Ari Paul, CIO and managing partner of BlockTower Capital, joins Real Vision's Ash Bennington for a wide-ranging conversation about the future of blockchain and cryptocurrency. Paul unpacks his views on the risks and opportunities in crypto-assets now, and discusses the ways in which he draws on his background as a traditional asset portfolio manager to make better decisions. Filmed on October 23, 2018 in New York.
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The Hidden Value In Crypto (w/ Ari Paul) | Skin in the Game | Real Vision™
That's four in a row, right?
I think so.
All right, Ari. Thanks for joining us. Excited to talk about distributed ledger and cryptocurrency. But first, let's play a game.
Thanks for having me, Ash. You know, in college, I was a semi-professional poker player. But I definitely wouldn't be semi-professional at Connect 4.
I think that means I'm going to lose.
We'll see how this goes.
You're first. Guests go first. All right, that was-- that was going to be my move.
So let's start at the very beginning. So we know that people have made a lot of money trading these assets. But what's a real world application for someone who's not been involved in the crypto space? How are these technologies potentially going to change the world?
The first use case that was the vision of Satoshi was P2P electronic cash. That was actually the subtitle of the Satoshi white paper. And the idea was to have sound money, money that can't be depreciated by central banks, money that is resistant to censorship, meaning, let's say I want to send a transaction to a gambling site, or maybe something like Wikileaks. Currently, banks can censor me, or the SWIFT system can censor me. So central resistant, and then last, is also seizure resistant. So it's an asset that can't be confiscated, or is at least resistant to being confiscated, where in the US, that might not be that valuable to us. But you imagine a citizen in Russia, or China, or Venezuela, or Iran, or much of the world, where they have to be concerned about corrupt law enforcement or the government itself literally confiscating their assets. So cryptocurrency, the first use case was as money that is more secure kind of in every way than fiat.
Since then, the scope of what cryptocurrency is trying to be has enlarged tremendously. Bitcoin was the first cryptocurrency and was really focused on that sound money use case. Ethereum captured a lot particularly Silicon Valley imagination as tackling a much broader landscape of use cases. So Ethereum is aiming to be kind of a world computer, a platform for decentralized applications.
And I won't get too technical, but it's a Turing complete programming base, meaning you can program anything. So any application that can exist, you could theoretically build it. And so some of--
And build it in a distributed way.
Right. And that's the key part. So something people in the crypto industry right now are puzzling through is what use cases makes sense to decentralize.
So a few examples are, you know, something in the news a lot has been the privacy concerns around Facebook and other large data providers. So imagine a decentralized Facebook, where the user owns and controls their data, where, literally, I get the benefit of software from a company like Facebook that has all of these developers, but they never, ever see any of my data. So all of the data is encrypted. that's one example.
Near term use cases, I think one that's powerful is remittances. So right now, people who are of any level of wealth, but it tends to be effectively a regressive tax-- people are paying $20 a transaction to Western Union, for example. They want to send $100 from the US to their parents in India, and they're paying outrageous fees. So cryptocurrency for remittance.