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The Connector Podcast - Nordic Fintech Week - Transforming the Financial Ecosystem: Henrik from PixelPai on Distributed Ledger Technology and Regulatory Compliance
Prepare to be inspired as Henrik, the mastermind behind PixelPai, shares his transformative vision for the financial industry. Imagine a financial ecosystem free from scams, where transparency and audibility reign supreme. That's the promise of the "Finternet," a concept Henrik is turning into reality with PixelPi's cutting-edge platform. Discover how distributed ledger technology—beyond just blockchain—is revolutionizing identity management, payments, and digital assets and why this matters for the future of finance.
Navigate the regulatory maze with us as Henrik dives into the complexities of blockchain-based business models and the crucial role PixelPai plays in helping creators stay compliant. From the nuances of converting between fiat and crypto to the implications of regulatory frameworks like MiCA, Henrik breaks down what you need to know. Learn about PixelPai's focus on the creator economy, especially in the gaming sector, and how it equips businesses to thrive in a new financial landscape. This episode is a must-listen for anyone keen on understanding the future of financial technology and innovation.
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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com
#FinTech #RegTech #Scaleup #WealthTech
Welcome to the Connector Podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Cohen van der Hooydonk as you learn more about the latest available trends and solutions in the markets.
Speaker 2:And here we are one last time at the Nordic Fintech Week in Copenhagen live. And today I have with me Henrik with a mission with his company PixelPi, to change the financial industry. But I'll leave that to you to explain why and how.
Speaker 3:Okay, yeah, so I think we call it shaping the Finternet like the future of the internet.
Speaker 3:Actually, I didn't invent that. That was actually something that came out of a report from the Basel Committee working paper in April, where they have decided that the future financial internet is called the Finternet. They believe it consists of unified ledgers with a central bank at the end of each central node in each market in the world. We thought it was really cool, because what they are writing is actually distributed ledgers, but they don't say DeFi, they don't say Web3, they say unified ledgers, but it's distributed ledger technology. So we are building a platform that is basically distributed ledger technology. It's not blockchain. That is basically distributed ledger technology. It's not blockchain. It's distributed in the sense that we have different components operating different tasks. So we manage identities as one key functionality, then we have payments that's another key functionality and then we have digital assets as the third sort of key component, and the point is then to be able to orchestrate so that only authoritative owners of assets or money can transact. So we want to avoid scams, we want to have full transparency and auditability and provenance in everything we do and we would like to support businesses that see a business case in blockchain or other distributed technology. So it's not crypto. It happens to be called crypto by regulators, but it's actually blockchain-based business models which we think is going to be the future.
Speaker 3:It's not necessarily blockchain, because blockchain are good for some things but not everything. For example, it doesn't have, say, real-time finality. Permissionless public blockchains don't have that. They have a probabilistic consensus model which actually is unstable for quite a while. So it's unfit for, say, capital markets with high-frequency trading, because it doesn't settle and you can't unwind trillions of dollars three weeks later when somebody else wins the game. A theoretical question in a consensus model. So we try to orchestrate all these things between public, permissionless blockchains or private blockchains or other types of distributed technology, like acyclical graphs, like Hedera or Whatever is the next thing that comes around for sure we know it's not going to be legacy COBOL core banking systems that will win. It will be something more transparent and we want to shape that, and so that's what we do.
Speaker 3:So basically, on-ramping, if you want to use crypto words on-ramping, off-ramping. That's sort of from fiat to crypto. Even if it's not crypto, it's native utility tokens that you need to use because on like a blockchain, on Ethereum, you have to pay Ether to be able to transact and then it's very much focused on businesses that see a point in that, which is very much the creator economy. So that would be brands, fashion, music, video and, in our case, gaming is where we start, because my co-founder, morten, used to run a gaming studio in the UK working with big brands like BBC and FIFA to help them create NFT games on their brand. So basically, I mean, like if you have BBC, I think they have a transmedia storytelling strategy. They want to move from platform to platform and in this case, to NFT and metaverse space, so he helped them create games around that.
Speaker 3:A lot of this runs into regulatory complexity quite soon, with the markets and crypto asset regulation coming into effect. Now, mika, yeah, mika and then outside of the EU I mean, in the US, everything seems to be a security these days or it has been for forever, including NFTs, and in other regions there's different regulatory treatments. It's either a crypto asset, or it's a commodity, or it's nothing, or it's a security. We would like to help creators take away that regulatory complexity and just help them become compliant so that they can remain focused on being creative. So we want to be the sort of outsourcing partner and the way we think of us is maybe like a DLT gateway. Dlt would then be distributed. Ledger technology.
Speaker 2:A word that comes to my mind when I hear to your story very fascinating story, by the way. Interoperability yes exactly.
Speaker 3:We would like to be the DLT gateway that ensures interoperability. So, for example, on our identity solution, we're working on creating a universal wallet, very much sort of aligned with, I think, what Vitalik called the soulbound token, where you own and you monetize and you control your identity. It's not big tech, it's you. So we create a wallet solution which we have operational with both identities uh, compliant with gdpr, and also with credentials where people can. Then you can say, maybe create a linkedin with verified credentials rather than just, uh, whatever you say. So this works for freelancers in the gig economy, where you have to prove that you actually are able to do something, a weird skill or a popular skill that people would demand from you as a contractor, because half the world are freelancers.
Speaker 2:Yeah, the other half are gamers, and I think that's probably the next step in identity management, because there's a lot of use cases nowadays in the more traditional digital entities Identities sorry cases nowadays in the more traditional digital entities identities sorry. But the fact that you would be able to sort of prove your work, your contribution, that's, I think, the next step in the internet and then when you say interoperability, what we would like or what we spent quite a bit of time on, is then okay.
Speaker 3:So what does it mean? If you, if you are, if you are you I mean cone, you sit here as your physical, you now and tomorrow, you sit, yes, you sit. Then you're in a game and you probably have a handle. You're called I don't know what, the Brave Belgian, the.
Speaker 2:Brave Belgian Knight.
Speaker 3:Yeah, something like that. And then in another game, you are something else, and then you have a civic identity and you have a professional identity. You have many identities. So we work with the concept of sub identities and you may want to deploy, say, your gaming identity, because you love a game and the gaming studio suddenly thinks, well, actually, this is a really cool game. It works currently on Ethereum. I want to move it to Solana. We will then help migrate that, but actually that's not trivial, because your digital representation on Ethereum is consisting of a lot of technical attributes. We have to ensure that you don't become somebody else while you transform yourself over to another blockchain or DLT. So that's what we would like to help.
Speaker 2:Orchestration is another word.
Speaker 3:Yeah, exactly so, you have the interoperability. The second thing is the orchestration. Yeah, exactly so, you have the interoperability. The second thing is the orchestration. In this gaming or other Web3 business models, there's a lot of transactions in and out of traditional money, digital money, different assets, nfts, whatever. We would like to orchestrate so that there is only authoritative owners. So get rid of scams, only have those that are allowed to transact. So authoritative ownership is something that we spent quite a bit of time on. Do you own the asset or do you not own the asset? Do you own the money or do you not own the money? Only those that own monies can transact with those that own assets, so you don't have scams. So in the case of gaming, where suddenly… it's pre-validation in the bank sector?
Speaker 3:Yeah, so, like in the case of gaming, when you get tired of a game and you want to sell your skin or your avatar right now, it's quite difficult. Sometimes it's possible in some games. We would like to basically standardize and make this open economy so that you can transact and get paid in a sort of real-time settlement, like you would imagine. Everything would be.
Speaker 2:If you give the example about a skin or something, then I guess NFTs are very close to that, because it could also be something that you collect. How do you see the future of NFT, because some may argue that maybe we're over the hype cycle or are we starting. Where do you see this happening?
Speaker 3:Well, I think I mean it depends. When you say NFT in that context, you probably refer to Bored Apes or something, a collection of pixels. I mean, in this case it's very much. I think we see it as a digital representation of something unique, so that would be your creation, it would be your music or your whatever whatever yeah, that has a digital uh twin, which is the nft.
Speaker 3:It's not a fungible something, it's not like money or something that looks the same, and there's a lot of them. This is unique identity things. That's what, basically. So I you could say, well, when we talk about uh, personal, um, uh identity, before you could say, when we talk about personal identity, before you could say product identity, I mean, that's a big thing coming up also from a compliance perspective very soon in everything, what is this product, what is its reusability, circular economy, thinking, that sort of stuff. So for that to happen in a digital world, you need to create digital identities and, in the case of compliance, eventually you will have what you will call a digital product passport, which shows that this is a product that comes from wherever and it can be recycled and reused in this way or maintained in that way. The story of the product is going to be an NFT if it is operated on a blockchain. If it is not, operated.
Speaker 1:That makes sense.
Speaker 3:But the point with the NFT is it actually leverages the affordances of blockchain or distributed technology, because it exists and it is immutable. Once it exists, you can't change it. So it's true, and you can basically use the blockchain technology to ensure provenance and proof of yeah well, where does it come from? This is true.
Speaker 2:This is legit. It's almost like a car that has kilometers on the car. Do you know how many kilometers it's been driving? Yeah, you could say that. In the past that was like analog. Now it's digital. It could also be an NFT, yeah, yeah, Because you would be more secure that it's not hampered with.
Speaker 3:But in the context of this, I think NFTs for me is more like digital twins, and it will be digital replicas of real things or digital things and we will see ourselves move in and out of physical worlds and digital worlds, a little bit like the visions around the metaverse, even if it's wherever that is. But it's inevitably going to go that way, I think. So there's a big future for NFTs, but not in the sense of investing in hype, meme stuff that is speculative. It's more like it is a digital representation of something minted on a blockchain, immutably now forever.
Speaker 2:It's more taking benefit of the actual technology right, Exactly, Rather than the hype and… yeah exactly so.
Speaker 3:that's why we would like to be considered as those that help to well genuine… I don't want to call it genuine traditional business models that see a point in the technology. We would like to help them navigate that including economics and financials around that, so that they can monetize their assets on distributed technology. That's basically just what we do Amazing.
Speaker 2:We're almost at the end of our podcast and I was just uh having one question. In my mind is that we're here at the nordic fintech week. Um, what have you got out of this, uh, out of this fintech week?
Speaker 3:well, that's a good question. I've been. I think I've seen a lot of interesting things. I've also become a little sort of um, uh, depressed with uh, there's a lot of talk but not a lot of action. I thought it was the interesting things I've also become a little sort of depressed with there's a lot of talk but not a lot of action. I thought it was the weather. Yeah, the weather might actually help in that sense. It's certainly started to become Danish weather again, but no, I think there's a lot of good potential. There's a lot of really interesting use cases being presented. But in some of the roundtables I participated in, I also see sort of well, it's impossible, and it's still compliance and the regulators are tough and we can't do this and we can't do that. I think there's sort of like a mental attitude that needs to be hyped a bit in the old finance, that they need to embrace this or become obsolete.
Speaker 2:That's a nice way to end, and if they want to join your story, how do they contact you?
Speaker 3:Henrik, or they can go to pixelpiecom we have. I mean, I'm Henrik Axelsson, we are based in the Copenhagen FinTech Lab, which is, I think, all in Danish finance knows that, but pixelpiecom is where you can just reach out brilliant thank you very much for your insights.
Speaker 2:Thank you for joining, thank you also to the audience and stay tuned.
Speaker 1:Thanks for listening to another episode of the Connector Podcast. To connect and keep up to date with all the latest, head over to wwwjointhaconnectorcom or hit subscribe via your podcast streaming platform.