The press coverage intensifies (my reply to email inquiry):> Hello!
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> I am a journalist at Virumaa Teataja, Lääne-Virumaa local newspaper, and have a few questions about the Malla manor. I hope you agree to answer them.
Hi,
I feel so welcomed by the Estonian press that I am glad to answer the questions
> * The purchase of Malla manor is considered to be the largest bitcoin transaction in the world. What is the historic meaning of the transaction in your opinion?
Previously the largest purchase that I know of, was a new Lamborghini about 2 months ago, and that also aroused a lot of interest. This one is much bigger, and as it is a sort of "luxury item" also, it has symbolic value that makes people think that Bitcoin can be a rags-to-riches life-changer. The purchase of Malla manor symbolizes the initial steps of Bitcoin from obscurity to world-famous technical innovation and the first Bitcoin millionaires, but at the same time it is dedicated to all the hard work that will happen in bitcoinworld from now on, as we aim to make bitcoins used throughout all the world. So it is both a prize for things already happened, and a venue for going forward.
> * Why did you choose Malla manor?
Although I am a Finn and live in Finland, I have for long had most of my business in Estonia taken care by local staff. I wanted a big house that would be able to host large gatherings of Bitcoin people, and both the buying and operating such would have been much more expensive in Finland. To have a place with centuries of history at an affordable price would have been difficult.
Estonia has a long culture of manors, and there were many to choose from. Malla immediately caught my attention because of its sheer beauty and majesty. Also the structural renovation had been carried out almost completely, which means that it could rather quickly be raised to its former glory given enough funds. The outbuildings are already restored and can be used immediately. But that is all logical stuff, the real reason is the Malla Spirit, which just captured me and did not let go...
> * Do you already have plans, when you are going to begin the renovation of the house? What are your next steps concerning the manor?
We are renovating it as soon as we can, which currently means that we must get to close cooperation with the relevant authorities to obtain permissions. Our intention is to conform to the highest standards of workmanship and materials, and restore the original spirit whereever possible. I am however anticipating clashes with the new building regulations, as we would like to use the original time-tested method of natural ventilation, for example. The building should not only be old and look old, but also function as an old building. I plead to the 'old buildings authority' and 'construction permission authority' for good relations and speedy handling of our applications so that we can start the hotel business as early as possible and employ as many as 10 local people, since summer is the best season.
The next project will be the development of the east wing to contain a restaurant, meeting room and a few hotel rooms. This will bring the total capacity to about 30 beds.
> * How often do you visit Estonia? When the renovation of the manor is completed, are you planning to reside there?
I am visiting Estonia about 2 times per month currently. I have many businesses and staff there. I will continue to live in Finland with my family, but hopefully we will have a long summer holiday together in Malla this summer.
> * You have told to media that you are planning to turn the old manor into a bitcoin centre. How many wealthy bitcoin enthusiasts are there in Finland, Estonia and nearby countries and also in the whole world?
Depends what you mean by wealthy, of course. In my estimation, there are about 50 people in the world with at least 10000 bitcoins (EUR 5 million) and about 800 have in between 1000-10000 bitcoins (EUR 0.5-5 million).
I know about 10 Finns who have 1000 or more coins, in addition there must be more. All Scandinavia is pretty interested so by logic, there must be many more. I am not so sure about the Baltic situation, it may be that people there are more reserved about displaying cryptowealth, because the regulatory situation is unclear. Finland recently ruled that bitcoins do not have VAT (previously they did), Estonia is going into the other direction, now saying that bitcoins are subject to VAT (which they previously were not). This is very understandable, because the technology is new. But it makes life difficult for people who own bitcoins and intend to develop the real economy also. In my situation, if the VAT ruling persists, I cannot sell bitcoins in Estonia in the future, which makes the future development of Malla difficult.
Also all this has happened so soon. In the beginning of 2013 the price of one bitcoin was 10 euros, and consequently you needed 100 000 bitcoins to be a millionaire. There was hardly 10 bitcoin millionaires in the whole world then. Now the number is at least 500. This illustrates the speed that Bitcoin is creating new millionaires. In the end of this year, there might be up to 10 000 bitcoin millionaires in the world, and this is the group that I want to gather in Malla castle, so Estonia would be in a real sense in the forefront of new economy, with many of these people starting companies and even relocating to Estonia, especially in Tallinn and Malla regions.
> * How is a bitcoin millionaire different from a cash millionaire?
A typical bitcoin millionaire is a very intelligent young (25-35) white male, with high earning capability. He has bought bitcoins outright or mined them in 2010-2012 with a determined effort and a significant cash outlay. He has a continuing trust in the technology of Bitcoin, otherwise he would have sold for quick gains as all the others did (those who used to hold many bitcoins during the years but do not anymore do so). Some of them started from nothing, but many (such as me) were businessmen even before starting with Bitcoin, so the change is less prevalent.
A typical cash millionaire is significantly older, and there are more ladies. Most are in high positions and are making good money, even though many have been millionaires whole their life, or at least come from a millionaire background.
Many bitcoin millionaires that I have met have an urge to make the world better. Most traditional millionaires want to preserve the status quo. To further elaborate this topic would be a matter of a separate article.
> * In which sense is bitcoin a more secure currency than national currencies? I have understood that you trust only bitcoins and silver.
I divide this to two aspects, issuance and transactability:
1. National currencies are issued through an untransparent mechanism, which gives elected and unelected officials much leeway in the creation of currency. Furthermore, what even constitutes this currency, is not clear. There is more debt entries in the world than positive entries, almost everyone is in debt. The situation is a mess and no matter if you hold debt or positive balance, the politicians can screw you or you fall victim to the market forces.
Bitcoin has a perfectly transparent currency issuance mechanism that takes away all uncertainty. In this sense it is like gold, you know very well the total number of bitcoins issued, know the future, and can make informed decision how many bitcoins you need for your transactional and wealth preservation needs.
2. National currencies can only mainly be transacted via a banking system. The legacy system poses many delays, costs and even outright threats to your money. For example right now some Russians are getting their bank assets frozen and as a retaliation some westerners may, too.
With Bitcoin there is nothing that can prevent you making a transaction, and as long as you control your private keys yourself (past performance of "bitcoin banks" and exchanges is abysmal, they tend to always steal your money and bitcoins), it is not possible to freeze or confiscate them with any executive order.
> * How do you see the future of bitcoin as a currency?
As a monetary historian, I would say that the history of the money of the world is quite short:
In the beginning, all kinds of barter was happening. At one point, cattle and salt were used as money, because salt was divisible and unperishable, and cattle could transport easily.
When metals mining developed, gold, silver and copper were introduced as money. The word "money" equals the word for "silver" in 50 languages. The reason is that gold was too expensive for most people to even see, and copper was too cheap. The situation is similar in that in Finland people think 50 euro notes as money, because most have never seen 500 euro notes, and coins are not valuable enough.
Silver continued as money for more than 2000 years, copper was dropped, and gold continued as a store of large wealth. Only in 1800s great silver discoveries were made, and countries abandoned silver in favor of gold.
The gold standard lasted only from 1870s until the WWI. After that, the war had destroyed world's economy and countries did not want to liberalize themselves (during the war they had been heavily socialized) and also wanted to permanently punish Germany. This was incompatible with gold standard so fiat standard began and gold standard was abandoned in the 1930s.
Fiat standard is only compatible with increasing socialization (as well as gold standard is only compatible with prevailing liberty). In the modern world many libertarians want the gold standard back, but it is quite impractical. So upon hearing about Bitcoin, they have changed to support that, because it has many of the qualities of gold, and also interesting new properties.
Only 0.1% of world's population owns bitcoins (in contrast to 20% using Facebook). Bitcoin's value grows in proportion to the number of people in the network, so it is possible that the price of 1 bitcoin rises really high even in the nearest years. The governments in the world will have to deal with this, because it poses a threat to their agenda of ever-increasing socialization, and humiliates the government currency that is constantly losing value whereas bitcoins rise in value. The future is uncertain - my thinking is that Bitcoin will be adopted to the mainstream of financial system with increasing popularity, value, but also control. Meanwhile the extreme libertarians will try to find ways for transacting outside of government control, and there are many cryptocurrencies in development that seek to provide this.
The history is full of examples of regimes that try to suppress innovation, but I don't remember that it has ever worked very well. As the saying goes: "There is nothing more powerful than an idea whose time has come" and cryptocurrency is clearly one of them. The countries that adopt a sensible approach and let the innovation grow without hindrance will reap great rewards. I am looking forward to Estonian authorities showing foresight in this aspect as well as they have shown in other policies that brought my business into Estonia already 5 years ago.
Thank you for asking such interesting questions,
Risto Pietilä
