Cryptocurrency

At Sylvester Road Capital, SFU Beedie MBA alumnus Anil Patel manages a fund that invests in digital cryptocurrencies. His experience is definitively international; he has worked, lived and studied in five countries.

Watch as Anil takes us through the major change cryptocurrency has undergone and shares what he sees for its future: from eliminating fraud to changing the lives of the billion people who don’t currently have access to banking.

Anil Patel

General Manager at Sylvester Road

Full-Time MBA

Q&A WITH ANIL

Can you tell us what we mean when we talk about cryptocurrencies?

Cryptocurrencies are digital assets that aren't issued by any central bank or government. So digital assets are built on top of blockchain technology and blockchain technology is basically the combination of double-entry bookkeeping and cryptography. Pretty exciting stuff! Basically, we now have mediums of exchange that don't rely on any other third party. If I want to conduct a transaction with you there's no need to involve a third person anymore, and that gives us a lot of freedom.

Bitcoin is probably the most well-known digital currency and it first came about in 2009 after the global financial crisis. And really it just offers us a more transparent way of conducting transactions of value. Bitcoin first came about in 2009 and we are almost 10 years later and there are now thousands of different digital currencies.

How are Bitcoins created?

New Bitcoins are created through the process of “mining”. Miners are computers on the Bitcoin network helping to verify Bitcoin transactions that take place on the network. For this work they are rewarded with a small amount of Bitcoin. This is the only way new Bitcoins can be created.

What can you use cryptocurrencies for?

Bitcoin has a range of different things you can do with it. You can take a fiat-issued currency (traditional government-issued cash), go to an ATM and purchase Bitcoin and have it sent straight to your mobile digital wallet. You can then use that Bitcoin to exchange for goods and services or other digital currencies, or you can loan out your Bitcoin.

A digital wallet is similar to the mobile banking app you might have on your phone, except in this case no third party controls it. If you own Bitcoin you very much own Bitcoin. It's not the same as if you have money in a bank account, where the bank still technically owns that money and you just have a claim to an account at that bank. So with Bitcoin you are your own bank.

Every day more and more businesses and services are signing on to accept Bitcoin as a method of payment; in fact, it's now a legal currency in Switzerland, where citizens are able to pay their taxes in Bitcoin. So the movement's definitely starting to build momentum.

What are some of the concerns around using this technology?

A common misconception with Bitcoin specifically is that it's completely anonymous and that can be used for all kinds of illegal activity, such as financial crimes and money laundering. But in reality, the blockchain is visible to everyone—we all have the ability to see all transactions taking place on the blockchain at any time, regardless of the user. This system is worlds more transparent than traditional state-run monetary systems. And there are a number of services popping up in the areas of compliance and audit that are actually able to solve a huge number of problems that we have in our current financial system. Since 2008 the world's big banks have paid over $300 billion in fines for a whole range of infractions from money laundering to financing terrorism. Cryptocurrency can solve a lot of these problems and bring a whole new lens of transparency.

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