In an exclusive interview, CEO and founder of Waves Sasha Ivanov told ForkLog about his vision of development of cryptocurrencies and blockchain; new emerging trends in fundraising; and gave a few valuable pieces of advice to anyone considering an ICO.
We talked with Sasha during the recent Blockchain Hack hackathon in Moscow, which, by the way, had visibly way more attendants than last year.
FL: Hi, Sasha! It seems that it’s five times as more people here. So, it’s obvious that the interest in cryptocurrencies and blockchain is growing, and new solutions are emerging. What basic trends of the industry’s further development you could outline?
S.I.: Blockchain technology is now bifurcating into corporate, B2B and other branches. In fact, nearly every bank is either running its own research, or participates in some sort of project. It’s a very slow process, and sometimes it may even seem that nothing is happening. It might be true, but eventually it would result in something way more serious. I believe we’ll see this in three to five years from now as the interest is indeed enormous.
We know that the Russian Central Bank is working in this area. In Ukraine, they even want to move their currency to blockchain. The progress is there, but we have to remember that all those gargantuan centralized institutions are inherently incapable of moving fast.
On the other side of the spectrum, where the unregulated projects are, there’s also a great movement. There’s understanding of token-based crowdfunding. It’s a new trend in ICO, and this thing is applicable not just in immediate issuance of currencies, but also in fundraising for other projects. It could be projects not even related to cryptocurrencies or IT altogether.
So it’s about tokens which are not linked to capital, and with no dividends payable. This token can’t be considered a security, yet it has some value. It’s used within your product, and if the product is successful, we may reasonably assume there’s a mechanism pegging the token’s price to your product’s success. Thus, you may raise funds by offering a certain investment interest.
It creates a whole new class of securities totally impossible before. Those securities can be traded, they may be employed to finance startups. It’s a serious trend people are just beginning to realize, both within and beyond the cryptocommunity. The mainstream has to enter the industry, it’s crucial. For instance, it may be fundraising in B2B industry – that’s about private blockchains. Anyway, the whole conception of ways to raise funds and venture investment is undergoing a fundamental change.
FL: So, it’s essentially some sort of financial globalization? There was an attempt of making USD a reserve currency, but it seems to be gradually failing. At the same time, cryptocurrencies are becoming a tool for masses.
S.I.: The thing is that blockchain technologies are multifaceted. They may appeal to centralized government institutions, and may be interesting to regulators as a part of a vertical structure, where they may run operations more effectively while maintaining transparency. They’re also interesting for decentralized systems, including cryptoanarchist crowdfunding. In fact, blockchain enhances both vertical and horizontal structures. They may harmonize thanks to the technology.
FL: I believe, many people wonder what cryptocurrencies, apart from Bitcoin and Waves, you consider worthy of investment. Could you share something about your conventional investment portfolio?
S.I.: Presently, I do not trade cryptocurrencies. It takes too much time and energy, so I completely abandoned trading when I got seriously engaged in Waves. I know one thing for sure: if I make enough effort to develop the project, the token’s price will grow. Speaking about other cryptocurrencies, I think bitcoin will grow in case implementation is fine, and authorities make no obstacles.
I can’t see bitcoin at ten thousand dollars, but it will grow. Ethereum has a great potential, yet there are many problems. One may expect serious growth of exchange rate and market cap only once they solve the scalability issues.
Generally, there’s some stagnation in cryptocurrencies. It seems people are waiting for some new technologies to emerge that would be focused on scalability and efficiency in the first place.
I expect new tokens to appear that would use existing technologies for real business cases and solve actual tasks. Ethereum’s smart contracts are a great idea, but it doesn’t fit to existing businesses. Simple blockchain tokens may be of more interest here as they offer more possible cases than smart contracts.
Nevertheless, safe smart contracts won’t go away, though other systems based on proof-of-execution will be developing simultaneously. I foresee tokens that would have a certain set of features depending on the situation. Waves doesn’t allow for that now, though I think we’ll be able to link it to smart contracts somehow.
FL: There are about a thousand of cryptocurrencies nowadays, though only a dozen or two are real projects. Can we expect this number to grow tenfold, say, in a year’s time? Could we see a situation where there are dozens of thousands of cryptocurrencies with their number growing exponentially?
S.I.: I think it’s quite possible. There will be enormous number of tokens issued on blockchain. Obviously, there will be several systems, but it’s unlikely that one single system will prevail over others. There will be Bitcoin, Ethereum, there will be Waves if we succeed, there will be some private systems; and all they will have enormous number of tokens. Those tokens would be used to issue securities, shares, loans, and so on. And certainly, there will be new platforms.
FL: Does this mean we’re entering the era of tokenization? Or maybe, we just don’t need that many platforms, and just a few would suffice to issue tokens for various purposes.
S.I.: Yes, we need a production system capable of issuing tokens easily. These days, you can’t issue tokens right away. There’s no system you could just enter, press a button and issue tokens. But it will change. I’m confident there will be a system capable of doing it all. Then there will be the next phase, which is about maintaining efficiency of that system. Users will be able to send thousands of tokens every minute. They will be integrated with smart contracts. As a result, we will have an extremely flexible system that may operate the most complex business cases.
Private blockchains would develop simultaneously as banks wish to do their own thing. But it’s alright actually. It’s still better than it used to be. There might be even public systems that banks could embrace. But even if this doesn’t happen, and banks continue developing private systems, it’s still much better.
FL: Keeping in mind that Waves has had one of the most successful crowdsales in the cryptospace, what would you advise to those intending to run an ICO?
S.I.: The main thing is to have a fine product, at least as a prototype. People have to really believe in it, not just use that approach of making a thing to gather money. People have to need the product. You would also need feedback. Be reasonable about any negative attitude. Any negative situation is better when mitigated. You should try to understand why it happened in the first place. Be adequate when communicating with the community and don’t make a cornerstone of yourself. The community’s interests and needs have to be known and satisfied. And, of course, it takes a will to win, i.e. a sincere desire to put your project to practice.
Sasha Ivanov was interviewed by Toly Kaplan