The Wolf Of All Streets - From Stone Money To Blockchain | How The Country Of Palau Is Adopting Crypto | President Of Palau, Surangel Whipps Jr.

Episode Date: January 25, 2022

In a hyper-connected world with a global economy, it makes increasingly less sense to restrict ourselves with artificial borders and limiting fiat currencies. The nation of Palau is redirecting the course of history as the first country to implement digital residency through blockchain. Palau’s President, Surangel Whipps Jr., came on the show to explain why the concept of digital residency enhances freedom and gives power back to the people. This podcast is the incredible true story of how barriers are breaking from the evolution of stone money to digital money - you can’t miss it. -- Amber Group: WhaleFin is a digital investing experience offering easy portfolio management tools, attractive investment yields, and access to the emerging digital lifestyle. With over $1T in volume traded, WhaleFin offers personalized, compliant, and secure service across dozens of digital assets in 150+ countries.  Find out more at https://thewolfofallstreets.link/whalefin  -- Horizen: Horizen is the zero-knowledge enabled network of blockchains powered by the largest node system with scalability and flexibility unmatched by others. Blockchains built on Horizen are enhanced by zk-SNARK privacy tech and provide massive throughput without compromising decentralization. Horizen can support up to 10,000 independent blockchains running in parallel and issue an unlimited amount of tokens.  More at https://thewolfofallstreets.link/horizen  ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co

This episode of the Wolf of All Streets podcast is sponsored by Horizon and Whalefin. Please stay tuned for more information on them later in the episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast, where two times every week I talk to your favorite personalities from the worlds of Bitcoin, finance, music, art, sports, politics, basically anyone with a good story to tell. Now, in a hyper-connected world with a global economy, it makes increasingly less sense to restrict ourselves to artificial borders. The idea of digital residency is rapidly gaining steam, led by the nation of Palau, the first country to offer a blockchain-native digital

residency. Here to discuss this groundbreaking move is His Excellency President Wips of Palau. Mr. President, it's an honor to speak with you. Thank you for joining me. Thank you, Scott. And it's great to be able to speak to you this morning and talk about Palau and talk about the opportunities of really creating freedom for people on the blockchain. So let's dive right in. Why is digital residency so important? Well, I think it really, you know, it's the foundation of the platform where people can be able to freely trade and do activities. So it really provides for economic freedom. It takes away the boundaries and maybe the barriers that sometimes get in the way. So it's really opening up that opportunity for people to be free. We're a democratic country. We believe in freedom. And this just allows us to allow citizens of the world to have that economic freedom wherever they are.

And what does the digital residency actually look like? What are the benefits for, I'm an American, for example, for me to gain digital residency in Palau? Well, you know, this is really the foundation of the work that we want to start. It allows you to give you an ID that's a government ID that is secured on the blockchain. We go through our AML and KYC processes to make sure that it's a valid ID. and then it just gives that person an opportunity to have an ID that's valid by a government. That's really the first step. And then later on, it maybe opens up our opportunities for creating companies and doing things in the future,

which we're still at the beginning stage or the first stage is the residency. But then it will develop into other opportunities. Hopefully, Palau, we're looking into becoming a crypto exchange, allowing for crypto exchanges in Palau. So building on this platform of the residency, then we can open up into different areas. And really, for Palau, it provides a new area of opportunity, especially in the financial sector. We're small enough where we can get together and maybe be more nimble in passing regulations and

adapting policies at a quicker pace to adapt to the fast-changing environment that we're in, but really to meet the demands of the market and the world and making sure that we uphold those highest standards of financial integrity. And you talk about being small and nimble. This actually passed basically every house of government through your office, correct? This readings in both houses. And we thank them for their understanding and their time that they spent, you know, deliberating and getting this important piece of legislation through. We originally were hoping that maybe we'd go through with allowing for crypto exchange. But our Congress wanted a little further study on that because, you know, we want to make sure that our reputation is, you know, as a clean in the financial sector stays that way.

You know, we don't want any doubts. We're a small economy. We don't want countries to ban us because they think that we're doing something that's not above board. And we really just want to make sure that we do things as transparent and as safe as possible to protect the future residents and, of course, the people that live here in Palau now. We saw the nation of El Salvador last year adopt Bitcoin as legal tender. And so we've seen a few nations starting to move in the direction of becoming somewhat crypto native. Do you have any other plans in the space beyond the crypto exchange that you already spoke of for further adoption of crypto? Well, I think for us, one of the things that we've been exploring is the possibility of having our own stablecoin. And we've signed an MOU with Ripple to explore that

possibility. And a stablecoin really based on the US dollar, backed by the US dollar, because we are US dollar, that's our currency. And that's something that, you know, for us, it really opens up that space for individuals that's difficult for them to bank, to have everything on a digital wallet and being able to move transactions around. I mean, it just opens up a new set of opportunities for our local citizens and possibly

for the new residents to be able to use this digital currency. So we're still in the building blocks of that, still exploring the opportunities, but we're definitely looking at all those spaces. But digital residency was the first of the building blocks. Would that be a central bank digital currency, an official version of the dollar used specifically by your country? Eventually, that's the plan. I think we'll go in stages. I don't think we're ready to just start a central bank tomorrow, but step by step. That's what I always say. You got to take baby steps. And we got to work with the US. The US is our partner on this. When it comes to – we use the U.S. dollar.

We need to make sure that their regulators are happy with what we're doing. And, you know, we do it together. So we don't – we want to make sure that our partners, especially the United States and our large partners that have been with us for a long time, understand that what we're doing is really trying to harness the new technology and use it really to benefit people at the end of the day. That's our goal. The future of cryptocurrency is a multi-chain world, and you can't have a multi-chain world without Horizon, who allows these chains to be interoperable. Horizon is the zero-knowledge-enabled network of blockchains powered by the largest node system,

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That's slash W-H-A-L-E-F-I-N. Check them out now. Is that the reason that you specifically chose blockchain technology? Obviously, you could have probably found a number of ways to do it. What was it about the blockchain technology that made you choose to go in this direction? You know, I have to say that I'm new to the blockchain space. I don't know too much about it. But what I do know from what I've learned, and I think the best example that I've heard is the way, you know, the information is stored everywhere.

So there's no central control. And, you know, and the best analogy I've had, I've heard about that is the comparing the Yapi stone money. I don't know if you know about the Yapi stone money. But they were mined in Palau and carried on canoes to Yap. And the value was based really on how many lives it took to make this stone money. And it doesn't matter where it's located. It could be in somebody's yard here. It could be in front of this men's meeting house over here.

It's in the Rock Islands in Palau. It's in the bottom of the Pacific Ocean because the canoe capsized. But there's a story and everybody keeps, every citizen and every person in Yap knows the story. And that's how that information is protected and taken care of. And so I think that's really what the blockchain is all about is it's about decentralizing, but really giving people back their freedom and giving them their control of the control of the system. So at least that's that's my my limited understanding of it. And just what's available and what can be done with it from what I've seen is just, you know, it's a whole new world.

Or as we say in Earth 2 or Sandbox, I mean, it is a new world and it's about harnessing this new technology and really using it to improve people's lives. I mean, I ran on the platform that people first, how do we improve people's lives? And, you know, just giving them the opportunity that blockchain really gives them freedom. That's what it's all about. I love the story of the Yap stones. I'm a huge fan of the book Sapiens, and I believe that it's discussed there as part of the history of money. And it's really, it's really refreshing to hear a president of a nation talk about decentralization and giving freedom and power back to the people, not something that you necessarily expect. Where does that instinct come from, do you believe? Why

is that so important to you? Well, you know, Palau has been around for thousands of years uh over the years I mean we at one point we were under the Spanish and the the Germans then the Japanese and then the Americans uh but I guess we were always free to hunt and gather and be in control of our own destiny and and so freedom has always been something that our people have strived for. So in 1994, when we gained our independence and got to launch our flag, it was so important for us that even though how tiny we are,

being recognized in the world as a nation and being free, a free and democratic country that can speak their language, that preserves their culture, that takes care of their environment, you know, that's what it's all about. It's about exercising those rights. So now you're taking it down to an individual level and giving them that freedom. I think that's what it's all about. It's not being controlled by some big government or some big entity. That's what the blockchain is about, is about breaking that down,

breaking down those barriers. So maybe that's, as a small country coming from a small nation, we like freedom and not being dominated by, let's say, the big boys or big companies.

Well, it's incredible to hear and it's an inspiration. And my understanding is that when you get digital residency, you obviously get a digital identity card, which you get one copy of that's physical. And I love this one copy. That's an NFT. Is that correct? That's correct. So we're hopefully that's a, you know,

this will be a new trend and it will really help, help those people that sign up to really get the freedom that they want. And how popular would you say crypto is in general amongst the citizens of Palau? Well, it's very new. And so people don't really understand it. And so even in getting the digital residency passed, when we were talking about the crypto exchange, there was a lot of fear because, you know, you watch Bitcoin and today it's 40,000, tomorrow it's 60,000.

And they're saying, you know, our limited funds here, if we're going to go crypto, you know, maybe we're going to go bankrupt or, you know, those are the. And so it's really understanding. So we had to break it down and say digital residency is one thing that we're talking about. The crypto exchange is something else. And and then the stable coin is something else. And then cryptocurrencies are something else. So it's really breaking it down and explaining it to the people. And I think as people get more familiar with it, gain a better understanding, then it becomes easier. So it's really about education. And this is really the first step. So there's people here that already trade in crypto, but it's not the majority. It's not the majority anywhere,

I don't think. So you're not unique there, which is probably good. It means that we're very early. Do you see a world where you could have more digital residents than physical citizens of the nation? Yeah, I see that's really the great opportunity that we have with this is there's no limit, right, to the digital residents. You can have as many that want to be part of this program as possible. So yes, we definitely see, we see Estonia. Estonia started this program. They have about 80,000. You know, we don't know what's out there, but we definitely need to try. And we have 20,000 people. So if we have 20,000 digital residents, fantastic. That'll be something exciting. And if it exceeds it,

we're okay with that too. I mean, we want to be open to the world, welcome people. And we're a tourism destination. We're known for our environment and known for being welcome and welcoming people. And we want people to know about our environment and known for being welcome and welcoming people. And we want people to know about our hospitality and welcome them through the digital world now to Palau. Well, I have a feeling that quite a few of your digital residents will want to come visit the land and actually experience it where they're a resident of. It would make a lot of sense. So before we're done, how does somebody actually apply to become a digital residency resident? Are there qualifications? Do you accept anyone who goes through the process? How does it work? Well, there's of course going to be a site

that they can go to. They can sign up. Then they'll put in all the information. Then we go through a verification process. After that verification process is done to make sure we meet those KYC AML requirements, then the residency is given. So the digital ID is given. And that really is all done through the blockchain and through the technology that we have available to us already. And, you know, Cryptic Labs is really our partner to make sure that that happens in the most efficient and effective way possible. So I think we're very soon ready to be able to launch this program. The law is in place and now it's just about implementing that law and making sure it's available to the world. So we're working hard with our partners to make sure that that's available very soon. Well, it's incredibly exciting, and I can't wait to see

it play out and to apply for my own digital residency. So hopefully I'll become a resident, maybe one day even a citizen of Palau. Yeah, so unfortunately, we do have one caveat in that our Palauan constitution says you have one of your parents has to be a Palauan. So that's why we can only go with this. I'll take residency. I'll take residency. It's enough. It's enough.

It's enough. Well, thank you so much for... We definitely would want all the visitors, all the residents to come and visit Palau. I mean, that's that's one of the side benefits. And we would love to have them come and visit and see what Palau is all about. So we welcome you. Come and visit us. I will absolutely come and visit. That's that's going to happen for sure. Once I become a resident. Well, thank you so much once again. It's an honor to have this conversation with you. And it's an inspirational vision and one that I feel probably many nations will be following in your footsteps down the road to offer a similar program. So thank you for doing this. Well, thank you. Thank you, Scott. Let's go.