An Interview: “Governments Can’t Prevent People from Choosing Crypto”

When you visit a crypto event, like the Block Forum in Vilnius, you take the chance to talk to anyone and everyone who will stop for a chat. This is a foolproof way to learn more about what’s going on in the cryptoverse from the big players themselves. talked to Miko Matsumura, co-founder of crypto exchange Evercoin, speaker, initial coin offering (ICO) advisor and investor.

Miko Matsumura. Source:

According to his website, Matsumura has 25 years as operating executive in the Silicon Valley, and he has raised over USD 50 million in venture capital for Open Source startups and over USD 200 million in ICO capital. He is also a venture partner with BitBull Capital, a cryptocurrency fund-of-funds.

In this interview, he tells us about his projects and his expectations for the crypto future.

Can you tell us what you’re up to at the moment?

The biggest things currently are the Gumi Cryptos, a 30 million dollar investment fund based in Japan. We’re mostly investing in token sales as well as equity. There’s also the Evercoin exchange in Malta.

Could you tell us more about Evercoin?

We feel that right now, exchanges are operating on a completely broken model that doesn’t fit in with the design of cryptocurrency. There are two cardinal laws of crypto. The law of the public key: don’t send things to the wrong address because of immutability. The law of the private key: whoever owns the private key owns the crypto asset.

The problem with exchanges is that as soon as you wire your money it’s in a black hole, you practically don’t own it anymore. You have no technical standing, and you generally have no legal standing. You’ve just given your cryptos away - the key owner is not you anymore.

We want a non-custodial exchange. We provide a wallet, and you own your cryptos and exchange them at the same time. The whole process of moving your assets on and off an exchange is completely unnecessary.

We’re mostly built. You can check the status on our website. It’s a functioning exchange, but we’re changing the model and building wallets. That should come in the next few months.

Why choose Malta, and what should other governments do to pull blockchain projects in?

What’s very clear is that exchanges are good business. What’s missing, though, is regulatory clarity. We’re moving into a different adoption phase for crypto, so regulatory clarity is number one on the agenda. Malta has exchange licenses and laws, and regulatory clarity means certainty. We know that our investments there will be compliant and legal, whereas in other jurisdictions, we have no clue. Everybody’s playing guessing games, and if you guess wrong, you end up paying a huge price later.

What about the US Congress and its lack of regulation for crypto? What are they doing wrong?

When you look at the U.S. Securities and Exchange Commission (SEC), hats off to them because they’re doing an incredible job for how well they are resourced. If you compare the SEC with, for example, Goldman Sachs - the SEC is about 1 percent the size of Goldman Sachs, and they have to regulate them. There are scams in both Goldman Sachs and crypto, and this little agency is doing the best to regulate them.

To me, it’s mostly a question of resources. The current US administration is very budget conscious that hates regulation and is shrinking the size of every government department. The SEC really is doing their best, given their circumstances.

So what do you think about the future of crypto?

Open source is a matrix that competes for consent. Pure open source competes for the consent of developers and users. In it, nobody is getting paid anything, there is no structured mechanism for incentivizing anything - people are working on it because they want to. When you give it money, you get an additional layer of incentivization that superpowers the whole thing.

The reason I’m optimistic is because these projects compete for consent and it’s going to be hard for non-dictatorial governments to prevent their citizens from choosing infrastructure that, freely offered, is better than competing infrastructure.

Even if cryptocurrency competes with fiat currency, a democratic nation will have a hard time keeping people from choosing something that serves them better, is faster, cheaper, smarter etc.

You said at the presentation that the fluctuations of cryptocurrency price is testing out the waters. How does that tie in with the infamous tulip mania? Did the same thing happen?

The Tulip mania may or may not have actually happened. But if you study the apocryphal legend of it, what’s the application? It turns out, tulips are not a very good store of value, because you put your money in, and when you take it out they flash to zero and never recover.

CryptoKitties is doing that too. It’s similar to Beanie Babies [a line of stuffed animal plush toys] that went crazy and then crashed to their base value - right now, if you wanted to buy one, it’s still priced quite close to base value. CryptoKitties propelled a lot of stimulus investing into non-fungible assets. It fueled a lot of investment. We’ll see what happens - but I think it will all be squandered.

About investing in decentralized apps (dapps): where would you start and should you invest in them at all?

You can find them through dapp browsers - basically a dapp store. But the thing is, gaming dapps are a little overplayed. By definition, a dapp is based on smart contracts and so far, the viable smart contract platform has been Ethereum. If you look at the Ethereum blockchain, the performance is very low. The question then becomes, how many dapps can you put on there that will actually be performant. CryptoKitties, for example, are one of those that are performant.

But the question is not, “Should I do an ICO?” The question should be, “Should I incentivize people who add value to my ecosystem or community?” But then, how can you say no to that? There are ways of incentivizing without it being a smart contract - we can exchange value with a dumb contract. I can just give you money because I think you’re cool - no need for smart contracts with everything.

What do you think, how long until traditionally built apps switch to blockchain just for the sake of not being the last one on board?

We’re probably around six months out before we start seeing real breakouts. There are game-changing breakouts that will happen - like Telegram that currently has ten times the number of users as there are crypto wallets out there. Blockchain-based systems are absolutely on the rise and will soon be there.