When a friend of Jamie Smith’s first urged her to work at a Bitcoin company, her first reaction was, “That’s criminal money, I want nothing to do with that.” But once the former press officer for the White House began learning more about the cryptocurrency, she couldn’t stop herself and was hooked.
Her trajectory is not that dissimilar to that of a lot of people when they first hear about Bitcoin. In fact, many people from traditional finance still think Bitcoin is a fad, a fraud, a bubble, a Ponzi scheme, etc. To address these misconceptions, in this week’s episode of my podcast, Unchained (Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio), Smith, who is now the global chief communications officer for Bitcoin hardware and software firm Bitfury and CEO of the Global Blockchain Business Council, along with Amanda Gutterman, the chief marketing officer of Ethereum venture production studio ConsenSys, rebut every common misconception about cryptocurrencies and answer all the most common questions about them.
From a high level, Smith says the way she came to understand the technology and how she thinks about it now is, “What we’re going to have in the years to come is, I believe, global wifi. I think almost everyone will have access to or own their own phone so, with those two components, now you have a system that allows people to move money or any asset they want peer-to-peer for almost free.”
Gutterman explains Ethereum to others by relating it to an experience every person has had — their computer slowing down: “If you have a bunch of tabs open on your computer, eventually if you keep on opening tabs and opening tabs, your computer will slow down and not work, and in a similar way, Ether acts as an economic disincentive for the over use of the public Ethereum commons,” she says.
As for the perpetual question of how cryptocurrency can have any value, Gutterman describes the concepts of scarcity, fungibility, divisibility and transferability to show that cryptocurrency has a certain number of units that can be exchanged, divided and moved between owners. Smith talks about the need to keep data secure and how because bitcoin is based on a distribtued ledger, “you can’t just break into one house — you have to break into an entire town,” to hack a blockchain.
Another value-related question we discuss is whether or not cryptocurrency is in a bubble. Smith described how, with one exception, every person who’s compared the internet revolution with the blockchain wave has said the current phase of development is similar to 1992-1993 in the internet. So, in terms of the value that will be created, it’s actually very early and quite small compared to what will come later. In fact, she had recently been listening to an interview with Jeff Bezos from the mid-1990s, and was thinking about what a long road he’s had from 1995 to 2017, but realized the same applied to blockchain technology: “When you have a vision and there’s a real desire in society for systems to change and become more efficient and you have a product that undoubtedly offers that, I don’t think you can stop that force.”
Gutterman says a lot of the objections people have to cryptocurrency now are similar to the ones that naysayers made in the first internet revolution. “The same way people in the early days of the internet thought consumers will never use this, there will never be commerce on this platform, it’s too complicated for normal end users — boy, were those people wrong,” she says. “Once the salability and security issues were solved, eventually all those things happened.”
Gutterman approaches the bubble question from the use perspective: “We see the utility. As more people are using what we call web 3.0 and need fuel in order to power their usage of those applications — that’s why a lot of people who are excited about Ether imagine it will increase in value.
Tune in to the full episode (Google Play, iTunes, iHeartRadio, Stitcher or TuneIn Radio, web), to find out how they explain what backs the value of cryptocurrencies, what things like mining and proof of work are, how they address perceptions that bitcoin is “criminal money” as Smith first thought, and what they say to people who think crypto is a Ponzi scheme.
Finally, since the two have organized the most gender-balanced blockchain-focused conferences in the industry, they talk about how they accomplished that and whether or not the crypto space is really as male-dominated as it can sometime seem.