Tone Vays interview with Gregory Klumov

Today we offer you truly exciting and deep insights from two digital asset industry professionals: CEO of STASIS Gregory Klumov speaks to famous derivatives trader, analyst, and crypto trading expert Tone Vays. Their conversation covered many topics, so we split it into a few parts. Have an enjoyable reading!

Greg: Hello, Tone, it’s nice to meet you. How are you managing during these hard quarantine times?

Tone: Hey, I’m quite fine. I’ve managed to come home to the U.S. before the international travel shut down, and I’m not going anywhere much these days, just staying put.

Tone Vays on Bitcoin

Greg: That’s great to hear! So, let’s start our dialogue with the most popular topic in the crypto universe — the Bitcoin. We’ve seen various technological advancements and significant shifts from 3G to 5G technology during the last decade. But what about new developments in crypto space, what about improving BTC in particular? Do you think that the #1 crypto asset is already good enough, and it doesn’t need to evolve as we didn’t see a lot of improvements so far? Maybe it still needs updates like switching to other algorithms such as PoS, for example?

Tone: When it comes to BTC, there must be no discussion about switching to other algorithms such as Proof-of-Stake and never actually will be. Bitcoin is developing quite fast actually. Just because many people want a ship to Mars tomorrow, doesn’t mean it’s going to happen! Unlike Ethereum, which doesn’t have a real impact on society, Bitcoin has already made it, and it’s developers are doing something that will last for multiple generations. They are building an asset that is so valuable, that it could destroy the whole foundation if it collapses.

Bitcoin can actually change the world. This asset has to take its time, though. It’s really impossible to compare BTC with any other project. Moreover, Bitcoin is a store of value for many people who want to make a legacy and transfer it to other generations. People want to move their money, hold it, and make sure it will be as secure as possible. I’m sure BTC will scale and it will be able to handle millions of transactions. Next, it will be private as a second layer, but the first one has to stay as decentralized as possible. Unfortunately, the way Satoshi started the initial layer, is the way it’s going to stay, as attempts to change it will ultimately destroy the very concept of what Bitcoin is nowadays.

Greg: So let me get it straight — do you think that other assets are doomed to slow death or oblivion?

Tone: Well, many speculative coins and useless tokens will have a slow death or will suffer government regulation as securities. Unlike in other assets, even the top ones, there is no corporation in Bitcoin, and no people are in control! So there are only two outcomes for the projects in such space as none of them are actually decentralized. Eventually, there might be a dozen nodes, and there might be a single miner, and all this stuff switches to the PoS algorithm. Because there is no point — none of these alternatives to BTC will ever be able to compete within the mining game. So, the miners go to the PoS since mining would be adapted to their coin. For example, another halving or two, and no one will be mining Litecoin as it can’t double in value for another four years! Why anybody needs such an asset in their lives?

Tone Vays on Mining & Hashrate

Greg: Okay, so Bitcoin is facing halving itself soon. We’ve seen a drop from its heights as much as 40%, disallowing miners to be competitive and make profits of activities. What do you think about the hashrate after the halving?

Tone: After the halving, I believe it will drop, but after the new price records are reached later, I expect it to get to new heights later. I run a miner, and I will do it in the future. Perhaps later, I will spend even more money to compete in the mining game as I need this asset in my life. Nobody really needs coins like Litecoin or Dash in their life! We pay for things that we need. Maybe one won’t profit by paying for an internet bill but will continue to pay for it regularly as it’s one of the primary needs of values. Many people will eventually be willing to pay the Bitcoin mining bill because it presents an end product of a successful decentralized political-neutral global currency.

Greg: Okay. But still, hashrate has been historically the indicator of the price. What do you think is a critical level of the hash rate that could challenge the decentralization network?

Tone: I don’t know what the level of hashrate could really endanger the network. But I think that if the worth of BTC after the halving would be like $1,000 it may put the whole network in danger. At the same time, I don’t expect it will be falling below $5,000 after the halving. But in case something happens and it falls below $2,000 and stays like this for a week or more — I think, then we’ll be in danger.

Tone Vays on BTC Price

Greg: So what do you think contributed to the dislocation of BTC’s price in March, and what is the chance that institutional money will come back this year?

Tone: I was always skeptical about the bull market in 2019. I’ve got a lot of trolling and negative comments all across social media on being a bear on BTC’s price. But nowadays, in April 2020, I’m a bull. And now, when I make statements that I’m buying all the dips, everyone thinks it would go down, which keeps me going and makes me more confident with my bullish statements. When the market fell, people panicked everywhere. If you are afraid that you may lose your job or you’ve already lost it, you won’t keep speculating with crypto. If you did lose a job and you don’t expect any income soon, you must spend some BTCs to survive. So many people have substantial accounts, and they feel the same way. It’s not that a lot of people are selling, it’s no one is buying much these days.

Greg: Okay. But money has to come from somewhere anyway, right? Just to keep the price level, it has to come from certain places, from institutional investors maybe?

Tone: I believe there are some retail investments, as a lot of them hold stocks and now feel that it’s dangerous, so they have to put it somewhere. I don’t say Bitcoin will go to new heights right now, and I think it will be stuck in the $6–10k range for the rest of the year. I’m watching the political landscape and see many people that are trying to eliminate cash and U.S. is pushing forward this “digital dollar” initiative. And if they go this path, it would create another huge opportunity for Bitcoin.

There are also other “black swans” that drive BTCs speculation — the breakup of the European common currency is the biggest one I believe. ECB will not be able to infuse liquidity as the Federal Reserve can, as it’s not set the same way. Potentially, I believe that the European population will become more interested in such an asset as Bitcoin.

Tone Vays on Bitcoin’s ultimate value & security

Greg: Yes, the topic of cashless money is resurging during the coronavirus, and people are trying to shield themselves from everyday things as paper money or anything that can be a host for COVID-19. Do you think it can accelerate crypto adoption globally? It can be a store of value, a digital gold. Anyway, people want a simple and reliable payment tool to use instead of cash and not only to pay for coffee. What do you think?

Tone: Oh, 100% Bitcoin is probably at least a decade or even two away before becoming a unit of account, when you can actually price things in it. In fact, I know people who already put prices in BTC for their services! I think it’s challenging, but there are certainly use cases for stablecoin and digital government currencies with a “unit-of-account” feature. Anyway, all these digital and not-paper-coins will not give you my favorite one: the so-called “unconfiscability” thing. My BTCs are the only things I can hide, protect, store, and no one knows how much I’ve got or where I’ve put them! When it comes to traditional government currencies or even stablecoins, it’s simply not possible. I expect that all the surviving stablecoins will sooner or later follow the government regulations. And finally, there will only be 21 million Bitcoins, but other assets? They may create as many coins as they want. So, any transfer conducted with stablecoin may be rejected by a particular entity if they don’t like it. To summarize, even if the BTC never becomes a unit of account, it may undoubtedly be a thing that people will always be interested to have no matter what.

Greg: Okay, but certain blockchain analytical tools can track all the activities already. So when you deposit your BTC, your transaction can be screened and scored to reveal how “clean” your assets are — whether they are stolen or whatsoever. All the large transactions are checked.

Tone: Yes, there always be a battle on that, and developers are aware of that as well. But eventually, if you want a functioning society, you need to have an element of cash, a certain untraceability. Let me tell you an example: back in the days, the U.S. government tried to put a machine in any single business to trace dollar bills on cocaine stains and came to the conclusion that almost every note had been marked by it to a certain extent! So, the government realized that if they implement this policy, the economy would collapse in case of traceability becomes absolute. So, smart people in the state understand that there must be an element of this untraceability; otherwise, you have no commerce. And Bitcoin will serve that role. The people will eventually demand it, as you can’t have a 2-tier financial system, there will always be a need for cash.

Tone Vays on next wave of SCAM projects

Greg: Do you think the next bull cycle in Bitcoin can provoke another round of scams, we’ll experience the same bad actors as back in 2017–2018 it will bring another wave of scam projects?

Tone: Oh, that’s a really good question! I think they will be a little less reluctant to act. Hopefully, the next giant bull market cycle will come significantly later, and after most of these useless altcoins come to ultimate and expected failure. There was quite a time when all these “dot-coms” skyrocketed, but eventually, people realized that there must be a business model present for this to work.

Greg: That’s true, but we still see that some people continue to invest in various Ponzi schemes and pour millions of dollars of cash into fraudulent projects. Can any change be expected?

Tone: Well, people need time. Look, Amazon didn’t make real profits for ten years, but eventually, it outperformed the competitors as it had an actual business model. At the end of the day, there must be some MVP present to make it happen.

Tone Vays on BTC’s purchasing options

Greg: What do you think about importance of crypto purchasing methods? Being able to buy Bitcoin as simply as possible, just in a few clicks?

Tone: It’s not about that, it’s about how much value it can bring to you.

Greg: Ok, but there are more hardships on the way. I mean, the interfaces are still clunky. Companies really need to improve their solutions to provide a smooth user experience if we want it to go mainstream.

Tone: Yes, it’s still hard to acquire BTC. Anyway, people in the world now have more chances to work online globally. They can switch to work for crypto and Bitcoins, and put prices for their services in digital assets. But acquiring BTC with a credit card means losing your anonymity. So the best thing is to work for it or ask your boss or clients to pay BTC as a salary. You don’t need to reveal your identity when you spend it as well.

Greg: I think that at the end of the day, the crypto purchasing experience must be enhanced significantly: we must overcome the technical issues and be able to hold, sell, buy crypto as simply as possible. We’ve developed STASIS Stablecoin Wallet, having this goal in mind — to simplify access to crypto and enable both users and institutions to touch this industry and get involved…

To be continued…