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Kraken’s Dan Held shares Bitcoin’s money thesis, DeFi risk profiles, and what got him into crypto

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In a recent interview with community-driven crypto edutainment channel Cryptonites, Bitcoin veteran Dan Held shared his thoughts on the current trends and topics of discussion in the crypto market, such as the rise of DeFi, the allure towards Bitcoin, and how blockchain impacts society like never before.

Held is a tech enthusiast who founded Bitcoin price and news app ZeroBlock back in 2013 (acquired by Blockchain.com), and then worked on crypto portfolio app Interchange, which was acquired by crypto exchange Kraken in 2019. Held now serves as the Growth Lead at Kraken.

Speaking to Alex Fazel of Cryptonites, Held spoke about his journey in Bitcoin — a ride that had Held see Bitcoin go from $10 to $20,000, oversee Roger Ver’s Bitcoin purchase, and working on the first design of Bitcoin.com.

Dan Held. Image: Cryptonites

Being productive vs. minting money

Held stressed on the need for being productive in today’s crypto ecosystem, one which infamously revolves around token prices and the growth of market cap instead of actual adoption or solution to a real-world issue.

“Build in a constructive way…go build a product or service that solves a problem. Lots of people launch a coin. You know, I think very few of those are productive,” said Held while speaking with Fazel.

Held, famous for his bullish Bitcoin tweets on Twitter, was then asked about what exactly attracts him to the technology, considering most adoption narratives fall either in the price going up basket or I-am-in-it-for-tech-bro meme.

“I think Bitcoin is distinctly different from everything else,” answered Held, in regard to the 7,000 other altcoins in the crypto market and the pioneer’s position among them.

“I was going to find studying finance and undergrad during the 2008 financial crisis. And I realized that none of my teachers and on my books. Nor anyone on TV knew what the hell was going on. So, um, you know, they’ve really challenged my faith in the system. And with Bitcoin, I immediately saw that as the solution to this problem.”

“Blockchain technology was built to build Bitcoin. But it was fundamentally chosen in terms of design parameters to build Bitcoin, like blockchain is not a general-purpose software that you can [use for] anything and make it more valuable,” he added.

Held further noted that Bitcoin’s success and fundamentals “totally change” the power structure across the world. “Because money, which is a representation of stored time and energy that you spend to earn it. You know, for example, the dollar value in your bank account represents the aggregate life’s energy that you’ve spent earning,” he said.

“Money underpins all value. And the preservation of someone’s ability to store it and move it without any permission is a fundamental human right. So that’s why I care about Bitcoin. That’s why I think Bitcoin’s mission is massive.”

DeFi risks and CeFi trust

Among other topics, Fazel asked Held’s thoughts about the rise of DeFi apps, which have gone from a tiny crypto sub-sector in 2019 to managing over $11 billion in locked assets as of today. Much of their growth has been driven by yield farms and high-interest rate schemes (10,000% annual returns in some cases), leading to both compliments and criticisms from industry observers.

“Not to say that they’re bad products or anything. But, you know, it’s really, I don’t really understand how a consumer would look at their defined yield rates. So some of these default yield rates, you guys here are crazy, like 2200%, right?” said Held.

He added:

“Those are very hyper speculative versus like the rap Bitcoin being utilized for like more safe things I think are very, very low yield. Like, like two bps. Yield, you know, so when you look at CFI, CFI rates will be much higher because they can take on more risk. Um, they have probably better, you know, it’s centralized.”

Held also noted the risks in CeFi — the term for crypto wallets and exchanges providing DeFi-like services — were far better understood as the counterparties were known. However, in DeFi by design, no one knows who is taking the other side of the yield, making it a “fundamentally different risk profile,” said Held.

“Like I have no idea if this market contracts will blow up in 10 years or two years or one year, or if the, you know, and then we’ll be the yield. So then when I look at my yield, my yield is much higher. And so you fall. And so there’s this whole, you know like I have to go convince a consumer to take on unknown risks and earn a lower yield.”

(The above is part of a Cryptonites virtual interview that you can watch in full below.)

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