Early on in the new year Nexo’s managing partner and co-founder, Antoni Trenchev, was once again on Bloomberg for an interview on the tremendous growth and transformative value of Bitcoin over the past decade, the recent developments in the blockchain space, and Nexo’s essential role in the future of banking.
Here are the key takeaways:
- Bitcoin has grown 9,000,000% since 2010 and could easily reach $50,000 by the end of 2020.
- The only historical analog close to the growth seen in Bitcoin over the past decade is the rise of the U.S. dollar against the Reichsmark in the 1920s when $1 went from being exchanged for 5 Reichsmarks to 4 billion Reichsmarks.
- Bitcoin has become “the new gold” — a stable investment delivering systematic asymmetric returns, uncorrelated to the traditional markets.
- While the USA is hesitating around the adoption of Libra, China’s government is going full speed ahead with the incorporation of blockchain technology and the development of the digital yuan.
- This advancement from the Chinese government, together with the widespread adoption of crypto by the general public, could alter how banking is currently conducted and challenge the role of intermediary banks.
- Nexo’s Instant Crypto Credit Lines аnd Earn Interest product continue to provide a much-needed utility dimension for Bitcoin and many other digital assets, creating a bridge between the world of long-term investment and day-to-day spending.
A recording and a transcript of the complete interview are available below.
Talk to us first about this incredible ride over the last 10 years. 9,000,000% is more than any asset I have been able to find, and I have looked for them. What do you think the future of Bitcoin looks like?
I think we could very easily see Bitcoin going up to $50,000 by the end of this year. We have our analysts at Nexo crunching the numbers, doing very substantial research. It is a hell of a ride — it is the halving coming up, the rewards for miners are dropping. Last time this happened Bitcoin rallied 4000%. It has been an incredible asset, uncorrelated to the overall markets, it delivers systematic asymmetric returns. The only thing we have seen close to anything like this has been the rise of the U.S. dollar against the Reichsmark in the 1920s when you saw one dollar being exchanged for 5 Reichsmarks to one dollar being exchanged for 4 billion Reichsmarks. If Bitcoin follows this trend, there is a long way to go.
I did an experiment where I lived on Bitcoin for a couple of weeks back in 2012 when it first hit $1000. People thought that price was insane, ridiculous, to pay $1000 for this digital token. Now we are seeing it trade at a little more than $7,000. But it is not any easier now in 2020 to spend Bitcoin on the street then it was back in 2012. Why don’t you think it is picked up as a method of payment?
That is a very good question. The initial idea was: we will pay for coffee with Bitcoin, but obviously that has failed to materialize. I think the narrative that is much more persuasive now is that Bitcoin is the new gold, and we see a confirmation with the turmoil we have this morning — Bitcoin is rallying on par with gold. In terms of sheer price action, if Bitcoin is the new gold and it captures 10% of the total market cap of gold, which is around $8–9 trillion; if it goes up a trillion that will be Bitcoin at $50,000. You have to stop thinking in terms of whole Bitcoins and start thinking of Satoshis because that will be what most people will be able to afford, just Satoshis not a whole Bitcoin; there is only twenty-one million to go around, there are morе millionaires in the world than that.
So a Satoshi is 1/8 of the Bitcoin. That is what you would compare to a cent when talking about a dollar.
Or a pence even. Good morning to you, Antoni. Let me ask you what you expect from central banks. We heard from the ECB’s Jens Weidmann. He said there is no reason for the ECB to develop its own digital currency. To what extent do you expect to see central banks engaging with digital currency as we go into the next decade?
I think that is definitely going to be the predominant topic of this year and the entire decade. I think for the first time ever, we are seeing China questioning the dominance of the U.S in terms of technological advancement. While the U.S. is in a state of hibernation, thinking “should we allow Libra”, which is not even a currency, it is backed by a basket of existing currencies. You see China going full steam ahead with a digitized yuan.
Digitized currencies will revolutionize the way we bank. It will question the supremacy of the almighty dollar, and that is something that has got everyone excited at Nexo because these are incredible times we live in. This gives China the mechanism to bypass the whole arsenal of sanctions and intermediary banks, which ultimately gives a lot of power to the U.S. That is being challenged as we speak right now.
If I am not mistaken, you do about $10 million worth of volume a day in trading. Аnd apparently, what is the deal? I can use a debit card from Nexo and borrow money backed by the crypto I have with you?
A couple of things. We are a digital assets institution providing banking services for the blockchain space. Our bread and butter is lending, so you deposit Bitcoin, and get an instant credit line backed by your crypto. That way you can spend its value without selling it. You have got the MasterCard, which you can use and spend with. It is efficiency across-the-board. We also have an interest-bearing product, which allows you to earn 8% on your idle assets whatever they might be.