Between the Motos: Aaron Tilton

I read you’re overseeing the construction of a nuclear power plant. Is that accurate? That’s not something we at Racer X normally get from people we interview!
We’ve been developing that project since about 2007, my background is in power development. I have partners who’ve run power plants, worked for G.E. Nuclear, one my board members was the chairman of the Nuclear Regulatory Commission and was appointed by Bill Clinton and later made chairman by George Bush, so we have some very deep roots in power development. People aren’t really aware that cryptocurrency, a significant component of what they do, involves electricity. That’s how we got into the crypto side of things years ago. For the power plant, we’re developing the site. We don’t build the site, we develop it. We acquire all the assets—the water, the land, do the data collection, and get it prepared. We get it ready so it has the potential to deploy a nuclear power plant.

How do you go from that background to co-founding SmartFi? You mentioned the link between power generation and crypto. That’s not something I understand.
It’s actually pretty simple. When you think about cryptocurrencies, they only exist in a digital world. With a digital network you need computers to build and operate it. Just like the internet, which is a series of servers all around the world, cryptocurrency networks are just a series of servers all around the world. The bigger those networks get, the more electricity they use. In 2017 we started getting calls from cryptocurrency miners, those are the people who run the networks, asking us if we had extra power to run their networks. We had to tell them the nuclear plant might not even be built for more than a decade. But we knew how to help them find the critical infrastructure, and that’s kind of where it started. They called us for power and we started helping them find locations. Because of the volatility of cryptocurrencies, they’d go through periods where they were worth a lot of money, and then they were worth a lot less money. We’d start helping them by loaning them money. We would receive their Bitcoin, or Ethereum, and we’d give them dollars to help them develop their facilities. That’s how we became a non-bank lender to cryptocurrency miners who ran the networks. We did that for years, and in that process we learned a ton about cryptocurrencies. We’re experts now. We decided to take what we learned from that experience and those transactions and make it available to the average person by simplifying it and making it easier to start engaging in this process.

Racer X’s Takeaway: Cryptocurrency exists on computer networks that require a tremendous amount of electricity. Due to his background in power, Tilton was able to assist cryptocurrency networks source that power. That progressed into providing loans for those networks, and over time he became an expert on cryptocurrency.

Talking about simplifying things, what’s the difference between having cryptocurrency and just having cash in the bank?
Cash in the bank is obviously regulated by the banking industry and statutes in the United States. There’s actually very little difference in terms of the form it takes. When you look at the balance on your bank account, it’s a digital balance. There’s no real dollars there. It’s zeros and ones on a network. The bank controls that from a central database. Banks have their own databases, and your information is localized there. One bank doesn’t know what your balance in another bank is. Cryptocurrencies are similar. There’s a balance on a network, but it’s decentralized. The information is public to anyone in the world. Anyone can see a balance, but they don’t know who owns it. One is centralized and run by a bank, one is decentralized and is run autonomously by software. The software is the only governing entity in that process. The networks give you the ability to transfer value to anyone in the world at any time, anywhere, with no intermediary controlling the access.

Racer X’s Takeaway: Don’t think of cryptocurrency as simply a form of currency. It’s a global network that allows you to make and receive payments anywhere, probably not unlike how you do it with your current bank. It’s just not run by the banking system. It also allows for anonymity, if that’s important to you.

You mentioned volatility. Why does the value of cryptocurrency fluctuate?
When you look at what most cryptocurrency networks are, they’re just the ability to make a payment. What they call the native coin, in the case of Bitcoin, there’s only one coin that exists on that network. It’s total speculation as to its value. Think of it as musical chairs. When the music is going and people are continually putting more chairs into the circle, there are new players coming in speculating on whether or not they want to buy a new chair in that game, or buy a chair that exists, it’s up to them what it’s worth. The value of the chair is whatever they’re willing to pay.

There’s no real tie to what it costs to produce a Bitcoin. You sell it for a certain amount, and people may pay more to get access to the Bitcoin that’s highly inflated compared to what everyone else paid for it. When a bunch of people are rushing in, prices run up. When people aren’t rushing onto the network, there’s no support and the price comes down. That’s where the volatility comes from. It’s pure speculation, you’re just trying to get a digital address on a network with value. It depends on how bad someone wants an address on the network. Stability, and getting more people involved, is really what SmartFi is all about. We developed a process, and our token actually has a structure that makes it more stable. We have some major innovations we’ve developed.

Racer X’s Takeaway: This one is a little tricky. Access to the network, be it Bitcon, Ethereum, SmartFi, whatever it is, is really where the value comes from. The more important it is to people to be able to use a network, the more valuable the currency of that network will be. Think of it like real estate. If a lot of people want to live in a specific area, the value of homes there increases.

So what are you doing that’s different?
We talked about how the payments work. Visa or Mastercard, they’re payment networks. Cryptocurrency is no different. What we’ve added is the lending component. Any time any major economic market develops, a bank always pops up somehow someway. Banking becomes essential because money is a service. Payments are one form of that service, but lending is the way to create wealth. That’s why all countries have a central bank, they have a currency they issue. Behind all of that is the ability to spur on economic growth, but that has to come from creating credits. In the United States, the way that we do that is we print money and make it available to the other banks at a really cheap rate. To expand the economy they send out cheap money to the banks, which lend it out to people like you and me, who buy things with it. If you have enough economic stimulus, you can compress time. Money is a service, and lending is like a time machine.

Racer X’s Takeaway: A banking system that lends people money allows people to buy more things in a shorter time period, which grows the economy. This is an essential part of the economy, and is something cryptocurrencies haven’t addressed in the past. But, unlike other cryptocurrencies, SmartFi also lends money.

What do you mean by compressing time? Making a lot happen in a short time period?
Yeah, or make it happen sooner. Instead of saving up all the money to buy your truck, you borrow money. We’ve become a consumer demand society here in the western world, and we’ve exported that cheap money to other places. That’s why the dollar has dominance. The United States has the biggest balance sheet to lend money, and we can lend money to a lot more places. Bitcoin and all these other cryptocurrencies popped up around payment systems, and trying to get rid of banks in the wake of 2008 and the credit crisis and all of the mortgage crisis issues. They said, “We can’t trust the banks to be honest arbiters of credit.” The guys who built Bitcoin just said, “Hey let’s create our own payment system and we’ll deal with each other and not have banks.” The piece they missed was, banks provide credit, which is essential to growth. At SmartFi we indexed our token to our lending portfolio. The price of our token goes up when there’s more loans. Now we have a fundamental that eliminates volatility. You’re still going to have certain volatility, but it won’t be as extreme. When we make more loans you’ll get a rise in price, then volatility, then there’ll be another rise in price, then volatility. But it’s smaller volatility. It’s what people would normally accept as a reasonable rate in volatility. That’s the innovation we’ve put into this. It’s not only tied to a payment system, but now more of a lending system.

Racer X’s Takeaway: Cryptocurrencies were created in an attempt to get away from the banking system. After all, plenty has happened over the last two decades to spawn distrust in the current banking system. But the economy still needs lenders to function and grow. When you buy SmartFi tokens, that money funds the loans SmartFi makes, which assigns actual value to SmartFi tokens, which helps reduce the major price fluctuations other cryptocurrencies have experienced. As the value of SmartFi increases, so do the value of your SmartFi tokens.