The are a series of interviews featuring various important voices and perspectives in the Bitcoin ecosystem. Each interviewee was carefully selected and asked the same group of questions. The main goal was to provide the world with a collection of commentary and opinions on the state of the current Bitcoin and crypto market. Some of the names you will recognize while others don’t wish for the limelight but have great insight and experience we all can learn from. Bitcoin Bear Market Diaries These interviews are raw and unfiltered with no agenda other than giving each individual their opportunity to speak their mind. If you like what you see, please share with your friends. If something offends you, you should probably X out and find another crypto fluff piece that gives you warm fuzzies. Nic Carter is Partner at Castle Island Ventures and cofounder of Coinmetrics.io and offers an interesting perspective on Bitcoin. His experience and analytical approach has always impressed me. Name Nic Carter Country I live in the US, although I’m originally from the UK. I sound American though. How do people know you? Most likely from my tweets or medium articles. I also cofounded a fund called Castle Island Ventures and co-created Coin Metrics, a blockchain analytics startup. How long have you been into Bitcoin? Casually since 2013, seriously since 2015. I’m not an OG! Best Bitcoin experience? Hmm… Anytime I send Bitcoin. It still feels magical. Other very memorable moments for me where when I finally understood the significance of the difficulty adjustment, or when I began to deeply understand the significance of Proof of Work, and how Bitcoin works with a dynamic validator set. It was a gradual process for me though, not sudden. Worst Bitcoin experience? Reflecting on all the Bitcoin I’ve blown on buying stupid stuff over the years… What do you think is Bitcoin’s biggest threat? Either a far superior alternative comes along — and it would have to compete on the important dimensions, like monetary credibility, scarcity, unforgeable costliness of supply, settlement assurances, and so on — or the proof of work function ends up being costlier than we thought, and it has to be abandoned. The latter would be the case if it turns out that the fee market can’t subsidize security at maturity. But what that will actually mean is that Bitcoin will have already failed, since that requires people not treating Bitcoin block space as valuable. So that would fall into the category of failing due to lack of interest. I think some of these protocol-level challenges can be dealt with, though. Ultimately, Bitcoin is a registry of ownership (the UTXO set), and the protocol can malleate to support that registry. A lot of money has been sunk into distributing those coins fairly, and no one wants to give that up. So much like ETH 2.0 is doing (changing virtually everything about the protocol, aside from the account set), I think Bitcoin could always radically modify its core features while retaining continuity in the UTXO set. What are your thoughts on the various Bitcoin forks? I’d prefer for altcoins to live and die on their own merits rather than trying to co-opt Bitcoin’s brand to market themselves. I usually take a fairly data driven approach so if a Bitcoin fork showed significant traction from a usage perspective, I’d take it seriously. But as of now, all the Bitcoin forks are wastelands. That said, Bitcoin can’t stop anyone using its brand. That’s both a strength and a weakness of it being an unowned protocol. What are you optimistic about in this space? The quality of individuals I meet, and the significance of what they understand they are building. The people I know are passionate about building resilient, anti-authoritarian technology. I’m not a technologist, which you might find surprising despite my job and startup, but I do see the importance of technology which is profoundly political in nature. I think the most politically impactful technologies of the last century have been the AK-47 (cheap and reliable weapon which enabled insurgencies to have success in asymmetric situations against much more powerful adversaries), the landmine (tilted the scales in favor of territory retention), and public key cryptography (granted individuals information privacy against state-level adversaries). The common theme there is that defense against more powerful actors became cheaper and more effective — for better or for worse. Compare the might of Al Quaeda or the Viet Cong to the American or Russian empires that took them on. I am not passing judgments on those technologies, merely noting their significance. In the next two decades I think cheap autonomous drones will radically alter warfare once again, alongside cheap 3D-printed or home-milled weapons — both with sweeping consequences. Alongside this, I foresee Bitcoin and non-state currencies challenging incumbent sovereign currencies; and self-sovereign data initiatives like Urbit challenging the massive oligopolies that currently rule the internet. The common trend here is the individual will be empowered, if they want to be. Undoubtedly there will be a backlash from those who benefit from the redistributive and highly inflationary fiat system — and we’re seeing it already from the press and academia — but the forces Bitcoin has unleashed are far too powerful to be stopped by naysayers. The demand for an exit ramp from weak sovereign currencies, generalized asset inflation, political short-termism, forced redistribution, and the mismanagement of central banks is overwhelming. Venezuela is just the beginning. Bitcoin and related anti-authoritarian technology is a powerful liberating force that frees individuals from the financial systems that they happened to be born into. There’s no reason we need 200 sovereign currencies, the vast majority of which are terribly managed. Global, neutral standards of value exist, and there is no going back now. They have already and will continue to challenge the power of the State, which is pretty impressive. The people in this industry for the most part appreciate the historical significance of what they are building, and I feel honored that I get to play a part in it. Biggest regret during the last bull market? Spending too much time looking at ICOs. For my Masters thesis I read and summarized over fifty whitepapers (the objective being to grade them on their transparency, putative governance model, and tokenholder rights). That merely confirmed my belief that virtually every ICO was an opportunistic extractive scheme designed to expropriate wealth from gullible individuals. What have you learned during the current bear market? Just how resilient ICOs and token models can be — the vast majority have yet to admit that they are abject failures — and that people are endlessly willing to forget past records of bad behavior. I thought that some of the bad actors in the industry would be hounded out by jilted token investors, but for the most part that hasn’t happened yet. What is the biggest fail you have seen during the bear market? The Coinbase Neutrino acquisition and subsequent mismanaged PR. Holy hell was that bad. What do you think helped trigger the current bear market? It was an inevitable consequence of the bull market. Asset prices are a reflection of discounted future expectations, and everyone collectively felt that that the distant future was far closer than it was in reality. They pulled the future into the present by pricing in sky-high expectations for Bitcoin, Ethereum, and all the associated tokens. Perhaps those expectations will be met some day, when these things mature, but 2017 was far too early. What kind of damage do you think latest price drop has done to buyer sentiment? Some damage, certainly, but an insufficient amount. The naive optimism of 2017 still persists in many ways, disappointingly. How do you feel about the current state and future of lightning network? Fascinating experiment, but one we shouldn’t mortgage the future of Bitcoin on. The beauty of Lightning is that if it fails, Bitcoin will continue to work just fine. I don’t think it will, but I don’t think Bitcoin needs Lightning to succeed. I never felt that Bitcoin was a petty-cash payments network anyway, so Lightning is firmly in the ‘nice-to-have’ category for me. That said, I am paying very close attention to startups building innovative businesses using Lightning, as I think it unlocks a lot of interesting use cases. What are your thoughts on HODLing Bitcoin? It’s just a form of saving. I know saving is not encouraged in American society — people are pressured to buy index funds instead, which I find unbelievably irresponsible — but that’s the consequence of a QE society where the dollar is debased and owning assets is the only way to tread water. It’s funny that economists deride holding Bitcoin as hoarding; do they call holding cash hoarding too? Hoarding = HODLing = saving. It’s just what we do with spare cash when we have some extra, and we don’t have anything we want to buy just yet. Long time preferences are the bedrock of civilization, and we seem to have forgotten that recently. What are your thoughts on alt-coins? Inevitable, and certainly a balance will be found where a handful of alts fill different niches that Bitcoin can’t quite satisfy. It’s unlikely that we just end up with one of these things. But equally unlikely that we end up in a state of digital barter where we have 1000 app tokens. Do you hold any? If not, why? Personally I still hold some Monero and some Tezos from the crowdsale (which I have yet to unlock). Monero is insurance against a world where Bitcoin fails to add privacy at the base layer. I believe it to be the most Bitcoin-like cryptocurrency. It’s humble and does not try to surpass Bitcoin, but rather to complement it. What kind of impact do you think the radical drop in alt-coins will have on their future? There will always be altcoins, and a large fraction of the current crop will die off. But some will carve out a niche as global monies with different tradeoffs from Bitcoin, and that’s ok. I think it’s totally inevitable. I do think that non-Bitcoin cryptocurrencies will experience significant churn in perpetuity, just because none of them have the brand equity of fortuitous circumstances of creation that Bitcoin has. Thoughts on the notion of bitcoinization? It’s happening right now in Venezuela, to some degree. Well, it’s kind of complex. I looked into it, and lots of the LocalBitcoins volumes are actually related to the acquisition of dollars by Venezuelans (held in bank accounts outside of Venezuela or with friends and relatives in the diaspora). The flow, as I understand it, is: take Bolivars, exchange them for BTC on LocalBitcoins, send BTC abroad where they are sold for USD, and hold USD in an overseas bank account. So what we have right now is an citizen-led dollarization facilitated by BTC. Of course some Venezuelans are acquiring BTC for the sake of BTC too. I think genuine bitcoinization can’t happen until we have many more liquid and censorship-resistant on and off ramps, on the ground. P2p exchanges, Bitcoin vouchers, simple wallets, easy tools to allow money-changers to deal with Bitcoin directly — those are all necessary before a weak currency can bitcoinize. But even with this Bitcoinization-lite in Venezuela, Bitcoin is geopolitically important now, for the first time ever. A bitcoinization event is now a matter of when, not if. What Bitcoin startups are you excited about? Casa! Disclosure: we’re investors. I think they’re doing tremendously useful work, both on the hardware side, and in simplifying the UX for lightning. Their key management product is excellent — I’m a user. I’m a fan of OpenNode — I used their 1.0 product and it was excellent. Lolli is driving Bitcoin adoption in an innovative way, to great effect. Underheralded is Hodl Hodl — they have a nifty LocalBitcoins-like exchange which uses 2-of-3 multisig and Bitcoin directly, rather than being custodial. I’m following Azteco keenly as they create Bitcoin vouchers, which I think will be a very important product. And I’m not sure Bakkt counts as a startup, since they’ve raised a ton of money, but I am very excited to see how their physically delivered futures Bitcoin product plays out! What “crypto influencers” do you think get it wrong and why? No one in particular. That said, people who tried to monetize their influence — be it with reflinks or just by straight shilling smallcap tokens — always rub me the wrong way. I never wanted to get a lot of followers — that just sort of happened. I never saw it as a financial investment, just a hobby, and I would never monetize it in any way. When I talk about a startup we’re invested in, I will typically disclose that. Our website also lists our investments. When I talk about Bitcoin, I don’t assume that my tweets move the price, because it’s a multibillion dollar behemoth now. And even then, I rarely will say anything about buying it. I do my best to avoid giving anything that could be interpreted as financial advice, and that’s for a good reason. People take what we say seriously, and I owe it my followers to be balanced. I err on the side of skepticism and cynicism for a reason. What “crypto influencer” do you think get it right and why? I think Tuur Demeester is a great follow, because he’s unfailingly kind and polite, and I’ve never seen him attack people or get nasty. When you think about the amount of flak he gets (after his Ethereum thread for instance), it takes a lot of restraint to stay balanced and refrain from getting nasty. I have had my moments of weakness when I’ve been nasty to people online, although hopefully not too often. What’s it going to take for this Bear market to turn around? I think the budding maturity of the market will begin to show through at some point. For a lot of putative use-cases that relied on a blockchain or a token, there won’t be a turnaround. Just a gradual recognition that the use-case didn’t need a dedicated token, or was too early. For Bitcoin, I think the institutionalization of the market will help turn things around — better exchanges, custodians, data services, you name it – How bullish are you on Bitcoin despite this recent pullback. I think Bitcoin is the most important technology of the 21st century, and I’m unchanged in that belief. I think it will continue to grow in stature and significance for the foreseeable future, assuming no catastrophic bug or failure. Any tips you want to give to people new to Bitcoin? Read carefully for six months before diving in! You don’t to understand how elliptic curves work or how SHA 256 works to understand Bitcoin, but it helps. There’s no hurry — Bitcoin will still be there when you emerge. Be very skeptical and understand that many things are cosmetically similar to Bitcoin but functionally different. The soul of Bitcoin matters, not just the technical details. have Best tips for storing Bitcoin? If you’re a Bitcoin whale, and you want to self-custody, I genuinely believe Casa’s multisig solution is the best way to do it (Disclosure: we’re investors.) It blends resilience — it makes attacks on users much more difficult and expensive — with flexibility. It’s easy to replace keys if they are lost. And it obviates the need for seeds! If you’re just a small timer, a Ledger or Trezor is good enough in my opinion. If you’re a fund or an institution, and you want to outsource custody, again I’m biased but I think the folks at Fidelity Digital Assets are second to none (disclosure: I used to work at Fidelity, although not in that group). They have an insanely good track record in conventional asset custody and they bring that expertise to crypto as well. Name some of your favorite information sources and/or podcasts in the space. I am not a frequent podcast listener but I sometimes tune in to Marty’s and Peter McCormack’s podcasts. Journalists: Kyle Torpey and Aaron van Wirdum are very good. Twitter is of course a great place for info and there are plenty of “top bitcoiners of twitter” out there. There are so many good bloggers, Dan Held, Arjun Balaji, Hasu, too many to list, really. My number one favorite Bitcoin resource is Bitmex Research! They do frankly astounding stuff. I am so happy they exist. Any last words of wisdom? Appreciating Bitcoin takes a lot of humility and restraint. The natural urge is to tear it down and build a better version. To nitpick and suggest a more modern alternative. To launch a new version where you just so happen to own 10 or 20 percent. But there’s a reason it is the most popular and beloved cryptocurrency. Because the circumstances of its birth are unique, and cannot be recaptured. Because the founder walked away from his/her billions. Because its UTXO set has been forged in a 11-billion-dollar cauldron of costliness (that’s the rough amount that miners have spent mining Bitcoin, all time). Bitcoin shuns leaders, can’t be easily governed, and is extremely difficult to co-opt and twist in a direction favorable to special interests. All of this is by design. Loving Bitcoin takes a sublime humility. Shatter your ego and submit! Stay tuned for the next Bear Market Bitcoin Diaries. You can find more volumes and articles here!
