Paolo Ardoino: Bitcoin & the Evolution of the Global Financial System

Nico Moran (0:00)

You're about to listen to an exclusive interview with Paolo Ardoino, the CTO of Bitfinex. He has worked in the space for over a decade, and today, he shares with us some unique insights on what he's building now at Bitfinex, and where he thinks Bitcoin could potentially go next.

Paolo Ardoino (0:19)

Commodities are at the center of the importance and the center of power when it comes to these geopolitical changes. Japan might sell US. Treasury to protect the Japanese Yen.

You could see like tariff wars on top of everything. And then of course, there is this dispute between the US and China on Rare Earth and other commodities. China is dumping US. Treasuries and buying gold. Bitcoin is the greatest currency that was ever created. If, sorry for the term, it hits the fan, we need to have something ready. You cannot build things after the catastrophe. You need to build them before so they can spread, so they can work and you can battle test them so that when people need it the most.

Nico Moran (1:06)

Absolutely, completely agree. Yo, good morning everyone. Welcome to a special edition of Simply Bitcoin IRL. And I'm joined here with Paolo Ardoino, CTO of Bitfinex. Paolo, great to have a conversation with you again.

Paolo Ardoino (1:20)

Hey, Nico, thank you for having me.

I'm very excited to be here. I think there is a lot to talk with the recent events of Bitcoin and hopefully a good fall and winter for Bitcoin.

Nico Moran (1:33)

Yeah, it's never a dull day in Bitcoin to say the least. Paolo, I want to focus on Bitfinex Securities and expanding access to capital markets. And today is a very special day, September 7th. This day records it's the official 5th anniversary of Bitfinex Securities. How are you feeling about this massive milestone?

Paolo Ardoino (1:54)

I feel great that Bitfinex has created something in five years ago that today, everyone is jumping on the bandwagon on.

So when Bitfinex Security started so many years ago, five years ago, it feels like 50 years in our industry. The landscape was completely different. Everyone was focusing on altcoins. Everyone was focusing on mean coins. It was 2021, yes, pre-FDX. So yeah, there was a lot of noise in digital assets and crypto. No one really cared about tokenization of real world assets. No one cared about tokenized bonds and equities. And I feel like Bitfinex before everyone else looked at how the world should embrace the philosophy of Bitcoin outside of Bitcoin, notwithstanding that Bitcoin is the greatest currency that was ever created. But what we can take from Bitcoin and apply to something that would anyway continue, right, of stocks, bonds, that will continue to exist, even if Bitcoin will be completely successful.

So how we can use the same ideals and ideas and technology to create more access and democratization of the rest of the financial industry. And so that's basically what Bitfinex Security did. And today seems obvious, but we put a lot of heart and believe in it, and we are seeing the fruits today.

Nico Moran (3:17)

Fantastic. So I want to go back to what you're saying in terms of essentially expanding the access to it. So Bitfinex Securities aims to level the playing field for both issuers and investors beyond efficiencies such as faster settlement. How can tokenization make capital markets more accessible? And what opportunities can unlock that traditional markets have struggled to provide?

Paolo Ardoino (3:37)

Well, I think that there are two parts that we need to consider. The first one is the fact that tokenization has a broader meaning. So people decide to tokenize. So in this moment, you could see a lot of efforts to tokenize anything. And the lower hanging fruit for tokenization is actually the tokenization of Apple shares or Tesla shares or Google shares. That is what most of the companies, most of the crypto exchanges are focusing on. Basically, most of the crypto exchanges are looking at the traditional finance, where traditional finance is looking to enter crypto or enter Bitcoin and this industry. And so the crypto exchanges are like, well, if traditional finance come into crypto, crypto has to go into traditional finance. So what is the easiest thing we can do? Oh, let's tokenize Apple shares. Well, that is fine, but I think is not adding much to the equation.

Of course, well, adds the fact that you can trade the 24-7 Apple shares, great, fine. But it's truly not going in the direction of the Bitcoin philosophy and ethos. I think the beauty of Bitcoin is that Bitcoin created a currency that would open up the financial industry to everyone and would work for payments, would work for savings. And the beauty of the block time of Bitcoin is that it's so slow because it takes 10 minutes on average to mine a Bitcoin block, that allows everyone, even with the worst connectivity to internet, to be able to download a block every 10 minutes, that is like between one and four megabytes, and just subscribe to it, and then participate and send transactions because it's slow enough so that everyone can really truly participate into it. And I think the same concept related to traditional finance would be how we can take the same idea of financial inclusion that Bitcoin created, and how we can expand it to, how we can include companies and people and opportunities coming from everywhere in the world that never had the opportunity to be on the financial markets, and how we can bring on the financial markets. And so that is a completely different story. That's where I think tokenization or real world assets make sense, and because it creates more accessibility. So just to give you an example, the parallelism with Bitcoin is if you are like in Patagonia, and you want to transact in Bitcoin, and you want to subscribe to the Bitcoin network, you can do that, and now you can download a block every 10 minutes, you can send transactions, it's easy, you can have like an antenna to do it. But the same thing, if you are the greatest company in Patagonia, or in Buenos Aires, or in countries that historically are underserved when it comes to the capital markets, well, how you can have the same opportunity to the guy that lives in New York? And that is where I think tokenization and adding the blockchain technology on top of it, in order to foster accessibility, comes into play. And so, that's what Bitfinex Securities is trying to do. How we can create the same opportunity for the guy in Buenos Aires than the guy in New York. The guy in New York can access the trillions of dollars of liquidity for any of his ideas. The guy in Buenos Aires has access to 1,000th of that liquidity if he's lucky. So how we can bring this to an equal playing, even playing field, that is the mission of Bitfinex Securities.