What is the Living Constitution? A Conversation with Professor David Strauss

The way I got into crypto was in 2020, when COVID happened. I was actually de-platformed by Interactive Broker. And since I was from emerging market, high-risk country like Pakistan, the froze their cow. And they're like, we have a lot of in-bounds. It will take about a month to kind of solve your case. So I was like, this is bullshit. So I got into that rabbit hole and kind of fell in love with the whole concept of D5, where it's permissionless finance. Ab is already live. Right now, you can act as a social payment layer, where you can send stable coin, both USDT, USDT to your friends, family, whether they're locally based, foreign based, and then you can off-ramp it into Pakistani bank account. The end little bit about Pakistan as well. By the way, it's a crypto superpower. There is a population of 240 million, average age of 20. Fastest growing remittance as well as freelancer corridor in the world, the freelancing earnings have grown about 80% year on year. The third largest stable coin adopted country in the world. So many, welcome to the show. It is going to be a full stay with you. We are recording this live at Korea Blockchain Week, the final interview that I'm doing for this trip in Seoul. And it's an absolute pleasure to have you here. So looking forward to talking about neo banks and everything happening in Web3 space. Web3 space as well as in South Asia, in Middle East, and lots of other geographies. So let's get started first. How did you get involved in this space? Yeah, it's a long story. I'll try to keep it brief. The way I got into crypto was in 2020 and COVID happened. So I was trying to apply for a brokerage account and I had this bet in mind that Fed is going to print a lot of money, which they did. So I wanted to buy a lot of index funds, wanted a lot of call option, and I applied for Interactive Broker. My, in fact, my entire broker was already active, but during COVID, there were so many users joining the account and since I was from emerging market, high risk country like Pakistan, the froze the account, little froze the account. So I was like, this is this bullshit. Like I didn't deserve to be in that position. So during that time, there were protocol like synthetics and mirror where you could still get exposure to global assets back then. So I got into the rabbit hole and kind of fell in love with the whole concept of D5 where it's permissionless finance. You can't be censored. Anybody whether it's from Pakistan, India, Bangladesh, it just like geography is not restricting you and you can do any of this in 27. So that got me into crypto. I left my trademark job, started writing acid overviews for Missouri and then from their onwards, I did, like I became a research director, took a matrix, then worked in Annemokha, then worked at hypersphere. And then now left hypersphere to basically make a new bind that allows you to trade those assets, like global assets in Pakistan. Not trade, invest in these assets and also use your stablecoin in off-ramp and pay out in local currency. So it's kind of like a 360 moment, like the way I got into crypto and the thing that I'm making, it feels like that was my life mission, but it's kind of coming to fruition now. - Yeah, yeah. And what's your, you spend this week here or last few days and so you've been to this conference. What's been your impression so far? What's changed in this industry compared to, let's say someone who went to Korea Blockchain, we class year. - Slowly left for last one year at least. - Yes. - I'm seeing a lot more people in suits. - Yes. - And you wouldn't imagine that to be the case in KBW, but yeah, there were a lot of people wearing suits. - Yeah. - Which is kind of the trend, I think we're seeing, like even I think Web 3 is getting matched with TREATFI, like you see you block things like Canton. Even before KBW there was Canton somewhere in New York. So I think that the two worlds are meshing and even when we talk about new bang, it's two worlds meshing together as well. And creating net new products, like for example, if you talk about crypto credit card, it's a net new product where you're putting in stable coin into your account and using it to pay in dollars, using it for like everyday life. So I think this conference has shown glimpses of that as well. - Oh, absolutely, I couldn't agree more. I like, even going to Bitcoin Vegas, 80% of, this is just few months ago, 80% of the people there were in suits. Generally Bitcoin had all sorts of crowd back in the days, like Libertarian, type people, all sorts of, from all walks there used to be artists, there used to be all, but not anymore. It's all just funds, ETFs trying to diversify and have Bitcoin on their asset work kind of. - Yeah, and it's also true. Like when I joined hypersphere, my imagination would like was that I would trade things like hyperlakeware, ZKAS, like tokens basically. But in my, in my stint over there, we were trading Robinhood, we were trading ETORO, we were investing in DATS. So I think those two world meshing also creates new opportunity, both for crypto native, like a few still armored cipher punk, ideologically driven, ZKAS was an opportunity that an institution could invest. And then there are institutional investment that earlier, let's say a lot of crypto folks wouldn't know about, like let's say for example, Canton or, or just investing in Robinhood, which is now getting into prediction markets and things like that. So I think just expands the space and it's good for our industry. - Yeah, the other, the other thing I've seen is that there's been a huge boom in the whole new bank space. It's kind of started with revenue, that was the only one I had heard for ages. And then now there's like, now new bank in Brazil is like the biggest new bank in the world. And there's so many so many-- - Is red all as well? - Yes, red all as well. There's so many all around the world now, new banks. So what are the some of the trends you are seeing in when it comes to new banks? - Yeah, so I think we were like discussing this offline, I'll just highlight this again. So initially the last five years we have seen, I think new bank, like last decade I would say, we have seen this thing called new bank 1.0, where these new banks, whether crypto oriented or let's say traditional new banks that revolution, we're trying to go global day one. So for example, if you look at red all, which launched three to four years ago, the whole aim is let's just expand to as many country in one go as possible. As in the next decade, we belong to those new banks that instead of going wide, we'll go deep. So for example, that depth could come from, let's say, either focusing on one particular region, that's a Pakistan in our case, or let's say focusing on one particular user base, like let's say, high net with individual freelancers, or one particular feature said that nobody wants to create a lecture, your compliance. And I'll tell you the reason why I believe in this thesis, because I've seen this play out in Pakistan as well. If red all is going after the whole world, from an app standpoint, from a UI standpoint, let's say if they offered the ability to pay, let's say, Pakistan local utility bill. The whole UI UX will look awful, because that thing will appear on a user in Brazil, or user in Ethiopia. So they'll be like, why am I seeing a utility bill for Pakistan? And vice versa, like why would somebody want to pay, like, see a utility bill of Brazil in Pakistan? Similarly, you also have nuances in terms of distribution, like in Pakistan, instead of doing performance marketing, you have to go door to door with businesses, go to SMEs, most of them are individual, you have to sit with them, on board them physically. While in case of, let's say, your dollar is spent better just to run Google ads, or run Facebook ads, right? So that distribution, the taste, the features, the culture are so unique, it doesn't make sense to have one new bank and try to fit everything in. So I think my thesis is next decade, there's going to be more new bank, which is great, but I think most of them will go deep, rather than just go wide. Also, there's a lot of competition, because red order is there, cast is there, etherifies there, but there's not that much competition, like I would say right now, there's no, Pakistan you wanted to new bank. Yeah, yeah, so it's an opportunity. Yeah, absolutely, there is opportunity, and there is another thing is that I feel like, new banks and other, these alternative financial institutions, there will be a huge need for them, because, you know, like, I was born in South Asia, I was born in India, even though I've been out of India for most of my life, more than I stayed there. I know that the region is start of capital, like, and that's why you might have followed the rise of like the you know the whole the country. have to have Grahamine Bank and Bangladesh and how that he won like Nobel Prize for it and stuff because yeah because it's just the whole region is start of capital if you want to if you have a small person a you don't have the necessary IDs and everything and the paperwork to go and access capital yeah and and you're getting capital at like 30 40 percent exactly right for what you know so yeah so yeah so there is this company Pakistan called Abhi so yeah that's the opportunity like let's say if you are a freelancer using our app we are collecting a lot of data about your own chain that what sort of off-ramping you're doing what sort of assets you own yes you can potentially take loans against that like fully collateralized loan or you can potentially have a credit history through which you can apply for credit while we work with some of the other partners that underwrite that right so it creates interesting opportunity and little bit about Pakistan as well it's by the way it's a crypto superpower in in in in many ways because there is a population of 240 million average age of 20 yes fastest growing remittance as well as freelancer corridor in the world the freelancing earnings have grown about 80 percent year on year in last couple of years and that's the third third largest stablecoin adopted country in the world so first being US third being Pakistan and yeah so there is a lot of potential there's a lot of users it's just that there haven't been application that just matches seven eight apps that one user is using into one like people in Pakistan will be using jaskas sadhapay yes then using then basically using Binance and then trying to do off-rime in like peer to peer transaction and WhatsApp grow then calling the person in home then so I think and then using their banks to pay bills then using another bank that gives them discount through credit card so we feel we can collapse the whole stack of seven eight apps into one yeah and also have also take advantage of crypto rails especially because we feel next five years stable coin are going to grow yes indeed steeply and rwa foreign assets are going to grow exponentially yeah and there's also right now no way of people in Pakistan having the ability to invest in foreign equities there's no way so we want to create that that opportunity if you are a Pakistani with the foreign bank account yes yes but locally there's no none so we can use crypto for basically the same issue I had in 2020 I want to solve that issue right now where there is no like a powerful interactive broker for even for which you need a foreign account yes I want to collapse that and make sure Pakistan have the ability to tab into the global markets yeah that's amazing you know I saw many things I don't know where to start and where to share like you know earlier before we went on before I press record we were talking about money 2020 and Saudi I met a company from Bangladesh there and how they are doing it is that they are tapping into the diaspora because you know South Asia has a huge diaspora all around the world especially in Middle East very big population and the person working there has a better credit history better credit score better availability to credit and so they give credit to their relative in Bangladesh where the relative has to repay so they are getting their credit on basis of the person living abroad and then the person living in Bangladesh gets it for much cheaper and has better access to it yeah and amazing and I'm sure there would be ways for you guys to also it's been on the podcast you should check it out yeah it's very cool very interesting concept and share compliant and all that I'm sure there'd be lots of opportunities for you to you know tap into that Pakistani diaspora around the world yeah so the way we are tapping the diaspora is if they are sending money to the relative yes the relative will have a U.S. bank account yes under the name it's very difficult to open it box on we're using our business partner who has banking licenses so they will have kind of like wise exactly like wise yes so you have that ability or if the relative wants to send money in let's say US DT US DC so we're creating both opportunity because we don't know how the next decade looks like our thesis is stable coin is going to eat banking so we need to preserve it is already right so we want to give both the option available to for the remittance market that the relative or the friend or the family can send money locally buy those two channels yes and then the recipient of that can either keep the money in dollars and avoid depreciation or just off ramp it directly into the bank and do it at interbank rate yeah do you think Pakistan will have its own stable coin denominated in Pakistani rupees and I hope it does I hope it does I'm not sure though yeah yeah I'm not aware of it but I hope it does yeah yeah it will also just expand the market for us oh absolutely it will bring so much more adoption because you'll have less of a work to do down the education side of things yeah I will yeah I hope it does instead of off ramping then you can just convert it to Pakistani stable so I hope that that's the case and yeah it just expands the market and I'm happy for it yeah yeah very cool very cool and so what's the current state for handle it's right yes already is already life right now you can you can act as a social payment layer where you can send stable coin both US DT US DT to your friends family whether they're locally based foreign base and then you can off ramp it into Pakistani bank account and in a few weeks time you'll you'll see a surprise that we're going to enable virtual accounts yes we are also going to enable global assets for you to use either using your dollars or stable coins to buy those assets and then the roadmap also includes a crypto credit card ability for you to pay bills ability for you to do top ups ability for you to book hotels either through dollars either through stable coins yeah and then also create a channel um for Pakistan that these dollars get off ramped or paid out in rupees so in a way we're also helping kind of address the current account deficit typically Pakistan runs yeah yeah all all South Asian countries on a hundred percent nearly net energy imported and all that you know exactly yeah yeah it's it's getting a lot worse in India that I know of yeah because the revenues have decreased sharply because of AI it has the freelancer and freelancer so in Pakistan you're seeing this as well the income of freelancer have squeezed but the frequency the amount of freelancers has increased so net net has grown but the income has been impacted and the reason being the thing that used to take a week for for you to deliver through AI tooling you can do it within hours so so project that you would get quoted for a week you you now have to deliver within a day yeah very interesting that has squeezed the earning for all freelancer yeah and my advice for them would be just have better sales and have more agency yes and just combine that with the AI things will work out yeah absolutely I think AI is creating more opportunity in many cases because now I'm being like you know outreach happens all the time on LinkedIn if you are on LinkedIn people and so people reach out all the time and I'm getting up because now they're able to use AI to do the outreach and they're able to outreach to a lot more people just not one AI they can create swarms yes and and basically just DM everyone DM everyone DM everyone and then not only do them core also maintain the database and do follow ups so yeah that's the world we are going to get into so forming those relationship deep relationship having this ability to sell in person I think those those things become very valuable because the things like for example we were just chatting earlier like making like editing videos doing motion design all of this AI would be able to do but the fact that you have the relationship with let's say a top guest that you can call upon any any time of the day will be hard for the AI to come in this so so there are certain things that will compound faster and I think it should be just just having those skills or abilities to recognize and then take advantage of yeah yeah absolutely yeah couldn't agree more have you guys raised funding are you guys looking for funding what stage are you guys that we might do PR PR announcement regarding that so keeping keeping our they're keeping those number secret but yes we have interest from a lot of foreign VCs and local VCs so we have raised and we have a good good good good cap table and you'll hear about that soon that's that's great and what does next six to 12 month of roadmap look like just take a as much as help extend the mega trend of stable coins or global assets in Pakistan. For us, the features are as I told you, just get the global asset in hands of freelancers, in hands of normal users, and just enable very fast and cheap global payment rail for Pakistan. So that's the aim. And as I said, the roadmap is delivered global stocks, virtual accounts, expanded to SME area, do more B2B as well, enable worlds, enable Sharia, compliant products, and just do all of that in Pakistan. - Yep. Do you see any other products in crypto that have done exceptionally well in Pakistan? - Binance. - Yeah, Binance. - As an exception, as an exception, yeah. And what do you think is the secret of their success? How did they get the adoption? - Good product. - Yeah. - Only product, good product, good spreads, P2P, good liquidity, yeah. - Good liquidity. And yeah, now working with the regulators now. So they're working with regulators, doing the right steps, yeah. - That's very interesting. - Yeah, yeah. Same in New Zealand, they've done really well. When they first launched, they reached out to me. I had them start like a podcast series there and get, yeah. So it's like education helps, 'cause when you are early, you have to really educate people on them, what it is, it is all this, how to do, how to do their taxes, we did all the CVs on that, and all that, that, how it would impact. But yeah, definitely. And what's your key ask? What's the number one thing that you are looking for? Are you looking at hiring? Are you looking at customer acquisition? Anything else? - Yeah. So, a thing that we are looking for, again, as a startup that wants to gain a lot of market share in Pakistan, fundraising is always one thing. We did PC, we'll do seed, we'll do CVs A, as things go on, so that's one. So if you're an investor or want to invest, my DMs are open, we can have a chat, but again, just for more value-ended investors. Talent is always scarce. If you have someone who has agency, can do things on your own, you can join one of the fastest growing Fintechs right now in Pakistan. Give me a shout out in on Twitter or LinkedIn, reach out. And yeah, and if you are SMEs or freelancer, we would love to hear from you. You can reach out or download our app on Google, Play Store or Apple Play Store. Apple Store, the name goes handle, handle, pay, H&N, DLE, and pay, P-A-Y. - Fantastic. What I'll do is I'll leave all the notes, links in the short, perfect, and descriptions, and in the joins, they also get a referral fee, so if you refer to your friends, you get $3 a rebate that you can use to buy a virtual card. - Amazing, that's really, really cool. So thank you, thank you so much. - It was a pleasure. - Thank you. We should be talking with you. And we'll have to do this again in six months or 12 months. See where you guys are. - Inshallah. - See how you're absolutely, thank you. That's it folks for today. And if you got value out of this conversation, you enjoyed it, then do not forget to share it with your crew and leave a comment, like and subscribe. So you do not miss the next episode because we will be sharing a lot more insights and industry secrets and also nothing that we talk about. Here should be taken as investment or financial advice. And if you'd like to collaborate, if you'd like to be a guest on the show, or if you're building something really interesting, then I want to hear from you. Leave it in the comments. Reach out to me. You will find all the details in the show notes description or just search for Sam Kamani. I look forward to seeing you again in the next episode. Peace. (upbeat music) (upbeat music)