“Breaking waves: does the crypto world have a future?” (Vladimir Smerkis for Forbes Russia)
Vladimir Smerkis, Forbes Contributor
Leading representatives of the world of cryptocurrency and blockchain have met onboard the cruise liner and analyzed trends and industry problems.
According to the latest “Hyip Cycle,” research by Gartner research company, the blockchain technology, and cryptocurrency market have been in a spin that lasted for several months, falling from the peak of inflated expectations to the lowest point of frustration in the technology itself. What do the key players of the cryptocurrency industry think about this chart, are we to wait for mass adaptation of the technology and what fate is in store for the main coins?
Twice a year, the leading players of the crypto world gather at a blockchain cruise conducted by the Coinsbank trading platform. While the previous cruises took place in times of complacent attitude to cryptocurrencies and the blockchain, the current market situation has created a cooldown period as far as the interest of the general public is concerned. The leaders of crypto-communities along with crypto millionaires from the Forbes List had to decide the fate of the world of digital currencies and the blockchain atop a huge liner breaking the waves of the Mediterranean.
Means of savings or means of payment?
One of the main issues on which the development of cryptocurrency depends is whether Bitcoin is recognized as a means of payment or savings.
Charlie Lee is known not only in the crypto world but also far beyond its borders: a scientist, a former employee of Google, he left the corporation to create his own cryptocurrency — Litecoin, whose capitalization is now more than $ 3 billion. This is the seventh largest cryptocurrency in the world. Lee sees Bitcoin and its closest “associates” as stable currencies.
“No-one can devalue bitcoins, nor print new ones, even the government”.
“I often witnessed hyip jumps over the past few years, but I think everything will stabilize, because the ecosystem will grow, mature, and people will begin understanding the true value of Bitcoin”, — said Charlie Lee.
In his opinion, the immutability of transactions and the freedom of payments associated with Bitcoins (at the discretion of the owner) speak in favor of future stability of cryptocurrencies. “No one can devalue bitcoins, nor print new ones, even the government”.
Lee admitted that he did not keep his money in the Ethereum network. In his opinion, a smart contract can be used for different purposes, but not for working with money: “The blockchain gives us decentralization, but it is inefficient and expensive: after all, instead of one server, we need 10,000, and someone has to pay for it all. Stable currency requires decentralization as a guarantee of protection against censorship, but the need for blockchain applications to work on a decentralized system is not always justified”. As an example, Charlie cited the famous Cryptokitties, an application for collecting and growing virtual pets, which disrupted the Ethereum network precisely because of unnecessary decentralization.
However, Roger Ver, the creator, and supporter of the Bitcoin Cash cryptocurrency network (capitalization of almost $ 9 billion, fourth place) and the odious owner of the nickname Bitcoin Jesus, openly calls this position “economic nonsense”, — advises Charlie Lee to buy a book on the basics of economics and provides an example of Karl Marx’ labor cost theory.
“If people put in a certain amount of effort to produce a cryptocurrency, it does not give it any value — as is the case with mud pies and apple pies. Demand creates utility, and the more efficient and useful a cryptocurrency is, the more people will want to use it”, — Ver explains.
The more applications of cryptocurrency — the better, and problems with its limitations must be resolved with the help of technological measures.
It is curious that during discussions of analogues of stable or strong currency, gold constantly makes an appearance. “Bitcoin is an improved version of gold, digital gold”, — says Charlie Lee. “I would like Bitcoin and Litecoin to become like gold and silver and eventually replace the fiat currency. They should be safe and as easy to use as credit cards”.
Here is crypto millionaire Brock Pierce (the capital that Pierce earned on online gaming is estimated to amount to $700 000 000 — $1 000 000 000) openly admits his sympathies for gold (the same as, incidentally, for the American Burning Man festival). He calls gold eternal means of value economy, which may well come in handy if the cryptocurrency bubble does collapse or humanity decides to abandon digital money as a concept.
At the same time, Pierce is talking about mass adaptation, a crypto-utopia, which he is building in Puerto Rico. The first wave of adaptation took place when China and Korea got hooked on online games in which digital currencies were accepted.
In his opinion, cryptocurrencies will first find demand in developing countries where there is no stable banking system and no strict regulation requirements: “Two-thirds of the population of our planet either have limited access to banking services or do not have it at all. Therefore, in the countries of Latin America, in Africa, we will soon see the beginning of the mass adoption of blockchain. After all, if you have nothing, access to something can finally change your life”.
Pierce compares this with the development of cellular communication in Africa: in places where there was never even a wire connection, mobile networks began being used immediately. As evidence supporting his point of view, he recalls that 5% of the population of the Philippines today use blockchain wallets to transfer money, and the government supports these initiatives.
He predicted that 20–25% of Filipinos will soon use the infrastructure involves blockchain. “This is what I call mass use, its second big wave”.
“Blockchain provides us with a record of what really happened — the truth”.
As for the market, Brock Pierce advises against paying attention to the price of cryptocurrency, calling it “the primary barometer of sentiment “, and admits that he prefers to diversify his millions earned with gaming through real estate, as well as investing in technology.
Another millionaire, one of the most outrageous blockchain supporters, a frequenter of conferences and the embodiment of elegance in his 72 years, John McAfee bluntly says that cryptocurrencies are a threat to the status quo prevailing in the financial world, and Bitcoin cannot exist alongside the dollar, and supporters of cryptocurrencies cannot be controlled by organizations such as SEC.
“Cryptocurrencies are only the monetary aspect of blockchain. Blockchain provides us with a record of what really happened — the truth. If HitBTC steals our money and this is confirmed on the blockchain, there is only one way to punish them — to stop entering this exchange”, — McAfee states, demonstrating an example of natural regulation.
One of the most colorful representatives of government circles at the conference is the former Prime Minister of Estonia Taavi Royvas, an energetic young man wearing white trousers and surrounded by a perfect looking family. He is the politician who signs 90% of his papers online and because of this, Fortune magazine called Estonia “the demo version of our technological future.” He himself is an advisor and investor in various crypto projects, including a blockchain application for running.
In our conversation, he boasts that one of the applications of the decentralized registry in his country is healthcare and the protection of Estonian medical data.
“I’m sure,” he says, “that blockchain technology is something that the government of each country should take into account. But I wouldn’t vote using blockchain. In our country, electronic voting takes place without any problems, and it is anonymous”.
Calling on the main problems of the industry, he begins with the convenience question: “I’m sure that there should be more convenient, intuitive wallets and applications than those that use a lot of hard-to-remember numbers, letters, and addresses. Secondly, there should be legal channels for transferring funds so that banks are not so suspicious of digital currencies and exchanges. Then crypto projects will be able to work in the legal field”.
Royvas believes that in 2018 it is impossible to have a widely implemented system that does not fit into the regulation and is not transparent. “Bitcoin criminalization is already in the past; today it is still much easier to use cash to launder money. And although it hurt the reputation of the crypto industry, today 90% of projects pursue logical and practical goals. I think one of the next steps will be registration of property rights or other rights on the blockchain”.
Another pragmatic player, Sally Eves, is a member of the board of Forbes Technology (a private club for technology leaders with the rank of general and technological directors). Ives is also a technical director and advisor to many digital projects, and she is also one of the world leaders in researching the social impact of so-called “explosive” technologies. Clearly separating the fintech aspect of the blockchain and the applicability of the technology, she is confident that the Gartner chart relates more to cryptocurrencies.
As an example of functional distributed registries, she cites her projects with the UN in Africa: “My blockchain projects are based on an already existing business. For example, a project that has been collaborating with SAX (Sustainable Assets Exchange — a platform for trading in compliance with ethical standards) has been involved in supply chains of materials such as rare African or Asian trees, from farmers to producers, in the market since 2008. This is an excellent example of the integration of blockchain technologies”.
Another project is underway — according to Sally, the UN does not yet allow disclosing all the details. This is an educational project in Africa, in which students receive remuneration in tokens for participation in school life, good study, after-school lessons, and participation in various circles and clubs.
For these tokens, a student’s family can receive funding. “We focus,” she says, “not only on tokenization or the need to attract children and teenagers to spend more time at school. Working with the local community, with people, with families is also important for us and for the UN.
”Hundreds of billions are easily manipulated, but it will be much more difficult to speculate with trillions!”
Bitcoin is now difficult to use as a means of payment due to lack of infrastructure, and as a means of preserving capital — due to the incredible volatility of the market. But, probably, both of these issues will be resolved in the near future. Mass adaptation will come immediately after institutional investors.
Full-fledged tests of digital currencies were held at the test sites of Malta, Switzerland, the Baltic States, and Gibraltar. Following the opening of the gates to the masses, volatility simply must fit into the classical canons of the stock market. Hundreds of billions are easily manipulated, but it will be much more difficult to speculate with trillions.