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Interview: Miko Matsumura on the importance owning your own keys, Evercoin, and more

On the day Bitcoin celebrates its 10th anniversary and we see an entire initiative which encourages community members to withdraw their coins from exchanges (Proof of Keys) and move them into their own wallets, Crypto Insider presents to you an exclusive interview with Miko Matsumura, a man who makes great efforts to encourage individual key ownership. The project that Mr. Matsumura works on, Evercoin, is a multi-coin wallet which also includes exchange functionalities.

In spite of the narrow-scoped title, it’s worth mentioning that the interview features many more ideas which complement and exceed the “not your keys, not your coins” argument. You will find comments about the 2008 collapse of the Lehman Brothers (and how the unfortunate event is bound to happen again any time due to institutional recklessness), the current status of cryptocurrency regulation, the crypto exchanges that are “too big to fail”, the Celsius Network, an even the state of decentralization in several projects.

Furthermore, Miko Matsumura also talks about the multiple ventures that he’s involved in, including Evercoin, Gumi Cryptos, as well as the numerous projects he advises.

The interview is inspiring and might just have a motivational effect which helps you remember why the world needs Bitcoin. So if you’d like to see the events of the last decade put into a nice and comprehensive perspective, you may watch the video attached or even read the full transcript below.

Cover image source: Evercoin Twitter account


Full transcript:

VLAD COSTEA (Interviewer): Hello and welcome to the Crypto Insider Interview. I am Vlad, and today my guest is Miko Matsumura, who is one of the co-founders of Evercoin, which is an exchange, a wallet, and also a really nice interface for crypto. And he has also advised many token projects and ICOs. Welcome!

MIKO MATSUMURA (Interviewee): Thank you very much.

VLAD COSTEA: So, could you please tell me more about what your involvement is in this business?

MIKO MATSUMURA: I am a co-founder of an exchange and wallet called Evercoin. We really are pioneering the non-custodial space, so if you need a wallet, we are definitely a multi-coin, a strong multi-coin wallet, we do provide custody so everyone has their own private key, and pretty much, we also allow for mobile exchange. So, the idea would be, if you are looking for that combination of mobile wallet, exchange, that’s Evercoin. In addition to that, I am also an investor in this space, so I am a general partner with Gumi Cryptos, which is a 30-million-dollar investment fund, based in Japan, we invest worldwide, and we have partners in San Francisco area, that’s pretty much where I live.

VLAD COSTEA: Okay. So, I am going to take this one at a time, you mentioned that in Evercoin, you get to exchange different cryptocurrencies, how does that work? Do you use a third party service like ShapeShift, or do you store your own coins with your exchange, or do you use a third party for this service?

MIKO MATSUMURA: Yeah, I can explain pretty easily how it works, which is, we built our own exchange backend, so we really are the only provider that has basically a full stack. From our perspective, there are two big differences you have the whole stack, which is both the exchange and the wallet integrated, one of them is a better support for experience, so what can happen is that you can have a wallet provider, and an exchange provider that doesn’t really interact or connect well, and then you can have a potentially complicated support experience, another thing that it is important about having the whole stack is really that we are able to create some really neat optimizations.

For example, we have this wallet-based limit order, so it’s easy to create a limit order if you get custody, so an exchange create a limit order because what’s happening on the backend is, you’ve already sent all your money to the exchange, so they can tell you anything, and they can make anything happen because it’s not actually happening on a Blockchain, it is just happening inside the database. And so, in a wallet, it is actually hard to do a lot of things technically, but if you integrate the wallet in the exchange component, you can actually do some very novel and exciting things. We really are a unique service, and I think for people that do want custody of their own cryptographic assets, it’s a great solution, particularly if you are interested in having a mobile wallet, we find that our customers tend to be a pretty dynamic group of people, and so they have busy lives, they are traveling, or they are going places, they are in meetings and if they want to make a trade based on things they’ve heard, the mobile component makes a big difference to them, so you are able to maintain a bunch of coins together, and you are able to basically do change based on news that you hear, or things that you need to do.

VLAD COSTEA: I have asked that question specifically because I know there are multi-coin wallets such as Exodus, and I think JAXX which integrate functions to exchange our coins into something else. But that’s done through a third party, and I wanted to know what is so novel and unique about Evercoin, and I guess you explained it really well.

MIKO MATSUMURA: Thanks very much. We like those guys, particularly we like Exodus guys because we know them pretty well, we don’t know the JAXX guys well. I think one of the things that’s important in Multi-coin as well is the mobile aspect, I do think that that’s a distinction, and I think it is something that our users value quite a bit. So I think, to me, if you are in the mood of kind of being glued to trading, and you are trading for like 5 hours a day, or if you are a professional, that’s really more typically a custodial used case, that’s sort of a finance used case, if you are a day trader, and that’s your job.

But if you are not a day trader and that’s not your job… And I think people really got excited by crypto, and they started doing that for hours and hours. But if you are more like me and you actually have other things going on other than trading, you do want to have custody, because you are a crypto type of person, but at the same time, you don’t want to end up being stuck, you don’t want to end up being in a situation where you find out you have to do something, and you can’t wait to get back home, and then you have to transfer from your wallet to any exchange, in order to make the trade, by the time you’ve done all that, probably the new cycle has already passed and whatever happened already happened.

To me, the limit order allows you to kind of do that more dynamically, as well as the mobile aspect allows you to do it on demand, but the point being that of course, you could set a limit order on something like finance, but then you don’t have the private keys, it is a certain combination of users that really want these combinations and features, so I think we are building a desktop interface that will serve a larger group of people but I think, for now, our service is really for people that understand why they want to have the keys, and people who want the mobile multi-coin experience, but I think for those users, I think we really have a sweet spot.

VLAD COSTEA: I think that’s one of the big issues with Robin Hood which is a service which received a lot of attention for having zero fees, right in the middle of the Bull Run in 2017. It was a big issue at the time to buy Bitcoin, because you could get these huge fees, and they just came around and said we have zero fees, but at the same time they did not allow you to have your own private keys, so that’s not always the kind of trade-off that you want to have.

MIKO MATSUMURA: Yeah, from our perspective, there are a lot of major services; Coinbase, Robin Hood and these types of services that don’t give you your keys, and there are certain customers for whom are acceptable. I think it just really depends on who you are and if you are really in the crypto business, I think for people who are a bit more nervous, then the question becomes who do you trust? I think that’s something that people have to make their own decisions.

VLAD COSTEA: Now, tell me more about your funds and all the companies, and projects that you got involved in.

MIKO MATSUMURA: My fund is called Gumi Cryptos, and it’s a 30-million USD fund, one of the nice things about Gumi Cryptos is that, they say in some ways, it is better to be lucky than good, the thing that has been nice about Gumi cryptos is that we have had a good relatively, beneficial timing, and so we are a USD-denominated fund, instead of an Ether-denominated fund, so luckily for us, we haven’t been negatively affected as much by the crypto crash, we did make judicious investments during more of the time of increase.

One of the examples of one of our investments recently hit the news which was our Base coin, we did make an investment in that. Alongside a lot of pretty prominent investors… Recently, they made the news because they are returning all the money, that’s a pretty interesting thing, and in some ways, it is a benefit of investing in really great deals with great founders. We do have a number of investments in this space, if you go to gumi-cryptos.com, you can see our portfolio. We still have quite a lot of dry powder, and in a way, one of the things that we have as a fund thesis is that there’s going to be a bottom to this crypto market and we are going to see the crypto market recover.

So, to us, we are not day traders, so we don’t predict the timing of this, but from our perspective, if we continue to professionally allocate capital, using essentially a venture capital type of a model, we should end up seeing venture clash return, so that’s the fund thesis, we continue to have dry powder, we continue to do judicious investments, and our average check sizes are $250,000 to about a million, so if you look at a 30-million-dollar fund from that perspective, you will probably get 50 plus portfolio companies over time.

VLAD COSTEA: That’s still impressive, and I was about to ask, are there any differences between the way you conduct business and cryptocurrencies in the United States and in Japan?

MIKO MATSUMURA: Yeah, obviously, one of the major issues in the U.S domicile is the regulatory force, one of the things that recently came out is, when you look at the news around something like a Base coin, one of the things that they declared is that they didn’t have a regulatory path forward, so if you look at the designation of their product as a security, then there are restrictions and limitations to how they can distribute and sell that security, and their conclusion was our original plans are not really going to work, and that’s why they return investor capital which I thought was the right thing to do.

From my perspective, in the U.S, the SEC has been quite clear, which is that, if you are really looking at something from the perspective of investment, and if you are looking at investing in something that needs to be built by the money that’s being invested, then you are really talking about a security, and at that point, the logic becomes, you should consider equity investment, because that’s something that’s much more traditional and its well-paved path. So, I do think the U.S perspective is, we have to be sensitive to the regulatory conditions here.

Obviously, it’s the same in Japan, but we tend not to make that many investments in Japan, one of the things that we do as a fund, is we bring companies to Japan, and we benefit them by our strategic relationships in Japan, and so because of that, companies that are already in Japan, we don’t really need to help, they are already successful in Japan so… I think from our perspective, we do like to invest in the U.S as well as more broadly overseas, but at the same time, we do recognize that the U.S jurisdiction has some interesting regulatory issues.

VLAD COSTEA: Oh yes. And also, I was really impressed when I realized that there’s a lot going on in Japan, and in South Korea, in terms of the market and at some point last year, I read that one in three office employees in South Korea were actually trading cryptocurrencies or holding some kind of assets, and that to me was very impressive, just knowing that you have this very broad and enthusiastic embracement of cryptocurrencies.

MIKO MATSUMURA: Yeah, Korea is definitely like penetration among white-collar, it is very high, Japan is probably a little less, but one of the things that is notable in Japan is the participation of institutional investors, so if you go to coinhills.com, you can see the BTC to Fiat exchange on a daily basis, and you will see exchanges like Bit-Flyer which has very big exchange volume in Japanese Yen, and so over the past 6 months, we have seen daily exchange volume, Fiat to BTC, Japanese Yen has been between 40% of total volume, and it has been as high as like 75% of total volume, planet-wide.

So, I think the U.S is now in the lead, I do think that Japanese institutional investment has been pretty strong and Japan actually oddly enough was the first country to declare Bitcoin as legal, which is interestingly enough, most countries recognize it, but Japan I think was early to recognize it as a legal property. So, it’s interesting to see Japan’s role in the crypto economy given that it is by some measures the third largest national economy in the world.

VLAD COSTEA: And also I guess that’s the reason why Mt. Gox, the now defunct, big cryptocurrency exchange, and also Roger Ver; he operates his business from Tokyo.

MIKO MATSUMURA: Yeah, absolutely. I am friends with Roger, and we will be chatting this week about Evercoin and we will be talking about other things as well. Japan is definitely a unique location for the cryptocurrency movement, one of the things that happened, I think you mentioned Mt. Gox, the other one that was difficult for Japan and Japanese regulators was CoinCheck which was about a half billion USD worth of NEM that was hacked. I think that Japan has been host to some spectacular exchange hacks, and that’s obviously a pretty bad thing, and it has really affected the regulations, it has affected the climate, it has affected the mood a lot in Japan.

But, the good news is that the JFSA, which is the financial regulator in Japan, has transferred regulatory authority to an SRO (Self-Regulatory Organization), effectively a group of exchanges that are now licensed by JFSA. So, what’s happened in Japan is that we’ve seen initially kind of like a freezing up of the regulations, under the authority, and then now it is probably in a trend line to move towards opening and liberalization, and I do think that it would take time, but one of the things that happened with the JFSA in Japan, the regulator, is that they realized that… I am going to maybe exaggerate the percentages because I don’t know the absolute numbers, but it probably seemed to them that half of the people in Japan were yelling at them to go faster, and then half the people were yelling at them to go slower.

So, I feel like the pressure in Japan from the regulator, also in Korea by the way, the pressure to the regulators is immense. And if half the people are yelling to go faster and half are yelling to go slower, you just feel a lot of pressure and obviously when there was a failure like exchange hacks, then obviously people become even more extreme and they become even more angry. And so, I think what eventually happened in Japan is that the Japanese regulators realized that they didn’t actually have the knowledge about the industry to move quickly and safely, so you have to move quickly, but you also have to move safely, and so, for them, their strategy was move to a self-regulatory organization.

By the way, industry self-regulation is not unprecedented, if you look at in the United States for example, if you want to get the so-called broker-dealer license, or ATS license or Alternative Trading System license, that’s all granted by a self-regulatory organization called FINRA, the U.S has its own self-regulatory financial bodies, and so it is not unprecedented or strange, because ultimately, you have to regulate the industry using intelligence that can come only from the industry, I mean, in a way this is why we got in big trouble with Lehman Brothers and with big banks, because in the history of a global financial system, it turns out that in order to regulate banks, you need to know a lot about banks, and so there is effectively what is called the revolving door, where people who work at banks become lobbyist and the lobbyist basically lobbies Congress, and so they just move between banks and regulators, and that’s kind of what caused banks to become too big to fail. Again, if you actually flip over into the crypto space, we now have exchanges that are too big to fail and I think that’s another potentially scary fact.

VLAD COSTEA: Which exchanges do you think are too big to fail?

MIKO MATSUMURA: Well, I mean if you go to something like coin market cap and you look at the top 3 or top 5 exchanges, I think they’ve definitely reached a point of too big to fail, and that’s a little scary, the style of exchange is that… the way I look at it is, Bitcoin has been pressure tested, and it’s been pressure tested up to like a couple 100 billion USD, and one of the reasons why it is able to survive such a pressure test is really… if you reason about it, it is partly due to decentralization.

I know that sounds a little bit like crypto mysticism or hype, but I will give you a really simple example, which is what people don’t understand about pressure tests, is that each level of pressure test is actually a different test. So, for example, 100 billion dollars is a different test than 200 billion dollars, which is a different test than 300 billion dollars, people generally think it is just numbers, but the thing that happens is that different kinds of attacks become economically feasible at different levels of pressure.

So, if you have a pile of money, the bigger the pile gets, the more complex and economically challenging attacks become feasible, so for example, state actors could potentially attack something like a finance, so let’s say for some weird reasons, let’s say that the keys are controlled by CZ from Binance, so the thing that is really interesting is that centralization, it means that if you have a state actor who decides to kidnap him, God forbid… Or you could even have tanks, the example I like to use is, if you get enough billion dollars involved, it becomes feasible to use tanks to attack a building which is a very strange idea, but the thing that is interesting about Bitcoin is you can’t actually attack Bitcoins with tanks, like in some level, it doesn’t matter how many tanks you have, like you can’t get Bitcoin. Now, obviously, if we as an industry pile all the Bitcoin into a single address, then you could probably use tanks.

Not to be like Ultra-Libertarian, weird or anything like that, I am really just talking about the pragmatic reality of holding custody over assets… the pragmatic reality is that the bigger the pile is, the more vulnerable it is to attacks of centralization. The same thing is true of data, so if you look at the 500 million user accounts that were compromised by Marriott hotels, apparently Chinese hackers attacked that, the fact that you have all of that stored in one giant pile makes it very vulnerable and it makes it very attractive. So, having giant piles of things is probably an anti-pattern for security.

VLAD COSTEA: I guess that’s what is called the honeypot issue when you just have the honeypot and you attract attackers, they just have the financial incentive to actually try.

MIKO MATSUMURA: Yeah, and the bigger it gets, the more outlandish the attacks can be, so there are definitely crazier styles of attacks that become economically feasible after a certain point, so each new size of pile produces new kind of attacks that were previously unfeasible. So the way I look at it is, the kind of notion of a centralized exchange… if you look at the Fiat banking system, I think about 8% of it is actually cash, and the rest is electronic, so the thing that is amazing about centralized, digital money, which is what the Fiat banking system uses, what’s interesting about it is, you can actually pretty easily reverse things, it is really hard to electronically steal a billion dollars from a Fiat bank, it’s just hard to do, what do you have?

It is like oh, I got access to the cryptographic keys of the bank and I transfer a billion dollars into what? Into a bank account that I have at that bank? Like that’s not what you do, right? So, if you transfer it from the bank to your bank account at that bank, they are just going to do what the Talaq did with Etherium classic, they are just going to reverse immutability and flip it back, and be like wow! And then they are just going to put you in jail. But the point is that, in cryptographic assets, it is very different right? Cryptographic assets, when you have custody, if you transfer them to your wallet, like it’s kind of over, like you did it, like you are pretty clear, which obviously you may have to do some weird things like laundering it or stuff like that.

Aside from doing stuff like that, you are probably scot-free, which is unprecedented, which in some ways I think that’s something that the industry has tested and it’s proven to be true, what’s proven to be true is that, at some point, a centralized exchange will pop, and I feel like it’s just like balloons, you can have really big balloons, you can have balloons that are so big that you can sit in a basket and float around underneath them. But at some point, every balloon has a point where they can’t handle the pressure and so I think that’s something that we learned as an industry. Not all the exchanges have popped, but they all should at some level, there is some maximum level at which, even these really well-run exchanges can be compromised.

VLAD COSTEA: Yeah, the issue with centralization of crypto exchanges is that sometimes you are not allowed to withdraw all the coins that you want, and I have a friend who told me that he had like 10 Bitcoin and he couldn’t withdraw them without providing a lot of documents, and even after that, after fulfilling the KYC requirements, they only allowed him to withdraw like 2 every week.

MIKO MATSUMURA: Yeah, and the thing about withdrawal limits and withdrawal fees, all of the frictions, it makes sense, and in a way when you look at it, it is some level even a protective measure, in the sense that what it suggests is it suggests that the exchanges actually don’t have the liquidity, and what I mean by that is that they are protecting themselves in the sense that if every single customer said that I would like all of my money now, it suggests that they wouldn’t be able to deliver it, like a bank, most of these organizations are doing things with the money that is in the accounts, and we are not sure what they are doing.

But since it kind of went off chain, we don’t know what they are doing, but the point being that the liquidity may not be there, so obviously they have to protect themselves by creating an exchange withdrawal limits and withdrawal fees, it is definitely something that people should be conscious of, and that’s really why philosophically, we built Evercoin on a provider… it’s funny because people are kind of like, you can do limit orders, but can’t you just do that on a centralized exchange, and of course you can, but from our perspective, we’d like to be able to rebuild all of the services, and all of the user experience, and even like most of the speed of running in a centralized format, but also doing it in a decentralized and non-custodial way, so owning your own keys, so that’s very important.

VLAD COSTEA: It makes sense to remind people all the time that unless they own the keys, they do not own the coins.

MIKO MATSUMURA: Yes, that’s absolutely fundamental. It’s interesting because it is a part of this phenomenon that is really fundamentally new, that’s the new part, which is at the end of the day, you can create simulations and you can create everything that the old system used to have, but if you read the second sentence in Satoshi Nakamoto’s Bitcoin abstract, it really says that most of the benefits are lost if you require a trusted intermediary, it’s like a bank or government, or something like that right now. Again, not to be overly crypto anarchistic or Libertarian, but if you are doing the crypto thing, you should get the benefits at the very least, otherwise, why do it?

VLAD COSTEA: Yeah, it’s the same issue which I read from Tim May, he gave an interview 2 months ago, for Coin Desk and as you know, he passed about a couple of days ago. And he said that the biggest issue that he sees with Bitcoin is that it’s transforming more and more into just another banking system and something which resembles PayPal, because of regulations and because of exchanges and because of all the KYC, and at the end of the day, it will not make much sense if we over-regulated it.

MIKO MATSUMURA: Yeah, I think so, because the thing to me is that, we really need… I am definitely not anarchistic or even Libertarian, but to me, on September 15, 2008, the collapse of Lehman brothers demonstrated fragility and people think, oh! banks are so big, how could they be fragile? And that’s actually not the right mindset, the mindset is that it’s mono-cultural and so it’s like having a single crop, if you have a very large crop, of all the same species, then one single disease can wipe out all the crops, so it is the same kind of fragility. To me, I have never been one for even disrupting the world’s financial system, it’s more about improvements.

And a major improvement is to increase decentralization, in order to prevent the kinds of economic collapse that we saw in 2008, and if you realize, the Bitcoin White Paper was published a month after the collapse of Lehman Brothers, so it’s certainly not a coincidence. I don’t think it was a coincidence that Satoshi Nakamoto published it in the time, nor do I think it was a coincidence that it started getting attention because people realized that wow!

These banks that are too big to fail, the net economic impact of them failing is pretty catastrophic, and the measures taken to prevent dominal failure of all the banks was actually pretty catastrophic, so the things that happened with quantitative easing were very extreme, and if you actually go back and look at the history, the things that were done to save the rest of the banks were extreme, those were extreme measure and hopefully, we will never have to do that again. But I don’t think we are headed there at the moment, I think we have a lot of work to do.

VLAD COSTEA: I don’t think we have learned the lessons from giving too much power to banks and turning them into an extension of the state itself. I remember when I was in France, and I had a scholarship there, I basically had no rights and could not rent anything, could not get a student bus ticket, couldn’t get a phone number without a bank account, and basically if I could not go to a bank and negotiate with somebody, and tell them, you know, I am not a citizen, I am going to be here for 6 months, during my scholarship, I just need this account to be able to make payments, and I got rejected a few times.

So, that’s insane, we entrust banks way too much with our daily affairs, and even the government does it. So, as I was saying, a state like France, which is one of the biggest world powers, trust banks way too much and there is nothing that you can do as a citizen in terms of economic freedom unless you start a bank account.

MIKO MATSUMURA: Yeah, my perspective is this, which is that we are all in this giant experiment, and we are all trying to do our bests. At some point, as a society, we want bigger and stronger infrastructure, and if you want to do things like build cities, and these types of things require financial infrastructure, and the financial infrastructure needs to be like really strong, so the question becomes how do you get the financial infrastructure to be strong. At the time, the best technology that we had was centralization…

Again, I am not kind of such a radical as to say centralization is a bad thing, it’s actually the vast majority of the benefits we’ve gotten from an information technology so far has been through centralization, which is things like the database. Databases are amazing, and to some extent, if you look at centralization… centralization is even a relative term, so what I mean is that, if you look at most databases, yes, they are centralized from the perspective of control, but they are decentralized from the perspective of essentially distributing computing, so if you look at common open source databases like Postgres or MYSQL, you know, they are usually run in a cloud form and they are usually run in a highly replicated form.

So, the thing that happened with the Bitcoin White Paper was that we created something where the control was effectively decentralized through proof of work, and that was kind of new technology and now, I think we have the opportunity to explore how that new technology can be used to improve the existing financial system. Responding to your original comment of, there is too much dependency on banks, I would say that certainly the collapse of Lehman indicated that there is deep and fundamental fragility, especially when you look at the issue of how banks are regulated, which is effectively someone who is that powerful and they can go off the rails as a function of not being well-regulated, and in a way we have to assume that as an emergent property of the system we created.

So, I like to say we’ve reached the period in history, that I call “peak centralization”, which is that we really squeezed as much as we could out of centralized social networks, centralized technology providers, centralized banking institutions, even government centralization is been shown for… it has witnesses, it has been a tremendous run, but centralization gives way to something more sophisticated.

VLAD COSTEA: I guess I agree with you. I am a political science graduate, and all my academic life, I have learned that it’s good to trust the government, and that’s all this world is about. But at the time, I didn’t know about forming small communities, how you can self-govern, how you can decentralize power, and I have actually noticed that in places where government isn’t as prominent and as powerful, the people who lived there in communities are much more incentivized to work together and get stuff done, and it gives them a greater sense of belonging there.

When you are in the middle of a big city, where you have a lot of centralization, you notice that somebody threw, maybe a banana peel in the middle of the street, you don’t care that somebody might slide on it, you don’t pick it up, you are like, that’s not my problem, that’s the same with homeless people, you see them on the streets and you say, you know I actually pay taxes, they have their own shelters, so if they are still there, that is not my problem, but if didn’t have as much centralization and we are much more free in this regard, I guess we would care much more about what happens in our neighborhoods, in our cities, in our countries and so on.

MIKO MATSUMURA: Yeah, I think what you are describing is the design of incentives. I think you are describing kind of scalability issues, because as you try to scale everything, you really end up with really complicated issues, and so like I was saying about something more sophisticated, I think when I say something more sophisticated, I am not naïve enough to think that decentralization is “the solution”, I don’t think decentralization is the solution, but in a way, one of the things that has been incredible about the experiment of Bitcoin is that it has created a true alternative system, which is that, it is probably the first financial technology that provides for a digital asset that doesn’t require a third party trusted intermediary. So it truly is kind of internet money, and so I think that’s an amazing thing, obviously.

When I say Bitcoin is an experiment, I am not being pejorative, because just a few minutes ago I said that banking was an experiment and democracy is an experiment, so I am using the term very loosely, because we are trying these things, and I sincerely believe we are all trying to do the best we can, and we have to learn, and one of the things you hit the nail on the head is that, I don’t think as a society we’ve learned the lessons from Lehman Brothers, and I don’t think we’ve learned the lessons about over-centralization, and I feel like we are going to keep getting whacked until we figure these things out.

VLAD COSTEA: No, I agree. But now, let’s get back to talking about Evercoin, because I took a look at the cryptocurrency projects which you support, and I noticed that you have Bitcoin cash, but not the 2 versions of the fork, as in you are not describing that there, the two of them, and I wanted to ask whether or not you acknowledge the ABC version which Roger Veer supports as being the Bitcoin cash, and also you have Dogecoin which is an interesting choice of listing, do you think Dogecoin has any value?

MIKO MATSUMURA: Yeah, I will take those 2 questions in 2 parts. So, I think we are following quite a lot of industry standards, which is that we are using the Bitcoin cash, because effectively what happened is that the Bitcoin cash effectively was performing an update, which is a hard fork update. So, when you look at the emergence of a new coin like SV, from our perspective, what our responsibility is, we will after the network has kind of stabilized, obviously there is no replay protection, so it is complicated to manage, but we definitely want to provide a mechanism for our users to essentially get both sides of that fork.

In some ways, having the key itself is really in some ways a pledge from the technology provider to be supportive. So, from our perspective, whether we create a wallet that contains the SV, and then gives the user what they are due on chain, or if we create some kind of transport tool that allows them to send it outside of our system to a wallet that accepts it, we are certainly open to that, bound by our own kind of technology resources, and our ability to execute that.

So, we are working on solutions for that, from a political perspective, as an exchange, we don’t take sides, we definitely want to be supportive of this kind of decentralized model of governance that Satoshi espoused from the beginning. So, we are definitely working on being neutral here, but I think the prime directive for us is to support our customers the best we can, so I think that’s the philosophy we take there. With respect to Doge coin, which is obviously… I know Jackson Palmer, the founder, he’s really not all that involved in it anymore, so the question becomes what is the value of a dogecoin?

From my perspective, if you look at it from a technology-based perspective, it is a fairly easy coin to support technically being a Bitcoin variant, and so from our perspective, we are not judgmental about it, it’s really just something that we thought would be pretty easy to put in and people do seem to like it for whatever reason. So, it sort of earned a place in the pantheon of coins, so I think that’s really the way I would look at it.

VLAD COSTEA: Also, I have asked you the question because I wrote an article last week, and it was based on the website which Jackson Palmer has also created which is called arewedecentralized.com. He basically presented that Dogecoin, that’s not the conclusion that you see, you see some data. But I wrote the article to present that Dogecoin has actually many more nodes and is more decentralized in terms of ownership than products like Stellar, like Nem, like XRP, Nano and also Iota… and Neo, Neo is very centralized. And to me it was surprising, because these projects take themselves much more seriously, and they promote themselves as being decentralized with the exception of NEM, which wasn’t as decentralized from the very beginning, but we should be concerned, if we want to see a next Bull run, in which people trust these assets and invest their money in them, we should make sure that they have more nodes, the distribution of coins is fair and it’s not just top 100 wallets holding most of the assets, like 70% plus.

MIKO MATSUMURA: Well, I think your observations are valid and helpful. But they also point to something that is a little complex about this concept of decentralization, which is that it isn’t a monolith sense that you described two dimensions of it, one of the dimensions you described is nodes, you said, how centralized they are from a node perspective, because if you look at something like in Neil, it is like 21 Block producers, my understanding is Neil has quite a lot of centralization in terms of the number of nodes or Block producers, and a lot of this set of so-called performance chains are reliant on centralization for their performance, that makes sense.

But the other thing that you talked about was wallets, which you talked about ownership, so that’s another dimension, and those two dimensions are very separate, so you can have something where every single wallet only contains one coin, so you have a very decentralized ownership, but it may be running in a centralized database. So, the point being that there is a nuance conversation to be had, I do think that everyone should be aware of these different issues and I think Jackson Palmer has been incredibly educational and informative, he has got great YouTube videos, I encourage people to follow him and study his content, obviously Andreas Antonopoulos, there is a lot of educational resources people should dip into, that will help them understand what they are getting into.

To me, I think with respect to trust, one of the bigger issues about the trust that would hopefully backstop a new kind of rise or bull run in the space is really ultimately more people delivering more value, and really when you talk about more value, it’s really kind of delivering on promises made, I think one of the biggest issues has been too many promises, too little delivery, and in a way, I think the promises were proportional to where we’ve reached which is that the maturity of market adoption and the maturity of the technology hasn’t been sufficient to meet all of the promises that were being made, and so I think in a way, that has caused the space a lot of undue suffering, but I think from the perspective of making and keeping promises, part of what you are pointing out is that we should all scrutinize each of these infrastructure chains, and try to understand what we are getting.

VLAD COSTEA: I know that NEO, for example, promises to be a much more capable network to provide the infrastructure for dapps, but if you think about it, if the network itself is so centralized in terms of infrastructure and the tokens are centralized in the hands of a few, it is much more vulnerable than Etherium, which is not as scalable at this point, but it’s much more secured to host an application on it.

MIKO MATSUMURA: Yeah, I think that’s really the trade-off, and the question is Bitcoin is kind of what people are willing to accept, and I will kind of link it to the word I used earlier, which is the experiment. And in a way, I find that I am less kind of moralistic about centralization than a lot of folks in the industry. From my perspective, a lot of it has to do with the system design, which depends on what you are trying to do, but I guess the thing that frustrates me sometimes about some of these infrastructure chains is that they are some ways kind of pulling an intellectual fast one on the people, in the sense that it is intellectually dishonest to deliver performance, simply by moving the slider of centralization.

I have a thought experiment coin that I call “Oracle Database Coin” which is moving the slider of trust from zero node, so Bitcoin is trust zero nodes, and I can move slider to trust one node and I can deliver your million TPS, and I can do it by just setting up a single oracle database and having everyone trust me, and if everyone trusts me to run the oracle database, then I can give you a million TPS, and that’s really fast, and I can even chain the Blocks if you want, like all the transactions that come into my oracle database, I can put a stored procedure that actually chains the Blocks together cryptographically, I can give you immutability, I can give you all the properties you want except decentralization, and I can give you a million TPS.

The reason why I am less moralistic about these about these approaches is that some applications require more trust and others require less. So there may be applications where that would be work, and at the moment, if you look at financial services, at the moment, it’s almost all applications, it’s like almost all applications work centralized and so the number of applications that won’t work are a little limited, and I think to me, the problem is not about applications, the problem is more of a systemic problem which is that, it’s not that the economy has to run on top of Bitcoin, it’s rather that if the economy doesn’t have a viable decentralized alternative, we will just do Lehman over and over again, and when I say Lehman, I am not talking about the failure of one bank, like that’s 600 billion dollars of balance sheet, it is not that bad, if you look at coin check, it is like half a billion dollars, if you look at Lehman, it is 600 billion dollars.

It’s a lot worse, but the point being that… the failure of Lehman was not the failure of Lehman, the failure of Lehman was the domino failure of the entire banking system that was prevented by fake money, that the United States government backstopped everyone with quantitative easing, and it’s not real, what happened was imaginary money was invented to prevent the collapse of the whole world economically, so to me, it is about we need an alternative, or we are just going to do that over and over again, and that’s not a good idea.

VLAD COSTEA: Speaking of alternatives and banks, I know that you advised the Celsius network, which Alex Mashinsky with whom I have had an interview last week, he said that it’s not a bank, even though it has the exact same features that a bank has. What do you think about Celsius, do you think it is a healthy alternative?

MIKO MATSUMURA: Again, I am very much… I would call myself an experimentalist, and so when I look at a Celsius, clearly one of the dimensions of Celsius is the idea of trusting Celsius and trusting the brand, and so in a sense, there is a centralization aspect to what Celsius is doing, which is, they are doing lending and so you are gaining interest. Whenever you are gaining interests, you are doing something related to custody, which is, in order to get interest, you actually have to give someone control over your asset otherwise they can’t earn the interest that they are paying you.

So, the bottom line being that, yes, there’s banks like Aspect there, but what I would say is the following, which is, at the moment, we are accepting centralized financial institutions that are largely unregulated to take custody of our cryptographic assets for which you will receive no interest, so those are obviously the exchanges, so the point being that, having an experiment where we see if we can have an institution that provides interest payments for cryptographic holders, it becomes a really interesting experiment, because if you look at something like Coinbase, Coinbase has custody of your assets and gives you no interest, so the question about something like a Celsius would be, what if there was an institute that did the exact same thing, maintain control over your asset or custody over the asset, but then did give you interest, so if you do that thought experiment, it would seem logical that customers of things like Coinbase, should eventually migrate to services like Celsius, assuming that the trust can be equal, so if all things were equal, which they may not be, but if all things were equal, people would rather get interest than not get interest. I think that’s the mindset behind a service like that.

VLAD COSTEA: Yeah, and I have spoken to people about Celsius, and at some point I told them, if you deposit your Bitcoin, they promise they are going to give you like 5% interest a year, and when they heard about interest and they heard about 5% guarantees, they just associated the top with Bitconnect, which promised to give returns based on your deposits. So, in essence, they were also custodians, and the question that comes into mind is, how do you distinguish, where do you draw the line between a clear Ponzi and something which is legit?

MIKO MATSUMURA: Well, the issue becomes trust issue, and the trust has to come from multiple sources, one of them has to be, maybe a degree of transparency about what they are doing with the money. Another one kind of has to be looking at past performance, if you look at what the people have done in the past, obviously their past performance is no guarantee of future results. So, I think those are important clues, I do think that the sales methodology matters, for example, if you have some kind of multilevel marketing, I think that’s obviously not going…

From my perspective, I think transparency ultimately would be probably be the solution for the space in the long term, in the short term, I don’t really know really know the correct answer, but I do think that one of the problems of the custodial solution is it’s hard to maintain 100% transparency. Maybe there is a non-custodial peer-to-peer lending solution that will arise, I know Kiva had it with peer-to-peer lending and I don’t think they are charging or providing interests, I think they may be charging interests but not giving the payments to the lender, all charitable, but I think that we will have new models arising in this space.

VLAD COSTEA: Okay, I know that the alternative is Nexo, which is advertised on coin market cap, if you check any coin you have, a button to get a loan, and you get a promotion for Nexo. And when I mentioned Nexo to Alex Machinski, he was like oh, they are not even compliant, they are backed by big money, but at the same time, they don’t know what they are doing, I guess that is just trash-talking the competition in a sense, but do you know about anything that Nexo does differently?

MIKO MATSUMURA: I don’t really know much about Nexo; I would have to defer to Alex, but I do think that there are going to be a lot of experiments in lending and in interest payment, I feel like it is going to be interesting to watch the decentralized financial system essentially growing all of the capabilities that exist in the centralized financial system. And the thing that is fascinating is that if you look at the replication of all the capabilities and services of centralized finance in decentralized finance, the thing that people miss is kind of following the money and knowing where your keys are, the reason why I kind of hop on that is, if you buy a house, the first thing you ask for is, where are the keys. If you buy a car, the first thing you ask is, where are the keys.

Clever people may ask things like, does anyone else have a copy of these keys? But they are all asking the correct questions, those are the correct questions that have to do with ownership, like you own this? Okay great, I need the keys. So, people aren’t doing that yet with their money, and the reason why I think that’s an important distinction is that if you don’t pay attention at all to that, then you can pretty much have any kind of magic service you want because it is all being done with mirrors.

So, the thing that’s funny is that, not to be kind of a crypto anarchist or an extremist, but when there is a run on a bank like Lehman, the thing that’s amazing is assets aren’t there, so then the question has to be… this is going to sound super-anarchistic so I apologize in advance, what’s the distinguish Lehman from Bit-connect? That’s a fairly extreme statement, but what I am really poking at here, as kind of a way of thinking is that, as soon as you cross the boundary into a custodial space, you are back into the centralized model and the centralized model is again kind of dependent on leverage, and the question becomes how much leverage?

And it turns out, in the case of Lehman, the leverage was extraordinary, they were doing credit default swapping on top of mortgage… so there was mortgage backed assets, but the problem is, that at the end of the tail, the mortgages won’t even go by it, there were robo-call, causing unqualified people to buy mortgages that they couldn’t afford and couldn’t pay, and so even the ground we were standing on, the so-called real estate we were standing on was like hollow, so not only did we fall from like an airplane, but when we hit the ground, we kept falling, because the ground was completely hollow, everyone thought we were standing on real estate, which is like ultra-solid and reliable, but even that was a fake, the leverage was extreme. And so, I do think those need to be legitimately be concerned about, which is once the model becomes custodial, the question about the asset itself becomes the leverage… the leverage is the scariest thing.

VLAD COSTEA: I guess I should allow you speak a little bit about yourself and the latest projects that you get involved in, and if you have anything to promote or to hype at this point, this is your chance to do it.

MIKO MATSUMURA: That’s very kind, I appreciate that a lot. We have talked about some of the bigger projects that I am affiliated with. If you are interested to kind of understand the things that I am involved in, just go to miko.com, I am not one to kind of directly pitch or hype things that I am working on. To me, it is better for people to come to their own conclusions, obviously, this space is riddled with lots of people hyping things and I definitely don’t want to be in the chorus of kind of hype artists. From my perspective, people should do their own homework, and they should figure out how they can benefit, or how they can contribute, and I feel like that’s my mindset.

VLAD COSTEA: Okay, so I guess you don’t really like people like John McAfee?

MIKO MATSUMURA: Well, I have met John, and I can’t say that I dislike him as a human being, but I do question some of his tattoo making or this type of activity, because it is not clear to me that that serves the economic benefit or well-being of the industry, so it is not entirely clear that creating leverage in social media is actually going to produce the kind of financial infrastructure that we all desire, that’s the way I would say it.

VLAD COSTEA: But do you believe in his price prediction?

MIKO MATSUMURA: I tend to also be more conservative about price prediction. It is my sincere belief that these systems are much more non-linear than anyone can say. Here is an example of one lever, like Heather crypto mom… one of the SEC commissioners herself said, I can’t tell you if Bitcoin ETF will be days or if it will be years. And as a good commissioner and as a good politician, she is not someone who will ever give any hint about when something like that would happen.

But, if there was an approved Bitcoin ETF, it could drive institutional adoption as a signal to the market, and the thing that is funny is the signal could be self-fulfilling, which is, people have talked about it enough that it will be like the coinbase effect or just basically, it will be a major listing and lots of people would buy it speculatively thinking other people would buy it speculatively. So, my point is this, I don’t think anybody knows the timing, maybe SEC commissioners in their heads that may have an idea of what the timing is, but there is no way any of them are going to say a word to anyone else, because that would be insider training in the biggest possible way, in the darkest possible way.

So I guess what I am trying to say is, we are just looking at Bitcoin ETF, and how opaque the timing is, and that’s just one dimensional variable across thousands of dimensional variables, and so I am definitely not a bold predictor of prices and timing. For me, I am more of an investor than a speculator, and so my perspective is more, am I alone on this technology? And I would say, I certainly am, when is the market bottom? I would say the bottom isn’t in yet, I think that in my view, the bottom should mirror at the top, at the top of the market you see ridiculous waste of resources, so for example, you see people buying Lamborghinis and things, partying and all that kind of stuff, so you see a waste of resources.

At the bottom of the market, you also see ridiculous waste of resources and the waste that you see at the bottom of the market are, you see really hardworking technologist with real products that are going out of business, and we’ve seen some of it, but I don’t think we’ve seen a proportional amount of that kind of carnage, I don’t relish it, I don’t like it, I think waste at the top is bad, waste at the bottom is bad, I feel like we should try to create a stable industry that enables really solid products to ship and deliver value and screens out people who have nothing, and I think the industry is starting to self-regulate and I think the fact that ICO has bottomed out is, in the sense that who’s investing now are basically professional investors with dry powder and diligence and it’s almost back to the VC model, and the VC model is imperfect and there’s a lot of badness to it, but like good companies have come out of it, so I think we’ll hopefully see good companies come out of these as well.

VLAD COSTEA: Okay. Mr. Matsumura, it was a pleasure to talk to you, I guess this interview was so much more than I expected, because at first I have done some research in regards to your projects, and it wasn’t I who setup this, I just had to do this, I am just the diplomat, the intermediary, the third party, and what I got was surprising, it was like an insight on what happened with the banking system 10 years later, and how we can actually use this new technology to make the world a better place, even though that’s a big statement and that you hear that a lot from a lot of tech companies. Really, thank you and I hope that we will be speaking and maybe talking about new projects in the future?

MIKO MATSUMURA: Absolutely, I enjoyed this a lot, thanks for your inquires and I definitely appreciate what you are doing.

VLAD COSTEA: Yeah. So, this will be published next week I think.

MIKO MATSUMURA: Great, thanks a lot.



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Vlad Costea
Vlad Costea
Vlad is a political science graduate who got a little tired and disillusioned with the old highly-hierarchical and centralized world and decided to give this anarchistic blockchain invention a little try. He found out about Bitcoin in 2014, had to do a presentation about it at Sciences Po Paris in 2015, but was too foolish to buy any. Now that he’ll never be a crypto millionaire and hasn’t acquired his golden ticket to lifelong financial independence, he’ll just write op-eds on various topics.


  1. Vlad, re your comment to Mike about NEXO, see my exact answer at https://youtu.be/Cd2Dy19oRUE?t=1252 during our interview. Nexo does NOT pay any interest, the opposite they charge interest for loans and then send these as profit to their lage shareholders effectively taking value out of the crypto community. Celsius Network does the opposite we charge interest on loans and redistribute them as BTC or ETH interest income to our members creating organic demand for crypto.


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