Bitcoin is secure from hacks and AI, CBDCs would require an overhaul of entire U.S. financial system - Steven Lubka
|Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!|
(Kitco News) - Investors don’t need to worry about artificial intelligence or hackers compromising the security of the Bitcoin blockchain, but should instead keep a close eye on the government’s CBDC projects, according to Steven Lubka, managing director and head of private clients and family offices at Swan Bitcoin.
“Even if you have artificial general intelligence, even if you have a superintelligent AI, it cannot actually compute hashes faster than the underlying hardware. There is a thermodynamic limitation there,” Lubka said. “It's like saying, ‘could a car go faster than its engine?’ It doesn't make sense, right? The intelligence of the AI does not give it the ability to go faster than the GPUs it's on, and so in that sense, it means nothing for Bitcoin.”
Swan Bitcoin offers automated Bitcoin savings plans and instant purchases through their app, and their Swan Private service also provides tailored Bitcoin investment for family offices.
Lubka spoke with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, at Bitcoin Miami in May. He said Bitcoin has proven itself to be very resilient to attack over a long period of time.
“This network has operated with near perfect uptime for 13 years,” he said. “If somebody could hack it, they would hack it because there's billions of dollars, it's the world's largest honey pot in a sense. If you could get the coins out of Bitcoin and convert them, you're extraordinarily wealthy, but no one has done it. So we have every reason to believe it's secure.”
CBDCs would require complete overhaul
Lubka believes that government-issued digital currencies are worrisome, but the project is less feasible than people realize.
“I think CBDC is one of the world's most terrible ideas, so I'm wholeheartedly against them,” he said. “That being said, people lack an understanding of how massive the engineering project would be to deploy a CBDC. In the US, you are talking about overhauling the entire financial infrastructure, every point of sale, every bank, even the existence of banks, credit card payment [processing], it needs to all be rebuilt from the ground up.”
Lubka said a digital dollar is not a near-term threat, because the government is not good at managing large software projects regardless of how they do it or who they contract to write the code. “I'm personally a skeptic that even if they went full tilt, we're gonna deploy a CBDC,” he said. “We're five years, seven years [away]. That's not a near term thing. It is an overhaul of the totality of US financial infrastructure.”
SEC lack of clarity is tactical
Turning to regulation of private cryptocurrencies, Lubka said that while many believe the U.S. government should have already fully regulated the crypto industry, especially in the wake of FTX, the American system simply doesn’t work that way.
“The thing people don't understand is it's not easy for the SEC to do things, and in many ways it's by design,” he said. “The political philosophy of the U.S. was one of making it very inefficient and the reason the founders and founding American philosophy wanted to make public bodies inefficient was so that somebody couldn't come to power and just unilaterally do whatever they wanted easily. It's hard to do things in the U.S.”
He also said that while the SEC is understaffed and hamstrung by legislation, he believes the agency has also been purposely opaque and unclear about regulation as a way of limiting the growth and institutional adoption of crypto.
“I think that lack of clarity is by design, I think it's tactical,” he said. “I think the SEC's lack of clarity, withholding rulemaking and various things as a tactic, I think that's correct.”
Banks are still free to serve crypto firms
Lubka is doubtful, however, that the government is ordering banks and other financial institutions not to serve crypto firms, and thinks this is mostly organic, market-driven risk management.
“After the failure of FTX and Genesis and everything that came with it, it would be natural to expect a level of pushback,” he said. “If the thesis is it's a coordinated top-down thing, where someone in the Treasury Department is sending memos to all the banks and saying de-platform all of the crypto companies, I don't know if that's the case. There are still banks serving businesses, including businesses like ours.”
He said there's also been a tightening at the state level, and it could just be a natural byproduct of FTX blowing up and taking a huge amount of wealth down with it. “It wouldn't surprise me if it's more organic and decentralized than people think.”
To hear Lubka’s views on gold’s correlation with Bitcoin, watch the above video