Dan Schulman, chief executive of PayPal, talks with bitcoin pioneer Wences Cesares about bitcoin, blockchain and fintech in a Facebook interview. Casares, a serial entrepreneur, has launched startups across South America and the United States, not the least of which is bitcoin wallet startup Xapo, which he currently leads. Cesares is also a member of the PayPal board. Schulman touts Cesares as one of the foremost authorities globally on bitcoin and blockchain.
Bitcoin & Blockchain Changing the World
Schulman pointed to the bitcoin price, which at the time of the interview was trading at $14,800, clairvoyantly predicting that the price could change even as he spoke. Bitcoin and blockchain have captured people’s attention because they view it as an “interesting experiment,” said Cesares. “If it works out, it could change the world more than the internet changed it,” he added.
Cesares warned, however, that given the nature of an experiment, bitcoin and blockchain “could also fail.” He gives the bitcoin and blockchain experiment a 20% chance — at least — of failure. He gave key investment advice, recommending that people don’t own more of the cryptocurrency than they can afford to lose.
But after the warning, Cesares provided a silver lining, saying there’s greater than a 50% chance that the bitcoin and blockchain experiment will succeed. But industry participants must be patient, as it will take anywhere from five years to a decade before that success is solidified.
In a successful experiment, he pointed to a different world and “concrete economic consequences,” saying “one bitcoin is going to be worth $1 million. So, most of the world is going to wish they had bought it at $14,000 or $20,000” the risk notwithstanding and putting today’s bitcoin price declines in perspective.
Argentinian-born Cesares has distinct memories from his childhood of his family losing everything, thrice. He characterizes those memories as “emotional” and “social” rather than economic, and points to the Argentinian government as having triggered events that led to the fallout — hyperinflation, for instance. It was two steps forward and three steps back for his family as a result of government activity, even confiscating bank accounts.
His childhood experience, coupled with an awareness of the world’s unbanked citizens without the luxury of the US dollar, seems to have shaped his belief in bitcoin. “It was the first time that I could see technology solving that problem for good,” he said. As a result, he’s pledged the rest of his career and is staking his reputation on it. He is pulling for the bitcoin experiment to succeed because if it does, we’ll have a much better world than we have today, he said.
Calling Out Ignorance
While it may be fashionable to do so, for someone to draw a distinction between bitcoin and the underlying protocol, saying they have an interest in blockchain but not bitcoin, shows “ignorance for how the system works,” Cesares said, likening the comparison to the web and the internet. “Blockchain doesn’t exist without bitcoin,” he said. It wasn’t till January 2009 that the blockchain “came to life” because that’s when we could trust the integrity of data without knowing hardware, software or jurisdiction because it doesn’t matter. With blockchain, there are no counterparties.
“If you were to remove the bitcoin, miners would disappear and so would the blockchain,” said Cesares.
As for the future of altcoins, he reminded PayPal’s Schulman that it’s an experiment, one whose outcome no one knows. Cesares also predicts a single blockchain for value, with the exception of certain use cases that merit a different blockchain, similar to how there’s only one internet. He predicts that the most likely blockchain will be bitcoin, which hasn’t suffered any hacks, but he admits that his prediction is highly speculative.
Cryptocurrencies & Blockchain
As for the bitcoin and blockchain grand experiment, signs of success would be more of what we have been seeing for the past nine years for the next nine years. “Protocols have their own timing, a much longer time horizon than companies have,” Cesares said.
Failure, meanwhile, could be the result of various scenarios. “The main way in which bitcoin could fail is if we begin to put into bitcoin money we cannot afford to lose,” he concluded. In other words, don’t put your kid’s college fund or retirement savings into bitcoin.
The Facebook Live broadcast aired on Jan. 11. Schulman also used the live platform to announce that the PayPal community from the first time over the holidays raised more than $1 billion in charitable donations globally.
Featured image from Flickr/TechCrunch.
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‘One Bitcoin Will Be Worth Million,’ Cryptocurrency Pioneer Tells PayPal CEO