Cryptocurrency 5 hours ago (Jan 21, 2023 22:40)
© Reuters It’s Only Bitcoin That Can End Corrupt Financial Systems – Exclusive Interview with Prince Philip of Serbia
Benzinga – Exclusively speaking to Mike Ermolaev, a crypto journalist who interviews celebrities and notable crypto figures, Prince Philip Karageorgevitch, Hereditary Prince of Serbia and Yugoslavia, explains why Bitcoin is set to be the world’s currency in the future and how it is superior to fiat and other cryptocurrencies.
His Royal Highness Hereditary Prince Philip of Serbia and Yugoslavia is the second son of the last Crown Prince of the former Kingdom of Yugoslavia, Alexander, and the grandson of Peter II, the last king of Yugoslavia. In 1945, the country’s communist leadership exiled the royal family. Prince Philip, born the United States and raised in the United Kingdom, recently returned to Serbia, where he lives with his family. An active public figure, he works for a Bitcoin company he believes is the best in the world.
Having spent many years in finance, he witnessed first-hand the weaknesses of the current monetary system, leading him to explore alternatives. This is a fascinating story about a blue blood, a symbol of tradition, becoming a passionate advocate for something so unconventional as Bitcoin.
It wasn’t love at first sight
My first question to Prince Philip was, of course, what prompted his interest in Bitcoin.
“Well, the story is that people often discover Bitcoin many times. I first came across it in 2012, but I didn’t buy it. It just appeared people were talking that it would go to a hundred dollars. I didn’t think any of it. I thought it’s just some magic internet money.
Then five years later, in 2017, my best friend invested in it, and he said, “Philip, take a look at Bitcoin. It’s really interesting. It’s got a 21 million cap. It’s gonna be this great inflation hedge and all this.” I was like, “Oh, interesting.” He kind of taught me to get onto an exchange and to secure my wallet. So I thought, “This is fantastic.” I bought some and got into a wallet, and then of course, I got distracted by other altcoins as well. But I was introduced to it then, and I had my first Bitcoin,” Prince Philip said.
Having developed expertise in finance, he saw growing issues with the traditional monetary system. Something changes in people’s lives forever when they recognize a problem and consider what they can do about it. The same thing happened to Prince Philip.
“I worked 15 years in finance, and I always thought things aren’t running as smoothly as they should be. There was just something I couldn’t quite put my finger on. And when the pandemic hit, the amount of stimulus that they pumped into the economy to try to keep it alive by just digitally printing money out of thin thin air rang alarm bells to me. There was this feeling like, “This is not right.” And of course, Bitcoin is its thesis. It’s part of that. You can’t inflate it. There’s a 21 million cap. So I was like, “Okay, so I’m going to study more about Bitcoin.”
So I studied more and more, and then all of a sudden I realized that the answer to many of my questions was right under my nose. When I learned more about it and its features, philosophy, I realized, “Oh my God, this is the answer to a lot of my questions.” It also dawned on me that the rest of other coins don’t matter. So, I sold all my other coins and got only Bitcoin. And I declared myself a Bitcoin maximalist at that point in 2020,” Prince Philip said.
A sudden rise in fame among bitcoiners
During a TV interview in March 2022, Prince Philip said Bitcoin is freedom for everyone, and that’s something he wants for everyone. After that interview, he was immediately welcomed by the Bitcoin community.
“During the interview, the host asked me about crypto, and I said, “Oh, yeah, not crypto. It’s all about Bitcoin”. And I spoke for two or three minutes about that. That was then picked up by the Bitcoin community and went viral on Bitcoin Twitter,” the prince said.
As a result, Prince Philip became a sensation in the crypto media, including Daniel Prince’s ‘Once Bitten’ and Saifedean’s podcasts, before attending the Bitcoin Magazine conference in Miami, where he met Samson Mow, who offered him the position of Chief Strategic Officer at JAN3. A major mission of the company is to accelerate nation-state adoption of Bitcoin across the globe. Among other things, it assists El Salvador in establishing Bitcoin City.
“Because I was a Bitcoin maximalist, I wanted to dedicate my life to this. I saw it as a future. I couldn’t say no. Then a few months later I transitioned out of my old traditional finance job. And now I’m full-time into Bitcoin. And now here I’m speaking to people like you, which is great and exciting. My work is now my passion,” Prince Philip said.
The Cantillon effect
In the course of our discussion, I asked Prince Philip what his concerns were with the existing global financial system. It is unclear to the average person how central banks harm economies. This seemed like a question that Prince Philip’s expertise could answer.
According to him, the current monetary system is unfair because it relies on the Cantillon effect. In a nutshell, the Cantillon effect describes a change in relative prices caused by a change in money supply. Every major financial crisis since the 2000s has seen the world’s largest central banks create new money aggressively. After the US exited the gold standard and the Federal Reserve was established, the Cantillon effect favored investors and owners over wage-earners.
“And so the question was, how do we fix the Cantillon effect? Why is it that people closer to the so-called proverbial money printer have an advantage over those further down the money food chain, so to speak? And I thought this was very unfair.
With Bitcoin, everyone plays, but in the fiat world, those closest to the printer have a better advantage. Because when the money gets distributed, they’re able to quickly allocate that money into real assets. These people are intelligent. They know that money is almost fictional. It’s just a bunch of numbers on a screen. But they know that if they put it in a real asset like property, they’re able to secure that.
So this is why property prices have gone up dramatically, especially since the first huge round of stimulus that happened in the great financial crisis. And I was wondering why is it that property prices go up? Because interest rates go down. That gives people an incentive to borrow money to stimulate growth. Then who are the ones who get that low interest rate? They’re the big companies, the big guys. And what about little guys? You know, these are the questions I was asking myself. And I thought, “Why can’t we make a solution to that?” Prince Philip said.
Adding to that, he said: “With Bitcoin, the person with the most amount of Bitcoin plays by the same rules as the person with the least amount of Bitcoin. No one is closer to any money issuance. The economic incentives of Bitcoin are completely reversed in the way that it incentivizes people to play by the rules. It’s really beautiful.”
Fiat value vs Bitcoin value
Another question Prince Philip said he asked himself was what was the exact value of fiat money. “That money is purely fictional. You look at a paper note, and you just see a bunch of art, some numbers and some silver tags, water marks and stuff. And you really think to yourself, “This is a paper, but it’s not backed by gold. And what makes it actually valuable?”
So the answer was, of course, it’s economies that back that. The stronger the economy, the stronger the fiat. But of course, it’s also the stronger the economy, the stronger the army as well, the stronger the fiat as well. And this is why you get down the rabbit hole of how petrodollars work and how many wars have been waged in order to strengthen the petrodollar system,” he said.
“With Bitcoin, its value is subjective, but Bitcoin has the reason why it exists in reality. It has to be cemented to reality. And that’s the SHA-256 algorithm and the proof-of-work. That is its cementation to reality. It has to use energy in order to exist. It’s an energy-backed monetary system. Bitcoin users pass this energy on to other Bitcoin users who transact with it. You don’t want your hard work and energy inflated away by someone, by just adding a few zeros on a keyboard and pressing enter. That’s not going to happen with Bitcoin,” Prince Philip added.
Bitcoin whales pose no threat
It couldn’t help but puzzle my mind as to how Bitcoin whales are different from those big guys close to the money printer in the fiat world.
As Prince Philip put it: “We are still in the Wild West. It is pure capitalism here. It’s the only market that’s open 24/7. It does not shut down. You have whales that can influence the market, but they can’t influence its issuance. They can’t influence the amount of bitcoins being printed. They can only influence the price of it going up and down, but really to a certain extent. This just creates volatility in the short term.
It’s actually just exciting for newcomers to the space where they can get Bitcoin at good prices if they’re just disciplined enough not to play the market and not to be traders. Instead, they can just DCA (dollar cost average) maybe once a week, and just forget about it – put it as automated trading so they can get on with their lives to be productive elsewhere.”
As a quick clarification of dollar cost averaging (DCA), it refers to an investment strategy which invests funds in set increments instead of all at once. It is used to avoid losing too much capital in the event of an unexpected market downturn.
Adding to the discussion of whales, Prince Philip explained that these big players would no longer have an incentive to play the markets over time. The volatility of Bitcoin has already decreased since its inception, and it will continue to decrease.
Bitcoin is more of a discovery than a creation
The prince said Bitcoin is the only crypto that is free from centralized control, making it different from all the other cryptocurrencies that can be classified as unregulated securities.
“They have teams of people, CEOs, and slick marketing teams. They have people working that you actually know. They have pre-mining and these sorts of things that just mean that they’re highly corruptible.
Bitcoin had the so-called immaculate conception. It was more of a discovery than a creation. So, in terms of centralization, you could say that there’s some centralization with mining. When China banned mining in 2021, there was about 60% of the hash. They banned that. Most of the hash left the country. The difficulty adjustment went down. And this was the beautiful thing about Bitcoin. The difficulty adjustment is ingenious. This shows how decentralized it is,” Prince Philip said.
He added that Bitcoin merely became more decentralized as those who previously couldn’t mine due to high costs were able to plug in their machines around the world. This is what is happening right now, and it will continue to happen. “It’s capitalism in its purest and it’s a beautiful thing,” he said.
Bitcoin is unrivaled
As for critics’ claims that Bitcoin isn’t scalable, Prince Philip disagrees. “In itself, Bitcoin’s layer one primary function is to be incorruptible and absolutely secure, meaning it cannot be manipulated or altered. And once its foundation is established, it’s then possible to build other layers on top of it. So that’s when things like Lightning and Liquid come in,” he said.
It has already proven to be highly effective, the prince noted, and can process over 17 million transactions per second, challenging MasterCard and Visa. “These are instant settlements, cutting out a lot of that middleman BS, and making economies more efficient in the long term,” Prince Philip added.
“All other coins have promised to be faster. But at what cost? They’re not as secure. At the end of the day, they don’t have enough energy to be secured. Someone can easily organize a 51% attack. They just can’t compete with Bitcoin at all,” he said.
In response to my question whether Prince Philip meant Bitcoin is perfect, he replied, “I think it is perfect through its imperfection.” He referred to Adam Back, a Bitcoin development veteran, who spent a few months trying to improve Bitcoin and ended up concluding that you can only improve one feature at the expense of another.
“He eloquently said that Bitcoin exists in an engineering sweet spot. Yes, it’s not the fastest, but it’s the most secure. And when you want money, one of its major properties is durability. Durability means that you want it to last forever. Bitcoin will last forever. It will be the last thing standing in this world as long as there’s one laptop that’s running it. This is the most important thing for money. It has to be completely incorruptible. It’s not going to be the fastest. But it then solves the issue of scalability with the use of layer two solutions like Lightning and Liquid,” the prince concluded.
A Bitcoin-only world may become a reality
Additionally, we discussed whether Bitcoin could ever replace fiat money. Specifically, I wanted to hear Prince Philip’s thoughts on how to achieve nation-wide adoption and how major economic powers like the US and EU can relinquish control over fiat and embrace Bitcoin.
“That’s one of the reasons why I was so intrigued in joining JAN3 with Samson Mow. Its mission is to accelerate hyperbitcoinization. We will have Bitcoin technology like the Acqua wallet, which will incorporate not Bitcoin only, but with USDT on Liquid. You’ll be able to transfer any altcoin in there, and it’ll be converted straight into Bitcoin.
We’re going to make it very user-friendly, but secure. So I believe Bitcoin will outcompete all fiat currencies. But Bitcoin can, at the same time, live side by side with fiat. You can see that Nayib Bukele in El Salvador did a very intelligent thing by allowing both the US dollar and Bitcoin to be used side by side,” Prince Philip said.
Furthermore, he explained that this is the way forward to becoming a Bitcoin-only economy. “You have to allow people the opportunity to use and try both currencies. And they can choose what they prefer to use. Over time, people will realize that with Bitcoin, your savings will go up and with fiat, they will go down. I mean, this is one of the main reasons why we’re all into Bitcoin. We don’t want to be transacting and to be holding onto an inflationary asset,” he added.
Central banks are all about control
In Prince Philip’s opinion, central banks exist to control the public. “I think that with time fiat will be its own demise. It’s hard to say this, but I think they will try to control too much. So you’ll end up having them pushing things like CBDCs. And that will be the last phase of fiat.
Hopefully, we will never get to CBDCs. People will realize that this is a step too far to have programmable money and a direct account with a central bank. The state will be able to track your spending, tell you what you can and cannot buy, and basically monitor all aspects of your life. There are many other things that we can go into detail about by CBDCs, but this is a very scary future if we go down the path of CBDCs,” he said.
“People will learn about what it’s like to hold your own wealth in your own wallet and to be a self-sovereign individual. They’ll understand that it’s actually quite ludicrous that you trust a third party with all your money. At the end of the day, humans are subject to error. One thing we’ve learned in history is we can’t trust humans all the time. You either know history or trust the government, but you can’t do both,” he concluded.
Bitcoin will strengthen civic responsibility
After that, I asked Prince Philip to describe a future where Bitcoin becomes the dominant economic force.
First, he explained how economic systems work today: “The philosophy of fiat is that we have abundant money, which means that we end up having scarce resources, because the incentive structure of fiat is its inflationary nature. So whatever fiat you have, you have to spend it before it becomes worthless or before it loses value. So this speeds up this insane growth concept of Cantillon economics, where they say this growth is healthy for an economy and try to use up resources to create cash flows, production, consumption, and all that. And that means that the resources that we have in this world become finite, scarce, and that’s obviously bad for the environment.”
He then went on to explain what Bitcoin offers: “If we flip this round and instead of having abundant money and therefore scarce resources, we will have scarce money. Therefore, we don’t need to start squandering our resources. We therefore are secure in the knowledge that our hard-earned money is not going to be inflated away. So we don’t have to do riskier things and push this ever perpetual growth model forward.
We’re able to do things that last for the long term, and therefore we will have more abundant resources. We won’t run out of stuff. None of things will ever run out. Deforestation, excessive oil consumption, overuse of plastics, etc. will no longer exist. This is just to keep the economy alive, and it’s horrible. That will all change in a Bitcoin-only world.”
Prince Philip believes Bitcoin will make people more responsible: “The freedom and the liberty of holding your own money entails a lot of responsibility. You own your own keys. If you lose those keys, you lose your wealth. Yes, you can set up things like multisig and other ways to make it safer for this not to happen. But essentially, you don’t trust a third party to, say, cover your tracks. And this is what’s so sloppy about fiat. People can make mistakes and they don’t care because they just think they can just go over it with more fiat and borrow more debt.
With Bitcoin, you’ll be more responsible because the cost of losing some of your assets is greater. You’ll have cleaner societies. You won’t have this decadence happening in this world. Watching what’s happening around the world with all these liberals and wokeism, and what cultures they’re producing, makes me want to vomit.”
Bitcoin adoption is largely driven by individual awareness
Prince Philip believes that individuals educated about Bitcoin can contribute more to mass Bitcoin adoption than institutional investors.
“If an institution says, yes, I’m into Bitcoin, or when someone like Michael Saylor says he’s on the side of corporations joining Bitcoin, he’s the start of that. He gives more legitimacy to it. That will then mean more people will be more comfortable. Whenever a company like MicroStrategy and someone like Mike Saylor come out and say, “Yes, Bitcoin is fantastic,” they eloquently describe how amazing Bitcoin is, and many people will buy Bitcoin because of that.
In my role as a royal, and with my royal connections, I will try to do something similar as well,” Prince Philip said. “So, yeah, I think companies and institutions are important, but really Bitcoin is about individuals securing their sovereignty and having more freedom,” he added.
“I didn’t know what hard money was a few years ago. And then I started reading about it, and realized that it’s almost like we’ve been purposely educated not to know about the history of money for obvious reasons. So I think it’s paramount that we educate people what hard money is and why we need it, and why Bitcoin is that hard money that will help us,” Prince Philip said.
“Bitcoin is a bottom-up approach, a grassroots approach. It’s mainly done individual by individual, but we do need to give it a hand top-down, and that’s where we come in as well. At the same time, we’ll be promoting bottom-up solutions as well, because they both work,” he added.
99.9% of crypto projects built on fiat incentives will fail
When asked why once successful crypto firms like Three Arrows Capital, Celsius, and FTX failed, Prince Philip explained that they had a fiat incentive structure.
“They’re not really teaching people what Bitcoin actually is, or how it should be done. They’re just setting up exchanges, trying to make these products that yield. You have individuals making other fancy tokens, doing these other weird tokens and hiding money, doing deals with God knows who and what. It’s just the worst of fiat in this world. And it’s obviously going to happen in this sense, because the crypto world is the Wild West,” he said.
“So it was a way for the fiat incentives to go wild again. But at the same time, this is the perfect time to learn. 99.9% of these projects have failed and will fail. And that’s education. When I saw FTX blowing up, I gotta say I was happy. A lot of us bitcoiners with half a brain, and I’m not that intelligent, just could see that FTX was a joke and a scam – that there’s something not quite right about it. We didn’t know when it would blow up, but it blew up. They won’t be the first and won’t be the last. You know, all these companies that are not humble enough to go with what Bitcoin actually means, and what it tries to solve, they’ll end up just disappearing,” the royal said.
“All the fiat goes into those projects because they promised a lot of money. It gets a lot of investors, who are promised X amount of tokens if they invest in them. Meanwhile, a lot of that money does not go into Bitcoin, but it still does. Bitcoin slowly keeps on chugging, churning along, getting stronger, bigger. There’s nothing people can do about that. It won’t stop. So I welcome more blowups, because there are good education moments,” he added.
The metaverse isn’t bad unless you live in it
As we discussed Bitcoin as a technology, our conversation turned to NFTs and the metaverse. He criticized Ethereum and suggested that people who wish for decentralization should use NFTs on the Bitcoin network.
“Ethereum went from proof-of-work which was only a redeeming factor to proof-of-stake. If you want to mint some art, you can easily do it on the Bitcoin network. It’s the only decentralized network out there. You’ll be helping to push decentralization further, not on Ethereum, which is highly centralized.
Ethereum calls itself decentralized, and they have a roadmap map with all these stupid names, like the Splurge, the Merge, and whatever they’re called. It’s an absolute joke. Pure decentralization does not have a roadmap anyway,” he said.
As for the metaverse, Prince Philip believes it’s inevitable with people like Zuckerberg pushing it, but he cautioned against using it to escape reality.
“You can have fun, use it as a video game, but that’s it. Don’t live your life in there. We have life here. We have a perfectly beautiful world. We have an energy-based monetary system now that’s going to help us cement reality. Have fun playing your video games in the metaverse, but don’t use it as your escapism from actual reality,” he said.
Belgrade will soon have a Bitcoin hub
Lastly, I asked Prince Philip if Serbian businesses are likely to start accepting Bitcoin payments anytime soon.
He explained that Serbia passed a law on digital assets in 2021, but it remains difficult for businesses to acquire licenses, and capital gains tax on digital assets is high. Prince Philip hopes to improve these regulations and encourage new laws. He and his fellow bitcoiners in Serbia are also launching a Bitcoin hub in Belgrade to do bottom-up initiatives and educate people about Bitcoin.
According to him, he was inspired by places like El Salvador, and especially the Swiss town of Lugano, where Bitcoin is de facto legal tender.
“I want to teach Serbians what Bitcoin is about and how it’ll help us to move into a better future. Meanwhile, Serbia is open, so please come visit us anytime. If you won’t be able to pay for coffee in Bitcoin, you still can have a good time here. And maybe by the time you come here, you might be able to. I’m working on it,” the prince said.
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