Tuur Demeester Talks Bitcoin Exchanges Being Banks, Crypto 4-1-1 Conversation with Stephan Livera
Tuur Demeester, the Founding Partner of Adamant Capital, has recently talked about Bitcoin (BTC) and cryptocurrencies with Stephan Livera in a recent podcast. Demeester talked about Bitcoin and its phases, Bitcoin valuation ideas and also a Bitcoin full reserve banking.
Tuur Demeester Considers Gemini A Full Reserve Bank
One of the things that Demeester talked about is related to exchanges and how they operate. He said that it would be very dangerous if people start withdrawing their own coins from cryptocurrency exchanges during events such as Proof-of-Keys. Exchanges must work in order to audit their reserves in order to preserve customer confidentiality.
At the same time, he said that in theory, all Bitcoin exchanges are full reserve banks. He specifically mentioned Gemini as an exchange that provides cold storage facilities for users.
SLP64 @TuurDemeester on Bitcoin Valuation Frameworks
Tuur joins me to talk:
– Bitcoin outlook and phases
– Historical and new Bitcoin valuation ideas
– Bitcoin Full Reserve Banking
— Stephan Livera (@stephanlivera) March 30, 2019
On the matter, he commented:
“I think the interesting thing you know time is coming where people want a return on their Bitcoin and then there are these shops that say hey you can do it here and the risk is that they’ll start making these impossible promises of like ‘oh, we can make you a return but also your bitcoins are always available to you’ which is not possible.”
Livera has also asked about an article that Demeester wrote back in 2014. In this article, Demeester suggested that customers would demand flexibility and control, deposit banking with high transparency and more. He explained that there will be a tension between full reserve banking and the desire to go to fractional reserve banking. There are some entities that believe that the risk of people withdrawing 80% of their assets is pretty low. This is why they could start lending some of the coins to make an extra return.
He has also spoken about how Bitcoin evolved in the market and how it will be slowly moving into a “full-fledged reserve asset.” This is clearly something that needs time and that cannot be achieved in just one day.
The first phase of Bitcoin was the “discovery” of the asset, in which coders and hackers started learning about it. This was a phase that took place between 2008 and 2013. There were very pool tools for developers and volatility in the market was almost extreme. After the price surge in 2013, the discovery phase changed. New hardware wallets appeared, ASIC miners were released to the market, and there was an increased appeal for Bitcoin to the general public.
Now, Demeester believes that we are in the infrastructure phase, in which the financialization of Bitcoin with derivatives markets takes place. There are also new advanced ways of storing Bitcoin and insurance. For him, this phase will continue throughout 2019 and reach 2020.
Bitcoin has recently been able to surpass $5,000 for the first time in several months. The market is expected to keep growing in the future as well and the positive sentiment in the space is growing.