My conversation with a bitcoin visionary
From Frank Holmes at Frank Talk:
Last week I had the opportunity to sit down with Marco Streng, the wunderkind bitcoin visionary behind Genesis Mining. Genesis, as many of you reading this might know, is the world’s largest cloud bitcoin mining company, with over 2 million customers worldwide. It calls Iceland home, whose cool climate and affordable green energy are ideal for mining newly minted virgin cryptocurrencies. Last year, Genesis helped connect the blockchain sector and traditional capital markets by partnering with HIVE Blockchain Technologies, the first publicly traded digital currency mining firm.
This week, Marco will be one of the panelists at the Consensus 2018 blockchain technology summit in New York, which I will also be attending. Below are highlights from our conversation.
Tell us how you got started in this industry…
I’ve always had a passion for mathematics, science, physics. I wanted to understand how nature works. I used to spend days and nights in the library, and I was actually on my way to becoming a math professor.
But then blockchain and bitcoin came along, and that changed everything. At the time, the community was very small, but the ideas and visions were very big. No one fully realized then how fast it would all grow or just how revolutionary it could end up being. I watched as new marketplaces began to emerge, businesses began to bet on bitcoin and people started adopting it. More and more exchanges popped up. All of this happened within a year of me first reading about blockchain and bitcoin—it progressed that quickly.
It was clear that something big was happening. The world was changing, and I needed to be part of it.
How would you describe bitcoin to someone who knew nothing about it?
With bitcoin, you can send money anywhere in the world to anywhere else without worrying about boundaries or having the transaction controlled or stopped by a third party. It’s a completely independent, decentralized, peer-to-peer system. This is what makes it so revolutionary.
The conventional banking system really shows its limitations when we try to move money between developed and underdeveloped countries, particularly those in Africa. There are some serious inefficiencies that, frankly, many of the big banks just aren’t interested in fixing. But with bitcoin, you don’t have to worry about that. You can send money to, say, a coffee farmer in Africa, and he’ll receive it directly.
Money transfers are only one among a number of many other uses. Bitcoin is also a store of value. It’s one of the few assets that I would say are uncorrelated to the broader financial markets.
As for blockchain, it has innumerable world-changing applications across a wide range of industries. That’s why I believe it’s crucial that people have the right information about blockchain and understand it. If people don’t understand it, and it gets overhyped, I’m afraid it could start going in the wrong direction.
We recently mined the 17 millionth bitcoin, leaving only four million left. Explain why it becomes exponentially more difficult to mine coins the closer we get to that 21 million-coin ceiling…
It’s not that the mining itself becomes more difficult. To answer this, I think we have to look at two components.
One component is the daily supply of bitcoin. At the moment, only 1,800 bitcoins can be generated every day by the whole network, meaning all the miners worldwide. But it’s important to remember that after every 210,000 blocks that are mined, the rewards are halved. What this means is that after the next halving, which I believe is expected sometime in 2020, the number of bitcoins mined a day will fall from 1,800 to 900. And then after the next halving, it’ll be 450. This helps reduce the supply in a natural way.
The second component is a measure of how many miners and how much computing power is in the network. If more miners come online, then of course the competition becomes greater. Because the daily supply is already fixed, your market share shrinks…