Joseph Lubin: “$4,000 is very high for Bitcoin”
Tags: Blockchain, Ethereum, Bitcoin, Cryptocurrency, Interview

It’s February 19th, 2019, and Joseph Lubin is holding a talk at the Lubin School of Business of Pace University in New York… No, they haven’t yet named the school after Ethereum’s co-founder and the founder of ConsenSys. It’s named after Joseph I. Lubin, an American accountant and businessman who passed away in 1983. The man was well-versed in ledgers, but not the decentralized kind. In this article we illustrate the most interesting topics that came up in discussion with the audience.

The event took place at the Schimmel Theatre, one of the biggest auditoriums in Lower Manhattan. There was quite a buzz in the lobby before the event began and it seemed like most of its 700+ seats were occupied. Mostly students, with the average age of an attendee being at around twenty-years-old. Just another testament that this new technology has been embraced by the young.

I entered the auditorium a few minutes early. Mr. Lubin was already onstage. I took the opportunity to introduce myself. Also, I mentioned the article that had been published just a few days before that was analyzing what typically happens to the price of ether after a fork. He seemed to be pleased with the findings — the price of ether tends to increase after a fork that was on the original roadmap.

I had a chance to ask Mr. Lubin a couple of questions. My first question was about the recent occurrence of what seems to be the most expensive Ethereum transactions ever. Mr. Lubin wasn’t aware of the situation, I explained it to him and asked about the rumor that maybe it was Mr. Buterin’s way of showing generosity towards the miners. He responded:

I don’t think it would be someone trying to give money into someone else’s hands because you don’t know which of the ten or fifteen thousand miners will win that actual block. So, I don’t’ think it was intentional. We have seen situations when someone actually paid too much money, more than they had to pay. When you have a transaction, you actually know the address it came from, so the mining person or the mining pool that actually validated that transaction, created the block with that transaction can send that money back. It will be interesting to see if that actually happens.

There has been a lot of news about the blockchain adoption, but mostly from the corporate sector involving private blockchain. When do you think we’ll see real adoption of public blockchains?

We have had that thing that people call a “crypto winter”, irrational exuberance, followed by a correction to a still a very high value for bitcoin, 4,000 is still a very high value for bitcoin (in my opinion); $150 for ether is still very high considering it started at $0.25. Crypto winter is that notion — we are just getting back to building software.

At our company ConsensSys — roughly 60% of activity focuses on public blockchain, 40% on enterprise solutions. We work with banks, central banks, and lots of corporations. On the corporate side, there was no crypto winter. There has been nothing but growth. We’ll roughly do five times more work in 2019 than in 2018. Last year wasn’t really a proof of concept year for us — for example, we launched Komgo with Citibank, a trade finance platform.

Blockchain Technology

Could you describe blockchain technology to the audience?

Blockchain is the next generation database technology. In my opinion, Satoshi invented three things:

- Blockchain database tech

- Cryptocurrency — there were digital currencies before, but Bitcoin is the first one without the need for the central clearing authority.

- Crypto-economics — it marries database technology to the token.

When I first read the whitepaper (around 2009), it was at the time of the financial crisis. Things were too centralized, banks, in particular, quantitative easing, too much money, too much debt. We were moving to what I call ‘a cascading collapse’.

Live Wires of Money Rails

I come from the corporate finance background. In our industry, when one mentions “cryptocurrency”, it is immediately associated with fraud.

Never in history have we had a technology revolution that was all about enabling people to access the live wires of the money rails, that has enabled people to create money for themselves. All those crypto tokens were too easily accessible, too easy to create, low barriers to entry. There was a lot of information asymmetry.

The fact that regulators are paying attention helps. We did a lot of legal work from the beginning. In the future, the projects will be much more likely to do the legal homework.

We created Trueset — eventually, we will it turn into a tokenized platform. It’s crowdsourcing, crowd wisdom to create Edgar like database.

What determines the price of a cryptocurrency?

Cryptocurrencies are like commodities. Ether was the first crypto commodity. As with any commodity, the price is determined by supply and demand.

Journalism

What are your thoughts on blockchain governance? (Mr. Lubin first mentioned that governance may take on many forms and then focused his response on journalism.)

Journalism is just a terrible mess right now. It’s an industry that has been decimated, especially the local journalist sites. Lots of private equity, hedge funds are basically owning the journalistic infrastructure in our world pretty much and hailing the same superficial messages into lots of different political contexts. And the way the adtech industry is working has essentially turned Facebook into most people’s newspaper or newsfeed. What they are doing is basically is creating this binary approach to different issues where the dopamine slot machine gets involved to, so we are not seeing settle presentation of issues, so we are not seeing as intelligent discourse as we might have, it’s a lot yelling. We need to fix journalism first before we can really use governance.

Check out the platform called Civil for sustainable ethical journalism.

Civil will get real traction. We did a token launch for Civil, it was the most successful failed launch ever. Our legal team created too many barriers for potential investors.

Stablecoins

What do you think about cryptocurrencies and why most of them are based on Ethereum?

Joseph Lubin: Cryptocurrencies are volatile, the price changes a lot. So stablecoins are supposed to solve that problem. Typically, they are pegged to the dollar or some other asset. Like tether, for example. There are many of them now. The most interesting is DAI by Maker.

Postscriptum

Mr. Lubin’s talk was over after an hour. He left through the main entrance which allowed some of the students to pitch their projects and take selfies. There was no entourage or limo waiting outside. Mr. Lubin is a lucent speaker. Also, he is clearly someone who cares about this technology as much as he cares about its social impact.

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