We are starting the series of interviews with PumaPay’s Advisors and senior management. Our first conversation is with Professor George Giaglis who was among the first Academics to research blockchain. Today, he is a Professor at the Athens University of Economics and Business (Greece), where he teaches blockchain and fintech, and Director of the Institute for the Future (IFF) at the University of Nicosia, Cyprus. Professor Giaglis is also working on the world’s first Master's degree program in Distributed Ledger Technology (blockchain) at the University of Nicosia.
PumaPay is honoured to have Professor Giaglis on the Advisory Board. We sat down with him to talk about the current state of blockchain and ICOs, the future of payments, and how PumaPay fits into the picture.
You were one of the first Academics who started researching and teaching blockchain. How do you feel the field has changed over the past 3-5 years?
I first came across Bitcoin in 2012 and became immediately mesmerised by it. At first, I appreciated the potential of having a form of currency that was global in nature, had an open and transparent monetary policy and did not require any intermediaries to mediate transactions or arbitrate disputes. As I started studying Bitcoin in more detail, however, I quickly realised that the potential of its underlying technology was far greater: the ability to create an internet-wide network of trust in which any digital value can be exchanged between peers is nothing sort of revolutionary. I’m very happy to see how the field has progressed over the past few years toward appreciating the promises of this revolution in: removing intermediaries from all sorts of commercial transactions; re-decentralising the internet away from large corporation monopolies toward a user-controlled data and identity ecosystem; inventing new forms of industrial organisation and crowd-funding; and, ultimately, unleashing a new era of commerce in which blockchains function as the settlement/payment layer of an intelligent IoT infrastructure.
There is a growing number of ICOs happening every day, and very few of them are good projects, with the potential and sustainability. Many are bad, and many are obvious scams. Are we in danger of good ideas being lost in the junk?
ICOs represent a novel, and extremely promising, way for new business ventures to finance their product development and market growth. I expect them to disrupt the current VC and professional investor industry in the coming years. However, as with all highly promising ideas, they have also attracted the attention of many not-so-promising business ideas and quite a few outright scams. This creates a number of problems: investors find it ever more difficult to navigate in a maze of hundreds of ICOs, legitimate and promising businesses have a harder time getting their message across, lots of negative media attention is created, etc. I expect this situation to improve in time, especially when regulators develop clearer rules on the nature and process of ICOs and when a more mature ICO support industry has emerged. For the time being, it is up to each of us to do their homework to identify really promising, genuine and legitimate ICO investment opportunities.
What is a good ICO project? How can an average person spot it?
As with all investments, there are no bullet-proof rules. However, a number of common sense principles are always important:
(1) Study the business proposition carefully: a generic whitepaper is much weaker than a technically-sound description of a real business opportunity.
(2) Evaluate the team: who is behind the venture; what is their background, expertise and prior experience; how committed are in the project; how complementary are their skills.
(3) Assess the legal structure: which jurisdiction is the company located at; what are the investor protection mechanisms if things do not go as planned; how transparent is the company in explaining them to investors.
Perhaps most importantly, though, the first test would be whether the ICO addresses an opportunity in which a blockchain-based token is indeed required. We live inside a blockchain bubble and everyone is looking at how they can ‘blockchain-ize’ their offering. Although blockchains do represent a revolution, as I explained above, they are not a panacea that will solve all problems. Investors should educate themselves in what the technology can and cannot do before being able to develop an informed opinion about specific projects.
When looking at ICOs, many people are hoping to spot ‘the next Bitcoin’, “invest” and wake up rich. Is this a good approach? or was the Bitcoin craze something that will never happen again?
As new technologies are being developed, sudden and large value increases are a natural phenomenon and I expect them to continue happening. After all, the 2017 Bitcoin craze was not the first in the currency’s history. It was at least the third, with the two previous ones (in 2011 and in 2013) being larger than it, percentage-wise. Not many people realise that, though.
Having said that, an investor should understand the dynamics of these exponential growth trends to position themselves better against the long-term trend. In fast-moving fields with not-yet defined standards, like blockchain, opportunities will abound, but they will always be high-risk. As such, a portfolio diversification approach is a much wiser strategy. It will probably not result in life-changing riches from a single early lucky investment, but it can also ensure that the investor will participate in the exponential growth wave, even if (inevitably) some of his/her investments do not live up their initial promises.
Vitalik Buterin has recently warned that all cryptocurrencies could drop to zero any moment. Do you agree?
The price of any currency, not just cryptos, is related to its utility and acceptance. Take Bitcoin as an example. If it ever reaches the status of a global currency, today's price and market capitalisation will, in hindsight, look ridiculous and a huge buying opportunity. If, however, Bitcoin fails as network or as currency (for example, because the network becomes successfully attacked or because the market decides to adopt a better alternative), then it will surely drop to zero. Why would anyone pay any price at all for something that is useless or simply not used?
In PumaPay, we are committed to making crypto the default payment method. What do you think the future of payments is?
Payments will be among the first industries to be significantly disrupted by crypto-currencies and blockchains. This has already started to happen, with fintech start-ups and global regulation enabling new forms of payment services. I expect this trend to accelerate and reach new heights when digital currencies and DLT (Distributed Ledger Technology) enter the mainstream of the payment landscape. The business models of payments have not yet been adequately addressed by existing blockchain-based services: for example, recurring payments, direct debits or subscriptions are difficult to implement upon an unmediated crypto-currency architecture. PumaPay’s Pull Payment Protocol aims to address this opportunity by providing merchants with an ability to integrate crypto-currency payments in a way that is compatible with and extends current payment business models and best practices. I believe that the potential of such new payment methods is very high.
Any blockchain project would be honoured to have you among the advisors. Why did you decide to associate yourself with PumaPay?
I receive many invitations to advise ICOs and I am very honoured by the trust that the community places in my advice. However, I am very selective on which projects I work with, both because of time constraints and, quite frankly, because I fail to see the growth promise in the majority of the ideas I come across. In PumaPay’s vision, however, I have seen all the necessary ingredients of success: a genuinely blockchain-based disruptive idea in a major growing industry; a clear vision and path to development; a passionate, knowledgeable and dedicated team; and a professionally run organisation. While any investment is, by definition, associated with risk, I believe that PumaPay can deliver on their vision and I hope that my advice will help them toward this goal.
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