Role of Quants in Crypto: Javier Rodriguez Alarcon, XBTO Chief Commercial Officer & Head of Digital Investment Strategies

Summary

Javier Rodriguez Alarcon, Chief Commercial Officer and Head of Asset Management at XBTO, discusses the role of XBTO as a full service digital assets provider, focusing on institutional investors. He explains the three main business verticals of XBTO: capital markets, investment management, and a platform business. 

Before moving to crypto, Javier was in TradFi at Goldman Sachs as the  Global Head of Client Portfolio Management and EMEA Head of Quantitative Investment Strategies. Prior to that he was at Barclays Global Investors, now part of Blackrock.

Key takeaways

-Javier breaks down step-by-step how quant investors use technology and numerical processes to apply statistical modelling to investment decisions and portfolio construction.
-The convergence of traditional finance and crypto is happening, but legacy technology is a challenge. Javier thinks the full adoption of crypto and digital assets in financial transactions is likely in the future and discussing how institutions utilise crypto derivatives (for the major coins) and the role of decentralised exchanges vs centralised exchanges.
-If you are in a technical role, soft skills such as communication and the ability to explain complex concepts, are crucial for you to stand out in the financial industry and crypto


Chapters

00:00 Introduction to Javier Rodriguez Alarcon and XBTO
02:50 Javier's Background as a Quant Investor
04:16 The Impact of Cloud Computing and AI
09:25 Javier's Transition from TradFi to Crypto
14:19 The Challenges of Convergence in the Financial Industry
23:48 Decentralized Exchanges vs. Centralized Exchanges
27:21 Quantitative Analysis in Portfolio Construction
35:12 Skills and Advice for Young Professionals in Crypto
45:24 The Future of Crypto and Digital Assets
49:14 Advice for Javier's 18-Year-Old Self

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Transcript

Matt (00:01.272)
Hi, this is Matthew Cheung from Work in Fintech and today we are delighted to be joined by Javier Rodriguez Alarcon, who is the Chief Commercial Officer and Head of Asset Management at XBTO. Javier has a quant background in investment management and he spent 13 years at Goldman Sachs as the Global Head of Client Portfolio Management, as well as the EMEA Head of QIS or Quant Investment Strategies. As well as that, he's cut his teeth in a number of other financial institutions. So Javier, thank you so much for having us today.

Javier (00:32.005)
No, thank you. It's a pleasure to be here. Thank you, Matt.

Matt (00:36.216)
So I guess to kick off, XBTO is probably not a household name. Do you want to just explain what you guys do?

Javier (00:43.335)
Yeah, no, absolutely. So, so, XPTO is, you know, in a simple, in a simple line is basically a full financial digital assets provider. Okay, so mainly, we focus on what we actually call institutional investors or qualified investors. So basically, that's our, that's our focus. We have, I would say, I mean, you know, three MIMs.

and three main business verticals. The first one is our capital market business. And here it goes to the very much, I mean, origins of the firm in terms of the DNA where we've been basically market making providers. We do market making for different protocols or let's call it coins, as well as being able to execute OTC transactions. The second business vertical is basically our investment management or asset management platform.

platform. And here what we actually have is a state of the art, a quantitative investment strategies, as well with other, you know, typical pros within asset management business, like for example, wrapping derivatives as a structural products and equal as well tokenization. And lastly, we do actually have as well our platform business. And this is our front.

basically, or the way that we interact with the clients. And this is what we actually call it our regulated custody. That's basically what is called full tech solution, but is actually regulated for custody and digital assets. And as well comes with an execution platform that allows people to buy and sell, or clients and institutions to buy and sell basically, you know, digital assets.

assets.

Matt (02:33.656)
So it's 100 % institutional.

Javier (02:36.809)
Very much, yes, we don't actually deal with retail investors. Yes, that's correct. And focus mainly with clients outside the US just to put the caveat as well there.

Matt (02:43.736)
So by all the questions, that's all.

Matt (02:50.744)
Yep. So my other question is your background. So you're a quant by trade. So I suppose what is a quant for some of the people who are listening. They may have heard what it is, but it'd be great to get you to explain it because you've been doing it for a very long time.

Javier (03:05.417)
Yeah, I think that's a great question. You know, a quant is, I would define it as, and I put it in the context of investing, you know, a quant investor is someone who actually use technology.

Okay. And technology comes in the face of, you know, using numerical process and technology to kind of make investment decisions. Now, one of the interesting attractions of being a quantitative investor is that, you know, you remove in some ways your gut feeling when you actually make investments.

Okay, so you have a very strong discipline that is reflected in the models and signals that you create. Okay, so that's very different to potentially what a fundamental or let's call it a more kind of a traditional sort of investor will do.

Matt (04:01.976)
And how has compute that's changed with cloud computing over the last like 10 years, how's that changed what you were doing 13 years ago when you started at Goldman, for example, compared to what you were doing more recently and obviously the big wave of AI that we're seeing at the moment.

Javier (04:16.106)
Yeah.

Yeah, no, that's an interesting question. By the way, I mean, prior to Goldman, I was actually as well a quantitative investor of another firm. You know, it probably resonates to you, which is called, well, used to be called Barclays Global Investors. So I was a BGI for quite a long time before, you know, BlackRock actually acquired and now it's called BlackRock. But, you know, I think it's

things are changing quite dramatically. And I would put this in the context as well of digital assets, because you mentioned the case of AI, for example. And I remember me to talk to investors about how potentially we could use natural language processing.

you know, 12 years ago to read text information, to try to kind of gather sentiment about what people are saying in documents, okay? And, you know, systematize that or automate that process to kind of generate scores that we could actually set, you know, oh, is it a positive news or a negative news or this results self -signed research is saying something positive or is cynical about it or talking,

your mind with regards to the company or in first things like a potentially will change their mind about this company in the future. And the funny thing is that when we started doing this, I mean, you know, 13 or 12 years ago, people will look at you like, seriously, this sounds like coming from outer space. It sounds like coming from a movie. But it resolved to be, you know, that now, you know, fast forward 13 years and, you know, and pretty much everyone is talking about AI and potentially using AI.

Javier (06:07.294)
for investment cases. So I think it is very difficult for people to kind of really see how new trends can actually potentially affect because people are so focused on the short term and what exactly that technology is doing now.

as opposed to what that technology can potentially do in three, four, five years. I mean, I think the same is actually happening with the digital assets. I think the technology is so incredibly powerful and can have so many different applications that, again, people continue debating, well, is it crypto? What is the user case? And so on. I mean, I think there has been several user cases that are completely proof.

at the moment, but it's still people kind of a challenge and said, okay, well, in a very short period of time, can I see something happen? And I think it does, you know, kind of, let's call it chap GPT -4 moments, the wow moment. That...

takes a long time for people to get to those stages. And that's what we're seeing with AI now. And that's what's very more likely that we're going to see with crypto or to digital assets in the near future.

Matt (07:28.312)
Well, it's the hype cycle, right? And we've gone past the peak of inflated expectations for crypto and use cases. And now it's proper solid use cases that are actionable and you can do things with them. Yeah.

Javier (07:34.861)
Correct.

Javier (07:41.933)
Absolutely, and you need to kind of leave the technology to advance. I mean, and the interesting things about the technology is that the technology needs as well capital.

and need capital in the sense of money and resources and interest and people and the network of people that are actually being working on those technologies to be able to take it to the levels of where potentially AI is at the moment, the same at the levels of where crypto is at the moment. And that takes resources.

but in both the shape of intellectual capital, but equal as well in terms of money and more important time. I mean, I'll tell you, I mean, when I remember when we used to do natural language processing, well, the first part of those, I mean, I don't know, 12, 13 years ago was actually about creating a dictionary of words, literally a dictionary of words that we could scan the text and try to.

match those words and every single word in the dictionary will actually have a score. And it was simple as actually adding the scores and see, well, a higher score is a positive and lower score is a negative. And to where we are now, where basically AI and particularly new techniques and natural language processing can even infer the tone of how you potentially write your emails. But again,

That was not possible 10, 12 years ago. So people need to kind of have a bit of patience and very important have the interest in technology to make sure that the resources are allocated.

Matt (09:16.632)
Absolutely. So I guess that segues nicely into my next question about why did you make the jump from TradFi into crypto?

Javier (09:25.938)
Yeah, I mean, it's a question that has been asked over the last, I would say, six, seven months, you know, why, you know, by the way, not only by my ex -colleagues at Goldman, but, you know, by many people that I know and investors that I know. You know, I think the two words that I usually said to people are basically financial convergence. I think we are in a stage now where I think it...

The technology is incredibly powerful. And the level of adoption and interest that comes from the tri -fi is to a stage where we're going to see the two industry convergence and a faster pace to what we currently see.

And mainly the reason for that is that I think there's benefits to both sides of the equation. So if you take a simplistic way about the war and say, OK, well, actually, you go to tri -fi and you go to a digital -sized camp or the crypto camp.

and two camps and going around. I mean, everyone have a very particular views about what the problems were, the issue, what the future of the technology looks like to be, you know, the tri -five people who said it's all about finding, it's all about, you know, what we have learned and we kind of know everything that is happening in the financial world. And on the crypto side or digital asset side, people say it's all about the technologies. It's just a technological problem. We just basically have a very strong conviction about the ideas or the

ethos of this, of this technology. And that should be the two and going and kind of in some way, parallel with no intersection. I think that's, that's not the case. I think, you know, both industries or let's call it both, both camps have a lot of benefits. If they work together, the tri -fi, there's no doubt that the tri -fi, you know, infrastructure needs a lot of the, the, basically the technology that has been created and the blockchain.

Javier (11:31.814)
I mean, that's no doubt. I mean, the way that settlements work, the ways that financial markets work and so on, there's a lot of great infrastructure that has been built in crypto and has been tested in crypto and continue to work. I mean, and I can give you examples. I mean, you know, half the markets are 24 hours, seven days a week. You know, the use of perpetual swaps, for example, something that, you know, Tri -Fi has not been able to kind of impose and while is in a...

in a meaningful way, you know, examples that you can see.

So there is a lot of things that potentially Tri -Fi can benefit from using crypto in general, the public blockchain. On the other hand, I mean, equally as well, the digital asset industry or the crypto industry can benefit a lot from the experience of basically the Tri -Fi business. And there's multiple different things. I mean, there's a lot of things

a lot of concepts that you kind of accelerate by the use of the technology, but the root of the questions, the roots of the problems, the root of the issues you're trying to solve, go back to the genesis of multiple different things that Tri -Fi have think about it, that actually have tested and they're half -evolved and they have been proof. So there are things, for example, learning from risk management.

majority of different things that we have been seeing and the Tri -Fi experience can be learned from the crypto side and can be adopted. That's a mutual sort of benefit. To summarize to you, to me, it feels that those industries are getting closer. I think someone with my experience can potentially...

Javier (13:35.479)
have a lot to add to the crypto size, in particular to the case of XBTO. And on the other hand, I'm sure that we have a lot of people in the crypto side can actually add a significant amount of skilled knowledge to the tri -fi world. So in my personal view, I think it definitely we're gonna see this financial conversion accelerating and go back to what we said,

We've seen recently, like the case of the ETF, for example, is just, in my opinion, is just the peak of the iceberg. I mean, we're just going to see significantly more coming in the near future.

Matt (14:19.416)
Playing the counter argument around convergence, with my other hat, with iPush Pull, we sell enterprise technology into big banks. And there's often legacy technology, things that have been hanging around for decades, which then are very difficult then to integrate into. In terms of the convergence of the tanker ships turning in the very large financial institutions,

Javier (14:21.559)
down.

Javier (14:27.767)
Sure.

Javier (14:36.791)
Yeah.

Javier (14:40.599)
Yeah.

Matt (14:48.696)
What do you see as the kind of timeline for that convergence? Because at the moment, there's some institutions that are investing heavily in it and they can kind of see it's the future and you've got someone like the BlackRock CEO talking about tokenization kind of every day. But in a kind of a timeline, how do you see that convergence playing out? Because of the legacy technology and financial institutions probably, you know, slowing it down.

Javier (15:03.703)
Yeah.

Javier (15:09.335)
I mean, I think it...

Javier (15:13.753)
No, no, I mean, I think you're you're you are actually spot on and highlighting that as a major challenge. And that's the that I would say is the biggest challenge that financial institutions are confronting in a continuous way. OK, so I don't think I don't think crypto is the only

is the only, or the block change is the only kind of issue when it comes to infrastructure for financial institutions. I mean, you mentioned one, at the beginning of your remarks, when you mentioned also how cloud computing is being affecting quant investing, for example.

And the fact is that even adopting cloud computing has been a challenge to financial institutions. And again, it has been how very successful tech companies have been able to monetize on that infrastructure, AWS and Microsoft and others. And the reason is because to some extent, banks have been kind of gradually embracing.

that transition and a lot of it. And again, I mean, I will leave this to the CTOs and, you know, kind of people running banks and financial institutions, but they're trying to kind of, you know, kind of maintain what they have with the less disruption possible and at the same time, upgrade. And that's an incredibly difficult, you know, task to do. And I think it's...

It is they trying to do their best into that. But I think it is the pace to what those financial institutions are moving forward is very, very slow. And that confronts with a lot of problems to them in terms of effectiveness and managing resources in terms of actually one, which is, you know, is incredibly worried is the customer experience. OK, so at the end of the day, the customer experience for those

Javier (17:31.482)
financial institutions are what they actually live on by clients being happy and continue using the services. If the customer experience is not a positive one, basically they're going to go into other companies that potentially have a better customer experience. And again, a lot of that customer experience comes from the fact that we all become significantly more savvy as digital users of technology. So,

So, you know, you become very, I don't know, very impatient with a financial institution that doesn't send you electronically your statements or actually place it on the cloud that you can access in those in a faster way. And by the way, that actually kind of, you know, the demand ends and your statements are right away, knowing 10 days after or things like that. Or if you're going to transfer, you want the transfer to be executed quickly, which is go back to.

to basically to crypto and those fees have to be reasonable as well because, you know, and again, all this suite of products that you want to do it over your mobile phone, you don't want to actually kind of go to a branch and all these different things. And so there's a lot of those stuff that actually been taken. So it is a very difficult, it's a very difficult task. I mean, and I think that's to be your challenge. So if you go back and make a link to...

to digital assets or to, let's call it FinTech in general. Well, I think FinTech is incredibly well positioned to basically make a big, big leaps and actually capture a good percentage of that business going forward. Now, how this will actually result in the future and how this is going to be told in regards to how those businesses are run and...

how banks will actually perceive at some point, potential acquisitions and things like that. You can see a lot of these examples that happens over the recent history, I guess.

Matt (19:41.976)
In terms of the institutional versus retail kind of market, like a lot of people listening to this will be familiar with going on Coinbase and buying some Bitcoin and every single student I speak to probably holds Bitcoin and has a crypto portfolio. But on the institutional side, like for example, you mentioned like perp swaps earlier and there's a number of...

kind of derivatives from the institutional world, which companies like XPTO, I guess, is getting involved in. Can you talk about some of the more institutional trading and workflows that you might be doing for someone who's coming from, I suppose, just lived and breathed looking at Coinbase and buying and selling crypto through that versus kind of what you're doing and what's the difference?

Javier (20:26.782)
Yeah, no, that's an interesting subject. I mean, I think there are natural causes of the kind of, I would say, the growing stages of a market, so asset classes in general. So in particular, you see that the first markets that we see, and in particular in the case of digital assets, is the spot market. And the spot market,

is what you just described it. So people being able to buy, you know, and sell, you know, coins through.

centralized exchanges or decentralized exchanges and taxes as well. Now, what we know as well is that it's the ability to actually do derivatives markets on those spots. But of course, for that to take place, you need to actually have a robust and solid spot market with a good volume and so on. Now, what we see now, the crypto in particular, at the stage that we are, is that the derivatives markets has grown quite significantly.

So there is an incremental amount of, or we'll say that a good size in terms of volumes that is straight in derivatives across basically the crypto, or let's call it the whole digital assets market cap. Now, what it actually means by this that,

This is actually something that is incredibly useful for institutional investors, because if you think about the way that they operate institutional investors, I mean, they will actually need to, you know, manage the risk with regards to potentially how they take positions on those particular digital assets on the particular those coins. The derivatives market offers a great ability for them to do that by, you know, selling, by imposing leverage, by

Javier (22:27.414)
basically hedging themselves. And that's not only in the case of, I mentioned to you, the futures market, but equal as well, the options markets, okay, the ability for them to buy calls, to sell puts, to sell calls, and actually, you know, create, you know, structures that allows them to, to mitigate the risk, and potentially to monetize and some of the investment views that they may have with regards to particular, you know, assets.

Matt (22:59.064)
And how would you define, because the word digital asset is used a lot more now in the institutional space versus probably crypto in the more retail space. What's the difference?

Javier (23:06.916)
Yeah.

Javier (23:10.469)
I don't think there is a, I think that the terms are actually probably interchangeable, no? I mean, I think a digital assets tend to kind of probably be a bit broader than in the sense of what you cover. So digital assets tend to not only cover, you know, coins, but as well cover potentially NFTs, cover...

you know, real world assets that have been tokenized, for example. So there is a significantly more broader set of universe that you cover through digital assets that just the case of cryptocurrency, for example.

Matt (23:48.152)
Can you talk us through the difference between a decentralized exchange and a centralized exchange and why decentralized exchanges is very much the ethos of where blockchain started. However, the uptake compared to centralized exchanges is very minimal. How do you see that playing out in the longer run?

Javier (24:08.103)
Yeah, I mean, you're right to say it. I mean, that goes back to the ethos and the question is that...

Let's take one step back. Centralized versus decentralized. I think the definition is fairly clear. Centralized, you're basically dealing with an exchange that is you're buying and selling your assets within that particular ecosystem. Which is like, let's call it a close -end ecosystem. Whereby decentralized assets, technically, we are dealing in a broader ecosystem that is not centralized.

by anyone. So it's you and I, we can transact without actually having a centralized function, an intermediary function that will do it for us. So that's a bit two things. So you well pointed out, basically, this decentralizes goes back to the ethos about what is crypto is all about and digital assets. Now, as I said to you before in my previous remarks, in this particular

period in this particular cycle, if we talk in using the crypto jargon, in this particular cycle, we've seen a lot of momentum towards the DEXs, okay? So basically the decentralized function. Now, and that's great because if you think of what I said before, technology needs time, needs resources, monetary.

and as well in terms of intellectual property for those technologies to advance. So, I mean, I think it still need a lot of work, again, still need to get into a level where...

Javier (25:55.977)
you know, you could actually match some of the benefits that you get in front of centralized exchange. So for example, your ability to, you know, find, you know, market pools of where you have so much liquidity, like you potentially can see in some of those centralized exchanges, when you can see a proper order book, you know, and so on, that's, that's a very interesting benefit. And that you could actually find centralized exchanges that, you know, when you go to the decentralized exchanges is very difficult.

Okay, so it's still a challenge for basically being able to do that. You can buy and sell digital assets, but perhaps you can have the same liquidity and the same visibility with regards to an order book that you could potentially exhibit into a centralized exchange. So.

So going back, I mean, so just benefits and pros, I mean, and it all depends on where those sits into your kind of a priority functions or your scale. But what I will do said is that...

that we see this actually evolving even further in the future, I don't have any doubt that that's the case. It's just a matter of, as I said to you, time and resources, but definitely, definitely we will see those solutions actually becoming stronger and stronger and better and better.

Matt (27:21.656)
From an asset management perspective, when you're looking at a portfolio, people obviously very familiar with Bitcoin, Ethereum, Solana, all the main different cryptocurrencies out there. There's obviously all the world of altcoins and so on as well. How do you apply then the quantitative analysis in looking at construction of a portfolio and managing it and evolving it over time? Can you walk through, I suppose on a layman's terms level, how you approach this?

Javier (27:50.059)
Yeah.

Matt (27:51.61)
that.

Javier (27:52.717)
No, no, I mean, I think it is, I would say there is different layers. I mean, and let me try to cover some of the layers in a way that I can say that people can hear me or can understand me clearly. So I think the first layer is that I would say that is interesting is that, okay, so what are the benefits of bringing digital assets into,

into a traditional portfolio. Let's assume that you can't find a ground zero, okay? You haven't make your mind with regards to digital assets. So what are those benefits that digital assets can come into your portfolio? Is there any benefits from that?

And the answer is that, okay, well, if you go to some of the quantitative terms, I mean, in the modern portfolio theory, you say that actually those assets, digital assets have very specific characteristics. I mean, so they have a high, you know, analyze standard deviation, so means definition of risk. And two, that they actually co -move in a different way during periods of time.

relative to traditional assets. And that's, these two features are very attractive. Okay, because if you actually bring something that can potentially have high risk, and at the same time, high risk means potentially high returns, and that's why you think it could be attractive to actually have something high risk, but two, that could move in a different way.

with the current asset mix that you have in your portfolio has incredibly benefits because it will improve the way that your portfolio will perform. Okay, so that's, you know, you can measure in terms of a chart ratios or information ratios, but that actually will improve the way that the portfolio is actually constructed. Okay, now that's for someone who...

Javier (29:55.405)
we'll say, OK, well, I'm in grams here. So bringing, let's call it a long position into one of those assets or a combination of those assets, and again, go back into another layer. So would you do one, or should you do two, or should you do more than that? Will actually improve. And in some ways, kind of move the portfolio that you have into a slightly different efficient frontier. And hopefully, that efficient frontier will actually have a more interesting risk -adjusted profile.

Okay, now, then the second part that you have is to say, okay, well, I'm in the level one, so I move one floor up, and I say, well, actually, I made that transition already.

I'd say I'm holding BTC like the majority of your listeners say, oh yeah, we bought BTC and we bought Ethereum. We don't have any doubt. We believe that the distribution of returns of those two assets skewed to the upside. Okay. So we think they're going to continue going higher in terms of price as there's more adoption, as the technology becomes better, as the user case, for example, in the case of both BTC and Ethereum continue to evolve. So then the question is,

Okay, well, I mean, how did you get exposure to those? All right? And there's a very simple question to set, okay, well, I would actually hold those as a long position and say, buy and hold, okay? Or I will actually said, okay, well, can I actually do some active management around those? Okay?

And that brings another layer, which is very important. And I think in the case of digital assets, or crypto in general, quantitative investing is very prone to the asset class. And the reason is because, again, it's a very...

Javier (31:52.753)
let's call it, it's a high volatility asset that trades 24 hours, seven days a week. Okay. And.

potentially have very interesting sort of microstructure in the market. So microstructure in the market is what has actually happened during the day. So you have very big swings in terms of changes and trends because of the high level of volatility that exists and that got embedded into the digital asset. So what I'm saying to you is that, well, if you are holding already some exposure to digital assets within your overall mix of assets,

will actually kind of appointing or having some of the techniques that come from investment management will increasingly, incredibly improve the performance of that section or that succession of the portfolio. So now you can say, well, what are those techniques are? Okay, well, you know, one of them could say, well, you know, can we just do, you know, trend following, for example, or manage futures on those coins? All right, so.

is a proof technique, quantitative technique that is utilized in traditional assets across multiple systems. And systems means markets. So you do it in rates, you do it in credit, you do it in electricity contracts, you do it in oil, you do it in 10 year bombs, you do it in currencies, you do it in equities, you can do it in any single pretty much of the traditional assets. Well, can you actually not do that in crypto? Of course you can. OK, but you need the skill to actually do build

models, those systems that allows you to trade those coins. Okay, so are the coins trading upwards, are they trading downwards, and so on. So you need that expertise, you need that old infrastructure and the skills to do that. Now, the benefit that brings to those strategies is that they have the ability to as well to take short positions. So,

Javier (33:49.937)
Now you embed in something that is a technique that come from the traditional side, potentially you can say from investment management and said, okay, I'm going to have the ability to show some of those coins when the markets are basically trending downwards. Okay, so you not only have the ability to produce positive returns when the markets are trending upwards, but equally as well.

is basically to benefit of when the markets are turning downwards. OK, well, so you can do that, but you need to actually be able to trade derivatives as a means to be able to shore those markets. So you need a futures market that allows you to do that, that have some liquidity, that have some depth, and so on. And that's where we are. So hopefully those examples can be illustrated in this, but you go different layers where potentially, you know, adding, you know,

let's call it first, digital assets to a traditional portfolio to you have make the decision, but you want to actually bring some techniques that allows you to be more effective in the way that the contribution of those digital assets will have into your portfolio. One example could be trend following, the shorting can be another one would be using options, for example, and so on.

Matt (35:12.024)
That was a great 101 on quantitative investment management. I think portfolio theory and efficiency frontier reminded me of some of the things I saw in a textbook like 20 years ago. That makes sense. Yeah.

Javier (35:24.369)
Yeah, I know, I know, but hey, but still, it's still very useful. It's still, it's still very useful.

Matt (35:32.248)
So, if we can, I suppose, look at actually your career and...

look at some of the skills that you've picked up along the way. So obviously there's some very technical skills that you've picked up along the way, particularly around what you've been doing in your role. But it'd be good if you could just talk through some of the soft skills as well as the harder skills that you've learned in your career and then how you've used them when you've moved from different companies and actually jumped from traditional finance into crypto. What's transferable? How have you used it? And what advice can you give younger people?

Javier (36:08.209)
Oh, gosh. I mean, that's a great question. I think, you know, I'll tell you, I mean, we talk a bit about my background, but I remember when I came to England, I came for grad school. And when I finished grad school, I started working as a quant for Barclays, actually. And I have a very...

quantitative job and modeling risk for a large interest rates book. And so I have to model, you know, swaps and pricing of interest rate options and so on. And, you know, one of the interesting things is that you get so into your small bubble, okay, so you have such a steep learning curve. And that steep learning curve that you go through time, it becomes less steeper and steeper and steeper.

And one of the fascinating things that you get is that, as you said, you develop some sort of, you know, some sort of other kind of, I would say, knowledge around what is actually going on in the broader scope of what you kind of are trying to achieve. So what I think it is important is that, you know, people can tend to be very bone down into the technicals.

But the technicals is a very important part, particularly when you are growing and when you start in your careers. But as your career evolves, you need to kind of be able to try and, you know, you need to kind of be, not to be able, but some people may not want to do it, but it will be very useful to be able to translate your technicals.

into easy, understandable and explainable way to people. And that's a fantastic skill to have. All right. And that's a skill that can take places, different places to people. And I always think, you know, there is very difficult to find quants than can actually be incredibly technical.

Javier (38:37.201)
at the same time, have the confidence to explain things in the more simple way than, you know, by the way, you probably remember the phrase from Einstein that say things can be simple, but not simpler. Okay, so, you know, you can explain things in a simple way, but maybe they're quite complex, no? But the important thing is that, you know,

It is, it requires a lot of confidence for people to be able to do that because it's very easy to bombard people with a, with a lot of jargon and stuff like that. So being able to build those skills as you go along, it is an incredible, powerful thing because you still have your technical knowledge. Of course, I mean, things that evolve, you need, you know, you know, people talk about, I mean, I remember when, when I think that, that, that, that allow me to, to, to,

basically get the greatest opportunities and I'm incredibly grateful to the people that hire me. It was because I can actually code. I can actually basically program. We always think, oh wow, if you're not being able to program now, you can't do that. But if you can program and at the same time you can articulate things, you can explain things, it is very important. Maybe those skills in the near future are going to be very different because I mean, with

with a lot of the AI stuff, probably the coding becomes a less relevant thing, but asking the right questions becomes even more important as we know that it's crucial. So my advice is to people to say, okay, yeah, focus in your careers on the technical side is important. Develop a good skill is very important, but make sure that you don't lose the north about expanding the universe of things that you're thinking about it. And that, that,

don't tend to actually kind of underestimate the powerful of those soft skills that you are going to develop through your career. And if you anything put an emphasis on those. I think that's a very important, particularly to people who actually have very strong quantitative skills and they're very into technologies and stuff like that. I think it's key. Lastly, probably the other advice that I've always think about it and it makes me...

Javier (41:00.945)
is that don't be afraid to take risk. I mean, and I know that becomes a bit of a cliche, but the way that I think about this is that everyone feels that in order to be good in a subject, you need, for example, formal education on that. Okay. So, and that's true probably for some very specific subjects. Okay. So,

If you're going to become a neurosurgeon, probably you cannot learn that through YouTube and open the spine of someone, probably that won't go too well. But I think there's multiple other subjects where you can't develop an excellent amount of knowledge and skill without that. So what I mean by this is that don't put yourself into a box because you did X or Y or Z.

and at university, for example, your formal, oh, you didn't go to university. Just be open -minded, take risks, educate yourself. There isn't a vast amount of knowledge now. Take advantage of all the tools that are up there. It's an incredible, easy way to learn at this stage, I mean, without kind of going and spending a lot of money on tuition fees, and take advantage of that. And...

And what you need to do is just to have the mindset and the flexibility to say, oh, actually, I'm good about this. I got a lot of knowledge and I kind of put it in practice. And that requires a bit of risk taking.

Matt (42:36.408)
How can a student or a young person who may have started their career, how can they get into the crypto and digital asset side of the business? Do they need experience in that world to start a career?

Javier (42:50.545)
I would say no. I think what you need is first of all, if we go through a bit of what we've been talking over the last 50 minutes or so, but if you, first of all, you need to have a curiosity for what is all crypto. That's very important.

You need to have that interest, that motivation. We talk about decentralization, some of the ethos. What is the digital assets are trying to solve? What's the problem is? And again, these are very important things. By the way, I didn't say this to you, but I was born in Venezuela. I grew up in Venezuela. So I saw what inflation can do to yourself.

or to your families. And I saw what it can actually do to a country by managing monetary policy or actually completely depreciating the currency. So there is a lot of things that actually produce a lot of interest in your day -to -day life. So that's one thing. Two, I think it is important to kind of make sure that we don't underestimate how powerful is

is financial theory. I mean, all this, you know, basically concept of investments and financial concepts are incredibly powerful. So I wouldn't know, basically, you know, kind of underestimate that. So, you know, if someone have the interest in crypto and actually interest in financial theory, I mean, this is an incredible, powerful way to...

kind of a built a career. And again, you know, be motivated, you know, be basically relentless. I mean, I think that's basically, you know, resilience is one of the things that is more important. Okay, so there's going to be very good periods of crypto, there's going to be very bad periods of crypto. But if you really kind of think that this is something that you're motivated that you

Javier (45:10.705)
feel that it's actually have a lot of intrasound and fits within your way to think, yeah, I mean, this is maybe the right thing for you.

Matt (45:24.28)
So 10 years from now, say in like 2035, will crypto kind of be the main or cryptocurrencies, digital currencies, will they completely overtake the way people transact financially around the world? Will that become the main means of transactions?

Javier (45:44.817)
I just don't know if it's going to be in 10 years. I think it definitely will be in a very different place to where we are now in one shape or form. That's for sure. That's easy for me to say. But I think if you ask me what adoption means, what full adoption means, which is a slightly different way to put your question on, is that full adoption would mean that instead of actually you

opening your mobile phone and say, I'm going to transfer, you know, this, my friend of mine, you know, 20 pounds or so, you know, you will probably do that through a wallet. Okay, so and it will be basically through a basic through a block change. And I don't think we are very far away from that. Okay, I think it's the

I think if we going back to a lot of the points that we make in this discussion about the rails and how the bank industry is trying to catch up with technologies and all these different things, but at some point in time, you will see that basically the more natural way for people to transfer things is by using the block change. And that could be not only 20 pounds, can be something else.

and as can be some other digital assets. And I think that's what I do think at that point in time. Forget about people doing the swift transfer of this and that. It's just going to be basically writing a check, which is at the moment probably no one does anymore. It will be very, very similar with the block change.

Matt (47:32.952)
Looking the other way, if you went back in time and you were confronted with your 18 year old self, what would you say?

Javier (47:43.217)
Hmm I will

Prove it you -

What I would say to myself, I mean, I think it probably will do probably very similar to what I've done in terms of my interests. It's kind of difficult for me to kind of say, okay, I will actually have becoming a, I don't know, a singer or an artist or something like that because I don't really kind of have that interest at the moment. So my interests will be the same. I would probably will say that I will...

I would actually have taken more risk. I probably would actually have done that. And I probably would actually worry less. But then basically, it would be a different person. I would be wired differently. So I think taking risk, but at the same time, understanding risk is important. I think it's important.

Matt (48:32.664)
Mm -hmm.

Javier (48:45.905)
I think there is every single decision that you take day in and out involves some risk. Even not taking a decision involves taking risk. Okay, so, and I think people are probably be more familiar with the concept of risk from their very early stages. I think that's something that I will probably will tell to my 18 year old myself.

Matt (49:14.392)
Fantastic. Javier, thank you so much for joining us today.

Javier (49:18.848)
No, it's great to see you, Matt, and great to be here. And I'm very happy to basically to keep in touch.

Matt (49:28.664)
Thank you.

Javier (49:29.951)
Thanks for hiring.