Fireside Chat with bitFlyer's Yuzo Kano

Yuzo Kano (bitFlyer), David Bailey (Bitcoin Magazine)

David Bailey: All right. Welcome everyone to Bitcoin's third halving. I'm joined here by Bitcoin OG and legend from Japan, Yuzo from bitFlyer. Yuzo, thank you for joining us.

Yuzo Kano: Hi buddy. thanks for inviting me.

David Bailey: So you, so is this your third halving that you've experienced?

Yuzo Kano: Yes and no. Actually, I started the company six years ago, so, officially the second time.  Was actually, was a bitcoiner before making bitFlyer, [00:13:00] so, I mean, I won't say that time.

David Bailey: So I, I always enjoy hearing from kind of Bitcoin OGs what brought them to Bitcoin in the first place. So, how did you find Bitcoin and you know, what kind of opens your mind to it?

Yuzo Kano: I used to be actually a trader in Goldman Sachs while my colleague introduced a Bitcoin in 2010. That was very early day. And I got the first, actually, I felt it's just toy money. So I didn't actually believe it. I believe that blockchain. I loved actually the technology itself, but then 2013, there was a surplus shock, then I looked back at Bitcoin again and the price actually and I took a deeper look.

David Bailey: You know, I feel like if you learn about Bitcoin and your first reaction isn't skepticism, then  you're way too open minded. You know, the best Bitcoiners are the [00:14:00] ones that come in the most skeptical.

Yuzo Kano: Yeah. I mean, that was, you know, its ideo gaming .

so my first impression was the same, actually this currency is same as a Linden dollar. We went up a lot. But, I mean,  went to zero, after actually  they issued a lot of actually lands that diluted the body of the money. but, yeah, I felt it was actually Linden dollar but Bitcoin had the very good technology. Yeah. I think it's very different.

David Bailey: So that's, that's a perfect segue to my next question. Monetary policy. You know, we live in a strange time today. I'm curious to hear your worldview about, how you think monetary policy, you know, either from the Federal Reserve or from the Bank of Japan is affecting Bitcoin and demand for Bitcoin. And is the dollar going to be the next Linden dollar?

[00:15:00] Yuzo Kano: Actually, I'm not  that aggressive. I used to work for the financial sector, so I think the virtual currency, or crypto in English, are different from the fiat. The crypto itself is not designed to manage the monetary policy. But the fiat currency is designed to do that so they can issue the central banks actually can issue the fiat currency anytime, at any amount to control the interest rates and the money flow.

But, I mean, it's, it's difficult in the Bitcoin cause you can't control, I mean appreciation, depreciation on the, I mean, yeah, inflation deflation.

So I think it's, I think it's different.

David Bailey: Well, do you see the Bank of Japan and stimulus that's happening in Japan affecting demand for Bitcoin? Like we right now have a Twitter handle that I think is pretty hilarious, called, “your stimulus check in bitcoin”. And they sent everyone  $1,200 here, and a lot of people bought Bitcoin with it. And now that $1,200 is [00:16:00] worth $1,700. Is there something similar happening in Japan?

Yuzo Kano: Yes, actually some people actually saying there's some demand of the Bitcoin is a lack of trust of the fiat currency,  but, I don't know. It's very difficult to say. Some people are afraid of actually the  hyperinflation of the Japanese yen because BOJ issuing a lot of Japanese government bonds. Actually it's not really issuing, but the buying the Japanese government bond and also buying the equities, Japanese stocks and straight bonds and it's increasing a lot of actually amount of the balance sheets. So people say it's the beginning of the hyperinflation. So then, some actually, money actually coming through the crypto world. But, I don't know that cause.

David Bailey: You know, it's one thing that's always interesting for me when I've traveled to Japan is when you go through airport security and they're like, they [00:17:00] open up a book, like, "do you have gold items on you or any of these gold items?" You know, really, probably one of the most  intense places to travel to and get questioned about gold. And it's surprising to me how friendly the government has been with Bitcoin when Bitcoin and gold have so much in common.

Do you think that that policy stance will stay the same? Am I interpreting that policy or  that kind of view of Bitcoin from the government correctly that they see it differently?

Yuzo Kano: Yeah, for the gold, the reason why actually they are checking the gold is because there's actually, you can do the tax arbitrage in Japan because you can sell gold with a 10% consumption tax. Meaning that if you buy the gold in the US and then bring the gold in Japan and then sell it at spot, meaning that you can sell 10% higher. That's a reason why a lot of people are actually doing this actually tax arbitrage, but people actually not really declaring the, that's [00:18:00] usually you need to do, to pay the tariff. But, that's the reason why I actually government is actually checking the gold .

David Bailey:  I want to take a little bit of a different direction here. You know, it's, it's interesting. I mean, I remember when bitFlyer launched, people were very excited. You know, it's interesting to look back over time and see all the Bitcoin companies that have kind of come and gone.

I mean, I have an old t-shirt from an old conference where literally there's 30 sponsors and 29 of them are out of business.

bitFlyer has been able to grow into really one of the only truly global Bitcoin exchanges. Why have you been able to do that?  What is it that you've learned that's made bitFlyer been able to weather the crazy volatility that, you know, just most Bitcoin entrepreneurs aren't able to figure out on their first attempt?

Yuzo Kano: I think we are one of the first to go green after Bitstamp, Coinbase, Kraken and then bitFlyer launched actually 2014, January. I started a company in the [00:19:00] 2013. So why was the reason why was actually probably started earlier and took the advantage of the fast going green. But we also actually very technical.

We're kind of unique. I just said we are the only exchange, we have actually three different licenses in Japan. Virtual currencies license. In the US ,  money transmitters license, money service business. We have the Bitlicense in New York state. And then we have the license in Europe as well. It's a PIs, payment institutions.

So we are the only exchange. We are very compliant and we are trying to actually to be the governance. So that's one of the reason, actually that's a lot of people actually trusted the exchange. That's one reason. Yeah.

And also, actually I did make a, a SRO, self-regulated organization. So, which is called like, original, actually JADA and [00:20:00] it's now JBCA so I was actually spending a lot of time to be at some roles to protect the consumers. So maybe one of the reasons. We're not really actually very successful in the US and Europe, so we have just started in getting into the market. So, to be very honest, so trying to expand, shifting from Japan to US and Europe more, these days.

David Bailey: Talk about that for a second. Before we started talking, I was asking your team, you know, when you look at growth, is a retail investor that you're trying to get excited about Bitcoin, the same as a retail investor in Japan? Do you market to them the same way? Do they, do they look for the same things? How are they different?

Yuzo Kano: Yeah. They found actually in 2016 to 2017 or maybe January to March in 2018 there was a lot of, actually, But I as in Japan, and that, that drove a lot of volatility in the [00:21:00] volumes. I think bitFlyer became number one volume, including the level of shredding globally, for maybe at least 18 months  before Bitmex actually came into the market. So we are not volume, but that's actually driven by the Japanese retails, for sure.

David Bailey: And is that, is that, is that user a different than the users that you see coming from Europe or, or the United States?

Yuzo Kano: Yes and no.

Yes, mainly actually early adopters, I mean, kind of same, same character, but in Japan, I don't have actually, you know, Mrs. Watanabe, Mrs. Watanabe, is kind of meme, is a Japanese house women, I'm trying to actually do the so-called forex. [00:22:00] It's, fiat-based forex, so like a Japanese yen buys versus US dollars and then leverage up to, let's say, 10 times to 25 times.

So the people who's actually prefer doing the more like high risk trading in fiat, is so-called like Mrs. Watanabe. Also, actually, there's a lot of actual users  doing the forex actually came into the crypto market. So that pushes up a lot of prices is in the, I mean, in Japanese market, usually trading higher than the rest of the world.

David Bailey: So, you know, that's interesting. I'd like to kind of ask you about, you know, is there a Bitcoin counter-culture in Japan or the people that make up the Bitcoin community in Japan - is there something unique about them cause in, in the United States, you know, it's, it's anarchistic, it's libertarians. It's, you know, it's a wide range of people, but there's definitely a countercultural element to it, you know?

Does that also exist in Japan?

Yuzo Kano: Yeah. I mean, [00:23:00] they are actually very core bitcoiners as in Japan, since probably 2013 still there just loving the Bitcoin. Well, there's actually some, controversial discussion between the Bitcoin cash and the Bitcoin core. So there's actually very core Bitcoiners here in Japan as well.

Also, some people actually believe that one of the reason why actually we got together in Tokyo was the actual thesis of the blockchain  is written by the Satoshi Nakamoto. That's actually also, kind of, we can sympathize that the Japanese name, so.

David Bailey: There's still a window here for the Japanese government to come out and claim, you know, officially that Bitcoin is a Japanese invention. They need to get out there and put that out there.

Well, so, let's look, look to the future a little bit. You know, you've, you've seen Bitcoin change a lot. [00:24:00] What is your, you know, you're on a recording right now. All right. People are going to be able to reference this in four years, and we're celebrating the next having,

Yuzo Kano: Yeah.

David Bailey: You know, what's the message that you want to deliver to them and what's, what do you think on the record, you know, we see over the next, over the next four years?

Yuzo Kano: Okay. It's kind of difficult to actually measure about the price, in my position. But, just, let's celebrate the, it's just a celebration.

A lot of actual newcomers don't know the reason why we actually celebrating the halving, so, maybe we can announce a little bit more just, enjoying and eating pizza. And then last, last time, actually, four years ago, we in Tokyo guys, foreigners and the locals actually got together at the one place. Maybe 50 to probably 100 people actually came to the party and that we actually checked the blockchain that was actually 25, [00:25:00] BTC to 12 and a half. Right. And then the, the time we were watching the, having the moment. Actually delayed a lot.

You remember that? Usually it happens every 10 minutes, but it took probably actually 15 to 18 minutes and then we are kind of red. Oh, what happened? Actually program backed up?

And then the finally, actually we are monitoring the blockchain explorer which is also actually built by bitFlyer, called like a chainFlyer. You should actually go to the chainFlyer. It's very visual. so easy to look how the blockchain look like. We all actually watching the chainFlyer and the, I mean, find that he actually checked the, Coinbase size. It's at 12 and a half and we celebrated then the cheers and whatever. It was very fun actually.

David Bailey: Yeah. Well, that's so classic Bitcoin. You know, whenever you're expecting something from it, it does the opposite. You needed to find a block. It's going to wait a few hours. Do you need it to wait? It's going to find it right now.

[00:26:00] Well, so I want to thank bitFlyer for supporting this having live stream and, and you know, I want to, can I highlight, I think, you know, in this next epoch we're going to have a lot of new people joining Bitcoin. We're going to have a lot of new people being called a Bitcoin as kind of this global uncertainty.

[ Audio skipped out] 

So for the neck a couple of years. And I think it's, it's so important that we develop a Bitcoin culture and a Bitcoin community that can, that can spread the philosophical underpinnings of what makes Bitcoin valuable so that when new people enter the space, they don't have to have 10 years of experience in order to be able to understand, you know, what makes Bitcoin unique?

And so, it's so cool to, to be able to get like a little taste of what the community looks like in Japan and, and what this global culture is that we're building. So I wanted to say thank you to bitFlyer for supporting this and, and for, for pushing the culture of Bitcoin globally.

Yuzo Kano: Yeah. Sure. Thank you.

Actually, I love to actually contribute [00:27:00] to the, to the markets or the community. I used to be a one just bitcoiner but nowadays it's a little bit difficult to act as just one bitcoiner, so it's all black all day.

David Bailey: Yeah. Sure, sure. You know, the thing is, is that in their heart of hearts, every crypto person, it's a bitcoiner.

Yeah. so, you know, before we wrap up this interview, you, you know, what is one thing that everyone listening to should be looking at and watching from bitFlyer? What's something that you're most excited about that's coming from bitFlyer?

Yuzo Kano: Well, we actually improving a lot of actually, services. We're kind of unique. We have the, how do you say, like, both trading. Like you can send an order into the, we call it , but it's a, it's an orderbook. Also, we have the very easy, iOS app and Android app to buy, which is called like, Marketplaces. [00:28:00] Also actually, probably listing more, probably I'm, I don't know.

Yeah. And, and we also actually doing the blockchain technology as well, which is called 'miyabi' or regional blockchain. We develop these, a private blockchain, which is very, it's a bit different from the Bitcoin blockchain, but, it's supposed to actually use for financial institutions and, some large institutions.

Also, we are hiring people, some engineers and, also kind of, it kind of actually unique that's very mixed culture of the American, European and the Japanese culture. We have, many, 40 engineers, so very unique Japanese company, which is actually also doing operation globally.

David Bailey: So for people that want to, to join the bitFlyer team and help take Bitcoin global, where, where do they go check that out?

Yuzo Kano: Sorry, what do you mean?

David Bailey: For, for you guys are recruiting and hiring somebody that's getting into Bitcoin. They want to come work with bitFlyer where should they check it [00:29:00] out?

Yuzo Kano: Yeah, check the website.

David Bailey: Alright. Well, thank you so much for, for joining me and thank you for ringing in this new halving and you heard it straight from, from the legend himself, when the, when the housing is near and make sure you pull up chainFlyer to watch the action go down.

Yuzo Kano: Yeah. Thank you for inviting me. It was very nice to talk to you guys.

David Bailey: All right. Thank you.

All right. Thank you. Goodnight.