Xapo CEO Wences Casares Believes Bitcoin Could Become Future Cryptocurrency Standard

Original story posted on Medium: https://medium.com/@ianedws/wences-casares-believes-bitcoin-will-become-new-internet-protocol-c59594c6f24b

Speaking with financial journalist Laura Shin on her podcast “Unchained” this week, Wences Casares, CEO of bitcoin storage company Xapo, said that he believed it likely that bitcoin would gain widespread adoption and become the future cryptocurrency standard. Casares thinks it likely that a single protocol for value transfer on the internet will emerge, as has happened previously in the technical development of the internet. He said that he thinks that bitcoin, still early in its development, will improve significantly over time and eventually solve many of its current problems, such as high fees and slow transaction rates.

During the interview, Casares compares bitcoin to the internet’s base protocols, such as TCP/IP, HTTP and SMTP. He states that these have evolved very slowly in comparison to the commercial technology firms that sell software or hardware. He mentions that in the internet’s early development, many believed that TCP/IP would only be used for low bandwidth applications like email and the web, and that other protocols like X.25 or Frame Relay would be used for high bandwidth applications such as streaming video or voice. (It turned out, of course, that TCP/IP is involved in nearly all data transfer on the internet.)

Casares believes that the current era of cryptocurrencies is like the first Dot Com Bubble in the late 1990’s when all sorts of experimental and ultimately unsuccessful internet businesses were funded. He thinks that though new cryptocurrencies may have functionality that bitcoin lacks, having the best protocol doesn’t guarantee widespread adoption. For Casares, the most important attributes of a cryptocurrency are hashing power, the number of users, and the number of transactions. And according to Casares, for those metrics, bitcoin is by far the strongest cryptocurrency.

He believes that at this point in its development, bitcoin is a store of value, not a payment system. Only once bitcoin’s rate of adoption rivals gold or dollars, meaning hundreds of millions of people owning bitcoin, will it evolve into a payment system. He sees this taking years and possibly decades. As such, he’s not concerned by current technical weaknesses of bitcoin.

When Shin questions him about Ethereum and notes its rising adoption rate and superior functionality, Casares says he thinks the best features of Ethereum, and other cryptocurrencies, will be integrated into bitcoin over time. It should be noted that even if Casares is correct, and Ethereum, Litecoin, Monero, zCash, et cetera, disappear, some altcoins will continue to exist. These coins would be still valuable because they could be used to access the new applications that will sit on top of the bitcoin protocol. But Casares’s scenario implies there would only be one universal cryptocurrency to exchange between all altcoins, which would be bitcoin.

Also during the interview, Casares relates to Shin about how he first heard about bitcoin in 2011 via a friend who suggested that he use it to send $2,000 to Argentina from the United States for a project they were working on together. At that time, wiring money into Argentina was very difficult due to currency controls. Casares found someone on Craigslist to sell him the bitcoin, and met in person to make the transaction. A few hours later, Casares’s friend contacted him to say he had received the bitcoin and had already transferred it into Argentinian pesos.

After this, Casares began researching bitcoin, and came to believe that it could be a solution for the economic problems that can occur in countries with unstable financial systems. Having grown up in Argentina, his family had experienced hyperinflation and other economic difficulties that the country experienced. A Silicon Valley-based serial entrepreneur, Casares was an early advocate of bitcoin and one of main characters of Nathaniel Popper’s book about the cryptocurrency, Digital Gold.

Link to podcast: https://www.forbes.com/podcasts/unchained/#632f4bea5b4f

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