The year is 2009, 4 days after new years eve. In the midst of the global financial meltdown, primarily caused by the US housing market. An unknown digital currency was introduced to the world, and by now you may have heard of it…It was Bitcoin. While some speculated that the birth of a “new world order”, was caused by the public retaliation against the established banking system (remember Occupy Wall Street?), young Jack Nikogosian saw something much bigger…An entire monetary ecosystem based on disruptive technologies, benefitting the public and established money markets. With another recession looming above the world, Jack who in the early days was internationally known as Bitcoin Jack after paying solely with bitcoin for an entire month, shares his insights on the future of cryptocurrencies, Central Bank Digital Currencies (CBDCs), metaverse, money, the one time he thought he might've met Satoshi and why now is the time to disrupt and innovate. Dear reader, you’re in for a treat, keep reading.
BEFORE WE DIVE INTO IT ALL, WHY DON’T YOU GIVE A QUICK OVERVIEW OF WHAT ARYZE IS, DOES, AND BELIEVES IS AN IMPORTANT MISSION?
Aryze has since 2017 been building essentially a consumer-focused CBDC, we've created something we call digital cash. Digital cash is essentially stable coins with the backing being placed in assets that hold government guarantees. We just launched the Aryze e-euro which is a euro stable coin, entirely backed by European government bills and bonds. This concept is called digital cash because that's what we've been trying to create essentially a digital representation of trusted cold hard physical cash.
BUILDING UPON THE WHOLE STABLECOIN CONCEPT, UP UNTIL MID THIS YEAR (2022), STABLECOINS WERE ALMOST A SURE BET FOR CRYPTO INVESTORS, AND NOW “THE WORLD” IS TALKING ABOUT CREATING A SO-CALLED CBDC WHICH IN MANY WAYS RESEMBLES STABLECOIN. WHAT IS CBDC AND HOW DOES IT DIFFER FROM STABLECOINS IF EVEN THAT?
In my humble opinion, CBDCs are perhaps 5 to 10 years behind other types of tokens such as stable coins or utility tokens, or other digital instruments or tokenized instruments, so it's difficult to say exactly what a CBDC is and what it isn't because it doesn't exist today it's not a thing it is a conceptual idea that national banks are exploring. Now the gist of it all is central banks are looking into the feasibility of issuing digital money themselves rather than issuing paper money themselves. So a CBDC issued by a government or a national bank would be a digital version of cash however it will not likely have the agility as cryptocurrencies do it will likely be a tool for national banks, banks, payment providers, and terminal issuers and essentially the middleman to interact with one another. Because the reality of finances and global solutions today is that they are all siloed and have a very difficult time interacting with one another. Whether that is banks to national banks or banks towards other banks, money is super analog, meaning CBDCs are a way for institutions and governments to make their own framework much more efficient. What it will not be in my humble opinion, it will not be a tool that regular folks can access, it will not be an instrument that regular businesses can purchase or sell, and it will remain an infrastructure component, for the governments and the infrastructure in place. Stablecoins I believe that a stablecoin cannot be considered a stablecoin if it doesn't meet two criteria A. it is stable in price naturally and B. and almost as important in my view it needs to operate on an open-source blockchain. Now we're trying to make programmable money but you don't have true programmable money if you decide what the developers can do. With the token on Ethereum, nobody really decides what you can and cannot do, you have the liberty to build on top of something and we want that something to be Aryze digital cash. Aryze digital cash will have or has the credit security of a CBDC or that of a CBDC would have, but it acts as an exchange rate as a stable coin so you acquire it from an exchange or a partner whether where the token is available you can use it on a blockchain with very little limitations but never at any point in time will you experience any doubt about the money being there the security of the underlying assets and essentially worrying about Aryze going bankrupt. Because even if we did so the money is still placed in European government bills which are now separated from the Aryze balances, so it's about removing risk from money similar to stablecoins. But there's an extension to that it is about enabling programmable money as we see with the world of crypto tokens, so we're really trying to bridge the gap between dumb money and smart money we're making dumb money smart.
ARE YOU “WORRIED” ABOUT CBDCS, OR DO YOU THINK THEY COULD PLAY AS AN INTEGRAL AND IMPORTANT IN THE GLOBAL MONETARY SYSTEM?
Both. I think that national banks which are super ancient, and super analog can get tons of advantages on tokenizing one or digitizing. But I've read that 80% of national banks are discussing CBDC, I'd like to add to that sentence, that none of them agrees with one another. So I am not I'm not scared of CBDC because I see it as a competitor. I think that CBDCs if built correctly we'll have their place, but I'm scared of CBDCs because I also see the control element like national banks if they issued a digital coin as we see in China, well then you can very easily control your population, you can very easily say well if you are late on your payments your account is frozen for a day or doing location-based VAT or automated taxation. Or let’s say you cross a red light and then your money account is banned for 12 minutes. Do we want these kinds of features to even be a possibility? My answer to that is no. There are two ways CBDCs are being crystallized today, 1. as an infrastructure play which can be really smart, and 2. as a Draconian dystopian nightmare we shouldn't get into. A level of control that governments have never had over their citizens. In the CBDC discussion, I just think that it's really important that citizens ask the right questions about their financial authority conduct, to the finance ministry cause money is always changing, but now it's the changes are so rapid and different from what we've seen until now that people often don't comprehend it doesn't get it. Like the European ID being built or European payment methods being built. I don't read those documents and I'm proud of what we're doing, but I'm very skeptical that this can turn into some weird Orwellian scenario. If it was up to me the national banks would remain an old and ancient institution. If it were me, they would write their debt on rune stones in a cliff wall. Let them remain analog because they should not digitize, they simply don't know how to, or even why.
LET’S TAKE A LITTLE SHIFT; ONE THING WHICH IS ON EVERYONE’S LIPS (AT LEAST IN THE WORLD OF THE WEB3 COMMUNITY) IS METAVERSE. ANY THOUGHTS ON THAT…FAD FLAVOUR OF THE DAY, COOL, NECESSARY, DISRUPTIVE?
I think that the version of the multiverse where the metaverse happened in the red play type away or the way that Facebook imagines it to happen, I don't think it's ours, I don't think it's our version of the universe that is going to happen. Perhaps in a world where the dot com didn’t happen, the dot com crash, perhaps in a different world this would have been a reality, in my view I don't think it's gonna happen and partly because it's really bad today, they suck, all of the metaverses suck. 2nd life 20 years ago was better than Zuckerberg’s metaverse. So the question is will it become so good that it will be iMessage or facetime and all these things, I personally don'y think so. I think that our screen time will remain roughly the same post-metaverse and pre-metaverse. If I spent 2 hours in a meeting in front of a computer 2 hours at home in front of the TV 2 hours here and there, so I spent 8 hours of that day in front of a TV? Well in the future augmented reality virtual reality world, I think I'll spend the same amount of time in that world, as I today do in web2. But at the end of the day like I closed down my laptop I will take off my goggles. Have you ever tried to interact with somebody with an Apple watch? It's annoying they keep looking at the vibration on their wrist or even though the glasses were you looking to the corner you can't interact with people in this way and I think it's maybe 5 or 10 years before you can, and at that point in time, I think this will be for the folks who game and for the people who think that this is fun. I do not see the metaverse as Facebook imagines it as being a professional tool that all will use. Aryze wants to create with the e-euro, a euro NFT that looks like a €100 bill. So we burn €100 and we use that burn data to mint an NFT that looks like a €100 bill. Now you have something where you can imagine you can put this cash in a vault, in a metaverse vault. So that would be cool if you put on your glasses and you go and manage your business, suppose you go to a financial district, you go to your bank, you go to your financial manager you go to whatever the big Bitcoin Suisse building when you're done take, off your glasses and you can move on with your life. But I don't see this as an all-encompassing thing but we're all hanging out, and being one big minion together. The world is pretty awesome I think that the world the appeal of real-world will hinder the success of the metaverses.
GIVEN THAT THE CRYPTOCURRENCY WORLD WAS CREATED FOR PEOPLE, BUT IN GENERAL, PEOPLE DON’T UNDERSTAND HOW MONEY WORKS, HOW DO YOU THINK THEY WOULD UNDERSTAND HOW DIGITAL MONEY WORKS? IS IT NOT MORE COMPLEX, AND UNSAFE, AND WHAT DO YOU THINK IS NECESSARY FOR A HEALTHIER AND MORE BALANCED FINANCIAL ECOSYSTEM?
I think that people don't understand how money works, partly because money is constantly changing and you really must have a kind of know-how about the economy, that average folks just don't have. Money is always changing, constantly changing and it's difficult for average people to know what's going on. You just put a level of trust in governments or regulators that they can manage this correctly. This is what has created our reality, where bank states default and bank states commit money laundering, and banks create debt out of thin air and they exclude 60% of the world’s adult population, there are many issues with banks because it is just a small percentage of people working with it who actually get it. And I think it's similar to digital money or crypto money the people involved with it the industry professionals are the ones who get it and understand it not the end users. And I think that's fine people don't need to understand everything. When my mom swipes a credit card she doesn't know how magnetism works. The credit card is an app she knows how to use this application in a shop she doesn't know how copper wires are being dug into the ground so the terminals can have electricity she knows none of that. I think it's the regulators who must protect so that the end users don't really need to worry about it. But today it's a weird situation because you know the banks do illicit stuff and the enemy seems to be the world of crypto. So there’s a bunch of misunderstandings happening and this is all still very young, as I mentioned money is always changing. But it's not often that is up to the masses how it evolves. Usually, the king decides how it changes. But for the 1st time, regular folks can influence how money changes and that started with Satoshi inventing bitcoin creating for the 1st time an alternative why didn't Satoshi get stopped like other leaders who have tried to disrupt the petrodollar, because he doesn't exist, nobody knows who he is. It's just awesome how money has been democratized. A bunch of folks are trying to disrupt money and not just the niche folks who have disrupted money over several millennia.
DO YOU KNOW WHO SATOSHI IS OR HAVE AN IDEA?
There was a period in time when I met W. Scott Stornetta (editor; one of the inventors of the Blockchain technology who is also credited in Satoshi's whitepaper), and I asked him in a conference afterward, I'm not gonna ask you if you're Satoshi, I'm just asking you what would you do and what would you say to me if you were Satoshi, about the pre-minted million bitcoin. Because out of the 21 million the 1st million got kind of pre-minted, and that's with him so I said how does that not contradict the mission of the bitcoin product? He gave a pretty cool reply; he said "it could be used in the ecosystem that doesn't have to just exist and live by Satoshi, but it could be reused in the system". I think that was a pretty Satoshi reply to give, so maybe that's my best bet or somebody here at Aryze that I have no clue and maybe that's actually Satoshi.
BASED ON THE FORMER QUESTION, ONE OF THE MAJOR PROBLEMS DURING THE LAST +10YEAR BULL RUN (WITH A FEW DOWNTURNS IN BETWEEN), WAS THAT WALLETS WERE HACKED AND PEOPLE LOST THEIR FIAT MONEY OUT OF THIN AIR, LEAVING SOME IN THE DEPTHS OF DEBT. DO YOU THINK BETTER, AND MORE SECURE COLD WALLETS STORED IN BANK SAFES IS THE SOLUTION, OR AUTOMATED WALLETS NOT BE CONTROLLED BY HUMANS?
I think that there are 2 types of users that we need to look at, there is like my mom and dad and then there is me. I am a technical guy who works in the industry and I try to develop new solutions. So for me, great custody providers, great multi-signatures, great code audits, these are some of the things that count. For my mom does this company have regulations to allow them to give me this Luna product, or a product for a corporate account can this company sells me this service is it safe is it trusted, there’s a different level of know-how that is needed. I and the developers and the infrastructure players need to ask different questions than the end users and Mr. and Mrs. Jones. I don't think that cryptocurrencies should be used in their raw formats by average folks. I think that the whole Starbucks, NFT is just a marketing gimmick I don't think that nobody is gonna download a seed phrase and manage encryption and private keys to handle Starbucks Coffee coins. But once the infrastructure has matured in a way that you know you have digitized artwork, digitized music, digitized real estate, tokenized this and that, then all those can interact with one another, through an application layer. Luna or revolute could have an investment instrument that consists of crypto assets or promote a music coin that consists of intellectual property for royalties from thousands of songs. My mom will use the end app where she just has to swipe yes look in the camera and convert. I am more interested in the mechanisms under the hood because that's where I operate, so there are 2 types of clients and 2 types of questions needed to be asked in this. People losing money is cause they're swimming in the crypto seas with no protection so I don't think the average folks should invest in crypto and stable coins without knowing what they're doing. That's why you see crashes, and people lose their money, that's how new protocols are dying now with their stable coins and people losing money. But the people who are losing money I don't think most of them are average folks, that's people who choose to swim in these seas. Naturally, there are people who get hustled and cheated by people who know what they're doing. This is the same way with the Internet, which anyone to make a website. Yeah, there are tons of s***** websites, but that doesn't mean that the concept of publishing is dead right.
ON AN END NOTE, YOU’VE BEEN INFAMOUSLY KNOWN AS BITCOIN JACK, BUT RECENTLY CHANGED YOUR VIEW ON THE FUTURE OF THE MOST DOMINANT CRYPTOCURRENCY, TALK TO US?!
I’m still a fan of Bitcoin. I think that there is strength in the fact that they are the ones who have survived the longest time, without their protocols being hacked or destroyed, or fundamentally changed. But there were some things that in my opinion have made it so that bitcoin became institutionalized too quickly in a way that it lost its original followers and original fans. When I worked with bitcoin in 2015 when I got the whole Bitcoin Jack name, I tried to live a whole month only on bitcoin, there were more shops in Copenhagen accepting bitcoin payments than today. There are fewer shops accepting pure crypto payments in Copenhagen today than many years ago when I did this project. And I think that it's partially because what the white paper of bitcoin described is not the product that bitcoin is today. And I think that there are many things why bitcoin got kind of disrupted in the wrong way, I think the ASIC miners played a huge influence. My gut feeling was that the bitcoin network should be upheld by its users its fans its community, where it quickly became now it's gonna be withheld by the people who can afford you know these expensive specialized checks. I think that was kind of the beginning of the end of what bitcoin was initially supposed to be, but that does not mean that bitcoin is worthless, its just in my view something else than a peer-to-peer digital version of cash, I think that was the title of the wallpaper. In my view today it is more of an energy harvesting coin used to monetize excess electricity that we cannot yield today so at night when the volcanoes are still hot or the geo earth systems are still active or the windmills are still spinning the wind turbines let's capture that energy and use that to mine because it's wasted energy anyway. So if bitcoin is not dead but is different, it's a different instrument it's an interesting instrument, but it's just not what it was when I got dubbed bitcoin Jack. So I don't have as such anything against it, I just want people to recognize that it's a different product with the same name. It has evolved into becoming a new thing like bank money 50 years ago is not the same today. Bank money used to be backed partially by gold when the fed stopped it, so in the same way, let us just recognize that bitcoin is also not set in stone. It is not what it wasn't 2009, it has not evolved into becoming what was initially planned, but does that mean that it's dead and worthless? No. Does it mean it's worth more? Perhaps. What is the strength of the planetary decentralized network which is upheld at night with excess electricity? It's free found energy, so it could be really smart still, it’s just not a peer-to-peer digital version of cash I think that's my view on bitcoin. Still a huge fan of what it has become but with different I'm a fan for different reasons than I was back when I started going in 2013. That was wow programmable money I can build cool s*** and invent new solutions. Now it's wow interesting energy harvesting mechanism to utilize excess electricity and a way to monetize something which would have not been monetized before. It's a wealth creation method that you can do at night when energy is cheap. With those lenses, I think it's a cool instrument.