Shownotes
Cryptocurrencies are expected to become the future currency in the coming years, but the blockchain technology that underpins them is already changing how businesses operate. Ranging from decentralised security to effective data management, and Vickaash Agarwal, the founder of Bluewheel Capital, discusses the wide range of benefits bockchain has, in this episode of Diving into Crypto.
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Transcripts
WHAT’S IN STORE TO EXPLORE
Participants:
Jervis Piera ( Host)
Vikash Agarwal ( Partner at Blue Whale Capital)
00:22
JP
Welcome welcome welcome, everybody, to our next episode of Diving Into Crypto, where we speak about crypto miners, what's in store to explore, right? This is JP, your host today from AdLunam, Inc. Speaking to you about Web3. Every evening on a Thursday, we come in at the same time, same place to talk about all the new trends and thought leadership that exist in the space that's changing your life at this point of time, which is Web3. So without further ado, ladies and gentlemen, help me welcome our speaker today partner at Blue Wheel Capital, Vikash Agarwal. Give me a reaction since I can't hear you clap, but I'm going to do that clapping for you. All right, Vikash. Welcome welcome welcome. How are you doing? How are you doing?
01:11
Vikash
Thank you, Jervis. Thank you. I'm doing good. Thank you, Jervis, Nadja and to the entire AdLunam team for inviting me to come to join as a speaker.
01:21
JP
Awesome. We are very glad that you agreed to come onto the show and share your thoughts with us today. I forgot one thing, Vikash. Before we begin, let me just share this with the audience that all views expressed on this program represent those of the speaker and any advice that is shared or thoughts that are shared are for education purposes primarily. Right. With that being said, Vikash, I got to ask you are breaking grounds, of course, with the company that you're in and in the space that you are, right? But I asked this to all our speakers that have come here. What inspired you to take up this journey in the Web3 space?
02:07
Vikash
iously I would term it as the:03:08
JP
Okay, so you began your journey, of course, from a traditional space and then there's this entire new space that's opened up, a new arena that's opened up for you where business is concerned. Right. So how do you see crypto changing money and business from a traditional space over to the side?
03:39
Vikash
I would term it as cryptocurrency is not changing the money. So it's an advanced form of currency. So technically, if you see the currency has been evolving from ages, maybe initially it started from barter, then you had gold coins which was being exchanged, then you had IOU, how the currency started from Greek or China, then you had fiat currency backed by gold. Then you had fiat currencies which was not backed by gold. Gold was withdrawn. Then you already have a digital currencies where you can make online bank transfers and all the blockchain factor has been added to it, which is called cryptocurrency now. So basically, I would term it as it is an evolving form of money. And if you see the history, every 100 years there is a change in currencies, the format of currencies which is being used by the community. In every 100 or 150 years there is a change.
04:31
Vikash
'll term it, we'll go back to:05:41
Vikash
Exactly, it is not being guaranteed by them. Why do they decide about our valuation of my currency? So that is how Bitcoin was invented and that is what is a changing form of money. It was invented with a view of community driven currencies, which the valuation can be decided by the community. The method and operations can be done by community. It will be trustless, it will be pseudo and it will be peer to peer easy transactions. So that is how this all started about. Now, when we talk about the business, it truly makes it decentralized, community driven pseudo-anonymous and ease of users. So for business, cryptocurrency works on blockchain technology, which has new technologies like smart contracts. So earlier, if you want to mortgage in a traditional time, when you want to mortgage a goal, you need to go and trust someone to give your asset and you need to trust on him to return you back.
06:42
Vikash
The valuation goes very high, there are chances that he may not give you. He may give you back or something. So they are decentralized finances now, which makes funding very easy without documentation. And again, it's a trustless form of community driven funding. You have smart contracts which are defined milestone. Again, you don't need to go and trust anyone. It is automatically defined by you and the contracts works accordingly. And the best example for this is spotify.
07:15
JP
So I want to go on that a little bit more, right? I mean, you've spelt out obviously what's the landscape like today, right? And obviously if you draw a parallel with currencies, right, you have governments across the world having the ability to print their own currency, right? And of course in crypto you don't have the same system as that. So you're dependent in some way on mining, right? So obviously mining has some importance. But what do you want to tell the audience about that in terms of the importance where mining from the way you see it? As an industry expert, what would you want to tell our audience about?
08:01
Vikash
Now, when you talk about mining and mining is nothing, but it's a validation of in a simple word, it's a validation of a cryptocurrency transaction and adding the transaction to the chain or the block. So that is what is a blockchain. When you have all the transaction records converted to hash rates and they form up a chain in return, the miner or the validator or the notes, they are the same word that gets the cryptocurrency or coins in reward. So it's basically like a server which when you do any Visa transaction, whenever the Visa card is swiped two, one, 5% or maybe some charges, it goes to the Visa company. Now, again, the same transaction money is being divided into the community who validates this transaction to make it economically viable. And why is it important when you talk about, again, in mining, there's Proof of Work, there's Proof of Stake.
08:55
Vikash
So Proof of Work includes certain kind of GPUs, ASIC miners, certain infrastructures investment and then you have Proof of Stake now like Ethereum Pi network. So they work on mobile computings or mobile power. So mining is again important to validate the transaction decentralized store the transactions in a decentralized way, not depending on the central servers or anything.
09:22
JP
Okay, okay. So there's obviously there are many ways in which you can describe it beyond just because for most of us who may not be completely aware, what we find out is that, okay, it's mining. Therefore there is some degree of some large computer going and hacking away at something and then unearthing a diamond of some sort, right? But when you talk about it like validation, when you talk about it from the aspect that you've spelt out, the picture does become clearer. Right? Now, I can imagine that something like this is obviously going to take a large amount of computing power because the quantum of transactions that happen on a daily I can't even say a daily basis. I would say a minute to minute basis, right. Wouldn't you?
10:23
Vikash
Hi, can you hear me? Can you hear me?
10:25
JP
Yeah. How do you make it more sustainable?
10:30
Vikash
Can you repeat it? Because I think I lost the network. Can you repeat the question?
10:36
JP
Considering there's a large amount of computing power and then the large amount of electricity needed for something like this to have these large validators, how do you make something like that more sustainable?
10:52
Vikash
The word sustainable is very vague here. How do we make the mining sustainable? Now, when we talk about Bitcoin mining is done through Proof of Work where you have large supercomputers like which are called ASIC miners. So the ASIC miners are basically application integrated specific circuit machines which are very high powered machine which are designed to do a single or similar task. So they use huge infrastructure investment to do Bitcoin mining where you have servers around the world. When you talk about new methodology of mining like what is Ethereum is adopting now it will be a mobile computing, a mobile validation where you can have your validator nodes in the mobile where transaction can be validated. But anyways, there are differences in sustainability of this mining. Like Bitcoin mining has too many contributions of using huge energies equivalent to maybe another land or something in the world.
11:48
Vikash
But Bitcoin is a kind of decentralized coin which has a background investment maybe of $111,000,000,000 around the globe for validating these transactions. So it's truly a decentralized coin. Now, when you come to Ethereum in the mobile, again, they are using the power of community where we have validation nodes in the mobile and it automatically gets computed. And since they use your mobile or something for validation you get some rewards in exchange. So there are different models when you think about sustainability. But again, yeah, energy efficient, green and faster compared to POW minings are new minings in the world which is more sustainable.
12:33
JP
Okay, could you dwell on that topic a bit more? I mean, people are talking about different forms of energy being used to make it sustainable. They're saying that, hey, you know what? We could do it with more solar power. We could use additional alternate energy sources to be able to mine. But when you speak about it as an industry insider, right, what does sustainable mean to you.
12:59
Vikash
When you talk about the industrial insider? The solar power is obviously it's the best form for the renewable energy to be used. But again, it's used huge capex and all those investments. But practically talking hydropowers is something which is being used more now because a lot of countries have good reserves of hydropower. Solar power has been people are starting using that. Abu Dhabi and other countries. Abu Dhabi is already putting up two gigawatts of solar power to set up a mining center in Abu Dhabi. So most sustainable is obviously green energy.
13:34
JP
Okay, so sustainable for you would be to have a more ecological source of power right? Right, okay any other ways that you can think of apart from these two examples?
13:51
Vikash
Mining can be done in a mobile in the GPUs, in CPUs as well but when you talk about sustainable mining CPU, your mobile validations are the good way and the green way of doing it but again, those depends on the voting system if you go much deeper into that the groups can be formed. The 51% attack is much easier in the mobile than doing in a decentralized coin like decentralized networks like Bitcoin.
14:20
JP
Okay, have you ever witnessed now this is uncertain arousing our curiosity right? So everybody in the room please give us a like because I know that this is a question that you want to ask can this stuff be hacked? But what I want to ask you actually, Vikash, is have you seen one of these incidents happening and if you could describe it for us that would be fantastic.
14:43
Vikash
See anything which start it starts from small so anything which starts from small is easy for it to be hacked. Again, when it starts small it is not worth it to hack for anyone I'll tell you how can Bitcoin be hacked? It can be hacked only if someone owns the 51% nodes of Bitcoin around the world so he becomes the maximum nodes operator and they can change the nodes or something but again, that is very complex or that is a very arguable fact. If someone owes 21% to 51% of the Bitcoin, then again it will collapse completely because it will not have any value. Then the Bitcoin has a value because it's truly an only decentralized coin, which is not relies on any centralized network, like is not relied on Amazon, your Amazon storage or Google Clouds or anywhere. It has its own infrastructure throughout the globe, which is decentralized.
15:40
Vikash
And I don't think anyone invest. After valuation of $1 trillion, it's easy for anyone to come and own 51% of Bitcoin. Again it started as maximum number of coins being with the whales. Then slowly it is getting distributed among the public with more than 300 to 100 million wallets now Bitcoin so obviously it's tough for Bitcoin to be attacked. Now Ethereum is coming up with Proof of Stake where you have to stake up 32 Ethereums to do validation and transactions and all this stuff. There is a controversy that because anyone forms up a pool and owns that record he can always obviously control the network. According to me, sustainable is not when you talk about sustainability. It's not only about power usage or infrastructure cost, it's again about how safe the network is to validate your transaction or control your value.
16:40
JP
Fantastic, okay, what are some of the measures you're seeing in the industry? Apart from the standard ones, of course, but what are some of the new, the cutting edge manners in which that security is being bolstered is being toughened? Because I'm sure everyone in the audience at this point is wondering, hey, you know what? If we all want to lend our mobile phones to the mining effort now, after having listened to you, right, we can form a pool and create a node. And I'm certain everyone here is willing to contribute whatever quantum of ETH that they can to be able to become a validator. But again, it comes down to security. And I think you fit on an important point. I think you hit on an important.
17:21
Vikash
Point with if you talk about your mobile security, if you very clear, if you download anything and give any access to anyone, they have the access for your mobile. Technically, Google has the entire access of your mobile. Facebook has the entire access of your mobile. They can access it. So you can't deny that. But I don't think there's any misuse can be done until some hacks are there. Recently, through GoDaddy, MetaMask was hacked from the back. So that's a part of it. So you need to be very cautious about it.
17:53
JP
Okay, how do we bolster that? So how do we make that more secure in some way? What are your thoughts?
18:01
Vikash
My thought would be when you have a mobile separately, only for the validation, not doing anything else in it.
18:09
JP
I know we're not endorsing any specific phone company, but could you tell us which one would be an optimal one for us to use?
18:20
Vikash
The phone company has nothing to do with it. They're just the Internet service provider, so phone companies will not do anything about it.
18:27
JP
Okay, so it's not going to matter if I'm on Apple.
18:32
Vikash
Apple can be a little more secure than Android, obviously.
18:36
JP
Okay. All right. Ladies and gentlemen, please do not rush to the Apple Store. We're not endorsing any phone company on this channel. Like I said, this is for education purposes only. But thank you for that because I think that does help. And I'm certain that if we do buy one of those phones and join the mining effort, we'd be able to pay one of those off fairly quickly, right?
18:58
Vikash
Yeah. Can you repeat?
19:01
JP
Yeah. So what I'm saying is, if we do buy one of those phones and I'm not going to mention the name, but the name but if we do buy one of those phones for the purpose purely of mining, to keep it, like you said, as a separate unit, right? It would pay for itself in a short span of time.
19:18
Vikash
You need to do any mining. There are a lot of mining calculators which give you a revenue calculation for the mining. So you should go and do that first revenue calculation, because whenever you do any mining, you should go to the entire white paper, read about it, because there are a lot of hidden things as well. Like if you do Ethereum validation today, it's a Proof of Stake. So if you do validation, you get rewards, but if you don't do the valuation, you start giving some penalty as well. So you need to be sure about it or otherwise there are pools where you can join the pools where you stake it together. They work for you on your behalf and you keep on getting your returns out of it. Similarly, if you talk about the Pi network, I've not studied the Pi network entirely, the white paper, but again, it's in a very early stage.
20:10
Vikash
You can always do that, but it depends on the coin valuation, coin adoptability, and what amount it is going to give you. But I don't think anything doing in the mind cost you anything in your mobile. So obviously you can install and you can keep on running the nodes.
20:25
JP
Okay, so when you're saying that we can do it, we can use our phones and even, of course, there are people that you see a lot of videos on YouTube that speak about using a Raspberry Pi for mining. That is something. What are your thoughts on the Raspberry Pi? I think you briefly touched upon that.
20:45
Vikash
If you talk to me personally, I'm very loyal to Bitcoin and I do Ethereum mining as well, but I'm very loyal to Bitcoin because I'm also a part of CryptoPunks. So it is only a decentralized coin. So I will not invest in any infrastructure or anything which is not decentralized.
21:03
JP
Okay. Between a mobile phone and a Raspberry Pi, which of the two would be-. Okay. Why specifically a phone over a Pi, in your opinion?
21:20
Vikash
I think Pi, you can do the Pi mining in your mobile. That's what is Pi all about. It works on a protocol where you can download the nodes in your mobile and based on your vote of the validation, the transaction happens. I think you can compare Pi with Ethereum. So I would prefer Ethereum to be much better than Pi.
21:42
JP
Okay, fine. So considering that you're loyalest to the two key coins that are being mined out there, what do you think about how do you think it's going to work for the new chains that start off? What are your thoughts on that? What do you see as an industry leader there?
22:04
Vikash
I didn't understand your question.
22:06
JP
So any other chain that comes up, right, that wants to compete with the two of them, what are your thoughts about how we are going to shift infrastructure to help mining and validation there?
22:19
Vikash
I think a lot of other chains who are coming, they're coming from Proof of Stake. Proof of Work is getting outdated because again, Proof of Work is a little expensive, where you have a lot of infrastructure expenses, you have HCD expenses, so it gets a little expensive for the transaction charges. I think your Cardano and all, they all work on Proof of Stake, Proof of Cap your achievements, Proof of Harvesting, there are a lot of Proofs are coming in. So it depends which is working on what.
22:55
JP
Okay, yeah. All right, so fine. So there you have it. We've looked at how the entire industry has been able to paint us a picture, a large landscape of so much of activity that's going into the space of mining and validation. That being said, I think there was also a question I think that were thinking of before. But how do you see crypto mining affecting the data center industry?
23:33
Vikash
Data center is something anywhere where the data are stored and validated and maybe you can fetch out data out of it. It's like a library of a data. So crypto mining, again, it's a very white term. When you talk about Proof of Work, you have a lot of servers around the world, like ASIC miners, where datas are stored and your entire transaction happens, where data are matched in 21 computers randomly and after the validation, the blocks get or your data get added to all the computers after approval. Again, when you talk about mining your mobile Proof of Stake and your mobile computing, it is again the layer top layer of the if you go technically there are too many layers. Bitcoin is a layer zero, then you have layer one, layer two. Other normally works on the top layers where only your first few hash rates are matched and based on the vote, the data are validated.
24:28
Vikash
So it can be from like we spoke about infrastructure for a million dollar to a mobile where you can do the data transactions. Right. So that is how the data centers are changing. Again, it's a community driven. It is more becoming a community driving centers.
24:44
JP
Okay, so you're saying that the machinery that drives this engine right, had started with like you're saying, a million dollars worth of equipment into a rig and then now it's getting smaller to community computing and smaller still into the mobile phones.
25:05
Vikash
Right, mobile. So it's the power of community again, using the power of community.
25:10
JP
Excellent. So what do you think is going to be the next step from there? I mean, how much smaller can this actually get?
25:17
Vikash
I don't think it can go below mobile. Otherwise how will the data get extracted? How will it get? I'll give you the best example is Tor. So Tor used to be always there from quite the ages, which was a decentralized data uploading and downloading center, right? You remember that tor, have you ever used Tor software where you can download the movies and songs, pirated movies and songs and you can upload it and it will kind of decent world of data story, right? So similarly, now the same thing is getting converted to mobile. So it may happen that lacks of mobile or billions of mobile in the world where the transaction data are stored randomly, anywhere that it can pick up and it can validate it. So the reason for this is it become more faster. They're trying to make it more faster in a decentralized community.
26:07
JP
Okay. That spread and that group is, of course, making it finer and smaller. And thank you for bringing-.
26:14
Vikash
Economical yeah.
26:19
JP
So I was saying, thank you for bringing back memories of the Tor browser way back when. Now, of course, we hardly think of it, but it's always good to have a throwback there. Okay. These factors are being considered. Right. Let's also speak about geography in a sense. Let's speak about geography in a sense. I mean, there are lists that are out there and if you do a quick search on Google, you'll find multiple geographies in which or states and countries in which mining is acceptable.
26:59
JP
Do you see at some point in time that more governments are going to say that, hey, you know what, we're going to open up spaces for investment. Let's have an entire crypto mining location out of here. Let's have a hub for crypto mining. Do you see that happening at some point in the future?
27:20
Vikash
Yeah, that will ultimately happen because a lot of governments are accepting cryptos now, they're legalizing it. But crypto mining, when you talk about Bitcoin mining, the countries which have little cold temperature because of natural airflow and cheaper electricity are the most sustainable country, mostly northern hemisphere of the globe, like Russia, you have Ukraine, and Georgia. When you come towards Iceland, Norway, Canada, US, Northern US. Part of the US. So these are the countries where crypto mining is very sustainable today because of the cheaper electricity and natural climates.
28:01
JP
Okay. So any space that is cooler is obviously a much better place to do that. So it's temperature and it's cheaper electricity, right?
28:11
Vikash
Yes.
28:13
JP
Okay, sorry, go ahead.
28:18
Vikash
You can do GPU mining in warmer locations like Ethereum and all, but those are getting shut down and you have Altcoins to do it. And I'm not in favor of investing infrastructures for any coin which are not stable.
28:34
JP
Okay, so I caught that you're not in favor of any coin that if ... could you complete that?
28:39
Vikash
Which is not stable, which is not truly decentralized, which is centralized and doesn't have some utility behind it, yeah.
28:50
JP
Okay. Because I think we're kind of losing you for a bit. I don't know if it's just me, but I caught that an Altcoin and then I kind of lost you. The voice didn't come out right. Could you say that one more time, please?
29:06
Vikash
I am not in favor of when you talk about setting up the mining centers or infrastructure that needs a certain amount of investment. Like, people invested a quite huge amount in Ethereum mining. Maybe last year they announced they want to convert to Proof of Stake. Now, it was for goodness of Ethereum, obviously, because they wanted to achieve the transaction to the speed of visa or something. But people who invested in Ethereum mining, ultimately they will be losing the entire infrastructure. So I am not in for setting up any infrastructure for any centralized coin network because you don't know when they change the technologies. Technology are getting upgraded very fast. So setting an infrastructure takes one or two years for your ROI to come back to get your return on investment. So it is not advised to do any investment, which is not very sure that it is going to give you a good returns in the future.
30:00
JP
Okay, then if that is the case, the investments already done, given the two places that you said are optimal, currently being in a state of conflict, how is that impacting the mining at this point? And I'm talking about, of course, Russia and Ukraine.
30:26
Vikash
Ukraine mining may be interrupted because of power outrage and all, but I do personally mining in Russia, and there is obviously no problem in Russia to mine. So the power supply is proper. We are mining well, we are getting our Bitcoin rewards, we are paying the bills. We have our manpower working there normally. But obviously the country regulations and country unstability will affect your mining at a time when you will not have people to go around to take care of the centers. If it gets shut down, it has to be started off. So that is a very important litigation, very important part of investment in any mining locations around the world.
31:05
JP
Okay, I think a question for all of us here is also that is that in some way impact the price of Bitcoin?
31:14
Vikash
No mining will anyhow never impact the price of Bitcoin because the code has been developed assets. If you have one GPU in the world, entire miners get that shut down, then also transactions can happen. But the person who is doing mining that time, he will be a trillionaire or billionaire because he'll get all the rewards of the Bitcoin single transaction, but it get dumped or priced due to the economical conditions. People sell, people buy due to demand and supply.
31:46
JP
All right, so thank you for that. Vikash, I think you shared some very impressive thoughts on mining, painting the landscape, and I'm certain that the audience wants more. So for the moment, I'm going to ask the audience at this point of time, if there are any questions that you have, you'd like to have answered about your thoughts on Bitcoin over here, you can raise your hand and we can get started. Checking sound. Yep. If you can raise your hand, our host will be able to unmute you. So you can ask your question to Vikash Agarwal, partner at Blue Wheel Capital. Okay. Anyone at this point? No. Right, okay. So it looks like I don't have a volunteer from the audience, but there is one person I know who may have a question. So I'm going to throw it out there. Amrit. Yeah, I've seen you before on a number of our programs.
32:56
JP
Go ahead. Amrit. If you have a question, raise your hand and our host will allow you to speak. Right. We'll give 30 seconds. If we're able to pull that in, then that's great. If not, we'll have some closing comments and wrap the show up. Okay? All right. Okay. That's the time that we have. So because one last question then. If I were to give you a magic wand where you could tell people across the world why they should be in the same space that you are as a miner, validator, what would you want to tell them?
33:46
Vikash
I would tell them mining gives me a very fixed return. When I do mining, if you invest in Bitcoin, obviously it goes up, it goes down. But when we invest in mining, we get a very fixed return. We keep on generating Bitcoin every day. So it's a good feeling when you see Bitcoin getting produced rather than investing just holding it and waiting for some time. Anyway, when you invest in mining, you get five times more return than you normally buy the Bitcoin. So try to mine yourself. Be a miner, be a part of a community.
34:23
JP
Okay, fantastic.
34:24
Vikash
Great.
34:24
JP
Thank you so much, because I think that's advice for everybody. Don't just unleash the child inside, but be a miner. And we mean, of course, crypto miners, no doubt. On that note, and with that joke, let's show to a close Vikash. Thank you so much for spending time with us this evening and sharing your insights on this show today.
34:48
Vikash
Thank you.
34:51
JP
You're very welcome. You're very welcome. Ladies and gentlemen, thank you. See you again next week at the same time on Diving Into Crypto. This has been JP from AdLunam, Inc. Speaking to you about Web3. Cheers.