
that up let's go to the uh the third
yeah the can you elaborate
that
more there was one just up here as well
was that yeah which one you want to
answer you can you can pick any
yeah what was the one pre yeah this one
can we ask that one can you uh scroll
down a little bit that oh just the one
above the presentation one
yeah um Okay so
so this yeah I mean this is um one of
the core challenges of tokenizing a
physical asset and um so it's this kind
of physical asset Oracle problem so that
as I mentioned in the presentation there
are kind of three ways three main ways
of ensuring that you know you can have
some control over a physical asset one
of them is to use a
centralized um sort of system and Trust
that that centralized um intermediary
but that kind of um well it does it
doesn't unlock computable economies and
um is is is very much just you know
using the the current methods so aside
from that you have you have two um two
ways of doing it one is you can lock up
the funds um you know within a protocol
and the second is that you can use a a
trusted
um verifier and custodian uh to to lock
up the actual physical asset um and and
in that case um you know the protocol
would still control who the custodian
releases the asset too um and and so
those are the two main ways of of of um
enabling this for physical assets yeah
let let's do the last question here
which one you want to
answer um the financialization of
everything that's an interesting point
so I don't see this at all as
financialization of of of the world what
I see it as is the um computition of of
the world what we're trying to do is to
bring all of the you know anything that
we want to be part of of of an economy
which means things that we want to
organize and coordinate things that we
value and want to organize and
coordinate we to bring them into an
economy the standard way you do that is
with property rights or just you know
attaching ownership and identity and
prices and so on into something one of
the things that can go wrong with that
is it becomes financialized and becomes
a speculative object but the reason that
you're wanting to do that in the first
place is because you you care about
something and and you want that
information in a in a system to
coordinate um the the flip side of
financialization is basically
politicization um if if when there are
things in parts of of a of an ecosystem
and global economy and so on that aren't
part of the economy externalities what
happens is that we have to use a
different mechanism for coordinating
that mechanism is usually politics um
sometimes that works great if we have
you know high quality politicians and
everyone votes rationally and you know
we have a we have a you know a
legitimate institutional process that to
produce only good political outcomes
that system really can work um it's just
it doesn't always work like that and not
all countries have have have have that
sort of State um so this idea of sort of
trying to bring in um things that
currently sort of aren't part of the
economy to turn them into part of the
economy through a process of of you know
attaching of sort of capitalizing them
or attaching asset or attaching identity
to them enables them to be computed by
the economy it enables them to be
efficiently rationally allocated um to
find sort of the best re uses for them
so um you know now financialization is a
risk of that but politicization is the
sort of counter