With over 21 years of industry experience, Technology Strategist Gil Luria has an extensive background in technology research focusing on e-commerce and financial technology companies. Gil joined our firm in 2017 as Managing Director, Head of Institutional Research, and transitioned to a software analyst in 2021. With regular appearances in the media including CNBC, Bloomberg, Wall Street Journal, The New York Times, and NPR, recently Gil has focused his interest on covering trending industry topics such as artificial intelligence, large tech companies, and cryptocurrency. When Gil isn’t in the office, you can find him carpooling his sons to sporting events.
Do you recall the first time you heard about crypto? If so, what were your initial thoughts?
I first heard about bitcoin (and the crypto movement) in 2013 on Twitter. My initial response was totally dismissive: “this can’t possibly work,” then “Visa can do this better,” “the government will shut this down,” etc. It intrigued me enough to do more reading and talk to people involved, at which point I realized there was some real innovation and particularly interesting subject matter. I proceeded to do so much research that in December of 2013, I published the first Wall Street research report on bitcoin, which led to a series of conference speaking engagements and CNBC appearances. As I met more people in the crypto community, I realized that the community was a cornucopia of technology wizzes, talented entrepreneurs, and ideologically driven enthusiasts, as well as a lot of questionable actors. One of the unique aspects of crypto is that it creates a built-in financial incentive to be involved in the promotion of a specific crypto asset which created positive motivation for some and more questionable motivations for others.
Would you explain what crypto is to the lay person? And how does it work?
Crypto assets are digital tokens that hold value because they have scarcity (there is a limited number of tokens) and utility (they can do something, e.g., move money, represent another asset). These digital tokens are entries in a new type of database—a blockchain. A blockchain is different than other databases in a few important ways:
- Decentralized – it is stored in thousands of independent computers, not one data center.
- Immutable – it holds a record of ownership going all the way to an initial state that cannot be tampered with.
- Secured by cryptography and tokens containing value – only the combination of a user’s public key (the equivalent of an email address) and private key (the equivalent of a password) can unlock a digital token.
That makes a blockchain a very unique database because instead of just allowing read/write of information, it allows read/write/own—helping keep track of valuable assets represented by these digital tokens.
How does one go about purchasing crypto?
The easiest way to hold crypto assets for the sake of investment is through the digital wallet already on your phone—PayPal, Cash App or Robinhood. These are regulated U.S.-based companies that already hold other assets (cash, card information, and stocks) and are capable of holding your crypto assets. Having said that, to really leverage the capabilities of crypto and the blockchain, tech-savvy investors and traders sign up for a dedicated crypto wallet that can allow them to keep their own private key safe. While it is easier to let PayPal or Cash App manage your private key, it also means that if those companies get hacked, someone could steal your crypto.
What can one buy with cryptocurrency, and how?
Using crypto to purchase items online is a very specific (and not particularly interesting) use of the technology. Our existing credit, debit cards, and digital wallets work great and don’t cost the consumer anything, so crypto doesn’t really solve a problem in terms of shopping. For enthusiasts who only want to have crypto and use it for everything, some websites accept payment in crypto, including Overstock and many Shopify merchants.
Is crypto safe to use?
Many crypto markets are still a little bit like the wild west—there are good guys and bad guys. We would recommend using common sense—would you give you stock portfolio to a company headquartered in Slovenia, Singapore, or The Bahamas? Would you open a bank account there? Then why would you trust them to keep your crypto? If you hold your crypto private key yourself, no one can steal it from you, and if you give it to a financial institution you already use, it is as safe as the rest of your money.
In recent, the world of cryptocurrency has been overshadowed by the trending topic of artificial intelligence (AI). Has crypto lost some of its appeal? Fill us in on what’s currently happening.
For many entrepreneurs and crypto enthusiasts, other new technologies are exciting specifically because of how complimentary they are to crypto. Metaverse? An exciting new place where crypto can be a currency. AI bots? They will use crypto as well!
Every new technology holds great promise of helping humanity move forward. It is a good idea to keep in mind an important adage: every transformative technology takes longer to change our lives than we initially think and ends up having even more of an impact than we ever believed. I expect both crypto and artificial intelligence to fall into that category.
Any other thoughts to add?
My investment recommendation around crypto has always been to think about it like lending money to your cousin to open a restaurant—don’t invest any more than you are willing to lose.
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