Bancor co-founder Guy Benartzi’s at the Ethereal Summit in Tel Aviv on September 15, 2019 (Photo by Molly Jane Zuckerman for Modern Consensus).
Technology

‘After the flood comes rainbows and sunshine’: Bancor’s Guy Benartzi on state of the crypto space

The co-founder of the liquidity-focused blockchain protocol spoke with Modern Consensus at the Ethereal Summit about the possibilities for a multi-blockchain, multi-crypto world

Bancor co-founder Guy Benartzi’s talk at the Ethereal Summit in Tel Aviv on September 15 was straightforward: he wanted to discuss the company’s Year 3 roadmap, and he wanted to share the new creator.eco platform—built on the Bancor protocol—that helps content creators monetize through a staking system.

But in a conversation with Modern Consensus, Benartzi’s pitch veered far away from these topics. Instead, he revealed an enthusiastic slew of predictions for 2020 that foresee very near-term crypto adoption. 

MODERN CONSENSUS: What’s your current take of the progress in the crypto and blockchain space?

GUY BENARTZI: I think that 2020 is going to finally be the year where blockchain matures. We’ve kind of washed out many of the bad actors—or many of the bad ideas—that have been in the space in the last few years.

The people you see still building and still doing stuff, they’re probably starting to get really close to where we’re going to start seeing mass market adoption. My guess is in 2020, probably more defi-type [decentralized finance] categories, you’ll start seeing the first end user applications emerge next year. 

That’s a lot sooner than anyone else I’ve talked to has said.

I actually thought it was gonna happen years ago, to be honest. We were ready to launch these kinds of things two years ago, but then we saw Ethereum doesn’t scale at all. Crypto Kitties was a watershed moment, where you saw that we were victims of our own success, and everybody went back of working on the piping, on the infrastructure.

People always overestimate how much you can do quickly, and they underestimate how much you can do over time. Right now, people are maybe a little bit pessimistic because of the last couple of years. But from my perspective, having maybe one of the largest developer teams on blockchain and having worked on multiple blockchains now—in Ethereum and beyond that—my sense is that 2020 is a breakout year.

How is the scalability issue being solved that quickly? What’s the point of trying to scale multiple blockchains, rather than working on one?

Different solutions for different use cases. For example, the current state of Ethereum is great for what’s happening in defi, it doesn’t need significantly more scaling for defi. 

[If] you’re talking about actual end user consumer DApps, you can’t do it on the Ethereum mainnet today; you’re forced to go to a different blockchain.

I think you’re going to see a multipolar blockchain world. Telegram is coming out with their blockchain, Facebook is coming out with their blockchain—I don’t think it’s going to be one blockchain to rule them all, it’s going to be different blockchains for different use cases. 

Even on Ethereum, there are creative ways to solve it [the scalability problem]. You can solve it with side chains, you can have many validators, you can have a side chain that periodically goes to the main chain in order to do finality of consensus once in a while. 

The biggest issue is that people have started to understand that if you want to bring a mass market audience into it, you have to create things that are super simple. It’s actually a user experience issue more than it is necessarily a blockchain scalability issue.

Do you think that user interfaces then will be accessible enough by 2020?

I think they will. The people that were into crypto at first were people that were either cryptographic geeks or mathematicians. Or, were into cryptography or opportunistically found their way into Bitcoin, usually because they read about some conspiracy theory theories on the Internet.

The ICO boom—for all the negative things that happened as a result of it—brought a new category of participants into the blockchain space, which is entrepreneurs. It [also] brought bad actors, and good actors aboard, but it’s the first time where entrepreneurs were saying, “Whoa! Something’s going on here.” 

Keep in mind that when somebody enters the space, it takes a couple of years before they actually can do anything that reaches the market. It’s now that a couple of years later. We’re beginning to see the fruit of it. Some people don’t have that much patience when they see prices rise and fall by dozens of percentage in short amounts of time; it colors the atmosphere a little bit. 

Do you think that the money making craze has died down since Bitcoin is no longer at $20,000?

I think that the money making craze is still there in the same sense that it was in the startup world, in the Internet world. After the first bubble, it exploded, $5 trillion disappeared and [that was] much, much bigger than what happened in Bitcoin. There was so many junk companies—and real companies—that were trying to do stuff. They were just naive about what was going to happen. 

It’s actually in between the two bubbles in high tech, but the most amazing companies were created because the people that were left were the true believers. They suddenly were reminded that you can do a lot more with less, that you don’t need so many millions of dollars to move things forward. Necessity is the mother of invention, so when your back is against the wall, you find out what you’re worth, you find out what you’re made out of. 

That’s what that’s what we’re seeing. We’re seeing a lot of the weaker participants leave, and we’re seeing the trees with the deeper roots survive the flood. And after the flood comes rainbows and sunshine. 

How can blockchain help content creators monetize their work?

I gave an example [during my Ethereal talk] of something that I’ve been waiting a long time to see, which is kind of B2C [business-to-customer] end user application use cases geared at the general audience. In the case of creater.eco, it is a platform for user-generated tokens. Any content creator, a journalist or a blogger or an artist, a musician, a podcaster or any person who creates content can essentially issue their own token—no technical knowledge, no cost, takes literally a minute. 

Their audience can use that token to get access to their premium tiered content. Rather than a Patreon or a New York Times subscription paywall, this is like a “stake wall.” You aren’t asking your end users to pay you money, you’re actually asking them to stake some money into your ecosystem.I think that this fundamentally transforms the dynamics between content creators and their users.

Content creators are really struggling to monetize. It’s a really, really big problem in the industry. The advertisers, as they become bigger monopolies, suck all the values, and so solutions like Patreon and other kind of patronage platforms have filled in that gap. 

But even that it’s not ideal. It doesn’t allow them to get involved in the way like at a startup [where] you give options to employees because you want them to have skin in the game. 

You’ve mentioned your belief already in a multi-blockchain world, but what about a multi-crypto world?

I say this because I don’t want to spark any hate from our fellow Bitcoin maximalist—I love Bitcoin, I think Bitcoin is maybe the greatest invention in the last hundred years. I have respect for Bitcoin. There will always be Bitcoin. 

Having said that, I think that it’s naive to believe that somebody invented—for the first time in history—the ability to move value over the internet between two parties with no middleman, and to think that that’s limited to one token. That’s ridiculous. That’s like saying that somebody invented the ability to move information between two people and it’s limited to one website. 

It’s true that it’s not always obvious to us. We’re not waking up in the morning and imagining Uber or Airbnb, or we would have all created it, or would have all invested in it. 

One of the things we believe at Bancor is that there will be millions and millions of tokens—it’s just that most of them will have very, very small market caps. They’re going to represent not just projects: they’re gonna represent people, they’re going to represent Facebook groups, they’re going to represent subreddits. 

Some of them are small and some of them are big, but none of them will exist if there is a liquidity barrier. If you cannot trade one token for another, if you need to rely on the bid-ask system and market makers, then you’re going to have this barrier to entry. What the internet did was lowered barriers to entry to zero. 

Right now, the barrier to entry to create your own cryptocurrency is not zero. It’s not zero from a technical perspective, it’s not zero from a UX perspective, it’s not zero from a security perspective, and it certainly wasn’t zero before Bancor from a liquidity perspective. 

But it is now, because Bancor has separated the volume from liquidity. It’s made these two things completely separate, because it understood that programmable money means you can now have a consumer-to-computer relationship, a peer-to-smart contract relationship, not just a peer-to-peer or a B2C or a B2B. There was an entirely new paradigm. 

With that infrastructure there, people will make amazing things. I have no idea what they’ll make when they make it. When they made Reddit, they had no idea what the subreddits would be, when they made WordPress, they had no idea what the blogs would be. I have no idea what people will make. But I know that if you reduce barriers to entry to zero, people will create unbelievable innovation on top of that.

This interview has been edited and condensed for clarity.

Molly Jane Zuckerman is a freelance journalist covering crypto and blockchain news. Disclosures: Zuckerman does not own enough enough bitcoin (BTC) to buy a Birkin bag (<$5,000) and not enough ether (ETH) to buy a quarter of a Birkin bag (<$1,000).

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