Murad Mahmudov: Crypto's Biggest Use Case is Speculation
In this debate (published on May 27, 2019) on the topic of cryptocurrency and speculation, we are joined by Murad Mahmudov, a well known crypto analyst, CIO of Adaptive Capital, a multi-strategy cryptocurrency hedge fund with a deep focus on on-chain analytics.
The key points in the debate below:
[00:50] Murad explains his introduction to Bitcoin as an exchange student living in China.
[02:47] Review of Murad’s claim: There are far fewer people who care about decentralized, sovereign uninflatable currency for its own sake than you think. Cryptocurrency’s biggest use case is speculation. For better or worse, speculation and human greed are your biggest hope.
Ninety-nine percent of people, be they rich or poor, don’t care about decentralization,
self-sovereignty, privacy, sound money, Austrian Econ, uncensorable payment or libertarian/ancap/cypherpunk ideals. The vast majority of people care about getting rich in a short amount of time.
[03:47] Maturity cycle of cryptocurrencies and new forms of money not supported by the government and why Bitcoin is currently between a collectible and store of value in this cycle.
[07:10] Murad explains why it’s necessary for Bitcoin to increase in price, market cap, and volume to become more stable and liquid.
[08:37] Why Murad disagrees that a medium of exchange or unit account must exist for something to be a store of value.
[10:15] Comparison of ‘hodling’ to the reservation demand and why people should hold onto their Bitcoin since it is not a stable unit of account or medium of exchange.
[11:54] The history of how gold became a global, dominant form of money; Murad explains why he refers to Bitcoin as ‘digital jewelry’.
[16:32] Gresham's law, Thiers law, inflation and how silver lost its monetary power to gold.
[19:45] If it’s agreed that store of value needs to happen before a form of money can become a medium of exchange, how do you measure if Bitcoin is becoming a good store of value or not?
[21:45] The anxiety reduction theory of money and its influence on where people choose to store their money.
[24:03] Why Ethereum is more exciting than Bitcoin for engineers, but the opposite is true from the perspective of investors or economists.
[27:30] How efficient security increases the value of a decentralized platform.
[29:00] Murad, why do you believe if the tokens don’t have as much value, they won’t be as secure?
[30:14] Niche, practical use cases for decentralized, blockchain applications.
[37:30] Murad, why do you think the Bitcoin community is somewhat evangelist in promoting its narrative?
[38:49] Viewing cryptocurrencies as social contracts and different blockchain as cultures.
[41:29] In the long run, if we’re going to compare blockchains to religions, do you think there will be more than one dominant chain?
[42:40 ] Why self-interest and the desire for self-preservation, security, and peace are main drivers for increasing the price of Bitcoin (and other cryptocurrencies) and supporting technologies forward.
[44:01] If people are motivated to hoard Bitcoin because it’s deflationary, will hoarding prevent Bitcoin from becoming a dominant medium of exchange?
[46:58] How the Lindy effect, developer mindshare, and desire for particular blockchain will influence the ability of another cryptocurrency to become a better store of value than Bitcoin.
Questions from the audience:
[32:52] What do you think are the biggest risks for Bitcoin, in the long run, if any?
[35:40] What are the most exciting things you’re looking forward to in the Bitcoin community? Are they mostly speculation or some technological things we can be looking forward to?
[38:26] Murad, what did you mean when you said that cryptocurrencies are less about technology and more about people?
[48:50] What are your thoughts on Grin and Beam?