Interview with ShapeShift Founder: The Worst Crisis in the Crypto Industry May Be Over
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Interview with ShapeShift Founder: The Worst Crisis in the Crypto Industry May Be Over
How do crypto OGs view Bitcoin, DeFi, macroeconomics, and other innovations in crypto?
Navigating Web3 tides with focused insightsBlog: Empire
Translation: TechFlow intern
This episode of Empire features Erik Voorhees, founder of ShapeShift, who entered the crypto space in 2011 and is one of the earliest OGs in the industry. Below is the整理 by TechFlow:
Article Structure:
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Bitcoin’s Present and Future;
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DeFi & CeFi;
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Macroeconomics;
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Misconceptions about DAOs;
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Industry Focus & Advice for Newcomers;
Bitcoin’s Present and Future
Host Jason: What’s your view on Bitcoin?
Erik: If you see Bitcoin as a monetary technology, then Bitcoin will be the best form of money—better than gold, better than other cryptocurrencies—mainly because it's more conservative, more stable, and more experimental than any other form of money. After more than a decade of growth, Bitcoin is steadily approaching its goal of becoming the world’s foundational currency. Of course, Bitcoin becoming the base money doesn’t mean it will encompass all financial innovation in the world.
Host Santi: How do you view Bitcoin’s security budget transitioning from block emissions as the main income source for miners to a transaction fee-based model?
Erik: When new coin emissions approach zero, it means Bitcoin mining security will be fully funded by network transaction fees.
Then a new question arises: Will these fees be sufficient to sustain mining? There will always be some lower limit to the security budget, regardless of how high the fees are. So the biggest question is whether this security budget can deter attackers?
Nobody knows the answer to this—not even the most technically skilled person or the greatest economic expert. Nobody knows what Bitcoin usage will look like 20 years from now, or what the transaction fee market will look like.
I believe the transition of miner revenue from block rewards to transaction fees could work. After all, just looking at the fee market today, transaction fees are already higher than mining rewards were five or ten years ago. If it doesn’t work, then Bitcoin will likely be overtaken by other forms of digital assets.
Host Santi: What’s your take on the conservatism within the Bitcoin community?
Erik: The deeply conservative culture within Bitcoin is a good thing. People should be extremely cautious and slow when changing Bitcoin, because that’s precisely what defines Bitcoin. Ethereum upgrades faster than Bitcoin, but that also increases its risks.
Host Jason: Can Bitcoin be banned?
Erik: Around 2012, I was most worried that Bitcoin would be banned, since its ultimate goal is to replace fiat currencies. Fortunately, no politicians actually perceive Bitcoin as a real threat. As long as enough people within government institutions own, understand, and value Bitcoin, it still has room to grow.
DeFi & CeFi
Host Santi: What’s your view on the divide between CeFi and DeFi?
Erik: Over the past few months, people have begun to realize how well DeFi has performed compared to how chaotic CeFi has been.
The biggest issue now is: there is a fundamental difference in how finance operates—between human discretion & interpersonal relationships versus math, blockchains, and immutable code. Recent events have clearly demonstrated the brilliance of moving finance from fallible humans to immutable code.
Politicians who claim to care about consumers and financial stability should praise DeFi if they truly understood the distinction between CeFi and DeFi—but no politician is foolish enough to give up their control.
Host Santi: What’s your outlook on DeFi over the next 5–10 years?
Erik: I don't think DeFi can express, control, or manage all financial transactions. For example, physical projects are hard to represent and govern through DeFi. Maybe it can do so in rough ways, but even if not, that's okay.
However, I believe the share of “purely digital economic trade and exchange” will only increase in the future. While people will always extend credit based on reputation, building the entire financial system on human frailty introduces systemic risks. Eliminating those risks could lead to a healthier system.
Host Santi: Why would users want to use DeFi?
Erik: I think people prefer DEXs out of laziness—they tend toward systems with less friction. Over time, centralized financial firms add friction (mostly regulatory). Anyone who has dealt with banks hates them. Over time, crypto custodians are forced to become more bank-like. Even if their regulations aren’t identical to banks’, operating under the same framework (i.e., how banks control and monitor funds) only makes things worse.
Macroeconomics
Host Santi: From a macro perspective, what’s your view on the global economy?
Erik: In the short term, digital assets are new, risky, and speculative. Bitcoin is affected by Federal Reserve policy just like the stock market—during monetary tightening, digital assets get dumped like any other risk asset.
In the long run, Bitcoin will hold its value better relative to the dollar. When 3–5 years of inflation arrive, the dollar will keep losing value, and people will slowly realize that even though Bitcoin is volatile, it’s a better store of value over time. No matter how much Bitcoin drops recently, if you compare its historical performance against the dollar, it outperforms beyond words.
When people discover this highly liquid asset that cannot be frozen or seized, offering full sovereignty and autonomy, while fiat money rots in their hands, they’ll flock to Bitcoin.
It’s hard for people to think long-term (including myself). If I see Bitcoin drop tomorrow, I’ll feel discouraged—even though rationally I know it doesn’t matter, that it’s just noise. Still, it’s a setback.
Host Jason: Is the worst behind us?
Erik: The worst crisis in the crypto industry may already be over. When all indicators are terrible and speculators are barely willing to hold any crypto, that’s usually the bottom. Having gone through several such cycles, I’ve found that after the winter ends and the cycle turns again, everyone starts making big money. (These profits come from what people built and focused on during the bear market.)
Misconceptions about DAOs
Host Santi: What’s your view on DAOs?
Erik: In any innovative and frontier exploration field, people should expect that most attempts will fail. Just like nine out of ten DAOs will fail—that doesn’t mean the concept itself has failed, but rather reflects being at the cutting edge of something.
People will keep experimenting to build better DAOs, but DAOs aren’t a panacea. They can’t solve every problem, especially human interpersonal conflicts rooted in human nature—but they are a very interesting new way of organizing people.
I think the biggest misconception about DAOs is that when people hear about “community governance,” they imagine a flat, egalitarian structure where everyone’s vote counts equally.
If a DAO has such a structure, I think it will fail. DAOs absolutely need hierarchy, structure, and rules inside. The difference is that these don’t come from a fixed group of shareholders who can’t really exit, but from a fluid group of token holders who can freely join and leave.
I don’t believe everyone should have equal voting power, because people aren’t equal: Their contributions differ, their risk tolerance differs, their investment horizons differ. So while “equal minds and bodies in a system” sounds nice in theory, it simply doesn’t work in practice when you try to build actual structures.
The number of tokens someone holds doesn’t fully reflect their relationship with the DAO. I hope to see great contributors have greater influence over a system—not just symbolic voting rights.
Industry Focus & Advice for Newcomers
Host Santi: Are you interested in things beyond Bitcoin?
Erik: I discovered Bitcoin because I believe in certain principles: Money should emerge from the market; people should have the choice to have financial privacy; the global financial system should be open, fair, and freely accessible to everyone.
With these principles, Bitcoin became the most fascinating thing I’ve ever seen. But it pains me that many people ignore innovations that express the same principles. For example: Zcash and Monero offer better privacy than Bitcoin, so even though they’re not Bitcoin, I’m still interested in them.
Host Jason: What’s currently the most exciting area of crypto innovation?
Erik: Thorchain allows anyone to swap L1 assets across boundaries, without friction or control. While trading assets within ecosystems like Ethereum works well, cross-L1 swaps aren’t supported. To address this, common approaches involve bringing external assets onto Ethereum as wrapped or synthetic tokens. These methods work fine, but often make trade-offs regarding custody or security. Thorchain enables direct swaps of native assets instead.
Host Santi: Any advice for newcomers?
Erik: Anyone wanting to enter the space needs self-reflection. Most people only join because a crypto project’s price went up. If you’re jumping in just because your friend made money, you should leave early to avoid blowing up. If you believe this rabbit hole is deep and powerful and will change the world, then focus on that.
Another piece of advice: Use the projects you want to understand, don’t just read about them. The best way to understand Bitcoin is to acquire some, send it around, and use it. The best way to understand DeFi is to lend on AAVE or trade on UniSwap.
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