Ido Sadeh Man on Saga's approach to global currency

0:22deep into the sega project so far if you could kick it off by giving you know what is the vision and the purpose of the sega blockchain and the sega cryptocurrency so we're very excited to launch saga just a week ago and that's the fruit of two years of work and a year and a half since we published our white paper the vision behind saga and the mission statement of saga is to

0:49design a global currency that is complementary to existing national currencies in the sense that those currencies those national fiat currencies as we would call them were designed to meet the national economy to react to a national national policy economical and monetary policy but we are witnessing in the in the past 40 years or so and ever-increasing scope of

1:18a global economy that is not impacted by any single nation states decisions and end policies and easter is very consistent when there is a new scope of an economy it requires a store of value a medium of exchange and a unit of account which which accounts for a currency and this is exactly what saga is trying to design one that would reduce and reduce the friction of

1:39borderless transactions but would also permit the store of value that is not only exposed to national decision vectors and n and policies very interesting and currently you know the most popular cryptocurrency being Bitcoin and most of these major coins are not backed by fiat currencies yet people argue that they have those three principles of money do you see those

2:07principles in Bitcoin and can is it not actually as functional as the Saga coin for working as an alternative to the American dollar for example so Bitcoin was definitely the starting point and the canary in the mine it was the first attempt that has proven the world and us amongst it that a non-governmental currency could be envisaged having said that bitcoin is

2:36not serving as money and this is not a self proclaimed feature right the ones that would decide whether something is a currency or not are are the people that are deciding to use it as such or not and I think that it is very clear that bitcoin is not serving as a medium of exchange and let alone a unit of account the store of a value feature is yet to

3:00be debated between have seen a loss of several tens of percents of its value over the past week and then regaining about ten percent this morning this is not something that allows it to be a currency like store of value if is extremely volatile you know the basic the basic premise of not being able to go down in some Coover and buying a cup

3:30of coffee with Bitcoin makes that Bitcoin is not yet not yet a currency the question of whether it could become a currency is what's more interesting to us and we believe that there are several fundamental issues and I'll name three the three main fundamental issues that will prevent different from becoming a currency and that we've tried to other

3:55to address in saga the first one is the issue of volatility obviously a currency needs to have a balance between the prospect of growth when you get a salary in a currency you would like this salary to gain some value and at least not lose its value but balancing this prospect of growth with stability because my grocery merchants would like to receive a

4:22currency in which he can meet his obligations the next day pay his employees and buy more goods and this cannot happen with raging volatility that we're witnessing in crippled markets are so volatility is one the second one is the ability to breach with the traditional established financial system and this as we know is extremely hard and we believe that

4:44the main reason for this hardship relies in the lack of compliance with a MLM kyc standards which which is a result of the pure unlimited between and the third one is governance eventually Bitcoin came up with a monetary model so did we believe that the full decentralization of governance makes it extremely hard to take decisions and adopt models to a changing reality and

5:13while reality always change in a non deterministic way models that are deterministic and cannot change or we believe will trail other models so this is exactly what we addressed in saga we built a monetary model that relies on the basket of currency I guess we will get into that very quickly and tames volatility on the way we are fully AML compliant and we've created a

5:39proprietary governance system to allow the currency to represent the holders on one hand but big decisions efficiently on the other mmm-hmm that's very interesting you know and from what I hear it sounds like that you know having saga backed by a basket of goods it's much more similar to what we've seen with Facebook's Libra coin and now if you know if we could give a comparison

6:02you know governance aside more so on the backing how are you guys different from Libra coin and what do you believe is the proper basket of goods to back a stable cryptocurrency okay so first and foremost saga is not a stable coin so we are using the reserve to tame volatility on our way to independence value and I'll explain how we are doing it but there are

6:30definitely some similarities the first one is the decision to rely on the basket and not on a single currency I think this decision is a function of the targets that we are trying to solve if we want to create a global currency then we need to rely on the basket that is the current reflection of a global economy and no single currency is reflecting the entire economy

6:52unlike Libra we have chosen not to not build or compose our own basket but to rely on the basket that exists from 1969 which is called the SDR it's a basket of currencies that is designed by the IMS in which currently central banks are holding their own reserves so since 1969 central bank's just like every one of us wants to hedge from the risk of

7:19fluctuations of different currencies and the basket they are using is the SDR funnily enough the SDR is only available for them we you and I cannot buy SDR only central banks and he says the iris composed out of five currencies in different ways the dollar the Euro remin be yen and foul and we're not determining it because the entire idea

7:43of relying on a basket is on relying on trialed tested instruments that have already proven trustworthy and migrating distressed into an intrinsic value very slowly in a way that tames the risk and therefore times volatility with it so we're relying on the on the SDR but we're not relying on it fully we start by a full backing on the SDR

8:09but as more saga is being created by the market because it's a flexible supply of money model the reliance on the SDR decreases gradually very very slowly and until the currency is completely independent and so the price of saga will fluctuate the reserve reliance will fluctuate as well it would simply do it very very slowly so that we cannot see an increase in price of thousands of

8:34percents even lot of single percents overnight or a decrease in price the Reserve is staining the fluctuations of prices and I think that the least amount of this is difference it's a full peg to the basket yeah so this is very interesting how you've implemented the SDR makes sense to sort of have a global average for saga but it's not stable in a sense

8:58that you know you're pegging a price floor or something like that and is the issuance of the coin itself you know in the supply is that determined by a body or does that change with inflation and deflation over the years so it's a fully elastic supply of money meaning that when someone buys saga from the contract it's an E theorem a RC contract when one buys saga from

9:26the contract saga has been created and the proceeds of buying are deposited in reserve when someone sells saga to the contract because it's fully redeemable constantly when one cell saga to the contract then saga is being burnt by the contract and funds are liquidated from the reserve so the amount of saga in circulation are determined by the market at the end and it's a fully

9:52self-regulating model of supply of money which does not necessitate or does not allow any human discretion in carrying out the protocol if you simply implemented on King mm-hm that's great and for having useful money you also need people to accept that money on the other end of the transaction is there you know you guys just launched but how do you foresee

10:19people adopting and getting in and out of saga easily so that it can actually become widely adopted sure so III think that's a great question because it taps into this ever known problem of chicken-and-egg of a two-sided market right why would I hold saga is no merchant accept it and why would any merchant accept the currency that no one holds and I think that very

10:46realistically we are not expecting saga to become a medium of exchange over the next at least one or two years what we are hoping is for saga to be trialed and adopted slowly as a store of value and as a hedging store value right if you're a British citizen and you're and you have some right rights to be worrisome about what would happen to the

11:15value of the pound after brexit and whether it's going to have an impact on your next purchase on Amazon then saga could be a solution it would be a solution for hedging your global exposure which which is relevant to each and every one of us once we're proving this monetary model where they then sagar could be envisaged as a medium of exchange and again unlike Libre unlike

11:43many others we believe in fragmentation we don't believe that we need to be the payments Network and the issuer of the currency and the custodian we are very content with solving a very distinct issue which is what is the proper monetary and governance model to issue a global non-governmental currency if we are able to solve this problem we're very sure that many others would be able

12:09to solve their pieces of the puzzle whether it's the blockchain scalability or laying down the payment network or providing custodianship solution for those who do not wish to keep their Ledger's under the mattress and we've built saga in a way that the protocol is very adept to collaborate with such services well it sounds like you guys have done a lot of work to

12:36get to this point and now that you've launched last week what is that what are the next steps for saga and the saga team is it you know help trying to aid in the marketing efforts and trying to grow it or looking for more trial users or strategic partners so it's all of the above I think that the first mission is a mission of Education and not necessarily just in regards to saga the

13:01the one of the biggest challenges we have is that we are trying to explain why money needs to change where most people don't know how money actually works currently and that's a challenge the entire industry is facing but with the complexity of the saga monetary model and the complexity of our governance well it becomes an even greater challenge a

13:26challenge and it's our responsibility to simplify it's our responsibility to pass the message across other than that as as I've mentioned I think that our main mission is to put Saga on trial because we're all experimenting with money right we believe that sag is in a very responsible experiment one that has a lot of downside protection because of

13:50the volatility taming of the reserve but it's still an experiment and so our mission is to engage more and more partners and more and more participants in these experiments and to prove to ourselves and to the world that the monetary model is indeed doing what we intended to do we've we've been advised in the creation of this model by

14:18central bankers by Professor Jacob Frenkel was a part of our advisory board as a myron scholes we believe that this model is extremely robust it is extremely reliant on unproven central banking instruments but eventually that the market would be the judge of that and if those trial users or partners are looking to get more educated or just reach out and get

14:45involved what's the best way for them to learn more information so first of all on saga dot org our website which is built in a sort of a layered way where they're rather short explanation or very complicated problems but then there is a resource section for deep dives and obviously on our Twitter Facebook Linkedin handles where our blogs are

15:15being published and AMA accessions etcetera great thank you know I'll leave those links in the description box below that's all the time that we want for this interview but thank you so much for coming on the show and let's follow up in the near future would be very very happy – thank you so much estimates arriving it for the pleasure you