Written by: DAN MOREHEAD, Founder and CEO of Pantera Capital
Compiler: Lu Jiangfei, Source: Chain News
DAN MOREHEAD, founder and CEO of Pantera Capital, recently gave a speech at the Economic Policy Institute of Stanford University and answered some questions about misunderstandings about Bitcoin.
The following is the dialogue in some points, if you want to watch the entire contents of this dialog, you can go to watch
Q: What is the vision of Bitcoin and other cryptocurrencies? They will replace fiat currency, right? But the problem is that these things have not happened so far. I cannot use cryptocurrency to buy goods on Amazon’s e-commerce platform, and I cannot use cryptocurrency to buy tomatoes in the vegetable market. I personally feel that this should be regarded as a technical failure. Can you explain this problem?
DAN MOREHEAD: Over the past eight years or so, I have often heard people talk about this question. The answer is actually very simple. Bitcoin will do many different things, but basically, among all these things, “buy a cup of coffee.” It should be the last thing.
Just like what you said, the current financial environment for 6 billion people around the world is not good. Devaluation of currencies, bad financial institutions, many people’s inability to use financial services, capital controls, and bank failures make people’s savings emptied overnight . and many more. So, this is the reason why you will see more and more people using Bitcoin in India, the Philippines and other countries, but now you may not be able to buy a cup of coffee with Bitcoin at Starbucks. There are two reasons:
1. Bitcoin price volatility is still very high . This is a fact. The current annual volatility rate of Bitcoin is still 60-70%. Therefore, Bitcoin is not suitable for corporate pricing strategies based on accounts. But this situation may change within ten years, because Bitcoin volatility will gradually decrease and eventually return to normal.
2. Another reason why Bitcoin is currently not suitable for commercial applications is: if you see Bitcoin prices continue to soar and asset values continue to rise, then perhaps no one wants to buy anything with Bitcoin, because doing so will make you regret it. Remember the first commercial transaction in Bitcoin? At that time, a programmer spent 10,000 bitcoins to buy pizza. If he didn’t, the bitcoin value would now reach 200 million US dollars. So the real problem is that Bitcoin is a highly appreciable currency, so using Bitcoin to pay is not an ideal choice. If you use Bitcoin to buy a flat-screen TV this year, you may be able to buy ten with the same Bitcoin next year. Therefore, many people are not eager to use Bitcoin for shopping transactions.
Q: Another Bitcoin issue that people often argue about is: Bitcoin has no value and has no intrinsic value. Some people think that Bitcoin is just the “Bit” on the computer. Why should we give Bitcoin so much value? How would you respond to this question?
DAN MOREHEAD : Well, there are actually two views on this issue. The first is practicality. Practicality is very helpful, if 100 million people find Bitcoin useful for something, then it is valuable. Second, as you said, in many developing countries, many people think that Bitcoin is more secure than banking financial services. In fact, you also mentioned the fact that Bitcoin is actually completely subject to encryption keys. protection. And the question I consider is that if you live in a developing country, some local banks are not so trustworthy, so you are willing to put all your wealth in an unreliable bank? Or put it in Bitcoin where you control the key? Again, if 100 million people use Bitcoin, then this is a huge value.
On the other hand, if we have this kind of dialogue again ten years later, when Bitcoin is already 22 years old, you may find that the central banks of some countries have included Bitcoin in their balance sheets. This is my opinion. I think from now on, every country’s central bank will own Bitcoin in thirty years, and some central banks may even give up gold.
Q: Do you think there will be another cryptocurrency. Compared with Bitcoin, this new cryptocurrency is better and faster, and will eventually replace Bitcoin?
DAN MOREHEAD : This is actually another very common negative view of Bitcoin in the market. I had previously accepted an interview with Andrew Ross Sorkin . He told me that he and his wife were walking along once Walking on the streets of New York, someone suddenly sold him a cryptocurrency, so they suddenly thought, why not launch a cryptocurrency by themselves? After all, it is very easy to construct a new cryptocurrency.
You will find that some people think that Bitcoin has no value because it is too easy to “copy” Bitcoin. There are more than 2,000 copies of Bitcoin on the market. For this view, my answer is this: For example, suppose you have a good entrepreneurial idea, such as photo sharing, then it is not difficult to launch this feature. The real difficulty is how to get 2.5 billion people in you Share photos on the website ( Chain Wen Note: This implies that only Facebook seems to have done so far ). If you can do this, you can make a lot of money.
So, in the final analysis, it is actually a business model. If you develop a new cryptocurrency that can attract more than 100 million people to use it, then it is definitely better than Bitcoin. After all, it is difficult for 100 million people to switch from one cryptocurrency to another. Kind of cryptocurrency.
Looking back at Bitcoin, there are currently 100 million people in Bitcoin storing up to 400 billion U.S. dollars in value, which means that it is difficult for other cryptocurrencies to compete with it. As Professor Dan Bonn said, although there are many interesting use cases for cryptocurrencies in the market, Bitcoin is already “digital gold”.
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