ValueWalk’s interview with Dr. Kapil Amarasinghe, the UK Community Ambassador to the Particl Project. In this interview, Dr. Kapil discusses his and his firm’s background, his views on bitcoin, how he values a new asset or currency as bitcoin, fiat currencies might need to digitalize to stay relevant, his thoughts on Ethereum, advice for clients getting into cryptos, if Facebook’s Libra is a PR stunt and how to join the Libra association council, why the congress is against Libra, if Libra can be used for illicit transactions, if the SEC is taking the right approach to crypto regulation, and treating crypto a currency not a commodity.
Dr. Kapil Amarasinghe is a passionate advocate for blockchain technologies, individualism, privacy, borderless trade and well-being. His cryptocurrency work includes the intelligent investors’ guides to cryptocurrency and to Particl. Mr. Amarasinghe created and ran a a web platform and film production company for artists, artradio.tv, and helped develop the mobile app, map-em, which was nominated for a 2016 Digital Health Innovation Award at the 24th Triennial Conference of the Commonwealth Medical Association. Mr. Amarasinghe is also a practicing Doctor in Emergency Medicine for the past 9 years, offering a broad range of expertise and insights on health and social care. His worldview is an intricate extension of these insights and interweaves psychology, politics, healthcare and economics. Mr. Amarasinghe is passionate about companies with world-changing potential, including the geopolitical implications and impact of blockchain technologies. He is also an active supporter of Ethereum, MakerDAO and Particl.
Q3 2019 hedge fund letters, conferences and more
Can you tell us about your background?
I am an Emergency Medicine Doctor practising in the UK. I am also the UK Community Ambassador to the Particl Project.
When did you start your firm and what does it do?
The Particl Project officially kicked off in early 2017 following a donation period and token swap from a precursor project SDC to help found the Particl Foundation which has led development up to now.
We have built the world's first, live, working fully decentralised, trustless, private eCommerce platform that potentially allows vendors to sell actual goods and services for more profits and buyers to pay less for them in almost all instances compared to traditional eCommerce platforms. We've leveraged the power of blockchain technology to create a platform where this competitive advantage can be maintained until we either absorb all vendors globally or until competitors and existing eCommerce vendors choose to adopt our fundamental model and achieve market saturation.
This is partly because we provide services that no other eCommerce or payment processor provides without significant costs they usually charge e.g. our commission free escrow, commission free sales, potential for multi-currency support (currently our native PART token and BTC but rapidly expandable in the future due to some upcoming announcements with various service providers) and tools to help vendors build an infinite number of customisable storefronts with their own unique addresses and product listings that allow vendors and busineses the ability to build marketplaces with custom audiences and further leverage our privacy technology to gain competitive edges by being able to mask their supply chains, manufacturing processes and transaction flow from competition at near zero cost.
When did you get into cryptocurrencies?
Me personally, I was aware of Bitcoin in 2012 and wish I'd bought in; too many ER night shifts! However Ethereum caught my eye in 2016; I saw the value of smart contract platforms for generating wealth via efficiencies and as a speculator jumped right back in the rabbit hole.
The experience has taught me a lot about markets, currency, speculation, trading and liquidity but more importantly emphasised the importance of fundamental value as providing convenience, solving real problems and long term reliable service provision; It's why I'm a proud member of the Particl Project today.
What is your view on bitcoin?
Digital gold. It's got no storage cost, occupies no physical space and is much easier to transport as a result. As such I believe it has the potential to absorb the market cap of Gold which means there is still considerable growth ahead of it in the digital cryptocurrency field. Unfortunately it is too slow and expensive to transact as a currency at base level although I believe proliferation and advancement of the lightning network will continue to improve and eventually solve that. It has great liquidity but I genuinely wish its proponents would stop wasting time touting ETFs and other speculative instruments as the way forward for it's growth and focus more on end user adoption, accessibility and education.
Most average people still don't understand cryptocurrencies. They know the name Bitcoin but the concept of currency, value or blockchain is something they are oblivious and indifferent to. Let the infrastructure grow, pivot away from maximalism and more towards collaboration and integration with various sectors including other cryptocurrencies (much like we are) and allow the ecosystem to mature to a point where the average end-user isn't even necessarily aware they are transacting in Bitcoin, Particl or other cryptocurrencies; then the market cap of this sector will grow astronomically.
How do you value a new currency or asset like bitcoin - how do you decide if you want to buy, sell or hold it?
Does it have liquidity? Does it have at least one useful non-speculative use case? Are there people already using it for non-speculative purposes?
Particl currently lacks liquidity having gone live with it's working marketplace at the end of August 2019 but we are currently tweaking the interface and our listings continue to grow. You could use it today to securely buy and sell goods without any sign up or giving any personal information; just download our desktop client. Our tokenomic model is designed to encourage word of mouth adoption as the network grows and both vendors and buyers of real world goods realise the numerous benefits of transacting on, learning about and using our platform. We anticipate inertia but our model is thought through, sensible and easy to explain if you choose to deep dive it.
What about Bitcoin alternatives like gold and cash?
Fiat currencies will definitely need to digitize if they are going to stay relevant. Local governments could utilise smart contracts into distributed ledgers to automate taxation, improve transparency and eliminate corruption if they plan their solutions and deployments carefully enough. There is still a large segment of the world that remains unbanked because they do not have access to smartphones, computers and tools required to transact digitally and if they do they may not have good enough access to the internet or data networks required to do so. Then there's the question of education.
I'm a great believer that finance should be included as a core component of every core educational curriculum in addition to maths and local language; people remain unbanked largely because they don't know anything about banking!
As for gold well it holds a lot of cultural value that has accrued over time and to an extent it will hold for a number of years; as I've said the physical convenience of Bitcoin and other cryptocurrencies will eat into that market cap purely because there is a need for a more portable store of value. I've seen a lot of tokenized gold products appear and largely find them uninteresting since Bitcoin does the same thing with less administrative hassle. That said if we look at gold; it's shiny, attractive, useful in electronics and medicine, rare and valued by those who don't understand cryptocurrencies which is still the vast majority of the planet at this point.
Why about ether and other big cryptos?
Ethereum is an excellent platform. It birthed MakerDAO which I'm a big fan of. They fathered smart contracts and DeFI and it's the platform that reintroduced me to crypto and inspired me to learn about this industry.
I do have reservations over the penalty system they wish to introduce for their proof of stake transition which I'd happily discuss with their core team sometime and honestly wish they'd just get their scaling sorted out sooner; I also am not so fond of the maximalist mentality I've seen creep into their channels of late. There are a lot of smart contract platforms emerging; Ethereum has a clear lead in terms of development pool and established network effects. More importantly it has liquidity and some good apps but again they need to work on user interface, accessibility and broadening adoption and they need to work fast otherwise a competitor will take their place.
As far as other big cryptos go, in my mind there's so much going on in this space but at the same time it sometimes feels like so little. Attention is very much diluted much like time is and honestly I've not had a chance to think in depth about the top 20 / top 100 for a while. Some of the most interesting projects I've seen are little heard of projects with really interesting use cases that I've seen at the conferences I've attended this year.
I personally don't think it's worth using the term big crypto; if you are a regular person working a regular job, there is no such thing apart from Bitcoin and maybe Ethereum and these are passing thoughts for most people day to day if they occur at all. The space really needs to move away from the idea that it's big and realise that it needs to integrate rapidly with real world use cases, end user adoption and providing an actual convenience and value that everyday people can understand if it's to stop remaining very small.
Are your clients getting into cryptos what do you advice them to do?
Download our marketplace client (currently for Mac, Windows, Linux with iOS and android version scheduled for Q4 2020); In the next few weeks you'll be able to buy and sell goods directly with it using Bitcoin and as more exchanges adopt Particl and increase the PART pairings we will be able to incorporate other cryptocurrencies too. All settlements on our network ultimately occur in the native PART token whether you use Bitcoin or not (we've just designed and will continue to tweak it so that knowing this isn't really important). The Bitcoin functionality should be ready by the next desktop client release which may even be now depending on when this interview is published.
If you're interested in using the marketplace in its purest form, buy Particl (PART) tokens, start staking a few and start being a vendor/buyer of goods on our network today. I'd also advise you to learn more about Spend.com as this will be relevant to our future deployments and integrations.
I would think more conservative investors would look down on crypto investment suggestions, is that the case among your clients
I don't have clients and I tell people where I'm throwing my money, time and resources, explain why and I tell them where I think that's going to lead me. If I did that in 2012 I'd be very much retired and practicing Medicine on a leisurely basis. I had the same option to retire in Jan 2018 after buying Ethereum in 2016; and I was telling people I cared about at the time to buy it then, only for them to panic buy when everyone else was herding in.
I don't really value the opinions of investors who look down on all crypto from and investment perspective. Additionally, I do agree 98% of cryptos are probably bad long term investments but that same rule applies to most regular companies and other investment vehicles too. 90% of businesses fail within the first 5 years; Crypto isn't really any different. Instead I encourage potential investors, traders and buyers to really understand investment hypothesis, Wykoff, Reflexivity, learning about the underlying blockchain/distributed ledger technology, the principles behind running a good business and make careful investments that are proportionate and considerate to their risk tolerance, impulse control, lifestyle and immediate, short and long term fiat needs.
Big talk about libra many saying its just a PR stunt what do you think?
I wrote an entire article on this. "It's called Libra - An existential threat to human rights, data privacy and national sovereignty" -
Libra is not a PR stunt. It's a very clever way for corporations to subvert governments and collectively take over entire countries. My objection to this is that corporate incentives are more maligned than government ones when it comes towards serving the wellbeing and interests of the common people. I think Libra creates a systemic risk of exploiting and enslaving billions of people if it succeeds and think it should be banned at least in it's current incarnation.
Is it really a crypto or more like a money market account? How would Facebook make money off of it?
Libra is not a crypto. Libra is a stablecoin verified by a pseudo-decentralised ledger which is collateralised by the collective assets of the Libra association council. You need to pay $10 million to join that council or provide the equivalent collateral in corporate assets. This gives you the equivalent of 1 vote. You are paying the Libra association for votes to dictate the governance of their system and they are looking to "bank the unbanked" which is a clever code for go to developing countries and effectively provide wallets which use the libra stablecoin as an alternative to the local fiat currencies of those nations.
That's great but if the locals of those countries switch to Libra then the liquidity of those nations local currencies dry up rendering them worthless and forcing their government to invest assets into Libra to gain votes. The trouble is by this point those governments assets will be near worthless in their own currency terms so the power they can buy in voting terms on the Libra association will be severely limited compared to the corporations that were early adopters and backers.
Why is Congress so against Libra? Who won that battle?
To quote my own article:
"Eventually corporate lobbying in regions where Libra use is prolific may successfully push to remove the need for citizens to even pay taxes in their native currency which in turn would force power of banking for these nations away from themselves and towards the corporations and members of the Libra Association Council. Thus smaller nations with weaker currencies may lose complete control over their fiscal and tax policy altogether.
In the most extreme version of this, Governments where Libra use is prolific may be forced to become members of the Libra Association council and in turn may sacrifice their own autonomy especially if their own economic power or weighting (remember 10 million USD = 1 vote currently) isn't significant relative to the other Association members. Say goodbye to local governance and national interests in that scenario."
I've not been following the congressional hearings. I hate to say this but I think Facebook and Libra are very well resourced, know exactly what they are doing and will find a way to subvert opposition to them by deploying those resources in the way traditional lobbying firms do. I hope Congress maintains its stance against Libra and doesn't cave to the inevitable onslaught of lobbying, propaganda and lies that I believe Facebook and by extension Libra are already undertaking.
The weaknesses of representative democracy particularly it's vulnerability to special interest groups have been increasingly exposed over the last decade and are historically all to apparent to any student of the impact of lobbying firms over the last 30 years. Facebook recognises this and I believe they have the ability to subvert Democracy until we switch to a model which enables direct democracy in the sense of 1 person, 1 issues, 1 vote; until then nobody wins this battle.
Facebook is using a patriotic argument to try and mollify the public, but if Facebook has to comply with US law vs lets say Venezuela cant they evade sanctions with Libra?
I'm not aware that a patriotic argument exists for Libra nor do I think one is possible given their economic model even if they try to argue otherwise.
Can Libra also be used for illicit transactions like some in Congress argued?
It's pseudoanonymous like Bitcoin. All transaction flows can be traced so even if it was used for illicit means these could be tracked and frozen. That's not actually the problem; the issue is Facebook and any other members of the Libra association council or indeed any blockchain analyst could perform microanalysis on the transaction flows and purchase history of any individual on their network (even if they say they won't) meaning your level of privacy will be potentially way less than under any current banking or commerce system. If you thought Cambridge Analytica or the alleged Russian election hacking scandals were bad, I can't wait to see what happens if a system like Libra gets engendered in our international community.
At the end of the day illicit transactions can happen with any medium of value exchange. HSBC and other big banks have been caught out repeatedly for illegal activities or facilitating bad practices; in any large organisation there are ultimately bad actors that need to be identified and weeded out
Do you think the SEC is taking the right approach to crypto regulation? What could they do better?
They're taking a mature approach and honestly I like a lot of the judgements they've made. I sense a lot of pragmatism and I think they're working as fast as they can. I hope that we can work closely with them in the future as platforms like ours have a lot of interesting financial and geopolitical implications that warrant study and exploration and may redefine a lot of the concepts associated with cryptocurrencies even established presently.
Do you think Jay Clayton is focusing on the right aspects?
I think so but honestly I think he'll need to have a detailed discussion with us at some point as what we're doing redefines a lot of the concepts of traditional finance in ways that even Bitcoin couldn't imagine.
What about FINRA and the CFTC?
I think it's unfortunate that a lot of US financial oversight and regulation is either blindly copied by the international scene or has a somewhat intrusive nature into the affairs of other nations that house US Citizens which means geopolitically global financial policy is heavily shaped by the US. This is at direct odds with its current presidential administration which is publicly engaged in withdrawal from multiple international commitments. Whilst I appreciate the situation is nuanced, I hope the US government can enact a clearer most consistent position overall on what it wants to do and perhaps ease taxation and investment restrictions on US Citizens residing abroad as this would make shaping the international regulatory framework much easier.
Treat it as a currency not a commodity and get a universal international agreement on this. It's an absolute pain that the UK in my opinion wrongly considers cryptocurrencies as commodities; platforms like Particl exist to prove this is not the case and the situation is actually much more complex. I think we should legislate with intent rather than the current reality as whilst these markets have remained speculative we are rapidly moving into a phase where adoption and non speculative use as a currency will be the dominant theme. Particl is pioneering and hopefully leading the way here so I hope it catalyses the necessary change in thought.
Final thoughts?
I'm very passionate about the crypo scene. I think it has ongoing potential for big impact and I urge you to follow us on our telegram/discord channel or go checkout our project at www.particl.io
