Michele Zilocchi On The 5 Things You Need To Understand In Order To Successfully Invest In Cryptocurrency
An Interview With Fotis Georgiadis
Bitcoin is considered a risk-on store-of-value, and that is why in some market conditions it happens to have a anti-correlation when compared to Gold. This pattern was clearly visible in March 2022 where the destiny of the Russian-Ukraine war was not already clearly defined. Under that circumstances, Bitcoin price started to decrease and Gold price started to increase because it was considered as the correct safe-asset for institutions like Investment Funds, Commercial Banks and Investment Banks (and many retails that bought Gold through such institutions).
Over the past few years, the Cryptocurrency industry has been making headlines nearly every week. Many people have gotten very wealthy investing or leading the cryptocurrency industry. At the same time, many people have lost a lot investing in the industry. In addition, more people have been scrutinizing the ecological impact of crypto mining, as well as its potential facilitation of illegal activity. What is being done and what can be done to address these concerns?
In this interview series called “5 Things You Need To Understand In Order To Successfully Invest In Cryptocurrency” we are talking to leaders in the cryptocurrency industry, as well as successful investors, who share insights from their experience about how to successfully invest in Cryptocurrency.
As a part of this series, I had the pleasure of interviewing Michele Zilocchi aka Mike Zillo.
Mike first heard of cryptocurrencies back in 2012, when he was still graduating at the M.Eng of Chemical and Process Engineering among Netherlands and Italy. He thought that cryptocurrencies were “stupid stuffs” and the guy from whom he heard talking about Bitcoin, should have focused more on getting a degree instead of doing such things. Now that guy is the CEO of one of the most important crypto-investment fund and I received my most important lesson here: being humble is free but it can cost a lot not being it.
He started his journey into the cryptocurrency space back in 2017, before the first big wave of Bitcoin, where he started trading and gaining experience into the crypto-mining field. Anyway, the mere speculation on cryptocurrencies was not satisfactory for him and that is why in 2018 he started studying and practicing to become a proficient Cryptocurrency advisor, with a focus on Companies willing to deploy their business in the cryptocurrency/Web3 space.
As a Cryptocurrency Advisor I understood that Cryptocurrency companies has the same (and even more) needs of a traditional company and that is why I decided to go deeper, increasing my expertise into Tokenomics, Product Design and Business Strategy. I have already experienced with a lot of projects the needs, the struggles and how to overcome certain difficulties. I see the term Strategy Advisory quite overwhelmed in its use today, but in my conception, covering this role is like an art: helping each team with different features, tasks and working paths, with a personal and human approach.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit. Can you tell us a little about your backstory and how you grew up?
I am an only child and I have always been very shy, so when I was a child, I refuged myself into studying, attending different courses to improve my academic skills and lately creating soft skills quite different and unique if compared to young people from my age.
I then graduated with good grades in Chemical and Process Engineering, with a nice Experimental thesis carried out in the Netherlands. At 24 years old, before graduating, I co-founded my first start-up in the field of microalgae for nutritional purposes. I loved the microalgae field and I loved Chemical Engineering too. By the time I simply realized that it could result quite static in the mid-term and that is why while working as an engineer I successfully started free-time working for a Direct Selling company. The income from this free-time job almost overcame my Engineer salary and that is when I decided to resign from my working place, to start investing time to develop proficiency into some Business Fields.
My dream was working into a young and dynamic environment with the chance of being involved with different projects and different task. My aspiration was to become a catalyst of several evolution/transformational processes into companies, but for doing that, a lot of experience had to be achieved since motivation and theory were just a nice (and useful) starting point. And then, the cryptocurrency opportunity landed in my head and hands, and since 2017 I am grinding in the field.
Is there a particular book, film, or podcast that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
The two movies that inspired me the most throughout the years have been “Karate Kid” and “V for Vendetta”. From Karate Kid, that I watched several times when I was a kid, I learnt that the repetition of specific tasks can lead to proficiency over time because hard work always beats talent if talent does not work hard. Besides, this movie is still inspirational to me, thanks the humbleness that Daniel-san had to prove to increase his Karate skills.
V for Vendetta, inspired me a lot when it comes to the power of dreams, the power of rebellion and the self-confidence necessary to pursue my ambitions, even if everyone and everything seems against me. Besides, from this latest, I also appreciate a lot the idea of the totalitarianism-rebellion that is something people should have always clear in mind. Totalitarianism only works until people believe in it.
Is there a particular story that inspired you to pursue your particular career path? We’d love to hear it.
The story that, over time, inspired me the most has been the one from Colonel Harland Sanders, well-known for being the Founder of KFC. He started a ferry-boat company, then he acquired a motel with his owned restaurant that were burnt to the ground. He then started the attempts to sell the fried chicken recipes but he got rejected 1009 times and later, at the age of 62, he opened the first franchise of KFC. The ability to reinvent himself plus the perseverance to face all the rejections is something that I really admire.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
The funniest mistake I made, started from my very first start-up and lasted some years until I better understood it. When starting a business together with other people, they will likely take care of you until they have a common interest AND the value of the relationship can usually be measured by their share of the amount of money at stake.
I know, probably you all thought of something funnier, but once you realize this thing, everything becomes funnier because you become more able to focus yourself on the business (and being less a dreamer) and see the real purpose that drives people having an interest towards you.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
In my path, I encountered different people, that taught me different things. Anyway, when it comes to gratitude, my parents are the two most important, that have always offered help during my struggles, they allowed me to attend several different experiences and taught me the most important values about how to be an integer person, giving values to human values, ethics and so on.
Are you working on any exciting new projects now? How do you think that will help people?
I am currently working on different projects, all of them aimed to improve existing ecosystems or to give tools to people to exploit market conditions. I think that at the moment of writing, the most exciting projects I am currently working are two, quite different among each other. The first one is called Decentra — Accademia dei Registri Distribuiti, an Italian association conveying deep knowledge about cryptocurrencies. Thanks to the growing network and the wide technical and managerial expertise, with such structure, every crypto-project can see its birth and the development. The second project that can really impact people’s life is a fully-decentralized platform for education purposes, where content creators and Learners will be rewarded based on the quality of the participation (and the content) they will bring to the platform. Its name is Skillsbite and it is co-founded from a Polish team, where I am figuring as a Strategic Advisor for the development of the business and the integration of the Tokenomics.
If you feel you want to connect with me, make sure to get in touch through my Linkedin Profile.
Ok super. Thank you for all that. Let’s now shift to the main focus of our interview. The cryptocurrency industry seems extremely dynamic right now. What are the 3 things in particular that most excite you about the industry? If you can, please share a story or example for each.
The first one are the words: “Decentralized” and “Permissionless”: what I really enjoyed from the very beginning was this idea of the removal of central entities, changing them with democratic organizations. That is why Wallets are the real deal of cryptocurrencies and not price fluctuations!
The second is the “Tokenization of Everything”, meaning that a lot of different categories of assets can be represented with tokens, with different purposes, application and limitations.
The third one is that Bitcoin has a limited supply, making it scarcer and scarcer as the mining keeps going. More than 19 millions of bitcoin have already been minted and less than two millions are left to be minted.
What are the 3 things that concern you about the industry? Can you explain? What can be done to address those concerns?
The first one is Greed. Cryptocurrency users are greedy and they get dazzled by huge APYs without taking into consideration all the potential risks involved behind such numbers.
The second one is again Greed because people are willing to sell their soul just to get some “passive income” with cryptocurrencies without keeping in mind about the relevance of decentralization (like in ETH staking, among the other examples where now just 5 validators are controlling more than half of the voting power). To help these two kinds of greedy people, education and evidences of platforms promising miraculous results blowing up are necessary to create awareness. Promoting decentralization is more difficult since evidences come up too late, like the FTX, BlockFi, Celsius examples.
The third one is connected to regulators that can feel cryptocurrencies as a too risky asset while they were given birth to create monetary independence for people using them.
What are the “myths” that you would like to dispel about cryptocurrency? Can you explain what you mean?
There are some myths I always explain to people, especially when talking to newcomers. The first myth I usually debunk is about Money Laundering, that if compared to Messari’s report data from 2019, every 800$ traditional dollars, only 1$ in cryptocurrencies is implicated into illicit traffics. So cryptocurrencies are actually used for illicit traffic but 800 times less than Dollar.
The second myth is about Bitcoin Volatility: VanEck recently issued a report stating that 22% of the companies listed in the S&P500 are more volatile than Bitcoin. For what concerns volatility you may all probably remember what happened when the Swiss Franc unpegged from the EUR in January 2015: a 50% price variation in a single day.
The third myth to be debunked is about Pollution and Carbon Dioxide emissions: from FAO’s data can be easily understood that disposed food has 10 times more CO2 emissions than Bitcoin and that Bitcoin network has an energy demand that is less than half of the banking system. Another myth is that people lose money with cryptocurrencies, while it’s just a matter of when they buy and sell their cryptocurrencies. Actually, this really depends on the time-span they are willing to look at for their purchase of cryptocurrencies and what coins (or s**t coins) they bought. I wrote a comprehensive Medium article on this topic and you can find it here.
How do you think cryptocurrency has the potential to help society in the future?
At first, I am totally sure that cryptocurrencies can help the society, and they are already doing it. At first, to disintermediate payments, bypassing potential restrictions of banks to work with third-world countries or other nations that are on grey/black OFAC list. But these can be just preconceptions, because there may be a lot of importers and exporters in such countries that are just willing to create an international business but they have to struggle with unnecessary bank restrictions.
Other applications are for the traceability of goods and services thanks to public blockchains that can store and notarize data.
Another advantage is the Tokenization of Everything that can create liquidity in non-liquid markets thanks to Secondary Markets, Digitization and Fractionalization. This can be really useful as a new frontier of the crowdfunding, with a potential exchange in the secondary market among Security Tokens.
Recently, more people have been scrutinizing the ecological impact of crypto mining. From your perspective, can you explain to our readers why the cryptocurrency industry is creating an environmental challenge?
Thanks for such question: it’s great to talk about it here. There are two ideas about pollution: the first one is the real pollution (hydrocarbons, heavy metals, polluting gases) and then there is Carbon Dioxide production/emissions. Cryptocurrency mining cannot pollute directly since it’s just a form of electricity consumption, so the trigger is moved to the source of energy production. Before accusing cryptocurrency-mining we should face the reality on how much sustainable is the electricity production nowadays. Anyway, recent stats from Coinshares state that about 30% of the electricity used for cryptocurrency mining comes from renewable resources. And that’s not so bad, if compared to the usual renewable energy shares for countries. For example, Italy (my birth-country) has the same share of renewable energy on the total energy produced of Cryptocurrency mining while USA are down to 12.4% according to EIA.gov .
Bitcoin yearly energy demand is less then half of the Banking ecosystem and 5% of the USA conditioned air consumption just for private uses. What is the priority? Setting the room temperature at 22°C during summer or empowering this ecosystem of distributed and democratic money?
One last thing: estimated yearly Carbon Dioxide emissions for Bitcoin mining are 95 Mega-tonnes per year while according to Mbow et al., 2019, p. 200, up to 10% of the total Greenhouse gases are created by wasted food. WASTED FOOD. I am not triggering the battle for Intensive Farming (that produces 7100Mega-tonnes/year of CO2). I am simply talking about Wasted Food. And that is huge. If we assume that 10% of products coming from Intensive farming are disposed, we are talking of 710Mega-tonnes/year of Carbon Dioxide to produce food that is then disposed. Just the “Wasted-Food-Industry” has carbon dioxide emissions 7 times higher than Bitcoin’s. Are we sure that we need to focus on Bitcoin’s emissions when there are millions of people starving around the world?
From your perspective what can be done to address or correct these concerns?
As usual, the first thing is to spread the correct information. Anyway, information should not be shared in a maximalist way. It’s ok being a Bitcoin maximalist but when it comes to information, we should try to understand the point of view of the other person that has probably some preconceptions in its mind and therefore we cannot start attacking it where if feels safe and confident. We must try to share with those people the correct information in the correct form with the correct attitude.
Recently, more people have been scrutinizing cryptocurrency’s impact on illegal activity. From your perspective, can you explain to our readers why cryptocurrency, more than fiat currency, is seen as an attractive choice for criminals?
This is another preconception that when I hold public speeches about cryptocurrency topic. Cryptocurrencies are used for illicit traffic, like any other currency is.
In 2019 Messari.io published a stats where they showed how cryptocurrency are losing the competition for illicit traffic application 800 to 1 if compared to traditional Dollar. That means that every dollar in cryptocurrencies used for illicit purposes, other 800 dollars are used.
Recent statistics from Europol made this ratio to decrease, but still in the range of 1:83–1:217. So again, cryptocurrency can be used for illicit traffics, but they are still losing the competition with traditional currencies by order of magnitudes.
From your perspective what can be done to address or correct these concerns?
I think that awareness is again the key. In order to increase it, mass medias should pay more attention to positive and constructive examples of cryptocurrencies and blockchain use cases. As of now, their main focus is on negative events, frauds and other events that contribute to dismantle the faith that people may have on these technologies because that’s what can significantly impact the size of their audience. Anyway, this is not entirely mass media’s fault. Big responsibilities are also on the shoulders of “cryptocurrency-professionals” or journalists that surf such hype waves to get some attention for themselves. To balance the polarity of these yellers, we need people that are here to BUILD and not to act just as megaphones and shouters but rather we need BUILDERS, PROJECT MANAGERS, INVENTORS. For the moment, unfortunately, some falling trees are making far more noise than a growing forest.
Ok, fantastic. Here is the main question of our interview. What are “The 5 Things You Need To Understand In Order To Successfully Invest In Cryptocurrency?”
1 — For people considering cryptocurrencies as an investment, keep in mind that cryptocurrencies are a relatively new asset, meaning that they are still considered a high risk asset. My first purchase of cryptocurrencies, back in 2017 was 100$ because the asset was new and, to be honest, I was almost completely ignorant of what I was purchasing. So I thought to spend just 100$ because I wanted to purchase some bitcoin and to start understanding how this system works. 100$ at that time was a correct amount that was not compromising my pockets and I could “forget” about.
2 — Cryptocurrencies are a lot, much different one from the others and before following the hype, I always evaluate the project, the team, the advancement stage behind. It happened to me when I bought Algorand back at the beginning of 2020. I studied the team, the validation method, and the technology behind and that is what led me to buying Algorand and even becoming and Algorand Ambassador.
3 — Cryptocurrencies are the tip of the iceberg. Blockchain and token applications are the whole iceberg. Cryptocurrencies have been the tool to apply the Theory of Games to Blockchain validation, stimulating people with an economic incentive to validate the chain in good faith and reject malicious transactions.
I had the chance to explain these features to a webinar I held for an Italian engineering association and they got quite astonished when I mentioned all the applications for tokens, from Security Tokens to NFTs and for blockchain for the notarization of data. People usually focus on the news from the mass medias and unfortunately they do not get the full picture of the whole evolution brought here.
4 — Bitcoin is considered a risk-on store-of-value, and that is why in some market conditions it happens to have a anti-correlation when compared to Gold. This pattern was clearly visible in March 2022 where the destiny of the Russian-Ukraine war was not already clearly defined. Under that circumstances, Bitcoin price started to decrease and Gold price started to increase because it was considered as the correct safe-asset for institutions like Investment Funds, Commercial Banks and Investment Banks (and many retails that bought Gold through such institutions).
5 — Not your keys not your money. Money not used for active trading should be kept in decentralized Wallets, to HODL the cryptocurrencies in a safe place. We have all seen what happened in 2022 to FTX, BlockFi, Hodlnaut, Celsius and some more. If you are really serious on buying cryptocurrencies to create your accumulation plan and hold them for some time, you should definitely understand how Native Wallets work, what types of wallet do exist and why they are such safe for cryptocurrencies. Leaving cryptocurrencies into Exchanges is like leaving the money into the bank: it’s safe until the bank is safe. And if you do not trade such funds, use the Wallets!
What are the most common mistakes you have seen people make when they enter the industry? What can be done to avoid that?
The biggest one, is about believing in absurdly high APY and joining cryptocurrencies spread by Multi-level Marketing. High APYs are hardly sustainable and they are often carried out with a depreciation of the token (higher earnings meaning higher selling pressure). The Multi-level Marketing approach to Cryptocurrencies is quite dangerous because the buying pressure will come mainly from recruiters recruiting “ignorant” people that at the first occasion will sell their tokens. As soon as the first drop of the price or the first negative rumor will happen, a chained bearish reaction will be potentially triggered, making the price going to zero in a few hours or few days at the most.
To avoid these situation, always make your Due Diligence and evaluate what is the project or the real underlying assets of this token. Furthermore, when you are proposed a token sold by MLM, your first attitude should be skeptical. Then DYOR (Do Your Own Researches).
Another huge mistake I see people doing is panic selling when the prices drop. Bitcoin has proven that has to be treated as a long-term deal and you can see information about this into dcabtc.com .
Do you have a particular type of cryptocurrency that you are excited about? We’d love to hear why.
I am very passionate of Algorand, which I have already spent some nice words about. Algorand introduced an innovative Proof of Stake, called pure Proof of Stake, pPos. The difference from the original PoS is that with the pPoS also the small stakers can get randomly “called” to validate blocks. So, the validation committee is different every block like in the traditional PoS but with the pPoS the distribution of probability to be inserted in the validating committee has a variable that randomly choose an Algorand wallet, with no weight correlated to the number of Algorand contained into it. So in the pPoS a part of the validating committee is based on the heavy wallets, while another part is chosen in a complete casual way.
Algorand Blockchain is fast and block validation takes about three seconds and the fee for the transaction is flat to 0.001ALGO. While I am writing, Algorand is in the range of 0.30$, meaning that the commission for transacting on the Algorand Blockchain is 0.3thousanth of dollar (0.0003$). That is why Algorand Blockchain is often used for traceability purposes and I used it as well for the supply chain tracking I have done since late-2020.
What I also like a lot from Algorand Ecosystem is the team, mainly Italian (like me, lol) and its leader, Silvio Micali, who is a Professor at the MIT of Boston and he has won a Nobel prize for cryptography.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
I am very passionate about environment and environmentally friendly technologies. Anyway, since there is already a lot in that direction I would love to create a “pat on the shoulder” movement by smiling and greeting people we encounter on the road. We are often immersed in thoughts, often worried about what is going on in our life and I think that walking here and there, smiling and greeting each other would have two different results: more positive energy spread around and second, by greeting people we recognize that someone is passing by and we are not alone on the route: we acknowledge that other people do exist and we greet them like saying “I know you are there, I notice you, I feel you”. I have already had this experience in the College where I lived when I attended the University (away from my birthplace), and it made me feeling really good! A smile can always change people’s day.
We are very blessed that very prominent leaders read this column. Is there a person in the world, or in the US with whom you would like to have a private breakfast or lunch, and why? He or she might just see this if we tag them 🙂
I have to choose only one and my choice is upon Lebron James. I am a passionate basketball player and I also admire him a lot. Starting from his troubled childhood, having the guts to attend the College and then being continuously under the spotlight, having now the chance to become the All-time top scorer. I would love to talk with him to understand his mindset, how he trains himself to stay focused towards his targets without being distracted from his same targets.
Thank you so much for these excellent stories and insights. We wish you continued success and good health!
Michele Zilocchi On The 5 Things You Need To Understand In Order To Successfully Invest In… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.
