The Tokenist recently had the opportunity to chat with Lykke CEO Richard Olsen and former CFTC Chairman J. Christopher Giancarlo. Both individuals are behind the Open Initiative, an emerging project which aims to foster financial and economic solutions during times of crisis.
The Open Initiative: Leveraging Technology for a Sustainable Economy
Richard Olsen is the founder and CEO of Lykke. His experience spans a multitude of leadership positions in finance, to include serving as co-founder and CEO of foreign exchange platform OANDA.
J. Christopher Giancarlo is the former chairman of the Commodity Futures Trading Commission (CFTC). He is also a director of the Digital Dollar Project which aims to promote a US Dollar-based central bank digital currency (CBDC). Mr. Giancarlo believes a digital dollar is the way forward, and can even alleviate some of the economic problems caused by COVID-19.
Both Mr. Olsen and Mr. Giancarlo recently sat down with The Tokenist. Topics of discussion included the Open Initiative, the possibility of accelerated blockchain adoption during a time of crisis, the progression toward a digital US Dollar, and even the future of Bitcoin.
The Tokenist (TT): What exactly is the Open Initiative?
Mr. Olsen: The open initiative kicks off an open source/open knowledge movement to develop digital technologies to transform the post Coronavirus economy and to unleash the potential of the global economy to address the many challenges that society faces.
TT: How did the Open Initiative come together?
Mr. Olsen: The open initiative is a continuation of the path that Lykke has been on since inception in 2015. Lykke was founded by myself because the existing financial system is like a broken bicycle that needs repair and digital technology with blockchain is an efficient tool to address the deficiencies. COVID-19 is a body blow to the global economy that the existing system is ill equipped to manage – the spread of unemployment globally is just one indicator of the economic pain that people around the world face. The open initiative aims to fast forward digital technologies to address the critical pain points.
TT: What will “success” look like for the Open Initiative?
Mr. Giancarlo: Times of stress and change are often the catalyst for great innovation. The global Covid-19 pandemic is just such a time and just such a spur to innovation. The Open Initiative will have achieved its goals if it helps to recognize and bring to light such innovation and accelerate its application as part of the global crisis response.
TT: What is needed for the Open Initiative to achieve success?
Mr. Olsen: We create awareness that digital technologies are the solution for the challenges that humankind faces. Globalization and economic development over the past 50 years happened thanks to technological innovations. Technological development was one sided in the sense that it was focused on natural sciences and not social sciences in particular economics and finance. The financial system is ‘computerized’, but only in a superficial way. It uses the same operating system as if processes were paper based. This is why settlement in foreign exchange markets happens with a delay of 2 business days or for equities for 4 days or more. Just imagine receiving email messages with a 2 day delay or trying to run one of the modern apps on an old Nokia mobile phone. We need to spread the message that digital technology increases the efficiency of the financial and legal system freeing up resources to address the many challenges that modern technology has brought us.
TT: The current COVID-19 pandemic certainly demonstrates the potential use-cases for products and services coming out of the Open Initiative. Do you see the current pandemic — and its impact — accelerating the adoption of blockchain technology? If so, how?
Mr. Giancarlo: It is interesting that you should refer to blockchain technology as that is a good example of technology born in a crisis. It came out of the last one: the 2008 Financial crisis.
You will not be surprised to know that I am a long-standing enthusiast of Blockchain technology. In early 2016, I called on the US Congress to adopt a “do no harm” approach to the technology similar to the original US approach to the Internet. I noted then that the technology will broadly impact financial markets in payments, banking, securities settlement, title recording, cyber security and trade reporting and analysis. I certainly think that this crisis is revealing a range of vulnerabilities and shortcomings in a broad swathe of venerable infrastructures, not just financial markets, for which distributed ledger technology offers solutions. So, yes, I do see the pandemic as an accelerator and the Open Initiative as a means to assist that acceleration.
TT: When it comes to Fintech, the emerging sector is reportedly seeing a notable increase in use, though funding is down across the board. As economies around the world start to re-open and initiate a path to recovery, do you think COVID-19 will have accelerated Fintech adoption?
Mr. Olsen: COVID-19 is a huge cost to the global economy forcing consumers and businesses to search for cost efficiency and will accelerate adoption. Fintech opens up new opportunities that are unthinkable without digital technology and is a big cost saver. We are launching the Open Initiative to attract people with deep insights in the problems of the global economy to rally and work together to transform the post COVID-19 economy and address sustainability in a lasting way.
TT: Every major central bank across the globe is reportedly researching central bank digital currencies (CBDCs) to some extent. How long before the U.S. Federal Reserve implements a CBDC?
Mr. Giancarlo: In the late 1950, the United States decided to land a man on the moon. Reaching that goal took a decade of time and many experimental steps, many successful, some not. Yet, landing on the moon would not have been possible without the initial determination to try.
Creating a well-functioning and universal digital Dollar should be done in the same way that the moon was explored and the Internet was created: deliberately, cautiously and, yet, with determination. Something as complex and worthy of the US Dollar’s global importance cannot be done overnight. It should not be cobbled together in a crisis. I cannot give you a date when it will be implemented. Getting it right will take time. Nevertheless, now is the right time to get started.
TT: While the famed Bitcoin “halving” has historically put the digital currency under a spotlight, the recent halving was different, for obvious reasons. Where do you see Bitcoin in terms of public reception in two years?
Mr. Giancarlo: I worked on Wall Street for a long time before serving in Washington. Both of those experiences taught me not to presume to gaze into crystal balls. I can’t begin to guess how the public will perceive Bitcoin two years from now. However, what my Wall Street and Washington experience does tell me is that technology is a powerful driving force that affects financial markets, politics and society. It cannot be avoided. The only option is whether a society and an economy seeks to harness and channel that innovation or surrender and have the innovation harness and channel it. I believe that powerful driving force right now is what some consider the second wave of the Internet, the Internet of value. It is going to have a profound impact on things of value, from agriculture and mineral commodities to contracts and indicia of ownership and, perhaps most keenly, on the concept of money. Bitcoin and the enormous global fascination it has attracted confirms that the concept of money is being dramatically altered by this wave of technological change.
Against this wave, the only question for me, as a former US public official, is what role does the US want to play and to what degree will its core values be brought to bear. Will the US bring to the technology of digital money longstanding US values of economic stability, individual liberty and privacy, free enterprise and the rule of law? If not, is the United States willing to accept the values of its economic competitors imposed on the future of money?
The Tokenist would like to thank Mr. Olsen and Mr. Giancarlo for their time and lively discussion.
What do you think about the Open Initiative? Do you think a digital US Dollar will ever emerge? We want to know what you think in the comments section below.