Last year was the year blockchain broke into mainstream public consciousness. Bitcoin investing soared to new heights as its value increased multifold, mom-and-pop investors — which even include teenagers — were throwing their hard-earned cash at virtual currencies, in hopes to reap a sizeable dividend.

Then, there were the ICOs, or Initial Coin Offerings, a funding mechanism that allows startups to use cryptocurrency to raise money instead of going by the usual VC/angel investor route. At e27, we have received a fair amount of requests from companies asking us to write about their ICOs over the past year.

But is this trend sustainable? Will we see the cryptomarket crash or correct itself this year? Are cryptocurrencies and ICOs legit or should there be more stringent vetting? What is the future of blockchain?

Here to tackle these questions is Ron Hose, who is the founder of blockchain-enabled mobile payments platform, Coins.ph. It allows anyone including those without a bank account to access financial services such as remittances, mobile air-time, bill payments, and online shopping at over 100,000 merchants.

Coins also use bitcoin and a few other ledgers to facilitate cross-border transactions.

The startup has raised over US$9.4 million from investors Quona Capital and global internet and entertainment conglomerate Naspers Group.

Besides running Coins, Hose, a Cornell graduate with a Masters in Computer Science, is also the founding partner of early-stage VC Innovation Endeavors. Ron also previously founded video conferencing startup TokBox, which was backed by Sequoia Capital and Bain Capital and was eventually acquired by Telefonica.

Here is the edited excerpt:

As the founder of a payments platform, how does blockchain help it deliver better services?

Some applications blockchain may not add much value; for others, blockchain fundamentally changes the function — like how the product behaves. Our industry — payments — is a good example of that.

Because the structure of a financial service built on top of blockchain is fundamentally different from a closed ledger business. And if you take into consideration of how you construct the product for consumers — it’s quite involved. If you already have an ongoing product it’s very hard to change and adapt.

There’s a bit of an advantage for players who can build it from scratch.

So, for example, with traditional remittances, you had to deposit money at a window, then have that money transferred to a bunch of financial intermediaries before eventually arriving at another country, With blockchain, you can immediately conduct party to party (p2p) transfer without any intermediaries.

What are your thoughts on ICOs? Do you think they are fishy?

It’s hard to speak about ICOs in one swop. I think that ICOs still lack some form of a review process. We can kind of imagine the next 12 or 18 months, there will be more clear regulatory frameworks to try to separate the different types of ICOs. Whether it’s a utility token, equity or currency-backed token.

And then when you look at equity-backed ICOs, you can imagine a variety of firms that will assess the underlying offering to ensure that there is actual substance behind it.

Right now it’s a bunch of people raising money and you have to know which ones are legitimately building vs. other ones that they are hoping they are building something of value or might not have the tools to really do that.

Also Read: Bitcoin – the last wake up call for financial players

The fog of war will dissipate very quickly, and investors will realise that companies are still companies. They are going to be evaluated for their business potential and something that is nothing but a white paper probably doesn’t justify an upfront of US$20 – 30 million before there is some traction. Those days that are going to end quickly.

Is this heavy climate of bitcoin investing healthy for the economy and for investors?

I am a big believer in blockchain and I’m a big believer in the things that it enables for us to do — for example, find better venues to raise capital. That capital might not actually be for a startup; it may be for a non-profit project or many different things. The fact that there are walls being broken is very exciting.

I think it’s very important they [bitcoin investors] understand its limits. The economy doesn’t change. Mechanisms change but the economy stays the same, Money is not created from nothing. So bitcoin will go up in value if only if people perceive value in using it as a transaction medium or as a form of storage of funds. Whether that is going to happen or not, no one knows.

This is very important because people are hearing about bitcoin for the first time and they need to be aware that bitcoin is volatile and it could go up or it could go down. We need to caution people not to invest in money they cannot afford to lose.

Another interesting thing is how in general the perception of goods, commodities and investments are changing. Our generation is already used to trusting in banks and traditional institutions, etcetera. So if it’s online, it might not be so trustworthy to us.

But people in their 20s who were born in the age of the internet have a different perception, they are used to consuming services directly from mobile, etc.

Do you see cryptocurrency becoming the de facto means of conducting financial transactions in the future?

I don’t know. Blockchain and crypto will converge with the banking system, it’s going to be an evolution of the financial services. Blockchain is going to allow banks and financial institutions to provide services in a much more efficient way.

So it might be that we use government-backed fiat tokens to transact very rapidly. Or crypto token may also be used as more of a fund storage. Either way, the places of cryptocurrency and blockchain technology are cemented.

But in the future, consumers may not be exposed to that. Kind of like in the early days of the internet when people were using modems and dial-up to connect to the internet and type in commands; that’s gone, right?

Also Read: There is something everyone knows about crypto and ICOs, but no one wants to admit

Today, you don’t think of TCP/IP when you access the internet. I think everybody will be using cryptocurrency one way or another in the future but they will just not know it, because they will still be using their traditional bank; but in the background, some form of blockchain transactions or digital assets are going to be used to settle those things.

Some prominent investment firms have labelled cryptocurrency as a scam. What is your reaction to this?

Those who say it’s a scam are a bit behind the times. I mean what gives things value is based on human decision; it’s scarcity.

I mean, what gives a rock (gold) value, right? In a way beyond its utility for sure. For cryptocurrency, it’s the same thing, one generation is used to trusting in rocks, the other one is comfortable trusting in digital assets.

Mining bitcoin is very energy intensive — making it environmentally unfriendly. Do you think this will remain a problem in the future?

If you look at ethereum it’s moving out from proof of stake, so there are ways to mitigate that. You have to remember all these tech are still very nascent. We are still at the very early beginning.

I think it’s just now we are starting to build out protocols that are more efficient.

Eventually, like in all other markets, there will be competition; if another ledger is able to offer the same level of security for transactions but with a lower mining cost, then that will gain traction. You see it now with bitcoin cash, actually.