Sterlin Lujan: The Burden Is on Investors to Make the Right Decisions
On September 14, Bitcoin.com ambassador Sterlin Lujan spoke at the NEXT BLOCK conference in Sofia (Bulgaria). He talked about the psychology and evolution of money and how cryptocurrencies can disrupt fiat’s hegemony but also touched on how governments can try to hinder this process. In an exclusive interview for Cryptovest, Lujan elaborated on his views. Last week, we published the first part of our conversation, which focused on the internal and external risks for cryptocurrencies.
In the second part of the interview, Lujan shares his political and philosophical views on cryptocurrencies, comments on why governments are afraid of them and offers his predictions for the cryptocurrency market at the end of 2018.
Cryptocurrencies are still being discussed in terms of their value in fiat money, especially US dollars. Do you think this is an issue impeding widespread adoption and what would it take to change that?
I don’t think so. It’s just a natural thing that is part of the current development ecosystem.
Cryptocurrencies are so new, and we are so entrenched in the current fiduciary system that naturally any kind of new money or new commodity will likely be valued in an exchange ratio with fiat currency. That’s the currency everybody is used to dealing with. This isn’t an impediment to mass adoption; it’s just a stepping stone.
At first, cryptocurrencies are going to be measured and valued in terms of fiat currencies, but eventually, with mass adoption, fiat currencies will fall to the wayside, and cryptocurrencies have the potential to become a unit of account.
This is primarily an economic but also a bit of a technological problem. It depends on how you look at it. Some people may want to develop stablecoins that are naturally less volatile and act as a natural unit of account, but, in my opinion, some might simply want to achieve mass adoption with an actual cryptocurrency. The more cryptocurrencies there are in circulation, the less volatile they become and the greater their chance of becoming a unit of account. Once cryptocurrencies become a unit of account, fiat currencies start to fall to the wayside.
I strongly believe that’s the path we are on; it’s really a matter of time. I can’t bring out a crystal ball and give you a date, but I do believe we are heading in the appropriate direction.
Which existing cryptocurrency do you see as having the greatest potential to become such a unit of account?
Bitcoin Cash and possibly something like Dash; some of the cryptocurrencies that are doing really good marketing. I think something like Decred can eventually have a really good chance of becoming a unit of account.
It’s just a market matter, a question of which one is more poised to be easily mass-adopted. Bitcoin Cash is in a particularly strong position to get there. That doesn’t mean it will win – in an open market, any potential cryptocurrency can win. Any that can be used as cash in a truly peer-to-peer fashion has an opportunity to become the unit of account.
Can crypto and fiat co-exist? Or does the potential rise of cryptocurrencies spell doom for fiat currencies?
They are co-existing right now.
This is a problem of ought versus is – what will happen is different from what I want to happen. And what I want to happen is for fiat currencies just to fall to the wayside. We’ll get a little philosophical if that’s ok with you.
Because of the existence of fiat currencies, people all over the world have been enslaved by governments. Governments control how fiat currencies are printed, and they can trace people’s digital transactions and then freeze an account.
Fiat currencies have caused widespread destruction. In my mind, they are also the currency of mass warfare. Since governments can print as much money as they want, they can fund a perpetual war machine, which is exactly what the United States has been doing with the US dollar.
In my opinion, not only should fiat currencies be absolutely eradicated, but it is imperative that we push for that to happen in order to provide humankind with a stable cryptocurrency that will have a limited amount printed out for the sake of destroying the war machine and mitigating the impact of warfare worldwide.
In addition to your advocacy of Bitcoin Cash, you are also quite vocal about your ideological beliefs. You promote cryptocurrency adoption not only as an economic measure but also as a political one. Do you think mass adoption could happen without a political or ideological paradigm shift?
Absolutely! It is already happening. At Bitcoin.com, we do a tremendous amount of work on spreading crypto adoption. As a matter of fact, our mission statement says we aim to provide people with more economic freedom, and it is already happening.
We are giving people the opportunity to start using BCH outside of the fiat currency system. We want them to open up a wallet and start trading in fiat currencies. We want end retail users to adopt BCH and start using it on a regular basis. In a way, this is fueling a type of agorist revolution.
Agorism is the idea that we should use counter-economics to destabilize the state apparatus in a peaceful way. Even if cryptocurrencies share an exchange ratio with fiat currencies, by using digital money, we bypass the fiat cash system and erode the power of the state. When we use cryptocurrencies, we empower ourselves. I don’t really see this as political action per se; to me, it is non-political because politics involves coercing and forcing people to live in a way you see fit for them. With cryptocurrencies, we act of our own volition, exercising our freedom of choice to move in the direction we want.
It is imperative that everyone continues to use cryptocurrencies as much as possible so that we can change our reality and spur a paradigm shift.
Do you believe there are any regulatory measures that might help cryptocurrency adoption rates?
Having some type of a self-governance model to weed out bad actors is absolutely a good thing, but I think that should always be pushed forward by the market. Market actors should see that as a problem and discover solutions. This is what always happens in a market – problems are teased at, and then solutions are developed for those problems.
Relying on regulators to determine what’s good or bad for our industry is an awful thing for two reasons.
Firstly, everybody knows that bureaucrats lack deep technological acumen; they don’t have an understanding of the space. That creates a situation where we have to pander to them to get special privileges so that we can run our businesses. It’s essentially the same as having to legally bribe a politician to be able to run our businesses and create the technologies we want to create. It takes a lot of energy and resources. It is bad and inefficient.
Secondly, in order for us to get bureaucrats to do this work, they first have to steal money from other people under the guise of taxation. That’s just wrong.
So, we should discover our own ways to solve the problems in our space. I think we are already doing it. For example, a couple of companies have created platforms that allow individuals and investors to analyze projects in a point system and with background information. Thus, they can determine if a particular project is viable or scammy. If the latter, it will get listed on these platforms and investors will have a quick way to determine what projects are good or bad.
Ultimately, even in this space, it is up to the investors to make the right decision. Some burden is on them to make sure they do proper due diligence to determine what projects are good.
To some degree, if they invest in a shit coin or a scam, it is their fault. If you are an investor, you have to do due diligence, and you also need deep understanding of the technology and how it actually works. You don’t give in to hype and don’t just follow the white rabbit down the hole if the white rabbit is a scammer.
Speaking of hype, do you think cryptocurrencies have a PR problem as a whole?
To some degree, but I think that’s changing. Early on, just like in the early days of the Internet, PR was all based on looking at cryptocurrencies as a conduit for allowing murderers, kidnappers, and the most detested criminal segments to use it. In the beginning, it was just these individuals who were using cryptocurrency.
To some degree, that stigma remains – you hear Bitcoin being associated with criminal elements, drug dealing, the Silk Road, with every other ugly part of the market.
But now a level of seriousness has been pushed into the ecosystem. Capital investment firms have come in, institutional investors are exploring cryptocurrencies, and serious entrepreneurs are looking at leveraging the technology.
It is starting to move out of the early stage of concern about who would be using the technology. As I said, the same thing happened with the Internet. When it first appeared, many claimed its only users would be criminals, pedophiles, kidnappers, murderers, and anybody wanting to do nasty things.
But as the internet developed, it grew out of this phase, and it is now a communication tool everybody can leverage for their benefit. The same thing will happen with cryptocurrency.
In a way, cryptocurrency is even more important than the Internet because it allows us to communicate value to each other.
One last question. Going back to fiat money, what are your predictions for cryptocurrency prices by the end of 2018, specifically BTC and BCH?
It’s going to be bad.
Many people still have a vision of the cryptocurrency market just exploding at the end of the year, with Bitcoin reaching $10,000 or $20,000, some even projecting $25,000. Granted, a few expect this explosion at the end of 2019, but right now, the sentiment is really bad and will stay that way.
There are a couple of reasons for this pessimism. The first is regulatory agencies and governments. There has been a lot of fear-mongering and a bunch of nonsensical regulations as those in China, where the government has banned initial coin offerings and crypto mining. The government in Ecuador has plain outlawed cryptocurrency, so fear is strong. Governments have reacted very unkindly to cryptocurrency, which has caused a lot of negative sentiment.
The second and more important reason is that at the end of December 2017, when the market was super bullish and the hype massive, the price of Bitcoin rose to nearly $20,000, but the average fee per transaction also shot up, jumping from $20 to $40. At that point in time, it was acknowledged the technology wasn’t ready for mass adoption because you couldn’t even use it. I think this caused the shift to a more bearish sentiment. In truth, of course, the technology could scale, but there were a lot of mistakes made in that regard, which we already talked about.
Right now, we are at a point of consolidation. A lot of the bad actors will be weeded out of the market, and we will start determining new ways to grow and develop the technology and trying to devise solutions to some of these problems. Also, mass adoption will progress without the help of governments.
It is still going to be quite a while – probably a couple of years – before we see a boom. It could be next year, who knows? But you know what? If I’m wrong, and the cryptocurrency market does erupt at the end of the year, I will gladly go on stage and admit I was wrong in my prediction, and now the market is doing just fine.
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