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Security Token Exchanges and Trading Organizations Take on Wall Street

James Haft, CryptoOracle

Summit Meetup Interview

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Transcript


 

Adam Chapnick:

Hey, everybody. It’s me again, Adam Chapnick. I’m here at the Security Token New York City meetup, brought to you by who else? Security Token Academy. I am here with the legend himself, the man, the myth, the Horace Mann alum, Mr. James Haft.

James Haft:

That was good, that was good.

Adam Chapnick:

Yes, well as a Haftley alum, it’s hard for me to celebrate that.

James Haft:

I remember that.

Adam Chapnick:

All right, so this is kind of funny, because we’ve been asking sort of the rank and file, what do you think a security token is? And so there’s something fun about me asking you, but I’m going to do it. Hey, what do you think a security token is?

James Haft:

It’s something that other people are going to try and convince you that you have to do in order to find liquidity through tokens.

Adam Chapnick:

And why will everybody be convincing people that?

James Haft:

Well, we have this system of issuing securities, which has been broken for a while, which has caused our capital markets to go down in volume and in size, which has not been working. So now, a new class of security comes around where there’s a new opportunity to create growth and to support passion and job creation. And instead of supporting it and making it free and easy and basically sticking us to a concept of being truthful and not fraudulent, and instead they’re going to try and shape it to look like the old securities, so that the new system will work just like the old system. So I’m not sure I understand.

Adam Chapnick:

Great, so how are you interfacing with security tokens these days?

James Haft:

So, I’ve been working in emerging markets for 30 years. 10 of those years was running corporate finance for Bear Stearns in China and listing the first company in China to list on the New York Stock Exchange. Then I worked in Latin America, where I worked for ING Barings doing basically all the equity capital markets out of Latin America.

Then I decided, you know what? To me, emerging markets is technology. It’s not round. It doesn’t have to be geographically defined. So I started to focus on what’s going to happen. What’s the changes that the digitization of information is going to have on humans? Because the one common element between all markets is that they’re participated in by humans. So it doesn’t really matter what you’re buying and what you’re selling, if you’re a human, you follow the same laws of economics.

Adam Chapnick:

That’s true.

James Haft:

So I started to basically apply what I learned from emerging markets onto what I thought was going to start happening with the digitization of information and how that was going to change how humans interact and how business was created. And it turned out I was right. I got to ride several great waves and several great crashes.

I’m a big fan of science fiction. One of my favorite writers, Neal Stephenson, predicted Bitcoin in 1997. He said there would be a currency that would occur during a game, and that in that game, there’d be people with too much time and not enough money. And there’d be people with too much money, but not enough time. And that the people with too much money would pay the people with not too much time to mine for the assets that you needed to be successful inside the game.

Then he said that they would start to go outside the game and pay these people directly in China and in India to do the action for them to generate this mine, this asset, which then you needed inside. Then he predicted that both sides would jump outside and people would start to just transact in the coin of the game, and that that coin of the game would then be above, as being outside of governmental control and would be absorbed by, who would think about it? Organized crime. That organized crime would start to use it together, and it would start to be chased after by governments who saw it as a threat on their hegemony of politics and government.

Then he predicted that the people would see this, and the general public would absolve it, and it actually would lead to significant political, social, and economic change. So having known this, and having known this guy was right about everything else he ever said and I didn’t follow it, because I’m an idiot ... So I said, “You know what?” Two years ago, “I’m selling everything. I’m firing all my clients, and I’m just doing distributed ledger to centralize the economy peer-to-peer, and I’m just going to go for this cryptocurrency stuff.” I educated myself as fast as I could. I dove into the water. I had no bank accounts. I’m holding everything in crypto. And now my wife has my money. So I really decided to go in whole.

The reason that it makes so much sense and the reason it fits is because investing is the search for liquidity. And ICOs represented that brief wind, that beautiful breeze of liquidity that flowed in, and everyone realized it. Then the governments got scared, because it threatens their hegemony on control of the currency and of the politics and of the economics.

Adam Chapnick:

Just as the book predicted.

James Haft:

Just as the book predicted, and now what we’re seeing right now is the machine fighting the new technology. You know, the new wave fighting the old wave, right? And where does this come out? Historically, unfortunately what happens is the machine does not beat the upstart by obliterating him. The machine defeats the upstart by absorbing it. That’s what we’re doing here today, is this is the machine trying to absorb cryptocurrency. I believe, and don’t shoot me, that it’s not going to work.

Adam Chapnick:

Well, awesome. Okay, so taking that twelve months into the future using what ... What was it, Neal-

James Haft:

Stephenson.

Adam Chapnick:

... Stephenson predicted and now you’ve seen what’s transpiring, what do you predict for 12 months from now. Where are we going to be?

James Haft:

See, this is where I get into real trouble. I haven’t seen our government actually be effective at legislating or regulating anything for the last two years. So it’s hard for me to believe that they’re going to come up with an effective regimen for how to regulate or police cryptocurrencies.

So my gut is that a lot more nothing happens in that world, and that what happens is that human nature starts to take over. And humans are not patient by nature. So I think at some point, someone just jumps in the pool. Then I think everybody jumps in the pool. I think the government has to play keep up. I think that as much as they’re playing keep up now, there are going to be a lot people to chase, a lot more stuff to do.

I think it’s going to become very difficult on the government. If the United States government does not start to become more proactive and doesn’t start to come up with holistic, intelligent solutions that allow the creation of jobs, the formation of capital, and the expression of people’s passions, that the government cannot control that. So I look forward to the government being successful in doing it, but I’m not that hopeful actually in the current environment.

Adam Chapnick:

CryptoOracle James Haft, thanks for joining us again. And you must come back and check in with us on how it’s progressing.

James Haft:

Please have me. Okay.