One of bitcoin’s leading luminaries, Vinny Lingham has an opinion on everything and an uncanny ability to sense market movements, earning him the moniker of Bitcoin Oracle. News.Bitcoin.com caught up with the serial entrepreneur to get his thoughts on bitcoin cash, Lightning Network, token models and more.
Vinny Lingham on Regulation
On April 20, over 1,000 delegates gathered at the Fairmont in Santa Monica for Start Engine’s ICO Summit 2.0. The event began sharply at 8:30am, with Vinny Lingham the most recognizable figure on a panel titled The State of ICO Regulation. Afterwards, news.Bitcoin.com sat down with the Civic founder for a chat about dual token models, blockchain scaling, and the acrimony that’s riven elements of the bitcoin community.
The overarching message to emerge from the summit was that most tokens are securities, and following the regulatory route – likely Reg A+ – is the only way to avoid SEC censure. “If the price of something is determined by its ability to deliver an investment return then it’s a security,” acknowledges Vinny. Belatedly accepting that many, if not most, ICO tokens may fall into that category, a number of projects have opted for a dual token model, one a utility, the other a dividend. Vinny Lingham is not a fan of this setup however, opining:
People will raise money by whatever way they possibly can [even] if it means bending the rules, changing the system, and unsuspecting people will wind up putting up the money to buy it. But just because you can raise money in a certain way doesn’t mean you should.
Like most of the delegates at the Start Engine conference, he’s convinced that the industry is headed towards securities, complete with the full regulatory compliance that brings, venturing: “I think security tokens will outpace utility tokens by a mile in the next three years”. A month previously, in a blog post titled The Value Trap Dilemma, he wrote: “If you’re building a utility token, it has to have real utility — if you’re just using it to raise money, then it’s a security.”
Don’t Fear the SEC
On the same day that news.Bitcoin.com spoke to Vinny Lingham, details were emerging of the SEC-led complaint against Centra, including allegations of the ICO’s founders pumping the price and creating fake team members. When asked whether there’s likely to be further subpoenas in the token space, Vinny responds: “There will definitely be some. They’re going after the most egregious people.” He doesn’t believe that escalating SEC activity could impact on all U.S.-based token projects, though, including his own Civic, adding “I sleep very well at night, I don’t worry about the next day waking up and [receiving a subpoena]”.
Vinny was tight-lipped about future developments for Civic other than to confirm there are “lots” on the way, some of which will emerge at the Consensus summit on May 14-16 in New York. He gives short shrift to the string of identity-based projects that have emerged since Civic, referencing a recent tweetstorm he composed on the topic, and proclaiming: “If you ask someone what are the top companies in the [identity] space, Civic will always come up number one. And there’ll always be a different number two.”
Vinny Isn’t Struck by Lightning
When conversation switched from the token economy to bitcoin, Vinny predictably had a lot to say about BTC, BCH, and the scaling methods attempted by both sides. There’s a tendency for proponents (or “maximalists” as the more devout are sometimes branded) to fall on one side of the divide rather than straddle the fence. Vinny Lingham is much more measured, seeing the merits in both strands of bitcoin, whilst remaining broadly supportive of the approach taken by Bitcoin Cash.
The South African entrepreneur isn’t a fan of the elements that are “too extreme” and encourages both camps, Cash and Core, to “exercise some restraint”, particularly when it comes to asserting which brand of bitcoin is the true bitcoin. A day after talking to news.Bitcoin.com, he shared the following tweet:
This ecosystem would be way further in its development if Bitcoin and Bitcoin Cash stopped wasting time attacking one another. Both now exist and are heading in different directions. Why do they insist on bashing one another every time they get a platform. We all got both tokens.
— Ran NeuNer (@cryptomanran) April 21, 2018
When asked whether he believes a sizeable Bitcoin Core contingent are pinning all their scaling hopes on Lightning Network (LN), Vinny agrees vigorously. “It is the panacea for them right now. Lightning is a big thought experiment which is in code right now and is not proven. How much money is in Lightning – less than $100k? There’s nothing there.” While acknowledging the effort that has gone into developing LN he says:
“Lightning, maybe it works, maybe it doesn’t. The point is, you’re going from something that’s proven, that can scale [increasing the block size], at least to some degree, versus something which is unproven [LN] and it may not be able to scale, and we’re pinning our hopes on it. It’s very impractical.”
“I think Segwit’s got some flaws in it,” says Vinny at one stage, before asserting that in the short to medium-term it makes more sense to increase the block size, venturing that “There’s no real centralization risk with [increasing the BTC block size to] two megabytes. There’s no centralization there and anyone who thinks otherwise is stupid. Let’s say the number of nodes that could afford to run in the long-term dropped by around 2%, that’s not going to create centralization.”
Decentralization Isn’t Everything
On the topic of decentralization, and the sacrifices that must be made to increase the speed of new blockchains, Vinny predictably has a lot to say:
“EOS is one where there is a trade-off, it’s more centralized, but it’s not very centralized. I think there’s a balance you can get. Like, how many nodes is enough [to ensure decentralization]? That’s the real question and no one can give me an answer…Is it a billion? Give me a number, any number.”
He agrees that new blockchains are still years away from needing to fulfil the half a billion transactions a day they purport to offer, adding: “That’s exactly my point. We’re nowhere close to the usage of needing to worry about it. Instead of kicking the can down the road and worrying about it later, we’re trying to deal with this now and it’s not an issue right now.”
The interview concludes with Vinny reflecting a sentiment that is expressed multiple times during the course of the summit by investors, lawyers, and entrepreneurs: that the token economy is “such a dynamic space you’re basically just guessing what [governments and regulators] are gonna do next.”
The Bitcoin Oracle has been proven right about many things, but when it comes to figuring out regulators, even he’s in the dark.