Crypto curious: Academics, bankers, entrepreneurs look to the future of money

These are strange days in the world of cryptocurrency.

On one hand, mainstream financial institutions such as Dunedin-based Achieva Credit Union have begun to offer bitcoin trading services to members Meanwhile, bitcoin’s value has plummeted from a high of nearly $69,000 to less than $20,000, wiping out fortunes overnight and prompting prominent crypto-based companies such as Coinbase to lay off workers. The whiplash-inducing series of events has industry experts likening the situation to the run-up to the bursting of the dot-com bubble in the late 1990s.

“I’m not in the habit of throwing shade at other companies, but in recent times we’ve seen many of the biggest players make huge, unnecessary mistakes,” says Nigel Green, CEO of Dubai-based deVere Group, a global fintech firm that specializes in advisory and asset management services and, in 2018, launched its own cryptocurrency exchange, in a mid-June statement. “They went for enormously expensive TV ads, jumped on highest-tier sponsorships, rolled out lending models offering astronomical interest rates on crypto deposits and launched unprecedented hiring sprees.”

Sound familiar?

“Now, what do we have?” Green adds. “Firms laying off swathes of staff, freezing client withdrawals and cutting back on investment. Unfortunately, these brands have made some classic, obvious and avoidable dot-com era errors.”

What does the upheaval mean for businesses, entrepreneurs and investors across the west coast of Florida? Many are already involved in crypto in some form or fashion, from the metaverse to non-fungible tokens. Others are considering it.

And, even with current market slide/correction the buzz around cryptocurrency remains deafening. But is it truly the future of money?

To John Dorrell, an assistant professor of economics at the University of Tampa who’s been studying cryptocurrencies for about seven years, the answer is a firm “yes” — but with some follow-up concerns and reservations.

“Bitcoin is money,” he says. “So, the future of money is cryptocurrency. The question is, which cryptocurrency or currencies, plural, will win out? And what is the timeframe?”

Dorrell says businesses, in anticipation of future customer and client demand, would be wise to at least dip a toe into crypto. Yet for a variety of reasons, he doesn’t see it as a make-or-break decision.

“If they have the people, the staff, to implement it, then yes,” he says. “If they have people who understand it, yes. But it’s not like they’re going to miss the boat by waiting a year or two, or three, or whatever.”

He adds, “The currencies themselves are good. But the systems for making them usable, in my opinion, are not even close.”

Crypto companies, Dorrell explains, need to do a better job of creating apps and other infrastructure that’s easy for “regular people” to use. Until such time, “It can get you in the newspaper; some people are going to think it’s cool; you might even get a couple of new customers, but it’s not like you’re going to open a whole new realm. There are just not enough people doing it yet. But in a couple of years, it’ll be much easier to implement.”

Shivendu Shivendu, an associate professor of information systems at the University of South Florida’s Muma College of Business, takes a similarly dim view of the current state of cryptocurrency as a tool for everyday buying and selling of good and services.

“The evidence points out that very few real-world business transactions are getting executed on a day-to-day basis in crypto,” he says. “But letting customers buy in crypto creates a buzz which may be a good low-cost advertising tool.”

Bitcoin’s recent precipitous plunge in value should also give businesses pause when considering whether to jump on the crypto bandwagon.

“Cryptocurrencies are highly volatile in terms of their prices in U.S. dollar,” Shivendu says. “Business owners incur all costs in U.S. dollars and, when they receive payments or revenue in cryptocurrencies, they expose themselves to the risk of variance in the value of cryptocurrencies on a minute-to-minute basis. This implies that when they price their goods in crypto, they should consider the risk due to price variations.”

Take the plunge

Achieva, a $2.6 billion asset credit union with some 166,000 members, isn’t waiting around for the cryptocurrency market to stabilize. It partnered with fintech company NYDIG — one of its slogans is Bitcoin for All — to add a bitcoin trading widget to its mobile app. Ensuing demand backed the move: three days after launch, some 200 members were already using it, says Tracy Ingram, the credit union’s chief digital and infrastructure officer. She says members were exhibiting a great deal of “crypto curiosity,” which prompted Achieva to explore ways to bring bitcoin services to its platform.

“Our members were already out there, using different exchanges to buy and sell cryptocurrency,” she says, “and they would ask us questions about it.”

Achieva members, Ingram says, traded more than $2.6 million worth of cryptocurrency over the past year. She recalls being at a branch and talking with a member who was knowledgeable about all things crypto and had made numerous investments. “‘Well, when are you going to do something?’ That was one of their questions,” she says.

Achieva wanted to make sure members were educated before stepping onto the crypto rollercoaster. So it packed the crypto section of its app with FAQs and articles such as “Bitcoin 101” and “Blockchain and Mining.” It also provided $5 as an incentive to each member who wanted to begin a bitcoin journey.

Ingram says a recent user review of the Achieva app consisted solely of the word “Bitcoin” followed by several exclamation points. “I sensed a lot of excitement,” she says, “and the feedback has been good.”

Like many institutions and investors, Achieva, Ingram says, is keeping an eye on the recent upheaval and controversy surrounding Bitcoin, but it has no plans to abandon or otherwise alter its crypto experiment.

“The goal is to provide a service our members are asking for,” she says. “I don’t think any of us can know, exactly, what will happen, but it’s something that’s out there and you can choose to do it or not. But a lot of people think [cryptocurrency is] the future and believe it will be utilized much more in the future.”

Bitcoin boosterism also makes good business sense for Achieva: the credit union charges a $1 transaction fee for each trade — a profit center that will surely only increase as the currency becomes more widely accepted.

Add value

Southwest Florida entrepreneurs Zach Katkin and Robert Genito are taking a different path than Achieva on their crypto journey. Katkin and Genito have lived and breathed cryptocurrency nearly as long as it’s been around, and they believe we’ve barely scratched the surface of crypto’s capabilities. Katkin, of Estero, in Lee County, is the founder of Krypto Investments LLC and is assisting Genito, a Tampa resident, in the launch of a brand-new cryptocurrency called Genius Token.

At its core, Genius Token can be compared to a high-yield certificate of deposit — a “store of value,” as Katkin describes it.

“From an end user’s perspective, the idea is that, over time, it will grow in value,” he says. “It’s structured like a CD ladder: At the end of the year, they cash out, sell all their tokens, get a net gain, and continue staking the leftover amounts. A lot of people, institutions and companies are looking for these kinds of tokens that they can lock up and get more of over time, and then sell and distribute as necessary.”

But where does the value of Genius Token come from? The answer is complicated, even theoretical and philosophical, but essentially it boils down to a growing desire for decentralized ways to buy, sell and invest — free of taxes, fees, credit reports and other institutional encumbrances.

“Value itself is an abstract thing,” Genito says. “Ten years ago, 20 years ago, you couldn’t just pop up and say, ‘Hey, let’s create a better store of value for the world. Let’s make a better gold.’ People don’t think a store of value is something you can create. But we believe that value can be programmed. Bitcoin was one of the first things to really show that.”

A cryptocurrency’s value, particularly a new one such as Genius Token, is also derived from the concept of community sacrifice. In the real world, community sacrifice could take the form of volunteering time and/or treasure to a cause with no expectation of anything of value in return. In the crypto world, community sacrifice could be the time and computing power that goes into bitcoin mining, or people’s willingness to trade other crypto holdings for unproven Genius Tokens, for example.

“A sacrifice is an event that determines all of the people who are going to get the initial supply of Genius,” Genito says. “People are volunteering their time and resources, their attention, money or whatever, to make this product come true. It’s not some corporation raising money.”

But will Genius be valuable? That depends on its utility, Genito says, and he’s not too concerned whether it succeeds or fails right away.

“If Genius is valuable, great,” he says. “If it’s not valuable, then a person is going to learn a lot from it and be like, ‘Oh, cool, this is how these things work.’ But if it’s useful, it’ll probably become valuable, right? Everything that’s useful to humanity became valuable for the businesses that formed around it.”

Likewise, Genito says he’s not concerned about the sudden drop in bitcoin’s value, having endured many booms and busts over the past 12 years.

“This is a cycle that happens all the time,” he says. “And every time it happens, it doesn’t stop this upward trajectory for cryptocurrencies. Why? Because they’re extremely useful; they’re insanely useful. Your average person today would love the utility that they could get from cryptocurrencies and from decentralized finance, but it doesn’t make too much sense. But it’s becoming more and more user-friendly.”