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Tokenization Call with Corey 20251111 190204 Meeting Recording — Transcript

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0:02you doing today?
0:03>> I'm doing good. How are you? How you
0:05doing?
0:05>> Good. Good. Busy day, man. It's a good
0:08It's a good busy day. Class, how are you
0:10all doing today?
0:15>> Good.
0:15>> Yeah.
0:16>> Yeah. Good. Somebody responded. That
0:18must be Is that Kellen?
0:22>> Kellen did respond. Yeah. Good, man. I'm
0:24glad. I know Benjamin did talk to me
0:26earlier. So I mean Ben Ben works for us
0:30so he he he talks to me all the time.
0:34>> All right. So
0:35>> sometimes too much. [laughter]
0:37>> Sometimes too much. Don't I give you
0:38hell, man. So you're like my kid anyway.
0:42You've gone through years with me. I
0:43guess I don't know three years now.
0:45Maybe give and take. You
0:48>> you've been in the Yeah. You've been in
0:50the journey with me since since I've
0:52known you. Right. Appreciate that. All
0:55right, folks. Uh we we have Corey today.
0:57So, we're going to be talking a lot
0:58about tokenization,
1:00right? What is tokenization
1:03and how is impacted the industry? What's
1:06the benefits uh of using tokenization?
1:09So, we will make this conversation uh as
1:12uh seamless as possible, but we're not
1:15going to take much time today. So, I
1:17don't want to take much of your time,
1:18>> right? Um so, we'll just start off with
1:20Corey. Corey, go ahead. you have the
1:22floor and feel free to jump in folks,
1:25ask questions as as you need it. All
1:27right,
1:28>> that's the way we'll handle it because I
1:30I was imagining this being more informal
1:32talk. We've talked in the past about
1:35tokenization,
1:36how it have uh worked with payment
1:38processing, what it is. The funny thing
1:41is when I when I saw the topic, I was
1:44like, okay, what what would would you
1:46like to discuss today? So, I went ahead
1:48and looked up the topic again just to
1:50see, you know, what's changed, what's
1:53going on in tokenization.
1:55>> And the funniest thing is it it seems
1:58like it's been picked up by the rest of
1:59the payment world.
2:01>> That's true,
2:02>> right? In a sense. So, you you got the
2:04merge of
2:06>> you do you think you could start using
2:08that with stable coins or you know, but
2:10I'm sure these kids I mean some other
2:12these guys would like to know about what
2:14is tokenization, right? and what does it
2:16entail? The other class semester, right?
2:20Yeah.
2:20>> I like to hear if the class has any any
2:23like, you know, if they've heard the
2:26topic of tokenization or how they've
2:28heard of it. Um if they've heard of it
2:31being applied to stable coins or to to
2:34block blockchain in general.
2:37>> All right. So, class, what's what's your
2:38take on tokenization? Let's ask the
2:40class.
2:46Yeah, I can I can respond if that's
2:48>> Go ahead, Ka. Yeah, go ahead.
2:51>> Yeah, so um I mean as of late, uh you
2:55know, tokenization has been pretty much
2:57a mainstream term within crypto and
3:00blockchain. Um specifically relates to
3:02like real world assets like basically
3:06uh tokenizing
3:07um physical assets onto the blockchain.
3:10But then then there's also like the
3:12tokenization that comes from just um
3:15your standard digital payments which is
3:17like more more traditional. So I think
3:20it's a little bit it can be it can be
3:23confusing now because the terms are
3:25being thrown around but they have like
3:28very different context very different
3:30context depending on um what you're
3:33talking about because yeah tokenization
3:35the security side is very different
3:38>> than tokenizing an asset um at least
3:41from how I understand it. No, that's
3:44actually it's that's exactly where I
3:46wanted to get to and and I'm glad that
3:48was the first question or the first
3:50comment on it because that's the context
3:53I was saying when I was uh doing
3:55research today is that there's a lot
3:57more talk about taking real world assets
4:00or or I shouldn't say physical assets
4:02but stuff like stocks and bonds and
4:05actually tokenizing them via blockchain
4:10to do transmissions. uh throughout the
4:13world. So, it's interesting because
4:16tokenization
4:18the way that I talked about in the past
4:20or the way that it's used in the payment
4:22industry up till now has been very
4:25specific. It was for the encrypting and
4:29transmission of payment account data. So
4:34while we talk about stuff like for in
4:37the credit card world, Visa token
4:39system, um, Mastercard digital
4:42enablement, uh, or it makes more sense
4:45when I say like Apple Pay, Google Pay,
4:49uh, Samsung Pay, those while they're
4:51mobile apps, really what they are are
4:54doing is is implementing a tokenization
4:57system to send your credit card data
5:00um, throughout the the entire mobile
5:03world whether it's the internet or or
5:05via mobile channels etc.
5:08But it's way more interesting now to see
5:11that stuff like stocks and bonds, um,
5:14financial contracts, uh, mortgages, even
5:18real estate, uh, transactions
5:20are now the focus for tokenization
5:24because something that we've talked
5:25about with stable coins,
5:28with just uh, blockchain in general,
5:31using that for transmission of that
5:33data. Now, that's the context they're
5:35talking about when they say
5:36tokenization.
5:38Um, so that that seems pretty
5:41interesting to me, Nick, that that's
5:43where a lot of these systems will go.
5:47And it makes me wonder if systems that
5:50were built for credit card tokenization
5:52such as Visa token system will be used
5:54for transmission of that contract data.
5:58>> So, let's talk about prior to the
6:00fundamentals, right? Why was token
6:02created? Okay, so you know back in the
6:05day so we talked about fraud and stuff.
6:08So
6:09>> right
6:09>> to me when we did this right u so the
6:13easier way to sum it is okay so for
6:15example you guys got credit cards right
6:18I mean every single one of you probably
6:19got one or or two or three which I don't
6:22so just let you all know that but uh so
6:25for example if a card's compromised so
6:27what do you do
6:30what happens when your card's
6:32compromised folks just basic question
6:34what do you all do normally
6:37if you you Contact support.
6:40>> Contact support. Okay.
6:41>> Contact the bank and
6:44>> card has been uh has been hacked or
6:46somebody has got my information.
6:48>> Okay. Got it. All right. So then think
6:50about your cards been linked to
6:52everybody and the uncle. Correct. So you
6:55got Starbucks, you got Target, you you
6:57have to call all these people, right? It
6:59just isn't it a hot mess just to get
7:01hold of everybody?
7:03>> Think about that
7:04signed up. Not only that, but back in
7:07the day, it used to be like with, for
7:10instance, you didn't really have to
7:12worry about that with checking accounts.
7:14Um, yes, you know, someone might steal a
7:17checking account micro number or
7:18something like that, but
7:20>> this was the days before electronic a
7:22where everything was connected online,
7:24people using that number quite a lot.
7:26Um, so
7:28>> checking was more of the issue. Mhm.
7:31>> But when e-commerce really came in or
7:36even more so mobile purchases, so like I
7:39was saying before, Apple Pay,
7:41>> Google Pay and such like that.
7:44um when people start using their credit
7:46cards online more to actually pay bills
7:49to pay the electric company to go ahead
7:52and
7:53>> those were things that just 25 years ago
7:57people weren't doing that wasn't
7:59consumer like the the normal consumer
8:02way of paying anything. Mhm.
8:04>> So that meant there was a whole lot more
8:06linkages,
8:08which if your card got stolen,
8:11>> extremely
8:13uh inconvenient, not just for the
8:15consumer to go to every single one of
8:17those sites and stop it, but from their
8:20issuer, believe it or not, on the back
8:21end to stop purchases still.
8:24>> Yeah. But that's just think about
8:26Netflix, right? Everything is tied into
8:28like all your apps, your Netflix, your
8:30Amazon, guys. It's it's unbelievable
8:33what you have to do but in a sense of
8:35token right I mean when you do
8:37tokenization
8:38so each each app is given a token
8:42correct so
8:44>> exactly it's
8:45>> so what happens if it's yeah if say your
8:48Starbucks is compromised
8:50>> if somebody can mute back there I think
8:52Priyanka I'm hearing background noise
8:54from your side so if you could mute it
8:56please thank you so if your if your
8:58Starbucks is compromised guess
9:01All you have to do is notify AAX or
9:04sorry, Mastercard and say, "Hey, my
9:06Starbucks is compromised. Therefore,
9:08guess what? Everybody else is fine. All
9:10you have to do is change the token for
9:12one app." Does that make sense, guys? I
9:14mean, instead of you notifying everybody
9:17so the problem is just solved at one
9:20point, right?
9:21>> And it solves for multiple uh multiple
9:25ways of fraud or or criminal activity.
9:27For instance, if my phone is stolen,
9:30>> the token that's within that, even if
9:32you unlock the phone, the token that's
9:34within the phone
9:36>> uh can easily be cancelled and that way
9:39you never affect the the actual card uh
9:43primary account number, the PAN.
9:45>> Mhm.
9:45>> So yeah, it it's tokenization has been
9:50extremely important for the security and
9:53the payment processing system. Even next
9:56year, Visa is uh creating a new what
9:59they call the interchange category where
10:01you pay for the network fees. Well,
10:04they're creating a new category
10:05specifically for e-commerce where if you
10:08do two different things, then you get a
10:12much better interchange rate. One of
10:14them is 3DS authentication. That's where
10:16you're making sure the customer is the
10:18customer.
10:19>> The other one is tokenization. And if
10:21the merchant participates in Visa's uh
10:24tokenization program, they'll get a
10:26better interchange rate. So this has
10:29been one of their primary ways of
10:31securing their network. Um
10:34even with pass keys, uh phto pass keys,
10:38that's one of the things that they're
10:39going to be use utilizing now on their
10:42system for tokens. So
10:45it's something where in the payment
10:47system they've seen the the utility of
10:51it for the last two decades. It's just a
10:53matter of they've seen it for credit
10:56card information not for more detailed
10:59contractual information.
11:03>> All right. Does that does that make
11:04sense class? What we talked about any
11:07any questions on that?
11:09Uh I have a question about uh so like
11:13like quantum computing when it comes to
11:15like tokenization like would that be
11:18more of like a a risk towards
11:21tokenization or more like an asset?
11:24Um
11:25>> when you say like uh like quantum uh
11:29quantum computing for tokenization is it
11:31more of a like applying quantum uh
11:34quantum computing?
11:36>> Yeah.
11:38Well, it's it's a it's a security risk
11:42that I would say
11:45just in the fact that you're talking
11:46about quantum computing, it's not a
11:50security risk that most of the industry
11:52would be worrying about. Um it does come
11:55up when you start talking about uh
11:58specifically security trading stocks and
12:00bonds. That's where you would get into
12:04uh groups going ahead and trying to
12:06build uh quantum computing models in
12:08order to go ahead and break the
12:09encryption and and see what's in those.
12:12But we're talking we're talking high
12:15scale at that point. Whereas um the
12:20worry really is going to be later on
12:23when we start doing
12:26um I I would imagine transmission of
12:28medical code and also for things like
12:32real estate but quite honestly more
12:35medical uh medical billing. if they can
12:38figure out tokenization and
12:40standardization of any type of
12:42transmission,
12:44then that's where I'd be worried um
12:47about someone trying to develop a a
12:49quantum model to break the encryption.
12:52Um but actually that's a that's a really
12:54good question because it's one of those
12:55things where in regular credit card
12:57processing, we never had to worry about
12:59that. It's such a low margin uh hack to
13:04go ahead and try to break uh
13:06tokenization that it's something where
13:09they really haven't worried about that
13:11in the credit card industry for a long
13:12time. But yeah, it would be a thing for
13:16stocks and bonds.
13:22>> That's actually really good one. What's
13:24the next question?
13:25>> Kell had a question.
13:28>> Oh yeah. Um, yeah, Corey, I've also
13:30heard with tokenization at like the
13:33transaction level, like for example,
13:35when you go to pay with something like
13:38with Apple Pay and you're and you're
13:39using basically the tap to pay that it's
13:42essentially creating like a unique token
13:46at the transaction level that basically
13:48um you know expires or once the
13:52transaction is complete like that that I
13:54that unique number goes away. Is that
13:57also part of the same conversation um
14:00with tokenization and security?
14:02>> Um good question. That's something
14:04that's been going on for for years
14:07actually with credit card tokenization.
14:11It hasn't been as dynamic as that
14:14sounds. Um, usually for every primary
14:18account number, there's various like I
14:20would say usually four or five different
14:22tokens that are are in play depending on
14:25how many subscriptions the average
14:26consumer has. And those tokens are
14:32pretty much once they're created,
14:33they're out there for the merchant. They
14:35they go ahead and use the same token.
14:37They don't really change it up that
14:38much. um even if it's a device token,
14:42one that links back to your phone for
14:44instance, um the key is is that when
14:47something does occur, like if a phone is
14:51lost or a card is lost or stolen or if
14:55your uh the credit card number that was
14:58the token is compromised like on Netflix
15:03or something, then they they have the
15:07ability with tokens to just clear that
15:10one and quickly move on to another one.
15:14So that's really when the change occurs.
15:16There's even um systems that are called
15:19account updators with uh Visa,
15:22Mastercard, American Express, and
15:24Discover as well as some of the uh the
15:26debit networks with their own card
15:27numbers.
15:29And when a lost or stolen or compromised
15:33card occurs, those account updator
15:36services um uh it used to be only every
15:3924 hours, but now it's even real time
15:42send a new information to the merchants
15:44who participate. They get their new
15:46token, they update it on the fly, and
15:49you don't have to do anything.
15:51Um, if you have a bank that
15:53participates, you might also when you go
15:55ahead and report your car lost or
15:57stolen, you might even get a text to
15:59your bank app. I believe Capital One
16:01participates, whereas some merchants
16:03automatically get that update and they
16:06get it at the time that you report your
16:07car lost or stolen. So,
16:10it's not necessarily dynamic. The
16:13networks are getting to that point.
16:15They've even planned for cards that do
16:17not show a card number on the card at
16:20all. It just has a dynamic number that
16:22changes every couple minutes. They've
16:24had that in the past, but they're still
16:27not there yet with that level of of of
16:31dynamic use of the card number. They
16:34want to get to that point. They want to
16:35get to the point where no one cares
16:38about a card number. Um, I can even say
16:42that there are um, and it's public
16:44knowledge, so it's not like I'm it's not
16:45like it's crazy confidential, it's more
16:47minutia. There's something called the
16:49primary account reference number, a par
16:53that links all these different tokens
16:56and card numbers together through every
16:58single transaction.
17:00The difference with a PAR is I can't do
17:03a financial transaction. So, I can't
17:05initiate a transaction. is just simply
17:07for me to do my own data mining and
17:11figure out, okay, how many different
17:14places is this card being used at? It
17:16works great for a network uh for a not
17:20necessarily for a network but for a
17:22larger acquirer like Fiser that has so
17:26many merchants that it's worth it to go
17:28ahead and look up do a par search see if
17:32a card is being used fraudulently
17:34everywhere through the use of different
17:36tokens. So, um, hopefully I didn't go
17:40off on too much of a tangent, but yeah,
17:42uh, the
17:44the use of multiple card numbers is
17:47actually a pretty big thing in payment
17:48processing, tokenization.
17:53>> Okay, cool. Yeah, thanks a lot. That's
17:55uh, really interesting actually.
18:00>> And questions. I just gonna say it's
18:04it's it's it seems like that wouldn't be
18:07a big deal like you know the use of a
18:10well I would I would say it seems like
18:12it'd be a dry topic the oh well how many
18:15cards link back to one token or but
18:19that's actually been something that as
18:21you heard even up till now we've been
18:24trying to get to a point where we can
18:26have even a financial reference number
18:29but that's just too much of a risk.
18:34I see. Okay. Yeah. Thank you.
18:40>> All right. So, we we described the
18:42fundamentals, right? So, what about
18:45what's coming up next? Where do you see
18:48tokenization evolving to?
18:52Well, in the payments industry, like I
18:54said, trying to use it multifactor with
18:58actual authentication. Um, trying to
19:02really tie those two things together
19:04when it's a card not present
19:05transaction.
19:07Um, we've gotten much further with
19:10authentication.
19:11As you know, tokenization has always
19:13been an a what they call a value ad,
19:17something that, you know, you can
19:19encourage merchants to do for the
19:21security factor of it when you're online
19:23merchant. But it hasn't it's been more
19:26niche than anything. Um, even when card
19:29not present has gotten has taken over
19:31from, you know, actual physical
19:33transactions.
19:35I think now with
19:38just how much car not presence is being
19:40done in particular car not present from
19:42electronic devices
19:45that tokenization is going mainstream
19:48even for just your mom and pop shops who
19:51just happen to have some type of online
19:53presence.
19:55um you're going to see in smaller um uh
20:00smaller like or excuse me businesses
20:03that target smaller merchants like
20:04Square
20:06>> Mhm.
20:07uh or Zoom or those types the ability to
20:11go ahead and actually do tokenization
20:13via Google Pay via Samsung Pay that's
20:17the importance of those actual those
20:19that we call them just the pays is that
20:22in addition to uh the merchant sa uh
20:26saving some money it provides that
20:28security
20:30um the biggest thing is that like I said
20:33right now it's uh I I wasn't expecting
20:37tokenization to become a buzzword like
20:39AI, but it has over the last year. And
20:44in the future, we're going to start
20:46seeing it used at least in the financial
20:48market for actual transmission of like
20:53uh what you call sale orders
20:56and the actual transmission of the the
20:58financial assets themselves.
21:01So it's not necessarily like so much a
21:05stable coin as using blockchain
21:07principles to transmit these actual
21:10financial assets.
21:12That is going to mean that we need to
21:15see a some type of
21:18standard worldwide
21:20for the transmission of noninancial
21:24like it's not financial like a coin or
21:27anything like that but non-financial
21:29contracts. So,
21:30>> Mhm.
21:31>> the actual shares, the actual stocks,
21:33the actual documentation for even
21:37selling of uh of real estate or actual
21:42assets, that's a big one right there. If
21:46it can be done in an encrypted manner uh
21:48for cheap, then we're talking about the
21:50replacement of a lot of different
21:53uh processes and structures that have
21:55been out there for for centuries. stuff
21:58like having to do notoriization and such
22:01can be done electronically.
22:04>> Got it. So, how might regulatory
22:07developments or new standards, new
22:10industry standards shift organization
22:13practices in the future? So, how do you
22:15see that?
22:16>> It's going to have to be uh industry by
22:19industry.
22:20>> Okay. And that type of regulation is
22:22something where you're going to see the
22:24industry push more for the regulation
22:27depending on how close they feel the
22:30technology is to actually being used.
22:33>> Mhm.
22:35>> Um especially for the uh the economic
22:38uses of it.
22:40>> Okay. So of course the buzz word now
22:43stable coins, right? I mean obviously
22:45with the genius act. So how do you see
22:48stable coins impacting
22:51tokenizations or tokens?
22:55>> I I think it's just another way of you
22:57know saying about blockchain is the
22:59stable coin but it's going to impact in
23:02a way of
23:04with the government
23:06actually like you said the genius act.
23:08This is the most legislation we've seen
23:10on the blockchain front in 5 years or
23:14so. Um, and this is going from the
23:19government working very slowly in like
23:222022 or so, just asking for comment on
23:26even regulation of coins by banks or if
23:30banks would want to use them. We've in
23:32the last 5 years gone from that to
23:35institutional use of them. Um so
23:40with the genius act it just signals that
23:42the government at least is participating
23:45from a front of forwardlooking
23:47regulation.
23:49Um I can't say about the actual criminal
23:52enforcement of some of these things. Um
23:55but they are now looking towards
23:57regulation of the actual use of the
23:59technology. I think Dave, yeah, I think
24:02it just needs to be a little bit more
24:04looking at the back end of it, but the
24:07technology itself is going to be used.
24:10>> So for right now, so you say Mastercard
24:12has got its vault, right? I mean, they
24:13got their one, Visa's got their own
24:15vault to keep the tokenization.
24:17>> So with stable coins,
24:20for example, say Amazon wants to create
24:22their stable coin, Walmart. So every
24:25Tom, Dick, and Harry out there say like,
24:26you know what, I'm going to create tok
24:28uh stable coins now, right? So th that's
24:31where my question is, right? So how is
24:33this going to impact tokenization when
24:35the whole idea about stable coins is to
24:37eliminate guys like Visa and Mastercard,
24:40right? For monopolizing the whole or
24:42cannibalizing the industry.
24:45>> So where does token go there, right? I
24:47mean that it's just a question is it's
24:49just
24:49>> No, no, it's a good question though cuz
24:51a lot of times people that's the first
24:53question is like how do we go ahead and
24:56establish this technology in a safe way
24:58when
24:58>> yes
24:59>> it's so new that there's a lack of
25:01government regulation because we haven't
25:04even thought of how to regulate it.
25:05What's the use cases for regulation?
25:08>> What do we exactly regulate? What type
25:10of databases? Um what type of personal
25:13identifiable information would be in
25:15play? what wouldn't be in play. So, you
25:18know that in the credit card industry
25:20that's taken
25:22decades
25:24>> of work between participants
25:26um to go ahead and start establishing
25:28that. The fact of the matter is that for
25:32instance,
25:33Mastercard is just a a scheme that and I
25:37say scheme not in a a negative way.
25:39That's the technical term for it. is
25:42just a scheme of different banks that
25:44work together. Used to be called Inner
25:46Bank became Mastercard became uh you
25:49know Master Charge and Mastercard. Same
25:51thing with Visa. I mean it was
25:53originally just Bank of America but then
25:55it became other financial institutions
25:57participating.
25:59You can say that also for the security
26:01aspect of the industry. um the payment
26:04council uh going ahead and creating PCI,
26:07DSS,
26:09there is EMV,
26:11even tokenization standards that are in
26:14place for the payment industry were
26:16created from hundreds of participants in
26:19the industry, not just the major ones.
26:22Visa has its own vault. Mastercard has
26:24its own vault. So do the other majors,
26:27but they all follow a standard, an
26:29industry standard. So that's really what
26:32needs to happen with blockchain. Um it's
26:35not a problem if you have multiple uh
26:38large groups having their own
26:40blockchains and having their own uses,
26:42their own use cases.
26:45Really the focus is going to be is on
26:47the transmission of things such as
26:49personal identifiable information
26:52>> or how what type of information can be
26:55sent in those contractual transmissions.
26:58And when they get to either end, if it's
27:01outside of the country of where
27:04origination, are you still going to need
27:06those real world items um such as money
27:10transfer license or are we going to have
27:12to build new regulations
27:15for the uh encryption and decryption of
27:18items on different continents? That
27:21makes a big deal because certain uh
27:23countries such as India have very strong
27:26data policies about data being
27:28transmitted outside their country
27:30>> and those are things where
27:32internationally those have to be
27:34resolved. So, if we're going to see
27:37transmission of uh assets of contractual
27:41information,
27:43it's going to take off, but it's
27:44probably going to take off uh at most at
27:47a national scale or at a regional scale
27:49at first, unless we're talking about
27:51highly regul regulated industries.
27:55Um those
27:57uh because of the focus on them and how
28:00narrow the use of it is, those will uh
28:03pick up first.
28:05You see, let's take one step back,
28:07right, Curry? I mean, yeah,
28:10let's remove tokenization from this
28:12conversation. We got the whole idea of
28:14stable stable coins is to make sure with
28:17merchants are taken care of, right? The
28:18whole, you know, less payments, less
28:20interchange assessments and stuff, but
28:24everybody's going to start creating
28:25their own stable coin in a sense, right?
28:28So, where do you see who's going to be
28:30controlling it? Who's going to be
28:32managing it? Right? who's going to be
28:34assigned to it or is this going to be
28:36like a like a cowboy town where you got
28:39like hundreds of stable coins out there,
28:41right? [laughter] That's what I'm not so
28:43sure. Correct. I mean,
28:44>> it's I I I would say yes, but I would
28:46say in a manner of that it's not going
28:49to be just the wild west cuz we saw kind
28:51of like that with meme coins and such.
28:54>> Yes. But when you come down to it, the
28:57coins that are actually functional coins
29:00that are actually used uh not just for
29:03financial transactions but for
29:05blockchains in general like Ethereum and
29:07such.
29:09Those are are utilized because of the
29:13planning that goes into them because of
29:16the amount of participants that work
29:18towards making those a standard. So
29:21>> who's going to be the central
29:22repository? the question that's what's
29:24going to be correct. Is the government
29:26going to control it? If the government
29:28controls it, think about
29:30>> Oh, as far as like no, it won't be
29:32government control because
29:34>> question is
29:35>> how many blockchains are you going to
29:37have out there for verification and
29:39valid validation? Doesn't matter.
29:41>> You're going to have you're going to
29:43have quite a lot.
29:45>> Exactly. But it's going to narrow down
29:49just by how many people participate by
29:53the fun by the usability of the actual
29:55like blockchain technology if it's
29:58versatile enough
30:00>> and then the part that you're saying
30:01government won't um very just point
30:04blank the government doesn't want to own
30:07a technology or even the network that it
30:10transmits remember I mean for instance
30:13the internet the worldwide web all these
30:15things. They originate as a government
30:18project, but the government didn't keep
30:21hold of just a solitary network. It's a
30:24web of networks that connect together
30:26and use one protocol. So, it's the same
30:28thing in the financial world.
30:30>> The government always has had the
30:32ability to own stuff like uh you know a
30:36clearing house for checks and later on
30:39or you know with Visa or Mastercard.
30:42Not only is it it we're a capitalist
30:44free market society. Not only is it not
30:46profitable, it stifles innovation. They
30:48don't want to own it. They want to
30:50regulate it as little as possible, but
30:53there are going to be regulations
30:55because unfortunately we're going to see
30:57pain with things being stolen or, you
31:00know, networks being compromised.
31:02>> Um, that's the way these things
31:04developed.
31:05>> Yeah,
31:06>> there should be oversight, Curry. I
31:07mean, honestly, if you get like 100 guys
31:08running around creating their own stable
31:10coins, then you're going to have a major
31:12problem, right? Why I I like to like
31:16encourage uh the students for courses
31:19like this to really think about
31:20compliance and think about
31:23um vulnerabilities and then bring it up
31:25in their in their projects when when
31:28talking about it because while it's
31:31inconvenient and a lot of times people
31:34just wonder why we mention vulner
31:36vulnerabilities during uh planning they
31:39don't want to invest more into it
31:41because it's not revenue generating.
31:43This is where
31:45the regulation comes from. This is where
31:48when you participate in these councils
31:51and you discuss, you know, different
31:53ways that you're solving for
31:55vulnerabilities or what should be
31:56implemented into the standard for
31:58instance ph. The amount of work that
32:01went into developing that standard um to
32:04not only be used just for payments but
32:06also for other securities within
32:09browsers.
32:10That's that's the way that regulation
32:13will come. So I would love it if the
32:16government simply paid for, you know, a
32:20a
32:21technical school to to sit back and
32:24think about, you know, all the different
32:26ways to
32:28uh do regulation on stuff like this. But
32:30unfortunately, it it comes with a little
32:33bit of pain usually.
32:35Okay.
32:36>> All right. Uh class, I'm going to open
32:38it up for you for questions.
32:48Did we throw you all off track, guys? Is
32:50that what it is?
32:52[laughter]
32:54>> Come on. Feel free to ask questions.
32:57>> Uh
32:58>> thoughts.
33:00>> Hey Cory, how you doing?
33:02>> I'm doing good.
33:04I had a question about like so what are
33:06the cost challenges or cost and
33:08challenges of tokenization?
33:11Uh, I can't say the cost part. Although
33:14I will say that like like I said before
33:18in general, the biggest thing about cost
33:21is when you're talking about something
33:22like tokenization or security in
33:25general, the general
33:28uh thought by by accounting and and
33:33executives is that it's not revenue
33:35generating.
33:37that unless you're talking about a new
33:39solution like that's the reason why
33:42stocks and bonds suddenly are are such a
33:45hot topic is because it can be revenue
33:47generating for that if you can do
33:49transmissions securely authenticated
33:52transmissions of actual stocks and bonds
33:56um changing them from physical to
33:58blockchain and back and such then that's
34:00great but in most cases it's talking
34:03about if it's not saving time especially
34:07in those contractual matters then it's
34:09not revenue gen generating at that point
34:11it's hey let's send this in a more
34:13secure way that's the biggest uh reason
34:17that these things haven't taken off um
34:20also complex transactions
34:23uh Nick you could tell the the tell
34:27anybody about just how much the payment
34:30industry has been wanting to do medical
34:32billing for the last two decades Yes.
34:36>> And the reason why is is not is simply
34:40because those transactions are so
34:42complex.
34:44Um when you go to the doctor, it's not
34:47like it's just a simple billing. Um they
34:50send the actual medical codes. They have
34:52to be allowed by your particular
34:54insurance plan. Even if it's allowed,
34:56they have to go ahead and authorize it
34:58per customer. And that might take
35:00several different interactions with the
35:02same doctor, with the same medical
35:05insurance group. So medical billing has
35:08just been this white whale for payment
35:11processing to do at scale
35:14and they haven't been able to get to it.
35:17things like tokenization, especially
35:18tokenization and blockchain,
35:22um could be the the use case that
35:24actually gets the payment industry in
35:26there, but it still needs to be
35:30regulated. It still needs to abide by
35:32current like, you know, HIPPA laws and
35:34such. And a network [clears throat] that
35:37can handle the the throughput and all
35:39the different changes has to be
35:40developed. So
35:43that's where the biggest it's there's a
35:47use case and I call it like a lottery
35:50ticket. Whoever can develop it is going
35:52to be a very rich or powerful company.
35:56Um or it will be Oracle. But either way
36:00it's that's the actual like the toughest
36:03part about doing something like that.
36:09Good question.
36:13Ben, you're quiet.
36:17>> No, I find it really interesting.
36:18Honestly, it kind of reminds me um of
36:22almost like how we we treat the
36:24internet. And I like how you brought
36:25that up as well where it's like uh
36:27tokenization similar to um and forgive
36:30me if I get the concept wrong, but
36:32almost like TPS where it's just like
36:33okay, making sure that the right
36:35computers are communicating and all
36:36that. Um, but I also, similar to our
36:41last conversation with stable coin, it
36:42seems like it's more back of house than
36:44it is for any of the uh consumer side.
36:47Like it's for the consumer, but it's not
36:49for uh the the direct use of the the uh
36:55the consumer. It seems like
36:57>> exactly you like when you look
37:00historically at technologies even for
37:03like I said for the the micro system the
37:07biggest use of it was at an enterprise
37:09level um consumers eventually get this
37:13type of technology I mean that's the
37:15reason that micers got on the checks but
37:18micers been along along I mean around
37:21much longer
37:23and it was for transmitting information
37:26between the actual financial
37:27institutions.
37:30So that enterprise usage is what we
37:32really should focus on as where the use
37:36case will make its big break. Um I would
37:39like to focus more on a consumer and
37:42figure out how blockchain can be used
37:44for them. But quite honestly, it's going
37:46to be at scale and it's going to make a
37:50much bigger difference in those back
37:52scale trans uh back uh excuse me,
37:55backend transmissions.
37:57Um heck, especially at a government
38:00level, that probably is going to be a
38:03very big change.
38:09I don't mean government as in conspiracy
38:11or something weird. I mean government as
38:13in like the IRS using it for instance.
38:16>> Yeah. Yeah.
38:19>> No, I appreciate. Yeah,
38:21>> good question. Anybody else?
38:25>> Yeah, Nick, I'll just say one last
38:26thing. I was thinking about what you
38:28were saying regarding um these
38:30enterprises creating their own stable
38:32coins. Um and something I thought about
38:35is the fact that most of the stable
38:38coins are actually you know backed by
38:41US uh debt you know like these like
38:44short-term like treasury bonds. So it's
38:46like
38:47>> right
38:47>> in a sense like the government is almost
38:49like um creating a new revenue stream in
38:53a sense that the more stable coins that
38:56are created they're basically um for the
39:00most part being financed with with
39:01government debt. I do think that at at
39:03some point it will consolidate. there's
39:06not going to be like, you know, a
39:07thousand different stable coins, but I
39:09think at least in the the next couple
39:12years, like it's it's becoming a huge um
39:15kind of revenue source in in the sense
39:17like that these stable coins have to be
39:20backed by um real
39:22>> assets.
39:24Yeah, fiat currencies. Yeah,
39:27>> it's it makes sense cuz you can't really
39:29create a fiat currency in the end. Like
39:32you you need a a governmentsiz entity in
39:36order not just to create the like the
39:39the currency, the fiat part, but to get
39:42whatever the amount of materials needed
39:45in order to back it and then to also go
39:48ahead and be stable. That's not just
39:50securing the the the assets, but also
39:54being stable enough to say, "Hey, we're
39:57not just going to suddenly fall apart
39:59and all these assets go to the wind or
40:02get tied up in any type of uh conflict."
40:06So,
40:09it it really is something where that's a
40:11very good point is that all these things
40:13are going to be tied to a fiat currency.
40:16Um, for the for the United States,
40:19that's great because that means that it
40:22long-term,
40:24even if these become more popular for
40:26all types of financial transactions, the
40:29fiat currency is still needed. Um
40:32>> well that'll put the green back as as
40:35still the the number one currency in the
40:37world right I mean if you look at it if
40:38you can do that
40:39>> now my if you all want to know my
40:41personal opinion I think this is where
40:42it's going to go
40:44>> it's going to head towards the CBDC the
40:46central bank digital currency I think
40:49that's where it's all going to come down
40:50to but if you all need to more know more
40:53about CBDC I wrote a paper on it like
40:55two years ago so you all can go out and
40:57pull my name and and read up on it right
41:00I And honestly guys, I mean that's
41:02that's how I see it going, right? Cuz
41:05there should be a central body that
41:07should be a governing body to to manage
41:10this whole stable coin. you know,
41:12>> you'll I think the best way to put it,
41:14Nick, is not necessarily centralization
41:16as just one one coin, but you'll see a
41:21lot more focus on centralization of the
41:23regulations so that these different uh
41:25coins can interoperate uh in some type
41:28of of viable exchange without, you know,
41:33having to worry about what's being
41:35transmitted. Well, you can always tie
41:37the the stable coins back to the CBDC,
41:40right? Your central bank digital
41:42currency. Um, I mean, why not?
41:45>> Oh, right. That's true. That's the
41:47stable part of it. It would keep a
41:50pegged rate and you wouldn't have to
41:51worry about value fluctuations too much.
41:55>> So, I I think that's where I see it's
41:58it's heading to cuz you you think about
42:00it, right? China's already got their
42:02digital wing and of course that's a
42:04communist country and they they regulate
42:06they control India is working on it a
42:08lot of the countries are going towards
42:09the central bank I mean digital
42:11currencies
42:13>> I think the best way to look at it is if
42:16you really want to look at a historical
42:18analog is the dollar
42:20>> um even though we call it the dollar
42:23there were you know dollars everywhere
42:26not just American dollars banks when the
42:29United States first started were able to
42:31issue their own uh own paper currency.
42:35They were able to go ahead and meant
42:37that.
42:38>> There wasn't central banks for a long
42:39time. But the once you introduce that
42:43stability where there was one greenback,
42:47>> one common currency throughout the
42:49United States that actually affected
42:52inflation, it affected fluctuations in
42:56different markets to the point where you
42:58could go ahead and do trading between
43:01the states. uh interstate uh commerce
43:05was a lot more important a century ago
43:08than international uh currency or
43:11commerce.
43:12>> So once you introduce that
43:15standardization, you go ahead and also
43:18have price fluctuations uh kind of you
43:22know come down.
43:25Um, it's not just the stable coin that
43:27you want. You want a stable market. And
43:30that's ultimately what we're hoping for
43:32when you say that the central bank coin.
43:37>> All right. Anybody else?
43:44>> Brandon.
43:48Ben.
43:50Hey.
43:50>> Brandon is quiet today.
43:53>> No, I am. Don't Don't make me come
43:55knock. Don't make me walk down there and
43:57knock on your door
43:58>> right now, so you can't come knock.
44:00[laughter]
44:01>> Well, Brandon lives two houses down from
44:03me, so I'll go knock on his door and
44:04wake him up.
44:06>> Yeah. No. No. Uh I I just more so how
44:10would um
44:12tokenization and realtime payments
44:15happen on a global scale as far as like
44:18crossbordered payments? Like how would
44:22regulatory stuff
44:24be handled.
44:26>> I mean, surprisingly, it's it it really
44:29is based around the use case.
44:32Um, it's not too hard cuz for instance,
44:36like let's take real estate then at that
44:38point what type of transaction is
44:40occurring because it has a it happens
44:43every day today. It's just of the amount
44:46of length of time, all the different
44:48processes that are done to do these
44:51exchanges or real estate transactions
44:53with foreign entities.
44:56And then you're taking that and you're
44:58saying, okay, for each part of it, how
45:00do we utilize that in a blockchain
45:03technology? What's important? What's the
45:06part that is the hardest part to go
45:09ahead and do? Is it the transmission of
45:12actual documents?
45:14Do they have to be authenticated between
45:16several different government agencies?
45:17Well, how do we do that electronically?
45:21So, it really is that's how the
45:24regulation is is done. You look at the
45:26process first. You see what's exactly
45:28being done and then you're going to
45:30regulate it. That's the reason why I say
45:32for specifically for fintech uh uh uh
45:38what you call fintech uh employees, for
45:41people who are payment pros. There we
45:43go. Uh, fintech payment pros in the
45:45industry. Those people who are are
45:47seeing these things or designing these
45:50systems or in the brainstorming part of
45:52the system,
45:54it's not only you know good or ethical
45:57or something. It helps your project go
45:59much quicker to think where would
46:02regulation impact this project.
46:05Why would we think about uh this when we
46:07design this technology? Because that's
46:09how the regulation ultimately happens.
46:12It happens from comments from the actual
46:15people designing these systems
46:18um and also who have knowledge of the
46:19industry. That's the reason why
46:21unfortunately sometimes it's much later
46:24on in the use of a technology till they
46:27see something that's oh wow we should
46:29have protected more uh from this man in
46:32the middle attacks when e-commerce first
46:34started going uh up were a huge problem
46:38and it's because no one thought about
46:40the security end of it. So yeah, it's
46:43the regulation is going to come from the
46:45people actually designing the systems
46:48and thinking just like if I design a
46:51bank, okay, what type of physical vault
46:54do I need? It's the same thing for
46:56digitally. You have to think that way.
47:04All right, good question. Any any other
47:06questions before we close out?
47:14Anybody else?
47:19All right, I think that's what we have
47:22today. Thanks, Corey. I appreciate you
47:23taking the time. And tomorrow, we were
47:26supposed to have a call with Salvador,
47:28but apparently he's dropped out. So, I
47:31will do a recording. I'll post a
47:33recording that we had from last semester
47:35with the same topic so you all can
47:37follow and discuss based on that
47:40recording. All right. Thank you for
47:43appreciate you.
47:44>> Many veterans are on the call. Happy
47:47Veterans Day and
47:48>> Happy Veterans Day to you all. Yes,
47:50absolutely. Thank you for your service
47:53and I will talk to you all soon. Thank
47:56you.
47:58>> Thanks everybody.
47:59>> Thanks everyone. Thank you. Take care
48:00everyone. Hey Corey, can you just stay
48:03back for a second?
48:04>> Sure.
48:07>> So, next month we have this uh meet and
48:10greet.
48:11>> It's going to be on December 8th. I'll
48:13send you the invitation. It's like what
48:14we did lastation.
48:16>> Yeah, I'll be happy to join.
48:17>> Yeah, just the one that we invited the
48:21uh current students, you know, and also
48:24um it's like an orientation. Some of the
48:27sponsors will be there, advisory board,
48:30>> you know, those kind of folks. Just a
48:31like a thank you thing, right? Just to
48:33get people to come and hang out and meet
48:36for a bit.
48:37>> No, I'd be happy to join.
48:38>> All right. All right, sir. Keep me
48:41posted. If you need anything, I'll send
48:42your name to uh
48:44>> Laura
48:45>> and Ari, I believe I already answered an
48:47email, but yeah. Yeah. Uh let me know
48:49more about the about the November 22nd
48:51one.
48:52>> Yeah. Laura will send you the invitation
48:54with the tickets and uh she'll send you
48:56the parking pass and all that. For some
48:59reason the other day I was thinking
49:00about uh of all things not football but
49:02uh baseball. I've gotten back into
49:05watching baseball and stuff and I was
49:06like ah Kennesaw probably has a good
49:08team.
49:09>> Yeah, we do. We're pretty ranked up
49:11there too.
49:12>> But baseball is is it over? It's over,
49:14right?
49:15>> Uh for Yeah. Major League Baseball's
49:17over. The World Series is actually
49:19pretty good. But yeah.
49:20>> Yeah. Um, Braves, um, even though they
49:22they weren't great this year, uh, the
49:25battery has been a roaring success
49:27financially for them.
49:29>> So,
49:29>> I think they made something like $29
49:31million in profit this year, which is
49:33like
49:34>> that's a that's a free agent like at the
49:38top of the the league. So, yeah,
49:40>> that's
49:40>> they're they're go they're about to
49:42start buying again.
49:44>> Well, they're playing on house money
49:45anyway. Everything was paid by the uh
49:48people.
49:48>> No, that's the reason why they made so
49:49much money. It's a it's like um David
49:52Samson, he was like a Marlins GM and and
49:55such. He has his own radio show
49:58>> and he was saying, you know, basically
49:59every sports executive out there has
50:01been trying to do this for for 40 years
50:04now and the Braves were the first one to
50:06get it right.
50:08>> Mhm.
50:09>> So, it's a combination of low taxes, but
50:12also the real estate is just actually
50:14working at the battery.
50:15>> Exactly. I do not know how much money
50:17the county makes out of that, but but
50:20they're playing on house money, so
50:21basically Yeah. Everything is for free,
50:23right?
50:24>> Exactly. That's the deal they wanted
50:26from everyone talked about transit or
50:28anything. No, the deal they wanted from
50:29Atlanta was give us free land around the
50:33stadium.
50:34>> That's what they got from Cobb.
50:36Basically, it's free land. It's not just
50:38the real estate. It's like you don't
50:40even pay taxes on this.
50:42>> No. They went and bought an office
50:43building, too, man. They wanted the
50:45parking space and they bought the whole
50:46building.
50:48>> Crazy.
50:48>> It's a self It's a city. It's a small
50:52city that they have the services done by
50:56the county and they don't have to like
50:58maintain it. So yeah, I mean quite
51:02honestly I mean well I used to get you
51:04know like you know sanctimonious and
51:06everything quite honestly I mean if it's
51:09actually if it can be successful enough
51:11to bring in the revenue whatever
51:15like as long as you but if they get to a
51:18point where they're a drain on the
51:19county yeah it's stupid. Like if you
51:21can't pay for you know new police or or
51:25medical stuff then it's not worth it.
51:29So, I don't know how it is in Cobb
51:31County if they're having trouble with
51:32any type of government functions, but
51:34until they do, it's it's uh it was a
51:37good it was a good plan.
51:42>> That laugh is knowing cuz that's pretty
51:44much what happened in Atlanta. I mean,
51:46remember, they built a stadium for the
51:48Olympics and ultimately they lost money
51:50on the Olympics.
51:52>> That That's That's crazy, man. But I'm
51:54glad they're here, though. They did the
51:56right thing. They did the right thing
51:58and ultimately Atlanta can say they lost
52:01money on the Olympics, but also I moved
52:04here because of all the business that
52:06came from the Olympics.
52:07>> Exactly.
52:09All right, brother. Um yeah, you'll be
52:11excited. Uh we pretty much uh the
52:14Kennesaw State football team is doing
52:15quite well. So
52:19>> yeah,
52:20>> even the other day when I came out like
52:22it was first time I really paid
52:23attention to the stadium over there. So,
52:25I was like, "Okay, well, let me Yeah,
52:27it'd be cool to go ahead and actually
52:29actually see the football team there.
52:32>> Yeah, it'll be nice. It's it's outdoor
52:34suite. It's not an indoor suite. So, you
52:37know, food will be there and and
52:38everything else is provided.
52:39>> They got heaters. I mean, it's cold as
52:41hell out there."
52:42>> Yes, they they'll have heaters. I'll
52:44make sure we request for it.
52:46>> Yeah, man. Come on.
52:48>> You know why people aren't from cold
52:50places?
52:51[laughter]
52:53>> Yeah, we got it, man. I'll take care of
52:54it. I'm to get some Gas. All right,
52:57brother. Take care.
52:58>> Take care. Have a good night.
53:00>> You, too, sir.

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