This is the very 1st interview in the series, with Cryptocurrency fund manager Eric Wall from Sweden. He is the long term Bitcoin follower and currently Chief Investment Officer of the Arcane assets.
1. How did you get into the cryptocurrency industry?
Back in 2011 as a student at Lund university, I was studying computer science. Or more specifically anonymization technologies and looking into the Tor network. With the Darknet markets you can discover Bitcoin transactions, and my friend suggested I have a look at crypto. I did and the rest is history.
I had looked into the value of bitcoin and noticed that in just a few months the price had increased 100%. I thought that this was my opportunity to get into finance as it was a completely new asset class. Since it is computer technology oriented and that was my expertise, I saw an opportunity to learn.
2. What have been the most difficult times for you personally during your crypto journey?
Absolutely the Mt.Cox cryptocurrency exchange collapse. I was one of the victims. When the exchange went bankrupt in 2014 it took all my bitcoins at the time. In 2015 I had to start from scratch, and I felt disappointed with myself that I had taken so much risk and kept all my trading capital at one exchange only.
When I started again, I chose a completely different strategy and attitude towards trading in general. I was still a student at the time, so it was not a gigantic fortune, and I have gathered back all those losses from that time.
It was a huge hit against my personal confidence, and I started to ask myself: Do you really know what you are doing? I decided right there that I wanted to prove myself and dedicate my entire personal capability to learn anything I can from bitcoin. That was the best learning experience of my career.
3. Pioneers have been into crypto for a long time. Why aren’t the early majority in yet?
There are so many negative stories in the media that scare people and in general education is poor relating to money and economy unless those are your specialties. Someone said it really well, “Most people don’t understand money and most people don’t understand technology”.
As cryptocurrencies represent both at the same time, there is a lot of work still to do to raise education about them. That said, adoption is phenomenal and everybody knows the name Bitcoin today. I remember a long time ago when nerds would cheer whenever Bitcoin was mentioned. Whereas now blockchain technology is hyped in the finance industry and several Central banks are doing their own related experiments.
4. What is your view of the biggest threat to cryptocurrencies?
Regulation. You don’t need to stop people from using it. You can have, for example very cumbersome tax laws. And we already have such here in Sweden for example. Exchanges must comply with regulations that demand they have clarity where the money comes from and goes to is undermining one the biggest use cases of cryptocurrency, namely the privacy.
If regulators would it make it easier to use, buy and sell cryptocurrency without people needing to worry about taxes, then the case would be different. Nobody knows if the countries will be positive or negative towards cryptocurrencies.
5. Apart from obvious scams, how do you see the risks of crypto investing for beginners?
It depends how they do it. If a new person receives bad information, then they are exposed to huge risks. But if they get decent information, then they don’t get tricked to buy smaller alt-coins with questionable reasons to be even existing.
Beginners just need proper information and guidance as to how to do it. Greed is the biggest risk here. Most people feel that they missed the train already with Bitcoin, which increases their appetite to try alternative sources.
6. How does your company/service/product/consulting help others in the industry?
Many investors are looking to get exposure to the cryptocurrency industry with a wider basket of cryptocurrencies, but it is hard to gather all the information with minimal risk. To address this we have created expertly designed, actively managed portfolios.
We are helping the industry by giving investors access without exposing them to scam projects and technically incompetent teams that are just trying to suck out as much capital as possible. We are operating in more traditional finance well. One of the important themes here is that we want to avoid misallocation of the capital. It all started from a frustration when we noticed how much money was going into scams.
The understanding of cryptocurrency space was so low, we saw people marketing with inept technical theories but advanced language. For experts it was easy to notice the difference, so we try to protect the investors. We eliminate the risks and try to ensure that the money goes to the right projects.
7. The world has more cryptos than traditional currencies (FIAT). Why are new cryptos still created?
Everybody can create a new cryptocurrency. It has shown to be very profitable. Lots of people want to get rich and exploit the greed of investors by creating a vehicle in the market to benefit them. As long as Bitcoin exists there will always be copy cats trying to convince people that they can do the same as Bitcoin did. That is why we exist in the market: To protect investors.
8. In your opinion, which countries/jurisdictions have the most advanced crypto regulation?
For instance, Gilbraltar have been innovating with security token regulations. They are launching security tokens and are trying to find a way to merge blockchain technology and the investment community in safe way.
Singapore also, if you look where people are setting up their business, Singapore has the most attractive tax laws. Those two are good example for new business.
And of course Switzerland has so many different foundations. These three seem to be interesting places.
9. How do you see the future of crypto investments and markets in the coming years? (Are you intending to increase / hold / get out of your crypto coin holdings ?)
We see the professionalization of cryptocurrency in general. It is a good trend but has long way to go. Compared to three years ago, the market is becoming more mature.
The few cryptocurrencies gathering most investment money are more solid than in the past when almost anyone with a whitepaper could collect money.
The use case of scarce crypto assets is becoming clearer. The two Megatrends are peoples understanding of scarcity value and, due to the Cambridge Analytica scandal, the need for privacy. The latter is becoming more and more important.
10. What is your expectations in certain currencies (Do you have any favorites) ?
The core thesis we believe in is the aspect of cryptocurrency matching the use case of Gold. That it can store value which Is not linked to any country. Cryptocurrency can be seen as digital gold. At the moment it looks like it is going to be Bitcoin.
It might happen that Bitcoin gets pushed away from that position, and we try to hedge ourselves for different scenarios. In the long term we see this as new form of money instead of pure storage of value. Alternative to the central banks is emerging.
11. What do you see as lacking the most in the cryptocurrency industry ? What things are missing and not yet out there in the global crypto community?
The aspect of privacy needs to be further developed. Even the experts such as me find Bitcoin privacy very cumbersome today. We need a good privacy solution for Bitcoin or alternatively see more growth from the existing emerging ones. People need easy to use privacy which is not risky nor volatile to use.
12. What is everyone inside crypto world waiting to happen in 2020?
The Chinese central bank digital currency and Facebook Libra digital currency are such projects that the whole world is watching. These would introduce cryptocurrencies at a massive scale. Both projects seem to have been postponed. Libra has just updated their own whitepaper, and in China Coronavirus has slowed down things.
13. Analysts speak about “Halving/ Halvening”. What is your opinion of this?
If you try to analyze the term, stock to flow -ratio is more critical. It is the monetary inflation rate in the currency. Halvening are of course the major moments in the evolution. There are questions such as, is the price not already set into the Bitcoin price today?
Everyone who thinks that the price will go up have already invested, and price would have gone up. The market is trying to estimate today what the impact will be.
We have the event that is impacting the price, but at this moment it is very difficult to say if prices are going to go up or down due to the halvening. My long-term perspective is that the price will go up regardless of the results of the Halvening. Many people are focusing too much on one single parameter (Halvening) as there are many complex aspects impacting the price of Bitcoin.
14. What do you think is the next big thing with cryptocurrencies?
I think it is the emergence of the ”Cyber buck”. It comes originally from the USA 1990’s ecash scheme. If you look into the explosion of stablecoin development in the current cryptocurrency market you can see how it is evolving.
If you can combine a higher level of privacy, then the Cyber buck can become reality, easing mainstream adoption of the whole blockchain space. Once you get used to the concept of everyone’s private dollar, the cyber buck, then the interest will increase also towards other coins to discover value storage. This would start the mass adoption.