In this episode, Founder of Metafi, data scientist, cryptocurrency and tech investor and entrepreneur and published author, Peter Saddington discusses cryptocurrencies, blockchain and how enterprise CFOs and finance teams can begin thinking about these disruptive technologies to complement current financial networks and business models.
In this episode, Founder of Metafi, data scientist, cryptocurrency and tech investor and entrepreneur and published author, Peter Saddington discusses cryptocurrencies, blockchain and how enterprise CFOs and finance teams can begin thinking about these disruptive technologies to complement current financial networks and business models.
Welcome to Finance to Futurist, a Sidetrade podcast series on how innovation, data and AI are disrupting order-to- cash.
Natalie Silverman:Hi, this is Natalie Silverman for Sidetrade. Welcome to Finance to Futurist. On today's episode, we're discussing cryptocurrencies, blockchain, and how enterprise CFOs and finance teams can manage these disruptive technologies to current financial networks and business models. The biggest questions are how do CFOs prepare to add digital assets to their balance sheet and how can blockchain solutions add value by digitalizing manual processes or to make trade, compliance and finance operations more efficient and less costly? Please welcome founder, data scientist, cryptocurrency and tech investor and entrepreneur and published author, Peter Saddington. Good morning, Peter and thanks for sitting down for Finance to Futurist.
Peter Saddinton:Thank you for having me. Glad to be here.
Natalie Silverman:You know what, let's start off with an easy one. And then we'll gradually get a little bit harder. Our podcast is all about innovators. It's all about the CFO. It's about new technology and just getting people introduced to maybe some new concepts. So today, we're going to take it in a little bit of a different direction. And I want to talk about all things crypto with you. But first, I'd love to get a little bit more info for our audience about yourself and a bit of background about Metafi as well.
Peter Saddinton:Awesome. Well, again, Natalie, thanks so much for having me on your podcast and your show here. So my name is Peter Saddington. And you can find me best on Twitter@AgilePeter. So that would be the best place to find me. But the TLDR that took too long did not read summary version is I've been in cryptocurrency for over a decade, having first read an article on Ars Technica talking about this technology stack that had lost value. And I said, why that doesn't make any sense for me as an engineer, how could Java or C sharp or C++ or Ruby or PHP lose value. And so I dug into this new technology called Bitcoin and learned way back in 2011, that I as a programmer could now program money if you just sit on that idea alone. It is life changing, especially if you have the means and the wherewithal and the capabilities to do it. And so I immediately jumped into the game of cryptocurrency ever since 2011. Till 2020 to where we are today, I've built multiple cryptocurrency startups in this space, all of them have been bootstrapped. Some of them have been venture funded, we had one acquisition in two early exits, as well as I had the awesome opportunity of building two venture funds, a family and friends fund at two and a half million and then a $10 million fund. And now we're working on our third fund, as well as we are building one of the world's first most amazing Bitcoin mining facilities up in Mooresville, North Carolina, just 30 minutes north of Charlotte. So it's a 23 acre 165,000 square foot Bitcoin mining facility. And we're building software on top of it with our community. So tons of stuff going on, but I have dedicated the last 10 years plus to the cryptocurrency space, and I love being an operator in it.
Natalie Silverman:Well, so Peter, do you sleep? I was gonna say that's a lot going on. That's a lot on your plate right now.
Peter Saddinton:If you ask all the people in our company, there's 15 of us, they might tell you that I don't but I'm online all the time. And what's really great about the technology today is I can run$100 million dollar Bitcoin mining company all through Discord. Some of you guys might not know about that. It's similar to Slack. So it's just all online asynchronous conversation, and we have a meaningless culture. So we don't like meetings, we'd rather just work and produce value. So we can do all of this in the cryptocurrency space. And I'm excited to expand more of my experience to you and your audience here.
Natalie Silverman:All right, so Peter, let's get down to it. So you know, our audience here a lot of CFOs from the enterprise, from the B2B perspective, you know, just for a little bit of background for maybe the audience that's not as well-versed in the crypto space, it may seem like that distant digital disruptor right. But especially for enterprises, right, or CFOs, that just might not really understand all about the space right now. But again, there's been talk of it coming into the payments space, right? For many B2B customers, suppliers, employees, governments, and obviously, you know, from a legal and regulatory clarity perspective, things are moving quickly, and we're seeing some central bank so you've been developing digital currencies and leveraging blockchain technology. So first question off the bat is CFOs really need to be ready, I think to add crypto to their balance sheet and to their assets strategy. What would your advice be for an enterprise CFO who's looking to take their first step into digital assets?
Peter Saddinton:That's a great question. I feel like it is actually and I think this is a very important anchor for our conversation moving forward so that everyone's minds are in the right place. Every single company that is dipping their toes into cryptocurrency and Bitcoin specifically to day will have a distinct outsized advantage to those who don't in the next three to five years. The reason is plentiful. We can go into digital payments long term value, hedge against inflation, go to accounting systems, we can go into leveraging it for debt. There's 1000 ways to leverage this new technology. But your question was a simple question. How do we get into it? Well, let's talk some numbers. First and foremost, first off, for all you CFOs out there, understand that crypto still is in terms of the total mass and size of the entire financial markets, relatively small still, though, at $2 trillion. Also, remember that $30 billion have been put into Bitcoin, specifically by nation states, and private and public companies. So it is a growing market. Most of these companies, from my experience in the last 10 years in this working with other CFOs, in Bitcoin and digital payment companies, most of these companies are getting into crypto and getting crypto exposure for two distinct reasons. Number one, a store of long term value. And number two, a hedge against inflation. I think this is a smart balance sheet perspective to take. And I think it's the right way to to get into it and saying, Hey, look, we know that this new digital asset classes here, we have actually never before most companies have never actually invested as a hedge against inflation, or in addition to their balance sheets, real estate, or gold or silver. Let me let you in on a amazing secret in the next year, or let's say let's say 18 months to 24 months, Bitcoin will overcome silver in terms of its total market cap, this is super bullish, not a lot of people are talking about this bitcoins market cap and cryptocurrencies market cap actually bounced off of the silver line about six months ago. So it's an interesting model to think about is that now as an enterprise company, I can de risk my business, I can do asset hedging, and I can actually have my business invest in an asset class like real estate, gold or silver. But we would never do that. What we can do now is we can invest in Bitcoin, a digital asset, and that what that allows us and I think this is the bulk of my conversation with CFOs, is by merely adding Bitcoin to your balance sheet is a forcing mechanism for your leadership to start thinking about what the hell to do with it. And so for me, in my conversations with operators and CFOs, I just say, hey, add some to your balance sheet. Don't worry about what it really is doing. What it will do, however, is force you guys to talk about it, right, you're gonna start talking about OpSec Dev, sec, security, custodian, Fiat off ramps, okay, can we actually get this into payments? Right? And so the idea is not to figure out how can I tactically use Bitcoin to value creation in my enterprise today? I don't have the answer to that. What I do know is that by adding it simply is a forcing mechanism for you to get up to speed number one, get educated on to number two, and number three, begin thinking about how to deploy it how to mobilize against your new digital asset class, and maybe ingrain it in some of your already existing processes.
Natalie Silverman:I like that answer. The elephant in the room is what the heck do I do with Bitcoin? But what you're saying is, don't boil the ocean right now take a small step into it right, which opens the door potentially down the line once you get more comfortable kind of with the idea?
Peter Saddinton:Absolutely. And I've talked to many, many CFOs, they've said, Well, Peter, I have to be able to come to my business with a good business use case for this. And if you're just telling me that the only thing that we're going to benefit from is exposure, and we're going to be offsetting some of our balance sheet CapEx, OpEx into this now asset class, and it might hedge, like, that's not a good use case. If that's the case, then we generally will have to move into some more of the tactical value points, right? accounting systems, bitcoin and cryptocurrency when it comes to decentralized accounting systems allows you to verify and allows you to trust the encryption technology. And so as computing continues to increase in computing power, and the ability to hack systems, when it comes to accounting systems, cryptography is going to be a huge component of just security systems moving forward. And by the way, having a cryptocurrency organization doing near pen test or some development, operational security audits is not enough. If you're a larger organization than me, I'm 15 People large, right. So most of you guys are if you're a larger organization than me, it's going to take you months and months to do correct audits on your security systems. And so Bitcoin is a maturation model for companies is how I've communicated before. It's like, do you remember when there was a big drive a decade ago plus for project management offices, and that was the big thing to help scale companies. I feel like the next big enterprise opportunity for any enterprise, you know, technology consultants out there, it's going to be the Bitcoin maturity model. How can we use cryptocurrency as a forcing mechanism to improve security, operational security, development, security, password security, infrastructure security, right digital security custody, you don't want to be sitting at the round table seven years from now saying, okay, so this Bitcoin thing, should we get into it? I think that might be a little too little too late.
Natalie Silverman:Yeah, no, I love that. And you know, we talk a lot about digital trends. Digital transformation and here even finance transformation, but a lot of times we're just talking about I mean, we're talking about RPA. Still right? And now we're talking more about AI and machine learning. But you're right. Blockchain crypto isn't necessarily at the digital transformation table. And you're right. It really takes some of those forward looking CFOs. I like to call them chief futurist officers, right people that are thinking even beyond machine learning to get into some of those areas. But let's talk a little bit about blockchain. Actually, that's a great segue because I want to talk about these blockchain solutions. And maybe again, getting into that Chief futurist officer, how can firms add value? And as you said, leverage, maybe the technology behind bitcoin and crypto. So what does blockchain mean for the finance organization?
Peter Saddinton:For the finance organization, Blockchain means two things, it means lower transaction costs and better encryption. And let me expand on those two. So I'm just talking to the finance or x here, the biggest financial benefit to finance or is encryption technology. It allows you now to trust and verify the ledgers that you guys are using this can be expounded to many things, whether it's payroll, whether it's leveraging against stablecoins, whether it's payment systems, cross border transactions, whether it's new payment processors, you want to get into the encryption tech of the future, because the payment processors in many ways are leading that and you want to be a part of that. So the first thing for finance org is encryption technology that naturally comes with any type of transaction of this new asset class. The second is massive amounts of transaction cost savings from a legal perspective, from an audit and supply chain perspective. If you guys do supply chain, actually, every single company in the world has to do inventory supply. I know that for a fact, if you use blockchain technology, it's easier to be able to if you especially if you have like scanners, the right scanner, so there's some infrastructural technology that's required there. But you can much easier track and consistently track how things are moving throughout your organization, how they're being used, especially if there's discipline around those particular verification points. So the cost of doing business goes down for finance organizations, audit considerations, man, if everything's on blockchain, it can't be deleted. And so, and I was talking with a couple of consultants from IBM, and they were telling me that one of the things that they're really excited about as consultants is helping them essentially just convert their old tech stacks to crypto tech stacks, or crypto enabled tech stacks. And so this is something that I don't feel like I'm pressuring anybody when I say it, let's be honest, in 10 years from now, people are going to be talking about crypto tech stacks, and you're gonna want to be able to speak fluently about, you know, how are these things making business better? How are we able to track things better? How are we able to reduce cost here? How are we able to ensure that our customers data is truly encrypted, because we don't control it, we're not a honeypot with a centralized server, we have dispersed it in a mechanism that is supported by a community or a network that allows you to verify and trust that the information that you gave me as a you know, as a customer is truly, truly secure. So these types of things are going to be even more important.
Natalie Silverman:As we move into the more even more digital age. Let's get back to this idea of I don't know, there seems to be a bifurcation. Alright, let's call it the cryptocurrency space having two distinct groups, right? I like to call them it's the believers and the non-believers. How is mattify? And how are you personally tackling the issue to change the minds of those non believers, and really to win their trust? Because you're talking a lot about encryption and security, compliance. And all of a sudden, again, that idea of trust, and maybe not being as trusting to the crypto space comes into play. And so those people that feel yes, this could be the wave of the future, but then how do I trust it? So how do you get those non-believers on your side?
Peter Saddinton:That's a really great question. One of the things that we have a hypothesis around Metafi. Now remember, for everyone, contextually Metafi is a industry Bitcoin mining company that's building staking software or cryptocurrency software on top. So Metafi essentially mines Bitcoin and creates really cool software to help the community and crypto people learn and earn is essentially our idea. Now, what's really unique about this is that we have a 23 acre 165,000 square foot facility. And we have this really unique hypothesis that we believe is actually part of the secret sauce of adoption by hypothesis goes like this, that even though Bitcoin being digitally native, being born online, grown not by institutional banks, by the way, grown by the fringe and grown by the community. So Bitcoin is two things. It is a digitally native asset, and it is a community grown asset. So we believe that the way to adoption is not actually more digitization. I think we've had enough abstractions of Bitcoin and all these alternative coins that have happened. We have a hypothesis that actually what is required for mass adoption is actually an analog counterpart. And so we here at Metafi we are opening our door to our 165,000 square foot facility to the world of cryptocurrency. We are the only mining company in the world that has public weekly mining tours. So you can come in and see the sausage being made, you can hear the machines were you can talk with us and sit down and and have us explain the history of money. We call it our seashells to staking how money evolved. And so once people see the mining pods, they see the miners working and they have conversations with us Bitcoin becomes alive and a 10 out of 10. The questions that we get after we give them the tour and showing the miners is how can I get involved like this thing is really real. I saw some stuff on MSNBC or Yahoo Finance. And I was also talking about scams and stuff. But you guys are great people mining Bitcoin and building software, it's real. We want to start creating stores all over the world to help the world get their hands on Bitcoin miners, whether it's a small retail minor, like the one I have here, or a more expensive one that they want to run at home or hardware wallets. And so there is we believe that there is an analog requirement for adoption, and people need to touch and feel the world of cryptocurrency. And that's what Metafi is all about.
Natalie Silverman:I love that you're so right. Everybody is talking about digital transformation. And they're in the metaverse, right. And they're talking about Web 3.0 and all these meme coins and all that right. And you know, you see Elon Musk on Saturday Night Live here in the States. And he's talking about Dogecoin. So it's sometimes it's hard to get through the noise. But I love that you're kind of like you said, bringing the best of both worlds and the analog and the digital together. Because you're right, I think there is a group of financial professionals that need be educated more and are yearning for to understand how it could directly affect operational efficiency.
Peter Saddinton:At Metafi we are huge on the educational aspect. So we're building a lots of training modules for operators in the Bitcoin space, whether you're mining it, whether you're staking it, whether you're a CFO, or whether you're in construction and building the infrastructure out. And so we're going to be building educational models for what is Bitcoin? How to get into cryptocurrency, how to make sure that your development security is good? How do you build miners appropriately? So there's a lot of education that's going to be coming out of this facility, and we can't wait to be able to share it with you and your audience as well.
Natalie Silverman:And in a way, you know, we're doing that at Sidetrade. I mean, we're kind of in the same boat, right? Again, I know we're more on the on the software side of the house in terms of for order-to-cash. And yeah, we feel the same way that education is really the key to driving adoption. And you know, it's interesting, I just read a fact Gartner who is one of the analysts that we work with, they're predicting that by 2024, so just in a few years from now, at least 20% of large enterprises are going to begin using digital currency, whether it's for payment for stored value or collateral, although due to the volatility of the market, they still think Bitcoin poses a financial risk. So there still is that push pull of people still thinking, yes, there's areas that we can start adopting it. And yet people still, you know, I think are a little nervous to dip their toe in. This illustrates the challenge that we just talked about for CFOs as they manage disruption and fight, you know, obviously, what's happening with inflation, disrupting their current financial network or their business model and having to bring it up with the CEO of how do we change? Right, so how do you think FinTechs maybe like Sidetrade like ourselves, how do we help CFOs? I guess from the technology side?
Peter Saddinton:Oh, man. Well, that's a lot of a lot of preamble, there's a lot in there. The first issue with most CFOs is that they often please, you know, if I'm creating generalities that aren't fair, but I have found that many CFOs don't have the capacity or time to be on the bleeding edge of what's being built, what's being ratified, what's being sanctioned, what's being codified, what's being regulated, what's being audited, what's being accepted, right. There's so much and so for me, you know, we're building a $50 million fund to invest right, this is our third fund to invest in part of the conversations that we're having with these bankers is just this. We don't know the future about Bitcoin or cryptocurrency and so the question that I help align everyone around is a simple question. What markets is Bitcoin not being talked about in today? And whenever I asked that, it takes a moment. But the answer almost always is well shoot every thing that I can think of. They're talking about crypto, it's in racing, it's in healthcare. It's in government. It's in sovereign nations. It's in finance. It's in gaming. It's in metaverse. It's in logistics, like it's everywhere. And so we if we can come to an agreement that crypto and Bitcoin is now a ubiquitous part of the colloquial nomenclature of society today, and that people are always talking about it in every industry, then the question is, is how can I as the CFO, be progressive enough to be the champion in maybe my traditional culture company to look at this as not a problem or an issue, but rather an opportunity to be solved for and so maybe that's just me in my bias as an operator, I look at every constraint as an opportunity to solve for. But I would never look at cryptocurrency and Bitcoin in this new technology that's coming out and saying, You know what, I mean, if I'm a CFO of a large company, I have to assume that that guy has gone through the.com bubble and seeing what's coming out of it, at least maybe see at least the repercussions of it, you know, I was in college during that time. So if that's the case, and if we take the lessons from the.com bubble, you know, what, there's going to be a lot of washouts, there's going to be a lot of projects that aren't going to work out. However, the technology and the internet still stayed, right. And the social apparatus, the social networks that grew, for example, from the internet boom, the payment systems that that exploded in e-Commerce that exploded from the.com, boom, right? We're gonna see this exact same commerce happen more in the digital token and digital currency space. And so if you think back to the.com, boom, and how that exploded ecommerce, well, now we're just in the next version of e-Commerce, which is digital payments, and that is all crypto and cryptography. And so it would be a wise endeavor to start digging into crypto and Bitcoin as a CFO, by being a champion for it for your company. And not a naysayer is how at least I communicated to them.
Natalie Silverman:Yeah, I think you're absolutely right. And for a FinTech like us, right, where again, we're supposed to be kind of a partner to the CFO. And obviously, to help them with what their challenges are, in a way, it almost is on us as well, on the FinTech side, right to actually be the champion, and maybe to champion some of these newer technology to help them educate the thought leadership, having folks like yourself on the on the podcast to get people excited and interested in it. So in a way, I feel it's on us a little bit as well as a FinTech in order to take the leap first, even to champion others to be early adopters.
Peter Saddinton:Absolutely, and I will be the first to say it here live recorded blockchain for most CFOs and the financial org of your company, blockchain and crypto is not going to solve any problems. What it's going to do is it's going to prepare you mentally, culturally, programmatically, and process wise for an imminent future of digital payments. That's all that but getting into Bitcoin, it's not going to solve any, like people will sometimes people ask me, like, if I if I start getting into Bitcoin as a company right now, what's the financial benefit? And the answer is probably none. I mean, again, it's a forcing mechanism for you as the leadership team to start creating programs and think tanks around it and say, Well, okay, now we have exposure to this digital asset class, you know, what we have, I'm making stuff up, we have 5 million customers who love X, you know what some of these customers are going to start wanting digital payments and digital payment rails so that they can pay with Litecoin, you know, what would be a progressively good thing for us to run a small team, and just see who uses it. If anything, maybe the market will love us for the fact that we're highly progressive, and you know, forward thinking, and will increase our current customer base on traditional tech, just because we're, we're helping people move forward into the future tech. So there's, there's a lot of PR, there's a lot of optics value to being progressive, but the real Juju is it starts changing the mental models of leadership to start thinking progressively about the future of digital technology.
Natalie Silverman:I love that. Peter, thank you so much. You're refreshing. And we always love to have guests around, you know, in adjacent industries, new technologies, innovators, as people that are changing and disrupting the industry. So thank you so much. I have one last question for you. It's probably a big one. But where do you think digital assets? Where are they going next? If you had a crystal ball?
Peter Saddinton:Oh, man, first and foremost, digital assets are going to be moving into two major categories. Number one, digital identity and accessibility, we can extrapolate from the NFT technology, non non fungible nests of NFTs, we can look out to the future where you could have an NFT that allows you universal access to all the applications you need. And no, it's never duplicated, no one can duplicate that NFT that quote unquote, password. And so there's a lot of power that we can start you leveraging from the technology of these kinds of experiments in the NFT world and the ICO world and all these projects that have happened, but we can start looking at leveraging the underlying technology for value. And so what the some of the really exciting conversations that I've had with operators is about using non fungible tech for digital identity voting, as well as personal security, which is going to be huge, especially in this digital age where everyone's selling all your information all the time. It would be valuable if you could turn on and off the ability to sell that. So there's a lot of digital tech that's moving into the security digital identity world. And I think that's going to be a hot ticket item in the future for sure.
Natalie Silverman:Thanks, Peter, for your insights into the future of finance. For Sidetrade, this is Natalie Silverman.
Conclusion:This has been another episode of Fnance to Futurist, a Sidetrade podcast series. Make sure you catch every episode by subscribing to our podcast on Sidetrade.com or through your podcast platform of choice. Thanks so much for tuning in. This podcast is brought to you by Sidetrade, and is for general information purposes only. All rights reserved