Joel Edgerton, COO at bitFlyer, a crypto-asset exchange that’s licensed to operate in Japan, the United States, and Europe, recently shared his views about the court case and charges brought against the Bitcoin Mercantile Exchange (BitMEX), a leading digital asset derivatives exchange.
Edgerton also shared key insights about the emerging decentralized finance (DeFi) space. He also talked about the Fintech industry and how it’s not really innovating, but rather just digitizing existing financial products and then hoping to get acquired by more established traditional financial institutions. He claims that crypto and blockchain is where real innovation is happening.
Our discussion is below.
Crowdfund Insider: What do you think about the current Fintech landscape and what role are blockchain and digital assets playing for the world of finance?
Joel Edgerton: I think the current fintech landscape is a bit disappointing. Many fintech companies are not really innovating but simply digitizing existing financial processes, packaging it with mobile customer experiences and then waiting to be purchased by traditional finance companies to accelerate their own digitalization. However, blockchain and crypto are innovating at an amazing, almost reckless, pace.
The blockchain industry is tackling tough challenges like creating a borrowing/lending/interest yield ecosystem that is trustless and out of the control of central banks. It is forcing central banks to re-think the very nature of money and the value they bring to economies and global trade. Companies are re-thinking their global supply chains to increase their resilience which was exposed by the coronavirus pandemic.
Business relies on trust, and trust itself has been challenged. We need a better way to work together and deliver value to people that optimizes skills and resources anywhere in the world. Blockchain technology offers one solution to this problem by moving trust from institutions to technology. We already rely heavily on technology
Crowdfund Insider: What extraordinary potential did you see in blockchain and cryptocurrencies that you planned to take a leap from the booming traditional Fintech space to this industry that’s still considered new?
Joel Edgerton: I started my own company in 2006, to build a platform that used algorithms based on behavioral economics to help individuals make better-investing decisions. While it did not do as good as bitFlyer — the company I am working with now — it was a great and humbling experience. I learned that solving small problems was easy and solving big problems was profitable.
There is the saying: “necessity is the mother of invention.” This is about solving the problems of today. I prefer “invention is the mother of necessity.” What are the new problems that we are creating and how do we solve them for tomorrow. Fintech is the former and blockchain is the latter. Fintech is solving the problems that the finance industry is too lazy to solve while blockchain and crypto are solving the fundamental issues. More importantly, crypto is approaching these issues from the perspective of the individual and how can we add real value by making things simpler, or cheaper for you to do.
This is why I was attracted to the blockchain and crypto industry. Blockchain is a distributed ledger that can help us provide an array of solutions across various industries including finance, supply chain, healthcare, education, and so on.
Cryptocurrencies, on the other hand, are not just exciting because they made some people millionaires. They are exciting because they have the potential to change how we perceive and use money today. For example, you and I may see Bitcoin as a volatile asset. But if you consider people in hyperinflation-stricken countries, Bitcoin is still an extremely safe asset that they can trust more than their national currency.
Crowdfund Insider: The governments all over the world have for long regulated the Fintech space. What do you think is making it so difficult for them to regulate blockchain and cryptocurrencies?
Joel Edgerton: I do not think governments find it difficult to regulate cryptocurrencies. Governments move slowly and crypto has simply not been a priority. At the beginning, crypto was too small to gain the attention of governments. Recently, governments began to look at the crypto industry more seriously, when they realized it could challenge their monetary control with the Libra initiative. However, they were side-tracked by the coronavirus pandemic.
The charges brought against BitMEX clearly show that the US government sees crypto falling under current regulations. Further, there are a few bills in the US Congress that further clarify and extend regulations in the crypto industry. Japan already has fully regulated crypto and the EU has proposed new laws as well. China has banned crypto for a while now. It is inevitable that crypto will be regulated. The crypto exchanges that have built their business model on the fantasy that they can avoid regulation will find themselves shut out of the major markets.
We at bitFlyer do our best to work together with governments for sensible regulation that allows for innovation while still protecting customers and eliminating bad actors. Only recently, bitFlyer USA worked with the state of Hawaii and their digital currency sandbox to launch our services there. Our services are now available across almost all U.S. states. That’s possible because we can’t solve the problems of tomorrow alone. We must work together to make crypto broadly available and easily accessible for everyone.
Crowdfund Insider: DeFi is the new buzz in the blockchain town, and it feels almost like the 2017 ICO times are back. Do you mind explaining what DeFi is and what potential it holds? Is it possible that DeFi meets the same fate as ICOs?
Joel Edgerton: I do not think that DeFi will meet the same fate as ICOs. DeFi is a real innovation that allows for borrowing/lending and interest yield on crypto assets. These are a staple of traditional finance but are relatively new in crypto. However, the real innovation in crypto is they exist without the lengthy paper process and human judgment of a loan underwriter. They can be done instantly in a trustless environment.
Obviously, there are risks and points of failure in DeFi projects at this time. People can make extraordinary gains or lose everything. It is this Darwinian environment that allows crypto to innovate and evolve at the incredible pace that does. We see real potential in this area and we will bring these innovations to our customers, once they are safe.
Crowdfund Insider: As a cryptocurrency exchange, how is bitFlyer working towards improving the Fintech ecosystem as a whole?
Joel Edgerton: Although more people are aware of crypto, a majority still perceive it as unsafe. News of hacks and criminal charges of unregulated exchanges, does not help the industry. The industry needs to grow up and deliver value to our customers.
bitFlyer currently operates in Japan, the United States, and Europe. It is the only exchange that is licensed in all three regions. It is the most successful and widely used exchange in Japan and has made cryptocurrency simpler for millions of people.
At bitFlyer, our mission has always been to provide a better experience to our customers combined with the highest levels of security. We utilize a large part of our resources and put in the maximum effort we can, to protect our customers.
Above everything, unlike many other crypto companies that lure more people into crypto with 100x leverage and hundreds of coin pairs, we have a long term vision. We care about our customers and want to provide a simple and safe experience. This is why we focus on delivering a small group of proven cryptocurrencies to our customers. We don’t want quick growth that lasts for a short time at the expense of our relationship with our customers. Instead, we aim for steady growth so we can help the crypto industry reach more people in a way that it positively impacts their lives.