As part of our efforts to bring you the latest news and updates from the crypto world, CoinQuora is speaking to specialists in the field to give you deeper insights into the digital asset space.
This week we spoke to Mati Greenspan, formerly a senior market analyst at eToro, and founder of Quantum Economics. He’s a well-renowned name in the crypto industry and trusted for his analyses of the financial sector.
Q. Let’s start with who you are. We know you’re big in the finance industry, you’ve also got big names in the financial industry like The Financial Times, The Wallstreet Journal taking comments from you. Could you tell us a bit about your background?
My name is Mati Greenspan. I’m a licensed portfolio manager in the European Union. I’m the author of the book, The Complete Guide to FinTech investing. I’m also the CEO and founder of Quantum Economics, which is a firm for FinTech research, analysis, and money management. I’ve been in the investment world since I was about 13 years old, tracking the price of gold on my grandfather’s Wall Street Journal, and have been in love ever since with markets and capitalism.
Q. How did you get into cryptocurrency and decentralized finance?
So, I’ve been working in various online brokers since 2008. In 2013, I was with my third broker, eToro, which I was with a total of seven years, seven and a half years. And, of course, you’d probably know, Yoni Assia, the CEO of eToro, he is a visionary. He has been writing about the tokenization of financial assets since 2011. So he actually gave me my first Bitcoin back when it was $30.
Q. Can we talk a bit about your newsletter, Quantum Economics? As in, what sort of content do you share with your readers?
Yeah, of course. So I’m writing a newsletter every day, which is available for free on quantumeconomics.io. I actually spend a lot of time and energy with the newsletter, because this is my way of conveying the analysis that I’m doing to the general public. And it’s a great way of gathering feedback because people are responding every day with their thoughts and more information, links for further reading, and questions. And of course, they are well-thought-out questions that really help me to think a matter through properly.
Q. We’re aware that you also share content on Medium and you’re very active on Twitter as well. Is it the same kind of content that you share on both places and your newsletter?
Twitter is going to be a lot more hands-on but a lot less thorough. A lot of the time, if I’m writing about a subject for my newsletter, I’ll test out theories on Twitter. A lot of the time when you see me tweeting, its because I want to know more about something and not because I already know something. Actually, I’ll tweet something and say, okay, here is a theory. And then the feedback that I get will either prove/disprove or give me a bit more exploration into the matter. That will help me of course, write the newsletter, which will be a bit more final, a bit more thorough and understanding because there’s a lot more space there, I can add different graphs. On Medium is where you’re going to see the work of my analysts. We have 20 analysts around the world in Quantum Economics. Each one of them, I would consider an expert no less than myself on the specific subject matter that they are involved in.
We have specified analysts for stable coins, one for decentralized finance(DeFi), of course, an analyst for Bitcoin and NFTs. These people have access to a world of knowledge which I could not myself, keep on top of every single update that comes out in the world of NFT’s and DeFi and all of it together. So this is why we have analysts who are in charge of this specific sector. They’re also diversified geographically so that we have people from all over the world, on our team, and that just gives us more knowledge and understanding of the inner workings of the global market.
Q. Why the name Quantum Economics?
Quantum Economics is a name that’s been bouncing around in my head for many, many years ever since I first got fascinated with quantum theories and economics and how the two can mix and match together. I actually had a blog on Tumblr back when that was popular, called Quantum Economics. People that saw my blog, you know, they just really just liked the name, and I loved it. So I just kept it moving forward.
Q. What do you personally think about DeFi and NFTs?
My theory about DeFi and NFTs is that these are the future of the World Wide Web. We’re moving quite rapidly to web 3.0, which is basically the Internet of Value, meaning the same way that we’re sharing information today, we will be able to share things that have value in the future. The way that we do that is through tokenization, through blockchain and distributed ledger technologies, which let us really track ownership in a way that simple file packets cannot do. The practical applications of this are virtually limited only to our imagination. I think that we still haven’t even scratched the surface of what is possible to do with these things. We can’t even imagine, at this time, because we don’t have the frame of reference. Only in five or 10 years from now, will we really be able to understand or grasp the concepts of the Internet of value.
Q. Are you happy with the way the industry is turning out? Do you think there should’ve been faster growth in decentralized finance, or that it’s on the right track?
I think that it’s growing extremely fast and extremely slowly, both at the same time. We have this kind of expectation that we always wanted things now, now now, right? And especially in this world, we find that instant gratification is something that the world is moving towards, at a rapid pace. To the point where we look at our phone to find out what the time is three times before we even realize what we were looking at it for. There are these distractions all the time. But if we look at the pace of growth—and it’s easy to see in the world of cryptocurrencies because we have the price movements that have such rapid appreciation in many cases. We see the price of a specific coin will rise and fall 1000s of percentage points. And then, of course, the number of coins out there and we can see the amount of money that’s moving into the DeFi market. These things are growing on a percentage basis anyways, faster than anything I’ve ever seen in my career and I believe faster than anything we’ve ever seen in human history. So, yes, it might feel like ages, but it really is in the last couple of years we’ve seen the invention of an entirely new area of the internet.
Q. What do you have to say about Bitcoin’s price? Who do you think are the major players influencing, or apparently influencing, it? Which is the main influencer?
It’s difficult to say at the moment. I know that we’ve seen Bitcoin slide from around 64K, all the way down to around 30K, even just a bit below recently. And I think that there was a multitude of factors that really led to that. The number one in my mind was that the market was over-leveraged, to begin with, meaning that there was just way too much leverage available for new traders who really didn’t have any business accessing that level of leverage, to begin with. That’s due to a market that’s largely underregulated and companies like Binance who have been pushing it. Because, obviously, they make a lot more money from the leverage trades and the advanced products than they do when people just buy and hold.
But we had a mass liquidation event recently, in which 800,000, people got completely wrecked. And that’s mostly new traders who don’t really know what they’re doing. So I think that that’s a major factor. And now it’s going to take a while for us to build up that kind of healthy leverage in the market again.
Again, I think that China’s mining ban played a very significant role in the hash rate for sure. We can see that the hash rate has come down very significantly, and that also has an indirect impact on the price. And then we have also the, you know, Elon Musk, and who I don’t think necessarily is is an influencer in himself, but rather-well, he is not an influencer of the price-but more of the general psyche and psychology. He’s guiding people’s thought process as far as cryptocurrencies, for better or for worse. So I think that those three factors have kind of led to the price movements recently. Going forward, there isn’t any real way to know what factors might influence it in the future. We can only analyze these things based on the past.
Q. You spoke of the regulation of cryptocurrency, and that’s a really sticky topic. What do you think about crypto regulation practices right now?
I think that the recent announcements from the FCA and even in Japan highlight that, that the G20 is not very happy with Binance in the amount of leverage that they’re offering. That said, they seem to be kind of leaving cryptocurrency alone for now. I think that in a large way, many countries in the United States are underregulating the crypto market and don’t have enough clarity as far as how things should proceed. They’ll get there in time, but certainly, I’m in no rush. Let them figure it out as they go. But the most important thing is that they don’t come out with some kind of sweeping reforms that are put together by people who don’t understand the technology because that’s the most dangerous. Technology needs to be allowed to flourish. And we can see that case in point I wrote an article about the Basel accords which are designed to prevent another crisis from 2008. But they really failed to do that. Because what they’re doing is they’re saying, okay, well, if you’re holding paper gold on your balance sheets, then it’s more risky than holding physical gold on your balance sheets. And I don’t think that the regulators should be in a position to say that because a bank doesn’t need any regulator to tell him what’s more risky or if it’s not. They paid people billions of dollars to know what’s risky, what’s not risky.
The regulators don’t pay people billions of dollars. What the regulators should be doing is holding people accountable for the 2008 financial crisis, putting people in jail, or giving them fines which match the crimes or at least the income that they’ve made. Instead, they gave the bankers bonuses. We can see that also in Robin Hood. FINRA gave Robin Hood a fine of $70 million, which for Robin Hood is nothing. In the last six months, the valuation of the company grew from 20 billion to 40 billion, what $70 million? It’s silly.
Q. You said that the US might be underregulating for crypto. What do you mean?
The United States is a bit funny in this regard, I suppose. They really dropped the ball on cryptocurrencies. They had an SEC Chairman in 2017, who came out with a very crippling precedent for all things that have to do with token, tokenomics. He basically said that everything that’s token is a scam, or at least he said, it’s a security and must be registered with the SEC, of course, his own organization. And if it isn’t registered with the SEC, then it must be illegal and subject to a fine. This was just something that caused all projects, and all people who were working on the web 3.0 to move away from the United States. And because other countries were able to get a basic framework in place to say, okay, this is a scam [and] this is something that could be a legitimate project. Switzerland, I think, was one of the first to do this in March of 2017. Shortly afterward, Japan and Singapore, and Europe very quickly followed. And this was three, four years ago. The United States still hasn’t done this. They’re still holding fast to their precedent set by the previous SEC chairman. And I think that it’s just a shame for the United States in general, because they’re usually the leaders of technology. But I could see how those in power in the US would rather not see this type of innovation specifically in the area of FinTech. Mostly because, you know, that’s where the money is in America; in the financial sector, and in Wall Street.
Q. What do you think about El Salvador’s decision to make accept Bitcoin as legal tender? Do you think other countries will follow? In that case, where do you place the United States?
The US is very far from there (not physically). El Salvador, I think is a very interesting case. On the one hand, I think that it’s very good for the economy to open up in a way like this. I think that it’s going to open up new opportunities for the country that certainly would not be otherwise available. I think that it’s going to attract industry. Case in point the people who are trying to build and are from the United States are not going to want to build in the United States. They’d need actually a place to live in, to operate, and many of them will end up going to El Salvador, especially the ones who haven’t already gone to Puerto Rico or other countries that have passport-friendly jurisdictions. On the other hand, I think that it’s very difficult to, for a business owner to, kind of manage a business in Bitcoin, because of the volatility. So let’s say if you’re I don’t know a farmer or involved in any kind of industry that requires time to manufacture goods, you’ll find that your price points can change drastically from the time that you make the purchases that you need, until the time that you sell your products. And you know, that’s good if you bought your goods for very cheaply, and now you’re selling them when Bitcoin price is higher. But let’s say just for example, somebody would have bought their goods in Bitcoin, when the El Salvador announcement was made, and their goods are now ready for resale, and Bitcoin is half the price. It’s not a great way of doing business. If your life is solely based around Bitcoin, and you only see that the Bitcoin balance, maybe it has less of an impact on you. But that would also assume that everything around you is also pegged to Bitcoin, meaning that the entire country’s economy and I would assume it’s not yet that that can only happen in stages.
Certainly, there are ways for business owners to mitigate these risks by futures contracts, or basing their balance sheet in a stable coin that’s pegged to the US dollar. But how does that help them over the current situation? It just means that they need to be a bit more finance savvy in order to run a business. That doesn’t necessarily have to do with finance.
The thing is… that it gives people choice. I think that in and of itself is a good thing, that it gives people that kind of freedom. And that’s really what Bitcoin is about.
Q. Do you think more countries will adopt cryptocurrencies as legal tender in the next five to ten years? Bitcoin or any other leading cryptocurrency such as ADA or maybe Ethereum?
Well, ADA, I think, at this point on the ground doesn’t have nearly enough adoption to hold it as a market steady currency. Ethereum might, but I don’t think that any politician at this point would be forward-looking enough to see that as, because who would want their currency in a position that could easily be influenced by I don’t know, Vitaliks Buterin saying, hey, we need to fix the issue and then say, okay, we need less 50% Ethereum coming online or something like this. Obviously, Vitalic would take such decisions very heavily, but I don’t think that there’s any politician who understands the space well enough to make those types of statements. What I think is that there were several countries, especially among South America, who during the Bull Run, were extremely in favor and now that they saw the pullback they said, well, well, wait for a second, hold your horses over there.
People who come into crypto have stars in their eyes or ‘laser eyes’ as the case may be, about how price might move but then they quickly wake up to the reality that volatility goes two ways. So I think that a lot of politicians around the world are going to be looking at El Salvador as a kind of a test case. Now that it’s on their radar. Now that they’re into it. Now that they have the laser eyes. Those laser eyes don’t go away. I had them too, and I still have them. They’re just very, very deep inside of my corneas at this point. To the point where you can’t see them from the outside.
The idea here that I’m trying to convey is that volatility, in the end, is a good thing. But its kind of one of these hidden good scenarios where you don’t really see the good apparently. It’s not quite apparent to the outside world. And I think that it might take a few years of El Salvador’s hard, hard labor and trials and tribulations for people to understand and for countries.
I mean, recall that just because a politician in Paraguay decides to put his laser eyes on, it doesn’t mean that the entire country is on board, and certainly doesn’t mean that he has the legislative power. El Salvador was unique in that they have a democratically elected leader who kind of has this full autonomy over the country and legislative power. He had power over Congress and power over the Supreme Court. In some cases, he has critics over there, too, that he took by force. So that worked in favor of El Salvador’s Bitcoin journey. But I don’t think that there’s any other country that has the full force of the government being Bitcoin-friendly, and I think that it will take a lot of time before we get there. El Salvador is going to be an excellent case study for this.
Q. Can you talk a bit about Ethereum? What do think about where its going, the issues with it right now? What is your personal opinion about it overtaking Bitcoin?
So I believe that Ethereum, I mean just like Bitcoin is the future of money, Ethereum is the future of the Internet. Everything that’s innovation, that’s being built right now, is all being built on Ethereum. Bitcoin stays what Bitcoin is, a better form of money, but Ethereum continues to evolve and teach us new possibilities of what we can do with the internet. So I put out a poll on my Twitter page, which is pinned to the top of my Twitter at the moment, which is basically asking people when will Ethereum’s market cap rise above Bitcoins market cap. In my mind, it’s really just a matter of when and not if simply because of the transformative potential. I believe at the moment about 38% disagree with me and say that Bitcoin will always be more valuable than Ethereum as a network. I think that the sweet spot is people thinking that it’s going to take about two to four years before it overtakes. As an investor, it doesn’t really matter, because you own some Bitcoin, you own some Ethereum, and some of the projects that you feel most strongly about. Whatever happens in the future, we can’t know right now, but it will happen as it happens. Maintaining this diversified portfolio, we can take advantage of these types of things, no matter how they work out.
Q. With the new update that’s coming out, do you think ETH price will rise?
I feel very strongly that especially in the short term, it’s quite impossible to know if the price will rise or fall. I think that very few people can do this with any degree of consistency. Even those who do may be relying more on luck than they care to admit. I wouldn’t say that anybody who tries to predict the future based on past data is a fraud, but at least they might not necessarily understand how markets work.
My best advice for anybody in the market is that think long-term. And, you know, have a diversified portfolio that consists of not only the different types of cryptocurrencies but also other assets like commodities, real estate, stocks. This is what’s going to keep you afloat when there’s a pullback in one market. You’ll be able to see your equity and your sanity staying more or less stable. And this is the way that you can grow your wealth in the long term, rather than get wrecked on trading on leverage. Which is, to me, I mean, it’s okay, it’s fun, sometimes it’s fun. But for some people who don’t necessarily know what they’re doing… I’ve seen people lose their life savings, which is not so fun. So I think that, in short, this is kind of my advice.
Q. What is your opinion on meme coins?
I’ve had Dogecoin from the very beginning, somebody sent them to me in 2014, I think it was. I must have been one of the first few 100 or a few 1000 people to touch it. I thought it was it was fun at the time, and I still think it’s fun. It’s kind of a funny way to explain to people how cryptocurrencies work and that their value can be tied to pretty much anything, including the size of the network, or a meme, or something that people spend their time on and understanding the value of networks. And as the network grows, you know, the value of the coin can grow as well. I think that it’s seen some kind of incredible, awesome growth, that’s very difficult to surpass, which is why people come out with different meme coins that they think can grow just as fast. Overall, those new meme coins represent the split in the network, and a splintering, which is not generally conducive to adding value.
Obviously, if we all moved over together, then it would create that value. But obviously, we’re not going to all move over together, rather, some will believe that this is a good thing, and some will believe that it’s not a good thing, and then the market does its thing. I think that the ones that manage to maintain a community and introduce utility, those ones are going to be the ones that are better off. But even if they are better off, some of them may never surpass their previous all-time highs, as far as price points are concerned. And some of them may surprise you, and you’d never really know which ones there are. There are dozens coming online every single day and as a novice investor, I think it will be almost impossible- even as a professional investor- I think it’s very difficult, if not impossible to figure out which of these joke coins is going to actually catch on. I like Doge because I’ve always liked it and I’ve always held it on some level. But you know, trying to predict the next Doge, I say no way.