Benzinga, a media and data provider bridging the gap between retail and institutional investors, is bringing back its annual Global Fintech Awards event to New York City on Dec. 8, 2022.
Ahead of this recognition of disruptive innovators in finance and technology, Benzinga will periodically publish articles on those brands it thinks are making a measurable impact.
Today’s conversation is with Staci Warden, CEO of the Algorand Foundation.
The following text was edited for clarity and concision.
Q: Hey Staci, nice to speak with you. Tell me a little bit about yourself and how you got involved in the business.
Staci Warden: I’ve been in many different roles across the public and private sectors.
I have worked for the U.S. Treasury Department, and think tanks such as the Carnegie Endowment for International Peace, The Milken Institute and the Harvard Institute for International Development.
In the private sector, I worked in markets at JPMorgan Chase & Co (NYSE:JPM) and Nasdaq Inc (NASDAQ:NDAQ).
What did those experiences teach you, broadly?
The theme that economic growth and prosperity will come from private sector-led growth. It is the job of the public sector to make private sector-led growth happen in a way that’s equitable for everybody.
One of the most important components, too, is well-functioning financial and capital markets. If that’s the case, you will have a safe outlet for household savings. On the other side, you have entrepreneurs that have better access to capital.
So, in my perfect world, investments go to entrepreneurs that can then grow their firms and hire more at better wages. More people, with better wages, lead to more savings.
Talk to me about some of these big themes — deglobalization in the context of inequality and inflation — and how crypto fits in?
When crypto came along, immediately I saw the potential for Bitcoin (CRYPTO: BTC) and blockchain technology to help with equal access to capital and financial inclusion.
Crypto is a revolutionary technology.
Can you speak to the correlation of these markets to others such as stocks, bonds, equities, and, even, commodities?
It’s a contagion and it happens. For example, during the 1997 Asian financial crisis, Latin American sovereign bonds were impacted.
There’s a risk-off mentality that’s not being helped by Fed-action, Putin invading Russia, as well as the crypto blow-ups that make people nervous. These are the ingredients for a crypto winter. It’s surprising that Bitcoin and Algorand (CRYPTO: ALGO) are more correlated, given the fixed supply. The thought was that it would be a very good inflation hedge.
Do the fundamental theses still remain?
Yes, I think so. In the medium term, it is likely that Algorand serves as a hedge against inflation because the thing about crypto is that it’s baked into a smart contract that you can only have a certain amount of supply, unlike what central bank governors can do.
The advantages are significant and, even though crypto may not displace traditional finance, it will continue to take a larger and larger market share.
Of all the reasons, why do you think Algorand wins out?
We’ve not been down since inception. We settle in about 4.5 seconds. We’re a green platform.
If you’re going to transact at very high volumes, you need to be able to achieve Visa Inc (NYSE:V) speeds, consistently. We’re at 1,000 per second, and we're going to 6,000 and, eventually, 10,000 transactions per second by the end of this year.
Additionally, we have so many real-world use cases in the creative and art spaces.
For example, we have exciting things happening with music rights and royalties. You can make investments in a song itself. Then, we have that partnership with Napster. They’re trying to pivot into Web3.
We’re also focused on impact and inclusion through payment and identity solutions. That comes down to making payments easier for things like disaster relief organizations. They need to get payments out quickly, and to the right people.
When searching for a Layer 1 blockchain provider, why did FIFA pick Algorand?
They hired a consultant who helped them decide Algorand offered the best tech.
They want NFT marketplaces like an NBA Top Shot, as well as having a better handle on fraud and secondary ticket sales. With blockchain, that’s going to be easier.
You could also imagine players traded on the blockchain, too.
Can we talk more about the utility of NFTs? It’s far more than pictures of rocks, right?
For example, say that you’ve established yourself as a fan of an artist on Napster, then, you get yourself a ticket to go to their show. When you scan your ticket NFT, it shows to the venue that you have listened to the songs by this artist many times.
Venues can invite you backstage to meet with these artists or, even, upgrade your ticket.
We also have an application for secondary sales of airline tickets, too. Why can’t I buy the ticket now and, if the date I bought it for doesn’t work, try to sell that ticket to somebody else?
These are non-fungible tokens of things. You make assets out of things and trade them. With liquidity — larger amounts of people — you can grow financial inclusion.
Talk to me about using NFTs as a way to participate in the growth of someone you admire or support.
Tracy Chapman. She had famously busked in Harvard Square. The reason she got signed was that everyone who listened thought: “Wow, who are you?”
What if those same people could have made an investment in her, early on? Well, she would have had the money when she really needed it, first. Second, they could have participated in some of the upsides for her when she became more famous.
I always think about this in terms of funding for education. Why can’t you invest in somebody and pay for their education? For this, you can participate in the future upside or salary that they might make.
Also, if artists understood how many times their song was played, and by who, that would be revolutionary. If you could imagine everything on the blockchain, then artists would be able to know how many times their song was played, where, and understand what royalties they could be collecting.
A hot topic as of late has been central bank digital currencies. Any thoughts on that?
Over the last two decades, Japan has been fighting deflation. What if they had a digital currency where they could give negative interest rates and punish you for not spending your money.
Can you, real quick, talk about tokenization? What is it and what are the benefits?
Say you have a bond. One, you slice it up into tiny little pieces. Two, you put smart contracts around those pieces so that humans don’t interfere and it happens automatically.
So, it’s slicing and automating. Because it’s on a blockchain, you will receive a coupon every six months. Then, if it is more complicated than that, like certain things having to happen if the bond is to pay out, you can also have a smart contract check to see if those things have happened.
There’s an organization on Algorand called Lofty AI that will tokenize real estate properties and homes. It’s very easy to do it on their website and you, as an investor, can track this because it’s on the Algorand blockchain.
Talk about the U.S. financial system encouraging people to take on debt. Where do crypto ecosystems play a role in shifting the narrative, so to speak?
As a financial system, we tend to encourage people to take on debt. We subsidize the accumulation of debt but not equity. This idea of tokenization can help you tip the scales so that people are more incentivized to build up equity in their homes as opposed to just debt.
What are you most excited about going forward?
Algorand is having a moment. When things turn bad, Algorand is right there, working.
With this attention, we’re delivering on real-world applications and excited about branching into the creator economy. I care very much about making sure that people that create get a chance to see some of the benefits of their creations.
We also just partnered with the government of Nigeria, for example, to provide the platform for all of their intellectual property rights, copyrights, and patents. Now, the people of Nigeria can see the benefits of their own intellectual property rights.
I’m also very excited about some of the core payments stuff we’re working on. We’re getting payments done right while disaster relief organizations can be comfortable they’re not engaging in fraud and the people that do need the money can get it right away.
That’s the kind of thing you can expect from us. It’s no surprise that Algorand is leading the way.
