Ali Banai is a Senior Business Lead at WeWork, where he works on data with the growth team in order to make sure that their real estate agents receive accurate listings for their clients. Previously, Mr. Banai has worked as a Financial Analyst at the University of North Los Angeles, an Equity Researcher at Pace University’s Lubin School of Business, and a Financial Administrator at Tysons Institute. Mr. Banai earned Yale’s online certificate in Financial Markets.
The Politic: Tell me about your background and how you got interested in the space!
Ali Banai: I have a background in the financial industry, specifically capital markets and securities. I received my certificate in Financial Markets from Yale in 2014, a BBA in Finance from Pace University in 2017, and I’m back at my alma mater pursuing an MA in Investment Management right now. Throughout my five years of studying finance, I haven’t formally received exposure to the cryptocurrency space.
That being said, I got interested in Bitcoin back in 2013 as a senior in high school. My friend and I were familiar with Bitcoin but not the underlying blockchain technology. All we knew was that Bitcoin provided a source of payment for fake IDs, fake credit card numbers, and drugs on the Silk Road market.
Back then, it was $100 per Bitcoin. We decided to buy one just for the sake of owning it, because at that time Bitcoin was the talk of the town. During that time, Bitcoin was mined using USBs. You would need to buy multiple USBs and USB hubs to draw enough electricity to reach profitability during the mining process. We couldn’t mine any substantial amount of Bitcoin because we lacked access to the necessary capital for buying USB hubs and electricity. We weren’t able to build an efficient mining system without that capital.
By 2015 when I had enough capital, I returned to the world of cryptocurrency. The price of was rising and the currency was catching people’s attention. I gradually got up to speed and built my first mining rig in 2016. I used that rig to mine Ethereum, which was approximately $8 per coin at that time.
One mining rig was equivalent to six graph cards. You would be consuming GPU, and the faster the GPU performed, the higher the hash rate you would receive when mining a coin. A “hash rate” is the measure of a miner’s performance. You can mine Ethereum and other coins using graphics cards, CPUs, and the SHA-256 cryptographic hash function.
Starting in 2017, I started scaling my rig as I improved at mining, and now I own about fifty rigs with ten Bitcoin miners, five Litecoin miners, and two Dash coin miners. Whenever a new coin was released, I would read the whitepaper, and rather than investing my own capital, I would allocate my miners to work on that specific coin.
As I was learning about the nuts and bolts of cryptocurrencies, I decided to get into privacy coins because I believed that privacy would be a big concern going forward. My thesis was that the number of hackers would increase significantly, and as technology continued to evolve, we would eventually need more robust security. That’s why I started mining Monero and Dash coin.
We had a smooth ride up until 2017. At that point, I decided to launch a company alongside one of my partners. We were able to raise $500 thousand in capital, but then the Bitcoin crash happened. My partner pulled out of the project, even though we had already bought the mining machines. Despite that road bump, I bought more and kept digging deeper into the technology. I was investing in more than just the coins. I was invested in the underlying technology. So, the short answer is that I really started exploring blockchain in high school.
I saw you received an IBM Blockchain Essentials certificate. What’s that?
The Blockchain Essentials course discussed the basics of blockchain technology and its potential use for solving business problems. It was just an introduction to blockchain. I took the course to have it on my profile and to see how well I knew the technology.
What do you do as a Financial Analyst with respect to blockchain/crypto?
I’m currently an intern at JPMorgan. My part-time work as a financial analyst is to generate research reports across all of the company’s assets. I don’t deal much with crypto while at work. In fact, my work with cryptocurrencies started to fizzle out because of other personal commitments. But, I do try to carve out some time to learn about the space and catch up on developments in the crypto world.
There was an event in 2016 where they talked about Amazon buying Amazon Ethereum and Amazon Bitcoin. In 2016, people were speculating that Amazon would purchase these cryptocurrency domain sites and that Facebook would own a proprietary coin. Fast forward three years, and technology companies like Facebook and financial firms like JPMorgan actually have created their own coins. I attend a couple of conferences to expose myself to the innovation and to keep myself abreast of the latest developments in the cryptocurrency world. I’m fairly up to date with the news, but I’m not part of the mining team anymore.
It’s great you’re up to date with the space. I’ll test you. What’s the current scoop on Amazon?
Last I heard, Amazon was planning to create its own coin. Either that may turn out to be the case, or they might use the blockchain technology of Ethereum to develop their coin. As we all know, Facebook’s release of a new coin didn’t go as planned because they didn’t use proper blockchain technology for the coin’s underlying infrastructure. People are saying that it’s going to fail because Facebook developed new code for its blockchain network, and because having new code comes with its own set of problems in terms of bugs and privacy.
Instead, they should have adopted the Ethereum network, because it’s a better and more stable platform. So, I think Amazon’s idea is to use the Ethereum platform to develop its own coin and move forward from there. Most companies are playing the waiting game to see how the first offering turns out. They want to learn how that goes before they release more info.
So, are you working in the cryptocurrency space at JPMorgan?
I work in the financial department at JPMorgan. JPMorgan’s digital coin team requires people who are competent in C++, Python, or Ruby. The last job listing I came across for the digital coin team was two or three months ago. They were looking for professionals with a background in finance, and who also have blockchain knowledge and computer science skills. I remember coming across a job listing last year, where Morgan Stanley had a couple of job openings for which they preferred people with knowledge in cryptocurrency and blockchain. So, I believe that Morgan Stanley is also developing their own coin.
Actually, I was rejected for a job at Bloomberg after interviewing with them. I was astonished to hear that I was overqualified. They said that Bloomberg wasn’t the right place for me. This was back in 2017, and it was a demoralizing experience. I had been passionately learning about this space since 2014 to 2015, and I was eager to contribute my knowledge. I genuinely thought that society wasn’t ready to embrace the technology’s growth.
Something similar happened back in the 1983. An American computer scientist and cryptographer named Dr. David Chaum tried to develop Ecash, an electronic cash system. It was used by a U.S. bank, but the system failed after the dot-com bubble. Society wasn’t ready to accept the technology, and the company filed for bankruptcy as a result. I believe that was the point when the concepts of cryptocurrency and blockchain were born, because when that coin failed, the technologists learned more about people’s desire and expectations so that they could invent an improved technology for making life easier.
Final words? Outlook?
Crypto is something that everyone must accept sooner rather than later. The only concern is coming up with answers regarding taxation regulation. I believe that crypto isn’t going to crash overnight, that people will adopt it in the near future, and that regulation is essential. Otherwise, you’ll end up with cases like India and China where the central governments have banned cryptocurrencies altogether.
Let’s say I have an Amazon coin and a Facebook coin. Can my Facebook wallet accept my Amazon coin? If they create their own coin, it’s going to be interested if they don’t accept other coins, especially if there are 60 different types of coins in circulation. Regardless, I know that society will accept the main coins like Bitcoin, Ether, and Litecoin, because some countries need them, especially countries like Venezuela or Iran where they don’t accept outside payments, and it’s really hard to make money.
Let’s say that I have a family in these places. By sending them payments through cryptocurrency, the payments will be 10 times faster than through a bank. If I sent those payments through Bank of America, I would have a five-day hold on my transaction due to geopolitical reasons such as sanctions. I would have to wait for Bank of America to determine who my money is going to, or whether I’m sending that money for nefarious purposes. Meanwhile, I might need this money as soon as possible in order to pay for medical bills, or maybe because there’s a recession of stagflation.
Americans might not accept cryptocurrencies, but if they go to different countries and explore, they’d notice its potential. Americans don’t see the other side of the world. The United States is great. We have banks, we have Venmo– everything’s “perfect.” But other countries are usually using cash-based systems. They don’t have credit systems, they don’t have PayPal, and so on. I think cryptocurrency is great. Even I use cryptocurrencies to send money to my cousins outside of the country. It’s all about making life easier.