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The reversal of the series of catastrophes which plagued virtual currencies this year which has resulted in a great many mainstream corporate investments in the expansion of Bitcoin via technology has taken another leap forward today.
Japanese trader-turned-entrepreneur Yuzo Kano has left his more conventional employment at a series of banks including BNP Paribas and Goldman Sachs, in order to found the first Japanese Bitcoin exchange since the demise of MtGox.
Mr. Kano resigned from his position as a derivatives and convertible bonds trader in December last year, a period during which Bitcoin’s values were at stratospheric levels, peaking at an all time record of $1,151.
Very shortly afterwards, the value had collapsed, with Bitcoin being worth only 50% of the values achieved as last year drew to a close, with the high profile demise of MtGox occuring just three months later, resulting in substantial losses for investors.
With the absence of an exchange following the bankruptcy of MtGox, Japanese Bitcoin users have had to make do with the solitary ATM in Tokyo in order to conduct transactions and convert fiat into Bitcoin. Now that Mr. Kano has launched bitFlyer, the availability will increase, however Japanese investors have become extremely risk averse. Perhaps a case of once bitten, twice shy.
Somewhat controversially, Mr. Kano considers the demise of MtGox to be a positive matter for his business. “That’s one less competitor for us” he told Bloomberg.
He does, however, understand the investor conservatism by further explaining that “It also left many Japanese with a very negative impression of bitcoin. We already had a company then and felt it was up to us to rebuild the trust.”
Practicality is very much at the center of bitFlyer’s functionality, as its website allows anyone with a Japanese bank account to buy and sell the coins. The service began in April and eschews the trading options used by other exchanges in favor of a simple interface that would, according to Mr. Kano, appeal to beginners.
Mr. Kano raised over 160 million Yen ($1.6 million) from a Japanese venture capital firm in order to found bitFlyer, attesting to the confidence from experienced backers in such enterprises. Recently, several seasoned venture capital funds have backed similar ventures worldwide, often providing substantial sums of money.
The realization that bitFlyer’s success or failure will determine the fate of Bitcoin in Japan is very clear to Mr. Kano, who explained to Bloomberg that ““If we have another fiasco like Mt. Gox, it’s game over.”
“There needs to be monitoring to prevent that from happening.” Indeed, in other jurisdictions such as Switzerland and North America, both nations renowned for their fervent responsibility toward consumer protection, regulatory structures for virtual currencies are currently in process, and Bitcoin is becoming a widely used currency.
bitFlyer is also seeking to set security standards and personal identification guidelines for bitcoin trading in the Asian nation, through the Japan Authority of Digital Asset, which groups bitFlyer with CoinPass and the Japanese unit of Kraken, a San Francisco-based exchange.
A point of interest in the modus operandi of bitFlyer is that contrary to many other exchanges, which link buyers and sellers together, effectively acting as an agency, bitFlyer is the counterparty for each transaction which allows deals to be concluded instantaneously without complicated price-setting mechanisms which, according to Mr. Kano, can be offputting fo new users.
He considers his methodology to be safer, as bitFlyer takes on the risk on behalf of its members.
Mr. Kano considers the future to be more fruitful for entrepreneurs who innovate, rather than those who tread the traditional path at large banks. “There is no stability in working at Goldman Sachs” he said. “Doing something on my own has a great upside, as I like complex systems which is why I became a derivatives trader, now its Bitcoin.