Q: What are your thoughts on the European Parliament regulatory measures? Do you think something like this was inevitable or do you think it is a major overstep?
Jumping straight to my favorite topic, I strongly agree with Brian Armstrong. Many of you know that I am a big advocate for decentralization and data privacy along with many other people in the crypto space. I also made a statement on our previous podcast “good luck regulating cryptocurrencies” that I addressed to all people trying to do such a thing.
It’s very important to understand that blockchain is not equal to privacy and can lead to a complete loss of privacy if handled incorrectly. It's interesting that the statement on privacy is coming from Brian Armstrong when Coinbase is a centralized crypto exchange that is complied with government regulation and has the possibility to ban users. Many people learned a lesson the hard way in 2017 when one of the largest and earliest exchanges of that time, BTC-E, was shut down by the FBI and all individual funds were seized. I know a small number of people were able to recover a portion of their lost funds, but I was not as fortunate. However, I was grateful for that painful lesson.
The reason I mentioned it is because we all need to understand that crypto belongs to us if and only if we keep our private key and/or seed phrase secured. If we use custodial wallets, keeping funds on centralized exchanges, it’s no better than keeping money at the bank. Those funds can be taken away from you meaning that they don’t really belong to you.
I don’t want to attack Brian Armstrong or other founders of centralized exchanges; they’re doing a great job bringing more people into the space offering a simpler way to purchase cryptocurrencies. Since they do involve fiat in that chain, they’re facing completely different regulatory demands. And for sure I don't want to be a hypocrite as I also run a centralized NFT platform FlashBack.One. The reason for this was to bring more people from the Web2 space into the world of Web3 seamlessly. At FlashBack we want to bring them on board and then educate about Web3, crypto, NFT, and how to store their data in a more secure way afterward.
I should definitely say if you’re buying crypto at the centralized exchange with your bank card. You’re actually making other people’s jobs easier to track you. Public blockchain transactions are available to everyone, you can see how much funds are stored on a specific wallet and where these funds came from. So now imagine if the entry point was your bank card with your name on it. Do you think all other transactions are fully anonymous? No, they can easily be traced back to you.
Q: What are your thoughts on the Stablecoin transparency act and do you believe Senator Hagerty’s remark that the bill won’t put stablecoins in the hands of “unaccountable bureaucrats who threaten to choke off innovation"?
We need to start with another question. Why do people use stablecoins? With increased globalization, remote work, and cross-border business transactions, why do bank transfers take days when they should just take seconds? And that’s one of the reasons why stablecoins took off. You need to do a USD transfer to your colleague, the bank will take a few days, you don’t want to do a transfer through Bitcoin as your settlements are in USD and you don’t want to bear the risk that comes with the currency conversion. Now you have USDT or USDC, a stablecoin that is pegged 1 to 1 to USD. And this stablecoin allows you to send money in a few seconds without any interference from banks.
Every time someone is offering you help or a “protection”, do you think they are just very nice people? No, there’s always some other reason that you might not know and you might never know about. The Transparency Act is pretty much this kind of person telling you “I want to help and protect you because I care about you”.
The first USDT tokens were created in 2014, why didn’t the Transparency Act appear then. Do you think it’s somehow related to USDT reaching a size of 93 billion dollars in 24-hour trading volume? I feel there’s some connection here.
The government securities are a very nice attempt to bring extra funding for the government. You see, here’s your friend who wants to help for his own reasons. It seems quite interesting to hear that act being introduced when USD is no longer having sufficient gold reserves as it used to have.
The government's actions with this act totally make sense if you put yourself in the shoes of regulators. The question is would it affect you if you switch to another crypto that is decentralized?
Q: What are your thoughts on both the concerns about security and the worries over energy?
I’m always laughing when people say Bitcoin is affecting the environment as if money printing does not. El Salvador, for example, found a way to use a volcano to mine bitcoins from a natural energy source. There is a Canadian project that already uses green energy for Bitcoin mining in North Vancouver. I also watched one video not so long ago where one lady was showing their fancy tesla power station. Following this, a journalist asked what energy they use for these electric power stations, and she pointed at their coal plant that was just behind these stations.
There is a lot of harm from our daily routines to the environment from some really unnecessary but convenient actions. When we’re talking about using energy to mine a decentralized cryptocurrency that can help every person on a planet regardless of their gender, race, age, occupation, citizenship, or any other attributes to get access to basic finances and gain financial freedom. Why are we trying to stop it when energy waste from the banking industry is double according to the Galaxy Finance report.
Q: What are your thoughts on US Banks creating their own stablecoin? Do you feel it was inevitable and do you think most people will move towards using it? Or that it directly takes away from the birth of crypto as a decentralized asset?
My opinion here is quite short. CBDC (Central Bank Digital Currencies) are centralized and no better than fiat in terms of decentralization and privacy. I do see lots of value for banking operations, cross-border corporate transactions, and even government payments. But we all hear the same statement again “protection”. USDF will allow them to trace every single transaction far easier than they can with banking and obviously cash-based payments. I will leave it to you to connect the dots.
Q: The New York Stock Exchange, the world’s largest stock exchange by market capitalization, wants to be the marketplace for NFTs just like with stocks. Is this a positive or a negative for NFT marketplaces? Is this a signal of the power of crypto as the old guard dogs are finding footing in the space?
It makes sense for large institutions to enter the field, no one wants to miss out. The more transactions we have the larger the market grows. OpenSea and Rarible are also centralized platforms to a certain degree. I feel NYSE stepping into this market can actually drive more people into the Web3 world. It’s just our responsibility to educate them about data storage and decentralization.
Q: We see large institutions entering into the metaverse because of economic gain, what kind of opportunity do you see for small businesses and individual economic advantage?
Oh yes! For sure. Metaverse helps businesses to get access to people from all over the world without any need to commute. For large players, it’s also a great PR opportunity as now everyone talks about JP Morgan or for example Mcdonalds that opened up a location in the metaverse.
For an average business, it always depends on the use case. For example, we have so many small galleries in NYC and they only have access to people locally as no one will be taking an expensive flight to come to NYC for a small gallery meetup. However, now they can host offline and online events in the metaverse at the same time. This gives gallerys access to a much larger market.
Now, let’s imagine Real Estate. Many people are buying apartments, buildings, and land in other countries. In most cases for them, it’s an investment opportunity, however, they don’t have time to actually fly and check this place out in person. Architects usually create a 3D model of such properties for buyers’ convenience. Now they can do it in the metaverse and purchase such property with NFTs. That actually eliminates a middle man and make transaction simpler.
Another example can be a simple team-building gathering for a fully-remote company. How much fun is it to gather in the metaverse compared to a zoom meeting? I can continue with so many examples, but my main point is that metaverse allows people to engage in a more interactive way whether it’s for business or just for fun.
See the full interview below: