There’s a strong sense of community in crypto, whether it’s troubleshooting wallet setup, collaborating on GitHub, or answering the questions of interested and skeptical friends. All of these daily interactions happen on a micro level and are mostly about making money. James Haft, co-founder of New York-based CryptoOracle, is a modern-day Rousseau, focused on blockchain technology’s role in reshaping economies and society. In this exclusive interview, we’ll get into the philosophical motivations behind decentralization and its impact.
The Merkle: Hi James, can you tell us a little bit about CryptoOracle?
James Haft: In October 2017, Lou Kerner and I formed CryptoOracle, building on our shared belief that crypto will have a huge impact on mankind. When I say crypto, I’m really talking about distributed ledger technology (DLT) and the decentralization of communications. The new crypto economy will change the world’s social and political landscape for the better.
CryptoOracle is a three-pronged business: fund management, community building, and strategic advisory. Our fund is raising $100 million to focus on the platforms, protocols and exchanges needed to support the decentralized economy. Communities are how we stay in touch with the best and brightest people, gain access to ideas and opportunities, drive interest in this fund, and promote learning. For example, we founded Crypto Mondays as a weekly Meetup event in NYC in the second week of 2018. Now, CryptoMondays has grown into a weekly event in 15+ cities around the world. We recently launched CryptoTuesdays for the Social Good, held on the first Tuesday of each month in NYC, and we’ve hosted conferences including BlockFin at LendIt to an audience of over 4,000 people in San Francisco this April. Lastly, we have a high-level advisory business for founders and stakeholders looking to leverage projects in the crypto economy. Many – not all – of these clients are doing ICOs, and we help them form the teams and communities necessary to execute their mission[s] on a large scale.
The Merkle: Your mission statement brings up “the largest accumulation and redistribution of wealth the world has ever seen.” Where do you see this wealth redistributing, and what do you think the effects will be?
James Haft: We see crypto as a political and social movement driving economic opportunity. While many people come to the space asking about bitcoin pricing and what cryptocurrencies to buy, to us that’s the tail of the dog.
Our society is overly centralized. Everything we do flows through third parties who are “trusted”. The government, banks, Facebook, Equifax, et cetera guard their own interests over the interests of paying consumers. We have become their product and do not have control over our own information.
The reality of our loss of control over our own data and identity affects the way we treat each other as human beings, and that’s evidenced by the political realm in the US and other countries. The people causing the divisiveness aren’t the problem, but rather a symptom.
The validity of media is now questionable, and it has become more apparent that politicians aren’t protecting our interests. There’s an obvious incongruity between what we’re being told and what must be true. The challenge here is to learn to discern the hidden agenda delivered as “facts” and to re-train ourselves to support systems which encourage veracity and accountability.
Media tell us information to affect the way we think rather than provid[e] facts to allow us to come to our own conclusion. The pendulum has shifted so far, we feel bombarded by a lack of truth and feel a need to protect ourselves. Once you realize information isn’t given to you as “facts” but as someone else’s purpose, it becomes obvious we need to learn and take action.
Decentralization, as represented by blockchain technology and the decentralized ledger, is all about the reversal of the pendulum, changing from a system where we have a “trusted party” in the middle treating us like products, to maintaining our own data and communication. What we need is a society where people can trust each other directly and no longer have to rely on middlemen who filter truth and knowledge through black box filters.
The community building around decentralization comes from our need as humans to return to peer-to-peer relationships. We are at an important crossroad. There’s never been an asset or accumulation of wealth that’s grown in 12 months at the rate or size that cryptocurrency represents. We have created over $400 billion in value, distributed globally over an 18 month period. This has never happened before in the history of mankind. It is not surprising that existing governments and economic institutions are not sure how to respond.
The Merkle: It sounds like some of your big goals around blockchain would lend themselves to a decentralized governance model. What do you think about those types of projects?
James Haft: I’m an advisor to democracy.earth, and I believe their vision will help decentralize and create peer-to-peer relationships. Having an “identity” is one concept needed in a decentralized economy as a way of having a voice and being counted in voting rather than surrendering it to a machine. I believe in the decentralization and democratization of the vote, and this is a big work in progress. Governments need to fulfill the needs of their population[s] over time, and blockchain gives the people a way [to] make their voices heard.
The Merkle: Despite crypto’s ability to unite people around the world, there’s still hacks, phishing scams, and massive amounts of energy waste as part of the blockchain ecosystem today. These problems put people’s livelihoods at risk as well as pollute. What do you say to this?
James Haft: I view the world as fractals; everything represents everything else. The crypto world is just like all the other marketplaces where we communicate and transact business. When you talk about fraud and bad actors, the common element between activities is that humans all participate and there will always be some people who cut corners or don’t respect the social contract. DLT may offer us a better platform for dealing with this by using open-source code and relying on the wisdom of the crowd.
We’ve been desensitized and taught that centralized methods are the only way to safely do things, and that banks, lawyers, and intermediate companies are protecting our best interests. The reality is these institutions have their own agendas and have been proven not to be trustworthy, either through fraud, intent, or just negligence. Historically, we deal one on one with these monoliths, and either sign their agreements or go away. Decentralization and open-source knowledge sharing allow for crowd-sourced intelligence to identify and correct bad actors and errors, putting the power back in our hands.
The Merkle: Sounds like you’re a big advocate for open source, but what about patented algorithms?
James Haft: I think right now there’s some need for all types of platforms. We are in a transitory period where we need some compromises as we move from centralized to decentralized platforms. In the long run, the open-sourced, crowd-sourced concept will pervade the market as people exercise their power to decide what platforms to use, and there will always be some niche need for patented and centralized platforms and protocols.
The Merkle: What advice do you have for early investors when considering ICOs and new crypto investments?
James Haft: First, buy a small position of something – start with an amount of money you’re willing to lose. Get a wallet and learn how to change fiat cash into cryptocurrency. You’re likely to start with some Bitcoin or Ether, and trade it into a token that’s interesting to you with social or political upside. By investing money, whether you make gains or losses, you’ll get your first taste of investing in crypto and can figure out from there if this environment suits you.
I advise everyone to go through this process, as a basis for gaining an understanding. Most of us don’t have time to manage crypto trades all day, so if you’re making a decision to invest a serious amount of money and will still have another occupation, I advise you [to] buy into an index fund of top coins. This gives direct exposure to the market and fund in equity and early stage opportunities, taking advantage of the structures coming to market that afford liquidity through tokenization.
The Merkle: In general, where do you see crypto evolving?
James Haft: I see the evolution both in terms of liquidity and technology. A big issue today is that the US government’s views and plans for cryptocurrencies is unclear. I see this market developing outside of the US, leaving us behind, if securities and liquidity regulations don’t get figured out. Our government needs to be true to their word and show us they want the capital here by clearly defining the rules and regulations they require and opening trading to maintain our leadership in the capital markets; otherwise, the innovation and growth will take place elsewhere. As of today, the higher-quality opportunities are being exclusively offered outside the US because of our regulations.
The Merkle: What are some innovations in the space or projects you’re excited about?
James Haft: It’s still really early. As humans, we overestimate the short-run impact of technology and underestimate the long-run impact. This is known as Amara’s law. People think they missed the boat on Bitcoin or think crypto isn’t going to last because of the current volatility. Long-term, I think Bitcoin will be remembered as the first example of a distributed ledger which worked and gained critical mass, and, possibly, not something financially or technologically important. We need faster, more flexible forms of consensus building. Even Ethereum, [despite being] a brilliant step in the right direction, may still be just a footnote.
There’s already technologies that form consensus on smaller blocks of data with more reliability, and zero-knowledge proof platforms that allow consensus without sharing private information. I’m also interested in the concept of identity and personality for how we transact using decentralized modalities as an innovation that leads to opportunities.
The Merkle: How have the new SAFT frameworks affected your decision-making? What will their impact be on the industry over time?
James Haft: The SAFT is a temporary band-aid for an artificial problem that will go away within the next 12 months. The SEC is choked up about the differences between security and utility tokens and how to place and trade them. These issues are based upon the government’s paralysis in understanding how tokens actually work. We’re not big fans of SAFTs, but CryptoOracle is participating in some of these offerings, as it’s the only way we can participate in some of the new projects.
The Merkle: What’s the question you wish someone would ask you in an interview but hasn’t? What would your answer be?
James Haft: Actually you asked it, and you gave me the opportunity to cover what’s important to me. Can we discuss the questions I do not enjoy instead? “Is it a bubble?” “How much will Bitcoin or Ethereum be worth?” These questions confuse cause and effect and distract from the complex societal issues we need to discuss more openly, such as the causes of, and opportunities generated by, the political and social impact of decentralization.