Viesturs Tamuzs: I am a bitcoin maximalist

Entrepreneur Viesturs Tamuzs has written a book entitled Bitcoins. Simply. It is the first explanatory work in Latvian on the cryptocurrency, which is gaining popularity around the world. Tamužs has almost a decade of personal experience in dealing with bitcoins. In this interview, he explains what he sees as the value and future prospects of this and other digital currencies.

Why, at the end of 2024, fifteen years after the creation of bitcoin, the most well-known form of cryptocurrency, would it be important for Latvians to learn more about it?

Three groups of people have emerged in society. The first are programmers who understand what bitcoin is and how it works. The second group is those who are trying to get rich from it by investing and speculating. Estimates suggest that there are around 20 million such digital speculators in the US alone. And the third group is the largest – people who have at best heard the word, but it doesn't really mean anything to them.

What has changed now that this knowledge has become relevant?

The knowledge is not a daily necessity, but it is worth noting that people's interest in cryptocurrencies and their most well-known and popular form – bitcoins – has increased dramatically over these fifteen years. At the same time, the price of bitcoin has risen enormously. As a bitcoin supporter, I am very confident that this process will continue in the future and that more and more people will want to learn about it. On the other hand, every person who knows something and is interested in bitcoins increases the currency’s visibility and improves its future prospects.

How did you get to know bitcoins yourself?

I first heard about bitcoins and bought them around 2015.

Was the process complicated?

No, it wasn't at the time. Two young people came to me as a venture capitalist with the idea of setting up a bitcoin exchange. I asked them what bitcoin was and they told me. I will not say that I understood everything, but I said, 'OK, let's do it.’ Registering an account with the European bitcoin exchange was easy, and transferring money from Swedbank to the exchange was not particularly difficult. So I bought my first bitcoins.

At that time, I invested quite a lot of money – bitcoins cost €200 per unit. I was interested to see what would happen next. For a while, I was convinced that it was a scam and something was wrong. Then AirBaltic offered to buy airline tickets with digital currency, and I used two bitcoins to buy tickets to and from Berlin. In retrospect, and knowing that the price of a bitcoin is now almost 70 000 dollars, I have to admit that these are probably the most expensive airline tickets I have ever bought. But as I got deeper into it and learned more and more about the philosophy of bitcoin, the underlying mathematics and psychology, I gradually got more involved.

Although there are a number of companies that accept payments in bitcoins, it is still awkward as a means of payment. At the same time, there is no denying that bitcoin works as an investment currency, although many consider it risky because of its high volatility. How do you think the average person should view bitcoin?

I have a group of friends and acquaintances that I call the bitcoin community. They have provided me with various services and I have given them bitcoins as a token of my gratitude. For some recipients, the value of the bitcoin has increased eightfold since the gift, for some three to fourfold. But those who sold bitcoins at an opportune moment, built houses or bought apartments. None of them has complained!

But would you recommend investing in bitcoins now?

You should probably buy my book, read it and consider the arguments before making such a decision (laughs). But to cut a long story short, traditional money is no longer standing the test of time, i.e. the purchasing power of money is falling, and falling fast. One sign of this is the rumours that one- and two-cent euro coins are being abandoned because they have become practically useless – they can no longer buy anything.

Another argument: most readers know themselves that what you could buy in a shop for €50 two years ago and what you can buy now are very different. Therefore, to keep your savings in traditional money in a bank account is to lose them gradually.

Bitcoin, on the other hand, is not affected by inflation, it is only deflated – its price is going up. In this respect, absolutely no other alternative store of value, let alone cash, can compete with bitcoin.

I myself have never been as successful in any of my previous businesses as I have been investing in cryptocurrencies! At the same time, I would never advise anyone to invest borrowed money in cryptocurrencies, only means of their own – this is a volatile market, and the chances of losing your investment are high enough.

I also believe that the statement that bitcoin is inconvenient as a means of payment is only partly true. Yes, bitcoin payments are inconvenient for the time being. But for a large purchase such as a house, a car, a valuable painting or a yacht, the ten minutes it takes to pay in bitcoins is perfectly acceptable.

It is no coincidence that countries that are under international sanctions and find it difficult to use traditional money for payments, such as Russia and Iran, as well as China, are preparing to experiment with bitcoin payments. And why not? It is a very liquid means of payment, it can transfer large sums of money in a perfectly reasonable time for such settlements, and bitcoin is not affected by the sanctions imposed on countries.

If an individual decides to buy bitcoins, what difficulties and obstacles can they face?

Each country's controlling authorities determine how tightly they want to restrict us. In Latvia, this limit is being increasingly tightened. In the past, nobody was particularly interested in what you did up to the €3,000 or €5,000 mark, but now transactions of €750 will be reported. So the answer is that it is relatively easy to invest in bitcoins in Latvia up to the €750 threshold, but it is quite difficult above that.

Up to €750, you can deposit money in a bank like Revolut and buy bitcoins with it, that is easy. Above that, it is more difficult, but nowadays, any transfer above the €5 000 threshold requires various reports and justifications. In general, Latvia is not a cryptocurrency investment-friendly country. On the other hand, transactions in bitcoins in Latvia are, at least for the time being, very lightly taxed, unlike, for example, in the UK.

Does it follow that bitcoin enthusiasts are people who do not trust governments very much and want to avoid their excessive control?

Yes, I think that is a common characteristic of all cryptocurrency investors. Cryptocurrencies offer the possibility of avoiding excessive state control if they so wish. But that does not mean that bitcoin or other cryptocurrencies are used to pay for all sorts of illegal or criminal transactions – the unrivalled means of payment in this area is and remains the US dollar note, which, unlike bitcoin, is really completely untraceable.

What do you see for the future of bitcoin and cryptocurrencies in general?

As far as bitcoin as an investment vehicle is concerned, I am optimistic and believe that its growth potential is far from exhausted. At the moment, it is estimated that the value of all investments worldwide is around USD 450 trillion. Bitcoin has a total capitalisation of USD 1.3 trillion – less than 0.3% of total global investment.

If those who control the 450 trillion have any faith in cryptocurrencies and start investing in them, this alone could double or triple the price of bitcoin in the blink of an eye. And the signs are there: 11 different cryptocurrency ETFs, or exchange-traded funds, were launched by major US investment banks earlier this year. Cryptocurrencies are slowly becoming a common investment vehicle for large US investors, which will increase investor interest in such investments.

It has also been reported that investment professionals at the world's major banks are already recommending that clients invest a small proportion of their investment portfolio, around 5-10%, in cryptocurrencies. If clients follow these recommendations, it will rapidly increase the demand for bitcoins and consequently their price.

In addition, although bitcoin is not yet convenient enough for payments, both Visa and Mastercard have announced the introduction of cryptocurrency credit cards, i.e. it is possible to spend dollars or euros but top up your account from your bitcoin wallet. Therefore, the situation will also change in this area, small payments will become more convenient and this will open up many more possibilities for bitcoins, and therefore demand, which will also be a factor that will increase the price of bitcoins in the future. So I am optimistic.