Right now I am trying to get in contact with Jonha. I have a question to ask her. If you know her or perhaps live on the same street or maybe go to the same cafe would you mind asking her to give me a buzz. In February of this year I interviewed the lovely Jonha Richman.  The article is below – it is a gentle article that spends more time on another podcast – Planet Money – than her story but I liked it well enough. Right now I am trying to get in contact with Jonha. I have a question to ask her. If you know her or perhaps live on the same street or maybe go to the same cafe would you mind asking her to give me a buzz. And the question I want to ask is – Are you okay Jonha? Thank you Jillian Godsil Jonha Richman – and the five year bet Sometimes people can be lighthouses – and shine light onto other topics rather than themselves. This was the case when I interviewed Jonha Richman who explained to me about a famous NPR podcast, or rather two podcasts, recorded five years apart. This is the story of the future of money. January 2014 and NPR’s Podcast Planet Money was witness to an unusual bet. Hosts Jacob Goldstein and David Kestenbaum were talking about predictions. Jacob said that he disliked most predictions as they were often ‘weaselly’ by which he meant that anyone could wriggle out of them in time. Of course, by the time most predictions come to fruition (either right or wrong) people have moved on and nobody is held to account. So in podcast #891 in February of this year Jacob described a prediction and a bet that was made back in 2014 on their show. They had two really smart people involved and the prediction was on the future of money. The two guests were Ben Horowitz, of Andreessen Horowitz VC fame and Felix Salmon, financial journalist. The timeline of the prediction was five years and hence the rematch on the show. Ben’s company had already invested $50million into cryptocurrency. Back in 2014 there was a lot of Libertarian talk according to Jacob. People were talking about not needing the government but Ben believed in bitcoin for more practical reasons. Ben argued back in 2014 that since online commerce used credit cards to process payments and that since transaction fees were very high – between 2 and 3% – he felt that the movement to bitcoin payments with its much smaller fees was inevitable. Ben quoted Overstock as a case in point – they were accepting bitcoin as a payment and enjoyed much better margins as a result on those ecommerce transactions. Felix on the other hand – while acknowledging that this bet with Ben was probably the high point of his career – felt the rising price of bitcoin would make it a problem. He argued that since bitcoin was a deflationary currency, by which he meant the longer you don’t spend it the more valuable it becomes, that it was not a very effective payment mechanism. So he felt it would not be used overmuch. The actual prediction was to see how many Americans would use bitcoin in five years’ time. The prediction was sharpened to see how many Americans had used bitcoin to buy something in the past month. A formal polling company carried out the survey which was based on 900 or so respondents. In the original programme they agreed that 10% was the predictive figure.  The prize for being correct was a pair of alpaca socks (famous back in 2014 for being a product one could buy with bitcoin). Ben said more than 10% and Felix said less. So back to the current programme, David had since moved onto This American Life but he re-joined Jacob to co-host the programme to examine the bet. David commented that five years ago when the bet was made seemed a long, long time ago. As he walked to the studio he wondered what has changed in the world and he noticed the presence of motorised skateboards. A case of plus ça change, plus c’est la même chose Again all four were joined on the podcast. Jacob revealed the results of the poll which claimed 3% of Americans polled had used bitcoin in the previous month. They discussed this figure and decided this was high as some of the outlets named did not accept bitcoin. Walmart of example. Jacob remarked that he felt Ben was very sanguine in losing the bet but he made two points, one of which meant he wasn’t wrong. ‘The Time’ according to Ben was too short – always a good way to overturn an inaccurate prediction. He had another interesting observation. Normally in open source projects, developers work at improving the code. Witness the evolution of the Internet. However, since the value of bitcoin was so strong it was not in the interest of miners or investors to make the code better. The trouble with bitcoin’s value meant it was locked down without change. Felix, while right in his prediction, was surprised by two points, both of which he had got wrong. Back in 2014 he believed the value of bitcoin would go to zero. He also felt there would have been more use cases. As Jacob summed up – “So it’s more valuable and less useful than you thought.” Another reason for Ben being so sanguine was that while he may have lost the five year bet to Felix, his real life investment in cryptocurrencies had netted him serious profit. For example, one shrewd investment had been into Coinbase, now valued in excess of $8billion. Ben admitted he was ahead on his other investments. Jacob was keen to rinse and repeat the prediction and bet. Ben agreed and Felix said it was like taking candy from a baby. However, the parameters were changed. Ben felt he had overlooked the ease of credit card use in America. Even with the high transaction costs it was unlikely to be overthrown any time soon. He wanted a new location and populace. He also wanted to move from bitcoin and replace that element with the more general cryptocurrencies. So the new prediction is five years from now more than 10% of Mexicans will have purchased something with a cryptocurrency in the past month. And the bet itself has changed too. Ben promised Felix his alpaca socks (size elevenish) but now the bet was for one bottle of 100 year old Madeira and one ETH. The value of a bottle of vintage Madeira is anything between $500 and $1000. And as Felix said “It’s a much better store of value than any cryptocurrency will ever be.” And as for the value of one ETH – well time and five years will tell. Jonha shared this episode of NPR’s Planet Money with me for two reasons. One reason was that some of the respondents in the survey mentioned they had used Litecoin, and Jonha is an advisor to the Litcoin Foundation. Only three weeks in but she is very impressed by the passion of the team. The second reason goes to the heart of Jonha’s views on cryptocurrencies. She is not one of those folk who think that blockchain and cryptocurrency will replace banks and their ilk. She is very much of a practical nature and believes that cryptocurrencies will exist side by side. “Regulation is a good thing. If a project cannot stand up to regulation then I question its ultimate practicality.” Jonha admits to being fearful of cryptocurrencies in the beginning, believing them to be used by drug cartels and the like. The high profile spats between the SEC and ICO advisors such as Floyd Mayweather did little to allay her fears A native Filipino, she moved to Singapore to work in advertising at Leo Burnett. A year later, she joined a firm based in New York where and one of her colleagues kept on talking about cryptocurrencies and eventually she became interested. “I view the development of blockchain in the same way the internet grew. At first it was just the cool kids and over time it moved mainstream. Blockchain is like that. And of course there are bad actors in the industry, this says more about the makeup of the populace than any underlying moral in the technology. “New technology starts off elitist, expensive, and often crappy. But I feel the long crypto winter has been good for the sector. It is a shame and I feel for people have lost jobs but now only scalable, provable projects will move forward.” Overall while Jonha does not see banks disappearing anytime soon, she believes the practicality of cryptocurrency will overtake traditional finance. “Consider traffic in Asia. It is ten times worse than anything you can imagine in London or Dublin for that matter. People sit for hours in traffic in Asia and as a result if people can find a way not to commute they will. Blockchain will allow people to work remotely and be paid remotely – for Asians this is a real issue. “Already in Manila there are ways of paying your bills and buying retail using cryptocurrencies. They are not using Bitcoin, it’s too expensive, but they are using other alt coins – Litecoin for example.” The other big push for adoption of cryptocurrencies is another financial crisis according to Jonha. “When the next imminent financial crash happens people will already have an alternative. Already one in ten people in the Philippines are using cryptocurrency to pay bills. This is only going to grow.” I think Ben Horowitz is kicking himself that he did not place his prediction in Asia – he would be on the money already and not have to wait five years. And that bottle of Madeira would be a very nice reward  – but then he can probably afford a case or two.

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