Wences Casares joined Chainalysis last week for a fireside chat with our CEO Michael Gronager, marking the first session of our 2020 Links Virtual event series. Casares is CEO and founder of Xapo, a cryptocurrency wallet provider that also gives users access to cold storage and Bitcoin-based debit cards. Our topic: cryptocurrency’s value in times of economic turbulence.
It’s a topic that Casares knows first hand. In fact, it’s one of the reasons he became interested in cryptocurrency in the first place. After seeing his family’s savings wiped out by three separate economic crises in his home country of Argentina, Casares eventually became convinced that Bitcoin could create true financial inclusion and give the economically vulnerable more control and protection over their money. “I said, ‘Oh my God, this may do for money what the Internet did for information.’ And I decided to dedicate the rest of my career…to helping Bitcoin succeed,” he recalled.
What followed was a wide-ranging conversation in which Casares discussed how close we are to realizing that goal, what else must happen for us to get there, and why he’s optimistic that we can. Read on for a partial recap or watch the entire thing here.
Problems cryptocurrency can solve
When we asked about specifics, Casares pointed to two problems he believes cryptocurrency can solve to make money more accessible to those who need it. The first is a discrete use case he believes can be addressed in the short term: International remittances.
“It’s a crime against humanity that today, I can send a picture on WhatsApp from Palo Alto to Indonesia in real time, for free, no matter the time of day. That picture has hundreds of pixels and thousands of colors. But if I want to send $5 to someone in Indonesia — maybe a kilobyte of information — I’ll have to wait a week and it’ll cost $15.”
Casares goes on to point out that this isn’t simply an inconvenience. It has real consequences for those who depend on money sent from family and friends overseas. International money transfers are frequently cited as a problem cryptocurrency can solve today, and with companies like Bitso actively working on it, it makes sense that Casares believes we’ll see a solution in the next couple of years.
Casares takes a more macro view when discussing the second key problem he believes cryptocurrency can solve, which is a bit more ambitious. “Crypto could eventually become a global standard of value and settlement that will change money as we know it forever.” Unlike the remittances use case, Casares believes it will take decades for this vision to be realized. However, he’s confident that when it is, access to money can be democratized by virtue of having the whole world operate on the same monetary system.
Cryptocurrency’s core value proposition
Our next question took an even more macro view: What is the purpose of cryptocurrency? Casares had an answer that makes a lot of sense upon explanation: Sovereignty. To Casares, the fact that cryptocurrencies obey only their own rules — a characteristic, he points out, shared only by nation states — makes them uniquely reliable stores of monetary value.
As he puts it: “I’m not trusting any third-party hosting, software, group of people, or country. I’m trusting math.” With everything from ownership to money supply to settlement governed by an immutable set of rules, cryptocurrency’s sovereignty means all participants navigate the monetary system equally capable of holding on to the economic value they possess, regardless of the government or economic conditions that reign in their physical location.
“We have a global standard of weight in the kilo and a global standard of length in the meter. No one would ever joke about changing them every year according to political necessity. But that’s what we do with value...so comparing value across time and across geographies is more complicated than it has to be,” says Casares. Cryptocurrency’s ability to solve that problem is why he believes it can become the global value standard that replaces our current system made up of several different currencies.
Interestingly, Casares contrasts sovereignty with another selling point commonly cited by cryptocurrency enthusiasts: decentralization. Casares sees decentralization as nothing more than a means to the end of sovereignty, rather than as an end in its own right. “We don’t care how we achieve the end of sovereignty...currently, decentralization is the best way to do it.”
Is the cryptocurrency economy on the right path?
Casares believes that Bitcoin is the cryptocurrency with the best chance of becoming the global value standard he envisions due to its advantages in momentum and robustness, though he acknowledges there’s a real chance it could fail. However, he also revealed the three indicators he looks at to judge whether Bitcoin is trending toward success:
- Total hashing power
- Transaction volume
- Number of users
While all three numbers fluctuate in small windows, they’ve generally trended upwards over the last decade, indicating that those who buy Casares’ larger theory should be optimistic.
Bitcoin isn’t all we discussed either. Later on in the session, Casares told us how Xapo and Libra, the company he runs and the company whose board he sits on respectively, fit into his vision of the cryptocurrency ecosystem. He also gave his thoughts on work-life balance during the Covid-19 crisis and what it means for budding entrepreneurs. If that sounds interesting, you can click here to watch the whole session.