On 22nd Oct 2017, Cryptoniam got an opportunity to have an exclusive interview with the philosopher and author of Bitcoin Magnet, Mr. Sunil Aggarwal.
Summary of the interview:
- If you have invested a lot of money in cryptocurrencies, then it a must to have a hardware wallet to ensure that your money is safe but if you want to store only up-to Rs. 1,00,000 worth of cryptocurrencies then hardware wallet is not mandatory. Instead you can depend on exchange hosted wallets or some online wallet like my Mycelium, Jaxx.
- There are lots of proposals in Bitcoin Blockchain which are in the stage of evolution like Schnorr signatures, Lightning network, side chains etc. So, if these proposals are actually implemented in next 6 months to one year, Bitcoin might become the next visa of Internet.
- There are hundreds of very good blockchain projects in Alt coins / ICOs currently. For eg. Ethereum, IOTA, BAT, Stratis, DASH, ZCASH, LISK to name a few. We have only seen a couple of black swan events like Bitcoins and Ether, we are yet to see at least a dozen more such top quality events.
- Blockchain will definitely become a compulsory part of our educational curriculum, particular for all technology related courses. Having said this, the real problem is that India does not have quality faculty to teach Blockchain. Mr. Chandrababu Naidu’s government has shown serious interest in building blockchain research institutes and training courses. In next 3-6 months we will see some good initiative in academic space to add Blockchain in the curriculum.
- Most of the people in India want to invest in cryptocurrency but they don’t want to invest into a space which might be declared criminal, or illegal or illegitimate in coming months or years. So if Government makes the right move in coming up with a regulatory framework, there will be lots of cryptocurrency investors in India.
- Cryptocurrency market cap would rise to anywhere between $5 to $10 trillion in next 5 years. This means that the Cryptocurrency market cap would rise at least, roughly 50 to 100 times, in the next 5 years.
- If 5 to 10% of current cryptocurrencies survive till next 10 years, it will be a huge monetary as well as historical change. People are not going to come back to fiat currency in a big way if central banks don’t change their ways of ensuring trust.
- Cryptocurreny will be the future of money but to achieve that, people will have to work continuously in order to build a serious grammar of investment, ethical behavior and performance statistics.
- There has been a 10x increase in the number of Blockchain start-ups in the last 2 years. Blockchain is turning out to be hot favorites for start-ups now. There are more than 50 blockchain start-ups in India alone.
- Though “Proof of Work” is not environment friendly, it has the best consensus method and no other model can ensure such fool proof security. We have to wait and watch for Ethereum Casper Protocol to prove to the world that “Proof of Stake” is much better method compared to “Proof of Work” to ensure better consensus and fool proof security.
- In Blockchain ecosystem, age and stability are the most critical hallmarks of public adoption.
- We are yet to see the Googles, Facebooks & Youtubes of the Blockchain era. If Bitcoin Blockchain has reached $100 billion USD, there will be other blockchains that will reach a couple of trillion dollars and it will come from platforms related to educational sites or social networking sites or e-commerce sites or any kind of ride sharing apps.
We started by asking the following:
Q1. Can you please give a brief introduction of yourself?
I am basically a philosopher of money and have been working in this area since year 2000. I was looking for true definition of money, because the kind of money we live in, is national money and national money is basically a power money. Whatever nation state decides, will be called money. That’s why, I was looking at a global scenario where things could be designed in a way that an individual, a common man, can actually reach, a notion of money which is controlled by peoples, not by governments. For a decade or so, I kept waiting for that ideal scenario and in early 2012, I happened to read a small article by Vitalik on the internet and that was a game changing moment for me, as after that I never looked back.
From 2012 to 2015, I did serious study into this ecosystem and by August 2015, I started sharing my work publicly and started publishing. In Jan 2016, Nalsar Institute of Law, Hyderabad invited me for teaching a credit-based course on “Bitcoin & Blockchain Technology Applications”. After doing that, I realized that I accidentally happened to be the first in India to teach a credit-based course on this subject. That actually boosted my courage, my strength. I started a Facebook based knowledge community. I never thought I would ever reach 500 members. I reached 1000 members in less than 10 months and the community kept on increasing, and today we have more than 1700 members. Along with that, I realized that this area is filled with big ideas. There is so many gaps which can be filled. The first major gap was the gap of knowledge. To plug that gap, I realized that we don’t have a standard textbook kind of thing, in this particular space, particularly for Indian readers. Then I wrote one book called “Bitcoin Magnet”. It came out in July 2017. Again, it turned out to be first in India, a comprehensive blockchain book coming from this part of the world. I also started a Blockchain education company and I am writing white papers for multiple projects. Currently I am involved with four white papers plus I am consulting two companies. I am also mentoring a couple of projects too.
Q2. Do you want to elaborate on your book “Bitcoin Magnet”?
I started nurturing the idea of writing the book around two years back, but I realized that matter was not fully ready, because the ecosystem was in a state of evolution. In early 2017, things started moving very fast, both on valuation front as well on technology front and that was the right moment to capture the emerging knowledge. I spend some months and came out with the book “Bitcoin Magnet” in July 2017. The book had a good response.
I have designed this book in a manner that anybody, be it a banker or non-banker, cryptocurrency expert or a non-cryptocurrency person, a housewife or an undergraduate student, he or she can read the book pretty easily. This book is divided into 8 sections and 40 chapters. Anybody can start from any particular chapter. If you can spend 10 mins a day on the book, then in next 40 days you will be completely thorough with the Blockchain ecosystem.
Q3. According to you, what is the best way to secure your wallet during the transformation phase like a hard forks? Is the use of hardware wallet recommended? Are they worth the investment?
It all depends on how far you want to go into storing cryptocurrencies. If you want to store up-to Rupees one lakh worth of cryptocurrencies, then I would not suggest you to go for a hardware wallet. You can depend on exchange hosted wallets or some online wallet like my Mycelium & Jaxx. But If you are really interested in investing lot of money in this area, then hardware wallet is a must have option because only hardware wallet will ensure that your money remains safe.
Q4. What are the improvements/changes that you foresee in Bitcoin Blockchain in the next 5 years or so?
Bitcoin blockchain comprises of two segments, technological segment and political segment. There are lots of proposals which are in the stage of evolution, but only having a technological proposition is not enough, because, at the end of the day, this technological proposition has to be accepted by the mining community and all other stake holders of bitcoin community.
Once technological proposition and political proposition is merged into one, they are accepted. For e.g. block size debate has been there for so many years, but only recently some sort of agreement regarding block size is becoming critical. i.e. Segwit2x is about to happen next month. Only those technological proposals will be going ahead where the committee is in consensus.
Not only Segwit2x, there are more proposals like Schnorr signatures, where secrecy can be enhanced a lot; secrecy of users, particularly the privacy features. There are more proposals like Lightning network, technological solutions like ‘Side Chains’ which are happening. There are some things which are inside the bitcoin community while there are others outside the bitcoin community. For e.g. ‘Side Chains’ is a solution which has been proposed by a private company known as Blockstream.
In this project they are creating a private blockchain in parallel to bitcoin blockchain and they will connect these two blockchains through a multi-sig wallet which means after every 10 minutes, or 60 minutes or 24 hours, both the ledgers will reconcile. Side chains will create a token but that token will exist only within the Side chains. They will create an artificial token anchored to bitcoin but it will not float in the public market. So, if these proposals like Side chains and Lightning network are actually implemented in next 6 months to a year, I am of the firm belief that Bitcoin might become the next Visa of the Internet.
Q5. According to you, what are the most promising blockchain projects in Alt coins / ICOs?
If I talk on this particular topic, I can speak for hundreds of hours.
I personally believe we have actually entered into the third phase of Blockchains. Bitcoin was the first phase of Blockchain (Blockchain 1.0). Ethereum and Dash comprise the second phase of Blockchain (Blockchain 2.0). After that, Platforms like Counterparty, Omnichain started creating more blockchains over their own blockchains, for e.g. Ether is a blockchain over Omni platform. Most of the current ICOs are blockchain over Ethereum blockchain. Steem is a blockchain over Bitshares. One wave is followed by second wave and second wave is being followed by the third wave. So in that context, I would say that there are dozens and hundreds of very good projects.
Ethereum is a very good project and along with Ether, IOTA, BAT, Stratis, DASH, ZCASH, LISK they all are very good projects. If you actually see, the number of project in the last 6 months only, there are at least 50 top quality projects which have been unleashed. So, we would need a very dedicated discussion session for only quality Alternate coins projects.
I personally feel that within Indian space, people have yet not fully absorbed bitcoins and it won’t be easy for people to understand that there are some projects which are much promising that even bitcoins.
I personally think that we have only seen a couple of black swan events like Bitcoins and Ether, we are yet to see at least a dozen more such top quality events.
Q6. Do you see Blockchain becoming a mandatory course in educational curriculum in India? If yes, when?
Blockchain will definitely become a compulsory part of our curriculum, particular all technology related courses like BTech, B.E, BCA, MCA and Business Management courses like BBA, MBA, or even M’com, MFC. Having said this, the real problem is that India does not have quality faculty. Without teachers you cannot run these courses and ‘Indian Government’ and ‘Indian Academic Institutions’ have yet not realized the subtle nature and critical importance of this particular technology and embedding it into our educational curriculum. That realization is yet to percolate into the wider academic mass. Till that happens, I don’t think, we will able to make it compulsory because without teachers you can’t go ahead. But Andhra Pradesh Chief Minister Chandrababu Naidu’s government has shown serious interest in building blockchain research institutes and training courses and they are keenly looking for quality people and I am also connected with one of such projects. I hope within next 3-6 months we will see some good initiative in academic space as far as blockchain curriculum is concerned.
Q7. What according to you are the key reasons that there are less people in India interested in cryptocurrency? What should be done to encourage them to invest in cryptocurrency?
Indians are by nature late entrants to technology space. Having said this, I would say that in India, there are two kinds of people who are involved in cryptocurrency space. One is a category of over a million people who have invested in Bitcoin, ether or other cryptocurrrency. But I think, that’s a minority segment. There is also a segment of people who are sitting on the periphery, who are simply waiting on the sidelines, that when governments gives complete yes, complete recognition to cryptocurrency they will jump in. If first segment in one million, then the second segment is roughly 100 million. The gap between 1 million and 100 million is the lack of regulatory framework. Most of the people want to invest but they don’t want to invest into a space which might be declared criminal, or illegal or illegitimate in coming months or years. That’s why I would say, that as far as Bitcoin Market space or Bitcoin Market share is concerned, Bitcoin has reached the masses but as far as putting your money into bitcoin is concerned, we are seriously curtailed because people don’t know if they invest their money into Bitcoin, will they face any scrutiny or which is a reference rate for Bitcoin / cryptocurrencies. For eg. if there are four exchanges in India, all exchanges have different rates. When there is regulation then we can have one India specific rate like we have London Inter-Bank Offered rate (LIBOR). My point is, that governments can venture into this system but in a manner where some sort of transparency is maintained. Some exchanges have already started moving in that direction but some couple of more critical steps are yet to be taken and that are missing. For example government can come out one day and say to all exchanges that you are free to run your operations but there should one Indian rate for Bitcoin. In that case, a common man, if he buys bitcoin on a particular day, the rate of Bitcoin on that particular day will be common across India. It will be important to calculate tax proposals. You can calculate capital gains out of it. These are very small things, but when you actually magnify the impact of these small moves on a big level, you will realize that they actually create a very serious impact. Indians are not, by definition, revolutionist people. They are very conformist people. So I would say that if Government makes the right move, there will lots and lots of cryptocurrency investors in India.
Q8 . Do you want to predict the price of Bitcoin in next 5 to 10 years?
This guessing game with respect to particular cryptocurrency is something that I would say might be counter-productive. Rather, I would actually, re-phrase this particular question of yours, in a different way. If you ask me, what is the potential size of entire market cap of cryptocurrencies in next 5 years, I can answer that particular question.
When I ventured into this eco-system, the entire cryptocurrency market cap was $ 0.1 billion USD. I have seen it rising from $ 0.1 billion USD to over $ 170 billion USD. So I have seen 1700 times increase. If something can rise 1700 times in just 6 years, I can see the potential of the same in next 6 years is huge. We cannot put any figure to it but my personal belief is that, as far as, the Global GDP is concerned, by 2025, the blockchain GDP, or to put more specifically, cryptocurrnecy market cap, would be anywhere between $5 to $10 trillion USD. What I am saying is that the cryptocurrency market cap would rise at least, roughly 50 to 100 times. I can’t say whether Bitcoin will control 50% or 20% or 10 % or even 80% because, that is a prediction, which nobody can make or nobody should make. This is because the range of cryptocurrency that have emerged in the last couple of years, even I could never have imagined such a wide range. This diversity is so mind boggling that nobody knows which blockchain is a better blockchain, even better that Bitcoin or ether.
So ultimately, who wins nobody knows, but I am of firm belief that cryptocurrency market cap will be between $5 to $10 trillion USD in next 5 years.
Q9. We see a steep growth of the number of ALT coins in cryptocurrency space? is it good in long term ? Will investors lose faith in cryptocurrency in the long run?
All innovations are always good steps but not all innovations are supposed to succeed finally. It is said that 95% of the start-ups fail. So if we assume 5 % success rate and use the same logic for cryptocurrency, we can say that 95% of the projects will flop. Amazon, Facebook, Google are very big projects but they came out of a phase and the phase was called internet dot com bust. The point is, when something is in a upward momentum, then many people tend to take a jump but all jumps are not lucky jumps. In that context, I would say that even if, 5 to 10% of cryptocurrency survive in next 10 years, and it will be a huge monetary as well as historical change.
My hunch is that if 5 to 10% succeed, it means that cryptocurrency will be huge. People are not going to come back towards fiat currency in a big way if central banks don’t change their ways of ensuring trust. So cryptocurrency are the future but there will be lots of traps in the way, lot of corrections in the way and people will have to work continuously in order to build a serious grammar of investment, ethical behavior and performance statistics. All these things will have to be managed seriously so that we can build standard templates of what good currency is and what is not a good currency.
Q10. What are some of the Blockchain start-ups, from India, that you have been associated with? And have you seen a surge in the number of start-ups in the last few years?
No doubt about that! Two years back there were hardly 4-5 start-ups. Last 2 years there is more than 10x increase and there are more than 50 blockchain start-ups in India alone. Two years back there was hardly any conference or business or media activity in this space but today there is lots of activity. As far as start-up space is concerned, blockchain is actually turning out to be a hot favorite.
Personally, I am connected with two companies, one is Signzy. it is a digital entity infrastructure company which is building its solution on Artificial Intelligence and Blockchain. The other one is Simpal portal, a Sydney based company which is planning to launch Water ATMs in India. Water ATM means that they have built a system where they will actually tokenize filter water. Water will be filtered, not by RO technology, but by Nano-mesh filtration technology. Through ATM you can sell filter water, and in fact, much better quality water, at nearly a fraction of the price bottled water is sold in India. For e.g. Bottled Water is sold at around Rs 15 to Rs 20 per litre in India and if you could sell the same at 10% of the cost, it would be a huge boost in safe water distribution in India.
In this project, Blockchain is basically a distribution innovation. Nano-Mesh filtration is a technical innovation but blockchain adds distribution innovation. For e.g, if we take a centralized corporation route, traditional technologies need a hell lot of capital investment, but if you use blockchain, then you can actually create a system where you can make community, part project funding agencies and part project beneficiaries. They are decentralized applications because the moment you have a particular water ATM and it is connected to internet, you don’t have to depend on any centralized server. You insert ATM card into water ATM machines and it will give you water. If 10 water ATMs are installed in a particular location, people can run all these machines on their own, without depending on any centralized agency.
Q11. We know that the “Proof of work” is not environment friendly because of wastage of electricity for Mining? According to you, when will “Proof of work” be replaced by “Proof of stake” in Bitcoin?
I won’t say anti-ecological thing. I don’t think that “Proof of Work” is only wasting electricity. Now, why I am using this particular argument. Let’s understand the energy consumption in the current monetary structure of India. We run more than 1 lakh bank branches and more than 2 lakh ATMs. Along with that, there are multiple other agencies involved in banking operation. If you calculate the energy cost of running such a massive network, the cost of lighting, cost of air conditioners, cost of many other things, you will realize that all large systems need serious energy investment. If you take just Indian case, I can say that Indian banking system would be using at least 500 megawatts (MW) of electricity on a daily basis. Compared to Indian banking system consuming 500 MW of electricity daily, Global Bitcoin Blockchain consumes 900 MW of electricity daily. So in this comparison of National vs Global electricity usage, I don’t think that choosing a Bitcoin Blockchain will not be a less beneficial option. Having said this, I do accept that some energy wastage can be reduced or some energy wastage can be eliminated.
The question is whether “Proof of Stake” would be in a position to ensure better consensus as compared to “Proof of Work”. Now that’s a very open question because there are many “Proof of stake” currencies right now like Ripple, Stellar, Stratis, NEM but the point is that no “Proof of Stake” model can ensure fool proof security because Byzantine Fault Tolerance is most successfully solved by “Proof of Work” method. Tomorrow, if Ethereum, comes up with this Casper Protocol (planned for mid of 2018), and if Casper protocol proves that it is much better “Proof of Stake” method, we might see a pretty good future for Proof of stake currencies and in that case, proof of work currencies might go obsolete. But I don’t see that particular debate settling in another 6 months or so because Bitcoin has took 9 years to reach where it is today and no Blockchain, whether “proof of work” or proof of stake” blockchain is as old as bitcoin blockchain and in Blockchain ecosystem’s age and stability are the most important and the most critical hallmarks of public adoption.
Scalability is also important but the point is Bitcoin blockchain can go for scalability through many methods like Lightning Networks and Side chains. Some blockchains might be scalable but all blockchains don’t need to be scalable. At the end of the day there has to be a settlement layer for all kinds of global operations. So, if bitcoin blockchian just goes for one particular function i.e Global settlement system, then it does not need to go for scalability and as far as, infrastructure of Bitcoin is concerned, bitcoin blockchain has already reached its limit. The number of transaction, I think, can move from 5-7 transactions per second to 50 transactions per second. Scalability is one of the many parameters of blockchain and not the most critical.
Q12 . Do you think any other cryptocurrency will come near to Bitcoin in terms of significance?
I personally feel that, when internet was invented in 1990’s, nobody could have thought that there would be a Google, Facebook, Whatsapp. So in the same vein, I would say that we are yet to see the Googles, Facebooks & Youtubes of the Blockchain era. If Bitcoin Blockchain has reached $100 billion USD, I am of the firm belief there will be blockchains that will reach a couple of trillion dollars but those couple of trillion dollars’ worth of Blockchains platform would be coming, either from educational sites or social networking sites or e-commerce sites or any kind of ride sharing apps like decentralized Ola or decentralized Uber. There would be multiple blockchains which will go beyond bitcoin but that’s an area where lots of experiments are happening and which will succeed and which will not is only a game of estimation.