The founder of the professional CryptoNet community of crypto entrepreneurs spoke about his vision of the industry, about what projects he invested in, and what future awaits Bitcoin in an interview for DeCenter.
Karpilovsky about Himself
I consider myself a crypto enthusiast, rather than a crypto evangelist. For me, the concept of "crypto evangelism" smacks of propaganda; I immediately imagine a person who runs around and tells everyone that cryptocurrency is good. I like being in the position of a specialist who answers the questions of the crypto community.
I'm not looking for opportunities to pay in tokens always and everywhere, because I understand that it is impossible in our realities of today. Although, for example, in my favorite hookah bar, where the hookah costs $15, I pay in cryptocurrency (Bitcoin), and in the restaurant next to our office, I pay not only in Bitcoin but also in Dash and Litecoin. Usually, my cash reserve is $1,000, and after the amount ends, I exchange some cryptocurrency for cash again. I use debit Bitcoin cards for this, mainly Revolut.
What Projects He Has Invested In
I have about 30 different currencies, those that have been in the top 20 for the last six months, and experimental coins, which I bought at their ICOs. From the experimental ones, I dabbled with Tron, Verge, Zeus; from ICOs, with Sonm and Storj. I do not play with unknown coins and try to invest in highly capitalized currencies.
What Wallets He Uses
My favorite is the Trezor hardware wallet. I dislike Ledger somehow, I cannot even explain why, it's a matter of taste. Ledger hardware is much more advanced than Trezor, but there are regularly uncomfortable situations due to its modular construction [with Ledger], either the software is updated, or you cannot enter some applications, or you cannot see your balance. I also like the Exodus wallet. It is a pity that it is only available on the computer. In my opinion, this is the most professional of the multi-currency wallets. I also like paper wallets. They retain an idea from classical accounting, such as the ability to rustle with papers, look at notes with passwords, it’s very romantic.
I think that Bitcoin will hold onto strong leading positions in the next 2 to 3 years. But I do not think that its chances of remaining the number one currency are so high in five years. Firstly, Bitcoin has a very heterogeneous, unrefined community, while the consensus, which is laid out in Bitcoin, requires the consent of 95% of the miners to implement any change. All the technological innovations, the corrections in the protocol just rest on this disjointed community. We saw this using the example of SegWit technology, which could not be implemented in Bitcoin even after it was used in Litecoin. Secondly, what we saw in November 2017, when Bitcoin stood on the edge of the abyss with SegWit2x, will not keep this currency in first place. Some influential guys were ready to clone Bitcoin, internal struggles were formed, and representatives of the professional community again could not agree amongst themselves. In fact, we could have lost Bitcoin back then as a single, solid monolith. Coins with a more understandable roadmap, with more precise control, will be able to beat Bitcoin, because Bitcoin today is a state run by kitchen hags, and I'm afraid that this is not very good in the long run.
Which Currencies Can Supplant Bitcoin
It is clear that each currency has its own problems, which must be solved. But, for today, the Ether coin is promising for me. It has more centralized management, and what Vitalik Buterin says is accepted by everyone unquestioningly. I would single out EOS alone of the coins that could become a killer of Ether and Bitcoin. Dash is the leader in community cohesion. As from the point of view of management and the conveying of some ideas to the community, I still like Waves. Unfortunately, this coin now has no prospect of getting into the top 5, but it has more transparency than others. The developers are publicizing everything they do, and this is the right approach.
Management is very important for any crypto business. We need mass adoption, so the industry enters society and starts playing a serious role in everyday life, and crypto business should be accepted by broad masses, from 16-year-old technologists to 40-year-old saleswomen at the deli to 70-year-old grannies. PR, in this case, is a super important component, and society underestimates how much the information background affects the speed of technological adoption.
The most turbulent and understandable technology is blockchain. It is easy to sell the technology to the corporate sector because there is an understandable value and it can be monetized with ease. Smart contracts, however, require improvements and long-term implementation. The development of smart contracts is moving quite slowly and will move at this speed for about two more years. This requires an army of professionals, there are not enough people to implement the system, because the implementation is boring, and everyone needs it to be interesting, fun. One needs only pave the way, and others will immediately run along.
This market, in the form in which it existed, was doomed to death back in 2017. The only thing that saved the ICO was the drop in the exchange rates of the main cryptocurrencies. While people felt comfortable investing in large tokens, constantly marking down Xs and having growth, the ICO industry was booming, but it was moving towards its natural deadlock associated with regulation. There were many scammers, who collected money for various developments, but the projects burned out at the initial stages and did not yield any profits on the exchanges.
In an unregulated space, the ICO bubble will burst sooner or later. We [Russia] will either follow the Chinese scenario with a direct ban on ICOs and its binding to securities, or the American one, when it is allowed to conduct ICOs through the regulator. Or there is another mechanism, as, for example, Vitalik Buterin suggested the multi-stage and multi-level ICO. But, such an industry will not survive, something must change.
The Role of the State in the Crypto Industry
The state has no experience in regulating the crypto business, and it is likely that it will commit a lot of mistakes. But, I think that the state is the necessary evil, without which this industry will not become truly systematic and large-scale. At a minimum, the state must implement what will protect the end user; we must become more civilized. The spirit of Victorianism that cryptocurrency is steeped in is not compatible with rigid regulation, because tokens are inconvenient to monitor and crypto flows are difficult to manage. Therefore, the state should take a liberal position and say: "We will allow this miracle to develop, let it grow, we will only limit it in the most dangerous manifestations, for example, with an uncontrolled collection of investments under the promise of gold mountains in the future."
The state needs to organize platforms, where it is possible to trade cryptocurrencies in the legal field. What the governments need to do is create a regulatory framework that will allow making exchange agreements related to cryptocurrencies, and ideally recognize cryptocurrencies as a unit of value, and with its help conclude sales contracts, including in cryptocurrency equivalents. Without government regulation, the industry will develop much slower.
The introduction of cryptocurrencies on a national scale, if we are talking about a certain national currency issued by the central bank, can greatly change the alignment of forces, but I think that we will not see such mass implementations for another five years.
Japan announced the transition from cash to cryptocurrency in 2022, and there are similar attempts in Israel. In general, the question arises about the inertia of people's thinking. A lot of time will pass until society decides to abandon cash in favor of some new digital candy wrappers. For example, there have been alternatives to plastic cards for several years now, but credit cards are still in use. We will witness the same situation with fiat money and cash.
World Regulation of the Crypto Industry
Usually, the state thinks in two terms, chance and risk. For example, we have a wonderful idea: "Why not make ICOs legal?" What are the chances of this for the US? If the entire stock market is completely transferred to cryptocurrencies, that will not increase its capital. If giants such as Apple, Microsoft, and Google start storing their shares on blockchain, they will become the property of some unknown, anonymous investors, which will increase the risks. Therefore, the US will not introduce such technology. Russia will not implement it, either, as it will worry about the shares of Gazprom, so they do not flee the devil knows where in this incomprehensible blockchain thing. But Lithuania will implement ICOs. Because there are very few joint stock companies in Lithuania that are of any significance to the economy. Thanks to this introduction, the Lithuanians can increase the inflow of new corporations that would create a digital Mecca and pay taxes. That is, small countries have less chance of taking risks. Therefore, we will first see scenarios for regulating the crypto industry in small and advanced countries.
Japan will historically be ahead of the rest of the world and will introduce a national cryptocurrency in the near future, and then we will see coins from the Baltic, Scandinavian countries from those where digitalization has gone far, and the economy is not very inertial.
China has adjusted to the whole system, despite the existing government bans. Their system is simple, you buy from us something, not ICOs, and as a gift, you get tokens or ICOs. This is such a classic gray scheme, and if the authorities of the RPC had wanted to ban ICOs, they would have done so long ago, and heads would have rolled. China simply deliberately leaves a loophole open.
Today, cryptocurrency in the CIS is still an investment asset. Nobody considers cryptocurrency as a technology, and very few people perceive tokens as a way of payment or even transfer of value. For most people in the CIS, cryptocurrency is a wonderland in the land of fools, where you sow one coin and reap two coins.
Decentralization of the System
The whole question is how much power is collected in centralized hands and who manages it. The idea of decentralization is cool, but in life, it breaks down into existing realities. In China, there was such a story, when large players bought up smaller players, and it was decentralized de jure, but, de facto it was possible to come up to five people to see 90% of all the cryptocurrencies in China. The same is expected in the ICO field. You will always find five people who will be responsible for the entire system. In fact, you still get a centralized system where decentralized technology collides with human thinking. People suppress their historically centralized consciousness. And, at this stage, such development is acceptable.