Tony Simonovsky
May 7 · 5 min read

At a young age Jeffrey Wernick parlayed $5,000 in $250,000 and that success was hardly the exception. Later in life he would be an early investor in Uber, Airbnb and most notably, Bitcoin. He’s a strong believer in blockchain technology and a regular speaker at blockchain conferences. We’re proud to have him on Value Tokenized with the CryptoTwins and we hope that you learn as much from him as we did.

Why projects will be tokenized

There are two reasons a project might be tokenized. The first is if the cost of capital is cheaper. That probably means, unfortunately, a less savvy investor because the cost of capital is already cheap in the capital markets for real estate.

The second reason is governance. If somebody goes to a fund like Blackstone, they will want to be involved in the governance of the project. If the project is tokenized instead then nobody is involved in governance and the person or company managing the project doesn’t have to answer any questions because tokens for the most part have very bad governance. Project managers talk about the community but at the end of the day they don’t say anything to the community once they have the money.

Why Jeffrey believes Ethereum isn’t living up to its potential

Jeffrey stated that he wasn’t against Ethereum because of a lack of respect for Vitalik and what he is trying to accomplish. Instead, he doesn’t believe that Ethereum is being used for a good purpose, I.e. it functions mainly as a platform for “shit coin ICOs”. Jeffrey believes that the ICO destroyed a significant part of the value of Ethereum.

Why STOs could be in trouble

There is the possibility that security tokens will follow the same life cycle as utility tokens. Not that utility don’t have value but their structure was bad from the beginning. The token design and incentives and the government structures were bad from the beginning. With that being the case there is a chance that the same thing happens to STOs and that investors are taken advantage of by predators just looking for a quick buck.

What Jeffrey finds interesting about tokenization

The interesting aspects of tokenization is that it’s possible to move everything onto a distributed ledger. That way there is a lot more information publicly available, a lot more transparency. Once that happens you can ignore what people say because the words become irrelevant.

That’s what trustless means, trustless means I don’t need to have a conversation with you, I don’t need to believe you and I don’t need you. That’s all possible because nobody has the capacity to cheat another person because all of the relevant information is on the ledger and the ledger speaks for itself.

Why the 2017 bull run was artificially created

In Jeffrey’s opinion the run up in prices in 2017 was artificial. It was related to the futures contracts and Jeffrey believes that the runup was the government’s way of destroying Bitcoin. First they create the bubble in order to burst it, to discourage adoption. Then the government can start talking about regulation and going after projects.

How central banks feel about Bitcoin

It’s clear that the beginning of 2018 was when the government started banning Bitcoin and banning Bitcoin mining. So that’s when the war began. The central banks knew, BIS (The Bank of International Settlements) knew, that widespread Bitcoin adoption could reduce their power and influence. So they got together and decided that Bitcoin and cryptocurrency needed to be stopped. They were afraid of cryptocurrency being used for payments or as a store of value.

The lack of thought leaders in cryptocurrency

What’s sad is that there are not many thought leaders moving crypto forward. The thought leaders that there are can’t seem to collaborate and cooperate and many of them seem to be more interested in making money and building their personal brand than developing blockchain technology as a whole.

What security tokens can do to succeed

Security tokens will succeed to the extent that you are able to have good people governing the project. The problem now is that there are managers with very little skin in the game and there are a lot of agents accepting and giving bribes. Then there are the board members who should be doing a good job for the project but they are paid off by the management team.

Finally, there are accountants who are supposed to provide accurate financial statements, but then management pays them to provide corrupt financial statements. In order to have a good project you have to get rid of all of this and have really good, competent people running everything.

What the cryptocurrency community is doing right

10 years ago the Bitcoin white paper appeared and in January there was the Genesis block. Today you have a whole ecosystem of people working on it. There are miners, people developing the open source code and all sorts of other people contributing and who organized all of this? Nobody. This is the perfect example of the invisible hand.

Every time you look at how many people there are right now actively engaged in the cryptocurrency community and how many people are engaged with Bitcoin and the lightning network, it’s all very impressive. It’s all impressive and they are doing all of it without anyone orchestrating it or managing the overall development. There is no central authority and there is no controlling figure. Satoshi is not out there saying, “You know I think this and I think that.” The cryptocurrency community is evolving organically and look how much is being accomplished, even despite the massive price drop.

Who has the potential to move cryptocurrency forward

Howard is a very smart guy. He is studying economics and could do something with that. Vitalik is also great if he can just transcend Ethereum as a project and focus on blockchain as a whole. These people all have a lot to contribute.

Watch the full interview in video format:

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Facilitating creation of internet of value for the humankind to be able to transact value as easy and cheap as sending an email.

Tony Simonovsky

Written by

Digital nomad, entrepreneur, blockchain enthusiast. I help companies raise money through token sales.


Facilitating creation of internet of value for the humankind to be able to transact value as easy and cheap as sending an email.

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