This week we had the opportunity to speak with the Co-Founder of Bancor Network Eyal Hertzog. We spoke about technicalities involving the smart tokens but also about his personal road-map in the unstable environment of cryptocurrencies.
After a month of important decisions in the world of initial coin offerings which took the whole industry by surprise, Eyal’s point of view towards cryptocurrencies and the future of the blockchain technology is still fueled by the vision that the world will benefit from this industry long-term. Bancor is and Israel-based project, that has raised in June more than $150 million in its crowdsale that lasted less than four hours. After the initial coin offering, Bancor became one of the 5 largest projects.
The idea behind it is the creation of smart tokens, an innovative way in which cryptocurrencies and tokens in reserve can be purchased or liquidated by anyone through smart contracts without the need for an exchange.
CryptoStreet: We’ve discovered a few months ago the Bancor Network, and the whole idea of smart tokens surprised us. Can you tell us how the idea for creating Bancor emerged?
Eyal Hertzog: Good question. I was a founder of the company MetaCafé which was a user-generated video ecosystem and it had a lot of users so I had some experience with the online ecosystems. In 2012 I came back to Israel from the Silicone Valley because I wanted my kid to grow up here and I started to study online on youtube. I’ve watched a lot of videos and learned about the world.
At that time I’ve learned a lot about how money works and the history of money and economy. After a while in May 2011, on one of the blogs that I was following, it was actually a video-cast there was a feature about Bitcoin. I immediately decided to focus my entire focus on this technology.
I had some ideas and also involved some of my friends in the process. At some point, we’ve started thinking about that Bitcoin is the first user-generated currency among several other examples.
So we thought that it’s going to be a “long-tail” just like with videos, with blogs and all the subreddits because everyone could get it because everyone can create and it gives the possibility of endless creativity to the people.
And we thought that the long tail comes from local currencies because there are already thousands of local currencies around the world, new technologies, and new ideas.And we created a system with a company called Atcoin that built a system that allows you to create local currencies.
We’ve run a lot of experiments. But in the long term, we saw that it was a decline in usage for those currencies. So even though we’ve started with a great excitement the currencies would not sustain. After we’ve spent a lot of time to figure out why we’ve started to suspect that it has to do with liquidity.
CryptoStreet: How come?
Eyal Hertzog: Liquidity is very important because just like a computer network is very useful on its own, you can do calendaring databases, emailing you can do a lot of things with a local computer network, but when you connect all the local networks together you get the Internet.
Now that’s way more useful than an isolated local network. Liquidity does the same for currencies, for tokens, for assets. It connects the currencies to a global network of value transfer through the internet of value if you will. Without liquidity you don’t have the internet of value, is like having a computer network with people with floppy disks running between themselves and transferring information.
But there’s not going to be a lot of liquidity for the long tail giving the current solutions, that’s for sure.
CryptoStreet: Why do you think so, and how can an asset become liquid?
Eyal Hertzog: Because the current solutions have barriers to liquidity. You need to be at a specific size, you need to be big in order to attract the market profit makers. That’s what can make your asset liquid.
CryptoStreet: From what I see your vision was backed up with a lot of research and hard work. How did you manage to keep your vision intact in an industry that is very unstable and controversial for some people?
Eyal Hertzog: To be honest there were moments when I broke down. If it wasn’t for my colleague the Co-Founder I’d probably wouldn’t be here talking about it. Because when he broke down I supported him and I broke down he supported me. There were some tough moments, yes, there were.
And I think that we are very lucky that we got to this point. At some point, just a year ago we thought that this isn’t going to work and we were thinking about creating this company, which it will become the foundation for Bancor.
We were thinking about starting to build a system around ethereum and get involved in something more advanced, but we were so burnt out from all the hardship we’ve experienced that we didn’t feel like we wanted to go into that.
CryptoStreet: What made you change your mind?
Eyal Hertzog: If it weren’t for one investor that called us, and said come on you have to do this I really want to invest in this, we would have given up.
CryptoStreet: What did you feel when you saw that after years of hardship the ICO made above $150 million?
Eyal Hertzog: Well before that, we were very stressed, and after the ICO it gave us time to relax, it was hard to realize at first that wow we have broken a world record. But it took us a few days to digest that and a few days later FUD articles started to appear about Bancor.
CryptoStreet: What were the articles telling?
Eyal Hertzog: The articles were saying that Bancor is not working and is flawed and whatever.While, you know, we’ve released our smart contract technology ten days after our ICO.
So operations over $100 million were traded through the BNT (Bancor Network Token) smart token. The technology works, it provides liquidity for fricking tokens, without an exchange on chain, it works. The interesting part is that they’ve criticized it between the ICO and the activation.
CryptoStreet: What happened after the activation?
Eyal Hertzog: When we’ve activated it, I don’t think that many people realized what the technology could do. And we were like, is based on smart contracts you should check it out. And besides that when you release a product with a working technology it sounds at first like a scam.
CryptoStreet: How do you think this technology influences us?
Eyal Hertzog: It is an existing technology, but you know, it’s almost like the internet. After it came the World Wide Web (www.) which was like a killer app for the internet which it had only the email before. And the Blockchain is the technology and bitcoin is like email.
Now Ethereum is like the www. in this case because it’s the first killer app. I mean email is nice, it’s great, very useful. On the other hand, we already have the digital working solutions, credit cards banks, and bitcoin only shines as a solution because it’s a permissionless private currency. But ethereum does something completely different, it provides solutions for venture fundings and that’s a pretty big deal.