This week bitcoin fell below the $30,000 mark again. In the crypto industry, this is a pretty big deal, but for a lot of folks out there, the reaction is more like “okay, so what?”
It’s been over a decade since bitcoin was first introduced, and yet there’s still a lack of understanding of the crypto industry in the United States, and that’s in the country with the biggest bitcoin trading volume in the world. A recent study shows that 24% of American adults still don’t know how cryptocurrency works and 20% don’t know how to buy it.
Society is still very much divided when it comes to the world of crypto and blockchain, not just in terms of knowledge but also, and especially, when it comes to seeing a future for it.
Two years ago, Neel Mehta, a product manager at Google, alongside leaders from Microsoft and Facebook, wrote a book trying to answer the question of whether the crypto world is a “Bubble or Revolution,” and the question is still alive today.
The last couple of years have yet again shown us both sides of the coin. While a single tweet from the uber-rich made people bitcoin millionaires, it was also introduced as legal tender in El Salvador, one of the most serious and promising steps for crypto so far. Meanwhile, people who were once leaders and pioneers have stopped believing in the industry and left. The crypto world is still divided.
CoinDesk got a chance to speak to Mehta about his opinion on no-coiners and superfans, the current crackdown on mining in China, the competition between Web 2.0 and Web 3.0, and, of course, Tesla CEO Elon Musk.
The following has been lightly edited for brevity and clarity.
CoinDesk: You’re a product manager for Google, one of the biggest Web 2.0 adapters in the world, but you also seem to be very interested in Web 3.0. Isn’t that a little contradictory?
Mehta: One of the conclusions we came to towards the end of the book is that crypto is a revolution in ways that we may not have anticipated for a long time. I don't know if it's so much a Web 3.0 versus Web 2.0, it may just be a combination of the two or it may be that Web 3.0 adopts on Web 2.0. When Web 2.0 came around, Web 1.0 didn’t go away, and I think something similar happened here.
Maybe you’ll see big tech adopt crypto or maybe you’ll see crypto work with big tech – we've already seen that within the financial system. The banks that crypto was supposedly trying to make obsolete, they're all working together. They realize that there's some overlap and some positive "synergies" there to abuse the corporate buzzword, and I think the same is going to happen in tech. Web 2.0 has its advantages and Web 3.0 does, and as it organically evolves, they layer inner mesh together. It’s not like one replaces the other.
There’s still a lot of people out there who believe that crypto isn’t going anywhere, that it’s just a “bubble.” Do you think that’s fair?
The folks who say that crypto is going to be very big in the future and the people who say that there's a lot of bitcoin bubbles going on right now, they're both right in their own ways, but it’s about understanding what the core tenets are that lead to both of these sides’ analysis. Maybe a couple of percent of the world has heard of crypto and a fraction of a percent hold crypto. Many people don’t think crypto is a good investment; there’s also many good points about the ecological, environmental impacts of it and there are plenty of people who are in their rights to be no-coiners.
On the other hand, with any new financial innovation, there are people who aren’t for it, and then there are people who have it and eventually what happens is that these new technologies do achieve mass adoption, maybe not in ways they were originally conceived. Not everyone is going to become an NFT (non-fungible token) superfan and not everyone is going to be hunting for the latest altcoin and putting money into it.
With every technology, there’s superfans, but one of the predictions of the book is that bitcoin slowly becomes normalized. You’re exposed to crypto for better or worse, and I think what happens is that eventually these new technologies mesh into the existing systems in play, so you can imagine some years down the line, maybe there’s a normal bitcoin index fund that works just like the S&P. What happens with these new technologies is that they mold into it and become part of the status quo and that’s how I think crypto achieves that mass adoption.
One of my complaints about some of the no-coiners is that they say it has problems and because of that, it will never go anywhere. I agree there are problems, but it’s still going to go somewhere, whether you like it or not. It’s all about thinking about where it’s going to go and accepting that it will go somewhere. People like crypto and they’re going to make it big. It will become part of the establishment.
Is El Salvador an example of a bubble or revolution?
There’s a lot of complicated geopolitics going on there. A lot of it hinges on what counts as legal tender. Do you want to tokenize your economy? Maybe there’s an argument for that, but the thing with El Salvador is that the president thought it would be good for his country and he made it a legal tender, but I don’t know if he thought through all of the consequences of that.
Steve Hanke recently on CoinDesk TV said that El Salvador’s bitcoin adoption is not a legal but “forced tender.”
It’s funny. One of the things I tell crypto boosters is that it’s great to see this stuff go to the moon but at least be consistent with some of the philosophies you put out there. I think one of the goals of crypto is that it should organically replace the system, but when it’s forced, it kind of goes against some of the philosophical tenets that were put behind it, so it feels a little weird.
Elon Musk? Bubble or revolution?
Elon Musk is a billionaire. He likes having money. If he’s here pumping dogecoin or bitcoin, you better believe that he is long on those things and that he’s trying to make a buck off of it. Tesla lost money on cars last year, and they made more money on bitcoin than from all of that, including the carbon offset they were selling.
With Elon, you better believe that he’s in it for the profit motive. I’m sure crypto fans have enjoyed this kind of rich, famous, super cool guy who was backing their thing and I think a lot of crypto feels burned as a result.
Elon Musk bought in, he very rationally pumped it, and then he managed to get out, and I think it should be a lesson to everyone, which is when you see someone really pumping and hyping something and making predictions like this in the future, think why are they saying this – are they trying to make a quick buck off of it? – and with Elon Musk I think that was the case.
China is heavily cracking down on mining right now, and it has a huge effect on the industry not just there, but across the globe. What do you think is China’s motive behind this?
Crisis reveals things that were already broken. China’s mining explosion showed that centralization is a problem for crypto because in theory, if it was a truly completely decentralized system, if one country banned it, it wouldn’t be a big deal, they’d just go somewhere else. But what you’re seeing was an incredibly high reliance on China. The big mining companies are all based there, so many innovations are coming out of there and so much of the new crypto coins investments are coming out of it. It is a mark against crypto, and I think it hopefully shows that the crypto community and the economy need to change things we have already centralized, like get back to the original tenet. Regulation is increasing around the world, and this is going to happen again, so I hope it’s a wake-up call for crypto boosters and investors to [realize] that they need to decentralize and not be so heavily reliant on one country.
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