cypherpunk ideals, regulation and the future of bitcoin
In an exclusive interview with crypto.news, Paolo Ardoino, chief technology officer at Bitfinex and Tether, provided a fascinating insight into his journey in the cryptocurrency industry, his thoughts on regulation, and the role of bitcoin in the future.
Journey into crypto
Ardoino, a lifelong developer, got involved in the cryptocurrency industry after discovering bitcoin (BTC) as a potential ledger solution to outdated and bug-ridden financial technology.
Beginning his journey with Bitfinex in 2014, he worked on improving their bitcoin trading platform before transitioning to his current role as the CTO of Tether in 2017. This position led to his involvement in expanding various business lines within the company.
Ardoino views coding as more than just a technical endeavor; to him, it’s a creative process through which ideas can be brought to life.
The cypherpunk ethos and tether’s role
During the 2022 PlanB forum in Lugano, Italy, Ardoino, alongside Adam Beck and Nick Szabo, explored the evolving perception of the cypherpunk movement. The panelists agreed on the image of cypherpunks as “rebels opposing systemic control by an elite,” arguing that technology and cryptography provide “alternative means for people to interact and maintain control of their money.”
Despite changing perceptions due to widespread adoption and speculation, the panel agreed that the cypherpunk ethos remains alive and strong. Ardoino explained that Tether is dedicated to preserving this ethos by investing in bitcoin development.
Better regulation
When asked about what kind of regulation is needed in the industry right now, Ardoino shared that, in his view, “good regulation is the one that understand the technology and the one that wants to actually protect the consumer.”
He emphasized the importance of open-source tech and called for regulators to make distinctions between beneficial and harmful projects. He urged regulators to focus on existing financial structures rather than reactively targeting cryptocurrencies.
“In the last two years, I’ve been in good contact with regulators that are 100% interested in creating a safe environment for cryptocurrencies and blockchain technology to thrive,” Tether’s chief technology officer revealed.
Scalability, illicit use, and the rise of bitcoin fees
Ardoino also discussed Tether’s exploration of scalability solutions, like the Lightning Network, and how bitcoin’s transparency can aid in tracking illicit usage. He believes that while working with regulators is crucial to avoid reputational damage by association, companies should also invest in bitcoin development to avoid potential slowdowns in bitcoin adoption.
Addressing the recent rise in bitcoin fees caused largely by Ordinals Inscription, Ardoino considers this a wake-up call for exchanges to adopt solutions such as Lightning Network and the Liquid sidechain: “As bitcoin’s popularity surges, the network needs to evolve to ensure scalability and maintain reasonable transaction costs.”
While Ardoino admitted that he does not personally like Ordinals, he also recognized them as an intriguing application of blockchains, albeit initially used as a “trolling mechanism.”
However, he emphasized that there isn’t necessarily a good or bad way to use blockchain technology. Despite his preference for less overhead, reduced space usage, and lower fees for users, he suggested that it’s impossible to control how bitcoin and block space are utilized. “In the end, we cannot control how bitcoin and the block space are used,” Ardoino concluded. He also pointed out that attempts to limit the usage of any technology historically have not ended well.
Central bank digital currencies and the role of tether
Ardoino shared his views on central bank digital currencies (CBDCs), stating that while they could be detrimental if used by the state as leverage against citizens, such scenarios are unlikely in regions like the US or Europe. He argued that CBDCs could bridge the gap in the utility of crypto for payments, but central banks would tread carefully due to the potential impact on the traditional banking industry.
Tether’s (USDT) market cap has been on the rise, which Ardoino attributes to the company’s liquid portfolio, risk management practices, transparency, and customer protection. He also spoke about the criticism Tether faced in its early days, with rumors of insufficient backing or market manipulation. However, after multiple attestations purportedly proving that its reserves are currently fully collateralized and having redeemed 25% of its reserves in just 20 days, Tether seems to have improved its position in the industry, he mentioned.
Bitcoin: the currency of the internet
Ardoino highlighted bitcoin’s disruptive potential, pointing out the difficulties politicians face trying to control it. China’s recent failed attempts to regulate bitcoin mining further illustrate this point, marking bitcoin’s emergence as the currency of the internet. Bitcoin’s hashrate momentarily fell, but the same ASICs appeared to have returned to activity elsewhere briefly afterward, as shown by the hashrate’s rapid recovery.
According to Ardoino, bitcoin’s decentralized nature overcomes traditional financial problems, such as the ability of central banks and politicians to print money at will. He sees bitcoin as a new form of digital gold that removes power from politics and creates a level playing field for building new economies. It’s a universal currency that transcends borders, is accessible to everyone, and is beyond anyone’s control. This degree of financial freedom is unprecedented in human history.
Tether’s goals and the future of bitcoin
Ardoino also discussed the evolution in crypto culture from early cypherpunk ideals to a more regulatory-friendly stance. He sees this shift as a reflection of society’s increasing acceptance and adoption of bitcoin.
Tether’s short-term goal, according to Ardoino, is focused on education and the stability of its stablecoin. The long-term goals involve investing in Bitcoin technology, promoting sustainable bitcoin mining, and supporting open financial and communication infrastructure in developing countries. The company is also committed to championing freedom of speech and open-source technologies, as reflected in their projects like Hole Punch and investments in open-source hardware wallets.
While other stablecoins like BUSD face legal scrutiny, Tether maintains its stablecoin is not a security and is regarded as a commodity by the US Commodity Futures Trading Commission (CFTC).
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