Crypto Cappuccino S01E02: Prof. Dr. Philipp Sandner

Article cover image with head shot of guest, Professor Doctor Philipp Sandner

Episode notes

Dr. Michael Kollo talks to one of the most influential German economists and head of the Frankfurt School Blockchain Center, Prof. Dr. Philipp Sandner. A true forward thinker, their discussion covers the stability of financial markets, trust in central financial institutions and how blockchain is going to reshape the financial services industry.

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Prof. Dr. Philipp Sandner


Dr. Michael Kollo

Hi everybody. This is Crypto Cappuccino with me, Michael Kollo. And today we'll be talking to Philip Sandner, Professor Philip Sandner, actually from Frankfurt. He is really an amazing forefront thinker in all things, blockchain, Bitcoin, cryptocurrencies. It’s worth whilst sticking with the conversation, because we've start to cover some really interesting topics around the stability of financial markets, financial services.

About trust in centralized financial institutions and about how blockchains behind Bitcoin are to reshape the financial services industry. So, I hope you can join us.

Dr. Michael Kollo

Hi everybody. I'm here with Professor Phillip Sandner economist and head of Frankfurt school, blockchain center at the Frankfurt school of finance and management of fine town that I visited, I think quite a few years ago now, but I, I really quite liked it.

It's lovely. It's kind of not too big, not too small, just the right size. He has been named the top 30 economists by the FAZ. I'm not even gonna try and pronounce what's behind that, which is a major newspaper in Germany. He's top 40, under 40. And he has his own Wikipedia page, which is an envy I'm sure of many people including myself.

So, it's superb. And it's actually my pleasure to welcome you today, professor.

Philipp Sandner

Yeah, thanks. happy for being here happy to talk with you about blockchain, our job, our university, and so on, maybe to give a little bit of additional information. We have approximately 400 to 500 universities in Germany and of them, we have a couple of business schools and so on. And of these business schools, the Frankfurt school of finance and management is one of the leading ones among top 10. But of course, I understand that it's basically too small that it's basically known by everybody. That's fire provide a little bit of context. And we are a private university, which is not happening too often in Germany.

Private university means that students are paying for their study programs. This keeps structures efficient, small and agile. And that's basically also the reason why we have a blockchain centre, right? Because large scale universities, university of Heidelberg, university of Munich, and so on, they are huge organizations, therefore, a little bit slow.

And I think this explains why the blockchain centre is existing with us in Frankfurt and nowhere else just providing limited bit of context. And one, one remark about Frankfurt. Frankfurt is one of Europeans capital cities in terms of finance, right? We have also London, but with Brexit properly, we have Paris, which is attracting more and more money.

And then we have Frankfurt. Frankfurt is a small city though. It's just having approximately 600,000 employees who can walk everywhere, and you can walk, basically can walk universities within 30 or 40 minutes.  

You are basically able to walk basically everywhere. So it's very unusual to have such a relatively small city being a financial center in the world, but that's basically how Germany works. Germany is quite central. We don't have that many huge cities just providing also individual context.

Dr. Michael Kollo

And look, I remember when I, did my PhD in London, school of economics, way back when, and in the first year of my PhD, obviously we had to look for scholarships.

And so, I was lucky enough to be given a scholarship by DCB. Because I was looking at Euro bonds as, as an issue. And I went to a conference, held in Frankfurt fine enough by DCB. So I remember exactly that people going to work with those you know, those devices that kind of flow through the, yeah, he's kind of a scooter, but it's only got two wheels. So, it's kinda like this kind of thing. And you're basically going to work, and I was very jealous cuz London is terrible for traffic. It's terrible for commuting. It's just not a very nice place. Generally speaking, to kind of live and work compared to something like Frankfurt and Frankfurt felt like a, a wonderful balance where most people spoke English.

Obviously Deutsche bank had a very big office there, a number of other financial institutions as well. So, I think the Frankfurt tourism board will be very happy with us for this introduction. So, I think we've done, we've done the city and university proud, but I'd love to ask you Philip a little bit about how you came to be here, cuz I think your journey must have been quite an interesting one.

Obviously. Now you are got this incredible profile looking at blockchains and their adoption in our economy, but I'm guessing this wasn't the plan at the beginning or at least, you know, how did you come to be here?

Philipp Sandner

No, it wasn't a strategy. So, to say, there is this, this, this amazing sentence that a strategy is an abstraction of the past.

You know, that means that things are happening. You know you are doing things. It will task. You are investigating time into specific topics. And so on, and afterwards you can very easily say that this must have been a strategy, but it wasn't, you know, it's just, it was basically stumbling from one step to another saying here.

But it does make things worth, right? Because it does work and identify Bitcoin as an interesting technology back in 2013, 2014, at that point of time, the Bitcoin hit like one of the first hypes. Going up to one, therefore in specific digital blocks, you know, like in Silicon Valley blocks, such as tech, branch and others, the Bitcoin was already mentioned in a couple of block articles, not in the newspapers yet, but just in block articles.

And I read all these blocks at that point of time because I like it. I like data and so on. And all these, then that to the, to my feeling that I have to investigate this. Read the Bitcoin white paper. And since then it became a little bit of a hobby. The price then tumbled down to from 1000, US total to 400 and the price was basically two or three years plus minus 400 US Dollar then I lost interest. And then for whatever reason, I don't know exactly why. Companies, you know, like industrial companies, but also banks around the world discovered the technology, not Bitcoin, but the technology that was in 2015, 2016. And that's when I then said, okay, wow. The technology is now being discovered more broadly.

Let's make this as one of my main tasks for the future, because, I truly believe in that technology already. 2005 and previously, and then we have drafted a proposal to set up some kind of blockchain centre at the university here, as I said, it's called Frankfurt school. And the presidential office was quite happy about this idea.

Yeah. Because the Frankfurt school educates many people around business, finance, data science a little bit of philosophy and law, and here, especially with the financial footprint, blockchain technology fits perfectly. Right? So, in case you would like to educate the future people who want to have a job in 10 years and 20 years that you have to learn blockchain.

Now, that's also one of the saying actually, I said this a couple of years ago and I also kept on. To students now, for example, last week when I hit the course, which is in case you are now starting with blockchain technology, but you know, like really focusing it, learning smart, never, ever be unemployed again, because there is so much stuff to be done.

Dynamic is there dynamic is increasing. People are building systems, intermediaries companies, business, unit startups.  or whatever, in case you now start to investigate blockchain technology deeply, you know, really understanding it and investing quite some time then you should have a decent career.

Dr. Michael Kollo

Yeah. And, I think this is a,really interesting one. So, I mean, maybe I'll frame this a little bit proactively. So, what is the big deal about blockchain as a technology? Obviously, you met you, you talked about the technology and how it's gonna change things. We talked about the future of industries or future of work being related to blockchains and smart contracts.

What for you, I suppose, personally for you, what is it about blockchain? So, what is the essence of blockchains that makes you go. Wow, this is crazy good or crazy. Crazy important.

Philipp Sandner

Yeah, for me personally, it's partly the technology, but it's also a lot and the main cryptocurrencies, for example, and Ethereum all the others, right?

These approaches, you know, decentral technologies are absolutely fascinating because decentral technologies means that there is no centre of power, right? Bitcoin is not having a CEO. Bitcoin is not having a CTO, no customer support, no website, nothing. It's just pure technology. And it. It lives now for more than 10 years, and it will live for another decades or centuries who knows.

And that's absolutely fascinating to have a technology coming to life, which is there, which is unstoppable, which is existing, and nobody can shut it down. That also means that when I'm going to retirement in 20 years, 30 years, Bitcoin will still run, you know, and the technology of this kind of quality is so fascinating and it's not, it's not just Bitcoin, right?

It's also Ethereum and the other smart contract platforms, all this taken together, the so called decentral networks, decentral protocols and so on. I think this caught my attention and that's. Technically speaking extremely fascinating.

Dr. Michael Kollo

Yeah. Cause I think it is funny when you fall into this topic, and you start thinking about it from different angles.

One angle perhaps is to think about blockchains and, these kinds of technologies as an emergent property of a. The large system. So, you have lots of computers, you have lots of data, and you understand that that network of computers will continue. And therefore, it's possible now to put on a protocol that is supported by so many different computers and so many different kind of systems, the same way that as you say, it's the strength of that network that keeps the structure and form of Bitcoin going forward.

And I, wanna return a little bit later to this point that you made, which I think is very important around imutability. In this idea that it's gonna be here forever and therefore that's a great thing. It's not going away. But before we get to that, I just wanted to ask you a little bit about companies and economies.

And I suppose where obviously you mentioned financial markets or payment systems, but I suppose in your work, where have you seen the biggest. Impact in terms of industries or companies where you think blockchain will kind of unlock a problem or solve a problem or, or kind of improve the outcome in, in a very material way.

Philipp Sandner

Yeah, that's a good question. And I also thought about this a lot because when we started with blockchain technology on behalf of the university, couple of years ago, we started to also do projects and prototype developments with industrial companies, you know, think of German companies like Daimler, Bosch, Siemens, starting all these guys.

And it didn't work out, you know, so we can also discuss this later, but there are many reasons why companies have really huge difficulties understanding and also adopting the technology. And then we lost a little bit of interest because we kept on pushing and nothing came back basically. So, we then turned more towards crypto assets.

That's these decent central networks. Right. And therefore, we now are part of the community, and this now works very well. These technologies, they are technologies for individuals. You know, that's a fascinating topic. You might have read a couple of weeks ago when the white house in the US launched their regulatory agenda, you know, how would they like to regulate everything around crypto, you know, digital US Dollar CBD Cs digital assets.

Crypto anything. And in the very beginning president Biden just mentioned the responsibilities of the ministries, right? Not more, but this very short announcement had a very, very fascinating first paragraph. And this first paragraph said that 40 millions of adult Americans. Are owning crypto assets or having owned, operating with it.

And on 40 million, that's 16% of the adult population. And if you now would have in mind, which that's not written in the announcement, but if you would have in mind how many companies, corporations are existing in the US this should be a couple of hundred thousands. What is basically adoption of crypto to work within these hundred thousand couples hundred thousands of companies.

Basically zero, right? We have a couple of banks or a couple of startups, but from a proportional value should be plus minus 0% and not minus zero. That's not possible, but basically very, very small and going towards zero. So that's what I wanted to highlight here. We have 16% of adult Americans having owned or only some assets.

And we have basically zero percent of corporations. And why is it so bold? Because the white house is acknowledging this from a numbers perspective. It should be the same in your country. It should be the same in the, in Europe should be the same in other countries, but it's interest to have one of the largest economies or regions on the world with, strong US Dollar presence and on emphasizing.

And what industries are primarily disrupted you or benefiting from it, I think to really be very clear on your question. I think everything relating to finance, right. And finance is real of, you know, finance is payment, you know, and how often are we doing payment per day or per week, you know, payment, then assets and securities that stock trading bonds, step instruments, loans, all kinds of financial services, such as.

Escrow accounts, interest, rate payments, you know, everything around financial services and even more. So, we also have other assets which are displaying some value, for example think of real estate as having some value and real estate also has a financial component cause it provides a return of return on investment and all kinds of other metrics.

So, fines is basically. Very much, quite much everywhere and everywhere there is silence. I think blockchain might be the infrastructure of the future. These are blockchain networks, which are then in the future representing the flow of money, but we also have to see that. For example, Bitcoin has grown to a significant asset.

On the world. So therefore, Bitcoin is also part of this finance domain, but not relying of course, on traditional currencies, like Euro US Dollar and so on and so forth, but creating an old commodity style Mac net of attracting purchasing power. Right? So, it's in my mind, it's all about finance. That's now say in plus five years and plus 10 years, I think we will see that identity management will also be heavily changed through blockchain technology. That's basically our identities in a secure way on blockchain systems and another topic, which is now popping up since half a year. It's better. New is the world around CO2 and tokenization of C of CO2. Because with blockchain technology, you can directly link, for example, a farmer in Brazil who is basically owning.

Woods, which is absorbing CO2. You can connect this person to an industrial corporation in Germany, which has to purchase these carbon credits, right? Blockchain technology basically peer-to-peer connects. These two entities allows trading and also the Providence of CO2 certificates in a very, very systematic way.

So, therefore, CO2 carbon is decarbonization might also be strongly linked. To blockchain technology, but we discovered this in one or two years.

Dr. Michael Kollo

Because I think, that's a fantastic example of a use case, but I wanna pick up a point you made earlier, which I found especially interesting, which is around this idea that is built for people and not for companies.

And I think that's a really interesting one, because one of the things I often wonder about is when you see new technologies coming through, sometimes they're an artifact of something that's happened or a previous technology that's evolved. And in this case, I mean, I suppose, do you think that the reason Bitcoin, crypto blockchain, that we're talking about and we're talking about in the context of removing power from centralized organizations and giving it back to people or giving it back to on a peer tope basis?

Is that because of what happened in 2008. So do you think that this is a kind of a flow on reaction? Not a linear one, necessarily. A broken financial system where people have lost faith institutions. They've lost faith in the agency of these institutions to, focus on them rather on big business, you have wealth inequality, you have all of these other things that have happened.

Philipp Sandner

I suppose gradually over years and years and years, and then have this big financial meltdown and incidentally have a technology that starts to take off right afterwards. That proposes an alternative financial system, devoid of central agencies and, some of the concerns around that.

Yeah, that's, that's an interesting question, but you can have mild opinions here, you know, I, of course tell you my opinion, but I might be wrong.

This needs to be show afterwards. Right. And it's difficult to argue this way or another way. I think it's the following, you know, in trusting institutions is not something everybody has, or nobody has it's also matter in the, of the country where you're living in. Right. So, for example talking for Germany, now we have quite good institutions.

We have some flaws here and there in, in ministries and all kinds of other things, you know, that's, it's not so good. But on average, I think in comparison to other countries, Germany is, does, is doing quite well with regard to institutional quality. Same with the EU, same with Canada. Same with the US. Same with Australia.

Same with a couple of other countries. Of course. So do we need blockchain technology necessarily in these C. Maybe not necessarily, right? Because the institutional quality is quite high. But imagine our world where this institutional quality is not so good, we are take Turkey with an inflation rate of 40%.

So, the institution of stable money. It's not existing anymore in Turkey, take other countries, which are far more extreme, you know, with an inflation rate of more than 1000% take ELOA where basically no banking system is existing, such that people have to travel for two hours to get a meeting with a bank, you know, imagine this.

So, these are countries where no institutions are existing. Where in, where institutions are getting weak. And so on. And I think for such regions of the world and countries where institutions are not clear weakening, I think that's exactly the case where decentral networks provide a replacement institution, right?

Bitcoin attracting purchasing power, storing your money, Ethereum for allowing money transfer across countries across the world and so on and so forth. So many aspects here. So I think blockchain technology in this decentral manner, right. Needs to be seen as. Replacement for not functioning institutions.

And therefore, I think it's, it makes very much sense to have institutions in low institutional countries. But speaking for Germany now it's good to have crypto assets, of course, but we do not necessarily need it right now. But what happens when the world is worsening? Right? We see we see inflation on the rise we have in, in Europe, you know, Europe is a couple of countries bound together.

So, there we, therefore we have multiple inflation rates. Inflation rates are ranging from 5% to 10% without the oil price shock. Right? So, in case this kicks in, we should be at 8% to 13%. Right. So, what are we seeing here is the, the institution of stable money. Getting a little bit weakened at that point of time.

And this might also worse. We also might have other situations where institutions are getting a little bit weakened. And I think for such cases in the far future where institutions might, for whatever reasons, be a little bit worsened, I think then it makes sense to really. Have triple assets as a backbone, as a replacement, as in plan B.

So, to say, that's for me, the, the main case, but to, to your question, you know, are we now turning away from institutions because we are trusting them, not anymore, maybe the younger generation, right? That, makes sense. But, you know, in case I look around in Germany tomorrow on the street, I, saw these cleaning people which are just driving the street and cleaning the street.

Then we have people. The police, for example, which is caring that everything is in order, you know, all this needs to be paid indirect taxpayers and all these institutions, they are working, you know, it's clean, it's safe. And people who are, who are very poor in Germany, they are getting subsidies from the government.

And yes, so many things do not work perfectly, but comparing to other countries, we see very clearly in the right now institutions are of high quality here, police everything. Right? So. I think that's a very important perspective. And to really, I honestly that's a last remark. I don't want to talk endless, right, Michael, but I think to really understand blockchain technology and trip point Bitcoin and on you have to, you have to try to to get a perspective on, on how life must be in countries without institution.

You know, how is life now in you? How is life in El Salvador? How is life in Venezuela and a very weak aspect in Turkey inflation rate, 40%. How is life there? You know, how do you protect Wells for the future when you can't work anymore? Because you're getting too old, right? I think and therefore, you know, I would say that in speaking for Germany, now we have difficulties understanding the benefit of this technology because everything is working so well, same for the entire EU and so on.

But to really understand this this replacement institution in case institutions are not working so well, we need to get the perspectives of people who are not having this institutional policy. And this is difficult from our perspective to be honest.

Dr. Michael Kollo

I, look, I completely agree if you look at the just as a data point to support your point.

If you look at the countries that have adopted. Cryptocurrencies, especially Bitcoin top of list is Nigeria then is basically Philippines, Thailand, Vietnam, Turkey is up there. So anybody without stable government or as stable financial systems, I think adopt these, especially if there's inflation.

But again, what you saying here is very interesting because we know that social stability and inflation are not friends. And we know that, you know, in historic periods where you've had. Inflation you've had degradation of social order. You've certainly had political volatility. And now there's this technology that's coming under horizon that seeks to replace institutions with what is perceived at least to be a neutral agent.

That is, not related to human skill or management. And so on. I suppose, the other big. The big element of this is, is not that I'm a sort of a, a studier for history or politics, but I also feel that even in developed systems like the US, which doesn't necessarily have the best banking system, let's be honest, but has a banking system.

You might say that. This idea of, again, a mistrusted institutions is prevail. So a lot of the research, not enthusiasm for blockchain originates from a country that has essentially lost faith. A lot of it in, essential institutions and suffers from some of the biggest wealth inequality for developed nation possible.

So, you'd have to kind of say that there's probably some kind of link, but I agree with you from Australian perspective, from a German perspective, we look around and we go look, stuff works. It's not perfectly efficient. But it works. So, is blockchain about creating more shareholder value? I mean, is that what we're gonna see?

Big banks are gonna take this technology, hire their own teams, or they're gonna ask us to Google or somebody else. And they're gonna like, with FinTech, what we saw when FinTech was like an amazing thing, a decade and a half ago, and eventually just got sucked into banks. And today, I mean, probably.

Relatively few, especially versus expectations of these banks that completely replaced or displaced or whatever, because these technologies are integrated into them. Is that what you see blockchain being integrated into some of the common enterprises and so on. So they still retain some degree of control.

Over the blockchain, perhaps some of the validation notes or validation processes, but now that their infrastructure sits on that, or do you see it as a complete competitor to them?

Philipp Sandner

That's a good question. Because I also kept on thinking about this for, now more than one year. And what we saw is the following.

You know, we had these, presentations and PowerPoint mode. From consultants lawyers also from me, you know, from other people at university,

Dr. Michael Kollo

We love PowerPoint. It's great.

Philipp Sandner  

Yeah, but, you know, you have these announcements, you know, a couple of years ago, what, what will happen in blockchain technology?

We will have prototypes that we have systems like, and also, and so on, these presentations have been made by consultants, by me, by others, people observing the system and so on and so forth. And what happened, you know, nothing, you know, nothing happened. Honestly, all these PowerPoint slides have been wrong.

And a couple of years later, not much happened on behalf of these companies and their companies providing possibility for creating new systems, but what happened instead, instead, we had trip assets arising. We had defi arising, NT, arising, Bitcoin, Ethereum, and Solana, and all these projects, are rising.

That's basically individual technologies. This is peer-to-peer. And now as President Biden and his administration said we have 16% of adult Americans somehow being in touch with crypto assets, right. And we have 0% of corporate America, roughly speaking, you know, and just being very, very illustrative here.

So how will this speak? How will, how should this change now? Right. I would expect that the 16% are climb into 17% or 18 to 20 to 22% over the. I don't know, one, two years. And do you now expect that corporations in Europe and around the world are suddenly adopting this technology overnight, such that the value is increasing from 0% to 10%?

That will not happen. Right? So, we see here that the spread, between individual adoption and corporate adoption will be increasing because it's a technology for individuals. Individuals have a much higher ease and comfort, getting in touch with the technology than corporations, with their decision-making processes, structures communities, and so on and so forth.

So, I think concerning oppression, I think yes, there will be banks who are adopting the technology. And actually, there will be companies arising, which will be basically asked to adopt this. These are called triple exchanges. Why is this happening? Because the government needs to have some kind of control of this ecosystem.

And how is this control possible? When you have uncontrollable decentral networks? This control is only possible when you are observing with regulatory measures and banking licenses and on it's possible by having a couple of large crypto exchanges, carbon point based finance, and so on and so forth, who are, who has to deal with regulation, who has statistic to the rules.

And with this, the government is trying to get a little bit of a footprint with some central elements in this decentral ecosystem. Is it good or bad? I think it's okay. Right? Because it's, I perfectly understand if the, government needs to get some control over money launch in criminal activities.

So, therefore, I think it's actually okay. Even though it's against the original thoughts of these crypto networks and so on. And therefore we will see the central elements of rising, we will, we will see, companies like Coinbase and so on adopting this, they will draw they will get some central power within these networks, but what will happen to existing companies, existing banks, financial services companies, and so on, not so sure because they will need it in the future.

Right. But they might be too slow adopting this, such that some of them might not survive. Right. We will have banks, you know, don't get me wrong. We will have financial service companies. We will have banks, they are, needed, and they also fulfill a very important function of this ecosystem because they, are acting at as a gateway between me as an individual and the blockchain system on the other side.

Right? So, these banks need to field as, gateway providers which are providing also some service but will all things be able to transform digitally towards this future? I don't think so, some of them will not make it and they will because part of banks are, too slow to be honest, right?

Dr. Michael Kollo

Yeah. And, I think, that there's so many interesting points here and that there's two that come to mind. One is the disintermediation of some of the capital raising, right? So defi as an example, but also the coin offerings and everything else are a way essentially to engage with essentially blockchain directly in order to sell some future value to others in, the form of coins and such.

And I feel like that also removes some element of intermediation. But the other part for me, which fascinates me is this idea of this segmentation between the Bitcoin money people and the non-Bitcoin or the conventional money people, if you want. And this idea that we really haven't had this experiment before, maybe, Europe was the only one we had this experiment where in 99, when the EU Euro was first adopted it was 1999.

There was another coin. There was another currency before it leading into it. Wasn't it. So it was called something similar but different. And so, everybody had that

Philipp Sandner  

ECU European Currency

Dr. Michael Kollo  

wanted yeah. European currency, ECU. That's right. And so you had ECU and the idea was that you had local, so Deutche marks, and then you had ECU, and then there was some exchange rate that was fixed and then eventually kind of ran into the EU.

So that time there was a kind of multiple currencies in effect in the same country. I think I might be saying something terrible. If I am, you could email me later and tell me off, but what interests me about Bitcoin or any other currency? Like this is. At the moment, there is a, there's a segmentation. If you put your wealth into Bitcoin, you can access certain services and certain elements of the economy that are probably unavailable to you in, in regular currency.

And that segmentation means that actually you can only do certain things in one and not, maybe not the other and as visa and as Tesla is threatening to do. And all these kind of companies start to accept. Bitcoin is legal currency and tender. You also wonder what, on the other side they will start to do in terms of accepting US dollar.

And obviously, the stablecoins are one example of that, the digitalization of currencies. But I feel like a lot of this conversation about the future of, you know, Ethereum or Bitcoin, et cetera, depends upon how much products and services can be built up on that digital currency side does somehow enable by digital currencies perhaps.

Inclusively to those, currencies. And then I feel like just more eyeballs, more commerce, more economics will move that it's. So, the metaverse for me is one kind of reflection of this idea of the, how much of our economy can we migrate to the digital equivalent of itself. And I suppose, you know, in, this quest to migrate all of us into that digital sphere as well, and obviously Bitcoin being a concurrency for that.

Yeah. If you have any thoughts on that, otherwise I'll, take us to maybe our last question. If you're ready.

Philipp Sandner

We actually just, one point I think the question is what is Bitcoin? The narrative is changing all the time. I think it's interesting to at this point of time, you know, speaking, at least from the perspective, I think it's good to, to see Bitcoin as a potential investment object potentially also weakening the, adverse effects of inflation and so on.

So, but it's not payment. Right. And why is this. Payment is should be a stable asset. We have the volatility with Bitcoin right now, at least this might we over the years to come, but right now the volatility is still there. And we have basically no acceptance of Bitcoin at shops and merchants, right?

So in Germany we have, for example, I think 60,000 gas stations or 6,000, you know, like thousands of gas stations where you can purchase easily with faster cards. Cash credit cards and other things, Apple pay all works perfectly, but basically goes to zero acceptance points of Bitcoin. So therefore, Bitcoin at this point of time does not work as payment infrastructure, at least for Europe and Russia.

I think at this point of time, it needs to be seen as an investment object. Right. But still the benefit is there because you can purchase this commodity side of asset to weaken your inflation revenue.

Dr. Michael Kollo

Yeah, I, think that's right and look, but this way, any company where income and costs are in different, or revenue and costs are in different currencies will face this FX risk.

So, what you're saying is, if you are one of the street cleaners, you've refer to, you're getting paid in euros. And if, even if you wanted to purchase goods and services in Bitcoin, you'd be constantly running that exchange risk as part of your everyday life. So that's probably not the best thing to do.

And, so I think it goes back to this notion that. There's this currency that's growing up. In the economy. And the question is whether it can live side by side with another currency or whether they will end up displacing and, so displacing means you can now be, you know, paid a fixed amount of Bitcoin every month.

And therefore, you can spend that, and you don't no longer have a problem, right? You no longer have price volatility because now you can spend that money on groceries and you receive it as, your salary as well. So, it's to me that it, in order for it to work and not be an exotic asset. That investment asset, as you said, or something else, speculative one, you need to move a critical mass of that financial infrastructure onto that system.

And I don't think that's an easy process and it's certainly not a necessarily a smooth one either. I want to take you to the last question just for it, cuz I'm, mindful of your time. You've been extremely generous and thank you so much again. This, this is a question that often kind of works at the back of my mind as we work our way through these different technologies.

So cryptos, blockchains, DeFi metaverse, and so on. I suppose just think reflecting on, and the big question behind me is, do you think that the acceptance and advent of blockchain will make the world a more equitable place?

Philipp Sandner

That's a good question. And it's very difficult to project this somehow.

But I, think there will be tensions. But I also think that the, technology will also help making this, this world a little bit better. And the key reason why I'm saying this is that especially those people in countries where institutions are. Weak or not functioning at all. It's those people who are benefit the most.

Yeah. Think of people in who can store their value in Bitcoin or in Ethereum or in US Dollar, right. But they do not have to use the local currency anymore because it's inflating at more than 1000% year. Same is true for 10, 20 other countries. Same might be true for our Western world. So, to say EU and in the US, because we also have higher inflation rates ING now 10%. So, we, might. Get something out of this. And I think those people who are getting the most out of it could be those who are financially excluded at this point of time because of weak or no in institutions, in, such countries.

Right. And therefore, there are hundreds of millions of people who potentially could benefit.

Dr. Michael Kollo

That's a wonderful note to end our conversation. Thank you so much for that.

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