With the recent ban on ICOs that happened in China, we have witnessed a sharp decrease in cryptocurrencies’ prices, and talks about bitcoin being a “fraud” have emerged. In this constantly changing world of cryptocurrency and blockchain technology, it is very hard to see clear and understand what is going on. In our mission to empower people at Spark, I decided to find a way to enlighten our readers about all this craziness by cutting straight to the chase.
I sat down with Daria Apelsinova who is a Blockchain Research Analyst at the prestigious Blockchain Research Institute in Toronto, Canada. Daria is also a Digital Currency Certified Professional and in this interview, she is going to try to enlighten us about this mysterious world of cryptocurrencies, and blockchain technology.
So Daria, how would you explain bitcoin and blockchain to a newbie in the space?
If I went with the simplest and shortest explanation, I would say that blockchain is a system that allows participants to interact with each other eliminating the need for an intermediary. It is represented by the “digital ledger” of transactions that is immutable and transparent. Bitcoin is a digital currency that uses one of the applications of this technology.
I think it is crucial to understand the relationships between blockchain technology and DLT (distributed ledger technology), as it tends to be misinterpreted in media coverage, especially with the recent crypto/blockchain boom. Distributed ledgers are systems that allow participants that do not trust each other to form and maintain consensus about the existence, status, and evolution of a set of shared information. Blockchain is just a particular type of DLT.
Some of the projects that I have seen in the space do not need to use blockchain technology or even DLT. According to a legend, if you say blockchain three times fast, your databases will magically become immutable and your company a fintech leader. That is the reality.
Why is there so much hype about bitcoin?
Everyone wants to get rich and bitcoin seems like an effortless way to do nothing and earn quite a bit of money.
I would say blockchain tech is overhyped and bitcoin is being in the spotlight as a side effect of crypto madness. My regret is that the media glorifies stories about people who bought bitcoins and managed to make money out of it instead of enlightening the audience about potential losses they could have had during the incidents with MtGox in 2014 or Bittfinex in 2016 (and I am not even mentioning mining, losing hard drives etc.).
What is the real value of bitcoin and the blockchain technology?
Falling into a category of emerging technology, bitcoin as a cryptocurrency should be addressed as an experiment which may or may not succeed. There were multiple attempts at creating truly decentralized Internet before bitcoin blockchain but they did not work out quite well. Blockchain has value because it can change the way we think about financial transactions. However, in my opinion, it goes far beyond creating a new path for financial services. It can create a social revolution, and as we have seen so far it has received a lot of public support and attention.
Where do you see Bitcoin going in the upcoming years?
There are several potential paths for bitcoin in the future. If the bitcoin community does not manage to solve current issues such scalability, unpredictable fees, block size etc., the bitcoin itself might be doomed to fail and substituted by a better and more efficient cryptocurrency. Surely, it will forever stay in our hearts as the first cryptocurrency that got so much attention, but will not be widely accepted as Satoshi and others envisioned.
In a different scenario, bitcoin will be managed by a small group of people dictating the price and controlling the information distribution that is not accessible to crypto-peasants aka the general public. Unregulated currency is a tricky and an interesting concept. On one
hand, the initial crypto-anarchists’ proposal mentions that the government should not be able to control bitcoin according to. On the other hand, obvious insider trading in crypto ecosystem defeats the purpose of the system that encourages equality between participants and fair distribution of information.
As for blockchain technology, it is hard to predict where we are going to be with it in a couple of years. Rethinking our traditional financial systems is a whole different process from actually making the average consumer adopt the technology.
Can the China ban on ICOs impact the development of the technology?
In order to reshape the existing financial world order, regulation has to go hand-in-hand with the technology. Many ICOs had very little and sometimes none built behind their marketing plans. I strongly believe that even though ICOs are inevitable for the globalization of cryptocurrencies and blockchain technology, governments should step up and start figuring out how to protect people from themselves. This is why a temporary Chinese ban seems like a logical action from the Chinese government considering the amount of scam ICOs that happened in the last few months. Very often, the victims of fraudulent activities make irrational decisions caused by lack of exposure to the technical side of the ICOs and the technology in general.
Last but not least, what can one do to take advantage of this new trend?
If you are really interested in learning more, I would say invest $100-500 (what you can afford to lose) in cryptocurrencies and maybe, ICOs (don’t forget to exercise your due diligence skills in that case) and start playing with this money learning how to read the charts and discovering what are the factors affecting the price. I think it is essential to understand the fundamentals of the technology to be able to have an intelligent conversation about it. I would also suggest reaching out to the blockchain&crypto community and try to get involved with them as much as possible.
 Richard Gendal Brown