Demelza Hays is originally from Florida. She has been living in Liechtenstein in Europe for the last 7 years. The two years before that, she was researching in India. Right now, she is the Director of Research at Cointelegraph which is a large media company in the crypto space.
Interview Date : 26st August 2020
- Demelza Hays (All Interviews)
- From Florida to Europe due to American Universities Competing
- Paid 0.5BTC for Content Writing
- Cantillon Effect is Why Bitcoin is Working
- Trickle Down Economics
- Unlike Printing, There is an Economic Cost With Mining,
- Moved Away From Libertarianism – it’s not heaven, it’s earth
- Kicked Out of Parliament for Buying Jimmy Choo Shoes
- Indian women saving with Vodafone instead of Rupees
- India’ SHG Group research in Punjab Villages
- “I don’t count the girls”
- Hash Rate and Bitcoin Price – Reverse Causality
- Hash Rate Today and BTC Price 11 months Ago
- Directory of Research Group – Cointelegraph
- Google Scholar and University Reports on Bitcoin
- Recommended Sources for the Average Reader
- Cointelegraph’s Internal Organization
Demelza Hays (All Interviews)
From Florida to Europe due to American Universities Competing
I never wanted to travel. I had not been outside of the US until the age of 18. In America, Universities have become so competitive with each other that they need to attract students with different kinds of scholarships. The university I went to was not a very famous one, but still wanted to compete and sent out an email to everyone that had decent grades. I had decent grades and was called into a session on national scholarships. The university would help the students to win one. The first time I went to the meeting, I discarded the idea. I thought “I am not a writer, and I don’t want to travel”, but I got the email again, and decided to try it. That was the start of my life.
I wrote a couple of essays, and people liked them. I started winning a couple of national scholarships from the Department of the States. I won a scholarship to India to research. After India, I wanted to keep studying, and my master’s studies took me to France. I applied to the top 10 economics Ph.D. programs, but the top 9 rejected me, and the 10th one was in France. So, I moved from India to France, and I went to a highly ranked mathematics program and continued my studies.
Paid 0.5BTC for Content Writing
I started writing articles in 2014 because there was a website called Liberty.me. They wanted content, and they wanted to attract content writers. They did a strategy where they would give 0.5BTC to the most liked articles at the end of the month. This was when Bitcoin was worth 150 dollars. I started writing all these articles and collected 0.5 BTC per month writing them. That is how I started out. Moreover, the website wanted to pay people in crypto, and I was a big fan of bitcoin at that time. Still to this day I am a crypto champion.
Cantillon Effect is Why Bitcoin is Working
The number one reason why I am a Bitcoin fan is because of the Cantillon effect. Richard Cantillon was an Irish-French economist in the 18th century writing in the 1750s. He described what is now described as the Cantillon effect; when you print money, you debase the purchasing power of the units that are currently existing. Hence, if a person is saving up rupees or dollars, and she is putting it under her mattress every day, there will not be much value. As long as the central bank in Mumbai is printing, her hard-earned savings are being depreciated, whether she wants that or not. What the Cantillon effect discusses is that, if all the money in the economy was equally debased at the same time, that might be fairer, and this is the number one reason to use bitcoin.
The people who are closest to the newly printed money get access to new funds while the prices are still at the level that was the equilibrium with the old quantity of money. So the prices of bananas, haircuts, cars, etc. are set on an equilibrium price. When the new money comes, the people who are closest to the printings (back in the day it was the king and his court, and nowadays it’s the government and the banks) and they get access first, you will experience the price of luxury goods go through the roof. There is expensive real estate that is selling properties at crazy prices. Rich people order bread that has gold and champagne in it, and they will spend thousands of dollars on a loaf of bread baked with gold. Meanwhile, other people cannot pay for their electricity bills. So, you have this increase in income inequality right in front of you.
A lot of media sources blame this on groups or organizations, pointing at each other. However, it is caused because of our monetary system where there is a massive distribution of wealth from the people that get the money first to the people that get the money last. Once that money gets into the economy, people start to buy up goods and services which in effect increases the price. This is due to newly printed money going after the constant quantity of goods and services.
Trickle Down Economics
The situation gets even worse when you think about the fact that some people are elderly and unemployed, and who will never see any of that newly printed money. So the most disadvantaged groups in our societies will literally only see prices rising. They will never be able to get any of that newly printed money. Sometimes this is referred to as trickle-down economics.
If you go to any top economics program or talk to a central banker, they will tell you that this is good for the poor and they are doing this for them. By restarting the economy and pumping in money, the big companies can get loans and hire people. However, what they don’t say is that the very first step of that whole process is debasing the money that the poor people are already holding on to. Nobody has proved that the loss of purchasing power that occurs to poor people is outweighed by the benefits of getting a job from a corporation that pays them more. That is the theory, but if you look at the wages in Europe, they have stagnated for the last 20 years, like anywhere else. The wages are not going up, but the prices of everything else are. This is especially true for housing, stock, bonds, and assets for people to put their capital in. As the banks get the newly printed money, they just give it out to financial markets. Those financial markets, like banks, for example, will give the money companies that have collateral. If you don’t have collateral, then you won’t get the newly printed money.
Unlike Printing, There is an Economic Cost With Mining,
People say that America is a capitalist country, but it’s easier to start a business in countries like Sweden. America used to be very capitalist, but in the last 50~60 years, it’s gone increasingly to governmental regulation of everything. The problem is not capitalist or socialist, rather the money supply that is creating inequality. That is why you have to switch to something fairer. Bitcoin has inflation in the sense that there are still coins to be mined, but everyone can become a miner. It’s not just the treasury that can mine new dollars, but everyone can if they want to. That allows for the benefits of seigniorage to anyone in the system.
Moreover, when miners print new bitcoin, they have costs. There is an economic decision that they have to make, which is unlike the central bank. The central bank has no reason to not print new money. they only have the benefits of printing new money. They don’t have any costs, so it doesn’t impact them as there is no economic scarcity or reasons not to. The original idea of capitalism like Adam Smith, and John Law, and Laissez-faire for me is what I prefer because I prefer individual liberty, but that is also why I use Bitcoin because I want my freedom back.
Moved Away From Libertarianism – it’s not heaven, it’s earth
A lot of Bitcoiners started out as libertarians, but I moved away from that over the last couple of years. I have lived in a monarchy in Europe for 5 years now, and I prefer the monarchy for myself. It is because we have a good monarchy in place here in Lichtenstein. The problem with libertarian is that I don’t think any system will work 100% with no uncertainty in the future. Even if the libertarians say “we have money, we can take our freedom back”, and maybe they will get some people elected in the US, but eventually people forget why they did this movement in the first place, and everything goes back to normal. Life is just a cycle of good times and bad times, and we are never going to have a system where it’s always a good time, because it’s not heaven, it’s earth. Some systems work better than others, but that depends on the culture and the many factors that characterize that community. Each group has to figure out what works best for them at that specific time.
Kicked Out of Parliament for Buying Jimmy Choo Shoes
Lichtenstein is a great country. It’s very small and that’s what I think is a good thing about it. Everybody knows the problems here. The politicians shop groceries in the same place as everybody else, and they go to the same sports games as everybody. There are 30 thousand people in this country, and in my village, there are 2000 people. We keep a very close eye on what the politicians are doing as well. The politicians are not getting elected if they take advantage of their position. Last year someone was kicked out of parliaments for using the government budget on Jimmy Choo shoes and luxury goods. They looked at the receipts and kicked her out of parliament. That’s how it should be and there should be accountability.
It’s too big in the US, and I can’t even keep track of who is vice-president anymore. I have no idea what’s going on in the white house or congress because I can’t keep track of 10 thousand people. It’s just too much for the brain to understand. I have my normal work and normal life matters as well, so I don’t have the capacity to remember this huge mass of government structure.
Indian women saving with Vodafone instead of Rupees
In India, my research project was to collect data on self-help groups (SHGs). There are 2 SHG programs; private companies that will give out small loans to women, and the government that gives out small loans to women. I had to collect data on the government program and see what kind of repayment rates they had. I also had to investigate what they would do with the money. Thus, I had to go to villages, where sometimes no foreigner had been before. I had to ask questions like “how many children do you have?” “What did you buy with the money?” “Did you repay?” “How many loans have you taken out?” etc. I had noticed that many women had been using Vodafone M-Pesa to save money instead of rupees. They weren’t using rupees. This was because they had to hide the rupees from their husbands.
I got curious and researched the Indian telecommunication branch of Vodafone’s M-Pesa service. This is a mobile money transfer and payment service that enables customers to access their bank accounts to send and receive money, purchase goods, pay bills, save money, and receive short-term loans. This also when I came across bitcoin. Originally, everybody thought that Bitcoin would be used for small micro-finance transactions because the fees were low and it was borderless. I found information about it on Reddit when I was trying to write the report for the US Department of the State.
India’ SHG Group research in Punjab Villages
I didn’t see any women in India using bitcoin. However, I did set up some people with bitcoin before I left India. And those people are very grateful to this day. They have become much better off financially than what they were before.
The women from the villages I visited for the research, couldn’t read nor write, and the men in their families taught them how to sign their names so they would sign the contract for the loan from the government. As soon as the loan was signed and the money in hand, sometimes the men would take the money. This has much to do with the culture as well. In Punjab, it’s taboo for women to own property is one example. On many occasions, even if a woman would want to buy a cow, the cow had to be owned by the husband just for cultural reasons. So, it was an interesting experience.
One thing I realized was that women could not easily get bank accounts. They would get into groups and meet once a week. Everybody had to report how much they had saved mostly from their own personal savings. It was a technical accountability group just to remind the women to save every week. These women were saving 40 cents per week, meaning around 2 dollars per month. Hence, opening a bank account was not an option for them. The women were either too far from the banks or the bank wouldn’t make an account for them. So, the phone credits were the only way they could save money for themselves.
“I don’t count the girls”
In the villages in Punjab I visited, the women were working 2 jobs. They worked their small jobs which they got their loan for like sowing, raising chickens and selling eggs, making soaps, etc., so they had all sorts of small businesses they started with these loans. However, they also had all the family duties, such as cooking, cleaning, and raising children. They did not have much free time. One thing I felt when I was there was the male-dominated culture. It depends on the different religions like if it is a Sikh village or a Hindu village, as well as on different casts of villages. I remember I asked a lady how many children she had, and she said “2 boys”. So, I wrote down 2. Later on in the interview, a little girl came up to her calling the lady “mom”. I asked her “I thought you said you had 2 boys?”, and she said, “yes, I don’t count the girls.” Girls are sometimes seen as an expense to them because of the dowry. So, they are most of the time looked at as a burden. There are educated and understanding families that give the girls the full and good treatment the girls need. This does depend on family background, education as well as the religion, and the cast of the village.
Hash Rate and Bitcoin Price – Reverse Causality
I met some researchers from the Fidelity Digital Assets group, and one of the researchers said he believed the price of Bitcoin is following the hash rate. I tended to disagree with him. I thought the hash rate followed the price. So, we had a big debate, and both of us were good enough with statistics that we could play around and pull price data and hash rate data, and try to figure out this relationship.
We concluded that there is reverse causality where each one causes the other. If the price went down to 0, it wouldn’t make sense for miners to mine, so the hash rate would follow the price to 0 as well. Nevertheless, if the hash rate goes up, it would mean that the network is more secure, and this could justify people investing more leading to a rise in price. Hence, we could say the price goes up due to an increase in the hash rate.
Hash Rate Today and BTC Price 11 months Ago
When you have this type of reverse causality, there are different ways you can find out the essence of the relationship with statistics; take the change of the hash rate and the change of the price, and subtract the trend of each. Then, by trying to study how those changes between price and hash rate correlate over time, I found that there is a very limited correlation in the change. Weirdly, there is no correlation between the day to day basis, so I reached out to the researcher at Fidelity and sent him my results. After thinking about the matter, it did make sense, because miners do not make their decisions based on the price today. All decisions for their mining strategies had to come 9 months before. Miners have to order equipment and get the facilities prepared which takes time. Even if the price would go down after they have started, it would have to go down quite significantly for them to turn off any of their equipment, or they would lose money.
Lastly, we added lag variables to see if we could see any correlation between the price 9 months ago and the hash rate today. We tried to study each month, and we found that the most correlated variable between hash rate and the price is the hash rate of today and the price of 11 months ago. I believe that 2 separate variables are impacting each other, but they are not causal, and that’s the final result we concluded. We still have to turn this into an academic paper which we will.
Directory of Research Group – Cointelegraph
I love my new job. The goal is to start writing research reports. Cointelegraph does many small news articles, but not in-depth 10+pages about more specific topics. We are working on a new side of the website that will launch in September, where we will have in-depth reports. Those reports will be on DeFi, institutional investors, etc. We want to bring more educational papers to the readers. Cointelegraph is read by the news-readers and retail readers, but we want to branch out to the academic and professional investor readers as well. I have a lot of freedom of expression in this position, and if I have an idea, I can pitch it and it potentially will be accepted, and that’s what I love about it.
Google Scholar and University Reports on Bitcoin
I have always considered myself to be an advanced reader, and that is why the research department makes sense to me. The standard news article is just too short, and that is why I do not read the news in general. I am more interested in the fundamentals, in the long term, and the changes in the long term of value. However, I have been reading more of the articles on Cointelegraph since I joined, and some of the articles are surprisingly good.
I like reading 10+ pages of academic papers, there is a good body of academic literature on google scholar for example. Searching for mining or MakerDAO on google scholar will give you so many good papers that are from places like Stanford University, MIT, University of Zurich, etc., and they have gone through every topic like security weaknesses, energy consumption, and many more. There are some gems there, so I usually search google scholar for a specific topic I am interested in.
Recommended Sources for the Average Reader
Crypto has people from different disciplines and areas interested. You have computer scientists, economists, entrepreneurs, etc., and it has got them talking about space. In the last 2 years, some companies have started publishing research reports. The research reports are not the academic kind, rather more in a template that is easier for the normal reader to understand. They have nice graphs that are not too complicated with nice visuals. These are companies that have experts working on those reports so that people can associate education with them.
Cointelegraph will soon have a library on its website dedicated to these research reports. We will have the latest reports on all sorts of topics which we have collected from good sources.
Our team is reading academic papers to turn them into reports that our normal Cointelegraph reader can digest. We take out all the regression analyses, and math formulas, and give the readers the meaning and the charts. Lastly, we cite the paper for people who would like to go more in-depth on a specific topic with the sources we have, so they can be led directly to the academic papers.
Cointelegraph’s Internal Organization
Cointelegraph has 8 million views per month. We have hundreds of employees and hundreds of freelancers, so it’s a massive team. The organization is very decentralized, which is what I love about it. We have small groups that make decisions for a specific area they work in. We have Cointelegraph Espanol, Cointelegraph Portuguese, Cointelegraph English, and we also have Cointelegraph YouTube, Twitter, SNS, and many more. I am the Director of the research team, and I have 7 people in my group. We interact and discuss our tasks every day, but it’s all remote. There are many employees at New York and Hong Kong hubs, so they do meet up at coworking spaces to work together as if it were an office. However, most of us are working remotely.
Decentralized Work Comes With Issues TooI was doing reports for banks before joining Cointelegraph. Banks would reach out to me to get a specific question answered. Questions like “why Huobi and Binance are sending so much money back and forth between each other on-chain?”. Their addresses can be confirmed on the chain, and so I would have to deep-dive into similar topics to write reports for them. I think as more and more banks get interested in in-depth research, it is going to be increasingly crucial to have such research groups like Cointelegraph make their own Research hub.
I don’t know the exact number, but there are so many women working at Cointelegraph, and they do everything from marketing to strategy to design, and much more. I think the Cointelegraph is open to hiring women, and anyone that has talent and is willing to work. The research team is a new hub, so the director position is a role that was not there before me. We are planning to do multiple reports per year, and predict it will grow over time just like crypto does in an organic manner and due to word-of-mouth growth. Stock analysts or bond analysts in general are looking for these kinds of reports. They are used to have reports that are a summary of last month’s market movements for example. I think this is a great interface for them, and traditional legacy investors because we are providing the information to them in a way that they are familiar with. I think our team will have a bright future as the crypto market matures, and crypto becomes just another asset class like the other assets classes.
Interviewer , Editor : Lina Kamada
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