America is an “Aging Empire” and Falling Behind Crypto

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BeInCrypto spoke exclusively with Omid Malekan, professor at Columbia Business School and author of Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms.

Omid Malekan first discovered Bitcoin in 2013, after a friend asked him to buy some on that friend’s behalf. Before that, I had no interest. My impression of Bitcoin was, like many people at the time, that it’s just a weird thing on the internet that attracts drug dealers, Malekan said. However, interacting with Bitcoin soon changed my mind. Its epiphany came when the Mt. Gox cryptocurrency exchange was hacked in 2014.

At the time, it was the largest exchange of its kind in the world, handling over 70% of all bitcoin transactions globally. It was the notion of digital scarcity that triggered the revelation. For the first time in the history of the Internet, something valuable was stolen and could not be replaced. And that was not possible before Bitcoin. It was this epiphany that sent me down the rabbit hole. It has become quite a career.

A decade later, Malekan is teaching cryptography to students at Columbia Business School. Possibly the most prestigious business school in the world after Harvard. He is also the author of several books on the subject. The latest is Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms.

Malekan is currently an Adjunct Professor at Columbia Business School. The aging empire

As an American, Malekan has had a front row seat to watch the United States turn against crypto. Operating a crypto business, or even trading cryptocurrencies, in the country is becoming increasingly difficult. Banking regulators have increasingly attempted to drive crypto out of the financial system. Law firm Cooper & Kirk described this as Operation Chokepoint 2.0. (The original Operation Choke Point was an initiative launched by the Department of Justice in 2013 to investigate banks doing business with high-risk businesses such as payday lenders, gun dealers, and online gambling sites. online games. Critics argued it unfairly targeted legitimate businesses and limited access. The Trump administration shut down the operation in 2017.)

Gary Gensler’s tenure as SEC Chairman has been marked by an anti-crypto attitude. The Biden White House now sees crypto more as a threat than an opportunity.

Malekan called the US government’s attitude misinformed. It’s counterproductive, he says. I’m almost embarrassed to say that America now acts like an aging empire that just feels threatened by a new kind of financial system. And instead of trying to figure out how to evolve to adopt it, there’s this hubris within these regulatory circles that, well, we’re just going to shut it down. We will deal with crypto on our terms using very outdated laws.

Ultimately, this technology will become mainstream because it will solve important problems, Malekan explained. He’s also extremely global and borderless, so if he doesn’t find a home in America, he will find a home elsewhere. And that means a large chunk of jobs and tax revenue will now go to countries other than the United States.

A solution looking for a problem?

One of the most common criticisms of cryptocurrency and blockchain is that they are a solution in search of a problem. Many of the world’s most quoted financial and technical minds have criticized the technology, including Bill Gates and economist Paul Krugman. Warren Buffet called crypto rat poison squared and said they would end badly.

How does Malekan respond to the claim that crypto doesn’t solve any real problem?

I can spend hours talking about it, he said. Whenever you hear someone make that claim, and I’ve heard it almost universally too, it’s an affluent elite living in the highly developed world. It’s usually someone like a professor or a banker in a place like New York or London. It’s very telling when they say things like, well, we don’t need blockchain or crypto because we have credit cards. Apparently, it doesn’t occur to these people that the vast majority of humans on the planet don’t have a credit card. Merchants and businesses would like to find an alternative to credit cards because of the fees they are forced to pay. Even in places like New York.

This dismissive attitude is an insult to millions of crypto users, he said. To say that is to say that they are all idiots and have no idea what they are doing.

If we want to break it down in detail, many people have used Bitcoin as a way to protect their purchasing power against very high inflation. Many artists have also found that NFTs offer them new ways to earn a living and interact with their fans. Some companies have started using things like stablecoins to make cross-border payments more efficient. And the list goes on and on.

Cryptos Tribalism

Malekan also has many caveats about crypto, including speculative excess. But, above all, he hates the tendency to rally behind those outspoken prophets and leaders who then turn out to be criminals and psychopaths like Sam-Bankman-Fried. It’s a very crypto thing.

The crypto community also tends to treat their favorite coins like football teams. Are constantly jostling to prove that their project is the best.

I think sometimes they act like they are actually religious movements,” Malekan said. “They have their profits, and then they excommunicate those within the movement who dare to question whatever fundamentalist vision.

I’m always amazed when I meet people who truly believe one project and one coin and reject all the others out there. To me, that’s absurd. There has never been a technology that has only one exact application.

Money has always lent itself to this kind of tribal passions. And then beyond that, unfortunately, is the world we live in on social media and the polarization and tribalism of everything.

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