- Last week’s podcast: The Future of Initial Coin Offerings
- What is Blockchain Guide
- How to Buy Bitcoin Guide
Transcript: Fran Strajnar: The Future of Bitcoin And Blockchain
Ameer: Today’s special guest is Fran Strajnar who is the co-founder and CEO of Brave New Coin – a digital currency and Blockchain data company. He’s also the founder of Bitcoin South – Zealand’s first international Bitcoin conference.
Fran, welcome to Block Geeks Lab podcast. How are you doing?
Fran: Very good! Pleasure to be on and I’m very excited to be here.
Ameer: Thanks for making time.
Before this, you and I were talking about the landscape of Bitcoin, Blockchain and cryptocurrencies. And you told me one of the reasons why you created Brave New Coin was to kind of collect all the data and kind of put everything to one space, so people can see a more crystal clear path of what’s going on in the industry. Can you kind of shine some light on exactly your main modus operandi behind Brave New Coin?
Fran: Yeah, sure. I mean look the thesis that I have been operating under is that there’s an entirely new asset class here.
Fran: So just a quick bit of background, I’ve been introduced into Bitcoin about 2010. I did not get into a hindsight. 2013 – I was busy with other projects at the time. 2013, I realized “Wait a minute! This is a whole new asset class.”
And so it had some very specific meaning to me. And I realized that what would be required for this asset class to grow and permeate out into capital markets is a lot of content, a lot of education to start with and of course, to get updated that people are used to getting for any other asset class.
So Brave New Coin is an attempt to legitimize the wider asset class of cryptocurrencies. And we do that in a way that we displayed the data, the naming conventions.
The website is a beautiful business card, if you will.
Fran: And we attract a good number of people that aren’t just straight cryptocurrency enthusiasts and developers, but a lot of the consultancies and these capital [inaudible 2:04] market participants as they’re starting to really look at this side of Blockchain down as well.
Ameer: You mentioned asset class. Do you see further coins getting more momentum besides Bitcoin? Because right now Bitcoin pretty much is everything. What’s the market cap? Like almost 12 billion right now? Do you see like in the future like of couple years, we have more coins reaching up to a couple of billion dollar market cap?
Fran: Absolutely! It’s not the type of coins that we have today that will exist in five years’ time.
Fran: So that we’ve seen a clear evolution of the asset class itself. And you’re right, I mean you’re saying on the fact that therw is a really big drop off of the Bitcoin right now in terms of market capitalization which – by the way, I would argue – was a terrible metric for much of these assets in the first place.
Ameer: Well, pause right there. Pause right there.
So what would be a good metric then?
Fran: Well, it’s very difficult because we’re used to measuring things in fundamentals, right? You know, cryptocurrencies or most of them right now don’t pay things like dividends.
Fran: Their money mechanics are or can be quite colorful, let’s say. It’s a full kaleidoscope of full spectrum of different money mechanics available for at the asset class. So when some developer decides to print a billion units of something and only has 30% available on the market, it’s very difficult to say. Well, only 30% should be calculated as the market cap or versus a hundred.
And right now, Blockchain statistics and adoption rights and some of the more thematic elements are the way to measure that fundamental data as opposed to just straight price per unit times units available as a market cap. But yeah, I could rant to that about all day.
Ameer: (chuckles) So how far do you think we are off before we start seeing a more rapid adoption or evolution of the industry that we’re in?
Fran: I mean it’s kind of… it feels like…
Ameer: Let me reframe the question a little bit better. What do we need to do to push this industry further?
Fran: I think all that is required is time.
Fran: Like I was going to say it feels a bit bipolar where you know if you’re in the industry, one way of viewing things feels like things are moving slowly. But yet for another lens things feel like they’re moving incredibly fast and already further ahead than we expected.
So I think the industry is doing just fine in terms of evolving and we just simply need more time. But I mean what has happened is Bitcoin was the dematerialization of value, right? And if you have heard of… what’s his name? [inaudible 5:00]
Fran: So that what’s happening with money and that’s what Bitcoin is for money and then it jumps to other – the commodities, the securities down and all the infrastructures required to go from straight currency which only really Bitcoin and Monero to some extent are picked up as an actual usable currency. And we all know the questionable adoption rates and the question of scale at the other end of the equation.
But I’m seeing this evolution from currency to commodity to security to these things called decentralized autonomous organizations and their own quirks and what exactly are they and how can they be classified. There’s not much taxonomy as a framework for they call some of these really exotic new things out there.
But I think where it’s all heading is that instead of the developers pumping out coins in the future, it’s going to be large organizations that produce their own currency either as a corporate or broken [inaudible 06: 07] of sorts.
Fran: So, we might see things for airline point coins. We might see like some kind of a reward program coin unless one of the existing Blockchain wants to get adopted.
Ameer: So do you think that industry when it comes to points such as like air miles – so the whole point system, that’s pretty much of the low-hanging fruit?
Fran: Well, the real low-hanging fruit is just straight value transfer, right? So cutting out middleman and we all know the use cases and the growth rates and [inaudible 6:39] as an application of Bitcoin.
Fran: But I’m saying that it’s a lower hanging fruit than some of the really exotic stuff out there. But I’m waiting for certain infrastructure come to market, be used and adopted and tested. And then, we’re going to see kind of like a jump, right?
So right now it’s what I called the – we’re still at the end of the deceptive stage where you got this exponential technology and it have some points and it goes exponential. But until it hits that point, it looks from the outside that it’s quite slow moving. It’s because of all the infrastructure that’s been built.
Ameer: Are you worried about any of these Bitcoin problems that’s been happening recently with the exchanges and also with even like the confirmation times?
Fran: Yeah. So, that’s touching on what, security and scalability, right?
Fran: I mean let’s address them one at the time. Security, I am not terribly worried about. I mean if an exchange gets hacked, well guess what, they’ll never get hacked again. It’s either they’re out of business or they’ll really learn to listen.
Ameer: That’s right.
Fran: And a fun thing to realize, I don’t have right words, but US exchanges have been hacked quite a bit worse that Chinese once haven’t. And what is the difference? And it’s all about the actual solution design. And to avoid going into, I guess, technicals, the major human difference in the solution design differences that typically in the Western exchanges, there was something like three to five people that had to do something to release funds. Whereas in the Asian exchanges, there was up to 17 to 25-ish individuals that had to do something through a process actually release funds.
So I think we can all have the [inaudible 08:31] social engineering protection that we want, but it comes down to really robust actual process flow for security.
So I’m not worried about if in the media overhypes it. It affects sentiment out there for sure. There’s millions of dollars of the Bitcoins that could be dumped on an exchange or likely it could be dumped over-the-counter somewhere.
Perhaps that answers that question. And I think it’s just going to get more secure maybe before these people get the experience. And there’s not a lot of people worth that level of experience when it comes to Blockchain-based security for exchanges.
Whereas only the other question was – I’m drawing a blank here…
Ameer: The confirmation time. So the actual…
Ameer: Yes. Scalability, yeah.
Fran: I’m at a point now where I just want somebody to pick a plan and execute it, right?
Ameer: (laughs) Yeah.
Fran: (chuckles) I guess as a project manager, I want what’s called hammock time. I want that beautiful bit where everybody knows what they’re doing and we’re just getting on with it, right?
Fran: And I don’t know if it’s possible with Bitcoin with the way the consensus is forming. And I don’t really want to get into like which solution is better, bigger blocks and smaller blocks. I’m just saying that I’m seeing a lot of fatigue out there, right?
Fran: And I’m not talking about just enthusiasts but large corporations that are already running or have been running sizable experiments on Bitcoin and Ethereum’s Blockchains. They nuances and problems over the years. It’s just fatigue, right? It’s like just pack a plan, just get on with it and I can definitely appreciate that.
So what I’m worried about in saying that is that people will rally behind anything because of the fatigue, right? And I would like to see something coherence rolled out that’s protected and goes with it like a fixer to get really interesting because you don’t really know how things pan out at 1 million users when you’re sitting on 10,000, at 50 million users when you’re sitting on 1 million, billion users when you’re sitting on 50 million. It’s very difficult to actually understand how this is going to be used in the wild when it’s just open for anybody to do things with from peer-to-peer transfer value for its building entire industries around this technology.
I’m a little bit conservative and like to know that things have been thought out but it’s about time to do something. And personally, I don’t understand why this thing isn’t being rolled out.
Fran: Yeah. A lot of people say I was political was [inaudible 11:27] than any other. Well, follow the money! Like the only reason why this isn’t being rolled out is because somebody has an incentive not to roll it out.
Fran: And it might be something to do with miners and that whole side of the industry which might as well be called Chinacoin at this point.
Ameer: (chuckles) Let me ask you this. What’s your take on the future plans for Ethereum to switch over to a POS system?
Fran: We’re pointing at the right person to comment on the intricacies between like training like [inaudible 12:00] and every other algorithm on the planet or a different touch of consensus.
Ameer: Well, let’s say if it works let’s say hypothetically it’s a success and obviously like any software there’s going to be bugs in the beginning and you have to iron it out. But if does succeed, do you think that would actually create a more flexible Blockchain where you can actually increase scalability, increase TPS? And because they do have a variable sizes for blocks as opposed to static, if that does happen, do you think it’s a possibility that Ethereum does have a chance to supersede Bitcoin?
Fran: I don’t know. Bitcoin has got a pretty massive first-move advantage. And the other question is does Ethereum means to supersede Bitcoin?
Ameer: Good question.
Fran: Because Bitcoin is… there’s quite a few different things predominantly as a currency. It’s stored value, right?
Whereas Ethereum has a smart contract application platform basically and there you can exchange value. But there’s nothing smart or contractual about smart contacts, which is something I’d like to get into.
Another that the team wants to do what’s called sharding which is the solution to scaling.
Fran: And to do that, I need to roll out what you just mentioned.
Well, POS work. It has a perfect state that work. Well, mechanically is. It has worked for very long time with other coins. It brings up new problems to basically factor in and I know that Ethereum class is saying “No. We’re not doing that. We’re going to stick with what we’ve got.” And basically avoid introducing new problems, possibly expensive scalability but hey, at least we’ve got immutability.
I, for one, when I hear the word “Ethereum” have to say “Which Ethereum?”
Fran: Irrespective of the context. Because in trying to raise awareness that’s “What’s going on?” has killed a lot of enterprise projects. And it’s taken months for developing community and enterprise to seriously look at Ethereum again. So okay, I’m starting to sort this stuff out.
And you can see that in a number of… get to Ethereum core, if you will. But to the amount of startups and private spin-offs of Ethereum and enterprise use applications. That’s how I think like this industry’s going to grow is by companies actually using the stuff in the wild but it’s taking and will continue to take years for the infrastructure to get upstretched where the risk-reward actually uses the technology is viable.
Ameer: Let’s talk about enterprises right now and Fortune 500 companies. Are you aware of any companies right now currently monetizing or actually even creating any revenue from this technology at the moment?
Fran: Oh yeah! I mean the big misconception is that this technology is still largely theory, right?
Fran: And that’s because a lot of the stuff that works isn’t exactly like packaged up and sold. Like have you seen the Silicon Valley, the TV show?
Fran: Yeah. And here’s where we’re going to put your box.
Fran: That’s not Blockchain.
Fran: I mean I want to see a website called Blockchaininabox.com where it’s just like a downloadable version of Microsoft access or something on a server.
But here’s a good example. IBM at any given point in time is so large that at any given point in time they had 200 million dollars in outstanding in dispute of what they owe to their service suppliers. This is for everything from pens and stationery or whatever for all their officers, everything you can imagine that IBM buys on a weekly, monthly, yearly basis. 200 million dollars worth of transactions in dispute.
What they did is they created a shadow Blockchain. Forget consensus and whatever, is it decentralized etc. But just simply created a shadow Blockchain to the existing ERP system that track all this and then gave permission to access to different bands so they can only see their own invoices. Boom! Overnight, they wouldn’t disclose how much of the 200 million was actually evaporated, but it sounded like it was far beyond 50%.
Fran: So, here’s almost 200 million dollar solution working in the real-world. It took 5 developers about three months, I believe, to put this together. They rolled it out for their business units and opened up to their suppliers. And that’s a tangible real-world problem that uses Blockchain today. And you can bet your bottom dollar that they will package this up and sell it to other companies.
Fran: It has worked them. They’re going to stress this to death and make sure it scales and address the consensus considerations along the way.
Ameer: And they would be selling that as the enterprise option, right?
Fran: Yeah, absolutely.
Ameer: Yeah. So going forward like beyond the Fortune 500 companies which have the resources, obviously, to create, to pay the developers and have a team for that, do you see any other fresh startups kind of getting to the space and have tackling problems like this?
Fran: Well, if you can think of it and its [inaudible 17:32] of possibly being able to use a Blockchain. There is definitely a startup somewhere on the planet in trying to put a Blockchain on it. I don’t think that everything needs a Blockchain. A lot of the stuff…
Ameer: That I agree, 100%.
Fran: I mean a lot of the stuff is now better than the Postgres database, right? I mean I’ve seen every flavor of enterprise Blockchain solution design you can imagine. And what we do for Blockchain labs which is [inaudible 17:58] that was formed early this year, there’s a lot of validation or invalidation for solution designs. People come to us and they say, “Oh, We’re going to do [inaudible 18:08]” Supply chain management is a big one at the moment as well as freight forwarding and [inaudible 18:16] and that sort of thing.
There is valid use cases in those examples. Some of the solution designs just that right do not work conceptionally. They didn’t work mechanically. But they’re not far off, right?
And do I know any non-enterprise startups that are working today?
Well, just to be cheeky. Yes. And they’re all on the digital asset side of the Blockchain.
People forget that it is very inseparable to have this beautiful consensus ideology and not incentivize and remunerate the noteholders, miners and every other participant that keeps that thing secure. So that you can have a secure enterprise solution for ABC whatever industry. You need some kind of consensus algo. So like the most profitable companies in the Blockchain space today other ones that are issuing securities, digital exchanges and brokers into deal brokers, broker dealers basically everything you can imagine on the trade side, both from the buy side and the sell side.
And a lot of what we hear of what the future is is on the post-trade side, right? We’re placing entire stock exchanges with some Blockchain solution, like with [inaudible 19:40] doing to do with the ASX or was trying to do with the DTCC. I think IBM is one of that one.
Ameer: Did an overstock do something recently?
Fran: So yes and they want to issue actual stocks on the Bitcoin Blockchain. And that’s a great use case of Blockchain technology. I’ll bring up another one in a minute, but regulation is something that prohibits really fast going market for those types of solutions, right? Regulators want to know that this is going to work and how it’s going to work and does it fit with my fit too. And the pleasure of different regulations and especially of the US which is why we’re seeing a lot more development coming out of Hong Kong, Singapore, Gibraltar and places a lot lighter regulation.
But yeah, I think that the industry is growing pretty fast and it’s just a matter of this infrastructure coming to market before we see sort of the wide adoption or mainstream years. And when we do see it, it’s not going to be like [inaudible 21:00] Blockchain.
Fran: It’s like terms and conditions forever, next, next, next.
Fran: “Oh, we’ve got Blockchain.” It’s late. Like consumers won’teven know they’re using Blockchain.
Ameer: Exactly, yeah.
Fran: They won’t know it’s even Bitcoin. It will just be faster transfers from New Zealand to Australia or US to Canada or whatever, right?
Fran: It’s just money will become even more digital. And it sounds a bit silly. Like do you have any automatic payments when you buy a car or something?
Ameer: Of course man, yeah.
Fran: Like I want something more intelligent than 50 bucks goes to this account to this account for a monthly basis. I want to do really complex transactions because I’m a business guy. And the more complexity you can have in transactions, the more sophisticated you can run your operation. You can hedge. You can manage your business. You can do a lot more.
So how do you get that interoperability, that programmability – sorry – into the real-world money and fiat money and other types of value?
And this is why I say there’s nothing smart or contractual about smart contracts. So I could send you 50 ether every month forever as long as you send me a crate of bananas on the first or whatever. And maybe I can get an API that hooks into DHL so that when it’s actually shipped and scanned, the money is released and get that little of complexity. But I don’t want to be paid an ether.
Fran: Like it’s great, but I think it creates a barrier like with dealing with somebody on the world. I’m not going to talk about it. But large international multiprofit organization and what was submitted was the solution that basically says “We can automate the list. We can have prominence. We can basically ensure that this reduction eliminated.” And I turned around and said, “What’s ether?” Like I don’t want to be paid an ether. It’s like we need oracles. We need bridges. We need on ramps and off ramps that are absolutely, totally seamless. And that’s the side where I see the asset class and the Blockchain technology being inseparable like it’s just another example.
So we’ve got some particles that give any smart contracts on the Ethereum Blockchain the ability. Just look up a price of the different currency like end of day rates. And it’s quite interesting because then you can at least have some currency conversion as the starting point.
And I know some really cool projects that, I believe, are profitable like smartcontract.com. They’re doing some amazing things and connecting a whole range of data, not just market rates from us, but APIs and the swifts and other banking services and making smart contracts externally aware.
And as I said, lack of talent, right?
Fran: People are still learning this stuff which is why I love your website because it’s a central repository of info. And that brain drain, if you will, or lack of knowledge base is quickly coming up the curve. I think I’ve gone from one Blockchain expert on my Linkedin to about a thousand in the last nine months.
Ameer: There you go, man!
Fran: And yeah, it’s slowly but surely. Time is all it takes. There are some areas of this technology I’m highly concerned about, if you can hear those.
Ameer: Please do tell.
Fran: There’s a huge carrot that has Blockchain dangling for a fury of misuse. And I’m not talking about ransomware, which I think is great because it’s forcing people to address this lack of security to an extent.
But I really think that some less than palatable nation is going to create a private cryptocurrency with back doors, side doors, tracing. You name it.
And imagine that the absolute [inaudible 25:19] turn that goes with being able to see every transaction that ever happened with complete personal identifiers. I think it’s going to happen. I think it’s going to be sold to the nation as the solution to some problem.
Fran: It could be.
Fran: I honestly think it’s going to be rolled out somewhere that’s more of a guinea pig nation elsewhere like a smaller population tested out on first.
Fran: And see how it works there before – I mean we could get into politics but if it’s like the rates in the US, like everybody’s so worried about what Donald Trump’s doing. The only thing that matters is if he does this here.
Ameer: That’s right.
Fran: There’s a huge calamity to the point where we actually need to consider rolling out something spice the green or the US dollar at the moment. This technology is quite tempting and I want to see how it wouldn’t be considered at least as a tool. I just feel like it’s going to happen in some other possibly third-world country. And already India, they just deleted like ALT+Ctrl+Del, boom, 87% of cash gone.
Fran: And they’re not even, whoever they are, aren’t really hiding the fact that they’re getting cash to society and it’s being sold as what will get rid of terrorism and financing of all the bad things. US dollars finance most of the bad things.
And so it’s going to be an interesting ticket and I’m still seeing… scenarios.
Ameer: With any technology have pros and cons, and goods and bads. But at the end of the day at least I would say this kind of even the playing field for… like let me put it this way. For the first time, I want to create – I don’t know – the Brave Coin, for example. We have the option. And if we have a network and we have enough people say “Yeah. We’ll accept the Brave Coin.” “Hey, that’s it!” Now we have equity and liquidity and it’s a valued asset, globally speaking.
So like any technology could be bad and I think the more people have to be educated in it to understand the potentialities of it and to understand the use cases of it and we go forward. Like you said, it’s going to be very interesting in next decade coming up.
Fran: Yeah. I think there’s a huge carrot for both the good and the bad, right?
Fran: We’re just going to see all the extremes evolve. And I’m going pretty excited about the day where – I don’t know – like self-driving car decides to repossess itself because you forget to put the ether or whatever into my smart contract to make the monthly payment.
Fran: I’m excited about the weird fringe elements of…
Ameer: Or your car becomes your employee and it works for you.
Fran: (chuckles) Yeah. Like just drop me off to this meet up. I’m going to have a few drinks. We’re going to rent out my driverless car while I’m busy.
Ameer: Yeah, exactly.
Fran: It’s mind blowing and that’s the stuff that excites me. And Blockchain’s a catalyst. I’ve created Brave Coin, but I totally get your point that the toothpaste is out of the tube, right?
Fran: You can’t put it back in.
Ameer: Beautiful. Well, I think we’ll wrapped up with that, Fran. If people want to get more information about you and what you do and get a hold of you, where can they contact you?
Fran: Well, you’ll find me from Linkedin.
Fran: There’s only one Fran Strajnar in the planet as far as I know.
Fran: You can drop me a line friend Brave New Coin or contact Brave New Coin if you need info on what we do. I’m pretty easy to get a hold of.
Ameer: Beautiful. Awesome, Fran.
Thnkas for coming on the show and I’ll talk to you soon.
Fran: Thanks, Ameer. I appreciate it.
Ameer: Yeah, my pleasure.
Fran: Thank you.