Cryptocurrency

Andreas Antonopoulos: Crypto doesn’t have a use-case in the ‘developed’ world…yet

Quick Take

  • The Mastering Bitcoin author says places like Korea “probably” don’t need smart contracts, crypto, or blockchain 
  • He predicted crypto adoption for people outside “broken [financial] systems” will come when more use cases are developed in phase 2 and it attains parity with the likes of Visa
  • He also shared his scepticism with STOs and centralised stablecoins

Andreas Antonopoulos was among a wave of bitcoin maximalists descending on the South Korean capital this week.

Speaking shortly after the crypto market’s bump, Antonopoulos told the Deconomy conference audience that mass adoption of bitcoin was a matter of “when,” not “if.” But, he noted, it may come later rather than sooner in places like the U.S., highlighting the long road of secondary development ahead. 

These are the soundbites of his speech: 

When mass adoption?

Ultimately, he said, people need to “need” crypto. For so-called developed countries like Korea, that need frankly does not yet exist. Largely because the space has so far only tried to “simulate”  the current financial system.

“Why do Koreans need cryptocurrency?” he asked. “The answer is really simple: Korea doesn’t need cryptocurrency…Really what is the purpose of cryptocurrency in a country where the banking system, the financial services system, is so well developed?”

He went on:

“Do you [Korea] need smart contracts? …People use smart contracts to record title of land and ownership. You think they’re talking about Korea when they talk about that? Probably not, because you likely have a land registry that works.”

Therefore, he said, mainstream adoption won’t happen all at once. It will be incremental, region by region, each with a different catalyst and format. He also predicted the next series of developments will provide a use-case for consumers outside Venezuela and for the likes of Korea.

For those countries, he said the appeal will come in decentralised financial systems and micropayments. He predicts adoption will come when crypto not only “remove[s] unnecessary layers of intermediaries” but goes far beyond that. Just like the internet, which began by providing an electronic post-office through email before eventually growing far beyond that.

“Stage one: Replace all of the fax machines. And then stage two: Do applications that a fax machine could never do.”

That also means don’t expect anything too soon.

Not beating about the bush

Make no mistake, Antonopoulos said – we’re just at the beginning. Crypto is still dominated by a small community who are either drawn in by the prospect of capital-gains, victims of corrupt governments, or anarchists.

“It is difficult to understand, difficult to secure, with very poorly designed applications and with very difficult wording,” he said.

He also highlighted the accounting burden that has hindered retailers conducting crypto transactions.

“At least in the United States, the way that the capital gains taxing is implemented on retail is you have to record every purchase or every company profit based on the cost basis…And that creates an enormous burden on accounting which has killed retail adoption…It’s almost impossible to do retail transactions. It costs me more in accounting than I make from selling things if I do that.”

Poopooing STOS and stablecoins

He also commented on the STO wave. To put it mildly – he’s not convinced.

“I think STOs are likely to bring a small improvement of the issuance of securities compared to traditional soft markets. But that to me is not revolutionary,” he said. “STOs are the simulation of the existing system only now we’re watching and that’s not very exciting to me.”

As for centralised stablecoins? He’s even less sure. He commented sarcastically:

“You like the dollar? How about the dollar on a blockchain, huh? Yeah? Nice. Stablecoins. Very, very exciting stuff. Cutting edge technology.”

He also compared stablecoins to the era of introducing colour fax machines to replace black and white ones; in short, not fundamentally changing the system.

When financial sector? 

Antonopoulos says he believes banks and the likes will wake up to customer demand when it is truly usable and desirable. It needs to be wanted, and it needs to be needed. Eventually, he added, banks are going to realise the inefficiencies of the traditional fiat system. He did not touch on their security and custody concerns however. 

Stay positive

Perhaps sensing he had deflated a bubble of excitement, he finished by repeating his catch-phrase: Bitcoin will overtake Visa and MasterCard in less than a decade.

“The day after we achieve parity for payments with Visa or PayPal or Venmo or any of these platforms, we are six months away from doing 100 times more,” he said.

He also noted crypto’s ability to disrupt different sectors is already visible, including in the VC world.

“We had this explosion of ICOs. Nobody expected the first application of disruption to be venture capital itself. Who were most surprised were the venture capitalists. They were like ‘hang on, did you just replace us? This isn’t fair.'”