We invited crypto expert Demelza Hays to chat with us at our headquarters in Vienna. We talked with her about how she entered the industry, about her thoughts on Bitcoin and her findings on her Crypto Research Report.
“Bitcoin is basically digital gold.”
What is Bitcoin in your opinion?
I found out about Bitcoin online while I was researching microfinance, and at that time, Bitcoin was still being advertised as a way to bank the world's unbanked. Bitcoin, in my opinion, is basically digital gold and it does not have an elastic supply. Which means the supply does not move in and out in response to demand shocks. There's lots of volatility with Bitcoin because it's not supply inelastic, and that's really different from the current money that we have, fiat money. For me, I think that based on Bitcoin’s protocol and the distribution over time, it's more like digital gold.
Did your sentiment towards Bitcoin change over the years?
Well, I think my sentiment changed a little bit because when I first heard about Bitcoin, I was so excited that I invested all of my savings in Bitcoin. If I had invested in 2013, it would've been okay but I invested about a year later when it was coming down off the 1400 peak. So when the price dropped by 50% about three months later, I'd lost half of my savings. And then I was like, “Okay I should probably research this and see if I just invested in a Ponzi scheme”. And that's when I started actually learning about this technology and over time my views changed. I'm just more aware and alert.
Could you give us an overview of the Crypto Research Report you write?
So the Crypto Research Report is a report that I write along with Mark Valek at Incrementum AG in Liechtenstein. Basically it’s the sister report to In Gold We Trust. Basically, we thought that we can add the same understanding of the monetary system to crypto. So we're able to basically combine our knowledge of these two asset classes in order to understand crypto more. It's available for free in German and in English.
The most promising technical development in the crypto/fintech industry right now is …
There's a lot of technological changes occurring within the crypto space, it's moving so fast and there's so much innovation. I'm really impressed by the decentralised finance movement. Such as now, you have smart contracts that allow people to use an asset that they already purchased, lock it up and then gain liquidity from that. We also have these collateralised loans now and I think that soon enough we're going to have decentralised mortgage lending. Where people could lock up assets and basically earn interest on giving their collateral to someone who needs it at that moment. I think that this is huge, if I can lend money to people, that's a benefit for me because I earn interest and it's a benefit for them because they need capital.
Can or should cryptocurrencies be regulated? If so, how?
I think decentralised finance is going to be huge for the world. That's the beauty of this technology, because it can be regulated in the sense that if you want to comply, you can. But if you don’t want to comply, they can't stop you. It has one foot in each space, it can be regulated and you can tick off all the boxes. Such as, I did KYC, I did AML, I paid my taxes, whatever it is, you can tick off all the boxes. And if the people that are making the rules take advantage, you have an escape. I think that a simple exit option will make the people that created the rules behave.
Could Bitcoin replace fiat currencies like the Euro? Or could we see something like a “Bitcoin standard” similar to the gold standard?
I think that you don't want to have your medium of exchange like your euro or your Swiss franc to be pegged to Bitcoin because Bitcoin is so volatile. The goal of the medium of exchange like the euro and the Swiss franc, is to basically have a stable unit of account, where the purchasing power of that unit is not increasing or decreasing in value. And that really helps producers to basically understand what the consumer demand is.
In my report, I explain how I think a decentralised financial system could work and I do think cryptocurrencies will play a major role in that. However, I'm just not sure it's going to be the current existing cryptocurrencies. And I'm not sure that it's going to be exactly the way people might think. I think we're going to have lots of competition, lots of different monetary experiments and monetary policies and the market's going to be choosing winners and losers. And I think that over time we're going to see certain business models attracting more customers than others.