Pain and fear are good in the cryptocurrency market because it enables us to stop making the same mistakes, according to the co-founder of crypto exchange Evercoin.
“Fear keeps you from being harmed,” Miko Matsumura said. “If you’re sitting in a room and a tiger shows up should you be feeling fear, should you be doing something about it? Of course, right? And pain prevents you from harming yourself. If you experience pain it allows you to learn not to harm yourself again.”
Matsumura was speaking on the recent Coinsbank Blockchain Cruise in a discussion panel, which focused on pain and fears in 2018. He explained that the panel was a good place to “point some fingers” and question “why as an industry we’re hurting ourselves, and how we’re acting like dumb asses,” so that improvements can be made. He then said that:
“Without pain and fear there’s no courage. The thing that’s happening in this winter, or you might call it an ice age, is that we’re separating the people who have the courage from the people who don’t have the courage and that’s great.”
Fellow panelists included Khalid Dianov, co-founder of the Blockchain Investment Group, an investment bank, Paul Mockapetris, creator of the Domain Name System (DNS), Jonathan Galea, a blockchain and cryptocurrency lawyer, Olga Feldmeier, CEO of Smart Valor, a Swiss-based blockchain startup building a decentralised marketplace for tokenised alternative investments, Bobby Lee, co-founder of Bitcoin exchange BTCC, Hartej Sawhney, co-founder and president for Hosho, a blockchain and security company that conducts smart contract audits and penetration testing of exchanges and blockchain protocols; and Charlie Lee, creator of Litecoin and chair and managing director of the Litecoin Foundation.
A few areas covered during the 30-minute discussion included initial coin offerings (ICOs), altcoins, exchange hacks, smart contracts, and private keys.
Going on from what Matsumura said about people acting like dumb asses, Hartej Sawhney cited Andreas Antonopoulos, a Bitcoin advocate, who once said that when a child burns their hand on a stove you know it won’t happen again.
“Yet, in this industry, we wake up in the morning and $500 million was stolen from a Japanese exchange and we simply say, ‘so what’s for lunch today,’ and people are behaving like dumb asses.”
In his opinion, there needs to be more people “burning their hand on the stove” and more active discussions around cybersecurity.
Turning the conversation slightly, the much-debated topic of ICOs came up, with Charlie Lee stating that people are beginning to realise that there’s no “free lunch” and that most of them will fail. As a result, people who put money into them last year are “in a lot of pain.”
“I think that’s a good thing,” he added. “I think people should realise that these dumb ideas don’t just succeed because they are doing a token. So I think a lot of people are learning this year and I think that’s good for the industry.”
According to Matsumura, we are collectively making bad mistakes, which can be rectified by educating people on basic things such as public key cryptography and the fact that when a person puts their money into a centralised or custodial exchange that key is no longer theirs.
“People keep investing in these things that are disfavourable to them, which is amazing,” he added. “They keep investing in ICOs and I think we all need to share the knowledge that we gain with friends as much as possible.”
Adding to this, Lee said that we are still very early in this crypto revolution. Consequently, most people leave their coins on an exchange because it’s hard for them to understand how to protect their money.
“In recent history, people have never had to protect their own money because they always had banks to put their money in and there’s always FDIC insurance, so if anything happens they get their money back,” he added. “So it’s a new thing for most people and it’s hard, that’s why people leave their money on exchanges or Coinbase.”
For people to become used to holding their own money, Lee said that it will take time to build out the infrastructure and user experience that enables a person to securely maintain their assets.
Extending on from this Bobby Lee explained that in the 10th year of the industry’s existence there are only a small percentage of asset holders who hold their own crypto keys. In his opinion, more than 50 per cent are relying on centralised exchanges. As a result, he thinks that there will be a lot more people suffering. Using an analogy, he states:
“Think of a world where no one knows how to swim because there’s no water, swimming pool, oceans or lakes. We are the first generation who is exposed to oceans and lakes and swimming pools where we can swim. So some of us who have had the ability to hold private keys, we have learnt how to swim, but there will be a lot of people who will drown. I do truly believe that in 20 years our society as a whole will know how to swim.”
By then, he thinks that everyone will have learned how to hold their private keys, but first it will “take a generation or two to wash out the people who don’t know how to swim.”