Crypto

Episode 39: Cryptocurrency Markets Update with Ondrej Pilny

Ben Lakoff, CFA
March 29, 2021
59
 MIN
Listen to this episode on your favorite platform!

Ondrej is the co-founder and CEO of Baserank which provides crowdsourced, easy to understand crypto asset ratings.

He watches the cryptocurrency markets more closely than many others, and gives us an update on exciting new developments in this fast-moving space.

In this conversation, we jump into Bitcoin, Ethereum & ETH2, Cryptocurrency Valuations and more.

There is a LOT going on in the cryptocurrency markets, enjoy this overview in this episode with Ondrej Pilny.

Listen on your Platform of choice:

Check out https://anchor.fm/investinalts for all the listening options (Spotify, Apple, etc.)

Show Notes

0:00:00   Welcome and context

0:02:37   Can you tell us a bit more about you?

0:04:01   What’s happening in crypto right now?

0:07:20   Why is Ethereum important?

0:09:00   Differences between ETH and ETH2

0:12:51   How are people valuing ETH?

0:20:00   What is driving the value for ETH?

0:25:30   What other smart contract platforms you see potential with?

0:28:03   What is the bear case for these platforms?

0:31:41   What is the Killer APP in the blockchain world?

0:37:30   What is your favorite wrapped Bitcoin asset?

0:41:11   What is a major risk to the current blockchain assets?

0:45:56   Where can people learn more about Ethereum?

0:47:15   What’s the most bullish sector of crypto for 2021?

0:49:47   What it takes to be a successful crypto investor?

0:54:09   Where is crypto going?

0:58:43   What’s next on your road map?

1:01:10   Where can people find out more about you?

Show Links

Baserank

ETH 2.0

Polkadot DOT

Solana


Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here’s your host Ben Lakoff.

Hello. Welcome to the to asset allocation podcast. Today’s interview is with Andre . Andre is the co-founder and CEO of base rank, which provides crowdsourced easy to understand.

Crypto asset rankings, cryptocurrencies are confusing, and there’s a lot of misinformation that exists. Andre watches the cryptocurrency markets more closely than many others, and he gives us an update on some exciting new developments in this very fast moving space. In this conversation, we jump into Bitcoin, Ethereum and ether.

2.0 cryptocurrency valuations. Defy and more, there was a lot going on in the cryptocurrency markets at any point in time. And Andre does his best to break down what the important factors are. And what’s moving the markets before you listen, please don’t forget to like, or subscribe to the podcast or even better leave a review.

If you’re watching this on YouTube, please subscribe to the channel and, or like the video. I really appreciate this and it really helps other people find the podcast and the YouTube channel. There is a lot going on and cryptocurrency markets. Please enjoy this overview with us, Andre. Penony welcome.

Andre, excited to have you on the show today.

Ondrej: [00:01:30] Thanks a lot better for inviting me.

Ben: [00:01:32] Yeah, this is round two. Last time. Both of us had internet issues and all, all the fun that happens of doing these things remotely, but you’re on the other side of the world. And thanks for taking the time today. Excited to be a heavy on

Ondrej: [00:01:45] yeah, I’m excited as well.

Thanks again. Thanks again. Yeah, last time. It was more mess than my problem on the internet site.

Ben: [00:01:50] Yeah, I think it was both both ways. It’s okay. I’m actually hooked up to the  ether, net cable today. So. Not even I’m taking wifi out of the connection out of the potential issue today. So last time we were talking I mean, there was the height of the defy madness summer.

But today this is December 1st and also another iconic day. Bitcoin hit new all time highs just recently, all, all, all time highs, which was great. Eat two as launching there’s still a bunch of craziness happening within defy and FTE.  You live and breathe this stuff all day every day.

What better person to have on to the podcast to give us a overview of what’s happening in the crypto world? Before we get into that, let’s start off just brief background, who you are, where you are.

Ondrej: [00:02:40] Yeah. So my name is Andre Pinckney. I am from disagree Republic and I’m the co-founder and CEO of base rank.

So base ring is a crypto assets research platform where we aggregate research about crypto assets. So basically what we are doing is that we are trying to find the smartest people in the crypto space, and we try to collect their opinions, their ratings and reviews of crypto assets. So we collaborate with crypto assets, rating agencies with independent analysts when with experienced investors and we collect their, their fundamental analyzes, their reviews of crypto assets to provide our users with one unbiased rating of cryptos that’s.

So they have a easy way to understand the fundamental value or the quality and and the quality of crypto assets.

Ben: [00:03:29] Awesome. Tremendous value proposition. And we’ll definitely get into fundamental valuation of crypto, which is a whole nother conversation that I definitely want to go into.  You said yourself, you’re talking to the smartest people in the room that are watching this crypto.

I went to the source behind the source, aggregating all of this great crypto information. Why don’t we start off? Just give me a given over overview of crypto what’s happening right now. What gets you most excited?

Ondrej: [00:03:53] I think it’s a Tyrian too. I think this is the most exciting thing that’s happening at the moment, because it’s going to allow a lot of projects to kind of really use Ethereum for what it’s supposed to be used for as going to be a lot of new apps that are going to be Darryl going to be built.

And a lot of the current decentralized apps, the will have a much better platform to be building on. So is going to be a much more scalable. There is going to be more transactions per second. And so it allows a lot of things to be built on Ethereum. So what was now, the first version was just the beginning was just kind of like the beta version.

Now it’s the full version. So to say for, for people that are not following it as much. So I think it’s the room first version or the one that we had before was kind of like the. The better version. And now we have the full version. So now I think people should be ready for all the killer apps that are coming in the crypto space and a lot of applications that people are saying, okay, well, when is the, when are the people coming alone is the majority of people coming.

When is the mainstream coming? So now it is going to be happening because I think in 2021, it will not be just a year of speculation, but I think it will be also the year of applications of the Ethereum applications of de-centralized applications, because now is really the time when people will be able to build what they really wanted to build, and it was not able to date.

It was not possible due to the technical difficulties to build a lot of things on Ethereum. Now it’s going to be possible. Of course, it’s going to take some time. It’s not going to be immediate. It’s a, it’s a process. It’s not like an instant switch. So it’s going to be a process of of months and years.

But I’m really looking forward to exploring the possibilities that Iran can bring. And of course I don’t use, I’m still very bullish on Bitcoin. But we believe in, in both the German Bitcoin, some glad that Bitcoin in their heads, new all-time high today is very positive news. But yeah, we’ll see where it goes.

I think there are a lot more institutional investors who are now interested in it’s Quinn and they’re buying it. And from my perspective, I think the, the, the mainstream people, the mainstream investors are still not noticing this. So I think it’s going to take a couple of weeks or months until we see the, the mainstream people kind of reacting to it and starting to jump into the bandwagon as well.

So we’ll see what happens.

Ben: [00:06:20] Yeah, well, I, I know nothing about the future. That’s all, I’m certain about that’s for sure. But my, my thought is that this Bitcoin acceleration as a store of value and goal alternative it’s almost a self fulfilling cycle, you know, as the price jumps up and stays up there it just, it perpetuates.

Excited to watch that, but actually for this, I, I I’d like to jump into Ethereum in a little bit more detail. So this is a huge news for the crypto community. A lot of people are really excited about it. Ethereum is somewhat difficult to explain. When somebody asks you, what is Ethereum and why is it important, you know, regardless of, or two.

And how do you answer that question?

Ondrej: [00:07:05] It’s a very good question. Difficult to answer. If I would try to explain it to. The five-year-old, I would probably say it’s a decentralized world computer to build things on top of that. So it’s kind of like a new layer that exists on the internet that allows you to build applications that were not possible to build using the infrastructure that we had.

So with uremia is basically a new infrastructure of the internet that allows businesses and programmers to build new, new applications that were not possible before. So it’s probably the easiest of when they should likely come up with, I know it’s still a little bit complicated, but I guess that’s how.

I could explain it to a five-year-old.

Ben: [00:07:53] And that’s what makes it so difficult, right? Because there’s so many different use cases. It’s like a whole new decentralized internet can be built on top of it. And that’s what it is. There’s a lot of different use cases. This thing could be used for a number of different things, but why is this?

And you alluded to it a bit on, on the importance of the shift to ease to it allows you more scalable removes a lot of the technical limitations for a lot of these decentralized applications that can be built on top of it. But what exactly is this shift? Like, why is this so important? What is this change like from a fundamental perspective with Ethereum?

Just talk me through, talk me through the shift from  to eat too.

Ondrej: [00:08:43] So. Basically I am. What I see is the biggest biggest game changer is the scalability because nowadays people are paying a lot of money for fees on Ethereum network. And there’s of course, a lot of hurdles for applications for the users that are using these applications.

So for example, you would be paying several dollars for in transaction fee, then it makes it makes it very difficult for the builders of the applications of what are users to actually use it for smaller transactions. So now what is, we see that a lot of people that are using defy products are willing to pay a lot of money for the transaction piece.

They are willing to pay a few dollars, $5, $10 for one transaction domain. Some users are not going to be willing to pay so much for one single transaction. Well, Ethereum to a 2.0 allows is that a lot of these transactions fees are going to be much lower over time. And it’s gonna allow much lower, lower.

The construction piece is going to be more, there’s going to be a more throughput. So more transactions are going to be coming through the network. So it means that from a user point of view is going to be much cheaper to use the ATM applications. And there will be more use cases for which Durham can be used in the future.

So uses one month and I have to think about, Oh, should I, should I wait to pay $5 instead of $15 that I’m paying now they will just do it because it will be such a small amount that they don’t have to think about it. So it will be in the son’s not involved. And this allows a lot of new applications where before were not possible because people wouldn’t be willing to pay several dollars for one transaction.

And the transaction doesn’t have to be even financial. It’s going to be some some other transactions or for applications that were probably not created yet. And there are so many applications that people didn’t even thought about or jumped about that can be built on material. So thanks to this new kind of thing.

Thanks to this big change. That can be a lot of new applications built for a lot of new users for mainstream users. It doesn’t have to be just a crypto people or to defy people who are going to be using this because now it’s going to really allow developers or businesses to be using it on the backend of the applications and their users need to even know that they are using a theater and they don’t even need to understand.

They don’t need to know what the theorem is, and they don’t need to know that it exists, but the application is going to be using it theorem. On the backend in the background of the applications. So these all things they were possible before, but they were very difficult. And now thanks to return to zero, there are going to be much easier and much more scalable and more accessible.

Ben: [00:11:33] Yeah, that makes a lot of sense. Coming from somebody that’s built applications on Ethereum, it’s like these transaction fees add up and they’re significant and they do impact your decision-making and you deploy contracts at midnight on Saturday because you know, less people are using it and they equate prices over lower and things like that.

So it’s a, it’s a real issue. And I’m, I’m excited for that hindrance, that hurdle to kind of be in theory, hopefully removed.  I’m curious with base rank, you’re aggregating all of these crypto analysts opinions on different cryptocurrencies. What is the sentiment look like for something like eith what does how do, how are people valuing it?

So, I mean, perhaps sentiment and then fundamental evaluation for both of it, but like, what does this look like for an asset like Eve?

Ondrej: [00:12:27] So from my perspective, a lot of people are very positive about Ethereum, not only things to deteriorate to zero, but also thanks to the fact that there are a lot of applications.

A lot of defy projects are being built on top of Ethereum. There’ve been a lot of other bought firms who are promising that they will be better than in theory. And that will be a Ethereum killer or something like that. But the case is that most of the. Interesting use cases of watching our build being built on Ethereum.

So from my perspective, I’m always looking to what kind of businesses projects or applications are using the specific blockchain platform. And I’m trying to compare different projects with each other. So if I’m looking at it, I’m looking, where are the other ones, where is where I CEO’s, whereas polkadots whereas Cardinal and other projects that are trying to achieve something similar.

And when I look at the theory and I see that there are miles ahead of other platforms, so what others are trying to achieve and trying to build a theorem is way ahead. And I’m not talking just about from from technical perspective, but mostly from a community perspective, because from my perspective, from, from the perspective of the, of an investor, it’s very important to look under community because technical Technical fundamentals are only one portion of the blockchain platform.

There have to be people that have to be Dell uppers. There have to be investors. There have to be journalists who want to write about these projects. So the whole committee behind it theorem is the strongest asset that the teacher room as a foundation and as a movement has on the other side, all these other projects, they are trying to create something similar, something competitive, but so far I, I think that Durham is really miles ahead.

So, Oh, talking about the sentiment, I think is very positive about on Ethereum and the fundamental value of cryptoassets. So. My approach, as I mentioned, is try to compare the projects, try to compare projects or along a specific segments, for example, blockchain blockchain platforms or crypto asset tokens or defy projects, and try to look for what are the key token value drivers.

So what are the value drivers that are going to kind of help push the value of that token in the future? And so for example, in the case of of blockchain platforms, I’m always looking at the amount of projects that are being built on top of the platform, because the more approaches are going to be built on top of the platform.

The more purchasers are going to be using Imperium, which will add value to, to ether. So. Well, if there are more projects who are more used by more users is going to create value for the underlying crypto assets, which in this case is ether. So I’m always trying to look for what are the token volume drivers and these token wallet drivers are specific specific like factors or they can be quantitative, but also qualitative factors that I’m looking into.

And I tried to compare these factors between different different projects in a specific segment. So for example, I did a comparative analysis of trip to asset exchange token. So I was comparing Binance token to Hoby token, low token, and many others. I think that there were 18 tokens and I was trying to compare like what gate, which.

Crypto asset is the, is the best from DS from this segment because it’s very difficult to create like similar to like stock investing. It’s almost impossible to create like one metric that will tell you which crypto asset is good. Meaning for example, like PE ratio for stocks is very easy because it’s a, it’s a, it’s a, it’s a, it’s a ratio that can show you like, like ho how much am I paying for, for the earnings that the company company’s making.

So, for example, I think with with Tesla, investors are paying 800 times more than what the company is making a year, which is insane, but it shows that people are willing to invest and buy by the stock of Tesla because the perceive that in the future is going to be valued way more. It’s going to be way more valuable.

And this kind of brings us to crypto investing because the same way Tesla is valued today as a stock people didn’t look only on the PE ratio. They did all of the disregard to this. Like if you would compare a PE ratio of Tesla, Ford, motor, or other like automotive companies, Tesla is the worst PE ratio of them all.

And looking at crypto assets, it’s very similar because investors are not just looking into the current situation. They’re not trying to compare only the crypto assets, but they are looking what’s going to be in the future. So me personally, I choose different methods for some cryptos as I’m trying to compare them.

But for some I’m trying to look into, what’s going to be possible in the future. Where is this project heading to? So. With a lot of crypto assets. It’s very difficult to avoid them as of today, because if you would try to elect crypto assets from a current perspective, most crypto assets have zero value.

There is no value at all, but if you look into the future day, might have some value in the future. And that’s what most investors are betting for. Most investors are not betting on the current volume. So it’s almost impossible to value crypto assets from a, from a current perspective, but from a future expectation perspectives.

So a lot of these crypto investments are actually speculations because you are speculating on the future value of something based on the information where some of the limited information that you have today. So that’s my kind of like take on fundamental analysis on Speculation about trip sets and yeah, maybe

Ben: [00:18:19] I think, that’s a good point.

It’s like, like tech or growth stocks, like you’re paying for the, you’re paying a premium for this future growth that’s why they have these higher PE ratios I like thinking about these crypto assets from like a price to earnings, some sort of relative valuation.

You can kind of stack these things up next to each other, but for some something like Eve,  you said a lot of the value comes from projects built on top of Ethereum. Undoubtedly adds value to the community, to the Ethereum blockchain, but thinking about value drivers, as you said, for eith ETH, the actual speculative token, that’s used to pay for gas floating around the ether, if you will.

But I mean, what is driving this EA or this earnings for, you know, the second biggest currency cryptocurrency you’d like.

Ondrej: [00:19:14] So if they’re in foundation, who is the foundation behind Ethereum and ether, doesn’t have to like any of your earnings support, the, they are not making any profits or anything. So the idea where the volume comes from is in the beginning, it was that eat ether is going to be used for the transactional piece.

And it’s going to be the place where ether gold gain devalue, but it used to be like this for many years. The one, when you look back, for example, for 2017, That was not the case where ether actually got most of the value. The value in 2017 came from people using ether to participate in an ICU. So suddenly ether, because Ethan was the only currency that could be used in many ICO’s or it was the perfect currency cryptocurrency that could be used in ISU in many ICO’s that would exit also out of crypto assets or cryptocurrencies.

But ether was the preferred crypto asset because it was very accessible. It was it was easy to use and paper people could just send ether and get back the ERC 20 tokens. So suddenly ether became a transactional currency and they may, I’m not sure if, if they’re in punishing plant this, but there was a, there was a clear, accurate of value for ether where people had to first buy ether.

To participate in ICO’s. And because there was a lot of, a lot of trading happening on ether and ether became a transactional currency where you first need to buy ether and then buy the token. So suddenly there is a, there is a value for the Toca and where people are using it for transactions. And this is like another value that has been added through ether.

So. So people were buying ether and there were, there were selling that was more trading volume and people are buying, holding, and this all added to the value. And when we look from today’s perspective in 2020, a lot of ether is actually locked in defy publications. So from transactional currency, which still ether is, is in many, in for many projects or in, in many scenarios.

And it is still being used for transaction fees for, for gas fees. Now there are also like Otter volume propositions. So for example, ether is also used as as a currency that is being locked into defy applications. It is used as a reserve currency. So for example, in to make her make her Dar particle ether is the.

Is ether is being locked into in the maker to create diet a stable coin. And it is essentially a reserve currency for, for some decentralized applications. So these are like other kind of like volume volume drivers that influence the real value of ether. But again, looking, looking at it from from the real-life from a permanent perspective of an investor, this is just a tiny part of the price of ether.

The biggest part of the price, why ether cost $600 today is not because of these token value drivers. It’s not because of these three things that I mentioned, the price is driven mostly by speculation. So it’s driven mostly by people buying ether because they expect the price will go up in the in the future.

So even though I mentioned this talking about drivers, and because in the case of heater, we can explain them. We can, we can we can quantify them. We can measure that there are still very small portion of the price. So most people who are buying ether are not buying it to use it for transaction fees as a transactional currency or as a reserve currency.

But they’re using it only as a meaningful speculation or investment.

Ben: [00:22:57] That makes a lot of sense, but I’m curious, like how do you actually get, how do you quantify these numbers to actually get to an E T to get to an expected earnings sort of thing? Because all of these, these are massively hard to quantify factors and numbers.

But if you’re trying to come up with a PE, like how, how does one think about that?

Ondrej: [00:23:20] No, to be honest, I don’t think there is a way I haven’t seen any, so I think it’s too complicated. And of course I would be glad if someone would come up with that, but.

Ben: [00:23:30] Yeah. Well, I think this is, this is the interesting thing about a fundamental analysis when it comes to crypto, right?

Like with something like a a decentralized exchange, like it’s very easy to figure out the earnings or these lending platforms or whatever.  You can very easily come up with a PE, but for something like Ethereum or Bitcoin, it’s different. And of course you don’t, you don’t value gold on a price to earnings.

You use things like stock to flow or these other, these other valuation metrics.  It’s an interesting discussion, always about these things, because there is that future value. That’s hard to quantify that flows into it obviously, and a big portion of it. You said Eve is miles ahead of its competitors, which I, I agree. And looking at this, it’s not necessarily the best tech it’s a number of different things, investor sentiment, all of these things, but just from a technical perspective, like who have these other smart contract platforms or Ethereum killers, like from a technical community growth factor, like where would you kind of place your bets

Ondrej: [00:24:38] from a technical perspective?

It’s very hard to say for me because I’m not really a technical person, so I cannot avoid this. But looking from a community perspective or looking from a. How many projects are being created in other communities, or if I see, for example, to which other platforms are current projects kind of Migrating then I see there is some traction in Polecat at the community.

There is some traction in and the Salada community and there’s still going to be like there’s going to be, it’s quite different from Ethereum, but Definity is also an interesting, I’m trying to look more in depth, but so far it’s too complicated for me to understand, but I think there is something interesting being created as well.

So I will definitely do some more research on that project in the future. So probably these three projects, I would be following them up more closely, but I really still think that there are still quite far from the community or from the network effects perspective, even though they might be better in the tech, which I cannot deflate.

I cannot decorate them from a technical perspective. It’s very, I’m not the technical person, so I can avoid them from technical perspective. From what I understand from the community perspective, what projects are they’re being created. I think these are very interesting.

Ben: [00:25:58] Okay. That was polka dot, which is dot Solano, which is Sol I think Definity, which has not technically launched yet officially.

Right.

Ondrej: [00:26:08] You haven’t launched the token yet is just a IOU token being traded.

Ben: [00:26:13] And I’m curious. Okay.  For smart contract platforms, overall, what is, what is the bare case? Like what’s the situation that these things just don’t work out and they don’t amount to anything?

Ondrej: [00:26:29] Yeah, I think they might, that’s a.

It’s a tough question because I hope they will about it’s good to, there, there are a lot of scenarios where data don’t catch up. I mean, when, I mean, they were they doing, they don’t just create something useful or they, they might not come up with a killer app. Or there are so many scenarios where it could be from a technical perspective where it just doesn’t work as it’s supposed to.

It’s not scalable enough. And people are just not used to using this and joining those applications. I think the current one of the hurdles for decentralized apps is the you user experience because most of these decentralized applications are being used by people who are into crypto assets, who are into crypto.

They really want to they’re believers in it, but they’re not using it for solving their. Problems or just like to solve their current issues. So from, from the friends I have that are using decentralized apps, most of them are crypto believers. I don’t have any friends that would be using crypto apps or de-centralized apps, just because those, it would solve their problems.

So if they’re not going to be apps that are going to be able to solve a problem, problems of ordinary people who didn’t care about crypto is going to be very difficult to create some adoption that we all kind of make a breakthrough and will kind of push us forward. So I think we got like the crypto space in the blockchain space.

Now we, we need new people that are coming into space. We need, we need new applications that are being built. And I, otherwise it’s very difficult to kind of push this forward. So there has to be a growth. And the amount of users who are using these applications. So unless there is going to be more people using that and coming to the space, it’s going to be very difficult to kind of move forward.

So of course, it’s, it’s a, it’s a problem that everyone knows about. It’s a, it’s something that people are always trying to figure out there are saying, this is going to be the next skill app for, for blockchain or crypto. And I just think from my perspective, it just needs more time because I think it’s the same with, with the internet in nineties.

It wasn’t like in a five-year or something. It took way, way longer. And there was a.com bubble. And after that, so many users were not using their internet. And there was a.com bubble and many people didn’t have internet at home. They just heard about it, but they never, never used it. I think it’s the same case.

Many people heard about Bitcoin, but they’ve never used it. So I think now 2021 will be the kind of decade all of blockchain applications, but also of AI. So I think these two technologies kind of arguing to be the most important for this decade,

Ben: [00:29:12] this time it’s different. 20, 21. There’ll be great.

Everybody will be using it.  I completely agree. It’s like these things have to be solving a real bleeding neck issue and provide a solution for that and do it in a way that’s not so cumbersome and terrible, and we’re still far way off. I mean, a lot of these defy tools are.

Awesome from like a UI perspective, but like you gotta have crypto, which is kind of an arduous process to like play in this little ecosystem. I’d be curious knowing what you know about all of these different products and things being built. Like everybody always talks about the killer app which I don’t necessarily agree with, but you know, these, these applications, these decentralized applications that are so ripe for mass adoption, that it’s the, world’s just screaming for a less centralized, you know, DAP version of this.

What would be your bet? What kind of, what would that application look like? Who would it serve?

Ondrej: [00:30:15] I think Bitcoin is the killer app of blockchain and crypto. I think Bitcoin is really the killer app, but not for, for, not for the like first world countries. Not, not like for, for us or Europe, we don’t need Bitcoin in our normal wise, but for people like that are from from countries like Venezuela or Zimbabwe, where there was a hyperinflation it’s I think it makes a lot of sense to be using Bitcoin as a store of value and as a transactional currency for, for purchases or for anything.

So from my perspective, Bitcoin is really the killer app, but still it’s very difficult for ordinary people to use it. So I really believe that the, maybe the future of Bitcoin will be only theory them. So I really believe that people are going to be using Bitcoin. As of rap still can only theory because they believe in Bitcoin as a store of value.

But I really cannot see people using lightning network that that soon, because I I’ve used an app, I like it. But I really believe that this room is like from a technological perspective kind of going foster that has a foster pace. So I think people are going to be using stable coins on Ethereum are going to be using Bitcoin on Ethereum as to store value as a transactional currency.

And I think this is something that thanks to crypto currencies. The idea of money is really being changed because, well, we have been always taught I mean, what do we have in all of this? Like Fathered school in schools is that money has to be a store of value, has to be a medium of exchange and a, you know, of account.

But in crypto assets, you can separate all these three things. And as a user, you can choose which crypto assets you would like to use as a store of value. So for example, you believe in Bitcoin, so you use grain as a store value, but you go in a shop and the shop uses something else as a, as a unit of account.

So you see the prices in different, different currency, and then the medium of exchange. Thanks to de-centralized exchanges. I can pay you with Bitcoin, but you can accept a dice table coin or anything else because thanks to decentralized exchanges, thanks to decentralized section protocols. We can exchange devalue and I don’t need to even know.

What crypto does is you accept because thanks to all these decentralized exchanges, we can exchange the value by. I send you the money and the, you receive whatever you want, and I send you whatever I want and it’s being exchanged. So I think the concept of money is being changed. And for crypto, I think the killer app is money and it started with Bitcoin.

But of course, now we, we will see like where, what does it go with? Bitcoin is going to be on Ethereum. I believe so arguing to be stable coins. So either Bitcoin or stable coins built on Ethereum, because for most people in the countries where central banks cannot take a good care of their national currencies, I think this is something that is really needed.

I think, in the countries where. Do you have a problem with inflation? I think this is going to be a really a killer app where when people are going to start using apps with stable coins with Bitcoin is going to be so easy to use and they will not have to they will not have to think about storing their Cedar is going to be way to figure it out in a, in a, in a nice way that we can just transport their money and they can trust the system.

They still be there. There has to be like a trustless way to do it. So I think this is going to be their kettle app because I think changing the way we see money is the key thing about crypto or about blockchain that can be solved thanks to blockchain and crypto and thanks to material. So I really think that we are looking for cool apps.

We all did see it, but it’s going to change in the future. So I’m definitely looking forward to seeing what will be the next versions of the money killer app. But I never thought of the thing is going to be in this space.

Ben: [00:34:23] Love it. Yeah. It’s very much aligned with a lot of that. I wonder what I tell people a lot.

Living in a developed country, but there’s two things that should very much scare the wealthy and it’s hyperinflation and government compensation and Bitcoin potentially protects you against both of these. I mean, a brick of gold, you can only hide so much, like it’s, it’s completely untraceable and.

A lot of different ways, but it’s a big physical thing. Bitcoin offers a very different option for that. I would challenge you probably a bit with the wrapped Bitcoin. I’ve just used lightning for the first time recently. And it’s. Pretty sweet. And I know there’s not a lot of traction with it yet, but it works pretty darn well.

And then for my listeners, like rap Bitcoin, basically in some way, whether trusted or completely trustless, somewhat trust, minimized, rather you take your Bitcoin, you put it somewhere and then you get a token that represents that Bitcoin on the Ethereum blockchain. It’s secured by the Ethereum blockchain.

So you have faster transactions, you can easily swap it for Ethereum tokens. And like what you said, which I loved is like breaking up those, those aspects of money that always were combined as one. With wrapped Bitcoin, there’s a few options out there like WTTC Wren BDC or TBTC probably some other ones that I’m not familiar of.

What is your favorite wrapped Bitcoin? Offering right now and why

Ondrej: [00:35:56] there is none light. I don’t have a favorite one. Like I don’t have a favorite rep’s Bitcoin version. And coming, coming back to the lightening rec work, I do like lightning network, as well as just, sorry, just to clarify, I’ve used it.

I showed it to people. They didn’t never experienced Bitcoin and they loved it. So I think it’s a good way to kind of showcase people what a bit Quinn is about. But of course also explaining them that this is like the future of Bitcoin where I see the problem of lightning network is that it’s very difficult currently to connect it to other assets.

So if you would like to exchange lightning network Bitcoin for stable coins for out token, I don’t know of any easy way to exchange a lightening Bitcoin network for a stable core Ethereum or other assets. So I think this is the current, this is a problem with lightning Bitcoin, I think from a technical perspective, it’s great.

It works. I like it, but you can own, it’s a closed system where you can sponsor Bitcoin between users and it’s still very good, but compared to where it pterygium setting, I think Ethereum has kind of like a big advantage in this sense. So coming back to your question, I don’t have a favorite raps Bitcoin protocol.

I’m actually not using a rep Bitcoin. I have to admit, but I think it makes sense in the future if rev Bitcoin on the, I mean, if you are going to be using Bitcoin as a store of value, then they can also use a rep Bitcoin and Ethereum, because for example, if they see, okay, I want to use Bitcoin as a store of value.

But I would like to use it to pay for services or goods, then they can use some breadth Bitcoin version of it, and actually stable coins are kind of also wrapped tokens or wrapped currencies. So, so to say, because it’s a very similar concept, so it’s the same way where you can, we can tokenize some other assets and just put it on, on the Ethereum blockchain and then exchange it.

So from my perspective is going to be the, in where exchange of value is going to be happening. And that’s why I’m such a big believer in interior because all of the exchange of value is currently happening. If it’s on chain it’s currently happening on Ethereum.

Ben: [00:38:12] Yeah. That makes a lot of sense.

Being able to swap in and out of those tokens, I mean, you do it in a Dex now and it’s, it’s, it’s really tough to say this and in the crypto world, but it’s a very seamless experience and it works really nicely.  I’m curious  in this future world that people are swapping in and out of stable coins, Bitcoin, and other wrapped assets.

Like, you know, you can have like the PAX gold coin, for instance, and hold your go gold. If you like the boomer version of Bitcoin a major risk to this and mass adoption would be central bank, digital currencies or CBD seas. How do you see those playing into this, this new world that we’re using?

All of these different tokens you see it as a massive risk. Talk to me a little bit about CBCs.

Ondrej: [00:38:59] I don’t think it’s a threat. I think if it comes then people are gonna learn about it. They’re gonna learn about digital assets. I’m not sure exactly how it’s going to be working in the case of some digital simplifying.

I see, as an opportunity is the same way I sold Libra, even though they are both centralized. I think once people learn about it and D are gonna use it and cryptos are going to be always an alternative. So if they are not going to like something about the centralized digital assets, the are going to jump into the crypto space, they’re going to jump into the decentralized space.

And from my, from my perspective, ship to us has had, has been always an alternative space. So I don’t see it as a, as like the mainstream thing where everyone will be using cryptos in the future. I don’t think that’s going to be the case because not everyone wants to. Be using de-centralized and not de-centralized money.

Not everyone needs to freedom. A lot of people actually are more happy with holding their money in a bank. And for that they are going to be centralized cryptoassets or decentralized digital assets. And so I didn’t see it as a threat. I see it more as a, as kind of like the kind of like introduction for many people because they are going to trust the systems more.

They’re going to be introduced to the concept they are going to be they’re gonna understand the, Oh, it does an alternative alternative to, to it so they can try to learn more about Bitcoin. So I think it’s just going to bring more people to the space. And of course they are going to try to regulate cryptos.

They are going to try to regulate cryptogenic delirium. And this might cause some some slowdowns or some hurdles. But the good thing about cryptos is that they are borderless. So if one country imposes some regulations, people can always stick their business somewhere else. So there’s going to be, there’s going to be a competition between countries.

If, for example, you’re a country, a specific country is going to regulate crypto assets and people have always the freedom to take their business and start it somewhere else. And so from my perspective, if there is a, if there are countries who are thinking about regulating crypto assets, blockchain, or things like that, they should be really careful because they should think about what are the benefits of regulating it and what are risks of regulating them.

Because from my perspective, I I’m mostly against regulations. So I would be really careful about regulating things in their early stage, because from my perspective, countries that are going to be a regulating are going to be lacking behind in the future. And I think it is going to be the same way as in the beginning of automotive era and UK, there was this law is stupid law where there has had to be a person with a red flag that was walking in front of the car and just warning everyone.

There is a car coming and because of the stupid law, there were not so many cars being sold in UK when they started. Whereas in Germany, there was no such a stupid regulation. And ultimately the industry really boomed. And I think it’s the same with crypto. So it’s a little bit blockchain. If governments tried to regulate it in a very early stage is going to cause more problems and more harm than good.

So I think it’s important to wait and see and just support it. I’m not sure if it’s related.

Ben: [00:42:29] Yeah, that makes a lot of sense.  That’s a lot about Ethereum and I don’t know if you’ve read Camilo, Russo’s the infinite machine, but this is a resource. I mean, she’s basically crown provided a timeline of how Ethereum started and was developed in all of these things.

It’s a really, really good book. I’ll link that in the show notes, for sure. But where, where do you normally send people if they want to find out more about Ethereum, Ethereum to the potential of this?

Ondrej: [00:43:02] That’s, that’s hard to say, like there’s a lot of resources. There is not just, I don’t think that it is like a central resource for Ethereum.

There are a lot of good YouTube videos, I would say for Bitcoin. And also for Ethereum, I always recommend under us Antonopoulos who can explain a lot of concepts really well. So I think people should first understand Bitcoin, then jump onto Ethereum, because I think it’s kind of like a prerequisite for people to understand the theory them, they should first understand Bitcoin because Bitcoin is like the first first successful cryptocurrency and people should first understand Bitcoin.

And then I think undress explains a lot about the theorem as well is a resume book about it. And I think he explains it a lot of complicated concepts in a very simple way. So if I would point to just one person, I would definitely own to him.

Ben: [00:43:54] Yeah, I echo that he does a great job and has tons and tons of resources on YouTube.

Ease to ease, Ethereum, these smart contract platforms are very, very interesting. And then there’s sub niches underneath them. Like, you know, within the eco ecosystem, there’s so many sub niches. What, what kind of while, either in one of those sub niches or, or elsewhere, like what else about the crypto world right now?

What’s what’s your most bullish sector. If you will, for 2021.

Ondrej: [00:44:30] So definitely defy most bullish on defy because it’s from a perspective of usability or perspective of how many people are actually using the decentralized applications, most of the traction is happening in the device space and the decentralized finance space.

So when you look at the other disciplines applications, it’s a very difficult to find any traction. There are not so many users, there is not so many things happening. And this is also based I mean, due to the fact that a lot of crypto believers, a lot of crypto investors, they are using decentralized finance to kind of solve their own problems.

For example, like lending crypto and getting some stable coins or using it to farm tokens. So I think currently is the, as the hottest thing in the crypto space, because people who were into crypto in 2017, Now they can use it for other purposes, but I think it has a current current, like the hottest hottest topic, but I don’t see that many users who wouldn’t be using crypto before now using decentralized finance.

And I think there is one I would say like, from, from my perspective, Eunice wall is one of the applications that actually is from my perspective, re easier to use is it’s a decentralized exchange. And I think you just want these way easier to use than a centralized exchanges, because it really looks like it’s on a few clicks.

So once people learn how to use mathematics. Then a dig and really easily use uniform. And for, for a lot of ordinary people using crypto exchanges is still a very complicated, like the idea of order books or putting putting an order in a, in a exchange is very complicated, but on a unit swap is very simple as so easy.

Like it’s I think you just want to have the best UI in the crypto space because it’s like a, it follows the concept of it’s unique only when you cannot take anything else away. So they really kept it that simple that you cannot take anything away. So it’s very easy to use for ordinary people.

Ben: [00:46:41] Yeah.

It’s very true. I be curious on, on the topic of ordinary people, like w w what do you see as the biggest hurdle to being a successful crypto investor?

Ondrej: [00:46:53] So I think for most people it’s okay. There are, there are two kinds of factors. There are some external factors and internal factors and looking for, from the internal perspective, I think a lot of people have a problem with patients.

I think a lot of people kind of try to jump into the space and they expect they’re going to be overnight millionaires if I can get traded. But also looking around people that I know personally who are not into crypto, like in the long-term perspective, they usually come around when there are new all-time highs.

And so I would say, this is the biggest hurdle. People are not patient enough. They really expect they’re gonna make money easily. They’re gonna make money fast. And the really followed their emotions. So they tried to buy when there is a formal, when when they say, Oh, the prices are going up. So the internal.

Factors are like of patients and emotions where they’re trying to buy when the price starts. I mean, when it’s already going up. So I think these are the most influencing factors for many people. And on the other hand, when I’m looking at the external factors, I think there is a lot of nice in the crypto space.

I think that there are a lot of fake influencers, fake crypto gurus, or like paint YouTubers who get paid to promote shit, coins and projects that have no, no way of ever succeeding. And I really think it’s a PD that there is a lot of noise that is directing, especially the newcomers to the wrong place or trying to.

Promotes them projects that are dumb, have the incentive of building something interesting. So I think there’s a lot of noise and especially for newcomers, it’s very difficult to know who is an expert and who’s just a fake guru. So it’s actually one of the problems that we are trying to solve as base ring is we try to aggravate the opinions or the ratings and reviews and research from, from the reliable sources.

So we like, we didn’t look at the fakers or people who we know they get paid just to promote a coin because it’s very easy for us to, to see that there is no real research backing. There are independent review. So it’s there is, there is a lot of my subspecialty on YouTube. A lot of these crypto YouTubers are not actually.

Kind of, they are not in the business or finding the good projects to invest in. They are in the business of influencing. There are influencer, they get paid for views. They get paid for promoting things. So Dan note analysts or anything like that. So it’s very difficult for a normal person to see it as they always claim that they are not financial advisors, but the reverse psychology, like people think that they actually are what actually they’re not.

So I’m not a financial advisor either. Yeah. I think a lot of there’s a lot of noise in the crypto space that it’s very difficult to filter out. And if you’re new person than a lot of, a lot of people are really like get stuck there on the day, go the wrong direction and they. Really bad on the very bad bad projects that have no S no way of succeed succeeded.

Ben: [00:50:13] Oh yeah. Well, I’ll definitely link base rank. I mean, that’s solving a real problem in the space, right? There’s a, but obviously you’re gonna, it’s going to be a difficult problem to solve because those paid shills always are willing to pay for their shill and you’ll have this business decision right.

As it goes along.  Definitely this by your project interests me. Right. I’m following it closely.  There’s a lot of opinions and ideas about where crypto is going. I’d be curious. I mean, you’re aggregating all of these opinions analysis. What is the contrarian opinion of where crypto is going, that you hold or unpopular opinion that you hold and why.

Ondrej: [00:50:58] Yeah. I mentioned one, one opinion thing that the crypto is going to be used by everyone. I think in some way, it’s going to be used on the backend. So people aren’t going to know that it’s going to be used in certain applications. And it’s still not going to be used by everyone. I think it’s it’s not going to be in the near future where everyone is using cryptos is going to be, it’s going to take way more time than people anticipate.

And I would say also another thing is that I see a lot of crypto businesses that do not have aligned interests with the investors. So I don’t want to be giving you any names. I feel as a lot of the crypto exchanges, the are, they’re not in the business of giving or helping investors to make money.

So if you are a retail investors, you go to an exchange. The don’t think that the exchanges has listed only the good things, even though the exchange is popular, it’s very famous. They’re not in the business of offering you to Bastow ghosts and Avastin. They are in the business of giving you access to these tokens.

So if there is a token, if there’s a crypto asset that people want to trade, if there is a business potential for them, because they aren’t in the business of trading tokens, they are giving in the business of giving an opportunity to people to trade these tokens, but do not do research on whether this project is going to be successful in the future.

They do a research on whether people are going to trade it and whether they are going to be able to collect money from trading piece. So a lot of people do not realize this, but. From my perspective, a lot of exchanges do don’t have aligned incentives, but the investors. So it’s something that people are not talking about that much.

And also other thing is that a lot of crypto investors I’m talking now about the muslin funds also do not have aligned interests with the retail investors, because there is a common problem that people that have been in the crypto space for a long time, didn’t notice. But of course, again, people are coming new Dan or the rare of this, but a lot of institutional investors, a lot of crypto funds.

There is a lot of shady things going on when there are these token deals when they’re buying tokens at a hugely discounted price. So I think it’s something that people are not talking about that much. I feel like a lot of these investment funds, they are just following other phones. So there are a lot of follower funds.

So there are a lot of funds that you are just asking who else is investing. And if there is not a famous investors digits, just going to go and they never mentioned it, they just, they just follow it. So there are a lot of investment funds who are just following. There are a lot of investment funds who are the ones who are being followed.

So these are probably the unpopular opinions that I have. I could be wrong, but that’s the way I see it. I would like to be proven wrong, but I think these, these are the things that we’re also trying to improve in the investment space, because we are really trying to kind of align the interests of investors with the analysts, because we believe that as a community, we can really achieve bigger things than if we are just taking care of each other needs.

And we really believe that if we help other retail investors find the best projects in the crypto space, the whole crypto space can move much faster forward than if we we’ll be just trying to pump and dump any tokens or try to shell shit’s coins, or try to promote scammy projects, because there are a lot of people who are doing that.

It doesn’t help anyone. It just helps them. So we are trying to really like expose these people and try to help the cryptic committees, especially the investment community to kind of. Have a resource where they can find reliable information because there is from my perspective as a real lack of that.

Ben: [00:55:07] Right. Nice. Well talk to me shortly about roadmap. What excites you most about base rate what’s coming up?

Ondrej: [00:55:16] So currently we are mostly working on partnerships with other crypto informational websites and with selected exchanges. So as I talked about exchanges, there are, there are few exchanges who actually do care about the, the, the success of their users.

So these, these exchanges are actually interested in showing them the fundamental value of cryptos or showing them ratings that we in, that we offer. So we are currently working on distributing debasement rating, the core, the core thing that we offer as base rank as a baseline rating, TM. Which is an easy to understand crypto asset rating.

So we are distributing this in other places because we believe that the rating should be accessible for everyone. And in many places, not only on bass strings. So we are talking with tripped acid exchanges with crypto information websites that are going to be integrating these ratings on their PR firms.

So this is something that I’m really I’m really positive about. There, there is a lot of positive feedback on this. People are really they, they really like it. And also we are working on, on an AI tool, which I can talk more in details, but we’re basically going to be using machine learning to kind of learn more about openings of lot of smart people in the crypto space without actually.

Asking them the question. So it’s it’s going to be more complicated that there’s a lot of data analytics behind it. It’s completely different world from what anyone is doing. I know it sounds very familiar to most people, but it’s way different than what everyone has heard about because it’s a completely different concept.

So I’m very positive about this. We are working on this for three months now and we found some very interesting results, how to find very, very good projects early on. So seems very promising.

Ben: [00:57:08] Nice, exciting indeed. Well, Andre, I really appreciate  you coming on today and talking about all these things, there’s a lot going on and it’s always nice to kind of level set and and talk about these things, but yeah.

Where can my listeners find a little bit more about you or base Frank? Where do you want to send them?

Ondrej: [00:57:28] Yeah, thanks a lot, Ben for inviting me, I think the best place to find all the information is on our website base rank.io. So all the researchers can find information about what we do, what we stand behind.

I think they should also check our medium articles. If they want to go more in depth with they’re going to dig deeper into what kind of, how it all started. What we, what is our history? So they can kind of read some articles. We have been in this place for almost four years now. And yeah, if they’re interested to kind of talk to me, they can just shoot me an email.

It’s O N D R E [email protected] So my email is as open. I always like to listen to feedback. So if someone has some ideas, so how to improve what we are doing, how to help to help. I’m always willing to listen and respond.

Ben: [00:58:24] Awesome Andre really appreciate it, man. Have a good day.

Ondrej: [00:58:28] Thanks a lot. Bye. It was really a pleasure.

Pleasure to be invited. Thanks a lot. Have a good day. You too.

Ben: [00:58:34] There you go. First off. Thank you very much for listening all the way through. I hope you got a lot of value out of that conversation. As always. You can find show notes, links, and [email protected] Please share this with anyone you think might be interested in derive any value from this conversation.

And as always, you can reach out to me for any feedback or questions. Please give the video a like, or even better subscribe on YouTube or your podcast player of choice. This really helps others find the podcast or the video as well. Thanks a lot. Hope everybody has a fantastic day and stay safe out there and invest wisely.

Cheers.


Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.