Digital Currencies and the Metaverse with David Birch

Episode Overview

Our Guest: David Birch – Breaking Down the Concepts with Tokenization and Digital Currencies in Finance.

David G.W. Birch is a globally recognized author, advisor, and commentator specializing in digital financial services. He is the Principal of 15Mb Ltd, his advisory practice, and serves as the Global Ambassador for Consult Hyperion, a consultancy he co-founded that focuses on secure electronic transactions. Additionally, Birch holds the position of Non-Executive Chairman at Digiseq Ltd and is a Fintech Ambassador for Digital Jersey. His expertise in digital identity and digital money has earned him numerous accolades, including being named one of the top 100 global fintech influencers and one of the top 15 favorite sources of business information by Wired magazine​​​​​​.

Birch’s career is marked by his significant contributions to the understanding and development of digital financial services. He has advised some of the world’s largest banks, financial institutions, and tech companies on the future of electronic transactions. He is also an accomplished public speaker, having delivered keynote addresses at major industry events like TEDx, Wired, and Mobile World Congress. His ability to demystify complex topics and present them engagingly makes him a sought-after speaker and moderator at international conferences​​​​.

As an author, Birch has penned several influential books on digital financial topics. His latest work, “The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony,” explores the geopolitical implications of digital currencies and was published in May 2020. Another notable book, “Before Babylon, Beyond Bitcoin: From Money We Understand to Money That Understands Us,” offers a comprehensive look at the evolution of money and its future in a digital world. Birch’s writings are widely respected in academic circles and among policymakers, making significant impacts on financial regulation and digital currency adoption​​​.

Episode Transcript

David Birch: Well, the thing is, because I write for a couple of things, I write for Forbes and a couple of other things. On Forbes, you get bombarded with stuff by PRs all the time, which is occasionally useful. So I’m not slating it because some of it genuinely does bring stuff to your attention.

Kevin Rosenquist: Hey, welcome to Pay Pod, where we bring you conversations with the trailblazers shaping the future of payments and fintech. My name is Kevin Rosenquist. Thanks for listening. David Birch is a prominent author, advisor, and commentator specializing in digital financial services, particularly digital identity and digital money. Birch has authored several influential books, including The Currency Cold War, and most recently, Money in the Metaverse: Digital Assets, Online Identities, Spatial Computing, and Why Virtual Worlds Mean Real Business, which he co-authored with Victoria Richardson. He has unique insight and strong opinions on the current state of digital currencies, and where they may and should go in the future. He’s also bullish on the metaverse and NFTs as being key components of the future of how we interact and transact. I was thrilled to be able to have him on the show, and I know you will be fascinated by his insight. Please welcome David Birch. You were on another podcast recently and you said something that made me laugh. You compared Bitcoin champions and writers to astrologers. When things are good, here’s why they’re good. When things are bad, here’s why they’re still good. It’s all about the spin, right?

David Birch: Well, the thing is, because I write for a couple of things, I write for Forbes and a couple of other things. On Forbes, you get bombarded with stuff by the press all the time, which is occasionally useful. So I’m not slating it because some of it genuinely does bring stuff to your attention. But there’s a particular genre that I think has a kind of sociological importance that I don’t understand, but some of your readers might. So basically what happens is Bitcoin goes up $1,000, or Bitcoin goes down $1,000, and you see two responses to it. So you see some serious market analysis of, why it’s gone up or down. Which is laughable, of course, because it’s not a real market. It’s a thin opaque and transparently manipulated sort of pseudo-market. It’s not a real market. So people apply the sort of language that they use with the stock market or other actual real markets to it, and that doesn’t make any sense. But then you get these kinds of, essentially, astrologers, would you like to interview the CEO of some random bitcoin or mining company or wallet company or something as to why the fall of Bitcoin is such good news for the long term?

David Birch: It’s because there were solar flares last night and this lowered the water levels for key miners in Tasmania. This had a knock-on effect when the Korean market woke up and all this kind of thing. Well, What do you want to interview our CTO on why Bitcoin going up? $5,000 is good for the long term. It’s the same thing. All of this stuff is not real. It’s not real. You see people plotting out these strange. You must have seen them online, these charts of his Bitcoin going up and down. Here’s the running median average projected against the constellation of, whatever the plow. It’s not real. It just fascinates me because clearly, Bitcoin is real. The technology exists. Some people do buy and sell it. Although not that many I think in the overall scheme of things. But it it does. That both kinds of commentary fascinate me. I’m always keen to learn more which is why I said that.

Kevin Rosenquist: Well, it’s funny because there are just fierce defenders of Bitcoin that are very it’s almost cultish in a way. I’m not saying everyone who has Bitcoin or likes Bitcoin is part of a cult, but people can be intense about defending it like feeling the need to defend this. Why do you think that is?

David Birch: No, I think cult is not an unreasonable description. I know people who are very, very committed to it for very good reasons. I disagree with them, but I think their reasons and their motives are completely genuine. For most people, it’s just pure speculation. There’s no real, but there is a cult attitude. I remember many, many years ago I went to a lecture. I can’t remember what the circumstances were, but I saw a speaker for the London School of Economics and a researcher, and she said the best way to think of Bitcoin isn’t as a payment mechanism. It’s not a store of value. It’s not as money. The best way to think of it is as a protest movement. I thought that was an insightful view, which I think explains a lot about it. A lot of the people who are passionate about it are protesting against various aspects of the current system and the people who write the kind of shilling, it’s going to be $1 million next week, you will have to buy it and that sort of thing.

David Birch: This is purely for speculation. There’s nothing more to it than that. Now, does that mean we should ignore the whole thing? No, it doesn’t, because the technology is very interesting. The creativity that that technology has brought is astonishing. The stuff that people build and I probably shouldn’t say this on a podcast, but you look at some of the amazing frauds that go on in the DeFi space. The intelligence and the mental energy that someone has sat there and thought, oh, wait a second, someone’s implemented this code slightly incorrectly. So if we borrow this money, we lend it to them, we swap it for this, we trade it back to that, we pay it back at the end of the block, and we’re £1 million better off. You kind of have to admire that. Well, don’t you think? It’s some incredible creativity. I would agree with that. I think you’re right. There are elements. There are elements of a cult to it.

Kevin Rosenquist: In your book The Currency Cold War, you discuss the implications of digital currencies, central bank digital currencies, or CBDCs, and private digital currencies like Bitcoin and Ethereum. What are the pros to switching to digital that you talk about? Is financial inclusion providing financial services to the unbanked? Why would digital currencies help the unbanked? I think there can be confusion there because people anyone can get a bank account. So I’m pretty much like I assume that anybody can get a bank account, at least here in this country I feel that way.

David Birch: Well, that’s why my bump sticker version of this is that unbanked isn’t the problem and banks aren’t the solution. So I think a very superficial view of financial inclusion is that the solution to financial inclusion is getting people bank accounts and the way to get them bank accounts is to force the banks to provide them, which in the US, as in the UK, means you’re forcing the banks to provide a money-losing service to people who don’t want it. Then you’re sort of surprised when none of this works. So I think an unbanked is the wrong characterization. So I prefer, I prefer the, the better term underserved. So there are many different reasons why people fall into that category. Like there are many people for whom actually. I’m staring at the corner of my AI, there’s a very good book about this that came out a couple of years ago from the guy who used to run Swift and about precisely this, what a lot of people want is a payment account, what they want is a way to pay and to get paid. All the other stuff that comes with a bank account is expensive and they don’t need any of it. So that’s the first thing. A lot of people don’t need a bank account, what they need is a payment account.

David Birch: But because of the regulatory structures which mean that in order to provide that, you have to provide a bank account, you get all of this. It’s not true in Europe, by the way, because in Europe you have this other construction, you have this concept of an electronic money institution or a payment institution that can provide these basic services. Revolut, for example, is a payment institution in the UK. It’s an arbitrary money institution. So, the idea is that you can provide basic payment services through not bank accounts. So by the way, this was demonstrated unequivocally in Kenya with the example that everybody looks at, which is M-Pesa, which has nothing to do with banks. It was provided by the phone company and went on to become the most successful fintech ever. So the idea that you need to give people a bank account, is wrong. People need a place to store money. I mean but securely, and this is why the sort of Bitcoin be your own Bank thing has a but no sane person wants to be their bank. That Be Your Own Bank is a great rallying cry if you’re like a 19-year-old MIT computer science undergraduate and you’re going to take your hard wallet and you’re going to wrap it in tinfoil and you’re going to bury it in a tin inside a Faraday cage in the yard.

David Birch: And as you’re going to do what I do and bury two tins, one of them’s a decoy, obviously, and then put the location of the tin in invisible ink secret writing inside a letter to my sister to be opened only after my death, which is then put inside a bank vault. Which begs the question, why don’t you just put the money in the bank vault? But you’d skip over that, so there has to be some other way forward. So the solution for most people, most people that I forgot the name of the guy who said it. But there’s a lovely quote one of the bits he said most people lack, I’d have to look it up. But he said most people lack the persistent competence necessary to manage keys. I am like most people in that example. I don’t want to manage my kids. If I dropped my phone down the toilet, I wanted to be Wells Fargo’s problem to get my keys back and get my money.

David Birch: I don’t want it to be my problem to take care of. So we need an institutional solution. But the institutional solution isn’t bank accounts. They’re an expensive and very inconvenient way of delivering that. So I thought the US missed a bit of an opportunity to do this a couple of years ago because there was an opportunity to have a federal non-bank charter that could have provided for the provision of these. Simple. Because they see, the thing is, the thing that blows up the financial system is the provision of credit. It’s giving, it’s allowing people to create credit which which blows things up. If you’re not creating credit this is the narrow banking thing that people talk about, then it’s not quite the same thing. In which case you make money through interchange or providing other value-added services. But not banking. Now, the other thing is, for an awful lot of people, the institutional structures are wrong.

David Birch: So it’s also the kind of institutional thing that is wrong. If you’re an undocumented migrant and you’re trying to send money back home, which your family and to some extent your country depend on, imagine the difference between walking into a branch of Citibank and a check cashing operation somewhere in Miami. You walk into the check cashing operation and it’s like walking into Kentucky Fried Chicken. There’s a menu on the wall that says, if you want to send 500 bucks to Guatemala, it’s going to cost you $4.50. If you want to send 500 bucks to somewhere else, it’s going to cost you $5. It’s clear it’s on the wall. You go and you walk into Citibank. You don’t see any prices. Don’t you don’t know what anything costs? You don’t know what kind of deals you’re getting anything. It’s that the banks are not the way to fix this problem.

Kevin Rosenquist: I feel like that’s pretty, pretty clear that that’s your overarching feeling is that banks are not the solution to the problem of underserved people.

David Birch: Yes. But also the alternative solution, which is to just have it all unregulated and get everyone, as I’ll put the name of the book in the chat so that you can promote it to me because it’s a brilliant book. It came out a few years ago, but it’s the “Unbanking of America.” So I’ll say that bit again, but I’ll reference the book directly so that’s okay. But it also seems to me, though, that there’s an institutional problem here with how these things work. There’s a very, very good book about this that came out a few years ago, the Banking of America professor Lisa Serban, and she was an academic who took time out to go and work in a check cashing operation to research the impact on I wouldn’t even say, poor people. I would say underserved people because one of the things she found was that a lot of the people who came into the check cashing operation had enough money to open bank accounts. They just didn’t want to deal with banks. and I remember I remember hearing her talk about this, and she said that one of the things is, if you’re a poor person in New York and you’re going to you just send money back to your family in Honduras or something, you walk into a branch of Citibank and there’s no what do you do? There are no prices on anything or direction.

David Birch: You don’t know. You walk into the check cashing operation in Brooklyn and it’s like Kentucky Fried Chicken. There’s a menu on the wall. You want to send $500 to Honduras. It’s going to cost you $7.50. This the people there know you because you go there every week to send the money back. They’re nice there. They pick and you, you get personal service there. so, it isn’t just as simple as saying, well, either we give everybody bank accounts or everybody uses Bitcoin. There’s an institutional solution which is in the middle of that.

Kevin Rosenquist: Another big concern that you bring up is the geopolitical implications of digital currencies and how different countries might leverage digital currencies for geopolitical advantage. How might a world power, like China or the US gain political advantage from digital currencies?

David Birch: I think this is quite a sensitive issue because I noticed that your future president DeSantis has already banned nonexistent.

Kevin Rosenquist: Whoa whoa whoa whoa whoa whoa whoa, watch it there, buddy.

David Birch: Okay. Let’s just say your future president, Robert F Kennedy Jr has come.

Kevin Rosenquist: That’s worse. Wait. Is it? I don’t know.

David Birch: However, I think the discussion around central bank digital currency in America. I don’t want to just pander to American exceptionalism, although I have been married to an American for a very long time, so I do know that. Exceptional. But there is something odd about the discussion in the United States. So to a rational observer outside the United States, you would think that a digital dollar is an incredible opportunity. What do I mean by that? Well, if you read for example if you go to let’s go back to the sort of Bitcoin, if you go to one of the Bitcoin rallies people quite often talk about places like Venezuela and Argentina or these are examples of where Bitcoin frees people from the tyrannical yoke of government and allows them to violate, cross-border money orders limits. If you delve down a bit deeper, what you see is that when people in Argentina want Bitcoin, what they want now is tether more than Bitcoin. But when people in Argentina want cryptocurrency, what they want is dollars a cryptocurrency is a means to get dollars. It’s a stand-in. It’s the next best thing. They don’t take those bitcoins and turn them into Argentinian pesos or Tanzanian shillings or they turn them into dollars. In fact, Argentina is the largest holder of physical dollar bills outside the US. So around the world, it seems to me that a lot of the non-speculative demand for Bitcoin is a demand for dollars. All the statistics around the dollar, there are more hundred dollar bills in circulation than there are $1 bills.

David Birch: Most Federal Reserve notes are outside the United States and will unlikely to ever be repatriated. I can’t remember the numbers off the top of my head, but it’s this massive, massive loan. It’s an interest like every hundred dollar bill that’s under some drug dealer’s mattress in the middle of Central Europe somewhere is a $100 interest-free loan to Uncle Sam in perpetuity. This is a fantastic benefit. For what uncharitable French president French persons once called the exorbitant privilege of being able to denominate your own debt. So the US dollar is an incredibly powerful instrument. Niall Ferguson, the historian, said the dollar is the equivalent of Marines and boots on the ground. People just don’t see it that way. It’s a lever of soft power and it has to be nurtured, I think. If you think as I do, that American soft power is, broadly speaking, a good thing. Then you want the dollar to serve those good ends. Most people in most of the world, most of the time would prefer to hold dollars. So if people had if there were digital fiat currencies, then anybody could hold any currency and do anything they liked with it. Most people would hold dollars, and that would be an incredible power for the US and a massive interest-free loan to the US. You could potentially double the amount of dollars out there by letting people hold digital dollars. So from the outside, it seems odd that there isn’t more pressure for a federal digital dollar.

David Birch: But as I say, the discourse in the US is unusual compared to other countries. And the US for one reason or another tends to and I think social media has a lot to do with this and tends to paint any kind of debate as black and white. So either you’re against digital currency, in which case you’re a freedom-loving upstanding good old boy, or you’re for digital currency, in which case you’re a member of the Chinese Communist Party. Of course, that’s not true. The reality is somewhere in between that. So I think, given the always-on 24/7 economy of the future, digital fiat currency is a very important and useful aspect of that. I don’t see why the US wouldn’t want to control that itself now. and so and then so people on LinkedIn or Twitter will this is where there’s a sociopathic side to my character because I also think someone will say, someone will send me a message. I read your piece about I read your piece about digital currency. You don’t know what you’re talking about. You’re an idiot. You’re a fascist tool of the running dog, lackeys of imperialist capitalism, and a central bank digital currency is a jackboot. I can’t understand why anybody would ever read one of your books or hire you to do anything. I could show you the emails right now.

Kevin Rosenquist: I saw a review for one of your books and it was just that the guy gave you a bad review only because he was a big fan of Bitcoin. That was it. But he didn’t say anything else about the book.

David Birch: The book is not that negative about Bitcoin. The Bitcoin cult is weird, but it’s interesting. I wouldn’t say I was anti-bitcoin I just think Bitcoin has any utility so but yeah so so but you don’t all I have to say because if I do get an email that says I read this article, I read your book and you’re an idiot, you don’t know what you’re talking about. You’re a psycho and you’re a Nazi and you’re going to try and enslave us all or something like that. I’ll just read the bit that says, I read your book. I’m like, okay, that’s good.

Kevin Rosenquist: My job’s done.

David Birch: I don’t care what this guy thinks about anything. I’m like, what do I care what you think about this? You read my book, thank you for that. But I think it’s an interesting point to reflect on, which is that do we want a situation where we have regulated fiat digital currencies that are being used to grow trade and therefore prosperity around the world? Or do we want things completely uncontrolled? I’ll give you one example to illustrate why I think this is a more complex and more nuanced discussion than is often presented on Twitter or in America, for that matter. So many, many years.

Kevin Rosenquist: Sorry, David. It’s called X now.

David Birch: Sorry, I keep calling it Twitter, I must call it x. But many years ago I was involved in it. So the British government made very strict anti-money laundering laws and they made them even stricter. So as a consequence, the banks were shutting down various remittance corridors because they just couldn’t comply with these rules. One of them was Somalia. It happens that Somalia is an important remittance corridor in the UK because there are a lot of Somalian expats that work in the UK and they send a lot of money back to Somalia. So when the last bank, which I think was Barclays, was withdrawing that corridor there were questions asked about it in Parliament and the government commissioned a study to look into the issue. What I remember from that was you make these, like, strong AML laws, and the bank shut the corridors. The money still goes to Somalia. It’s just the money goes in crates of $100 bills from Stansted Airport every night. Now you go from a situation where you had some idea of how much money was going and where it was going to, and you knew roughly what was going on. You may have maybe that the AML rules weren’t as but it was good.

David Birch: You could see where money was flowing. You go to a situation where now it’s all gone back to cash. You have no idea where the money is going and how much of it is ending up inside Somalia and moving to other places. It’s not obvious to me that as a citizen, I’m better off because of that. So I think the whole thing is more complex and more nuanced do I think that digital currency is a good thing? Yes, I do, do I think that central bank digital currency is a good thing? Yes, I do, do I think that we should have a central bank digital currency that is designed by a totalitarian regime that looks at every single transaction and screens it to allow you to? Well, no. By the way, if the digital dollar worked like that, nobody would use it. So what would be the point of designing a digital dollar that works that way? Right. Because then absolutely nobody would use it, nor even Americans. So I think it’s a fascinating debate. There’s so much more to be learned here. I learn more about this every day by reading up on it. But it’s much more complex and much more nuanced than that, I think is presented.

Kevin Rosenquist: In the way that you talk about powers gaining a political advantage. Is it possible for smaller nations could gain power from digital currencies and perhaps somewhat level the playing field and and help them out?

David Birch: Well, I think that’s a yes and no answer to that. So the example I use in my book which I think is an interesting example to think about, is imagine there was an American digital dollar that had some Nazi jackboot thing. Whatever Robert F Kennedy’s nightmare comes true version of it. There was a Canadian digital dollar that offered some privacy because Canadians are always going on about privacy. This is in the US and they have privacy commissioners, all this sort of thing. So now imagine there’s an there’s an American dollar and there’s a Canadian dollar. The Canadian dollar offers some privacy that the American dollar doesn’t. Would that be enough to get people around the world to switch to a Canadian dollar instead of an American dollar? I think the answer is yes. I can’t show you a spreadsheet or a pie chart that would prove that. But I sort of feel, yes. the Canadian dollar is not an Argentinean peso. It’s also liquid. It’s freely convertible So I don’t know. So I think what you’ll see I call them patrician come currencies in the book, I think what you’ll see is an emergence of, of kind of top-level currencies. Which will have some slightly different characteristics that people will want. There is some evidence that this is already in place because if you look at the figures, it’s certainly true that when it comes to kind of international reserves and international trade, the dollar has been losing a bit of ground albeit very slowly. The dollar has been losing a bit of ground, but it doesn’t lose that ground to rubles or wand or Brazilian gone blank for a second or what? The Brazilian.

David Birch: That volume goes to Swiss francs and Swedish krona. So you can kind of imagine a situation where you’ve got the dollar as top dog. That’s what people want. Some people prefer the Canadian dollar because it has some privacy capabilities. Some people prefer Swiss francs because it has some different privacy things built into it. They’re all regulated. They all operate under some people because of patriotism and prefer to hold their national currency. Some people will prefer to hold other currencies for political reasons. So that’s all fine. So in that, in that sort of marketplace, I think in a way, what’s more interesting to reflect on is what that means in the long term. Because just to go back to the point about Bitcoin again for a moment, there’s a position that’s very unpopular with Bitcoin people, which is the position that people like me hold, which is this whole kind of digital assets, tokenization, decentralized finance that looks pretty good, that when you kind of begin to look at how that pans out in practice, when you start to sort of dot the I’s and cross the T’s on exactly how that would work, it looks all right. The reason why the Larry Fink’s of the world are all in for tokenization isn’t some ideological rebellion about centralized systems.

David Birch: They want tokenization because it’s cheap because the money is the message, so to speak. In McLuhan terms, because, well, for the obvious reason, if I sell you an Apple share, we have to have brokers and dealers and front offices and back offices and reconciliation and settlement and error accounts and audit or something. If I sell you an Apple token and you give me a US dollar token in return, end of story. There is no clearing and settlement. There is no back end. So the whole kind of and I’m very interested. I mean what people talk about is the composability of decentralized finance, the idea is you can have these basic building blocks, and then you can see why institutions certainly would want to do this because they want to manage their risk in different ways. So they would want different building blocks to sort of come together. To me, that all seems exciting and interesting and plausibly the next-generation financial market infrastructure. It’s not obvious to me where cryptocurrency fits into that, right? But in the long run, it’s also not obvious to me where digital currency fits into that. If you have tokenization at everything, which is what people are talking about if you have complete tokenization of real-world assets, then all markets become 24/7 liquid markets in those assets and the need for you to ever take your wealth out of those assets and turn it into cash to do something with it, that would never happen.

David Birch: So I know this sounds mad, but you can imagine I buy an airline ticket in the future. The airline, I say to my AI, well, what have you got? And my AI says, well I’ve got some Apple tokens. I’m not so bothered about those at the moment. I’ve got some US dollars. I’ve got some tickets to Disneyland and I’ve got some pots of paint that I got in a and then the airline is like, yeah, we could use some of that pain. So we’ll take some of that. Not bother about the tickets for Disneyland, not bother about US dollars, but we’ll take the Apple stock. Then my system says, oh, I haven’t quite got enough tins of pain. Can I give you? That sounds mad when you imagine people talking, right? But if you’re talking about AIs in continuously traded 24/7 liquid markets where the values of all of those goods can be goods, and services can be measured against each other. It’s not obvious why you need money as an intermediary anymore.

Kevin Rosenquist: Right.

David Birch: So I think one of the things that fascinates me about where technology is taking money is that I think it’s quite possible that in the long run, it’s even crazier than it might seem at the moment. I think it’s very funny when I said this to somebody yesterday on another podcast where you talk about something different, but we were talking about science fiction. I was at Money20/20 Asia a couple of weeks ago, and there was a guy there, Farhan from Payoneer, and he was he said, well he said, if I want to know something about the future of financial services, he says, I’m not going to ask management consultants. I’m going to go and look at what science fiction authors have. To say about it, and I thought that was a very interesting comment. Then I remembered I was watching a star. I’m not a big Star Wars fan at all. I never liked Star Wars. But my son likes one of the Star Wars series they have on.

David Birch: So I was watching this with him and it’s in the year 3 million, and this guy has taken over a planet, and people on the other planets have to come and pay tribute to him because he’s like a warlord, you know? So these guys were right. These guys arrived to pay tribute, and they came up with this chest they opened the chest and it was full of coins. I was thinking, I don’t know if you paid tribute to a warlord. Now you don’t do it with a chest of coins. They were made in the year 3 million. They said. That’s a very weak vision of where money might be going, you know. You can contrast that with the sort of Star Trek vision which I also like to make fun of, because the Star Trek vision is no money. The Star Trek vision is that because it’s 1960s hippie rubbish. It’s like it’s post-scarcity, man. So there’s no need for money. Well, that can’t be right either, because things are always going to be scarce, right?

Kevin Rosenquist: Scarcity, man.

David Birch: There’s no such thing as post-scarcity. Things are always going to be scarce. That beachfront house is always going to be scarce so, so, so these visions can’t be right. I have a suspicion. Again, I don’t know if I can prove it to you scientifically, but I just have a suspicion. If you look at what goes on with tokenization, decentralized finance, these kinds of continuous liquid markets, the different kinds of digital currencies that could come in, I don’t know, I think the future looks much crazier than Bitcoin people think.

Kevin Rosenquist: Well, not only are the Bitcoin people going to be mad at you but now the Star Wars cult and the Star Trek cult. I coming after you too.

David Birch: I can’t get a break. But hey, any publicity is good publicity. So the star. If the Star Wars people want to come demonstrate outside my house, that’s cool. I’d love that.

Kevin Rosenquist: Well, that’s a good segue into your new book which you co-authored with Victoria Richardson. Money in the metaverse, digital assets, online identities, spatial computing, and Why virtual Worlds mean real business. When many of us think of the metaverse we think of Mark Zuckerberg and Meta’s failed promises and at least thus far of delivering a life-altering digital universe. Or we think of giant $3,000 headsets that are cumbersome and not practical. What are you seeing? You’re seeing more than I think maybe what a lot of other people see. What do you see in the metaverse?

David Birch: Well, my interest was very practical originally. So what happened was I got invited to a book launch in the metaverse. Not one of my books, unfortunately, but I got into a writer to a book launch in the Metaverse by Ava Pascal, who is an incredible woman, and Ava founded or co-founded the very first internet cafe in London many, many years ago, which is how come I know her. So for the book launch, she commissioned a metaverse building company to build a 3D version, a 3D model of London’s original internet cafe from all those years ago. Then she had the book launch inside the internet cafe, and it was fun. So you were walking around chatting to people and as avatars, not as real. So we were all much slimmer. I have to say.

Kevin Rosenquist: Everyone looked better, right?

David Birch: Yes, they look much better. So I rather liked it. so it was fun and it was interesting and I liked interacting with people. But when you wanted to buy the book, you had to come out of the 3D world into a 2D world. You had to scan a QR code which then took you to a website where you put your payment details in. Then the book showed up in the post, and I just thought, that just can’t be right. That just does not seem right. You think that in the metaverse, I meet you in the metaverse, I want to do some business with you. I surely would just give you something and you would give me something like in the metaverse, right?

Kevin Rosenquist: Yes.

David Birch: So I started to read up on this a bit, and it was interesting how much of the stuff I was reading was taking me back to Web3 and tokenization and DeFi. So I started to think, oh, actually, maybe there’s a connection between these two things because maybe tokenization is the natural way to deal with things in the metaverse. Then, of course, the sooner you start to research the fundamental difference between metaverses and virtual worlds, that fundamental difference being that in a virtual world, the stuff isn’t yours in the metaverse it is. But isn’t. That reinforced my thinking in order for that to work as a market, of course, you need ownership. That sort of brought in digital identity and reputation management. I started to come to the conclusion that the digital wallet was going to be massively more important than I’d thought because it seemed to me the digital wallet was going to become the pivot between. Between the real world and metaverses, I know a bit about digital wallets. I’m not an expert on them, but Victoria, who’s an old friend of mine, is the CEO of a company that’s building some called digital wallet stuff down in Australia. So I asked Victoria for her views on some of this. Of course, as soon as she started to talk about it, I realized, oh, there’s a whole world here I don’t understand.

David Birch: Yeah, right. So I asked her if she would come and jointly author with me, which turned into a fantastic experience, a wonderful experience. The book ended up much richer for it. A lot of the case studies in the book are case studies that Victoria developed and looked at for me to look at the implications. I think one of her key points, which does stick with me is when you talk about the next generation. So we think of kids as spending their whole time doing the tick-tock, throw yourself off a bridge challenge or whatever it is they’re doing this week. They’re mucking about on YouTube and so on. But, if you look at the attention figures, the next generation that are already spending most of their time, most of their attention in the proto metaverses they’re already in Fortnite, Minecraft, and Roblox. That’s where they meet friends and socialize. So it seems quite natural as that generation moves on. Of course, the headset technology will continue to develop the glasses technology. Sooner or later someone will come up with some sort of hologram thing. Have you been watching that Halo show on Paramount?

Kevin Rosenquist: I have not watched that. No.

David Birch: I love that show. I think that’s just such a great show.

Kevin Rosenquist: I used to play the video game, but I haven’t watched the show.

David Birch: No, it was a fun game. I played it a few years ago. I’m not motivated enough to go and play the game again. But I thought the show was good because a crucial part of the show is you have Cortana, which is the artificial intelligence that appears to you like some sort of hologram. So the idea that the metaverse is, will you put on these glasses and, or you put on this headset, that’s a starting point. I can’t wait for my Apple headset. We’re not allowed to have them at the moment in the UK. Oh I didn’t.

Kevin Rosenquist: I didn’t think I realized.

David Birch: No, they’re they’re geofenced. I tried buying one in San Francisco, but they’re geofenced. So we have to wait till the end of June or something to try it. But the idea that the Apple headset or the meta Oculus is the end point of the metaverse is ludicrous. That’s like saying the Newton is the one which I love, by the way, I still have. That’s like saying the Apple Newton is like the end point of internet devices. Not true. So for organizations, I remember my clients are what your people would presumably regard as the boring Dinosaur Inc. incumbent if you’re a bank your metaverse strategy is on a 3 to 5-year horizon. You don’t have to do anything about it tomorrow. But it’s more a question of where if it turns out that your new customer acquisition in five years, time has to come through the metaverse, for example. It’s worth thinking about that now to think about how to get there. So anyway the more time I spend working on the book and the more of the case studies I worked through with Victoria, the more convinced I became that these things are all linked together. So you may have AI in the middle, and I certainly buy into this idea that AI will be the main user of the smart wallet that’s at the heart of all of this but quite a proportion of that Commerce is going to take place in the metaverse.

David Birch: A lot of it is going to be done, if not all of it is going to be done using tokenization digitally, and assume Remedy’s metaverse is going to be very different, right? If you and I are currency dealers and we’re connecting with each other in a metaverse because we’re looking to make some currency trades, then the metaverse that we’re in may be the hills or the volumes of the different currencies or something. The tree density is the number of trades or I don’t know, but you’d make a metaverse that would make, made it easy for us to get to a deal as quickly as possible. So I look at you, you look at me, we can sort of see a path. So maybe there’s a path through the trees that are ideal. I don’t know, I don’t you need more artistic people than me. That’s not going to be the same metaverse where you and I go to meet up and watch a football game together, right? That’s not going to be the same metaverse as where, if that’s I was talking to an Australian company the other day about something. and they’ve just bought Facebook, and Oculus devices for all of their developers because they discovered that having them meet in virtual reality at least once a day was, was better for productivity than having them on Zoom all day. which I thought was quite interesting. The interesting then the Oculus isn’t that expensive. They’re what are they, $500?

Kevin Rosenquist: They’re a lot cheaper. Yes, they’re much, much cheaper than them.

David Birch: So they bought one for each of their developers. I said, well it’s kind of expensive alternative to Zoom and the CEO. She said, well, but we want them to experience it this is where business is going to end up. What is it? So we want the developers to experience it. And I thought that was an interesting reflection on it as well. So yes, of course, we all looked at the Facebook thing with those bubble people and we’re like, well, I don’t know about this, I don’t know. We all looked at the apple glasses and like $3,000, I have to say about that. As I was pointing out before, that sounds like a lot for those Apple glasses, but I remember buying my first Apple(2e) as it was, which is when I was living in San Francisco in the early 80s, and I can remember going to the computer store down in the. There was no Apple Stores then. So you went to the computer store down in the Embarcadero Center to go and buy an Apple. I bought an Apple Tui with a hard disk and a five-megabyte hard disk. Went with it. I think that was that was like $3,000 then that was that was in 1982. That’s like $1 million now or something. I don’t know exactly.

Kevin Rosenquist: That sounds right.

David Birch: But $3,000 is the equivalent of what a Mac costs. That’s equivalent to the first Compaq portable. It sounds like a lot, but if you’re if you’re if you’re if you’re the boss of a pipeline company and you’ve got guys going out fixing pipelines, and the world’s best pipeline guy is back in your head office, what do you care about $3,000 for a guy to put on a pair of glasses? So the guy back in the office can see exactly what the problem is and tell him, oh, you need to connect that red thing to that blue thing, but whatever, I don’t know like $3,000 is nothing if you’re the McLaren top engine tuning guy and you’ve got one of your engineers in, in California and he puts on the glasses and you can see what the problem is with it. What do you care about $3,000? it’s like nothing. Also when you think about what you’ll use the metaverse for, I think so. Here’s an example I used the other day. So tomorrow night is a really, big soccer game in England. Tomorrow night it’s Manchester City versus Tottenham Hotspur. It’s a huge, huge game. I’m a big, big Manchester City fan and, I’ve got to go to London. I can’t afford to go up and see that game. So if I could put on a headset and like I’m at the game like not watching on TV, I’m in the stand.

Kevin Rosenquist: Like you’re in the seat.

David Birch: Yes. So could you charge me 20 bucks for that?

Kevin Rosenquist: Easily. Of course, you could.

David Birch: Could you charge me 50 bucks for it?

Kevin Rosenquist: I don’t know, I’m tempted.

David Birch: Could you charge me a hundred bucks for a, I don’t know, maybe a hundred bucks is too much, you know? But now my five best friends are all big fans, one of whom is in San Francisco, one of whom is in Scotland, and two of whom are in London at the moment. They put their headsets on and we’re all standing together in the stand, watching the game together, talking to each other. Could you charge me a hundred bucks for that?

Kevin Rosenquist: Absolutely.

David Birch: That’s a completely different experience. I’m sorry to use such male examples, but you know what I mean. There’s a world of difference between watching the game by yourself and watching it with your friends. We do that now. We do it in a kind of semi-way because we do. We’re all on Twitter. Well, we’re watching the game. We’re all on WhatsApp and Twitter talking because talking about it with your mates is as much fun as watching the game, you know? So you take that experience part of it. Now you’ve got your Apple headset on watching the game. You’re just watching the game. Now you’ve got the augmented reality, you’ve got the stats, you’ve got the scores. When the guy is running, you put his speed underneath it. When the guy hits the ball like there’s so much can be done with that, like you, we haven’t even scratched it. So you’ve got the whole you’ve got the virtual world, you’ve got the augmented reality, you’ve got the mixed reality stuff. So I think people who look at those Apple headsets and say, I’m not paying $3,000 to watch The Simpsons in 3D. Well, nor am I.

Kevin Rosenquist: Yes, I think that you’re right. Because I think your sports examples are a good example because as a fellow sports fan, yeah me and my buddies, we get together at sports bars because how much do I spend on beer while I’m at that sports bar? where I could I could buy a six-pack and sit at home by myself and watch the game, save a lot of money, and still take in the game. But it’s a different experience.

David Birch: If your buddies are all in town, you’ll still go to the sports bar because it’s fun.

Kevin Rosenquist: Sure. Yes.

David Birch: If your buddies are not in town with you, that’s what I mean.

Kevin Rosenquist: You’re kind of recreating that experience of going to the sports bar.

David Birch: I’m looking at the Qatar behind you as well. Yeah, right. To put the headset on and pay $50 to go and see an LED Zeppelin concert from 1975 with you in the middle of the crowd? Who wouldn’t pay for that?

Kevin Rosenquist: I would, too.

David Birch: Yes, exactly. So I think the reaction was, okay, we had a look at the metaverse. It didn’t seem very good. Therefore it’s never going to happen. That’s the wrong answer.

Kevin Rosenquist: Yes, I agree. One more question, you brought up NFTs, or you brought up tokenization. I think NFTs, obviously, they’re highly volatile. As far as how they exist right now, people think about Bored Ape. You think about the Bored Ape and all that kind of stuff is there. How can NFTs and tokenization be less volatile? How can it be in your world?

David Birch: I’m a big NFT fan. I think NFTs are going to be huge.

Kevin Rosenquist: I know. I read that.

David Birch: I promise you, I do not own any JPEGs of chimpanzees with sunglasses on. Like I see no value in that whatsoever.

Kevin Rosenquist: I think most people are like, I don’t understand this. What is this even?

David Birch: I’ll give you another real example from a discussion in which I ran the table. You’re a big pop star, let’s say, Taylor Swift because she’s the biggest pop star. But that’s another thing I got slated for on LinkedIn because I made some comment about how Taylor Swift is the biggest pop star there’s ever been in the entire world. She made more money from her tour than any other pop star ever made on her tour. I said on LinkedIn, which was true, I couldn’t pick her out of a police lineup, and I didn’t know a single one of her songs, like How Can You Be the Number One? And I got slated. They are mean. Those Taylor Swift fans.

Kevin Rosenquist: Swifties, Swifties mean business. You don’t want to get to that side of them.

David Birch: So let’s say the wrong side of them or the Beyonce. I forget what her crew is called.

Kevin Rosenquist: But you do not know that one either.

David Birch: But look at it this way Taylor Swift comes to the O2 in London, the biggest arena in London. She plays five nights at the O2, so she plays to 125,000 people. She doesn’t know who a single one of those people are. The venue doesn’t know who any of those people are. Ticketmaster knows who some of those people who bought tickets are, but not who the rest of them are. They have terrible problems with ticket counterfeiting people buying fake tickets online, and scammers scamming people out of tickets online. The distribution is incredible some of the tickets go to corporate and some others go to bulk ticket agencies and a ticket is a concert ticket to go see Kayla is the perfect example of an NFT. It is a perfect business school case study of an NFT. It is utterly unique. It can’t be copied. It can’t be counterfeited. It can only have one owner.

Kevin Rosenquist: Are you sure the same thing for sports like Super Bowl tickets? I’ve heard the same thing about that.

David Birch: Super Bowl tickets. Exactly. So you turn up either you have the NFT and you get in or you don’t have the NFT and you don’t get it. End of story. Meanwhile, now you don’t need any of these stupid things where you change colors and show people it’s red today and the bounce. You don’t need any of this.

Kevin Rosenquist: The QR code that changes every ten minutes or whatever.

David Birch: Yeah, you don’t need that. And what’s more, you don’t need Ticketmaster because you could just if you’re Taylor Swift, why do you need any of those intermediaries? You just mean 125,000 NFTs put on eBay. Let the market clear itself. If you want to reserve some tickets for members of your fan club, fine, go ahead and do that. But why do you need these intermediaries? Nobody can fake the tickets. Nobody can clone them. Nobody can trick other people online into buying them. It’s either you’ve got the NFT or you don’t end the story. So I think NFTs look huge now, whether and we’re picking and we’re picking an obvious example, but there are plenty of other things where if you had a functioning digital identity infrastructure, which you don’t in the US at the moment, we don’t in the UK either. But if you did so that you could have ownership of those NFTs linked to real-world entities e.g. me, there are plenty of other examples of things that could be NFTs you think of the example of you imagine that you go to the thrift store and you find insert name of the expensive designer coat here. You find an Alexander McQueen coat. Like, how does that mean an Alexander McQueen coat? Suppose that quote was bound to an NFT, and you could just go online and find out who that NFT belongs to. It belongs to the thrift shop. Wow. It is that coat, you know? Oh, man. Go back along the blockchain. Wow. That coat used to belong to Beyonce. That makes it even more valuable than the thrift shop thing. like this ability to bind real-world assets into tokens I also think has amazing possibilities. So no, I’m a big NFT fan. I don’t see the point of the chimpanzees with sunglasses on them. Just that passed me by.

Kevin Rosenquist: Yes. I think that’s that’s another, another example of education especially when it comes to Web3 and blockchain technology, because I, I think so many people, all they think about is things like crypto and apes with sunglasses and stuff like that.

David Birch: That’s why the people who bought the apes with sunglasses, lost all their money. Right? So that’s gone the way of skateboards and hula hoops, I assume. I don’t think. Do people still do that? I don’t think they do. Do they?

Kevin Rosenquist: Skateboards?

David Birch: No. No pictures. Chimpanzees in sunglasses.

Kevin Rosenquist: Bored ape? I have not heard anything about Bored Ape in a long time, so I have no idea. But I’m guessing it’s certainly. The buzz is not there like it used to be. There were some people that got scammed. I forget there was an actor who got scammed or a musician who got scammed, I can’t remember. But then it was in the news and then I haven’t heard anything since.

David Birch: I saw something on Twitter. Is it Paris Hilton who was shilling some NFTs on some TV show?

Kevin Rosenquist: No, boy.

David Birch: Then somebody lost all their money and they were complaining. I saw some people on Twitter who said basically, if you listen to Paris Hilton for financial advice that’s a prima facie case of negligence. Why do you have a claim on this, which I thought was kind of?

Kevin Rosenquist: That’s perfect. You’re that’s where you’re getting your financial advice from. If you’re getting your financial advice from people who make JPEGs of chimpanzees, then don’t know what to tell you.

David Birch: So I don’t think NFTs are huge. I just think that’s part of the future.

Kevin Rosenquist: Well, David appreciate you being here. David Burch, the new book is Money in the Metaverse co-authored with Victoria Richardson. Where can people get it?

David Birch: All bookshops, all good bookshops. They can get it at all good bookshops, Kevin. I hope some of the terrible bookshops as well.

Kevin Rosenquist: Well, thank you very much for being here. I enjoyed chatting with you.

David Birch: Thanks. You made that fun, Kevin. That was easy. Thank you very much.