Jen asks, "How do you envision markets transitioning from centralized to decentralized exchanges? What are the implications you see, at large?" Decentralized exchanges are a fantastic idea I think it's an idea that can be applied fairly directly to trading between open, digital cryptocurrencies But trading cryptocurrencies to fiat currencies, trading between the US

dollar and bitcoin, is a lot harder to decentralize The reason for that is the dollar system is centralized You have some examples of decentralization and recently they haven't been growing as fast, like LocalBitcoins [and] various types of cash markets ATM machines, those are fiat to bitcoin exchanges They are decentralized, but they can't really generate a lot of volume of transactions

They're not very convenient Whereas doing things like atomic swaps, cross-chain atomic swaps — where you can swap currencies from two blockchains, with two transactions, that are trustless and neither participant can cheat — means that we could see many more decentralized cryptocurrency to cryptocurrency exchanges We'll see how that happens I think that will be really interesting Another possibility that we're seeing (and I think a lot of different people are now exploring) is the possibility of having fiat currencies expressed as some kind of pegged cryptocurrency An example of that would be Tether

There are proposals for some other forms like that, where you have fiat currency in reserve and then you have a cryptocurrency asset issued in equal proportion You can trade that on a blockchain It allows you to do arbitrage and decentralized exchanges for fiat currencies too, although of course the bank deposits that contain the actual asset (ex US

dollar), those are still centralized "Will a Tether collapse lead to such a fierce bear market that it kills off Bitcoin? Will decentralized atomic swaps and Bisq be too late and weak to save the day?" I have not really studied what's happening with Tether, but I do know that it is a centralized / centrally managed system That represents custodial risks, counterparty risks, like any other centralized / centrally controlled system Having lived through a few very big crises in Bitcoin, I'm really not fearful of a "fierce bear market" that could kill off Bitcoin I really don't think that can happen, for a variety of reasons

One reason: most people who get into Bitcoin today don't realize how big a deal the collapse of MtGox was [It was] a time when there was only one exchange, when that exchange was responsible for price setting, and when that exchange was responsible for the vast majority of all of the exchange volume When it collapsed, it collapsed suddenly and catastrophically, with a loss that was a staggering amount of money as a percentage of the total amount of Bitcoin in circulation And Bitcoin didn't die It was the first and only time I was afraid that this might really knock Bitcoin back by a long time

Or even potentially stop it in its tracks, force us to reboot the currency, and start something new When it didn't happen, I realized that Bitcoin is more resilient than I thought Then I started thinking about what my reaction would have been if bitcoin had dropped precipitously back to double digits, or even single digits, in value against the dollar I realized that what I would probably do is buy all of them, with whatever cash I had Then I realized that everybody else would be thinking the same, or at least a very large number of people who had seen that this experiment was working and believed in it, would think the same

This idea of "buy the dip" isn't always investment advice or good investment advice In fact in some cases, it's terrible investment advice It is like 'catching a falling knife,' as they say in investment circles But there are some people who believe in this project so strongly that if they see an opportunity to get back in at a much lower cost basis, they will Some of these people have a lot of money now

What they consider a buying opportunity is much higher than what I would In fact I recently saw a tweet that was kind of funny, which said: "What would you do if bitcoin dropped to zero?" Someone responded, "It wouldn't, because if it dropped to one penny, I could buy all of them for $168,000 And I would" That kind of attitude, at different price points, means that I don't see that scenario Could a collapse of something like Tether set us back for a significant period of time? Yes

We keep seeing these things happen They're the result of centrally controlled, centrally managed, custodial systems Tether is one of those The same thing could be said for the recent massive theft at CoinCheck, which was half a billion dollars worth of NEM and a significant amount of Ripple's [XRP] We will continue to see these centralized systems introduce counterparty risk Every now and then, that counterparty risk is going to turn into an actualized loss