There is a source of growth for the second economy in the world that is in the Shadows. How will cryptocurrencies influence this economy (aka System D)? CoinIdol.com FinTech News Outlet spoke to Geir Solem, founder and Chairman of the Cryptor Trust group of companies.
Geir is also the Chief Editor of Bitcoin Investor, founder of Elliott Wave Technician and Cornupia Capital Ltd. and President of the Cryptor Foundation . His specialties include analysis of the financial market using demographics, economic cycles, and Elliott Wave theory / technical analysis. Geir focuses on investment in long-term trends around the world. He engages in the trading of commodities, bonds, stocks, and currencies.
Geir’s company Cryptor Trust is the first, and still one of the few, investment groups in the world to introduce a formal capital structure based on bitcoin, holding bitcoin and blockchain related investments as its main assets as well as expanding into distributed, blockchain-based finance.
CoinIdol: Cryptor Trust Inc. is an investment vehicle for investing in Bitcoin, Blockchain, FinTech and Crypto related assets worldwide. As people invest more in these alternative cryptocurrencies, how will it change the stock market?
Geir Solem: The main effect on the world stock market will be more liquidity, diversity and a substantial increase in the number of various participants like investors, listed companies, advisors, analysts, etc. It will also create new stock markets, especially in the 3rd world. Businesses in the 3rd world will have easier access to capital. The barriers for new companies to be listed and investors to invest will come down.
CI: Cryptor Trust is the first global investment company that operates without the use of a bank account. Besides this fact, how will Cryptor Trust stand out fr om the other global investment companies selling Bitcoin?
GS: We are not selling bitcoin. We offer an affordable entry point for those who want to
invest in blockchain related assets using Bitcoin. Since it is an open digital platform based on Bitcoin and the blockchain, anyone all over the world can participate in being an investor. There are no barriers that stop people from investing, transferring funds, receiving funds. etc.
CI: How does the decentralized Blockchain Asset Exchange Inc. (BAE), initiated by the Cryptor Trust Inc. group of companies in 2016, compare to other exchanges and what does BAE offer investors?
GS: The Blockchain Asset Exchange Inc. (BAE) offers an extremely low-cost platform for Businesses to list on an exchange in order to create liquidity in their shares. Investors can buy and sell shares on the exchange from a digital wallet at a similar cost level as a bitcoin transaction in near real-time with no restrictions or paperwork. A whole layer of banking bureaucracy is removed by lowering costs and saving time.
CI: About a year ago, Blockchain Investor Inc. (BCI) was launched as a new digital platform by Cryptor Trust. It was stated on your website that Bitcoin’s “blockchain technology will be as important to the world as Gutenberg’s printing press and the Internet.” Can you share what impact this new digital platform will have on investors?
GS: In the bigger picture what we talk about is the 4th industrial revolution. The 1st industrial
revolution used steam power to mechanize production. The 2nd used electrical power to create a mass production. The 3rd used electronics and information technology to automate production. The 4th industrial revolution is bringing together digital, physical and biological systems. It includes the Internet of things, cloud computing, 3D printing, artificial intelligence, mobile supercomputers, nanotechnology, genetic editing, etc. When it comes to finance and banking it includes the socializing of finance.
The Blockchain can be used for distributed cloud storage, unbreakable contracts, and the end of patents, just to mention a few areas, as the potential for the application of the blockchain is massive.
Finance and investment will be democratized as this will open the door for a new digital ecosystem and more people around the world will be able to participate in different ways. Blockchain Investor Inc. wants to be a player in this ecosystem.
CI: What challenges do you see in the development of Bitcoin’s infrastructure that would have an effect on investing?
GS: There are challenges like cryptography protocols, capacity, speed, etc., but they will gradually be overcome by technology. They are basically temporary problems. When problems related to these challenges occur, some investors, will of course, go on the sidelines for a while. Examples of this are the repeated hacking and ‘forks’ on the Ethereum platform. However, when the platform is improved enough, most of them will come back.
CI: How will a distributed, decentralized, and blockchain-based financial platform open the door for people who have not banked before? How does this decentralized system empower the crowd?
GS: The unbanked now get an opportunity to have a bank account in the form of a digital wallet, doing affordable cryptocurrency transfers for purchases, savings, and investment. Until now the traditional banking system has been too expensive and bureaucratic. The fences/barriers are coming down and a door is open for them to enter.
CI: Cryptor Trust is now on the OpenBazaar platform offering the latest Bitcoin, blockchain, and FinTech related investments. How will the influence of Cryptor Trust propel this new economy forward for investors?
GS: We are early in creating an investment and money management ecosystem based on digital currencies and the blockchain, so we help facilitate the new trends/changes.
CI: In 2015, Bitcoin was officially the world’s top currency as it surged 35% in value by the end of the year. How transparent is Bitcoin versus the fractional reserve and overly leveraged monetary system that is in place now? How do you see this transparency or lack thereof shifting with the acceptance and usage of Bitcoin in the future?
GS: Cryptocurrencies like Bitcoin are a transparent system as the rules of the game are defined on an open-source platform, and the old monetary system, based on fractional reserve as well as the will of politicians, is not. I think both systems will live side-by-side in the future. Politicians will fight to keep the old system going as it gives them a lot of power over people’s money, extracting taxes and possibilities for manipulation. However, the old monetary system most likely will be on the defensive while the cryptocurrency system will be on the rise as it will set people free. We expect the use of cryptocurrencies to
increase dramatically over the next decade. After all, it is the money of the Internet.
CI: Why is Bitcoin considered a disruptor for the global economy, how will it dismantle or maintain national sovereignty, and who will control the narrative? Is it important who controls the narrative or does it essentially belong to the crowd as the new peer-to-peer paradigm?
GS: Crypto-based currencies break down old power structures and put the politicians and central bankers on the sideline scrambling for a defense of the old abusive monetary system. The narrative now belongs to the crowd, technologists, and entrepreneurs.
CI: Describe the “shadow economy” or “System D” and how Bitcoin will have a huge role in its facilitation.
GS: Bitcoin and cryptocurrencies are made for the informal economy also called the “Shadow
Economy” or system “D.”
The OECD (Organization for Economic Co-operation and Development) expects that two-thirds of the world's workers work more or less in this economy. If aggregated, the $10 trillion global black market is the world’s second-largest economy after the United States and it is also the world’s fastest growing economy. The OECD projects that, by the year 2020, fully two-thirds of the world’s workers will inhabit this shadow economy, or “System D.”
“System D” is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise” or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy."
All kind of vibrant economic activity is occurring in this informal economy, which in some regions is between 20-60% of GDP or more, and every economy needs a currency.
Essentially, bitcoin is the “System D” of currencies — global, decentralized, and non-state sanctioned.
It is still in the early days but as Bitcoin bypasses traditional banking and financial institutions, it is a currency off the grid just like “System D.” To deny the existence of “System D” is to deny the fact that economic participants find ways to survive even during prolonged times of hardship.
CI: What will happen to Bitcoin and blockchain technology if cash is banned and national economies fail?
GS: It will accelerate the development and use of cryptocurrencies and the blockchain.
CI: How does Bitcoin empower users to have complete control over their own money, affecting the structure of the economy as a whole?
GS: They become their own bank and have full control of their own money which is very
CI: What is the interconnection between the Sharing Economy, Blockchain Markets and Crowd-Based Capitalism, and how is it changing society as we know it?
GS: As “crowd-based capitalism” or the “sharing economy” expands, we're taking economic activity out of institutions. In the established old model, most economic activities were controlled by large companies and institutions. Now we have a digitally controlled model, a platform that sits between people directly. New technologies based on the blockchain and distributed network make people trust each other enough for these interactions. The sharing economy is all about people and trust. People are once again being drawn
closer together on a global scale. This is the melding between commerce and community. You could say it is a democratization of opportunities. This will lead to more independent workers and entrepreneurs as the doorkeepers like banks and other institutions are bypassed with favor given to peer-to-peer markets.
CI: How do value and trust play an important role in a decentralized peer-to-peer system that involves Bitcoin and blockchain technology?
GS: It is an absolute must and it could not exist without it. The blockchain is a shared, trusted ledger that everyone can inspect, but which no single user controls. Bitcoin’s blockchain ledger prevents double spending and keeps track of transactions. It is what makes possible a currency without a central bank. The trust and value are built into the system.
CI: What innovations are emerging for “stockchain” and digital asset market applications?
GS: Decentralization, new types of assets, virtual interfaces, the use of artificial intelligence, more intelligence available based on “big data.”
CI: Are there advantages and disadvantages in leaving the fiat currency behind with the adoption of Bitcoin and blockchain technology?
GS: I think we have pointed out the advantages in my earlier answers. When it comes to disadvantages the risk is a dependency on electronic systems in case of natural catastrophes, wars, and similar events wh ere the systems might not be available for a long period of time. You will also need more knowledge and infrastructure using cryptocurrencies and the blockchain, compared to using old fashioned cash hand-to-hand.
CI: Explain the difference between the current fiat debt-based system and the Bitcoin equity-based system and why is this shift happening now?
GS: The old debt based fiat monetary system is beginning to break down due to new technologies that facilitate digital peer-to-peer money and markets. Another important contributing factor to the shift is the abuse that is going on in the old fiat money system by governments and central banks.
Credit expansion in the western world has reached its highest level ever and is still rising. The debt level is now at unmanageable levels. In the future, the promised level of pension and social programs cannot be sustained. Savers are robbed by an ever-declining real value of their fiat currency. The West has basically lived on increased borrowing during the last generation.
CI: The Elliott Wave Technician forecasts the financial market using Elliott Wave theory, economic cycles, and demographics. Using the Elliott Wave Technician, what is the future of Bitcoin as a disruptive technology to the current monetary system and what is the timeline?
GS: Our forecast for the Western world, in short, is as follows in this extract:
The Debt Bubble to implode With all of the debt problems around the world, especially in Europe, Japan, and the US, a contagion can begin at any time now, and defaults in one country will spread to other countries. This is truly frightening. If history is any guide expect deflation to follow.
US history offers two previous periods of deflation in terms of magnitude 1835 – 1842 and 1929 – 1932. During these periods the value of financial assets almost disappeared. Europe’s and the US overall demographic trends in spending and productivity has peaked Demographic spending trends are the key factors driving the economy of the developed consumer countries. These trends are predictable and can be used for forecasting. New generations of consumers have a predictable behavior with the spending wave peaking at the ages of 47-49 and then followed by a decline.
The baby boom generation in the United States created a strong economic surge that began after WWII and peaked around 2007/2008.
The surge was due to consumer spending and the productivity-cycle that peaks between the ages 46 and 49, corresponding to 2007/2008 for the baby boomers in the United States. The concept is called the ‘Spending Wave’ and is developed by Harry S. Dent, an American demographer.
Japan’s baby boom spending-cycle peaked in 1989, nearly two decades preceding that of the United States. As a result, the Japanese economy began a long-term decline. In broader Europe, including Russia, this occurred around 2007/2008.
We predict the economic collapse of Europe, as well as immigration woes to increase, more protectionism and the rise of collectivism (like fascism, socialism, Marxism).
We expect failing banks, bankrupt cities, and an increasing number of countries defaulting on their loans in the Western world in the coming decades. The stage is set for panic in the streets. When governments, giant firms, and banks fall, they’ll crush the man on the street.
We expect increasing unrest and rebellions in the streets of Europe and expect it will reach its initial intensity from 2016 to 2023/2024.
Cryptocurrency and the blockchain is only in its initial rise. The full impact of these technologies is in front of us and will go mainstream during the next decade or two. In Elliott Wave terms we call this wave ‘3’. The most powerful rise in an Elliott Wave structure.