Erik Voorhees, CEO of ShapeShift speaks to us about the explosion of cryptocurrencies from a financial services perspective. In this interview, he shares his thoughts on swapping digital currencies and the role of innovation in the field
ShapeShift is a part of today’s cryptocurrency ecosystem, which enables one to quickly swap between assets. As an expert in the field of cryptocurrencies, we enjoyed a conversation with the firm’s CEO, Erik Voorhees to find out more about cryptocurrencies, as well as swapping digital currencies and the role of innovation in this space.
Firstly, assuming that the reader has little or no knowledge of cryptocurrencies, Erik is eager to reveal that cryptocurrencies, such as bitcoin and Ethereum are defined as decentralised currencies. This means that they are not controlled by any government and rely on technology, cryptology to be redistributed and are transferable from peer-to-peer (P2P) around the globe, very quickly.
“Cryptocurrencies value generally comes from people who are buying and selling them in markets where there is a limited supply, so as people buy and sell them their value goes up and down. They run on a blockchain, which is a distributed digital ledger. This allows them to settle without having to trust anybody else in the world. As long as we trust mathematics, we can trust that these things are going to work.”
The conversation then moves to Erik’s thoughts on swapping digital currencies and just exactly how safe and secure he thinks they are. He tells us that in terms of swapping from one digital currency to another, there are a couple of things to consider. Firstly, Erik says that when it comes to sending a digital currency on a blockchain, is extremely secure and is backed by the power of those networks.
“The main point of cryptocurrencies is to make it easier to transfer value securely, across borders, without having to trust any third party.
“There are a few different ways to swap from one digital currency to another. There are centralised exchanges where you can do this. You need to set up an account, deposit your funds and then set up orders to quickly exchange from one digital currency to another. Those have varying levels of security. You are essentially trusting that the exchange, which is holding your funds is not going to run off with their money or be shut down.
“There are other exchanges, such as ShapeShift, which are non-custodial and far safer than a centralised exchange. We never actually hold customer funds. It is like a vending machine – you pop one asset in and another one comes out, and therefore you always remain in control of your assets.”
Erik then shares his views on the extent to which the cryptocurrency ecosystem is changing today and where he sees it heading in the future. He explains that the cryptocurrencies industry has grown by leaps and bounds, especially during the last year and a half. Erik goes on to explain this interesting point to us in further detail and also his thoughts on what financial services could look like in the future.
“Cryptocurrencies have exploded in value in terms of global interest, but in the long-term, they will become the backbone of a new financial system. This will disrupt and disintermediate many banks and middlemen who have traditionally provided such services.
“Eventually, it will go far beyond financial services and it will disintermediate everything that requires trust. We will move to a system where we will not have to trust third-parties. Instead, we’ll be trusting mathematics, which is much better than trusting governments and people.”
When it comes to the role of innovation in the field, Erik explains that the entire field of cryptocurrency concerns this. Cryptocurrencies, he believes, are one of the most important innovations to happen to humanity since the internet and even before that, when the idea of paper currencies was invented. In closing, he elaborates on this fascinating point.
“These platforms essentially allow for permissionless innovation. Right now, if you are trying to innovate in the FinTech space, you tend to be held back by the fact that all of these traditional financial systems require permission. Cryptocurrencies and blockchain technology are permissionless. This allows innovation to take a much faster pace than we’ve seen in the financial space in centuries.”