🎤 Interviews Alexander Goborov

Bitcoin ETF, a Tail Wagging the Dog: Interview with the Founder of Virtuse Exchange, Ras Vasilisin

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With Bitcoin ETFs being considered for approval, the CEO of Virtuse Exchange, Ras Vasilisin, explains what it might spell for the crypto market
Bitcoin ETF, a Tail Wagging the Dog: Interview with the Founder of Virtuse Exchange, Ras Vasilisin
Contents

Rastislav Vasilisin, a native of Slovakia, is the founder and CEO of Virtuse Exchange, a crypto exchange platform based in Singapore. With many years of experience as a trader on Wall Street, Ras sat down with U.Today to talk about the current crypto market situation in general and Bitcoin Exchange-Traded Funds in particular.

Trading and Exchange Platforms

U.Today: Hello Ras, you are now the CEO of a crypto exchange platform. Why did you leave the life of a traditional New York trader behind?

Ras: My personal trading adventure kicked off 23 years ago in New York as a stockbroker on Wall Street and later as a financial analyst at Mitsui. However, I got bored with the capricious corporate lifestyle and together with a friend of mine decided to move back to Prague in 2001. Five years later, I co-founded a brokerage company, which became a predecessor to the Virtuse Group.

U.Today: Nowadays, there are quite many crypto platforms around. What is the attraction of creating one? How challenging is it really? How is yours different?

Ras: After 12 years as one of the largest carbon emissions traders in Europe and China, we decided to bring commodities to the crypto world. Commodity trading had been traditionally the domain of large banks and institutions. Incumbent exchanges are largely exclusive, requiring chunky collaterals, fees, and extensive prior experience in trading. We decided to change that and make the space more inclusive for everyone, not only for the 0.1% of the world population.

There are many challenges associated with running a platform like that, of course. The main ones are rooted in technology, regulations, and liquidity. The tech hurdle we solved by developing our cutting-edge platform with the smart contract for multi asset trading. Liquidity is being facilitated by the world’s top market makers. And the compliance issue we solved by applying for the first crypto-commodity exchange license in the world, residing in Singapore.

In one sentence, Virtuse Exchange is a crypto exchange that bridges crypto markets with trillions of dollars worth of financials, commodities, and physical assets. We facilitate trading of all these assets on one platform, with minimal incremental investments and deposits. In reality, an investor can invest into oil, silver, or coffee with as little as one Bitcoin or Ether. Naturally, no banks or intermediaries are involved.

U.Today: It seems that Asia is currently leading the world by the number of crypto exchange platforms, in terms of how many there are and how big they are. What is the reason for that? And, of course, you chose Singapore, which is in Asia, as Virtuse’s home. Not a coincidence?

Ras: I relocated my family and Virtuse Group’s HQs to Singapore 4 years ago in order to stay near to China, our largest emissions market. Singapore is the 3rd most favorable country for ICOs in the world, and thanks to the light touch on the regulations from MAS, ICOs are able to thrive in Singapore. Since I had already lived in Singapore previously, it was an obvious choice for me in terms of where to launch the platform.

Bitcoin Exchange-Traded Funds

U.Today: What are your exact thoughts on Bitcoin Exchange-Traded Funds (ETFs), which you seem to be quite critical of?

Ras: There’s definitely an enormous market appetite for Bitcoin exchange-traded funds. Bitcoin ETFs are inevitable, but potentially harmful in the long run.

Over the last decades, Wall Street has perfected the art of leverage-based financialization. Global banks and large hedge funds effectively created several times more financial claims to commodities than there are underlying assets, which distorted the price-discovery mechanism.

Sadly, the financial engineering has already infiltrated the Bitcoin markets too. Thanks to the Bitcoin futures and many other exchange-based leveraged products, we can detect the effect of financialization of Bitcoin. Daily liquidity for synthetic versions of Bitcoin is already approximately $15 billion, which is three times more than Bitcoin's daily spot liquidity of approximately $5 billion.

As we move closer to the date of the potential Security and Exchange Commission's approval of ETFs, there is a legitimate uneasiness in relation to what leverage-based financialization might bring to the crypto market.

U.Today: You have said before that a Bitcoin ETF could become absolutely disastrous. Could you elaborate on that?

Ras: Let me take a step back and clarify. It is no secret that the Bitcoin price reached its peak on December 17, 2017, when CoinMarketCap recorded the aggregate price of Bitcoin standing at 19.535.70. Coincidentally, this was the very same day that CME (Chicago Mercantile Exchange), the financial giant, had their Bitcoin futures trading launched.

I warned at the time that artificial Bitcoins in the form of futures are artificial cash settled IOUs (debt acknowledgments) without the physical delivery of Bitcoin. All the institutional money flowing into this “fake Bitcoin” has not been affecting the price of Bitcoin positively. In fact, it’s been affecting it in the opposite way mostly, since this flow dilutes the highly cherished scarcity by artificially creating Bitcoins.

U.Today: How much capital exactly are we talking about here?

Ras: It’s a huge amount. In the third quarter of this year, Bitcoin futures average daily volume rose 41% and open interest was up 19% over the second quarter, according to the CME website. In Q3, on average 757,950 paper Bitcoins were traded per month. Which is about 3.6% of all Bitcoins ever in existence. That amount doubled from the first quarter. The average daily volume on the spot is about $6 billion.

Introduction of cash settled futures in other assets caused the same market price to decline. Take the gold market for example, although numerous other examples can be used.

U.Today: The gold prices were also influenced by CME in this way?

Ras: Gold markets have been in steady decline since 2011, from the peak price of roughly $1,900 to $1,230 /oz. CME runs COMEX, which is the derivatives market where gold futures are traded. COMEX through its clearing banks provides margin trading and on average issues 360x more paper gold than physical gold. It makes Bitmex’s 100x leverage with its socialized losses look like child’s play.

And this all comes at the expense of the gold investors. The large banks and brokerages can technically create 360x more gold out of thin air, while an average retail investor has to come up with hard cash to buy gold at full price.

Bitcoin ETFs might eventually be leveraged in the same manner as the futures contracts. The same financial engineering dynamic as this year might be played out next year, too. This will most probably take the wind out of the sails in 2019.

U.Today: Is there any space left to be optimistic about these funds at all?

Ras: Yes, there is.

The first reason is that HODLers can resist the aforementioned pattern simply by keeping their coins outside of the financial system. Unlike gold or silver, most of the spot holders in Bitcoin markets are already storing their coins away from the system, making it hard for financial institutions to borrow it.

Due to the hard-to-borrow nature of Bitcoin, the magnitude of the impact of ETFs, futures, and other Bitcoin derivatives might be smaller than with commodities derivatives that are mostly settled in underlying assets. Nonetheless, cash-settled derivatives have a lot of potential to affect the price of the underlying coins.

The Crypto Wrap-up

U.Today: We’d better keep our eyes peeled then. But let’s shift our focus. You do a fair bit of travelling attending forums and giving talks. Anything in particular that stood out for you this year?

Ras: I’ve been extremely pleased with the turnout at the largest crypto events in Asia. The tremendous amount of entrepreneurial talent, energy, and funds that are still being poured into the space is mind-boggling. This market has an enormous potential to disrupt and transform the entire economy, particularly financial, healthcare, and government ecosystems.

U.Today: How do you see the future of the crypto market and, perhaps more importantly, Blockchain and DLT in general?

Ras: I believe the DLT and crypto are alongside inventions like the steam engine, computer or Internet, one the most disruptive technologies in history.

Blockchain is set to fundamentally transform the way business is carried out in industries all over the world. I would encourage everybody to start paying attention right now.

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🎤 Interviews Katya Michaels

How We All Go Into Space: Aliya Prokofieva Has Mission Under Control

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U.Today spoke with Galaktika’s CEO about why it’s worth reclaiming our passion for space travel
How We All Go Into Space: Aliya Prokofieva Has Mission Under Control
Contents

Aliya Prokofieva doesn’t look like the usual suspect for the founder of a private space initiative, but upon closer inspection, it’s evident that this destiny was inevitable. Having grown up among the astronauts, engineers and sci-fi writers who were part of the community at the famous Pulkovo Observatory, she caught the space fever as a child and carried it, with purity and dedication, to the establishment of her company Galaktika.

In the last few decades, the incredible advances of technology are showing us more and more than anything is possible, but it seems we tend to be over-focused on the way new tech can improve our screen resolutions and scrolling speeds. Aliya intends to shift that focus where it belongs– space, the final frontier. U.Today spoke with Galaktika’s CEO about why it’s worth reclaiming our passion for space travel, not only for the opportunities it will create in the space cities but for the way it can change human society here on Earth.

Drops of Jupiter in her hair

U.Today (Katya Michaels): Aliya, in the last couple of years you have become a prominent player in the private space development industry, but I wanted to start at the beginning – both your mother and your aunt were astrophysicists?

Aliya Prokofieva: Yes, that’s correct. My mom was not only an astrophysicist, she was also chief constructor for the Pulkovo Observatory, one of the biggest and oldest observatories in Russia. She also worked on the observatory in Norway’s Spitsbergen and many others.

UT: That must have been a strong influence on your path as a woman in tech, having these amazing role models.

AP: Of course, although as a child I didn’t dream of being a scientist or an engineer. I am more interested in culture and society, specifically the way scientific discoveries can serve humanity. From the beginning in this industry, I have been more focused on creating something that will help people, that will endure after I’m gone and contribute to sustainable solutions that will be applicable all over the world.

UT: Did your mother also believe that it was possible for humanity to colonize space in your lifetime?

AP: You know, it’s interesting – my mother was born, grew up and worked in the Soviet Union. When she was 19, Yuri Gagarin became the first man in space.

It was 1961 and everybody really thought, both in the Soviet Union and the US, that people would be living in space by the millennium.

There was this absolute confidence that the next decades would see massive and fully scaled space development. Not only my mother, but many scientists and engineers in the Soviet Union thought that this would be a reality. If you were to ask some of the old NASA guys who remember those times, they would say the same. So, my childhood impressions were a melding of the engineering facts of space exploration and the romantic-scientific idea of the imminent reality of life in space.

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The nearness of stars

UT: I feel like the archetype of the romantic scientist is a uniquely Soviet phenomenon, in many ways exemplified by the sci-fi works of Strugatsky brothers, and that it doesn’t really have parallels in other cultures… Do you think that’s true?

AP: I don’t believe it’s unique, because international sci-fi authors like Isaac Asimov and Arthur Clarke were at that time writing the same kinds of stories as Arkady and Boris Strugatsky. However, what really is different about the Russian approach to space is the background philosophy.

Space was first explored not for the explicit purpose of scientific discovery but approached as a source of spiritual development for humanity.

The philosophy is called Russian Cosmism. It’s a phenomenon that appeared at the end of the 19th century, counting among its proponents such distinguished writers as Dostoyevsky. It was not about technology – Cosmist thinkers explored what space could mean for the human soul and eternal life, in a metaphysical way. In fact, Konstantin Tsiolkovsky, one of the founders of cosmonautics and space travel, was inspired by the philosophy of Russian Cosmism to work on his scientific and engineering discoveries.

Swapping space travel for VR

UT: What do you think happened since the 1950s to the way space travel is viewed? It seems that humanity was dreaming of flying cars and space cities, and instead got smartphones and virtual reality. Kids used to dream of being astronauts and now they want to be Instagram influencers.

AP: I think that the main reason for the change is the fashion for particular heroes – what we are shown in social media, in films and so on. Although I don’t agree with you that kids don’t dream about being astronauts. I know lots of young people, both in the US and in Russia, who are really passionate about space and would like to have access to more information and opportunities.

I suppose what I’m trying to do is create a fashion for space – for going there and being connected with it. That’s why I decided to create this community and this space movement.

It’s not so much about technology, but about creating a real community of people who will be supportive to each other to make space real. That’s my mission.

Space playground

UT: Do you meet with a lot of skepticism? How well informed are people generally in terms of the realities of modern space technology?

AP: Generally, people think that space is something that is very far and not relevant to them. They are taken by surprise when I tell them that we are actually all living in space, already. We have the technology, but it doesn’t have the mass reach of cars or airplanes. There isn’t enough information out there, and it’s part of my mission to educate people. I mean, if you and I were chatting in the 1950s and I’d tell you that it would be possible to converse on video from any location, over any distance – you’d think I was crazy. The same thing is happening with space development, it’s just a question of greater scale.

UT: A big part of what you’re doing to make people more aware of the possibilities of space is an educational initiative here on Earth. Could you elaborate on that?

AP: That effort is in two parts. One is a virtual community platform which is a combination of social networking, project collaboration, an incubator, and a funding structure. It will also give users access to lectures, educational materials, films.

The second part is a space city prototype on Earth, an edutainment format that will be a mix between Universal Studios and the Guggenheim Museum. We are currently creating multimedia and interactive materials for the project. The goal is to make visitors really feel what it would be like to live in space.

UT: Where would this center be located?

AP: Currently we are thinking Switzerland, a location with an area of about 30,000 square meters. We would also have an area nearby for a Mars or Moon safari theme, where visitors could test real equipment. Hopefully, this kind of science center will demonstrate that space is not something distant or fearful, but engaging and fun.

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Off-world equity

UT:  Private space initiatives get investments from the big players, but when will it be possible for everyday, small-scale investors to get into the space game? What kind of returns could they hope to see and in what kind of time frames?

AP: We are in the process of creating tools that will make that possible. It’s something that I have often faced during my space journey – the financing problem in the market. Space companies are either very small startups or established giants like Space X and Blue Origin.

As a result, many great minds don’t have access to financing because most investors think space technology is really remote and risky.

In fact, space investment can be less risky than many IT startups or real estate projects.

Space technologies can be used both in space and on earth– to name just one example, solar panels were originally a space technology and are now a major part of sustainable solutions on Earth.

In our project, the fund structure is a combination of classical venture capital and investment capital instruments, accessible for institutional and large private investors, with a cryptocurrency crowdfunding framework. I discovered that there are so many people who are interested in making their impact on the future of space exploration, whether through intellectual contribution or financial investment.

We also feature different investment categories, with short-term returns within three or four years, midterm returns in five to seven years, and the long-term over ten years. Our management team can work with investors, linking different projects and bringing stable returns of at least 25-30 percent within two years, and those are conservative figures. We are implementing Blockchain and smart contracts to make these investments safe and transparent.

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May the forces be with each other

UT: We’ve been discussing private companies, but of course there are government space programs as well. Do you think private and government sectors will combine efforts? How will they work together?

AP: I believe everyone will join forces. Even now, NASA and the European Space Agency are very supportive of private space initiatives. The future will favor projects that join together public and private efforts–  governments can provide the infrastructure, and private companies contribute a solid business approach since they are understandably motivated by returns on investment.

UT: What about collaboration between nations? When you talk about your project in Russia and in the US, do you feel that there’s a remaining competitive feeling left over from the Cold War? Or is that completely in the past?

AP: I think that in general it’s gone – as you are well aware, what you read in the newspapers is usually someone’s biased agenda. In the space technology, everybody understands that countries should be supportive of each other. What I find interesting is that people are really prepared to collaborate and create joint projects, such that every country’s and every company’s competence is employed to the fullest for the common good.

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Making Marvel comics real

UT: One of the most fascinating questions about space colonization is how it will change human society, both in space cities and here on Earth. You have written about relative autonomy of space colonies as the variable that will determine community development. The first stage is a very demanding survival mode– do you think modern residents of developed countries, used to comforts, are ready for those kinds of sacrifices?

AP: I see that people are searching for something interesting, and their reaction depends on how information is presented to them. If you focus on details of technology development, financing issues and challenges that astronauts face, that can get boring and seem like it’s very far away. When you show how space directly affects people’s lives, show them space as a source of inspiration– their eyes light up.

This is especially true when they realize that they can influence this process– intellectually, financially or by direct participation. It’s like making Marvel comics real! If they can be a part of it, they are eager to step up to the challenge. The space colonization endeavor is really a new, unprecedented type of collaboration.

I think people are tired of the emptiness of social media. What’s the point of showing off and getting a few thousand followers, if that’s all that will be left after you’re gone? What they really want is to make an impact on the future of humanity and the planet, something that will last for generations.

The space city itself is more than a technological challenge. On the one hand, it’s a new economy that will provide a unique professional opportunity for every field– medical, engineering, technical, entrepreneurial, cultural. On a different level, it’s a metaphor for a new era in human evolution, a new purpose for people’s lives.

Independence from Earth

UT: You wrote that at the later stages of increased space city autonomy, these city-states will gain independence from Earth governments. Do you believe this will be a seamless process? Won’t the mother countries fight to retain their space colonies?

AP: I believe, and this is one of my goals as well, that there will be a shift in the mindset. We are still living in a very competitive society, but transitioning to a contributing society. We are used to saying, ok, these 100 acres are mine and these are yours. It’s amusing when people try to apply this dealing to space, which clearly belongs equally to everyone.

I hope that countries will be united in space, regardless of religion and politics, but the way this will turn out depends on us  – whether we’ll be entrenched in colonies separated by borders, or sharing space as human beings who are citizens of one community.

Don’t panic

UT: What is your personal dream of space?

AP: My personal dream is to inspire every human with the vision of life in space and to build the first space city. I want to make space travel as easy and approachable as buying a ticket from New York to London.

UT:  What are your favorite portrayals of space life in books or movies? Something that really reflects the way you imagine space.

AP: Actually, I am currently writing a script for my own space film, as well as a fiction book about a girl’s space journey. What I don’t like about most sci-fi movies is that they portray space as a harsh and hostile environment, while it’s a source of great inspiration and value for humanity. My favorite ones are still Star Wars and The Hitchhiker’s Guide to the Galaxy. They are closer to my idea of how life in space could be – not always friendly, but exciting and adventurous.

Here, you can listen to the Technotopia talk with Aliya Prokofieva.

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Decentralization and Social Platforms: ONO’s Bashir Modanov Exclusive

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The newly established social network ONO promises to stay out of its users’ lives
Decentralization and Social Platforms: ONO’s Bashir Modanov Exclusive
Contents

U.Today is bringing you an exclusive interview with Bashir Modanov, Global Marketing Director of the recently established decentralized social platform ONO. A native of Kazakhstan, Modanov is now based in Beijing, China, where he was working as a business executive for a number of high-tech firms before joining a startup company with a very particular vision. Our journalist Maria had a chance to catch up with him in person.

Behind the Doors

U.Today: You are defining ONO as a decentralized social network. How did the idea of putting a user “at the epicentre” of it all come to you? What’s the background of this idea? You specifically listed diversity as one of the distinct features of your social network. Can you expand on this?

Modanov: We are a social network based on the Blockchain technology. The reason we came up with this concept is that when you look around, all you see is heavily centralized platforms that make profits from their users by selling their data without any regard for the law. As a result, many platforms today make the headlines mostly due to their ignorance and neglect. What ONO offers is different. We provide features similar to other social networks, but ours is a unique concept that has introduced self-governance and a reward system for its users by allowing them to tap into their own net worth. It should also be noted that ONO is, first and foremost, a decentralized platform, and, as such, offers the benefit of data protection, since the platform is not capable of withholding any of its users’ information.

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U.Today: Back in June, you announced that you were going to be an EOS BP Candidate. What are your current aspirations? Are you aiming to make it into the top 21?

Modanov: Yes, that’s right, we were an EOS block producer candidate, but our strategy has shifted, because we feel that EOS is not a platform. The costs of integrating it are sky-high, while the benefits are meager. So, we came up with our own main network that we simply call the “mainnet”, with the view to create our own chain, which is currently in progress.

U.Today: You say that you have Super Partners, and their main job is content management. Is there a possibility for collusion?

Modanov: There was this possibility before. It actually happened with EOS. But we’ve since decided to use a different track: there will be a totally different voting system, and possibility of collusion will be completely eliminated.

The Super Partners are a group of individuals from all walks of life who moderate the network independently. What happened with EOS pushed us to use a different type of scheme, so as to avoid potential problems.

We have set up a voting system different from what EOS offers, such as 70% of the work is done in an automated manner, while 30% of what we do goes through machine learning. In the future, our aim is to develop this capacity, that is, have 90% of the work done using machine learning and only 10% of it done manually.

Function

U.Today: Are your AI and Machine Learning algorithms running on your servers? Or are they decentralized?

Modanov: Actually, we are already cooperating with some AI-focused companies in regards to the KYC process, content research, and targeting. As soon as our mainnet is launched, we’ll be ready to move everything from our servers onto the Blockchain.

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U.Today: What are the main functions of the platform: describe what I can do there and how it promises to change my life?

Modanov: The basic functions are similar to those of Twitter and Instagram, so, naturally, you can share pictures, articles, and short videos.

However, the difference is that ONO comes with a reward program. For each engagement, you can earn tokens, called ONOT, which you’ll be able to change to fiat currencies. This unique ecosystem is gaining recognition worldwide.

By the time we launched in August, we offered our first 300 000 users 300 tokens each for registration. We now have a growing community of 3mln+ users: the registration reward is 50 tokens, as is referring a friend. Another way to earn tokens is to publish posts, since this mechanism also works for post-based calculations. Frankly speaking, right now most of the users are already using the decentralized App, sharing their moments and earning coins, but in the future there’s going to be a feature which will also allow them to exchange those coins for fiat money.

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U.Today: You are actively participating in various events, among them Consensus. What are the future plans for the Asian roadshow?

Modanov: There are a bunch of conferences happening all over Asia. One of our next stops will be Cointelegraph’s Block Show, a huge event hosted in Singapore.

U.Today: How is user identification going to be handled? And how are you going to fight the Sybil Attacks?

Modanov: The KYC option allows users to have their identity verified, and as such your user power is increased compared to a non-KYC-verified user. As a verified user, you can write really long posts (more than 500 words), and you can share your photos. For non-KYC users, we’re implementing AI-solutions, but these users will indeed have limited power on ONO and won’t be able to share as much information.

In terms of Sybil Attacks, I don’t think there’ll be a huge problem with that: the Blockchain is one of the most secure cyber spaces we have seen so far.

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What’s Next

U.Today: In 2018, everybody in the crypto industry understands that massive user adoption of decentralized systems will not happen unless UX is on par with centralized systems. This is especially true of social networks. What is your solution to ensure that the user gets the best possible experience while using a decentralized platform?

Modanov: Many users haven’t been able to experience the best of the Blockchain as most decentralized systems are poorly built, and, as a result, aren’t offering their effective solutions to the public. That’s what we’re looking to change. You can try our App, which is available on Google Play and the Apple store, to see it for yourself. Currently, we’re working on adding fun, useful features unavailable elsewhere on the market, and one of the upcoming features we’ll be introducing soon is a wallet for users to buy, exchange, and transfer coins.

U.Today: You mentioned POC (Power of Contribution) in your white paper. What are the principles behind it, apart from it being the incentive for users on your platform?

Modanov: The power of contribution is something more than just registration: we’re using it to evaluate content and reward users with tokens, so that the users also become contributors.

U.Today: For a social network, getting a critical mass of active users with valuable content in the first stages is crucial for creating the much needed snowball effect. What is your strategy to make it happen?

Modanov: We are trying to attract more and more creative individuals, creative users, and top writers on Steemit to deliver decent content. I think a lot of people will be coming to our App for high-quality content and fair interaction, as it offers many more benefits compared to many other currently available platforms.

U.Today: In your white paper, it’s written that for the starting phase you launch ONO on the Ethereum network in order to gain a limited number of initial users and you later plan to migrate to EOS once all has been properly launched. When exactly then is the migration to EOS scheduled?

Modanov: The white paper hasn’t been updated for quite a long time, and so there are some facts on it that have since been modified accordingly.

We’re planning to launch our token system on the Ethereum network, but not the App, and we are creating our own main chain, called the ONO chain. The first testing phase is taking place this December, while the main chain is due to be made available at the beginning of next year.

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Playing Nice With Government: Expert on Google’s Cryptocurrency Ad Ban

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Google’s cryptocurrency ad ban draws criticism from the crypto community, but what are the mechanics behind this decision?
Playing Nice With Government: Expert on Google’s Cryptocurrency Ad Ban
Contents

 

Google’s announcement of its decision to ban advertisements related to cryptocurrencies comes just a couple of months after Facebook announced a similar ban. While there is disagreement to the extent these steps will affect the cryptocurrency market, it is impossible to deny the Duopoly’s influence on millions of consumers. CryptoComes asked Ian Wishingrad, founder and creative director of the BigEyedWish creative agency specializing in branding and digital development, to comment on the causes and implications of Google’s policy change.

Ian Wishingrad, founder and creative director of the BigEyedWish creative agency

Smart move

CryptoComes: Google’s decision to ban cryptocurrency-related advertisements comes on the heels of Facebook’s similar announcement. What is your take on this?

Ian Wishingrad: I think it’s a smart move, and it makes perfect sense because their biggest issues right now are brand safety and reputation. It would reflect very poorly on them if people get scammed or do fraudulent things via crypto on their platforms.

Until there’s a little more clarity and it’s less dark, mysterious and potentially treacherous, the risk does not outweigh the reward considering their total advertising revenue.

Competing against the government

CC: Given the publicity issues that Facebook and Google have faced with fake news and questionable ad placement, one might ask: with seeming laxity of regulation in such aspects, why are these platforms picking on cryptocurrency?

IW: Well, it’s just bad luck for crypto. What’s happening now is precipitated by those concerns. These companies got their hand slapped and have seen the backlash, so now it’s not worth the risk. That’s the biggest issue when you are an open platform- when your business is built on advertising revenue, you need to consider the ramifications for brand safety.

Facebook, Google and Amazon all carved out their unique spaces in the market, but they are really competing against the government.

Exercising a certain amount of self-regulation and self-policing will bode well for them in the long run because if the government intervenes, that’s going to be much more painful than anything they inflict on themselves.

Cryptocurrency will be back

CC: Google is often seen as being close with the “establishment.” Could this decision be construed as another expression of that?

IW: One hundred percent. I don’t think they even disagree with that. They are operating as a United States company, governed by US law. You can be all cowboy and Wild West when you’re small and under the radar, but once you are a publicly traded company and one of the most powerful companies in the world, you have to start playing nice with the government.

As advertising dollars shift from television to online, it’s really difficult to police user-generated content. For Google and Facebook, the crypto industry it’s too nascent, there are too many bad players.

Once the area matures, I’m positive cryptocurrency will be back on these platforms.

CC: Often when new technology emerges, it is publicly represented as a maverick, a representation of freedom, of independence from regulation. Google was perceived this way in its time, but it seems that now Blockchain represents that maverick freedom, while Google represents the established structure.

IW: That’s exactly what is happening and what will happen. If you become successful, you become the establishment, and by virtue of becoming the establishment, there is a space wide open for the next players.

Self-regulation

CC: How will these bans impact the cryptocurrency market? Will it be destructive, or will it help weed out fraudulent players?

IW: Right now, we are separating the wheat from the chaff very quickly. All the mavericks, the pirates, the innovators- everyone wants to crack this.

Now, it’s going to come down to execution, securitization, government approval and finding the right way to play with the SEC.

I think we won’t be surprised by the people who come out on top- smart, with the right capital, the right public relations and understanding that it’s not just what you do, but how you are perceived.

CC: You mentioned the motivation for Google’s self-regulating approach. Meanwhile, the Winklevoss twins’ Gemini exchange announced the creation of a self-regulatory organization. Is this indicating a general trend? Will there be more self-regulation initiatives?

IW: I think there will be two things: the perception of self-regulation, and the actual self-regulation. The people that are ahead of the race are going to want to behave like the establishment, show that they are mature adults, exercise self-regulation because it’s really the most prudent move. It pays to play nice. You don’t want to make the government your enemy.

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Federico Pistono: Bitcoin’s Power Structure is Very Robust, Altcoins Are Test Bed

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The prominent researcher, investor and speaker brings a practical approach to his vision of the future
 Federico Pistono: Bitcoin’s Power Structure is Very Robust, Altcoins Are Test Bed
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After Google’s public demonstration of its AI assistant some two weeks ago, waves of shock, denial and censure rippled through the media. Audiences seemed unprepared for the progress made by artificial intelligence while they weren’t looking.

Federico Pistono, however, foresaw this moment, and the many similar moments we will undoubtedly witness in the near future, as far as six years ago, in his bestselling book "Robots Will Steal Your Job, But That's OK: How to Survive the Economic Collapse and be Happy."

In addition to researching the societal implications of artificial intelligence on the evolution of society, Mr. Pistono is an entrepreneur, investor, startup founder, public speaker and most recently, Head of Blockchain at Hyperloop Transportation Technologies- a company that is working on the first supersonic land transport. He took a few minutes out of his busy schedule to speak with CryptoComes about Bitcoin’s prospects, surveillance states and why he might take some time before writing another book.

Complex systems

Katya Michaels: Among all your diverse interests and achievements, what is the thread that ties it all together? What would you say is the unifying theme of your research?

Federico Pistono: Probably it’s trying to understand complex systems. They are very easy to disturb and usually when you do, you disturb them for the worse.

No one understands complex systems really, and very few people have any idea of how to tweak the variables just slightly to improve the whole.

In a sense, for me, it's about trying to understand the laws of the universe on different scales.

The traveling banking problem

KM: Obviously, your exploration of these subjects began before cryptocurrencies and  Blockchain technology proliferated, probably even before the release of Satoshi’s paper. When did you first discover Blockchain and how did it fit into your research vision?

FP: Cryptographic hash functions have been known for 20 years. When I studied math in university, I learned about the traveling salesman problem, which is essentially impossible to solve. When I read Satoshi’s white paper, I found that there was some circumvention mechanism.

I didn't even understand the implications of it on the economic scale, at the time. There wasn't a lightbulb moment, it was more of a process of piecing things together and trying to envision some of the implications.

Societies reach an equilibrium point of technological development.

For example, when we could only do banking through paper, you couldn't scale as much because it's an organizational problem. Computers allowed for the creation of worldwide banks and online payments, but then it stagnated and hit the limit.

After PayPal, there wasn’t really any innovation in the banking sector, that was as big as it could get with just the Internet. And PayPal didn’t really change anything in terms of the structure of power. It allowed more fungibility and more access to small credit for people without bank accounts, perhaps, but that was about it.

Now with Blockchain, you change everything– literally. Let's say you live in a country that you think is stable, and then one day you have to leave because the economy's collapsing or some dictator is coming after you.

If your money is in the national bank or in a bank that's controlled by the national government, your money is gone. You can’t move it, you can't take it with you, in fact, it can be taken away from you, like what they did in Greece.

With Bitcoin or another crypto, you can literally remember ten words in your head, and you take your money anywhere.

False dichotomy of Blockchain vs. crypto

KM: Between Blockchain technology and cryptocurrency, which are you most excited about? Or do you not separate them?

FP: I think it’s a false dichotomy. It’s like saying “are you more excited about TCP/IP or the worldwide web?” You need one for the other.

KM: I suppose the argument is– cryptocurrency can't exist without Blockchain, but Blockchain has other applications.

FP:Blockchain is a database. The database by itself doesn't have any value or any utility. It's just a way of storing data unless you build something that acts like a cryptocurrency or token.

Whatever you call the thing that you are connecting the dots in, crypto or token, it represents something which runs on something that looks like a Blockchain. We're going really into semantics now.

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Altcoins are a test bed for Bitcoin

KM: Bitcoin was the original cryptocurrency built on a Blockchain. What are your favorite post-Bitcoin or post-Blockchain platforms?

FP: There are a lot of cryptos that have very interesting properties, but to be honest, I think Bitcoin is doing a great job. The Lightning Network is expanding rapidly. Rootstock are smart contracts on Bitcoin.

I see most other crypto as a test bed for Bitcoin. You try something, if it works out, then you take what's good of it and integrate it in your code base. That's what Bitcoin is doing.

I mean, Segregated Witness was first explored in other cryptos, like Litecoin, and then it was integrated into Bitcoin. The same thing with Lightning Network. Smart contracts came off colored coins, onto Ethereum, and now they're doing Rootstock. Zero-knowledge proofs used by Zcash and Monero - there is support for that on Bitcoin.

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The value of Bitcoin is that it's so widespread. The hash power is unimaginable compared to the other cryptos. That's not to say that other coins don’t need to exist, but I think that Bitcoin will transform and eventually become the de facto standard for a global currency.

KM: You are an investor in Bitcoin yourself?

FP: Yes. It's got a lot of momentum and the way the power structure is organized makes it very robust. With Ethereum, 20 people could essentially decide its fate.

Most cryptos are centralized, even though they like to say they aren’t. Bitcoin is maybe the only truly decentralized currency right now. They can never agree on anything. It takes two years to get to any decision. Well, that's what democracy is– slow, inefficient, messy, but eventually it gets it right.

If you have a benevolent dictator, you’re quick, you're agile, but you may get things really wrong. Litecoin is a great example. I think Charlie is a great guy. He's very smart, he's the prototype of the benevolent dictator and he got most of everything right.

But if one day he flips or someone else takes over, it may go very wrong very quickly because it’s more centralized. Bitcoin has so many competing interests that you have to find a solution that fits most people. That’s the process of large coalitions.

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Quis custodiet ipsos custodes

KM: Blockchain can be a tool both for complete transparency and complete privacy, depending on how it’s used. How does society make sure that Blockchain is used for good rather than for questionable purposes?

FP:It’s the oldest question in the book– who watches the watchers? Quis custodiet ipsos custodes.

What if you have corrupt institutions, not in the sense of bribes, but corrupt in the moral sense? The UK is becoming a surveillance state, for example. They order ISPs to block certain sites and keywords, certain ports and protocols. People use VPNs to do anything of significance in the UK. There are hundreds of thousands of CCTV cameras everywhere. Same goes for China. The US is moving in that direction.

When you have these kinds of institutions running society, then it's pretty obvious that they will use Blockchain for further expansion. But I would imagine it will be different in a country like Norway or Estonia, which is already using the Blockchain for voting and in medical records.

From vision to adoption

KM: Since your book came out six years ago, have you amended your thoughts in any way? Has humanity disappointed you or impressed you favorably?

FP: What changed is my understanding of how things are working. I think it’s a little more nuanced now. Here’s something that I think most people don't understand. You see something not working and you think– “but it’s so easy, if they just did this!” And yes, maybe.

But how you get people to make the changes is the real issue. It’s not enough to recognize that things aren't working and they could be working better if everyone suddenly acted in another way. That's what a lot of activists do and that was also my problem. “But the solution is so obvious! Everyone can see this. We should just tell people about the solution, and then it would become crystal clear!” No, it's not.

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First of all, the solution that you're envisioning may not necessarily bring the results that you want.

Because systems are so complex, tweaking in the smallest way and continuously checking how that impacts the system that you are perturbing may be the only way to actually change it effectively.

KM: Even when people are presented with clear facts and explanations, they are not rational actors or judges.

FP: Not only that. Most people are not rational. Most people are not even educated enough to understand what you're saying. And sometimes, the more educated you are, the better you are at confirming your own biases.

It’s about root causes. You think you found the root of all the problems, but then you come up against irreducible complexity. Also, if attacking the root cause takes limitless amounts of money and energy, essentially what you're saying is you're never going to do anything. And the only way to perturb the system upward may be to act on the leaves and have it trickle back to the roots – like an upside down tree.

KM: Since you have amended your vision somewhat, is there another book in the works?

FP: Well, one of the things that I amended was my readiness to pontificate.

KM: You're still giving lectures though.

FP: Sure, but I'm reducing the scope of the grandiosity of my goals somewhat. I feel like I'm more down to earth now. I still havе the visions and I’m trying to bring it all home.

It's the difference between someone who has a grand vision but has not developed it and someone who is now building organizations and realizing how difficult that is.

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Hyperloop

KM: Does being head of Hyperloop’s Blockchain department fit into your practical approach to changing the world?

FP: I think the project is one of the few that are actually likely to change the landscape of our cities in the near future. It's a bit like the introduction of trains or planes for the first time– that really changed the way we live. Beside space travel, I don't think there is anything else of that significance in terms of changing the landscape of cities.

Electric cars are going to change a lot how we live in cities, and Hyperloop is going to change how we move between cities and what distance we consider to be our immediate circle.

Some studies show: the amount of time that people are willing to spend commuting without getting annoyed is 25 minutes. This is true now, it was true in the 1950s, it was true during the Romans.

So the constant is time and the variable is distance. Now, in twenty-five minutes you could go 200 kilometers or more with the Hyperloop. We can connect cities like we connect neighborhoods now.

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Adult Industry on Blockchain: Leah Callon-Butler Changes State of Play

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Applying Blockchain in the adult industry might just be the use case to drive mass adoption.
Adult Industry on Blockchain: Leah Callon-Butler Changes State of Play
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While the adult industry has proven to be the driver of tech innovation and adoption - such as VHS and streaming - in the past, there is also a great deal of social stigma attached to both working in the industry and consuming its products, even when those activities are perfectly legal.

Among Blockchain developers and investors, too - few give serious thought to the disenfranchisement of adult business entrepreneurs and the lack of data security for users and providers. Just ask Verge, whose announcement of a partnership with Pornhub seems to have done irreparable damage to the asset…

But Leah Callon-Butler, co-founder and Chief Impact Officer of Intimate, a cryptocurrency and platform aiming to facilitate payment and trust for the adult industry, believes this to be an ideal use case for Blockchain - here’s why.

 

Social impact

 

Katya Michaels: Could you give me a brief story of how you became a Blockchain entrepreneur?

Leah Callon-Butler: I've always worked in emerging technologies and helping really early stage companies figuring out how they were going to find their first customer, across lots of industries but focused on sales and business development. When I was doing my MBA, I found that I had a real passion for the social impact.

It led me to work with a lot of really cool companies and startups, including the renewable energy industry. With that, I could see that it was completely centralized and I couldn't really see how that was ever going to change if we couldn't actually change the way that power was produced and shared with people across the markets.

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A few years later, my mentor introduced me to this case study, the Brooklyn Microgrid, which was essentially peer-to-peer energy trading between neighbors. And this had never been done before because for energy markets were always centralized power plants.

When I discovered this technology, it blew my mind. I couldn’t imagine a world where we weren’t controlled totally by centralization.

When I started to look into it, I saw that everyone was trying to apply Blockchain to everything because it was so hot right now, but at the same time it was kind of infantile and a needed really smart people around it to be able to apply it to an industry use case that really needed it.

So I got a bit obsessed with trying to find the right use case that needed decentralization. What I learned was that there was actually a lot of parallels between the issues that exist in the adult industry and what I've been working on with other projects around social impact. Particularly with things like gender equality, power inequality in the greater world, developing economies and concepts around identity and micropayments.

Actually, this is the perfect use case for blockchain where we can enable transactions, but at the same time empower people who have been neglected and stigmatized by society.

Mass adoption

KM: The adult industry has always been a driver of innovation and technology. Do you think that Blockchain for the adult industry is the key to mainstream Blockchain adoption?

LCB: There's probably no other industry in the world where you would see such a cross section of all walks of life - from workers to consumers to business operators.

This is a basic human need that is relevant to pretty much everyone across the world. Don't take it from me - one of our biggest investors, which is a large crypto fund called Alphabit, they put in over a million dollars into Intimate and they said that they were very inspired by this because this was the project that crypto had been waiting for in terms of a real use case and possibly the first to drive mass scale adoption.

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Pseudonymous reputation

KM: Cryptocurrency itself promises to provide privacy, transparency and ease of payment. What does the Intimate token do for the adult industry that cryptocurrency cannot?

LCB: This is one of the most common questions that we’re asked and I never tire of answering it, because I think we should actually ask this question of every single coin on the market. We should always be asking, in the first place, is Blockchain needed? And secondly, do we need another coin?

A lot of people confuse us with being a privacy coin. We are highly concerned about user’s privacy, but what we offer is pseudo anonymity. Where we go beyond something like Bitcoin or Monero or even just cold hard cash, is that Intimate has a reputation system.

Consumers want to be able to transact privately, but service providers and business operators need to be able to establish trust through data disclosure. How do you solve this? Through pseudonymous reputation.

Peer to peer networks are changing who we trust and why we trust them, but those existing systems, like Uber or AirBnb, despite their merits, are still centralized and controlled. There is no system that allows you to port your reputation from one platform to another.

What Intimate is doing is creating right from the start a reputation system that is industry wide. So no matter where you are transacting with various entities, you can build that reputation in one place and port it to another, but also be in control of that data.

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Voluntary disclosure

KM: One thing that I find continually fascinating about Blockchain is that it promises absolute privacy and absolute transparency at the same time. How do we make sure that what needs to be private stays private and what needs to be transparent stays transparent and not the other way around?

LCB: That's why we’re really clear about the fact that we don't provide anonymity. We've taken a really hard line on this and obviously you can't be the solution for everything.

Some people feel that cryptocurrency is designed to hide things and to help people hide their tracks. There was a certain point in time where that was true, but today some of the biggest proponents of Blockchain technology are banks and governments because they've seen what it could do to improve efficiency and transparency.

How can we take this technology and apply it to industries that people have traditionally thought of as “bad” because they've been run by underground shady characters? If we can start to bring some transparency and accountability to these industries while still applying the benefits of privacy, that is really powerful.

The point is that no one should have control over your information. So the key for me is voluntary disclosure, that you own your data and only you get to choose if and when to disclose it.

Trust and responsibility

KM: I feel like Blockchain is not just a technology, but a social construct. Do you think that people are ready to put their trust on the Blockchain, but also to take ownership of their data and take responsibility for their decisions?

LCB: That’s such a massive question. If I can relate it to what's happening right now, Mark Zuckerberg is in a lot of hot water because of the Facebook debacle. That’s actually been great for us because it makes very clear that data privacy is important to everyone, not just sleazy men who want to cover up something they were doing online.

It's great that we're having this conversation right now, because a lot of people are saying, “Hey, do you really have to right to own my data and who gave you that right and what are you going to do with it?”

But your question was, are people ready? I'd say no, they're not because Blockchain also puts all of the onus back onto the individual and that's what makes it so difficult. It seems great to get rid of trusted intermediaries, but they also provide a level of insurance and protection. If you lose your banking password, we can give you a reset button. If you lose your private key, sorry, you’re screwed.

There is also things like governments - a lot of people get upset about paying taxes, but taxes go toward paying for things that we take for granted in our everyday life, like schools, garbage trucks and police. That's why we need solutions that are gonna come in kind of halfway, take the benefits of what's there and take baby steps towards what the future could be.

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The state of play

KM: I just wanted to finish up by saying congratulations on the Golden Token nomination! What does it mean, to be nominated in that category, as Female Leader of the Year?

LCB: It means everything!

I got into this space because I saw that this technology had far greater power to be able to reimagine the state of play.

I guess I'm relatively new to this space and sometimes it's hard because you think - if I'm not a computer scientist or an engineer or a mathematician or a cryptographer, then maybe I shouldn't be here.

But I have different skills that I bring to the space and the social impact is something that I'm really passionate about - seeing more women in technology, more women recognized for what they do. Diversity and inclusion is one of the most powerful mechanisms of competitive advantage that we have.

Blockchain is a space where it's all about decentralization, it’s about giving power to the least represented and the most vulnerable.

To be nominated for an award like that is powerful for me because, let's be honest, I work in a controversial industry. Some people will not agree with what we're trying to do, but we push on despite that and we have a vision to change the world for the better.

I guess I was never one to really kind of take the road more traveled. The more that people want to push back on me and tell me that this industry shouldn't be respected and that there isn't a place for it, it only drives me more to keep doing exactly what we're doing. There's a big opportunity to do a lot of good here and that's what makes me leap out of bed every day.

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