In the first part of this interview series, Vox CEO Stefano Virgilli talked about his early life and entrepreneurial career, while also touching upon blockchain. In this part, he dives further into blockchain and ICO, and speaks about the future of the industry.
Blockchain has now become an integral part of many industries, and companies have already started reaping the benefits of it. But are you still saying it is not going to be sustainable?
No, I mean you are working for one of the most important media outlets in Singapore. Of course, you interview only successful companies and don’t cover failure very often, right? That’s good.
Now, if someone has implemented blockchain in a crap way with a smart contract that doesn’t work and that was invalidated, their funds go waste. You will not interview such firms, right?
My first question is why do you need a blockchain? And if the answer is it is because it’s transparent, I ask you how it is transparent? You see 64-digit in a line, does it make it transparent? Or if you say it is safe, how is it safe? Is there an insurance in the event of a failed transaction? They say it is fast, how is it fast?
I was in Europe for 15 days. I didn’t even have a single Euro with me, but I survived for 15 days. I bought everything I wanted using my Visa/Mastercard cards.
But since it’s decentralised, you don’t need a medium to carry out transactions, so it is more efficient and useful than credit/debit cards…
But you need a medium when you want to complain about the transaction, right? You see in every pitch I hear, they say we’re going to cut off the middlemen. I am like ‘yeah, right, you want to be the middleman’. So, how do you make money? If you take the Visa fee and you give them back to the community, how do you make money? So why do you need blockchain? Why do you need a token? Why do you need an ICO ? How do you make money? How does the customer make money or take advantage of the token?
These five questions are crucial. I don’t think that my children will see the end of the banking system. Not even the children of my children will see the end of the banking system.
I lived in Africa where everyone talks about the unbanked or underbanked population. Well, in this continent, there exist different banking solutions. So, in Uganda where I used to stay, they have Mobile Money, which is operated by a telco, but does it prevent any other bank to do mobile banking?
Every single prediction has to be followed by this special precious word, which is ‘until’. Everyone was complaining that in Saudi Arabia, women were not allowed to drive until they let them drive and then nobody talked. Until last month North Korea was the terrorist of the world. They became the best friend of the most powerful country in the world until they met in Singapore. It’s always ‘until’. Bitcoin mining by 2020 will take more power than the entire world until they develop a technology that makes it 10 times, 20 times, a million times more efficient.
Do does this mean blockchain will never replace banking system?
No, not in 50 years because it’s too slow, not scalable, not safe, you can’t complain to anyone. Is this something that is really scalable to every human being?
Don’t you receive those emails every day, which tell you that you have inherited US$3 million and you have to open a bank account in Lloyd to get the money. If you receive it, it still means that there are tons of people that fall for it.
Look, a Telegram for ICO has become the easiest way for scammers to scam tens of thousands of people. The scammer says ‘I am going to contact them one by one and pitch them my scam’. If you’ve been scammed once and you follow that guy on his bitcoin transaction and you look at his wallet, you’ll find they’re making millions of dollars this way.
Is scamming possible on blockchain. Do you also say the popular perception that blockchain is safe and scalable is wrong?
Scamming is so easy on blockchain. If I send you money with my bank and later I say ‘hey, I got scammed’, you can do nothing here, but if it is done via PayPal, you can ask it to open a resolution centre. So, if I think you scammed me and I bring evidence, they give me my money back. In blockchain, you can’t do the same.
Having said that, there are certainly good projects that are on the blockchain. See the case of Stellar for example. I work a lot with that ICOs. So, every ICO that I am onboard, the first question they ask me is where they’re going to list their token. Listing a token on an exchange cost a lot of money. How do we save money? Well try with Stellar. At Stellar you don’t have to pay for the exchange. You can list free of charge. So, Stellar solved the problem. It is very fast, very efficient. It is on blockchain.
I don’t want to be painted as the guy that is talking badly about blockchain. Some of the projects are good. Stellar is a great project.
Can you point out at least one or two industries that can be transformed using blockchain?
I was very naive until the beginning of last year. I thought why I always carry my passport. It is just a piece of paper. Isn’t that silly that in 2018, I have to prove with a piece of paper that I have been to this country or that country? And shouldn’t this be blockchained?
I would be very happy to have a chip in my hand or in my thumbprint. I scan my thumbprint and enter a country without showing the password.
But then I thought how about the Secret Services? The agents of every Secret Services have multiple passports, but they don’t have multiple fingers, right? They only have one thumbprint that they can use and if they want to pretend to be a certain nationality when they enter that country, it will never happen because you will have the resistance of all the security.
I wrote an article last year about this topic. You see that even the community don’t talk about it very much because they know already will not happen.
Recently, I saw one pitch in which they were talking about drivers involved in car accidents. When you take a ride on an Uber or Grab, you can check the history of that driver and see if he has been involved in any accident before. Well, but does the driver really want to be tracked and known that he’s been in an accident? Maybe, not.
Of course, it’s good for the passenger, but it’s certainly not good for the drivers because you’ve labeled them forever . It is good for the insurance claim, it’s good for the maintenance of the car as well as for the passenger, but there is one party that is very unhappy. That is drivers.
What I am trying to say is blockchain will transform the industry if all the parties involved are happy. Sports is one such industry. It could be the tracking of records like, for instance, what is the world record in 100 meters? We know that there is some authority which records all these. This could be quite interesting because many of the scholarships in the US are for overseas sportsmen and athletes and they are big. They go to the US to get a scholarship and they say ‘this guy from Kenya can run the marathon in this much time’. But how do you know? You’ve never met him.
Another one that could be quite interesting is for air condition (AC) maintenance. In Singapore, whenever you rent a flat you have to call a guy to clean the AC and sign a piece of paper. So, if you live there for two years, every three months a piece of paper will be there to say I serviced your AC.
It would be nice to have a QR code that you scan and the manufacturer of the AC knows about it. The tenant is happy as he doesn’t have to keep the paper. I lost my paper, so they actually charged me for two years of maintenance because I didn’t keep the record. The manufacturer is happy because he can sign longer contract with the maintenance crew. The maintenance crew is happy because everything could be blockchained and paid real time. And there are so many opportunities to make it a win-win for all the parties involved.
So can we say blockchain has no future? Do you think it will be replaced by some other technology in the future?
I don’t say blockchain has no future. But to me, blockchain as an area of interest finished last year. Because I think that blockchain has attributes that don’t promote the longevity of it. And I don’t think that the blockchain that we know now is ready to replace systems that have been in place for hundreds of years.
I say that under the umbrella of the distributed ledger technology (DLT) and if you talk to the big boys, if you talk to the banks, if you talk to the stock exchange, the government, they all talk about the DLT. They don’t talk about blockchain. Maybe, casually they can mention blockchain, equate them, but DLT is the main category. Under DLT, there is a great opportunity to generate multiple technology like Tangle and Hashgraoh have already done.
The idea of a DLT is very interesting. Sometimes it’s not necessary but between the distributor and decentralize, yes this is an area of innovation.
So, if blockchain is to move one step away from centralisation, where centralisation is not needed, there is long life to blockchain. But if blockchain has to be the antagonist of established systems, I don’t think it’s going to be working. It has the same same logic between the difference of fintech and techfin.
Fintech means you and I build a new startup and our goal is to do without any other bank. We are a bank. We offer you end-to-end services on blockchain, and we are a completely new product.
Techfin, on the other hand, is different. Here you and I launch a startup analysing what the bank is already doing. We identify a weak point and we inject our technology, which could be a DLT or blockchain. We don’t offer end-to-end solutions, we just integrate.
So, the idea of having blockchain as an antagonist to something else or the blockchain is going to kill or destroy or do something else to another industry, I don’t think it is really realistic. It is propaganda, but the idea of blockchain complimenting or integrating with existing industries, I support that vision. I don’t think that anything comes from destruction — everything comes from working together. Trump and Kim didn’t go and bomb each other. They actually sat together. They still have some disagreements, but at least they made the move in the right direction.
When it comes to supporting corporate governments and banks, I’m much more specific. In favour of peace, then those that say destroyed this and that and destroyed everything.
(In the first part of this series), you put ICO in the entertainment industry rather than industry of finance? Why 90 per cent of ICOs fail? What do you think is the future of ICO?
If you fast forward one year from now, my best guess is they will not be ICOs anymore. They will be individual coin offering targeted to achieve a specific group, a specific goal.
For example, no companies will go to the market and say ‘we need US$40 million to develop a Proof of Concept (PoC)’. No one needs US$40 million for a PoC. A PoC costs much less, many be around US$250,000. So they will make a coin offering which will not be initial. It would be a continuous process. It could be called continuous coin offering or CCO, or an ongoing coin offering. They can simply separate coin offering into offering I, offering II, offering III, offering IV and so on. Coin offering I for PoC; II for entering, say, Vietnam; coin offering III to foray into Thailand, and IV to enter India.
The community will then decide whether they want your project in their country or not. If the coin offering to enter Vietnam fails, sorry, you’re out. Try the one for Malaysia. Try the one for Thailand. You want to run them simultaneously, great. And the community decides in an inclusive way whether your project is needed or not.
Now, why 90 per cent of ICOs fail?
First of all, what is failure? When do you measure the failure?
You can measure failure at the time of how much money they have attracted. If they say that they wanted to attract US$30 million, but only attracted US$1 million, well it’s still quite a success. I mean you can still use that dollars. Give me a million dollars, I can set up another business.
Secondly, the price of the token. Some of them say ‘we attracted US$80 million’ and then the next day the token price was down five times. Is that a success? Did the investor make the money back? Some of them make a lot of money, they managed to keep the token stable, but the big investors that have supported them doesn’t have anyone to sell the token to, so you didn’t get the money back. That one is a failure.
This one is interesting. If a company develops anything at all and attracted many millions of dollars in ICO, they don’t disclose the actual number because you can pinpoint that they haven’t developed anything. And they keep saying ‘we will, we will’. One year later, it’s still ‘we will’. And the last one is will they be making money or not? And to me that’s the most important question.
Is Uber a success story? To me Uber is a failure, but it depends when you ask it. If you ask the same question two years ago, it was unquestionably a success story, now it’s unquestionably a failure.
Now, when do you measure failure? Is Toys R Us (American toy clothing, video game and baby product retailer) a success story or a failure? Two years ago, it was a success story, now it’s failure.
Business are meant to decay sooner or later. Some of them have longevity. Coca Cola has a fantastic longevity. Now if I could correctly remember, 13 groups own 19 over per cent of the economy of the United States. Fifty years ago, the cake was shared among over 300 groups. Now it’s becoming the bigger company, buying small players and operating their business in an efficient way. It’s good.
You will find me supporting the government, banks, corporations, all the things that are not popular in the community because they have these ideals of being free and being anarchic. My point is that blockchain is an ideology that is not sustainable in the long run.