In an exclusive interview with crypto.news, Paolo Arduino, CTO of Bitfinex and Tether, offers a fascinating insight into his journey in the cryptocurrency industry, his thoughts on regulation, and the role of Bitcoin in the future.
Journey to cryptography
Ardoino, a developer for life, got involved in the cryptocurrency industry next discovery Bitcoin (BTC) as a potential ledger solution to an outdated and bug-ridden financial technology.
He started his journey with Bitfinex in 2014, working on improving their bitcoin trading platform before moving to his current position as CTO of Tether in 2017. This position has seen him involved in expanding various lines of business within the company.
Arduino sees coding as more than just a technical endeavour; For him, it is a creative process through which ideas can be brought to life.
The spirit of cyberpunk and the turn of the rope
During the 2022 PlanB Forum in Lugano, Italy, Ardoino alongside Adam Beck and Nick Szabo explored the evolving visualization of the cypherpunk movement. Panelists agreed on the image of cypherpunks as “rebels who oppose systemic control by the elite,” arguing that technology and cryptography provide “alternative means for people to interact and maintain control over their money.”
Despite shifting perceptions due to widespread adoption and speculation, the panel agreed that the spirit of cyberpunk is still alive and strong. Arduino explained that Tether is dedicated to maintaining this spirit by investing in Bitcoin development.
Better organization
When asked what kind of regulation is needed in the industry right now, Arduino shared that, in his opinion, “A good regulation is one that understands the technology and one that actually wants consumer protection.”
He stressed the importance of open source technology and called on regulators to distinguish between beneficial and harmful projects. He urged regulators to focus on existing financial structures rather than reactively targeting cryptocurrencies.
“In the past two years, I have been in good contact with regulators who are 100% interested in creating a secure environment for cryptocurrency and blockchain technology to thrive,” Tether’s CTO revealed.
Scalability, illicit use, and rising bitcoin fees
Ardoino also discussed Tether’s exploration of scalability solutions, such as the Lightning Network, and how bitcoin transparency can help track illicit use. He believes that while working with regulators is critical to avoid reputational damage through association, companies should also invest in bitcoin development to avoid a potential slowdown in bitcoin adoption.
To address the recent spike in bitcoin fees largely caused by Ordinals Inscription, Ardoino considers this a wake-up call for exchanges to adopt solutions like the Lightning Network and Liquid sidechain: “As bitcoin’s popularity soars, the network needs to evolve to ensure scalability and keep transaction costs reasonable.” .
While Arduino has admitted that he doesn’t like Ordinals personally, he also acknowledged them as an intriguing implementation of blockchains, even though they were initially used as a “phishing mechanism.”
However, he emphasized that there is not necessarily a good or bad way to use blockchain technology. Despite his preference for lower overheads, less space usage, and lower fees for users, he has suggested that it is impossible to control how bitcoin and block space is used. “Ultimately, we cannot control how Bitcoin and block space are used,” Arduino concluded. He also noted that attempts to limit the use of any technology historically did not end well.
Central bank digital currencies and the rope role
Arduino shared his views on Central Bank Digital Currencies (CBDCs), noting that while they could be harmful if used by the state as leverage against citizens, such scenarios are unlikely in regions such as the United States or Europe. He argued that CBDCs could bridge the utility gap of cryptocurrencies for payments, but that central banks would tread carefully due to the potential impact on the traditional banking industry.
Tether’s (USDT) market capitalization has been on the rise, which Ardoino attributes to the company’s liquid portfolio, risk management practices, transparency, and customer protection. He also spoke about the criticism that Tether faced in its early days, with rumors of insufficient support or market manipulation. However, after numerous testimonials purporting to prove that its reserves are now fully secured and recovered 25% of its reserves in just 20 days, Tether appears to have improved its position in the industry.
Bitcoin: the currency of the Internet
Arduino highlighted the disruptive potential of bitcoin, noting the difficulties politicians are having in trying to control it. China’s recent failed attempts to regulate bitcoin mining illustrate this point further, signaling the emergence of bitcoin as the currency of the internet. Bitcoin’s hash rate dropped temporarily, but the same ASICs appeared to be back in activity elsewhere shortly after, as evidenced by the rapid recovery of hashing.
According to Arduino, Bitcoin’s decentralized nature overcomes traditional financial problems, such as the ability for central banks and politicians to print money whenever they want. He sees bitcoin as a new form of digital gold that removes power from politics and creates a level playing field for building new economies. It is a global currency that transcends borders, is within everyone’s reach, and is beyond anyone’s control. This degree of financial freedom is unprecedented in human history.
Tether goals and the future of bitcoin
Ardoino also discussed the evolution in crypto culture from cypherpunk ideals to a more regulatory-friendly stance. He sees this shift as a reflection of the growing community acceptance and adoption of Bitcoin.
Tether’s short-term goal, according to Arduino, is focused on education and the stability of its stablecoin. Long-term goals include investing in Bitcoin technology, promoting sustainable bitcoin mining, and supporting open financial and communication infrastructure in developing countries. The company is also committed to supporting freedom of expression and open source technologies, as reflected in its projects such as Hole Punch and investments in open source hardware wallets.
While other stablecoins like BUSD face legal scrutiny, Tether maintains that its stablecoin is not a security and is considered a commodity by the US Commodity Futures Trading Commission (CFTC).