Last week, I attended the ninth annual Consensus conference in Austin, Texas.
Consensus is one of the world’s largest, longest-running, and most influential gathering of the crypto and Web3 communities.
The conference featured six separate stages, with content from over 500 speakers covering everything from protocols to policy to the metaverse.
The Austin Convention Center is about the size of 15 football fields, and it was filled with 200-plus project booths. I can tell you there was tons of positive energy as I interacted with the over 15,000 fellow attendees.
There were hundreds of speakers and expos at the convention. But the biggest trend I uncovered is the marriage of traditional finance and blockchain technology.
Today, I’ll tell you why this exciting trend will increase the adoption of blockchain and Web3 technologies – plus, a new innovation that will make using crypto much easier.
The Marriage of Traditional and Decentralized Finance
TradFi is used to describe traditional financial systems. Decentralized finance (DeFi) is based on blockchain technology that operates independently of centralized authorities.
There were plenty of examples of the marriage between the two at Consensus.
One of the biggest involves Franklin Templeton. It’s a 75-year-old global investment firm with $1.4 trillion in assets under management.
At Consensus, it announced it will launch the first U.S.-registered mutual fund to use the blockchain to process transactions.
The fund will operate on the Stellar blockchain. According to the company, investors can earn 4–4.5% interest from the fund.
CEO Jenny Johnson said moving the fund to the blockchain will reduce costs and increase transparency in an unparalleled way compared to traditional finance.
Franklin Templeton also announced the launch of a mobile app called Benji. You can download it from Apple’s App Store or the Google Play store.
The app allows anyone to “browse tokenized securities and cryptos and invest in the world’s first tokenized money fund that is natively issued on a blockchain.”
This gives users the opportunity to invest in real-world assets, U.S. Treasuries, on the blockchain.
Another example of the TradFi-marrying-DeFi trend came from KKR, a global investment firm that specializes in alternative assets.
KKR – which has over $500 billion in assets under management – is partnering with a company called Securitize, a leader in creating private digital securities.
Through its partnership with Securitize, KKR will tokenize part of its $4 billion health care growth fund on the Avalanche blockchain.
For years, alternative investments have only been available to the likes of hedge funds, large institutions, and accredited investors.
While KKR’s fund still has limits, a tokenized fund will allow anyone to invest smaller amounts than previously required.
And it’s paving the way for a day when retail investors can have access to these type of investments.
There are other benefits besides lowering investment minimums. KKR believes tokenization will improve digital investor onboarding… make compliance easier… and increases potential for liquidity with the advent of regulated alternative trading systems.
Finally, there’s global exchange-traded fund issuer WisdomTree. It has $90 billion in assets under management.
The company plans to launch a crypto wallet called WisdomTree Prime that supports tokenized assets.
According to CEO Jonathan Steinberg, WisdomTree Prime will allow anyone to purchase and sell tokenized assets like U.S. Treasuries and gold.
The company already has nine blockchain-enabled funds. Right now, it’s using Ethereum and Stellar to record transactions.
Like the other CEOs, Steinberg believes DeFi will vastly improve the traditional financial system by making it more efficient and transparent, while lowering overall costs.
These are just a few examples of the marriage between traditional finance and tokenization I personally saw at Consensus.
But there’s more. A new technological development make this marriage even stronger.
This Tech Will Bring Crypto to the Next Level
One technological advancement that really excited me at Consensus is the creation of “smart accounts.” They’ll be a game-changer.
Most crypto users are familiar with digital wallets. That’s where you store your digital assets like bitcoin. These types of wallets use externally owned accounts (EOA).
EOAs use private keys. These keys allow you to access your account.
Right now, private keys are long, random alphanumeric strings. You need to use them any time you want to sign into your account.
A hypothetical key string could look like this: 0xeEE5Eb24E7A0EA53B75a1b9aD72e7D20562f428a.
That makes crypto EOAs cumbersome. And if you lose your keys, you lose access to your account.
On the other hand, a smart contract account is governed by code.
Unlike EOAs, smart contract accounts are much more flexible and customizable, given their programmability. (In other words, they’re simply code.)
For example, you can program a smart contract wallet to have a seedless login. That means you won’t have to worry about keeping track of your seed phrases anymore.
You can also program in social recovery. Meaning, if you do lose your credentials, there’s a means to get them back. No more assets lost forever.
And that’s just the tip of the iceberg.
The programmability means wallets will be feature rich. Soon, we’ll be able to do things like schedule payments, automate transactions, use different tokens to pay for gas, and much more.
It’ll be similar to a PayPal account. You just sign in with one click, and you’re done.
This innovation will take crypto wallets to the next level.
There’s a $20 Trillion Catalyst on the Horizon
While many naysayers dismiss crypto as a novelty or niche sector, behind the scenes developers are improving what we believe will become a truly world-changing technology.
I saw this firsthand at Consensus with the marriage of TradFi and DeFi and the development of smart contract wallets.
One way to play this trend is to buy Ethereum (ETH). It’s the most widely used Web3 software in the world.
In the future, we believe most Web3 apps will be built on Ethereum, just like how most traditional financial apps are built on Android (Google) and Apple software.
Another option is Stellar (XLM), which is getting a boost from the marriage of traditional and decentralized finance.
Remember, crypto is highly volatile. So never invest more than you can lose. You only need a tiny grubstake to see the potential for life-changing gains.
While TradFi will be a long-term trend, there’s a catalyst on the horizon that Daily editor Teeka Tiwari believes could send nearly $20 trillion of investible capital into crypto.
Thanks to his connections in the crypto space, Teeka recently obtained critical intel that a new banking regime is set to take effect June 1.
On Tuesday, he held an urgent online strategy session explaining what’s behind this banking regime. You can stream the replay right here.
During his special strategy session, Teeka also discussed details about three new coins he’s never recommended before. And he even give away his entire crisis-proof portfolio during the session for free.
This is a portfolio that should do well no matter what happens with the banking crisis. All you have to do is watch the replay to get it. No strings attached.
You can stream the replay right here.
Regards,
Greg Wilson
Analyst, Palm Beach Daily