Peter Smith, the best network choice of a 32-year-old Crypto CEO

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Peter Smith is the CEO and co-founder of Blockchain.com, a crypto startup backed by Baillie Gifford. At the Token2049 conference, the 32-year-old shared his take on DeFi and the Layer Two landscape. He also explained an area of ​​the crypto market that makes him nervous, which could lead to a “collapse.”

Over the past 10 years, Peter Smith has built Blockchain.com from scratch into a crypto unicorn that earned a valuation of $ 5 billion following its latest Series C fundraiser which was backed by the Scottish asset manager Baillie Gifford and DST Capital.

According to a Smith blog post, Blockchain.com is already “very profitable” in a number of industries, as it provides institutional and retail investors in more than 200 countries with a range of means to trade, secure and use cryptocurrencies. Instead, the new cash explosion is being used for acquisitions, as well as product expansion and hiring.

Acquisitions and venture capital investments are extremely important in the cryptocurrency market, which is constantly evolving at breakneck speed. Despite being the CEO and co-founder of a leading cryptocurrency company, Smith struggles to keep up with trends. He considers himself a “crypto boomer”, like someone who entered space in 2011 after Gavin Andresen gave him his first bitcoin.

“I can’t even keep up with the young trends,” Smith said in a fireside chat at the Token2049 conference in London last week. “So I’m like a grandfather at 32.”

Being a “crypto boomer” means that Smith has witnessed the ups and downs of crypto market cycles, which helps him spot the differences between speculation and the game-changing trends in the market.

One trend he says is here to stay is the need for layer two networks.

These networks provide scalability to layer blockchains, such as bitcoin or ethereum, which are slow and expensive, making them more difficult to use to solve real-world problems at scale.

One of the most promising solutions are rollups, which execute transactions outside of the main blockchain and then publish that data to the network. This improves speed while still being secured by the layer one solution.

Smith is keeping a close eye on the evolution of layer two networks, as Blockchain.com handles a significant number of transactions. However, with many second-layer solutions still in their infancy, Smith’s investment strategy is to try to encourage and support as many projects as possible by investing in the five or six market leaders.

Of all the options currently available, Smith currently sees a lot of potential in the Polygon network.

“I actually think layer two is going to work,” Smith said. “Polygon is already working. I’m a huge fan of Polygon, which is controversial. Some people don’t like it because it’s not a classic approach. [it] but in my book it works, and tons of people use it. “

Polygon (MATIC) is a side chain. Side chains are seen as a shortcut to scaling, which makes them controversial. They operate in parallel with the main blockchain but are not technically a two-layer solution as they have their own independent blockchain, consensus and security mechanisms. This means that they sometimes have security gaps.

However, Smith likes Polygon because it already works, which fits with his personal philosophy about building products, rather than talking about it.

“I like shipping products. I don’t really like tweeting, I don’t think it’s productive,” Smith said.

Without Layer Two networks, Smith doesn’t expect decentralized finance (DeFi) to be widely successful, as transaction costs are currently too high to justify current use cases. DeFi allows parties to conduct financial transactions directly with each other by removing intermediaries and using blockchain technology for the transaction.

“I think I have this big bias towards product engineering in general, where I just give people who ship things that work a lot of credit, versus technical superiority,” Smith said. “I love Polygon, I think it’s pretty cool, but I think most of the stuff that goes to layer two will come back to the Ethereum blockchain.”

He also expects that many Layer 1 blockchains compatible with the Ethereum VM will eventually become Layer Two networks.

One area of ​​the crypto market that is already seeing significant transaction traffic is the non-fungible token (NFT) space with around $ 499 million in transactions taking place in the past seven days, according to NonFungible.com.

During the conference, Smith confirmed that Blockchain.com will be launching an NFT-related product for customers in the coming weeks, but explained that he was “nervous” about some of the levels of speculation within that market. . NFTs are essentially digital collectibles that represent real world assets, ranging from artwork to music, video and beyond.

He currently finds it difficult to judge how much interest is currently around the collecting side of NFTs versus what is simply a “hot money game”.

At the end of a “hot money game,” some customers are still injured, Smith said.

“I think everything in the crypto world usually goes through this cycle of hype and then there is like a blowout,” Smith said. “And then people rebuild and build things that have real value. And I think it’s probably going to explode, so I’m nervous about that space until this eruption first.”

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