Thread by @ChainLinkGod

Next up at #SmartCon is panel with @SergeyNazarov, co-founder of @chainlink and a special guest 👀

Special guest is from @SWIFTcommunity !!

Sergey: How do you see global financial infrastructure evolving over the years to come and the role blockchains will play?

Johnathan: SWIFT is at the center of the financial economy, follow the trends, current system is digital and analog system, still very manual today

Johnathan: Mix of use of cloud and self-hosted, mixed status, the second thing is more than ever asset managers, pension funds, past years a real focus on customer demands: need ESG, responsible innovation, they will need to know the customers who will inherit money from parents

Speaker is Jonathan Ehrenfeld Solé, Strategy Director at SWIFT

Johnathan: More than just saying ESG, last thing is that there is the right number of drivers with new technology, volumes are not going down

Johnathan: Not the role blockchain will play, but everything around blockchains, one is assets can be digitalized, another is smart contracts for programmable agreements, programmable money like cryptocurrencies, the big three things blockchains provide

Sergey: Every around it is everything you get from blockchains

Johnathon: Smart contracts, digital asset, cryptocurrency, those three things are more important than blockchain on its own

Sergey: Blockchains need to create real world settlement and value not possible before

Johnathan: How do you see existing infrastructure interfacing with blockchain today?

Sergey: My view is that SWIFT already has private key infrastructure (PKI) and messaging standards, to send digital commands, that digital interaction people are already trained on

Sergey: Use systems that work well today and add blockchains and oracles, create a stack with focused components, use existing PKI and SWIFT standards, that doesn't need to be replaced, the innovation of blockchains and SCs is cryptographically validated state changes

Sergey: Ability to send command to systems can from digital system, HSM and PKI for private keys to sign transactions for various blockchains, the most efficient direction, piggyback existing standards, blockchain community can benefit from this

Sergey: Blockchains do the state changes for smart contracts, point of view is that existing infrascture should be used for existing PKI and messaging standards of SWIFT

Johnathan: Using existing infrascture means you don't need to start from scratch

Sergey: Existing PKI from SWIFT is used by 12,000 banks, with each bank having 100k to 1M+ of users, messaging and PKI doesn't need be innovated, can be improved (multi-sig), blockchains innovate by providing useful outcomes from those systems, interface with existing systems

Sergey: Make blockchains more useful faster, don't need to reinvent user interface, going to be a website, like using SWIFT Alliance Access, what needs to change where those messages go and the final state for settlement on blockchains, don't need to reinvent everything

Sergey: Huge accelerant for adoption, how do you see DeFi to be included in global financial system

Johnathan: Depends on who finds DeFi useful and why, more inclusive services and democratic, example Robinhood failed in this, that's the success of DeFi

Johnathon: DeFi expands blockchain beyond transfer of value, and goes to crowd funding, betting, and beyond, regulator needs to put a canvas to it, SEC approved DeFi environments and firms built on DeFi, and asset managers the main actors of industry

Johnathan: Grayscale fund is now the largest crypto fund, cutting the middleman results in more middlemen appearing, not the primary advantage of DeFi, pitch should be about the advantages, democratization and open access

Sergey: Existing institutions have a user base, curating assets in current environment, what's natural is as Paypal and others offer crypto then it signals interest, every middleman is not going to poof and disappear, FinTechs and banks have a new market to go after

Sergey: Capitalism forces people to adapt, will force banks and asset managers to adapt to DeFi, comes in them needing to interface with blockchains using existing systems, demand comes from consumers and banks that get behind that their users will stay with them

Sergey: Ignoring DeFi is like ignoring the internet, clear analog

Johnathan: Even before blockchain, big initiatives in market like T2S in Europe that settle securities, even then intuitions haven't disappears, if you make money from inefficiency, that will disappear

Johnathon: We have talked many times, was just a few people at Chainlink Labs, collaborated many times, in Innotribe, presented in front of SWIFT board of largest banks in world, impressed with Chainlink, what attracted you to work with SWIFT

Sergey: My thinking with SWIFT, it's something that powers a lot of world's transactions, there has to be a reason for that, not a coincidence, SWIFT existed from the 70s, three things

Sergey: SWIFT brought digitalization to finance in the 70s, doing that before the internet was a realistic construct, SWIFT is fundamentally a standard, not a proprietary tech, but a global standard about how to message about transactions

Sergey: That doesn't need to be reinvented, messaging commands or PKI for signing transactions, signing quadrillions of dollars in value, something works here, why would we not use that part of the stack for signatures and messaging into blockchains

Sergey: Already secures large amount of value, can add messaging type for blockchains, need ability to efficiently interface with multiple chains that 12,000 banks want to work in, banks who have SWIFT PKI can then suddenly interface with chains

Sergey: How can we make this infrastructure interface with blockchain, massive influx of liquidity into blockchains, don't need to change the PKI or HSM infrastructure, existing standards in multi-sig use existing standards and processes,

Sergey: Take this infrascture and accelerate how it can interface with DeFi, once that integration happens, once banks, insurance companies, global trade can interface with smart contracts, that's when the amount of value will go from billions to trillions

Sergey: Question was always how can we work with existing infrastructure to add blockchain to make them more useful for society, this is most efficient path to mass adoption, the final thing is that everyone at SWIFT is a very nice person, relaxed and always had a good time

Sergey: Not an aggressive banking organization, very collaboration, actual final thing is that SWIFT is member owned, existed for 50 years because it's very similar to a DAO, member-owned cooperative, , not a for-profit entity monopoly, all member owned

Sergey: Processes directed by SWIFT member banks by their proportion of their usage of SWIFT, no set committee, purposely adapts to user shift, similar to DAO and PoS models, degree you use a system, the degree you have a sway over the system

Sergey: All the member banks know they won't put monopolistic company between them and counterparty, SWIFT returns fees back to members if it passes a threshold, no monopoly rent, a model that a lot of DAOs want to arrive at, control distributed across parties

Sergey: Working for decades, became clear to me, this is the type of thing that should continue to provide PKI and interface to system, members want to use it, hasn't been clear to people in crypto industry, it's why Chainlink Labs is working with SWIFT

Johnathan: First PoC did with Chainlink, showed how the ISO20022 standard can be used to write a smart contract, billion of API calls already using ISO20022, open source standard, underestimated, good explanation of SWIFT given by Sergey

Sergey: PKI is already a useful valuable system that the blockchain ecosystem can benefit from, connecting PKI and messaging to hundreds of chains, overnight banks can transact with multiple chains, orders of magnitude higher value flowing into DeFi

Sergey: Win for enterprises in terms of ability to interface with blockchain, win for dApps as they access to massive user base, body of work that Chainlink Labs is working on, thanks Johnathan for his insights

This was a pretty awesome talk with SWIFT