A lot of things are being said about Bitcoin. The cryptocurrency has been called the money of the future – and just another “bubble” as well. What is the essence of this phenomenon? What sets it apart from the other cryptocurrencies? Why are various governments less than fond of Bitcoin? Tone Vays – trader, cryptocurrency analyst and Bitcoin “evangelist”, who delivers lectures and gives master classes all over the world, talks about this and many other issues.
– What’s up today in the world of cryptocurrencies?
– For me, the basis for the cryptoworld is Bitcoin. I don’t think that anything else will last more than 4-10 years. Bitcoin is a currency that no government can control. You can make a payment to any person anywhere in the world, and no one can stop it. Bitcoin, like gold, is not subject to inflation. The total number of bitcoins that can be mined is known in advance. Some 80-85 percent of this volume has already been mined, 5-10 percent has already been lost, but the rest is in circulation. Therefore, I expect that the popularity of Bitcoin will only grow further.
– In one of your interviews you said that Bitcoin would work better in a country where it is prohibited. Do you still hold the same point of view?
– I would not say that it would work better there. In that case, people would still be wary of using it. What I meant was that it would work best where there are more restrictions on exchanging Bitcoin for a common currency. In this case, Bitcoin would be more expensive, because people have to take risks.
– Which countries, in your opinion, are on the path of recognizing cryptocurrencies and are ready to adjust their legislation correspondingly?
– I think that almost all states dislike Bitcoin. Today, most countries are seeking to remove cash from circulation so that people only use electronic money. This gives the state complete control over the money stock. Bitcoin breaks this order: if you remove cash, more people will use cryptocurrency. Therefore, in countries where cash is being phased out of circulation, the situation for Bitcoin is very favourable.
For several years it has been said that the euro will collapse and each country will return to its own currency. This would also be very good for Bitcoin. If people are feeling like this process is already in motion, many will invest their euros in bitcoins.
The greater the trust, the higher the price
– What could happen to bring down Bitcoin?
– Any currency is, first of all, the trust people have in it. The longer Bitcoin works, the more people will believe in it. But there is no government behind this currency. Bitcoin is, first and foremost, a technology. If this technology develops serious problems, then, of course, Bitcoin may fall.
– To what extent is psychological factor important here?
– It is very important. For example, if people are afraid that a bank will “burst”, they immediately run to withdraw their money. In the same way, if people stop trusting a currency, they start selling it in large quantities. And – for this reason alone – its rate begins to fall.
The process that cannot be stopped
– Usually, when we talk about cryptocurrencies, ICO immediately comes to mind as a phenomenon of the same sort. What do you think about this investment search method?
– I was not a fan of the ICO model from the very beginning. Its only “innovative” feature is to collect money from ordinary people through Facebook or Telegram and to do with the money whatever one wants, without reporting it to anyone. I believe that there are time-proven rules regarding to from whom you can and from whom you can’t take money to create your own company.
– Could you elaborate more on these rules?
– First, business investments are usually made by wealthy people. And these people must clearly understand where they are investing. In the ICO model this does not happen. You can be taking money from anyone!
These investments begin paying off only after a considerable length of time. And then the company can use the IPO model, and an ordinary person can buy a stake in this company. But this happens when the company has already achieved some success. In the ICO model, nothing like this happens. People invest money from the very beginning, within a month, even before the company has managed to accomplish anything.
Additionally, all these ICO sites are centralized companies. So, the government can stop their activities. In turn, Bitcoin, thanks to the blockchain technology, is impossible to “stop”. In the framework of blockchain technology, all transactions are equally important, regardless of the amount and when it was made – one day ago or one year ago. In the Bitcoin system it is also considered mandatory that a person should be able to check any of his transactions for this period, even 20-30 years on.
– So, this arrangement is exclusive to Bitcoin?
– Well, the principle is widely used. But only the Bitcoin system has the capacity to store this information for a period of a hundred years. This process is easy to stop when only 3-4 people in the world store databases; but if, like Bitcoin, there are 50-100 thousand people, it is nearly impossible to stop the process.
Bitcoin, able to change the world
– You have said that blockchain technology is to some extent overestimated.
– In his white paper on Bitcoin, Satoshi Nakamoto does not even mention the term “blockchain.” He described how the mining process is conducted, how transactions are carried out and verified. And how it all allows you to create a currency on the internet. Many people tried to do something similar, but no one succeeded until Satoshi came up with mining. Usually, when you send something by email, you are just sending a copy, but the data itself remains with you. Satoshi came up with the idea that this data should acquire the properties of a real thing. That is, when you send them, you lose them, but someone else receives them and only he can use this data. For me, blockchain is associated with this exactly. This innovation is called “the proof of work”. And if it is not used, then it is just a database, like it was 20-40 years ago. And people are gradually beginning to understand this difference.
– How did your life change when you became a cryptotrader after having been a Wall Street trader?
– On Wall Street, I was a trader of almost everything. But gradually I began to travel more often to conferences of cryptocommunities, and I created my YouTube channel. Now these are my main activities – I give advice to companies, tell them what Bitcoin is, what blockchain is, conduct master classes in different countries, teach people how to trade, how to read charts. And I like it!
TONE VAYS’ FORECAST FOR 2019:
“I think next year we will see Bitcoin scaling. Today, one of the problems of the Bitcoin algorithm is the limit of 5-7 transactions per second. This is a very difficult technology that has been developing for a couple of years. But now we already see that it is starting to work. I think that in 2019 people will start using it.
As for the price, I think, until the end of this year, Bitcoin will continue to fall, but starting from next summer it will start to rise again – slowly at first, and then very rapidly. I expect that by 2020 approximately Bitcoin will exceed the 20 thousand dollars mark. This will be a new hype.”
– How do you make your forecasts?
– I am a technical analyst. I do not even need to know what it is: bitcoins, gold, exchange commodity or currency. I just look at the dynamics of prices on a chart: what prices have done in the past – and I see what people are most likely to do in the future. This does not always work. But the main thing is that it should work in more than 50 percent of cases.
It’s almost like playing cards. When statistics are on your side, you bet. When statistics are not on your side, it is better to wait.
“Learning to teach is impossible”
– When did you understand that this sort of educational activity is your vocation?
– I always liked it. I got a geology and mathematics degree, and after that I acquired a qualification as a financial engineer. I taught in a high school, worked as a college professor. My work on Wall Street was also related to teaching: I taught programmers the science of finance. I always wanted to stand on stage and teach people. And this is exactly what I am doing now. At one time I took master classes in teaching skills, but then I realized that learning to teach is impossible; you are either able to do it or you are not.