Lex Sokolin | Autonomous Research
Cryptocurrency and blockchain predictions
Lex Sokolin is a Partner and Global Director of Fintech Strategy at Autonomous Research. Lex is a futurist and entrepreneur focused on the next generation of financial services. He was named one of Linkedin’s “Top FIntech Voices of 2017”. We recently sat down with Lex, who will be chairing our Digital Asset Strategies Summit (Oct. 16 – 17 – Dallas), as he shared his thoughts on new developments he thinks may happen in the world of crypto and blockchain.
Digital Asset Strategies Summit: At what point does digital lending and crypto converge?
Lex Sokolin: In my view, Crypto and Fintech are closely related, but different themes. The latter is about using technology to democratize access to existing financial product. Think about using desktop or mobile-first interfaces as front-office or middle-office solutions. So companies like Roboadvisors, Neobanks, or Digital Lenders are all great at democratizing solutions, creating access to products at a much lower cost, with a lower distribution overhead, thereby allowing many more people to access high-quality financial products from institutions.
Crypto, on the other hand, is about decentralizing the manufacturing of financial product. You can certainly layer other Fintech solutions on top of that – so as to have a Roboadvisor or Digital Lender that uses blockchain underneath it. But the core innovation of decentralized global computing or digital assets is something completely new.
I believe it will take quite some time, likely 3 to 5 years, for regular people to get fully comfortable with financial products that have been manufactured in a decentralized fashion. We saw a comparable gap in the case of BitTorrent and the modern streaming services. Media sharing led the invention of technology that in large part now also powers how music and media are downloaded at scale by everyone.
Digital Asset Strategies Summit: How does crypto make financial services companies more customer centric?
Lex Sokolin: To understand crypto, you have to understand the communities that drive different projects. The builders and the users literally hang out together and build together. This behavior was seen before in open source communities, but did not need to apply to financial services companies with traditional value chains. Looking at Crypto today, financial services companies can learn a lot about customer growth, user-led marketing, rewards that people care about, and social platforms which determine which projects succeed or fail. Such decentralized networks exhibit growth that certainly rivals that of any finance company in history.
Digital Asset Strategies Summit: Will regulations ultimately obsolete ICOs or will they enhance them?
Lex Sokolin: At the surface level, there are two things to say about regulations. First, shining a light on good and bad practices, and creating implications for poor types of behavior is an absolute positive. While global regulations differ, coherent frameworks are starting to emerge from the patchwork. These will help quality projects move forward and they will also help drive adoption by normalizing the asset class. Driving out the bad actors by starving them of oxygen — the easy scams and hacks available now — is also a good thing. The second point is that regulations are very likely to reflect our existing worlds as opposed to future ones. That can be a danger to innovation and experimentation, which different societies prefer at different amounts. Hopefully, that can be decided through cultural and social negotiation and not by decree.
The broader point about regulation is that, at least to a meaningful extent, crypto governance has to happen in the software itself. Code will execute as it is written. Therefore, until lawyers, regulators and common practitioners have a strong grasp of computer science, human judgement-based approaches to litigating issues within these networks may come off as foolish.
Digital Asset Strategies Summit: If 2018 can be summed up as the year of developing the crypto infrastructure, what do you predict will define 2019?
Lex Sokolin: If the infrastructure does get built in a significant way during the rest of this year, then I hope 2019 will be about creating interesting and easy-to-use applications for real people. A few hardware projects are also in-flight, which may land mobile phones that are block chain-native into the hands of consumers. Interesting mass-appeal crypto projects could come from unexpected places. For example, it could be the next augmented reality Pokémon GO game that brings digital collectables into teenager hearts. Or maybe a local community in a developing country will start using an application that allows for credit to be used between the un-banked. Or, perhaps certain medical data can be jointly shared by hospitals and governments around the globe to help treat critically-ill patients, saving lives using the technology. While it is hard to predict an accurate outcome, I’m excited about the direction of travel within the application layer.
Digital Asset Strategies Summit: You have stated that there is no distinction between the web enabled world and the crypto enabled world. Can you explain?
Lex Sokolin: To answer this, you almost have to get to philosophical grounds. Should people believe in Progress? Is such a concept naive and idealistic, neglecting the lived experience of millions of people in the world today? Is it revisionist history, justifying everything that’s happened before with broad strokes? I think, if we put aside socially constructed issues like culture and politics, we can find some version of Progress in technology. This is also a very Millennial perspective. Technology has been getting better and better every year in my lifetime. And certainly some have drawn that arrow of history to the first time people made fire.
So I believe that crypto is the next step of a technological toolkit. That means anything that is currently on the web will in the future incorporate blockchain-based elements (in the same way that technology today incorporates electricity, or radio waves, etc.). If you are an entrepreneur today, there is no reason not to use at least a small portion of what the crypto world has to offer within your business idea and see what happens. It’s an exciting time!
Digital Asset Strategies Summit: Thanks Lex. We look forward to hearing more of your thoughts at the Digital Asset Strategies Summit October 16 – 17 in Dallas.