Second part of initial interview with Simon Dixon, read first here https://fuk.io/interview-with-simon-dixon-ceo-of-bnktothefuture-part-1/
What do you think is better at this point – investing in crypto companies i.e. through your platform, or rather buying cryptocurrencies? Should people buy shovels or buy the company selling them?
– Really, I split the industry into a few things. Personally, I’ve been through six ultra high return waves since I got into the industry after speaking at the first Bitcoin conference. The first was Bitcoin itself, which has turned out to be very rewarding. By allowing people to own their own money and spend their own money it’s been very rewarding for the people that actually save it as a store of value, as well as experience the freedom of using it as cash.
Then we’ve got altcoins, where people were looking to do better things, fork off of Bitcoin and create different models where many scams came from, but also many ultra-high return opportunities came from those experimenting with real innovation.
Then you had the equity in the companies through BnkToTheFuture, which was allowing people to invest in the companies of many of the crypto industries -we have several unicorns and they brought ultra-high and valuable returns.
Then you had the whole ICO and token wave and many of the people were investing in Ethereum mining through our platform, right in the early days, and Ethereum produced a very, very high opportunity of return. Many of our investors invested in some of the tokens through the platform and benefited from the ICO boom, and we’re not sure where that’s going to go next.
The next wave that came was hard forks, where people were rewarded for owning cryptocurrencies by receiving another cryptocurrency. So if you were in Bitcoin, you got Bitcoin Cash, which was free and created another ultra-high return opportunity. Now we’re at the stage where we’re not sure where the token market or the securities token market is going, and we’re seeing a resurgence towards equity.
My answer to you is that the way BnkToTheFuture.com was designed was to allow you to be diversified in many different things. We knew the future of finance looks very different from the past, and that was our investment thesis. We wanted to invest in many different things because we didn’t know which companies, cryptos, ICOs, securities tokens or the next innovation in finance, were going to fail or were going to succeed. So we looked at putting together a due diligence process whereby we could have good teams, reputable teams, that sometimes fail, sometimes get it wrong, but some of those opportunities, the ultra-high opportunities, came from this industry, and the only way I believe to actually build wealth in a responsible way is to keep it diversified and believe in the omission over the long term. You should be diversified. For example, there’s a movement towards equity right now because people want real value and they’re fed up with tokens that don’t necessarily have intrinsic value beyond those network effects in a bull market.
But, at the same time, I’m sure those tokens, or securities tokens, or these cryptocurrencies, when it returns to a bull market. But then the equity also benefits from the performance of these cryptocurrencies, because the companies hold large positions in their otkens, it also becomes something that is backed by a real asset and has more accountability in the legal sense. Securities tokens are looking to combine the best of the legal protections of equity with some of the benefits of tokens, but we’re not sure exactly where that is going to go next. The only way to do this is to be diversified, that’s been the approach we’ve followed all the way through and we continue to support new innovation and new technology in this industry. Whatever we are investing in and whatever we are looking at, we open it up to our network of investors on BnTtoTheFuture.com when we can.
Your website is fully KYC/AML compliant; what do you think of exchanges that want to let users be anonymous? Don’t you think decentralized places for buying and selling tokens are the future?
– There are two-tiered markets, and I think both of them are important. The regulated market allows people that identify themselves, institutions that identify themselves, and entities that identify themselves to be able to onboard into the crypto market in a way that may not necessarily protect their privacy because governments have an agenda, and that is to do anti-money laundering and consumer protections. Therefore you have securities laws and money laundering laws and all sorts of things we had to spend years and years, and years and much money over the time to actually comply with. Whether you believe in that process or not, we have to comply with them and we have to respect that that’s how a centralized company works. It allows people to be onboard and it allows people to participate.
At the very same time, we often invest in some decentralized companies that are doing new and innovative things that allow people to actually go peer-to-peer. In many of our traditional investments we like the peer-to-peer market as well and we look to support that industry. I believe that having a very innovative decentralized market means that the regulations are kept in check and they perform the role of regulating the regulator. Throughout history, no one has regulated the regulator, so there has always been that problem of how can you ensure that the regulator isn’t corrupted?
We saw in 2008 that sometimes the regulator can get things wrong and support industries that are very corrupted and problematic. So having an alternative to the traditional market with the peer-to-peer market I think is the role these decentralized exchanges and services will have in the end. They may be more convenient for consumers because they don’t need to upload KYC and do all these things and go peer-to-peer, but they also come at the expense of convenience because you need to understand the technology, to know how to store your own private key on a hardware wallet, to know how to have two factor authentication, personal security, unique passwords for everything you do and with the movement, comes an added responsibility of securing your own assets.
I think both are really important and that personal security is one of the skills everybody will need to master in the future. I think it’s really important to have the two side by side, and therefore we have adopted that approach at BnkToTheFuture. We are a centralized company and we are compliance driven therefore we have to do what securities laws and money laundering laws and all these laws state is important for the government’s goals. At the same time, we’re supporting the decentralized industry and we are excited about the decentralized innovation and how that can actually regulate the regulator, and produce a better financial market all around. I believe you will make your choice and you will diversify across both or there will be a reason why you might want to choose one over the other. But really, the two go hand in hand and they are a diversification against each other.
Do you think BTC can hit 20,000 USD again by the end of this year? What are your price predictions?
– If you are investing in Bitcoin as a store of value and you’re not using it as a transactional mechanism, because it allows you to own your own money and spend your own money, then you are either investing into the long-term or you’re a trader. A trader is somebody that’s trying to speculate on the short-term price. I used to work as a trader as a market maker in my corporate days in investment banking, and I know firsthand that 90% of lose money at the expense of the 10% of insiders. The same is true in crypto. You might make money on a trade, you might do well, but the 10% of insiders are going to be making money off the 90%. You are either a professional trader or a longer-term investor, the non-profIf you’re an investor you’ve got no choice but to either ignorantly hold it, or get educated on the economics of Bitcoin.
The user case of Bitcoin, that I got so excited about when I spoke at the first Bitcoin conference and inspired me to write that book, ‘Bank to the Future’, and started invest in that industry by creating the platform BnkToTheFuture.com, was Bitcoin providing an exit from traditional finance and later becoming a store of value for the long-term because of its fixed money supply and economics. Now people can actually have an alternative where they can own their own money, spend their own money. The traditional financial system will create more and more reasons for people to want to own their own money, spend their own money, and as that happens because there is a fixed supply as more demand for it grows, it can only come out in the price.
In the short term, Bitcoin can pump, can dump. I’ve personally seen my $30 Bitcoin crash to $3, a 90% decrease in the short term. I’ve seen my $1200 Bitcoin decrease to $250, about an 80% decrease and I’ve more recently seen my $20,000 Bitcoin go down to about $5,000 and back up a little bit, and who knows where it is going next in the short term. The answer to this question is that I have no idea in the short term what will happen. I might have a forecast but I’m not a short-term trader. I’m in this for the economics of Bitcoin and the long-term value of the disruption of allowing people to own their own money, spend their own money and how the monetary policy rewards the long-term saver rather than traditional money that rewards the debter. It’s a cop-out, but I believe that if you want to know my guess at the short term price, have a look at the last bear market, it was after the MTGox hack and it took approximately a year and a half in order to recover and get traction again – and we’re approximately halfway through the crash that started in December,. The latest crash happened in December of 2017/January of 2018 and we’re approximately 10 months into that in October. I would imagine by mid-2019 some of the user cases that drive new users into this market, a crisis in the traditional financial markets, or there will be new on-boarding that brings institutional investors in, like the ETF to lead to the next bull run and new highs.
Bitcoin rewards the patient person, the person with strong hands, and the person that can hold on if they believe in the economics. In the future it is going to either be worth a hell of a lot more than it is today or it’s going to be worth nothing because this experiment failed. I believe that the first is true, therefore I continue to be long-term and try to trade as little as possible.
Do you invest in cryptocurrencies or watch some? Which ones do you like and think have a good future ahead of them?
– When I joined the industry there was only one cryptocurrency and that was Bitcoin, which was forked off into several other altcoins, which had virtually no interest or volume and were incredibly easily manipulated.
Bitcoin should always be the core of a crypto portfolio in my opinion. I believe that the ability to own your own money, spend your own money, and have a monetary policy that rewards the saver rather than the debtor as a long-term store of value because of it’s fixed money supply, is something that is going to be around for the long term. I also believe that there are ways to outperform Bitcoin or lose your Bitcoin if you’re willing to take more risk, and I’d diversify into more alternatives and more speculative things.
I also believe that you should diversify into other asset classes like equity that benefits from the growth of the industry and so my approach has always been that. I also believe that there are going to be other user cases. The Blockchain that does disruption in central banking and traditional currencies may not be the same Blockchain that does disruption in capital markets, IPOs, and venture capital. Maybe it’s not the same Blockchain that does disruption in the derivatives,futures and swaps markets. I think these user cases may be done on Bitcoin, or they may not be done on Bitcoin, they may be done on different Blockchain all together.
I believe that the user case of having every transaction transparent on a Blockchain like Bitcoin might be not so beneficial for other user cases that require ultra privacy and fungibility, with no ability to check the blockchain for those transactions. It is very hard to see how this can all be solved by one thing. Many people are working on solving these problems on the Bitcoin blockchain by having side channels and lightning networks, and different innovations, and I hope they succeed and create a better version of Bitcoin that people can use in different ways.
I also believe that competition is good, and that these different user cases are important to innovate, but I appreciate that these are way more speculative and they might just be, as a result, a way of accumulating more Bitcoin and having more Bitcoin in the end pr losing it all if you speculate wrong. This is very speculative and no one knows exactly where it is going to go next. Do I own other cryptocurrencies? Yes, I do. Do I own Bitcoin? That is where the vast majority is, and I believe it is right for me. And do I diversify and look at other things and find them interesting? Yes.
My, and my team’s full-time job at BnkToTheFuture.com, is to stay up-to-date with this industry and even then we can’t keep up all the time.We’re having to hire a lot more people in order to cope with that. That’s why we created the platform really – we believe in diversification and also supporting Bitcoin in becoming what I believe will be the most disruptive thing to the traditional financial markets and one of the most important innovations in financial history.
So if smart contracts come to BTC, do you think ETH will still be used? Already tokens made on ETH use their own tokens as fees; don’t you think BTC going into this niche will finally kill ETH?
– Smart contracts were enabled on Bitcoin before Ethereum existed. It originally was done through a project called Mastercoin that eventually became Omni. One of the most popular Omni smart contacts that exists on Bitcoin is a stable coin called ether which is pegged to the dollar. Then there were other projects like counterparty. which With both of these projects, Vitalik, the founder of Ethereum, was working on trying to support them. He decided that in order to create a platform and blockchain optimized for smart contracts you needed to start again, and you needed to be more flexible. The changes weren’t necessarily gonna be made on Bitcoin.
So far the process of tokenizing on Ethereum has got a lot more traction and has attracted a much larger development community. Could Bitcoin come along, and through side chains, and different ways of creating contracts disrupt Ethereum? Yes, it could. Will it do it? Maybe not. Maybe we need to optimize two different blockchains for two different user cases because it is very hard to be everything to everyone at the same time. Maybe the great thing that makes Bitcoin Bitcoin is that it’s very hard to change, and others might be able to change faster I’ve personally spoken to some of the blockstream teams about their liquid network that’s being built and might be integrated with lightning channels that allow people to achieve much faster transactions and just focus on value transfer without all the bugs that come from trying to create a whole and complete language for smart contracts. I’m very excited about that.
What does the future hold? It’s very hard to actually know, but what you can do is diversify,
So what are you working on right now, as BnkToTheFuture and/or yourself?
– Let’s start with the company. BnkToTheFuture.com is currently very excited about our coming product launches. We’re excited about our secondary market which will allow our investors that own equity in some of the most valuable companies in the industry to sell them to others that wish to buy through our platform. creating a market-driven price for some of the most valuable companies in the industries. We’re excited to launch our first secondary market and scale out more and more. We’re also excited about launching the BF wallet which will allow people to access some of the membership benefits that come with owning the Bnk To The Future token, (BFT), but still own them on their own wallets and connect it.
Also expanding the BF wallet to be a wallet that supports securities tokens. In 2019, we’re excited about rethinking our platform and building an alternative platform, which will be a securities token exchange, which also integrates with a lot of these different moving parts we’re building. Thinking about how we can rebuild the platform from scratch given the technology in the environment that we’re in today is exciting. We are really excited about lauching all those new products and at the same time staying on our goal of what we originally achieved – supporting the disruption of traditional finance through technology by bringing investment opportunities, and trying to serve our investors better.
We’ve got lots of things we can improve on. We listen to our investors constantly and our investors are constantly telling us things that they would like to see and things that we might not have done as well as they want. But the fact is that we’ve been here since 2010, and we are aiming to be here for a long time and support this industry for the long term. We willadjust to what our investors demand and how the market changes. Some the trends we see, for example, the shifts that we saw from equity to tokens, to utility tokens, and now to securities tokens, and back to equity. There may be a shift from Ethereum based tokens to Bitcoin-based tokens or EOS-based tokens, and we’re going to be navigating that environment, and trying to stay one step ahead of a very fast-changing market by diversifying and trying to support the industry where we think we can, and in the way our customers, clients, and investors want us to.
In terms of myself, I’m very excited about being the CEO of BnkToTheFuture.com. It’s superseded my expectations in terms of the impact that this had in funding many companies that have come a long way in disrupting the traditional financial sector. I’m very excited about diversifying across different opportunities, and I’m very excited about staying true to my root and evangelizing for the benefits that I think Bitcoin can produce for people to own their own money, spend their own money, and benefit from a monetary policy that was designed to reward the saver. I’ll continue to speak around the world and in different countries, We are witnessing the disruption that this tiny little experiment of 20-40 people from that first Bitcoin conference I spoke at is having in the traditional financial industry. I look forward to seeing that grow over the years and decades ahead and still being a part of that.