In the crypto world, 2019 has been a year full of big expectations, large announcements, heartbreaking disappointments, and new discoveries. We’ve been holding our breath, waiting for the regulators to make their first steps towards embracing cryptocurrencies. We’ve been following all the crazy price predictions, expecting a new Bitcoin price all-time high or at least a sign of a new outstanding technology.
Despite the growing number of IEOs and decentralised exchanges, I guess this year has been rather calm and quiet for the community, but that doesn’t mean that nothing great happened in 2019. The technology is still growing, putting down its roots in financial institutions.
Recently, I had a chance to speak with Paolo Ardoino, CTO of Bitfinex and Tether, who told me about their plans for 2020, new products, and achieved results.
U.Today: Hello Paolo, thank you for joining us! You have quite an impressive background in IT. What drew you to the world of blockchain technology? Is there a story behind it?
Paolo: I’ve been a developer my entire life. I started coding at the age of eight, when I got my first computer. I was extremely passionate about it. I consider myself a cyberpunk, someone that really has a deep philosophy for the Internet and a vision of how its protocols should be designed for resilience and peer freedom. I worked really hard to apply that vision with companies I work with, Bitfinex and Tether. I think that my knowledge in distributed computing and networks are well suited for running a business like Bitfinex. Also, my experience in computer and network security is a really good fit for both Bitfinex and Tether.
I started coding at the age of eight, when I got my first computer.
U.Today: Recently, the crypto store Bitrefill teamed up with Bitfinex to allow its clients to shop with Bitcoin (BTC) over the Lightning Network. What benefits does this give your users?
Paolo: Yes, this is one of the most exciting things that has happened recently. I have been a supporter of the Lightning Network since the beginning. Bitrefill’s integration with Bitfinex is a great way to demonstrate the power of the Lightning Network. So, I started discussing with the Bitrefill team. We were all excited about the Lightning Network, and jumped in by giving our support for using this technology in a legally compliant way. Bitrefill was the perfect partner when it came to the testing and experimenting phase. They have a beautiful use case, which is gift cards.
One of the most interesting things that you need to deal with when it comes to this kind of cooperation or partnership is finding a way to send money from one company to another. Let’s say a Bitfinex user buys a gift card from Bitrefill. How should we settle the funds between Bitfinex and Bitrefill? We agreed on using a dedicated Lightning Network channel of 1 BTC size between the two companies so that we could operate smoothly and reduce the risk for ourselves and for our users. While LN is such a new technology, we did not have any problems so far. A lot of people are already using it on a daily basis. So I'm really happy to see the results.
U.Today: How do you list your tokens? What are the criteria for listing tokens? Will you add more fiat currencies to the exchange?
Paolo: That is a good question. I always talk publicly about the fact that Bitfinex doesn't want to be paid to list tokens. This is a business model that some exchanges have, but I think that having a business model where you have to search and decide which tokens are best suited for the platform and its users had better suit us. So, we have implemented rules for listing tokens that include U.S. and other legal opinions to ensure that the tokens are appropriate for listing. These are good parameters for us to follow. We also perform our due diligence on the coin topic and the activity on GitHub, checking to see if the code is fully open-source. It's a really long and tedious process, but I think that the rules that we have implemented will pay off in the long run. We are also working to add new ways of posting deposits to Bitfinex. This new method will come soon, most likely next week*. Of course, we’ll also add new payment methods via traditional wires as well as with more currencies. For now, we only have four currencies available - US Dollar (USD), British Pound Sterling (GBP), Japanese Yen (JPY), and the Euro (EUR).
*Editor’s Note: Customers can now use their credit or debit cards to purchase cryptocurrencies.
U.Today: In the Spring, you launched a new project called the UNUS SED LEO token to refund lost money. Can you tell us more about this project?
Paolo: It’s public knowledge that Bitfinex had issues with Crypto Capital. A substantial amount of Crypto Capital’s funds appear to have been frozen. The reason the UNUS SED LEO token was created was to give us the opportunity to raise $1B to meet strategic and operational objectives, and to burn UNUS SED LEOs from the market every day at any price that the market would set. The great thing was that we were able to raise a billion dollars in 7 to 10 days. This was one of the greatest things that I had the privilege of being part of. That is amazing!
Of course, we know that our users are really interested in understanding whether Bitfinex will be able to recover the frozen assets. We are working on it. We have different legal teams in different jurisdictions, and a good understanding as to the location of these funds. We are confident that we can make our case in various courts in order to recover these funds. We know that it is going to be a long battle, and we are ready to fight it and will do so.
U.Today: When do you think we should expect the next All-Time-High for BTC? What do you think about John McAfee’s famous BTC price prediction by the end of 2020 (which is $1 million dollars for 1 Bitcoin)?
Paolo: The halving is expected to occur next year, and I think it’s reasonable to expect an increase in the price of Bitcoin. I won’t do any price predictions myself and this is not financial or other advice from me or from Bitfinex or Tether, but I don't see any reason for Bitcoin not hitting $100,000 within the next few years. That would already be an amazing goal for such technology. I personally believe that Bitcoin is the best cryptocurrency and the best general method for storing financials, as well as sending and receiving micro-payments via the Lightning Network.
U.Today: Do you have any major plans for upgrading your projects? Can you tell us about them?
Paolo: Yeah, we are currently working on several different products. One is called Prediction Markets, which is interesting because it will list certain markets with a proprietary system, allowing Bitfinex customers to bet on uncertain political events and sporting events. We are planning to deliver this new product by the end of Q1 2020. We are also working on adding additional derivatives products to our platform through iFinex Financial Technologies Limited. These new products will be more suited for institutional investors and traditional financial traders. Options markets will be likely delivered between Q1 2020 and Q2 2020. This is our main focus for the start of the new year, and we’re excited to experiment with new things.
I won’t do any price predictions myself and this is not financial or other advice from me or from Bitfinex or Tether, but I don't see any reason for Bitcoin not hitting $100,000 within the next few years.
One interesting project that we're working on is called Dazaar. It's not yet another blockchain first of all, and that’s something I’m really proud of. It is a super scalable, data stream network that gives people the option of creating data streams. This new technology allows people to send real-time data streams in an expedited manner faster than anything available currently, while optionally supporting agnostic micropayments, which can be in any form of cryptocurrency. We will release it fully open-source. Everyone will be able to have it, expanding the support for additional cryptocurrencies or other means of payment.
We wanted to give back to our community by creating a product that will help the industry grow.
U.Today: Thank you for sharing, that sounds really interesting!
In a recent interview with TRON’s CEO, Justin Sun predicts that at least 50% of the USDT will migrate to the TRON network because of Omni’s high fees and slow speeds for USDT transactions. Do you think this prediction is correct?
Paolo: Well, I think that he's really pushing hard to make that happen. Tether received some complaints from the Ethereum community as soon as Bitfinex, Binance, and other exchanges started to halt Tether Ethereum. At one point, Tether accounted for more than 25% of the total Ethereum chain activity, so since we want to ensure that if there is a problem with the blockchain (clogging, ...) or if there is any other issue, Tether would continue to function between the exchanges and businesses using other blockchains.
We wanted to give back to our community by creating a product that will help the industry grow.
I think that TRON is using this opportunity to draw a lot of interest to its blockchain when it comes to the adoption of Tether. Of course, every blockchain has its uses. For example, Omni is known for having Bitcoin security, while TRON, Ethereum or EOS are much faster. However, they also offer a different security model. Therefore, we do our own due diligence. We think that every blockchain that issues Tether needs to be 100% secure and needs to maintain standards of development continuity, code reviews, etc. We just want to serve the digital token community. We want to serve use cases. Another good example is Liquid from Blockstream, which is a Bitcoin sidechain that uses Bitcoin security and a federation of nodes to allow faster transactions with 1-minute blocktime. In addition, Bitfinex and Tether are funding some experimental projects that aim to bring digital assets (like Tether) to Lightning Network. So, to summarize, whatever our customers like, we will try to provide it. I really like Bitcoin, but I cannot be biased towards a single blockchain when it comes to the companies I work for, hence I involve myself and my team in researching and experimenting with many blockchains to learn and understand better our customers want.
U.Today: What are your thoughts on decentralized exchanges (DEX)?
Paolo: That is a really good question. This was one of the most discussed topics in 2018 and at the beginning of 2019. Lots of entities started delivering potential DEXes. Most of these platforms are in reality non-custodial exchanges rather than pure decentralized exchanges. The fact that a single entity controls the exchange code, the sidechain the matching engine runs on, etc… makes harder to claim that most of these projects can be considered true DEXes. Even the ones that are doing a better job usually have another common issue: a single entity (or community) gets the majority of reward from such DEX.
This, in my opinion, will force these projects to introduce proper KYC/AML policies following regulatory requirements that will be adopted by centralized exchanges.
While developing eosfinex we learned a lot about these requirements and engaged with regulators to ensure a bright future to our fully-on-chain EOS based exchange.
The only truly unstoppable solution can only be built on top of P2P technology (such as Lightning Network) with every node operator running their own small micro-exchange.
Bitcoin has been built to stay and change our financial institutions.
U.Today: In your opinion, do you believe that a mass adoption will occur anytime soon?
Paolo: I think that mass adoption is still a few years away and to make that happen today it's important to improve the user experience, improve the knowledge base, and ensure that there is enough education for the average person to understand the technology. I believe that we still have a lot of work to do in order to make mass adoption possible. At the same time, I think that we are seeing more and more blockchain related projects, mobile wallets, as well as more and more competition. This is the exact recipe we need to make a mass adoption to occur. I don't have any doubt that it will happen, but I'm not sure that it will happen in the next year or two, we might need to wait a bit longer. Bitcoin has been built to stay and change our financial institutions.
U.Today: Okay, thank you, Paulo. This was really interesting.
Paolo: Thank you for your time. I hope I answered your questions.
We’re eager to see what new technologies and developments will bring us during 2020. It seems that the crypto community is growing stronger day by day, but will we have enough patience to overcome the resistance of the old world, accept the new one and educate our friends and families to make mainstream adoption real?