Have you noticed anything strange going on with your money lately?
Whether you consider the Gamestop short squeeze, the money printer going brrrr, or the pandemic-stricken global economy at large, it seems like the financial establishment is showing its cracks in a way we haven’t seen before. Something big is happening in finance right now, and it’s clear that blockchain technology has an important role to play.
Cryptocurrency and blockchain topics seem to be approaching their tipping point in the public consciousness. We caught up with Meltem Demirors to get her take on what’s been going on.
An increasingly influential voice on Twitter, Demirors is the crypto journeywoman who has served as vice president of the Digital Currency Group, as an advisor to MIT Media Lab, as co-chair of the World Economic Forum’s blockchain and cryptocurrency councils, and has even designed a blockchain curriculum for Oxford University.
She’s also the person who had to explain the difference between a Bitcoin and a “shitcoin” to Rep. Warren Davidson (R-OH) during a televised congressional hearing last July.
Nowadays she serves as chief strategy officer of CoinShares, a digital asset investment firm with $3 billion of assets under management and 15 different crypto companies in its portfolio.
She’s hyper-connected to the business news cycle, brimming with liberal arts ideas for the fintech arena, and vocally discontent about certain aspects of her industry. Most recently she shared that she’s leaving New York for New Hampshire, citing assorted frustration with the Empire State’s bureaucratic business logistics and taxes. Her new state’s “Live free or die” motto seems well-suited to her.
Here’s what we talked about.
Stop thinking small
Demirors is an established crypto native and Bitcoin believer who actively does business in the space, but don’t take that to mean she’s perfectly content with it. As an avowed sci-fi fan, she’s starving for some substantive futurist thinking from the crypto community.
In a recent tweet, Demirors said “bitcoin wasn’t always ‘real’—we made it real by believing in it and meme-ing it into reality.”
Bitcoin began with the myth of Satoshi Nakamoto, the persona adopted by the creator—or creators—of Bitcoin that willed cryptocurrency into an economic force to be reckoned with.
Bitcoiners are going to have to keep believing if they are going to push the crypto narrative forward, she told Modern Consensus.
She suggested that the words used and stories told by the crypto community have the power to effectively design the future. That’s powerful stuff.
It’s also something she doesn’t believe the crypto community is doing very well at the moment, with all eyes on old-school banks and corporations and the huge sums of money their involvement brings—JPMorgan’s $100 million dollar move in December for example, or Tesla’s $1.5 billion bitcoin buy earlier this month. It’s easy to interpret those moves as big votes of confidence for cryptocurrency’s underlying principles and technology.
Demirors doesn’t buy it. She says:
“I think our aspirations are so small. Making Bitcoin institutional? I could give two fucks if JPMorgan cares about Bitcoin. It does nothing for me as a person, and it makes me sad that so many people have made institutional adoption a goal.”
She continued, “[i]f I give my BTC to JPMorgan and get a piece of paper in return, that’s no different from the relationship I have with my money today. We’re calling this innovation? That’s not what I signed up for.”
Demirors is worried that the crypto community’s force of will that helped make Bitcoin real—that designed and advanced crypto’s “mythology”—has dissipated.
“We don’t often talk about the importance of mythology in the Bitcoin ecosystem,” she said. “Where are the futurists in Bitcoin? Where are our storytellers, sages, shamans? I believe what we say and aspire to, that’s ultimately what we become.”
Describing the situation lately, she said, “The picture is not rosy.”
The separation of money and state
Demirors praises Bitcoin as an example of “the first large-scale success at separating money and state.” She said this particular framing is helpful for getting crypto newbies to more easily understand its importance and promise—especially in the wake of an extremely contentious election cycle in the U.S.
“[Separating money and state] hasn’t really happened since Julius Caesar bound the two together by stamping his face on gold coins,” she said. “This is the first time in three millennia that we’re trying this experiment, and I think it’s profoundly exciting.” Demirors added:
“What sort of world is possible when one billion or two billion people are using Bitcoin? I’m excited about what this will do to forms of organization, how we work and collaborate as a society.”
With levels of discontent and unrest seeming to reach all-time highs in 2020, Demirors says the case for Bitcoin has never been stronger. She even indulged some post-state thinking:
“I think it’s highly likely that in a post-government world, we will live in a bunch of corporate states. The issuance of corporate-backed digital cash [like Facebook’s Diem stablecoin or PayPal Cash] is a perfect example of where this is headed. It could get dystopian!”
CBDCs as government-enabled crypto control
Demirors agrees with the broad premise that cryptocurrency will inevitably go mainstream in the long term, but qualifies that this transformation is “not inevitable in the way we imagine.”
Where BTC maximalists might imagine a world economy redesigned as vanilla transactions on the Bitcoin blockchain, she says we’re much more likely to see central bank digital currencies (CBDCs) become the world’s de facto crypto.
This means that CBDCs are on their way to becoming what people talk about when they talk about crypto. From China to Australia to the Bahamas and beyond, countries large and small are launching their own experiments with national cryptocurrencies. We can safely expect many more to follow suit—bring on U.S. Coin, Mexico Coin, Russia Coin, EU Coin, among others.
“Crypto right now is being envisioned as a way to control currencies, and that’s not consistent with the vision for Bitcoin that inspires me,” Demirors said. “The erosion of privacy for everyday citizens is troubling and concerning. Over the coming decade, I expect cryptocurrency advocates are going to need to be more closely aligned with the government.”
She warned that CBDCs are going to come with some important compromises by comparison to Bitcoin. These tokenized national currencies will run on a blockchain and operate mostly on the same premise as unaffiliated cryptocurrencies, but they will be designed from the ground up to operate in compliance with the laws of that particular nation. The finished products are bound to come with certain safeguards and degrees of control to protect a government’s interests—often at the expense of the individual’s privacy.
While it may become extremely cheap, easy, and commonplace to use the hypothetical U.S. Coin of the future, it’s going to come with baggage of a variety that truly open cryptocurrencies do not have. It seems completely reasonable that the government might intercede in transactions that it didn’t agree with, or lock people out from accessing their money.
That was made clear last November by Mu Changchun, head of the People’s Bank of China (PBoC) digital currency research institute. Speaking at a conference in Singapore, he said the government knows people mostly want to transact anonymously, but introduced the rather Orwellian-sounding idea of “controllable anonymity” as a compromise on total anonymity.
Considering Demirors just moved to the most libertarian state in the U.S., that’s an uncomfortable thought.
BTC maximalism “is odd”
“Bitcoin maximalism” is the popular notion that BTC is the only cryptocurrency—or even currency, period—that matters. Maximalism can take a lot of different forms: some lobby publicly for BTC as the answer to a lot of personal and business finance problems, some simply invest heavily in BTC and wait.
There are more than a few people out there who readily identify as BTC maximalists—consider Tone Vays, Max Keiser, and Jimmy Song—but we can count Demirors out here. She pegs maximalism as an odd concept:
“Calling this idea ‘Bitcoin maximalism’ is odd to me because if you believe in Bitcoin, you inherently believe in monetary Darwinism.”
She elaborated on the concept of monetary Darwinism: “This is just the idea that the best monetary system is going to succeed over time. If you believe in that and you also love Bitcoin, then why worry about all the other stuff out there? Eventually it’s going the way of the dinosaur.”
Whether the maximalists are right or not, we’re still going to have to wait a long time to see any suggestion that their instincts are truly correct. Right now there are trillions of dollars in the U.S. stock market, bonds, and treasuries—that money won’t turn into Bitcoin overnight. Bitcoin’s market cap is presently $970 billion. It sounds like a lot, but JPMorgan Chase CEO (and prominent bitcoin skeptic) Jamie Dimon controls assets worth nearly three times as much.
“In terms of scale,” Demirors said, “it’s a terrific accomplishment that Bitcoin continues to occupy so much mindshare.”
Updated 1:00 a.m. Feb. 19 to replace studio-born lead photo with awesome rib-eating image.