This past week I had the absolute pleasure of speaking to eToro senior analyst Mati Greenspan about how Bitcoin and blockchain technology are developing and what the future holds for crypto.
Mati is the grandson of a self-made billionaire, and his long road to financial expertise started at a very young age. During his youth, he would research and write down the prices of assets such as gold and deliver his notes to his grandfather so he could make decisions regarding his portfolios.
During our talk, we discussed interesting topics surrounding Bitcoin and blockchain technology, such as how Bitcoin is developing both as a store of value and as a currency, the impact of regulators and governments on the Bitcoin market, the reasons why BTC will keep increasing in price vs fiat and, of course, the future of cryptocurrencies.
You can check out the video of our interview below. There’s even a special appearance by a future Bitcoin expert!
We started our talk by discussing how Mati was introduced to Bitcoin during his early days at eToro, and how Bitcoin made him completely rethink his perspective on money.
First of all, it’s important to underline that Mati’s expertise is primarily in financial markets, with Bitcoin being one of his more recent discoveries having first heard of the asset around 2013. His love for the king of crypto developed due to its decentralised and permissionless nature – something Mati truly prizes for a store of value as no government or agency can directly influence or completely control it.
During Bitcoin’s early years, Mati was cautious when discussing the topic, even though he always saw Bitcoin for what it is: an alternative digital currency that is owned by users.
Mati believes Bitcoin is a serious contender to gold and other “stable” assets (like oil) even though it can’t currently be used as cash as it’s not widely accepted in the mainstream. Mati mentioned during our chat that he thinks there is a big chance Bitcoin will one day be accepted by merchants, but there’s still a long way to go:
“We’re getting close to full penetration. Everyone (in the developed world) knows what Bitcoin is, even though there are some stigmas. We’ve come a long way from nobody ever hearing about Bitcoin.”
Of course, with greater improvements come greater challenges. For instance, Mati mentioned one of the most pressing issues the Bitcoin community is currently facing which wasn’t a big deal back in the early days:
“In 2013, there weren’t many altcoins. Today we have a lot of tribalism.”
Is there a way cryptocurrencies can adapt and learn how to coexist? Or will the cryptocurrency market remain immature for the next couple of years?
— Mati Greenspan (@MatiGreenspan) May 30, 2019
Mati spoke about the likelihood that Bitcoin will evolve into a form of P2P cash instead of “just” being a decentralised store of value:
“I don’t know that it can – at this point, it appears that ship has sailed. The LN (Lightning Network) is not user friendly, there are liquidity issues, and it’s not easy to use. Although it’s pretty cool to send small amounts. But I don’t see merchants using the Lightning Network. The way I see it, Bitcoin can be used as a global reserve currency.”
As a short-term (or potentially long-term) solution, cryptocurrency users simply use other cryptos like Bitcoin Cash or Litecoin in order to send cheap transactions. I agree with Mati when he says it’s simply easier to go down that road than trying to force the LN down everyone’s throats.
I personally believe the LN is a great solution, but there are many other potential solutions. We should focus on all the solutions available and not just the one. If there are issues with the LN in the future, there are alternative cryptocurrencies one can use to send money cheaply across the world.
We also talked about the role regulators are playing in the crypto space. Mati was quite positive on the overall outlook, but he believes the clear path is to focus on self-regulation:
“Each regulator needs to learn how to treat Bitcoin in their region, as it’s the first time we have a global asset by nature. India banned it. Other places are extremely friendly like Malta, Switzerland, and France. But we won’t have clear guidelines in the foreseeable future and regulation will be done on a one-to-one basis. I believe self-regulation is key (…) and the way to go in the future.”
Self-regulation means imposing standards to make sure people have the right access during the right times and do not overstep any boundaries or take actions that would damage the protocol. Basically, it means we need to look out for each other and for Bitcoin.
Can #bitcoin completely replace all the money on the planet?! ??????
My answer is… NO!!
Feel free to try and change my mind….. preferably after reading the article, please. ?
— Mati Greenspan (@MatiGreenspan) May 29, 2019
When the conversation moved towards the future of Bitcoin and cryptocurrencies, and whether BTC could ever replace the USD as a global currency, Mati spoke about the remote possibility of hyper-bitcoinisation – a hypothesis that argues fiat currencies will be replaced by crypto:
“I don’t think it will happen. I’ve recently written an article why I don’t think Bitcoin will replace all fiat currencies, but what can happen is central banks using Bitcoin as a store of value. Venezuela introduced the Petro, Putin is under pressure from the Russian Central Bank to regulate Bitcoin, and Iran is already working on their crypto-real, as Russia is working on its crypto-ruble.”
The fact that governments feel the need to buy and store Bitcoin – or at least to regulate it – tells me they’re starting to understand its underlying value. How will the market adapt? I cannot say. I would assume the more participants in the BTC market, the better.
Mati concluded our interview by mentioning how Bitcoin is helping the world economy:
“Bitcoin does not need to replace fiat money. If fiat is stable, there is no use case for Bitcoin. Think about a table – the more legs, the more stable. Bitcoin is just another leg to support the entire economy.”