So, The Futereum Foundation, which owns TCJ as well, launched FUTR yesterday. How does it feel?
I’m exhausted, honestly. I never anticipated how much work this would be. But I am exhausted in that sort of adrenaline kick way you are exhausted after a run. And to think the run has only just begun!
Tell us about how you came up with the idea for Futereum?
I am from an investment banking background. What people don’t tend to realise about investment banking is that it is a very futuristic profession. You are always focused on the next value event, the next quarter’s earnings. There is a phrase on Wall Street that goes, “you are only as good as your next trade.” That’s about the size of it: yesterday doesn’t matter. Even today shouldn’t matter if you are doing it right.
With that in mind, Futereum is a future expansion of the Ethereum network in value terms. When Bitcoin came into being, for a bit you had a bunch of these so-called shitcoins; essentially copy-and-paste work which Satoshi and others had already undertaken when developing Bitcoin. There was nothing inherently new innovation-wise about any of the Blockchains that came out of the first crypto bull market before 2014, with the exception of Proof-of-Stake (PoS) mining. Essentially, all blockchains were some sort of version of Bitcoin. I believe that is what drew us into a crypto recession by 2014 – essentially, it was more of the same and there was nothing new or innovative there to speak of.
Then came Ethereum. It is no coincidence that the minute the market turned up again was the same minute a wonderful new protocol was being actively employed in meaningful utility creation. Towards the later half of last year however, you began to see this same old pattern all over again – more of the same. ICOs were turning out ERC20 tokens with no smart contract functionality. That doesn’t harness the utility of the Ethereum network, it bypasses it altogether. It’s value-erosion by the employment of negative utility. I think that is why you saw Bitcoin rise so much during the fourth quarter of last year. When Bitcoin rises that is when meaningful value creation has sort of gone out of the window, so to speak. And then to top it all off, CME and CBOE went and securitised Bitcoin in the form of futures contracts by year end!
I had frequently had this back-and-forth dialog with colleagues that went something like this: imagine if we could create a Crypto that didn’t factor in premine, that took small fee slices instead, and imagine if it could somehow lead to a more equitable distribution of a hugely inherently valuable crypto like ETH or XRP; and then imagine further, if this had a sort of income perpetuity to it, but one that was purely in the form of fundamental Blockchain utility and not in the form of securitised redistribution of profit. And one day, one of the individuals I was having this dialog with – who’s a very accomplished developer but who I knew less well – interrupted me and said, “imagine if you stopped saying imagine and went and wrote a White Paper about this and teamed up with someone like me who would design a smart contract and it could actually be a product, not a figament of the imagination!” Few men I think can stand such a direct challenge and offer to assist without immediately getting down to work on the task, I think.
So Futereum is a smart contract that uses the Fibonacci sequence in a way that rewards the FUTR holders with a larger share of ETH than they would have obtained via making market purchases of ETH. Explain how that works.
So what happens is this: there are 10 mining “levels” we have set per “cycle” of the smart contract. Within those 10 levels, the difficulty – or rather, intrinsic cost (all else being equal) – of mining FUTR rises per level. This is where we employ Fibonacci. Fibonacci is such an elegant algorithm and often used in financial markets trading tools because of the infinite equation inherent in its construct – it literally goes on forever. So in the first level – which is where we are now – if you send 1 ETH to a smart contract then you will receive 114 FUTR. In the second level however, which is after 1 million FUTR have been mined, if you send 1 ETH you get just 89 FUTR; in the third it’s 55 FUTR, and so forth, all the way down to the tenth level, where you receive just 2 FUTR per ETH.
You may ask, “well who’s going to mine the very last levels?” We have answered this in the White Paper, by showing how a major asset management company or an ultra high net worth investor could actually make a massive amount of money by mining the eighth through the tenth levels, not exchanging the FUTR they hold at that point, and then mining pretty much the entire first-to-fifth levels of the next cycle of FUTR issuance right after. If they swapped after the following 13 months, their return increases to something like 2500% extra per 1% gain in ETH!
Because the mining is ongoing, and the smart contract is set never to self-destruct or end, the algorithm returns FUTR miners huge amounts of money over various timelines, depending on where they mined. Those who are mining FUTR now by sending ETH to the smart contract address on our website stand to make about 2,000% in the next 6 months just by virtue of the difficulty of the mining algorithm increasing throughout the various levels of mining. It’s essentially Proof-of-Work (PoW) mining on fast-forward.
Those are some pretty hefty returns. Why hasn’t anyone come up with this before now do you think?
I think the answer to that is two-fold. On the one side you’ve only just had people like myself from the securities markets look at this technology seriously and go, “wait a minute, there is some truly deep value being traded here – and what is more, it looks like it is meaningful value, too.” And when those guys do come in they tend to come in with a full-on securities capital asset valuation approach, which is equally wrong. Blockchain value has nothing to do with capital asset pricing or cost of capital appreciation models or net present value discounted cashflow events. You can see that in the nature of the technology; it is fundamentally focused all around how the ledger based technology interacts with the market it is serving. That is what no one understands and a company like Ripple gets, for example. They don’t try and securitise everything in sight; they play along and create a digital asset and try and find real-world financial applications for it.
On the other side you’ve got the reality that most people aren’t, for want of a better word, very innovative. A lot of innovation is just about copy-and-paste. That is nothing new though. That’s always been the way it is. There is this tendency today to think that everything happening in the virtual world is somehow a first-case scenario. But everything you see going on, from the fast-money shlysters raising $100 million and running what is in essence nothing other than Charles Ponzi’s stamp scheme to the class action courtroom drama where hundreds of angry plaintiffs are baying for blood, to the PR-intensive focus of the news – all of this is just a repeat of every innovative cycle we have had. Underlying all of it usually is the simple truth that in each case someone hasn’t innovated enough somewhere. Real innovation may have its fair share of ups-and-downs but the real innovator rarely gets himself into any sort of trouble that he can’t find his way out of somehow.
You bring up the media focus on PR, which you describe as “intensive”. I think that is an interesting choice of word. Tell us a bit about why you included The Currency Journal in the launch of the Futereum Foundation. After all, isn’t a news site a strange extension of the product offering?
It’s a very strange extension of the product offering, you’re right! But it’s a natural one. There were several reasons for us wanting to do this. Our lead developer Tehol and I had some long discussions late into the evening as we got underway doing multiple drafts if the White Paper and testing and re-testing versions of the smart contract this about various aspects pertaining to how Crypto was developing with the increase in funds that it was experiencing, and in particular about a certain lacking focus on the idea of decentralization.
Decentralization is not an anti-government stance. It is not anti-business. In fact, it is the very idea of capitalism. It is how capitalism should look in a perfect world. Decentralization doesn’t mean that you reject establishment or anything like this, all it means is that you don’t have to leave someone in charge the whole time. If you look at life, this is much the way it has developed over the course of the last few hundred years, ever since the dawn of the industrial revolution in fact. The industrial revolution decentralized massive amounts of cost and process, so that automated manufacturing and even later on, especially in the case of media, delivery was concerned. Decentralization is at the heart of evolution.
I felt that the topic was so vast and so important that we should set up an affiliate news site to handle it, to cover this vital part of the history of decentralization. The difference between this decentralized economic process and all the others that is so fascinating is that in this case, money itself – our core concept of value which underpins all our notions of, essentially, what it is to live freely – are in the process of being decentralized. But that doesn’t mean that businesses can’t play part and won’t play a beneficial part. By the same logic, I suppose I figured that there wasn’t too much to be concerned about starting a website, getting a developer to enable the right SEO features, spending a few grand more than we were already forking out for all this stuff as it is, and hiring great people like yourself to write for it.
That’s flattering, thank you. I hope I live up to your expectations!
I think it’s not my expectations you want to aim to live up to, it’s your own. That goes back to that decentralist argument again – just because I founded the project, there is no inherent reason to try and live up to some sort of idea that I may have in mind of what you do. That’s so arbitrary. If you live up to your own expectations of yourself I think that is often the very hardest thing to do at times. Few of us manage it completely.
I’ll have to remember that, thanks. So – give us the elevator pitch for FUTR.
OK then. Once we reach the floor marked “G”, go find a Starbucks and read the White Paper. The whole thing is in there. Every bit of it. How did I do?
That’s the shortest elevator pitch I think I’ve ever heard other than “buy it”!
Hey – there you go, you said it, not me! No, seriously – this is a product that makes tremendous sense to own if you already own ETH. If you don’t already own ETH I would take a bit of a closer look before mining it. But if you do, then this is a no-brainer. This product is ETH – that is exactly what you end up getting back!