Ship or Die at Accelerate 2025: Lightning Talk: Finternet (Siddharth Shetty - Finternet Labs)

Siddharth Shetty, from Finternet Labs, unveils a groundbreaking approach to financial infrastructure that could revolutionize how we handle assets, identity, and transactions on a global scale. The Finternet project aims to create universal rails for financial systems, enabling unprecedented interoperability and efficiency across various asset types and jurisdictions.

Summary

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Finternet is a visionary project that seeks to address the limitations of traditional financial infrastructure by creating a universal system for handling various types of assets. Shetty highlights the current challenges in building financial systems, which are often purpose-specific, siloed, and take an exceptionally long time to develop and integrate across different countries and sectors.

The Finternet concept, published as a paper in Washington, DC, proposes three core ideas: giving users control over any type of asset or credential, unlocking verifiability and transactability of these assets, and building the system on highly universal rails. This approach aims to create a more efficient, interoperable, and scalable financial ecosystem that can benefit countries of all sizes.

Shetty emphasizes the role of tokenization in this new paradigm, drawing parallels to the simplicity and immediacy of physical cash transactions while leveraging the benefits of modern technology. The Finternet project is actively working on solving complex technological challenges, such as handling high transaction volumes, ensuring privacy, and maintaining interoperability across different asset types.

Key Points:

Traditional Financial Infrastructure Limitations

Traditional financial infrastructure is built in a siloed, purpose-specific manner, which leads to significant challenges when trying to create interoperable systems across different countries and sectors. This approach results in separate rails for various types of transactions, such as peer-to-peer payments, merchant payments, and government payouts. These siloed systems are often slow, expensive, and difficult to integrate on a global scale.

Shetty points out that building financial infrastructure in this traditional way would take centuries to achieve global coverage, given the number of countries and the complexity of interlinking different systems. This realization led to the development of the Finternet concept, which aims to create a more universal and efficient approach to financial infrastructure.

Core Ideas of Finternet

The Finternet concept is built on three fundamental ideas that aim to revolutionize how financial systems operate:

1. User Control: Finternet proposes giving users control over any type of asset, identity credential, or asset. This includes regulated assets like money and securities, registered assets like physical property and vehicles, attested assets such as commodities, and user-controlled digital assets like NFTs.

2. Verifiability and Transactability: The system aims to unlock the ability to verify the provenance of assets and enable their seamless transfer. This extends beyond financial transactions to include the transfer of property rights, such as transferring ownership of real estate or creating rental agreements that can be financed.

3. Universal Rails: Finternet seeks to build highly universal rails for financial transactions, similar to smartphone operating systems. This approach would allow even smaller countries with populations under 10 million to benefit from advanced financial infrastructure without having to build everything from scratch.

Tokenization and Its Impact

Tokenization plays a crucial role in the Finternet concept. Shetty describes it as a "back to the future" approach, drawing parallels to the simplicity of physical cash transactions. With tokenization, the goal is to recreate the immediacy and self-contained nature of physical asset exchanges in the digital realm.

This approach aims to eliminate the need for complex intermediary systems that currently exist in digital financial transactions. By leveraging cryptographic developments from public blockchains and digital signatures, Finternet seeks to create a paradigm where users have direct control over their assets, similar to how they would with physical cash or stock certificates.

Technological Challenges and Solutions

The Finternet project is actively working on solving several key technological challenges to make its vision a reality:

1. Scalability: Developing systems capable of handling a billion transactions per day.
2. Interoperability: Ensuring universal interoperability across different asset types.
3. Privacy: Implementing methods for private transactions on public rails.
4. Regulation: Creating a playground where regulators can effectively oversee activities while allowing innovators to develop new solutions.

To address these challenges, Finternet Labs is establishing a network of labs across the globe, including in the US, India, Switzerland, and Singapore. These labs will work on experimenting with and refining the ideas laid out in the Finternet paper.

Facts + Figures

• Finternet Labs has been working on the Finternet concept for over two years
• The team behind Finternet has previously built ecosystems with over 3 billion users across identity, payments, and data sharing
• There are 100 countries with populations less than 10 million that could benefit from universal financial rails
• The Solana community has offered a million-dollar grant for projects building on the Finternet concept
• Finternet Labs has been set up in the US and India, with plans to establish labs in Switzerland and Singapore in the coming months
• The Finternet paper was published in Washington, DC
• The project aims to handle a billion transactions per day
• Finternet Labs is working on implementing layered proofing for identity verification based on transaction risk

Top quotes

1. "If we look at the way we've been traditionally building financial infrastructure, it takes a long time. It's very purpose-specific."
2. "Every time we build infrastructure, you take a new car and you build a new road in the financial system."
3. "The key question we are after is unlocking verifiability, which is provenance, and transactability of these assets."
4. "How do you have universal rails much like your smartphone operating system?"
5. "This is sort of back to the future, because if you think about it in the world of physical cash that you had, let's say you gave me a dollar bill, I could instantly take that dollar bill, it was mine, verify it, validate it."
6. "Our goal is to then eventually see how do you take crypto on a lot of its primitives, but deploy this at population scale for societies across the world."

Questions Answered

What is Finternet?

Finternet is a revolutionary approach to building financial infrastructure that aims to create universal rails for handling various types of assets and transactions. It seeks to address the limitations of traditional financial systems by providing a more efficient, interoperable, and scalable ecosystem that can benefit countries of all sizes. The concept focuses on giving users control over their assets, enabling verifiability and transactability, and building on highly universal rails.

How does Finternet differ from traditional financial infrastructure?

Finternet differs from traditional financial infrastructure in several key ways. While traditional systems are built in a siloed, purpose-specific manner, Finternet aims to create universal rails that can handle multiple asset types and transaction types. This approach allows for greater interoperability, faster development, and easier integration across different countries and sectors. Additionally, Finternet leverages tokenization to recreate the simplicity and immediacy of physical cash transactions in the digital realm, reducing the need for complex intermediary systems.

What are the main technological challenges Finternet is addressing?

Finternet is tackling several significant technological challenges to make its vision a reality. These include developing systems capable of handling a billion transactions per day, ensuring universal interoperability across different asset types, implementing methods for private transactions on public rails, and creating a regulatory framework that balances oversight with innovation. To address these challenges, Finternet Labs is establishing a network of research facilities across the globe to experiment with and refine the concepts outlined in the Finternet paper.

How does Finternet handle identity verification?

Finternet proposes a layered proofing approach for identity verification. This system adapts the level of identity requirements based on the risk associated with a particular transaction. For example, in a demonstration using legal entity identifiers (LEI), the Finternet wallet allows users to import their LEI and create campaigns with specific proof requirements. This flexible approach to identity verification can be extrapolated to handle various KYC (Know Your Customer) requirements across different jurisdictions and use cases.

What role does tokenization play in the Finternet concept?

Tokenization is a crucial component of the Finternet concept. It allows for the digital representation of various asset types, including regulated assets like money and securities, registered assets like property and vehicles, attested assets such as commodities, and user-controlled digital assets like NFTs. By tokenizing these assets, Finternet aims to recreate the simplicity and immediacy of physical asset exchanges in the digital world, enabling faster, more efficient transactions and transfers of ownership or rights.