Become a Blockchain Expert Founder & Main Lecturer, Cem Goksel Ozargun, answered questions of Coinium team in an interview. Here is the transcript of the conversation.
Can you talk a little bit about who you are and what you are doing?
Even though I actually got my BSc on Mechanical Engineering and my MA on International Business and Management, my only passion has always been software-related. In fact, for this reason, I have never stopped learning even during my 10 years of professional career and eventually I became a Product Manager leading mobile app projects and holding countless reputable certificates such as Project Management Professional, Certified Scrum Master, Professional Scrum Product Owner, Advanced Android Developer, etc.
Then I quit my job and started working full-time on blockchain which is the most important invention of our time in my opinion. I am so excited about this technology that until now I must have absorbed over 3.000 hours of information about it via reading and watching through thousands of separate resources including books, articles, news, videos, webinars, meetups, online & offline courses, whitepapers, and others. And now, I am sharing the knowledge with other people by teaching them everything I know!
I can basically define the current ‘me’ as a blockchain expert that cannot stop the urge to learn more every single day. I advise blockchain projects, review and invest in ICOs, trade cryptocurrencies but I believe there is always more to learn so I constantly consume new information regarding blockchain. I believe that learning never ends and a person should always try to find a way to access new information for self-development purposes. However, if we want to teach more people about blockchain, we definitely need good resources to make them learn faster and easier. In fact, it is very difficult for a beginner to try to find information from hundreds of separate sources and unfortunately, blockchain is not something you can study in most schools as there isn’t a major for it except for a few visionary universities in the world. For this reason, I am currently also occupied with preparing the most comprehensive online blockchain course ever made to provide people with the ease of learning everything they need from just a single course.
What do you think cryptocurrencies mean for humanity as a whole?
Examples of cryptocurrencies are many. Even in the 1980s and 1990s, there were several attempts to create a useful cryptocurrency. Some of these attempts were DigiCash, Hashcash and B-money that never got the technology right and couldn’t build up enough support, so they eventually disappeared. The most popular one among all attempts have been bitcoin, which was invented in 2009 by Satoshi Nakamoto, an unknown person or organization. Satoshi made use of the experiences learned from the previous projects such as Hashcash and B-money and he indeed went much further than the previous implementations by being the first to conceptualize a distributed blockchain and using it in his own cryptocurrency: bitcoin, which can be defined as ‘a cryptocurrency utilizing blockchain and cryptography to transfer money to anyone anywhere in the world’.
After the invention and proven success of bitcoin, cryptocurrencies became more and more popular and many other cryptocurrencies were created. While some of these cryptocurrencies were serious developments for mankind that had use cases in many industries from health to energy, some were unfortunately just scam projects. As of today, there are several thousand cryptocurrencies available worldwide and this number grows at an insane rate, by around a hundred new cryptocurrencies created each month.
I see cryptocurrencies as a way for people to take the power back to themselves. Thanks to cryptocurrencies, we are now able to send money abroad quickly and at low costs, or safely store and share our health records, or let out unused storage space on our computer, or rent other computers’ computing power. The things we can do are limitless and it is up to our imagination.
Why should a company issue coins – what are the benefits of doing an ICO for them?
ICO is short for Initial Coin Offering which is a new way for projects to raise funds for the idea of a product or MVP (Minimum Viable Product), by creating a cryptocurrency and exchanging it for investors’ money. ICOs are similar to a project on Kickstarter but instead they are mostly for decentralized applications (although there are some regular projects that make use of ICOs just to collect money). In other words, ICOs can mostly be referred to as the crowdfunding of dApps. In fact, most of the ICOs carried out today are for dApp projects developed on Ethereum. MVP, by the way, refers to a product that has the minimum required features to function properly and to satisfy early adopters.
An ICO is also similar to IPO, which is short for Initial Public Offering, a term used to describe the listing of a company’s shares on the stock market. Traditionally, with IPOs, private companies go public and sell some of their shares. After that, an investor can buy or sell that company’s shares on the stock exchange for a price determined on the exchange according to demand and supply. Some kinds of shares even give the holders a right to vote on specific actions of the company so the investors actually become owners of the company.
With ICOs, on the other hand, if you are an investor, you neither get shares of the company nor the project so you don’t get to become an owner and on most of the projects you also don’t have any rights to vote as well. Instead, you get tokens at discounted prices in return for your participation in the ICO, which are then used mostly to access a service after the project goes live. On the other hand, developers use the funds they collect by selling these tokens to you and other investors, to cover their project expenses. Furthermore, if the project turns out to be successful, price of tokens that you have purchased might go up and you might sell your tokens for profit, which is an additional benefit of investing in ICOs on top of the right of access to the service provided by the project. Actually, making profits by selling the token at a higher price is the most common reason why people invest in ICOs. Everybody wants to be rich, of course J
As in everything, ICOs have a downside as well: Regulations. It is forbidden to do an ICO in some countries such as China and South Korea. One of the reasons behind this is that many ICOs take people’s money but turn out to be scam. On the other hand, some ICOs which are not scam see this as an easy way of collecting funds while bypassing taxes and regulations, so they are also risky and governments come for them sooner or later. Also, most of the ICOs don’t even ask their investors for any information such as name or surname which does not comply with laws of many countries.
To sum up, from a company’s perspective, it is beneficial to go for an ICO as it is a quick way of raising funds while bypassing regulations. It is also good that you are not actually giving out shares of the company to the investors so that only you will be in control of the company. In addition, it is also easier to manage thousands of small investors of your cryptocurrency than having few powerful venture capital firms that can try to influence the way you run your company.
Why should a person invest in cryptocurrencies?
Total market cap of cryptocurrencies is 283 billion USD at the moment. To make a comparison, let me list the market cap of other assets in the world. To start with, total worth of gold is 6.4 trillion USD, which is 22.6 times higher than the value of all cryptocurrencies. However, I expect this number to surpass the worth of gold at some point in time, so I believe there is a lot of potential for cryptocurrencies to go.
I even expect the total worth of cryptocurrencies to surpass the worth of all physical money in the world someday, which is currently about 28.8 trillion USD. I believe, in the future, we will be using a globally accepted stablecoin instead of today’s major fiat money such as USD or EUR. In this way, the cryptocurrency market cap can increase by 101.7x.
I don’t even want to mention the virtual money deposits in banks, value of stocks, loans, debts, bonds, real assets and derivatives which would result in about 10,000x potential. I think we still have a long way to go in the cryptocurrency market. In fact, I expect a major global financial crisis to severely affect our lives between 2019-2021 and I believe this upcoming crisis will make us see the potential of cryptocurrencies better.
Anyway, even though I am almost 100% sure cryptocurrencies will gain value in the long-term, it is very difficult to find the right time to buy. Unfortunately, we might see continuation of the bearish market for a few more months, just like it happened in 2014-2015.
What are some coins that have the potential to go up 100x in value and why?
Although I constantly follow new ICOs, review them and invest in the ones that have the most potential, I don’t want to mention the names of any recent cryptocurrency due to risks of investing in an ICO or a recently developed cryptocurrency. In fact, with wrong investments, it is possible to lose all of the money invested.
Accordingly, I only want to mention the names of major cryptocurrencies in this interview. For example, my favorite major cryptocurrency is XLM, which is the cryptocurrency of a non-profit organization called Stellar, as you might already know, founded by Jed McCaleb in 2014 who had co-founded Ripple in 2012 and left in 2013.
Similar to Ripple, Stellar offers payment technology to its users. However, while Ripple connects banks to each other and facilitates their cross-border payments mainly, Stellar’s goal is to connect individuals. Stellar aims to become the common payment channel in the world, connecting everything including people, banks, and payment systems, starting from the developing countries where many people are unbanked. In other words, Stellar mainly aims to fuel payments in large quantities but in low amounts while Ripple serves banks which are not too many in numbers but the amount per transaction can be huge. Also, Stellar is open-source while Ripple is a private network accepting only approved members.
As Stellar is a non-profit organization, during its establishment in 2014, it reserved 5% of initially issued 100 billion Lumens (XLM), which is the cryptocurrency of Stellar network, in order to cover its operational costs in the future. Also, Stellar managed to receive $3m additional funding from the payment company Stripe and then continued raising funds in order to cover further costs by receiving donations. Among the donors, there have been many companies including giants such as Google and BlackRock. Moreover, it is important to mention that Stellar has also established several partnerships with companies in tech and finance. Among these partnerships, there are even more well-known companies such as IBM and Deloitte. All these donations and partnerships have allowed Stellar to find itself more use cases in time and reach wider adoption as a result.
As for transactions speed in Stellar network, I can say that they are pretty fast. In fact, Lumens can be transferred to anywhere in the world within 2 to 5 seconds. Also, the cost of transactions is very low as well. It is only 0.00001 Lumens per transaction. This fee is taken to protect the network against spam attacks and is burned as the transaction occurs. Normally, with blockchains such as Bitcoin and Ethereum, this fee would be paid to the miners. However, the validation of transactions happens differently in Stellar compared to other cryptocurrencies because Stellar does not use Proof of Work consensus mechanism. Instead, it uses its own consensus mechanism called Stellar Consensus Protocol that allows quick and secure payments to another user anywhere in the world without having the entire miner network to validate transactions as in Proof of Work.
In addition to the features I have already mentioned Stellar also distinguishes itself by having its own decentralized exchange where trading various cryptocurrencies and fiat currencies is possible. Even though having an exchange is unique and very useful, it is one of the least recognized features of Stellar.
Moreover, it is also possible to create tokens and launch Initial Coin Offerings on Stellar’s platform. Some projects have already launched their ICOs on Stellar and they have preferred the platform over others such as Ethereum due to its advanced scalability, consensus protocol, and other features such as Lightning Network.
I believe Lumens is one of the few cryptocurrencies that will have the greatest performance in the future. It wouldn’t be a surprise to me if it were adopted by many more tech and finance giants, and even by governments. However, as any cryptocurrency, it also has a weakness and that is the risk of centralization as we have recently discussed. It is risky for the community that most of the Lumen supply is in the hands of the company. Today, this amount is more than 80% of the total supply.
Other major cryptocurrencies I like include but are not limited to Ethereum, Zilliqa, Wanchain, Nebulas, NEM, Siacoin.
What are some coins that are good for income investors?
It is possible to invest in cryptocurrencies of blockchain based platform projects for regular income. These may include exchanges, marketing platforms, education platforms, etc. that take commission from transactions happening on the platform and then sharing some of the profit with its investors.
One example could be Kucoin Shares (KCS) which is the cryptocurrency of Kucoin exchange which distributes a portion of its profits with its investors.
What are some interesting and unexpected developments you have noticed in the space in the last month?
There are always good and bad news coming about blockchain. For example, recently we are seeing news implying that interest of corporations towards cryptocurrencies has been increasing. I remember reading a report published by Grayscale Investments, a cryptocurrency investment management company, stating that it has received an additional 250 billion USD fund during the bearish market in the first half of 2017. Also, in May, Circle had reported a 30% increase in its corporate clients as well. These news are great for crypto.
Also, other interesting news of this month includes Stellar becoming the first Sharia-certified blockchain for payments and asset tokenization; IBM backing Stronghold, the US dollar-pegged stablecoin that runs on Stellar network; London School of Economics introducing an online course on cryptocurrency investment; Sergey Brin revealing that he is mining Ethereum; OKEx and Binance working to create decentralized exchanges.
However, bad news is coming as well. For example, Hashflare, a cloud mining service, just announced that it has shut down its bitcoin mining hardware and terminated its contracts, leaving the users unable to withdraw their money.
What are some current obstacles to adoption and what would increase adoption of cryptocurrencies?
Well, of course the adoption of blockchain and cryptocurrencies will not be quick and easy, just like the adoption of internet. I believe that currently the most important obstacle is regulations. However, I don’t think that regulation is just bad. They are necessary and there is no way of avoiding it. Governments will regulate cryptocurrencies someday if they haven’t already. So, I think the sooner they get regulated the better because there is an uncertainty now and it prevents some investment funds and large companies from entering into crypto.
On the other hand, I also believe that overregulation is the worst thing that can happen to us. Overregulation includes banning of cryptocurrencies or ICOs by some countries and this kind of decisions totally disrupts the whole crypto world. I hope all governments can find a way to allow cryptocurrencies, at least in a limited extent.
Also, there are of course other obstacles in the way of adoption such as people using cryptocurrencies and ICOs for fraud, money laundering, selling illegal stuff, or for financing terrorism. With their activities, these people are not only damaging our lives but they are also discrediting cryptocurrencies and are giving reason to the regulators to be harsh on them.
In addition, another obstacle is that today the knowledge of most people about cryptocurrencies is limited to bitcoin. Unfortunately, a bitcoin transaction is one of the slowest (also sometimes the most expensive) among all cryptocurrencies. Accordingly, it is not sensible to use bitcoin for payments in daily life unless you have 20-30 minutes to wait for network confirmations. Moreover, due to the fact that bitcoin price is extremely volatile, it is possible for the milk you want to buy from the supermarket to be 2x more expensive or cheaper from day to day. Thus, unfortunately, the most popular cryptocurrency is one of the weakest in terms of technology and use case. For this reason, if we need the greatest adoption, we have to start by looking for a cryptocurrency that can be used in daily life and that doesn’t fluctuate much.