A lot of people pay attention to Erik Voorhees when he talks about Bitcoin, he is a crypto pioneer.
Following the popping of the first bitcoin bubble in July 2011 where the price fell from $31 to close at $2 on 31st of December that year, Erik predicted that the future bitcoin price would hit thousands of dollars, like a stalwart high conviction manager.
Bitcoin hit its all time high on the December 17th 2017 at $19,783.
Successful speculators in crypto have posted returns in the thousands and funded the ICO boom. Many lost as the market turned in early 2018 - crypto had its .com moment.
An economist by training who followed financial markets, Erik was initially sceptical about Bitcoin. The more he read about the power to liberate people from governments, central banks and fiat currency the more his views changed until he got the Bitcoin bug.
Erik is one of cryptos greatest libertarian advocates, and often sounds like Thomas Paine.
He is the founder of Shapeshift, a non-custodial crypto to crypto exchange, and has attracted investors like Lakestar and Blockhain Capital, and heavy weight insdustry influencers on the Board like Oliver Bussmann, the President and Co-Founder of the Crypto Valley Association in Switzerland.
His past blockchain company affiliations include: BitInstant, Coinapult and, most notably, SatoshiDice, which was responsible for most of the Bitcoin transactions in 2012 and 2013.
Erik and I had a fireside chat at the Money2020 conference Amsterdam in May, a month before Bitcoin hit its 2018 low of $5,938. We caught up this week to further discuss where the crypto market is going, overcoming industry roadblocks through education, regulatory improvements, and Shapeshift's plans.
Where the Crypto is Market Going
Q. Have we hit a bear market in cryptocurrencies?
A. Yes, I’d say we’ve hit a bear market in cryptocurrencies. In terms of price I think we’ve neared our low, however we could very well stay here for a while before a bull market returns. That being said, crypto is crypto. This bear market could last for several years, or we could see it end in a month or two. Neither would surprise me. The one thing we can be certain of is that this is uncertain territory, and while we have the freedom to speculate, we’re really just along for the ride.
Q. What are cryptocurrencies biggest roadblocks to mass adoption?
A. The biggest roadblock is education and habit, we need more educational resources and simpler, easier to understand and less intimidating products and services for first time users - The education of people in how to safely and effectively use this stuff, and the breaking of their old fiat-based habits.
We need better educational resources for non-technical individuals with no experience in cryptocurrency or blockchain technology. We can’t just keep catering this to ourselves, and hoping for everyone else to get on board. We have to do more to help people see the potential of this technology and make them comfortable entering into it.
There are not technical aspects that are roadblocks right now… there’s always innovation and improvement, of course, but crypto works, and works decently, and the rate of advancement and experimentation is phenomenal, so I wouldn’t mark this as a concern.
Overcoming Issues with Global Regulators
Q. Should regulators be as concerned as they appear to be about decentralized exchanges?
A. I don’t think regulators realize the extent to which fully decentralized services will displace and disempower them. Most regulators are still trying to realize what Bitcoin is, debating whether it’s money, what that means, and trying to see how many tokens will be categorized as securities. They do all this while decentralized alternatives are built, and the harder they clamp down on these markets, the more power the decentralized alternatives will have.
Ultimately, people want to be free, and deserve to be, so long as they aren’t harming others, and since decentralized platforms enable that tendency, they are inevitable. When it comes to ShapeShift, many people wrongly assume that we’re decentralized. ShapeShift is a non-custodial digital marketplace, meaning that users can trade cryptocurrencies with our service, but we do not hold their funds like a traditional exchange.
Q. What steps can regulators take on a global scale to accept this technology?
A. Regulators can learn from jurisdictions such as Wyoming that are implementing crypto-friendly regulation. It’s easy for regulators to focus on the negative characteristics and risks associated with cryptocurrencies, but they should recognize that much of the reason this technology has been built is because people are tired of trusting government bureaucracy to protect them. With crypto technology, consumer protection can actually be programmed, and can thus be far more effective than the status quo. If the regulators truly want to protect people, they should be thrilled at these developments.
Q. What steps does ShapeShift take to comply with changing regulations?
A. We’re building out our compliance team, most recently with the hire of Greg Arroyo as our Chief Compliance Officer and Veronica McGregor as our Chief Legal Officer. We’ve literally had to spend millions of dollars just to navigate the changing and unclear global regulations, so we’re taking it very seriously but it’s an immense burden that distracts from innovation and productivity.
The ShapeShift Business Model
Q. What makes the ShapeShift business model so special?
A. ShapeShift is non-custodial, meaning that we do not hold customer funds. Security in terms of consumer protection is a core principle for ShapeShift, and something we always consider as we build our business.
Q. What were the motives behind ShapeShift acquiring Bitfract, a diversified digital asset portfolio management tool?
A. Bitfract was building a product that we at ShapeShift were ourselves beginning to build. They’re vision played into our own future vision for ShapeShift, so it seemed a natural move to acquire the company.
Q. What does the ShapeShift strategic roadmap and direction of travel look like?
A. We have some incredibly exciting projects in the works right now, but we aren’t quite ready to talk about them just yet. As these projects unfold and come to light, ShapeShift’s strategic roadmap will begin to publicly take form along with them. However, we did just announce the first phase of our Membership Program and the FOX token, which gives customers better rates and higher exchange limits.
Lawrence Wintermeyer Contributor