Olivia from our team is joined by two blockchain enthusiasts, Dani Pico and Zachary Habayeb, who are working in the community building space of Web3.
Olivia dives into what this new tech is and what roles local government practitioners can play in these emerging spaces.
Episode Guests:
Dani Pico, Director of Community at Forum
Dani is a long time start-up operator focused on the education and innovation sectors. Currently, Dani is the Director of Community at Forum Ventures, an early stage fund and accelerator program focused on B2B SaaS.
Zachary Habayeb
Real Estate Tokenization in the UK
Visit govlaunch.com for more stories and examples of local government innovation.
Lindsay: (00:05)
Welcome to the Govlaunch podcast. Govlaunch is the Wiki for local government innovation. And on this podcast, we're sharing the stories of local government innovators and their efforts to build smart governments. I'm Lindsay Pica-Alfano, co-founder of Govlaunch and your host.
Web3, crypto, metaverse are terms not often discussed within the context of local government, but we hear them in just about every other context these days with these technologies being so cutting edge. Is there even a role for government in this space today? The answer is yes, I'll pass it over now to Olivia from our team, who's joined by two crypto enthusiasts, working in the community building space of Web3. She'll dive into what this new tech is and what roles local government practitioners can play in these emerging spaces.
Olivia: (01:02)
Hi, I'm Olivia from Govlaunch and I'm here with Dani Pico and Zachary Habayeb. And they're a couple of crypto, web 3, blockchain enthusiasts that have worked in lots of different sectors and they're here to teach us about local government applications in the blockchain and web 3. So let's start off by introducing yourselves to our audience. Uh, Dani, how about let's start with you.
Dani: (01:25)
Amazing. Thank you for having us Liv. So I'm Dani. I work at as the community director at forum ventures, but prior to that, I spend about eight years or so working in the ed tech industry. I should start off by saying I'm like, absolutely not an expert in web 3, nor is anyone because it's changing a lot, but my interest really started because I saw the potential that web 3 had to disrupt and improve some of the biggest problems that we had within education, particularly higher education. I've spent the last year or so diving into it and really learning about how it can be applied, which is really my focus and specifically beyond cryptocurrencies, which is what a lot of people think about when they think about web 3.
Olivia: (02:08)
I can't wait to unpack all of that with you in just a moment. Zach, How about you introduce yourself for our audience? How did you get interested in crypto and the web 3 world?
Zach: (02:19)
Yeah, so my name is Zach and I have a background in venture capital. I worked at a venture fund in New York for over a year, and, um, I saw the, the rate of change in the rate of technology happening in the crypto space, advancing at such a fast, fast pace. And I saw the use cases around decentralization and DAOs and, you know, the ushering of, of web 3 and, and what decentralization means for artists and communities and, and even countries when they put their technology and their art on the blockchain. And I got fascinated by this whole concept. And as of eight months ago, I've been fully in the web 3 crypto universe. So that's a little bit about my background and I've been an investor and an enthusiast in DAOs and NFT projects and, and art and NFTs and kind of the whole intersection of, of what web3 means these days.
Olivia: (03:13)
Fantastic. So we're gonna go into a couple of definitions in just a moment, but you mentioned a couple acronyms already, Zach, for us. Uh, can you tell our audience what DAOs are and what NFTs are?
Zach: (03:23)
Yeah, so DAO is a decentralized autonomous organization. And the whole idea with the DAO is that governance and voting power is spread across all the people who contribute to the DAO and want to be involved. So a really tangible way of thinking about this is like a co-op. You can think about it like a digital co-op where everyone who is involved in making the co-op happen has to say, and, um, it's permissionless as well. It means no one has to have permission to contribute to the DAO. People can just put their hands up and volunteer to support any way they can. And this kind of goes against this idea of centralization, where power is accumulated at the top, maybe among one person, the CEO, the president, whatever title they like to go by, but it is essentially distributed power to the people.
Zach: (04:11)
And an NFT, NFT stands for a non fungible token. And you can kind of think about this as a token that holds data just like any cryptocurrency. So NFTs could be an image. They could be a digital asset, they could be music. Essentially this just allows people to prove that they have ownership over this asset and that this true, authentic piece of art or music, whatever it might be belongs to this creator. And, and this is verifiable on the blockchain. So I think a fun meme going around is people see this board, ape yacht club, NFT and, and people write, click save, and they say, Hey, you know, I own this now, cause I save this image on my computer, but you know, what a blockchain, what the blockchains does and what an NFT does is, is allow people to say, well, I have the rights, I own the rights to this thing, um, on the blockchain as proven by this NFT.
Olivia: (05:07)
Dani, am I just turn it over to you. Talk to us about web3, because I know that all these different things kind of build in web 3, if you can walk us through some of those definitions just to set the stage, that'll be super helpful.
Dani: (05:19)
Yeah, absolutely. So I think the first thing I would say about web 3 is that it gets jargony really fast as you probably notice from the intro section. So don't let that be intimidating. I find the easiest way to think about web 3 is like big picture first and then diving into some of the terminology. Um, so web 3 basically is a new version of the internet. Like if we think about web 1.0, it was like Yahoo and the time when everybody could just make webpages about their favorite pet and really it was all about pushing information out. The people who published it, they owned it and we consumed it. And then we think about web 2.0, which is known as the platform era where we think about Facebook, Twitter, a lot of the platforms where we now consume information, they are platforms where we publish it, but they own it and we consume it.
Dani: (06:13)
So web 3.0 is really all about ownership of information. So we produce it, we own it. And that doesn't mean that there is no platforms or no publishers. It's just a new way of thinking about how information is owned and who it belongs to. And so I would say really at the central premise of web 3 is like ownership, empowerment, and particularly around creators, as Zach mentioned, giving them the power to hold onto what they produce. And we think a lot about creators as like people who produce art or music and of course there's applications there. Um, but it goes way beyond that, like creators are anybody who is pushing out ideas online, which is most of us.
Olivia: (06:56)
So when people talk about web 3, oftentimes we hear things like it's lawless, decentralized is such a common way of describing this place. And then we think about government and public sector, which is, you know, we would describe it in a completely opposite way. Based on information that you've shared and applications that we're gonna get it into and just our own collective knowledge here on this call around public sector and opportunities in web3. At first, you might think that web 3 actually makes government and the public sector redundant when you think about smart contracts or decentralized, but in reality, we're gonna unpack this in just a moment. There's actually huge opportunities for the public sector to get involved in this space. So what does all of this mean for the public sector?
Dani: (07:39)
Yeah, so I think that's a great question. And I mean, the honest answer, although I will give like some applications that I think are useful is that we, we don't know, like, I think the public sector has been slow to respond both in regulation, which in my opinion is deeply needed. Um, so there's definitely a big role for governments to play there, but also in application like web 3, there's so much opportunity for web 3 to make processes that we're already using more effective, more efficient and more transparent, which is something governments are always striving to do. And I think I would say again, and, and going back to something I already mentioned, like, I didn't really understand what everybody was so excited about until I really started thinking about how this applied to my sector. Um, so I wrote out just a couple of examples for how people might think about using web 3 in the government context.
Dani: (08:33)
So one of the things that some governments are already doing, or some private sector companies are already doing is using web 3 to reward positive citizenship behavior. So if you think about this in the private sector context, that might be like Airbnb using coins and blockchain technology to reward their best performing users. So like their top hosts, if you think about it in the government context or in the context of city politics, you can imagine having a city token and giving everybody who participates in city programs, coins that they can then use to redeem in city parks, community centers, affiliate businesses. So it creates an internal system that then allows you to exchange coins for behaviors that you wanna reward,
Dani: (09:14)
Another example would be creating efficiencies using smart protocols. So, I mean, if you work in government, I'm sure you can think of a million processes that are not as efficient as they could be. A problem I'm experiencing right now is around visa processing and delays. And so you can think of deploying smart protocols to help people receive faster responses on their visa, applications. And application of this is already being looked at in higher education when we look at graduate applications for entrance into schools. Usually when students apply to university, they may not hear back for six to nine months. There are universities looking at how they can deploy smart protocols and web 3 technology to help that process go by faster and to increase the transparency around people around why people are or are not getting accepted, which is amazing because we have so many problems around discrimination in higher ed.
Dani: (10:10)
And then of course, cryptocurrencies, I will let Zack jump in with more about this, but particularly for economies where currency is really volatile. And we'll talk about this and let, and the application sector later. There are emerging nations that are testing the ability to accept and pay people and offer payments in cryptocurrencies. The idea is that cryptocurrencies might be more stable. Of course, given the last couple of months in the crypto market, this has actually taken a massive step back. But I do still think there's a lot of potential for local governments to at least be exploring stable coin currencies as a way of providing that for people and giving them the option
Zach: (10:50)
Yeah. Danny did a good job of touching on stablecoins and essentially what stablecoin is, is it's pegged to a particular reserve currency. So that could be the us dollar, the Euro, any other international currency out there. And the idea with a stablecoin is that it does not deviate from that peg. So a very popular stablecoin right now is called USDC and USDC is supposed to be tied to the US dollar. And the way that this happens, there's a few mechanisms actually, but the most tried and true mechanism for a stablecoin to maintain its peg with the dollar is that it is backed by actual, tangible Fiat reserves. So things that accurately reflect the amount of dollars in circulation, USDC - these digital dollars in circulation. And these can be things like treasury, treasury bills from the government itself. It could be bonds, US dollar denominated bonds, or treasury bonds. It could be stocks, it could be actual, you know, cold, hard cash, but there should always be an equivalent amount in the reserve for this digital dollar as there is digital dollars in circulation in the metaverse in web 3 in crypto.
Zach: (12:05)
And that's kind of the mechanism behind stablecoins and there are a few other mechanisms too. There are algorithmic stablecoins that essentially use arbitrage in the market to remain pegged. So if people believe that this digital dollar should be worth a dollar and they believe that this is the true value, then whenever it goes above a dollar people sell it when it goes below the dollar people buy it. And it's kind of up to the market to determine this dollar. And those are the riskiest ones, of course.
Olivia: (12:39)
So I guess it's not all just the wild, wild west. Stablecoins seem like they're pretty good minus the algorithmic ones. That sounds like that could be a recipe for disaster or really great depending on, on the algorithm, but really interesting stuff.
Zach: (12:52)
Yeah. I mean, there are some cautionary tales for people who wanna do a little bit more of their own research. I think a prime example is this digital dollar. This stablecoin called tether and Tether had a very, very famous implosion actually. It had a circulating supply of about $38 billion in market cap. It was an algorithmic based stablecoin. And in the matter of 48 hours, the stablecoin went from $1 pegged to barely like fractions, fractions, fractions of a cent, and $38 billion essentially of net worth was wiped out. And, uh, a lot of retail retail investors got affected by that. So there are cautionary tales out there and, and you're absolutely right. Um, some stable coins are promising and others, uh, are definitely big red flags. And that stablecoin, I think is called Terra if I didn't mention it already.
Olivia: (13:47)
So do you have an example, a concrete example of a local government somewhere in the world that is currently using web 3 or blockchain to improve services? Who's at the forefront right now in this space?
Dani: (14:01)
So there is a lot of people researching it. As I mentioned, there's sort of been a slow adoption to this. There are now over a hundred countries who have directed their financial regulatory agencies to develop regulation for financial institutions and look into strategies around web 3 and cryptocurrencies. The most famous one sort of in the last year was the Biden administration who's now created a task force around this, um, in terms of examples of local government, there are some it's very early in the development and most of the projects are using ING, meaning blockchain as opposed to any of the other applications that we talked about, which means that there is lots of room for innovation and exciting projects to develop, but just to shout out a few, uh, in India, the UNDP is using blockchain technology to build a land registry.
Dani: (14:51)
For those of you like me, who did not know what a land registry is, uh, is a system that tracks who owns land, where, and some of the, especially in developing nations, a lot of the times this can pose problems for corruption. Sometimes people who do not own that land, sell that land and there's money exchanged, even though they never had ownership, especially when we talk about rural areas. So what they're doing is creating a land registry on the chain, so you can see exactly who owns it, if they are able to sell it and then how much it was bought or sold for. And you can track that over time. So that reduces scams. It also reduces the administrative burden on people. If, for example, there is a massive natural disaster and they're then looking for landowners to be able to replace certain infrastructure, um, which is one of the problems actually that we saw in Haiti after what happened was people were not able to track land. And so then it was very hard to get them to fix the infrastructure or remove elements from the infrastructure. So that's a pretty cool application.
Dani: (15:56)
So another one and this one's very different. But the city of San Jose in California launched a pilot with an organization called the people's network, which is a company creating a blockchain powered network on a blockchain network called helium. It, the mission of the company is to help solve the digital divide, which is the focus for a lot of city and local governments. But what they're doing is they are using hotspots that can be deployed by anyone and they enable individuals to earn helium's native coin. So if we go all the way back to tokens and think about that application where you reward people with tokens for doing things that you want, what they want is for people to share these hotspots. And they get rewarded in Helium's native currency in exchange for providing devices with connectivity. So you can hand out some of these devices to maybe schools within areas that lack wifi access or community centers, and then incentivize them to utilize these hotspots to give access to the entire community. And this one was actually really publicly advertised. So there's a lot more information to look up there.
Olivia: (17:04)
It's really exciting. And for listeners out there, we actually interviewed San Jose's, lead on tackling the digital divide back in February of 2021. Listen to episode 27.
Dani: (17:20)
And then one last one that I'll mention, cuz I think I would be like booed off if I didn't. It's very popular and has been like very controversial. El Salvador, which is the first country to accept Bitcoin as legal tender. It was a big movement. They actually incentivize people to download this digital wallet called Tuo. And what they were trying to do was basically bring in Bitcoin as a way to stimulate their economy. So they purchase and deployed a lot of Bitcoin throughout El Salvador. And the reason that this is controversial is because it stands to see there was a lot of people who were excited about how El Salvador was adopting cryptocurrencies and there was a lot of potential for them to sort of become a web 3 hub. But then with the most recent economic downturn, there's been a lot of fluctuation in the value of those assets. And so there's been a lot of criticism about how this scandal didn't pay off for them, from my perspective like T B D. And I think that there is a lot of kudos to be given to them for taking the risk to do something different, um, especially to test something out on that scale.
Zach: (18:27)
Yeah. You made some great points there Dani, and El Salvador definitely tried to push their people into this blockchain experiment with, with their own native wallet. Actually they tried to incentivize people to download this wallet and they were willing to pay El Salvadorians $30 per download as a, as an incentive and, and give them a little Bitcoin to get their crypto journey on the way. But I think, you know, the El Salvador story is yet to unfold, like you mentioned in the future is there's question marks around the future. But I think if done well and if executed with a few, I think I would say a few iterations. It could actually become an interesting success story or at least an interesting case study. And I mean that in a good way, I think with El Salvador, one of the biggest use cases with blockchain with using Bitcoin would be an easy way for El Salvadorians abroad to provide remittance to their families in El Salvador.
Zach: (19:29)
And the reason why blockchain is kind of good for this is because the transaction fees associated with remittance generally are very high. They use these very traditional and archaic financial systems. I mean anyone who is trying to send like a wire transfer knows this, you pay $50, you go, you have to go to the bank. First of all, you pay $50. They verify your identity. You know, you have to show your driver's license and then you need all the information of whoever you're sending it to. And they charge you for the pleasure of taking an hour of your time. But with blockchain, you know, everyone has their own individual wallet that wallet can be verified and essentially authenticated right away and people can use blockchain technology and the infrastructure to send money instantaneously. There's no three to five day waiting period.
Zach: (20:12)
It can happen in seconds. And we see this already with chains like Solana, for example, can handle hundreds a hundred thousand transactions per second. And it's at a fraction of ascent to do these transactions. And it could be any dollar amount. It could be hundreds of thousands or $10 or $5. You can send it to whoever's wallet you have right away. And I think this was a really interesting use case for El Salvador because last I read 25% of El Salvadorians, uh, work abroad and send money back to, to the country. So it's quite a large percentage of GDP for the country itself, I think in terms of a use case and in terms of how El Salvador can use blockchain, I think it might make sense for them to move away from Bitcoin. Honestly. We talked a little bit about stablecoins and how stablecoins have to be backed by some sort of reserve currency.
Zach: (21:00)
And, you know, it's not the best and the cleanest situation here, but Bitcoin can actually be used as, as a reserve reserve currency, just like gold was back in the day. And a digital dollar launched by El Salvador can be tied to that Bitcoin reserve. Of course there's gonna be fluctuations in price because of the value of Bitcoin. It's not a perfect one to one, but El Salvador can then adopt or include some of their GDP into that reserve. They can add in currency to make it one to one. And by having a digital dollar, it would allow this remittance to happen way cleaner and they could even if they wanted to open up their own blockchain and kind of decentralize it so it's safe and secure and quick, but, you know, they can have an El Salvadorian and blockchain essentially that allows their citizens to send money back and forth via the stable coiner or via whatever mechanism or token their citizens want to send back home.
Zach: (21:58)
So it is, uh, it is a tough situation now with Bitcoin being at sub $20,000 around that price. But you know, if Bitcoin hits a hundred thousand, like a lot of people are saying, and, and a lot of speculators are saying, of course it could be a good payoff for them, but unfortunately Bitcoin is highly speculative and it's at the whims of the market to, to really decide, you know, what the value of this token is. It's not, it's not rock solid, like gold. It can fluctuate a hundred percent, 90% in a day in a week. It's quite a wild ride. So I think there's ways for El Salvador to improve, but yeah, there's some work to do.
Olivia: (22:34)
So we've heard a couple of great examples of things happening and, as Danny mentioned, it really is just the starting point. People are just dipping their toes barely in this space when it comes to public sector. Zach, what are your thoughts on the opportunities? What can local governments do? Say there's a blank canvas. A team of very keen people interested in getting involved in, the web 3 world. What are the opportunities for service delivery in the context of local government?
Zach: (23:04)
It's a fantastic question. And honestly, I think the opportunities are kind of endless, cuz really anything you can do on the blockchain, you can apply to government. There are a lot of ways that the blockchain can be adopted by government and local governments to make their processes more efficient. I think we just talked about one was south Salvador and, and that is kind of like making a digital central bank. So I think when it comes to use cases, a lot of people in government are afraid of letting go of centralization. And to be honest, I think you can have centralization and centralized power on the blockchain by just using the underlying technology rather than making every, everything a DAO or, you know, making the federal bank or the federal reserve. Now a decentralized entity where everyone has voting power. Doesn't really have to be the case, but every country can use the rails and the technology of blockchain, which is hyper fast transactions, verifiability, immutability, a distributed ledger where everyone can see very transparently where money and, and public spending is going, by government all in real time. These are things that really land hand into the idea of liquid democracy, where everyone has a say and everyone can see where, where things are going and, and where their money and taxes are, are being contributed to. This could all happen on a, a governmental ledger if, uh, people so chose, but there are also other tangible examples. I mean, supply chains are hyper complex right now. A lot of governments don't want to support other governments who, um, participate in child labor or participate in unethical or environmentally damaging practices to get to extract resources. The blockchain could allow supply chains to be hyper transparent.
Zach: (24:45)
Every, every item or material that is extracted from the ground or coming out of a factory can essentially be put on the blockchain with a QR code or with a scan. And, um, it allows governments and essentially local economies and local consumers to know where exactly their products are being sourced from. And, just like every blockchain, this ledger would be indestructible. People can't go back and edit it. So, um, it provides a way for hyper transparent understanding of where your things come from, which is a big, big deal these days.
Olivia: (25:21)
Transparency seems like a common theme in our conversation and that's definitely a huge area of opportunity for government.
Zach: (25:29)
Yeah, definitely. Transparency is a big one that comes up again, especially for government. I mean, it's really important for citizens to know where their money is going and, and the blockchain kind of enables this in a very clear way. But you know, we also touched about upon the financial system. I think the central bank can go onto the blockchain. And in other use case land registration, like Dani mentioned and, and kinda had a conversation around, but land could essentially be put, put on to the blockchain as an NFT. NFTs can be deeds. They can be legally binding documents. And how cool would it be to see a house you love? You know, you see everything very transparently, what's good, what's bad. And if it suits your need, you can purchase it with crypto with your stablecoin or with some Bitcoin. And this is something that's being experimented with now. And actually the UK government, if people wanna dive into it, did a pilot project with this crypto infrastructure company called Consensus. And they actually worked with land registry ministry to see how crypto and how the blockchain can be used when it comes to land transfers and real estate. So I encourage everyone to maybe click the link that's in the show notes to dive into that a little bit more, but essentially anything where there's a legal transaction or an exchange of goods or services between the government and, and the citizens can be done on the blockchain. And this is with taxation voting, legal entity management, corporate registration, it's all, it's all possible.
Olivia: (26:52)
So Dani, you mentioned that you were a web 3 skeptic. I think I was as well and have only recently started to dabble in this space. When we think about government and as much as I love the public sector, I'm a public servant and I'm very proud of all of that. We know that there is sometimes a bit of that slow mover, not always the first one to adopt in some cases can be quite innovative and that's a conversation for another time, but in other cases can be slow to adopt new technologies, new processes and new ways of doing things. So if you're surrounded by hypothetically speaking, if you're surrounded by a bunch of web 3 skeptics on your team and you're in local government and you're just looking to foster a culture, that's more open to the opportunities that these things I don't even know how to define them, can offer for your service delivery for transparency, et cetera, et cetera. What are some concrete steps that a local government practitioner could take today to foster an open culture that is excited and enthusiastic about the opportunities that the web 3 world can provide?
Dani: (27:55)
Yeah, I so that I am surrounded in a world of septics. I, I think people know this broadly, but like education also not known for its wild openness to new and innovative ideas. But I think the, the biggest thing that I have to say that worked for me in talking to other people about web 3 and why it's exciting is really first trying to decouple it entirely from cryptocurrencies. Not that they're not exciting and that there is no potential in them, but I think a lot of people think of cryptocurrencies and they think of like get rich quick schemes and like people buying NFTs that are like a super overpriced jpeg. And like, I'm not saying that those things are true to be clear. I just think it's very hard to overcome that barrier first. So I would really focus on like some of the potential of the blockchain of smart contracts of protocols and start investing in education for that. If you're in a position of power, definitely encourage you to start looking at educators in web 3 and how they can run workshops or webinars for your staff on what they're doing.
Dani: (28:58)
And then encouraging people to look at existing processes that could be improved. Definitely starting with like the tech welcoming people first, but really looking at what are areas for improvement, where we do use contracts or where we basically have people just checking things off and are there opportunities there to instead use smart contracts or protocols to help us create efficiencies there and help people focus on more important things. And then as I mentioned before, like just reaching out to local web 3 organizations, there's a lot of groups who are lobbying in this space for government to be more open. They are great organizations to engage with and to start educating yourself with, I think there's a lot of fear around web 3 because it's different because it's new.
Dani: (29:40)
But I really do think that there's a lot of potential in it. And I think that at the very least like you can learn a lot about these new technologies. I think people tend to overhype the speed at which this change will come like, especially at the local local government education. Like it will take a while for this change to come through, but it is the development of the space will matter a lot based on the people who are at the forefront of that development. And right now we just don't have like diverse, innovative people who are really thinking about the social innovation applications of this. We have a lot of people who are thinking about making money and that reflects in the way that the sector has developed. And so I really just encourage you if you care about issues, which I think everybody in government does, you need to be learning about this because if you don't, other people will create the space for us that we will then have to live with. And that's why I really care about being involved in it
Olivia: (30:38)
Such wise words to wrap up on, thank you so much, Danny and Zach, for your words of wisdom and for inspiring us and in thinking about new and innovative ways that we can apply web 3 opportunities in the context of local government. And I'm just really excited to see where this space goes and, and to Danny's point just now, it is important. This change is happening, whether or not we, we want it to. And I think there's just a really strong need for, for all of us who care about government, the intersection of government and the public sector and innovation to, to get knowledgeable on these topics and, and to get creative with it as well. Wealth of opportunities. Thank you both for your time and for joining us.
Dani: (31:21)
Thank you, Olivia.
Zach: (31:22)
Thanks for having me. This has been great.
Lindsay: (31:28)
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