Transcript
Angie Lau: Is NFT a fad or foundational? Can I move my NFTs to other blockchains? Where are investors focusing their activities in the market, and what’s so good about NFTs anyway?
Welcome to Word on the Block, the series that takes a deeper dive into blockchain and all the emerging technologies that shape our world at the intersection of business, politics and economy.
It’s what we cover right here on Forkast.News. I’m Editor-in-Chief Angie Lau.
The big story this year — and we’ve been talking about it for a while now in blockchain — has been the growth of non-fungible tokens, better known as NFTs. But with success come the haters. NFTs have had their fair share of criticisms this year, and one of the most popular dismissals of NFTs is: ‘It’s useless.’ As in, what’s the use case for a unique digital picture, anyway?
But for others, it’s only the beginning. Don’t judge before this has had a chance to bloom into something more, they say.
Well, today we’re here to explain and explore that something more — what the NFT revolution could look like. And joining me today is the co-founder of Zilliqa, an ecosystem that’s gearing up to sprint into the world of NFTs, recently launching the ZilBridge mainnet for its interoperability with Ethereum. He’s also an investor in this ecosystem, with more to come.
Max Kantelia, welcome to the show. It’s great to have you on.
Max Kantelia: It’s super to be here, Angie. Thank you.
Lau: So much is happening, and I want you to catch us up on what’s happening with Zilliqa. A lot of developments in this space — a lot of developments with you, with Zilliqa, and I want you to tell us all about it.
Kantelia: Well, you’re absolutely right that there is a lot happening. The high-speed train has definitely left the station. Angie, I think the time has come for Zilliqa to really mature — and I choose that word very carefully because it applies to just about every component of the company.
I’m a longstanding entrepreneur and investor, and every company has its tipping point — and I do feel that Zilliqa has reached a very, very important tipping point just now. It’s time to really move into second or third gear. Excuse the car analogies, they’ll come fast and furious! It’s time to move up a gear.
So, to really summarize, the time has come to really look at how we can commercialize our technology to the point where anybody — particularly in the enterprise world, whether they be big brands or whether they be SMEs (small and medium-sized enterprises) or even startups — can integrate what they want to do with Zilliqa very, very easily. Frictionless is, I think, the right word.
At a technology level — and it’s not just Zilliqa — the industry needs to get to a point where integrating with these blockchain layer-1s, especially, becomes seamless. As much as that might sound like a lofty goal to some, I feel that the time is right now. And partly that’s because — as you mentioned in your introduction — the space is lighting up. There are green lights all over the place, and that’s because we are seeing real use cases that can scale now.
And some of this was theory a few years ago, and it’s now becoming absolute reality. And indeed, if we’re going to extrapolate that further and see more growth in these use cases — and NFTs being a very important one — then technologically, still a lot has to happen. It’s still internet-1996 in some ways.
And so building more usable technology only really comes through bringing people into the camp that have the experience of doing these things in reality. You’re going to see more new team members coming on board, people that have done this before with deep, complex technologies, and that can bring that dimension to the technology layer. These are very important points, because every team has bandwidth, and we need to keep adding bandwidth if we are indeed going to move forward at the rate that I certainly would like Zilliqa and its ecosystem to develop.
So, those are some of the key things that I would say are going on, Angie. My personal drivers at the moment are completely — by the way, just to be clear about this — driven by the Zilliqa engine. Everything I do is driven by the Zilliqa engine. Is to globalize our brand, it is to bring enterprises and big brands to Zilliqa and its ecosystem.
And in terms of, certainly, my forays into this ecosystem, before Christmas, I’m going to be announcing some incredible new ventures that will be built on top of this engine into the Zilliqa ecosystem, which I think are going to have a massive impact on industries and certain industry sectors that I’m really passionate about. So these are some of the things that we can hopefully look forward to before the year is over.
Lau: I want to unpack a lot of what you’re saying. For a lot of people who are just joining this space, those people are not ‘OGs’ — as we’d call them — or developers or engineers. Anybody who’s just joining now is enterprise-grade. They’re from industry. They’re really discovering it because blockchain is impacting those verticals, those enterprises.
But in the early onset of blockchain and development of blockchain, it very much was developer-driven. It very much was protocol-driven. We were talking about some of the smartest developers, some of the smartest brains, in this space. You were very early on… (Ethereum co-founder) Vitalik Buterin… these are developers who are working on code. That was the first support layer of blockchain.
What I’m hearing from you when you use the word ‘maturity’ is that in order for the next stage of blockchain [to develop] — and we’ve witnessed this ourselves at Forkast.News just reporting on the ecosystem — is that enterprises and the use of blockchain in industry now needs to accelerate. So when you say ‘maturity,’ and you’re hinting to adding different team members to kind of create those enterprise products, it really sounds like at Zilliqa — and you come from kind of that world of traditional finance — that you’re bringing that maturity of other industries, now that kind of thinking, to Zilliqa. That’s what it sounds like.
Kantelia: Yes, that’s exactly right, Angie. Preaching to the converted isn’t good enough anymore. Just as with the dawn of the internet, in the early stages of the internet there were hobbyists, there were people that were completely committed to this technological revolution. The blockchain revolution has not been any different to that. Whilst I believe that those people that really are already converted to the use of cryptocurrencies understand how blockchain can be so impactful, my aim is really to open the eyes of those people that aren’t inside of that group, because the world that lives outside of the crypto converts is enormous.
Just as in 1997, if you’d asked a big brand whether they would ever have a website. Remember Pets.com? You probably don’t. You’re too young. I think that most people would have laughed you out of the room. And that point is coming where enterprises and big brands — especially with the dawn of the NFT — are beginning to take notice.
However, there is a lot of educating to be done, and I’ve spent quite a lot of my time speaking at private internal conferences, with family offices, with financial institutions of all shapes and sizes, really educating them on the the benefits of this technology — and not just whether they should invest in cryptocurrencies or not. So I feel that it’s very important that we educate people, and then we get these people to understand how indeed they can use this technology to the benefit of their own businesses.
And I have to tell you, I’m very excited because I’ve spent the last nine months speaking to some of the biggest luxury brands in the world, and owners of those luxury brands who have no idea what blockchain is or any of that. Some of them actually don’t even use email. But it’s fantastic, when I’m speaking to these people, to see the light bulb moments come on. And it’s amazing to see this happen.
But there is a driver behind it, Angie. That driver is that all of these large luxury brands — and I talk about luxury brands because of something that I’m going to tell you about a little bit later on, I hope. I speak about luxury brands because luxury brands are constantly looking for new channels to new markets, and a lot of these people have now realized.
Let’s look at what’s happened to some of the biggest brands on the planet, whether we’re talking about high-fashion brands or leather goods. The entire shape of their product base has in many ways evolved through discovering new channels to market. For example, China. There are brands which I used to dearly love, let’s say, 10 years ago, and I could just about get away with wearing that I can’t even wear anymore because I’d probably look like a clown. And so the point is that I think the big brands are beginning to see that there are new channels, new markets that they can be marketing and selling into, and that offers them further scalability in their businesses. And that’s the key point. You’re a commercial person, as am I. And when I see that happen, that is a major tipping point.
Lau: We’re talking about NFTs, we’re talking about metaverse, we’re talking about so much of that. But it all also kind of boils down to the technology there, and this is where I want to find out a little bit more from you on ZilBridge. You just deployed the mainnet for ZilBridge. This is a cross-chain interoperability bridge built on Zilliqa. It allows use of Ethereum. It supports the movement of wrapped BTC, which also is Ethereum-based, Ethereum USDT between Zilliqa and Ethereum. So that’s super-important, especially in the NFT space. It’s super-important in DeFi (decentralized finance). So how is this now mainnet going to allow you to explore these enterprise relationships more meaningfully?
Kantelia: This is a huge step, Angie, because — let’s face it — today, whether we’re talking about NFTs or DeFi, the asset base that sits upon Ethereum is the largest in the world today. When developers want to develop a dApp [decentralized app], when enterprise people decide they want to look at blockchain, it’s typically the first place people go to, and there are very, very good reasons for that.
However, I do believe that the architecture has become a little bit of an issue, because it’s become so successful. And we’ve seen what I call ‘traffic jams’ on the network, which unfortunately, other than increasing the time for the settlement of a transaction, the gas price that people have to pay in order to do a transaction has at times become completely uneconomical, which really wasn’t the thesis for decentralized public blockchains.
And therefore, for people that want to port their digital assets to an environment where the transaction fee is lower, the efficiency, the environmental friendliness … are all of the things we designed into Zilliqa when it was first created back in 2017. I feel that those characteristics are now becoming extremely important, particularly when we start to look at applications that are going to create bigger traffic jams than we’ve ever seen before, and therefore being able to port to a platform where we can solve those issues for builders, for enterprise customers, even individuals.
I think this is a huge step. And this, to me, is a really strong example of interoperability. I do not see a world even in 30 years’ time where there are only going to be less than a handful of blockchains. I don’t see that for a moment, Angie. In the 90s, we saw the growth of what we call today the systems integration industry — Oracle and SAP and PeopleSoft all talk to each other. And that’s that’s the vision that I have for this space. Different blockchain platforms have to talk to each other.
Lau: They have to talk to each other. They absolutely do.
Kantelia: Yeah, so I believe that the bridge is a huge step forward, and I’m really looking forward to cooperating and working with other chains, too, in the future to enable their customers to be able to do things upon Zilliqa as much as they may be [able to do] on their own chains. And so this collaboration, which I’m beginning to sense now, is massively important for the industry as a whole.
Lau: It’s the only way, in our view, or in my view, that it can grow. You’re totally right. Once upon a time, it was: ‘Which blockchain will rule them all?’. That was something that a lot of people talked about in the early days. And I think what DeFi has shown us — what NFTs have shown us — what this entire space has shown us — and layer-2s have shown us — is that interoperability is absolutely what that next stage of growth is going to be.
So in the NFT space… let’s talk about that a little bit more. You talked about the luxury industry, the luxury goods industry, and the NFTs. I’m thinking, the NFTs, the metaverse universe that we’re kind of existing in right now. What are the opportunities that you’re seeing? What are the opportunities that this industry is seeing? And when you talk about creating new markets for enterprise — particularly the luxury goods market — what is it that you are building towards?
Kantelia: Those three letters have become pervasive in every aspect of our lives. London cab drivers, family, friends, everybody wants to know about what ‘NFT’ actually means and what it might mean for them. So this is a ubiquitous term now, and in the same way that e-commerce now means a thousand different things, so does the term NFT.
I believe that it does mean different things for different people, and it’s an overarching term. We shouldn’t think about it as just being one thing or another. Now that we’re rapidly hurtling through the experimental phase, where people can understand the art of the possible, what is it, what is [it] actually that this technology provides us?
Actually, in some ways, we’re harking back to 2016, 2017. I remember standing up at conferences then and talking about provenance, and talking about things that actually I’m interested in. I’m a collector. I collect lots of different things, and I won’t bore you with that right now. But the provenance of anything that I collect has always been very important to me. I like telling people the narrative, the source, the origin … whether it be a bottle of wine or a piece of art.
And so actually, whilst NFTs have only really come into the limelight in the last, I’d say, eight or nine months, the idea of using blockchain technology for provenance has been there since it first started. It was the thing that really got me hooked.
And so whether it be fashion brands, whether it be major artists, whether it be musicians, people are beginning to see a few things, I would say, that are our light bulb moments. Number one is that you can create a digital asset where you have this proof of ownership that the blockchain allows us — but we have to be careful between proof of ownership and copyright to those. Those are two different things, and maybe we’ll touch on those a little bit later on. But I see big brands beginning to see how — if they indeed enter the digital product world — then, for the first time, they can ensure provenance for their customers.
The vision that I have is slightly different, however, Angie, because I believe that long duration — and I mean the next 30, 40, 50 years — is going to come from brands being able to produce digital assets that sit alongside physical ones. And therein lies, I believe, the secret to longevity in this space, particularly if we’re talking about those people that aren’t rationally going to look at some file on their Dropbox or their server every day of the week for the next five years because they paid US$1,000 for it. And so in my vision, it’s about what some people are calling the ‘Phygital World.’ It’s a combination of creating digital assets alongside physical ones.
And I’m really excited, because I’m currently looking at some incredible technologies that I hope I can bring into the Zilliqa ecosystem that are really going to help to solve some of those issues that exist around [this]. How do you indeed prove that this physical item, this pen, is indeed what it’s supposed to be? Even if we have a digital counterpart — and I’m looking forward to bridging that gap too, with some exceptional technologies that I’m looking at right now — and that’s why.
Lau: The interoperability from the digital to the physical space. That’s very interesting.
Kantelia: Correct. As with everything, we’re limited by our imaginations, we’re scratching the surface every day. I have another new idea for what a brand could do with this technology. But another key point, Angie, is that we have to find the right venues for these large brands. And I’m hoping that we are, before Christmas, going to be able to announce something that is, I think, the first of its kind, that provides an environment where the world’s biggest brands, the biggest luxury brands, will feel comfortable in being able to showcase their digital assets alongside … their physical counterparts. And it’s not far away. I can tell you that.
Lau: Well, there are a lot of platforms that are in this space right now. Many of them are those crypto exchanges, and other NFT exchanges — we’re seeing that. But are you saying that there will also be a physical, or a storefront or bricks-and-mortar, that we could see affiliated or associated with this? You’re dropping a lot of hints. I want to understand. Ok, so yes, bricks and mortar. So analog meets digital, and it’s going to be Zilliqa, in the NFT space.
Kantelia: Correct. And in the luxury NFT space, in particular.
Lau: Interesting. So I’m imagining a one-of-a-kind couture piece from, insert brand here. And there’s also a digital representation that you could wear in your metaverse, whichever one you’re in. And then you’d actually have the physical version as well, something like that.
Kantelia: Absolutely right.
Lau: Ok, that sounds really super-cool and exciting. And this is very interesting because a lot of people are still kind of stuck in the ‘oh, it’s art, it’s sports memorabilia, it’s collectible’ space. You’re talking about a whole new ballgame here, especially associating it with a physical representation of that asset.
What are your thoughts on real estate? What are your thoughts on other assets that actually exist in the physical space — in the physical realm that actually have a lot of value that can be unlocked, potentially with NFTs? Just curious about your thoughts.
Kantelia: I think that we could probably think of an NFT application for most real-life services and products, genuinely. You’ve mentioned one — you’ve mentioned real estate. And of course, there are already examples of how people are using blockchain technology to facilitate real estate transactions.
But let me come in with a little bit of… not bad news, but let’s call it ‘uncertainty’… around some of these use cases, real estate potentially being one of them — which is that the use cases I’ve seen for real estate on blockchain thus far are, in fact, fractionalizing real estate. And the moment we start to fractionalize real estate, this word called ‘regulation’ starts to come into play.
And therefore, I think that today there are uncertainties around regulation — wherever in the world you happen to be, by the way. There are uncertainties about what that regulation is indeed going to allow you to do with NFTs. And I feel that we cannot ignore this. I mean, we can talk about regulation until the cows come home, but it’s vital, it’s necessary, and it’s good.
I’ll talk about a country I know well, because I happen to live there. The UK, for example — it’s not just the UK, others are doing similar things — is trying to balance innovation with customer protection, which is what a regulator should be doing. But whilst there is some writing on the wall, whether we look at what the U.S. is trying to do, with the U.S. infrastructure bill, whether we look at what the FATF [Financial Action Task Force] is trying to do today, there is no law yet, there is nothing in place.
But I think, as an example… I don’t know… let’s look at China right now. It’s really interesting to see what’s going on, and you’ve probably been following the space. But I find it fascinating to see that whilst the Chinese government is obviously banning cryptocurrencies — and we’ve seen many different flavors of this coming from China — I think those of us that understand how China works understand that they have a certain policy, and this supports their policy, which is fine.
However, when you look at the government’s stated vision for technology, blockchain technology is in the top five. What’s happening in China right now is really interesting because Tencent [and] Alibaba have been experimenting with NFTs, as you may have seen. But what they’re all trying to do is to decouple cryptocurrency from the blockchain. And so there’s a lot of experimentation going on, but you’re hitting the sides of the regulation window here. Your original question was about which other assets. I think many, many other assets could come on board, but I think regulation may have a role to play in that.
Lau: That’s a great point. I mean, China, specifically, has been paying attention to the cryptocurrency activity space, capital control — all of that stuff is very specific to that. NFTs, they [have] so far [been] left alone. But from this moment, when Word on the Block actually airs, that could change. It could change in the next five minutes or change the next 24 hours. To your point that the regulators, once they start shifting to this space, it could be an entirely different story.
Increasingly the regulators and the regulatory issue is coming into focus. It absolutely does drive a lot of the sentiment in this space. Increasingly, we are seeing more and more conversations, even at an international level. We just heard from the Biden administration that there’s going to be a 30-nation global conversation that they want to congregate on cybersecurity, cryptocurrency, stablecoins and the like. From your perspective in the ecosystem, in blockchain, in crypto, at Zilliqa, from an Asia perspective as well, and from a global perspective, how do you view these international, nationwide global discussions that — beyond lawmakers, governments, nations — are [happening] on the crypto space. What’s your view?
Kantelia: I speak to friends who have some understanding of what their various different countries are trying to do, and I actually do see quite a lot of similarity in the way that different countries are approaching this. Obviously, if you look at what FATF is trying to do, this sits above the national level, and so whatever the FATF may bring to the table has to ultimately be implemented by the countries that sit below that level. The same holds true in some ways here in the E.U., which of course we used to be a part of.
And so I make my own interpretation. I go back to what I said 10 minutes ago. My own interpretation is [that] I think we’re well beyond that point where large nations are looking at how they ban these things. I think that the conversation is not about any of that. It’s about regulation, the right level of regulation. And as somebody who comes from the traditional world, shall we say, into this brave new one, to me, the rails for things like traditional finance — centralized finance, as people now call this space — I mean, getting the right rails between DeFi and CeFi (centralized finance), for example, building a market infrastructure — which is again a very hot topic on my personal radar screen right now — building that, I think, is going to help the regulator. So, what’s interesting, I think, is that the infrastructure layer has a lot to do with whatever regulation and policy actually comes into play, and that’s another three or four years away, in my humble opinion.
And in that time, I think that if we can start to see this bridging between CeFi and DeFi, for example, it’s going to give a huge sense of comfort to those policymakers. That’s where I see regulation going. As I said, I think we’re beyond the point of digital assets going to zero when blockchains are being banned left, right and center. We’re beyond that point, in my opinion.
Lau: I think as it’s defined by technology, absolutely. That is a narrative that I think even the regulators and everybody who’s even just beginning to understand the space recognize that that’s an old chapter. The new chapter is being written right now from your perspective. Even defining it in the luxury space.
So I’ve got to get back to that, because that sounds super-exciting. Does Zilliqa want to own this enterprise space from a retail perspective? So, I want to hear more about that as much as you can tell us. But then also beyond luxury, what’s next? I want to hear about the roadmap, if you will.
Kantelia: Certainly in terms of the Zilliqa ecosystem, which, as I was explaining, is where I position myself today. It’s sort of like Zilliqa-person on the outside, almost. From my perspective, I think that there are two industries that are really interesting: the luxury world, I think for sure — and I’m not just talking about million-dollar diamonds and necklaces, because the luxury world does actually go to a much lower price point than that too — so that to me is one, for sure. And across the whole gamut of jewelry and watches, to automobiles to various other things, I think there are two other industry segments: this e-sports space and the gaming space — very, very, very important. In fact, one of my venture companies, Aqilliz — I do believe you know a little bit about Aqilliz and ‘G-man’ (Gowthaman Ragothaman) who runs it — has already been doing some amazing things during the lockdown between big cricketing brands and cricket fans, for example.
And so I see the innovation, particularly in the NFT space, in the e-sports world, the gaming world, as being huge. I think it’s absolutely enormous. So you’re going to see some major activity coming from the Zilliqa ecosystem around that space. That’s the second one.
The third one, Angie — which I have to say is a little bit of a passion project for me other than the luxury stuff and the collectible stuff — is the music industry, because I think that the plight of the artist is something that has dogged us for centuries and centuries. Picasso sold paintings so that he could have lunch. He gave away paintings, rather, in a trade for lunch, so that he could feed himself. And I’ve believed for a long time that there are brilliant, brilliant artists out there whose work will never come to light, because they never get paid.
I certainly know… here in London, I know several artists who have been encouraged to give up whatever else they’re doing to come back to this space, because now the blockchain technology allows artists of whatever sort — musicians and painters and sculptors — to be able to earn good money in a way that has never been possible before. So I’m a huge music fan, and I would say that the third space that I’m really interested by — and again looking at very closely — is the music space, and how we can take that a step or two further, particularly looking at it from the artist’s perspective rather than the producer’s perspective. I’m very, very interested in those. I think there’s plenty to do within just those marketplaces. But those are very exciting to me.
Lau: Well, it just sounds like you’ve shared with us the next phase of growth for Zilliqa beyond the application of your new mainnet, but also exploring what new spaces that you could really have impact. And I’m just very interested to see what that bricks-and-mortar store is going to look like. It sounds extremely interesting, and I can’t wait to see it. And I expect that we will be able to see it soon, and I hope that we will.
But Max, it’s just really great to connect. We’ve been obviously following the story of so many protocols for a while now, and just to see the evolution beyond revolution now. Now we’re in the evolutionary stage, now we’re in the maturing stage, and to see the application so specifically here — that’s encouraging and exciting non-blockchain people into blockchain. I think for the entire industry and for the entire ecosystem, that’s just really exciting to hear.
Kantelia: Yes, thank you, I’m just so excited about what can be, and I have to say that I’ve been spending quite a lot of my time talking to Zilliqa community members. It’s amazing being able to talk to people whose Twitter handles and photographs just don’t do them any justice whatsoever. And I say that in a very positive way. I’ve befriended some community members who are exceptional people from the world of fashion to legal to music to automobiles, and taking in their inputs as community members and token-holders. I’ve found it to be so refreshing. I think the way we engage with these communities also has to change a little bit. I’m an entrepreneur. I want to know what it is that people want to see happen. And I don’t just mean in terms of price point. That’s a given. That’s an obvious one. And so, yes, lots happening, my dear.
Lau: Well, I’m so glad that you shared it with us. I appreciate it. And when you’re ready to share more specifics, I want to see those blueprints.
Kantelia: Absolutely. You’ll be getting an invitation to a very private event soon.
Lau: I’m excited about that. We will absolutely cover it on behalf of our global audience, of which your audience is also included in that. Max, happy to always share time with you. And thank you so much for sharing your time with us. We really appreciate it.
Kantelia: Thank you very much, Angie. This is a great hour.
Lau: And thank you everyone for sharing your time with us here at Word on the Block. I’m Angie Lau, Editor-in-Chief of Forkast.News. Until the next time.
