Modern Finance
April 20, 2021

The Potential DeFi Collapse, Bull & Bear Markets, and MobileCoin with Ari Paul

BlockTower Capital Founder and CIO Ari Paul joins Kevin to discuss the crypto cycles of bull and bear markets, the potential for a DeFi collapse, why you should avoid a crypto index fund or ETF, and a new cryptocurrency called MobileCoin, which aims to power all mobile payments.


BlockTower Capital Founder and CIO Ari Paul joins Kevin to discuss the crypto cycles of bull and bear markets, the potential for a DeFi collapse, why you should avoid a crypto index fund or ETF, and a new cryptocurrency called MobileCoin, which aims to power all mobile payments.

BIO

Ari Paul (@aridavidpaul) is the Co-Founder and CIO of crypto-asset investment firm BlockTower Capital, and author of The Cryptocurrency Investor blog, where he has published papers on cryptocurrency lending, the history of money, and applying investment concepts to cryptocurrency.

 

SELECTED LINKS FROM THE EPISODE

 

SHOW NOTES

  • How did Ari get started in crypto, and what cues gave him the conviction to stake his career on it? [02:10]
  • What problems does Ari see as uniquely solvable by cryptocurrencies? [05:53]
  • What does Ari think it will take for people who are comfortable with traditional banking to put their trust in DeFi? [06:53]
  • Just one example of how DeFi security beats the way we've been transferring large sums of money for decades. [09:05]
  • As blockchain transactions become more common and accepted by the mainstream, will the average user even need to know this is how their money is being moved? [10:36]
  • An important reminder that applies to DeFi as much as any other transactional technology: an informed consumer is a safer, better-served consumer. [12:01]
  • When weighing how crypto might face off against traditional methods of transaction, remember: no matter what's convenient for any given merchant, demand comes from the consumer side. [13:07]
  • While people aren't generally going to stake their life savings on risks they don't understand, there's a lot of "play money" being thrown around in the crypto space right now with unpredictable results. [14:14]
  • If all of this seems complicated, don't feel bad. Ari's a financial professional and the Swiss WIR system (around since the 1930s) is still largely a mystery to him. Still, he knows he can trust it without needing to understand its intricacies -- it's the Lindy effect in action, and this is how DeFi will become trusted as it withstands the test of time. [14:58]
  • How adoption by major companies like Tesla and Square boost the public's trust in crypto, and how it might be boosted further still. [15:55]
  • Analogies about traditional investments that may help someone trying to wrap their head around the value of cryptocurrency today versus tomorrow. [16:29]
  • In any new industry, the first movers are people with less to lose. [18:10]
  • How does Ari picture DeFi 2.0? [19:23]
  • How does BlockTower decide what to back in DeFi? [20:30]
  • To Ari, what catalysts signal well-timed sell-offs? [23:30]
  • Weighing the sustainability of rewards in traditional vs. crypto markets. [25:58]
  • Is Ari bullish or bearish about DeFi at the moment? When does he anticipate this might change, and what would drive such a change? [28:46]
  • Impediments to companies like Square and PayPal giving DeFi a more consumer-friendly interface. [31:22]
  • How does staking work, and what causes yields to fluctuate? [32:56]
  • Ari's thoughts on Bitcoin today and where it's going. [34:36]
  • How does Ari track institutional buying and retail interest in cryptocurrencies? [38:21]
  • How Michael Saylor evangelized Bitcoin to fellow billionaires. [40:02]
  • Ari's advice to a novice versus a professional investor, with a look at index funds and ETFs and how they're represented in blockchains. [40:30]
  • Another hitch that makes investing in crypto a minefield for the novice investor: scams frequently make it into top 10 lists. [41:57]
  • How does Ari value oddball currencies that attract communities with an almost cultlike enthusiasm — like Dogecoin? [42:43]
  • Why Bitcoin is the only crypto asset Ari can recommend on a 10-year timeframe with conviction (in spite of its pro being the same as its con). [43:39]
  • How does Ari feel about Ethereum as a longer-term investment? While popular today, could it become the MySpace or Friendster of crypto tomorrow? [44:23]
  • Ari's crazy, crystal-ball predictions (with a heavy reminder that none of this is intended as actionable investing advice). [46:08]
  • What is MobileCoin, and what makes the tech by which it's powered appealing to Ari? [48:54]
  • What is StormX, and why has it caught Ari's attention? [52:34]
  • How does Ari expect crypto to influence the world of gaming? [53:46]
  • Thoughts on in-game purchases being transferable via NFTs and potentially outliving the games where they originated. [55:40]
  • Games involved in this space that Ari is keeping an eye on, and why he feels development is moving at a seemingly glacial pace -- for now. [58:04]
  • How does Ari believe interoperability will play out where gaming and crypto intersect? [59:27]
  • What are atomic swaps and layer zeros? [1:00:11]
  • What are the tradeoffs of these new technologies? [1:01:33]
  • Looking down the line, if you can access the features of any chain with the financial asset of any other chain, where will value (and associated risks) accrue? [1:02:51]
  • What is Ethereum's EIP 1559 intended to correct? [1:04:40]
  • Why Ari doesn't like the index approach to DeFi, and what he would prefer to see. [1:06:52]
  • Does Ari see a future in which everything is tokenized in some capacity? [1:09:50]
  • What's the best way for a newcomer to "get smart" on crypto? [1:11:15]
  • Is MobileCoin available yet? [1:12:14]
  • Where to find Ari Paul online, and parting thoughts. [1:12:56]

 

PEOPLE MENTIONED