The fourth annual Blockchain Summit took place at billionaire Richard Branson’s Kasbah Tamadot resort in Marrakesh, Morocco.
It was early July and the summer sky was crystal blue, but as some of the world’s most successful blockchain entrepreneurs mixed and mingled with government bureaucrats and former high-level financial regulators, heavy geopolitical storm clouds began to move in.
Earlier in the day, two of the most powerful people working to extricate Great Britain from the European Union, a process known as Brexit, had resigned their positions, leaving the nation’s embattled nationalist prime minister, Theresa May, in the vulnerable position of having to execute the controversial separation largely unprotected.
Rumors began to circulate at the exclusive gathering that the entire Brexit process could be reset or that May herself might soon be out of power. Small groups gathered around the resort to discuss what the change could mean for their businesses and their nations.
One of the attendees, Greek European Parliament member Eva Kaili, helped organize an impromptu conversation between Branson and the former prime minister of Belgium, Guy Verhofstadt, who is now helping oversee the Brexit process on behalf of the European Parliament.
While the subject matter of the conversation was deemed off the record by the event’s organizers, Branson shed some light on the exchange in an exclusive interview the following day.
The man whose Virgin companies generate a combined $20 billion revenue shared not only how his blockchain investments are helping break down borders but how lessons from the past and his own personal preparations for the future are changing his worldview.
“As I said last night, we’ve got to go back to why [the European Union] was set up,” Branson said, speaking in the Kanoun dining room of his Marrakesh retreat. “Europe was set up to create a borderless society where people could love, marry, party, dance together, and it would be too sad to see it go back the other way.
”The exchange between Branson and Verhofstadt was triggered by the resignations of Britain’s now-former foreign secretary Boris Johnson, and the unofficial “Brexit minister,” David Davis, who helped champion Britain’s departure from the European Union.
As Britain works to separate itself from Europe and the United States plans a wall along its southern border, Branson has been pursuing a multi-pronged effort to connect nations and economies.
As far back as 2014 Branson was among the first wave of mainstream investors to back a bitcoin startup when he participated in a $30 million Series A to fund BitPay, an early bitcoin company that helps customers send money across borders and now processes more than $3 billion in transactions per month.
Then, in June 2017, London-based cryptocurrency wallet company Blockchain, Inc., announced that Branson had participated in a $40 million Series B, and the following month the company added European support via a partnership with Denmark-based Coinify.
While a representative of Blockchain says Brexit has yet to impact the company’s daily business operations, the firm is also part of a larger trend of U.K.-based companies opening offices in Luxembourg, a capital of the European Union, as a way to simplify doing business in the region.
Following a similar trajectory, some of the startups represented at the annual blockchain soiree are more ruffled by Brexit. For example, Kenya-based BitPesa was founded in 2013 to serve as a bridge between bitcoin and mobile minutes widely used in the nation as a form of currency.
Two years later, the company became the first bitcoin-payments firm to receive a license from the U.K.’s Financial Conduct Authority (FCA), and through a process known as “passporting” evolved into one of the first licensed bitcoin startups to do business in Europe.
But with the looming split between the U.K and Europe, BitPesa founder and Blockchain Summit attendee Elizabeth Rossiello, also moved her headquarters to Luxembourg and was forced to purchase Madrid-based Transfer Zero to obtain a European license.
“If a small, growing startup is facing this cost, it must be huge for the whole industry,” said Rossiello, speaking in conversation following the Branson-Verhofstadt exchange.
“You have to duplicate your corporate-governance structure. If you happen to have the U.K. as your base, you have to have a whole other base.
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In fact, contrary to Boris Johnson’s claims that the European Union destroyed jobs in the U.K. and that leaving the union would have a positive impact on the nation’s economy, Branson cited recent GDP numbers as evidence that the opposite is true.
As of June 29, U.K. economic growth was lower than pre-Brexit-referendum levels.
Image from Moody's June 2018 "Brexit Monitor" report.
MOODY'S“If you’re lucky enough to have made a lot of money through creating a borderless society and advocating a borderless society, it is highly hypocritical if you then want to build walls,” Branson said, describing not himself but other blockchain entrepreneurs.
Going a step further, he then described those who seek to return European borders to pre-World War II conditions as “xenophobic.”“You have to think, what is it that they don’t want in their country? Most likely, they don’t want someone with a different-colored skin, that speaks slightly differently when they come into the country,” said Branson.
“But all of us come from somewhere in this world.”It is this interconnectedness of the global economy that another participant of the Blockchain Summit thinks is central to blockchain’s ability to do more than just break down borders.
Following the Branson-Verhofstadt conversation, summit cohost Valery Vavilov explained how he thinks the nature of competition itself could eventually be undone.
A native of Latvia who cofounded Amsterdam-based Bitfury in 2011, Vavilov takes a more philosophical approach to the impact of tokenizing the world’s assets and trading them on a shared, distributed ledger.
By giving all the users of the blockchain a vested interest in that system’s success, Vavilov argues, bitcoin and other cryptocurrencies incentivize people to cooperate for the success of that system.
Instead of competing to make improvements, Vavilov predicts, participants in a blockchain-enabled global economy will collaborate.“The most interesting thing, the most powerful thing is we will not compete with each other,” Vavilov said.
“This technology will allow you to launch economies, but collaborate, where everyone is incentivized to grow the economy, to push the economy.
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Beyond Branson’s own personal blockchain investments and the support he lends to the Blockchain Summit each year, the Virgin founder highlighted the work of economist Hernando de Soto as among his favorite applications of blockchain.
Having risen to international prominence helping fight drug dealers in Peru by giving farmers legal rights to the land they cultivated, de Soto is currently working on a project to tokenize the untapped resources beneath the surface of the earth, so that the assets can be traded on the global market.
“The best way of pulling people out of poverty is for somebody, a government or the local councils, to go around giving everybody a plot of land, legalizing it,” said Branson. “The best way of making sure that that is registered is blockchain.
”De Soto himself met Branson in May 2010 at the billionaire’s private safari game reserve in Ulusaba, South Africa, where the duo also spent time with former South African president Nelson Mandela and former archbishop of Cape Town Desmond Tutu.
De Soto distinguishes himself from blockchain builders in the developed world as coming from “the other side of the wall,” in reference to the barrier now being constructed between the United States and Mexico.
Unlike some more ardent free-market supporters, De Soto downplays the historical significance of the recent rise of nationalism, placing it in a larger cycle of creating and destroying borders.
He describes the current sociopolitical climate as part of the beginning of a larger process whereby global transactions conducted on a shared, distributed ledger lead to smaller, but “better connected” fiefdoms.
“The way I see it, this goes back and forth. It’s a reflex,” said de Soto. “Obviously whatever we did from Bretton Woods on ain’t working and people are redrawing those borders.
”Or, if Branson has anything to say about it, perhaps removing the borders altogether.
Beyond blockchain, Branson has been working to break down borders in other ways as well. Last week, he rejoined Desmond Tutu, along with former U.S. president Barack Obama, at Mandela’s 100th birthday celebration and has been tweeting under the #WalkTogether hashtag aimed at drawing attention to civil society networks that connect communities around the world.
If Branson’s burst of work to break down borders seems sudden, it’s perhaps not without reason.In addition to his work with cryptocurrency wallets, blockchain supply chains and civil society networks, Branson is in the rare position of having regular access to a number of astronauts in the final stages of helping his company Virgin Galactic prepare for its first commercial flight to space.
While the exact date of the launch is a closely kept secret, Branson teased the impact the launch is having on his view of the world. “We’re going to be sending people to space very soon now, and with almost one voice, what almost all astronauts say, is that what they notice the most about the world is that it is one world,” he said.
“Bob Marley got it right,” he concluded, referring to the musician's 1977 hit “One Love.”
“It looks like a borderless world, it should be a borderless world, and I think blockchain can really contribute to making the world a borderless world.”
The fourth annual Blockchain Summit took place at billionaire Richard Branson’s Kasbah Tamadot resort in Marrakesh, Morocco.