Singapore-based venture Quoine sees bitcoin being big in Japan

April 3, 2015 1:49 pm
Many Japanese may be skeptical about the encrypted currency
bitcoin due to last year’s Mt. Gox fiasco, but a Singapore-based venture
sees a big opportunity in fostering a bitcoin market in .

“When we thought about it, Japan is the third-biggest
economy in the world, huge economy, huge market . . . nobody was really
tapping that market from a bitcoin perspective” after the fall of
Tokyo-based Mt. Gox, Mario Gomez Lozada, CEO of Quoine Pte Ltd., said
during a recent interview in Tokyo.

Quoine CEO Mario Gomez Lozada poses in his office in Singapore. | COURTESY OF QUOINE

The 42-year-old, originally from El Salvador, launched the
bitcoin exchange Quoine last June and said that while it might take a
number of years, he is confident he can attract Japanese consumers to
Quoine, because it was built based on his experiences and knowledge of
traditional banking systems.

He said that what makes Quoine different from other
exchanges is that its management team members, including himself, have
worked at global financial institutions like Merrill Lynch, Credit
Suisse, HSBC and UBS.

“We have this significant amount of experience from banking
that we can apply to this new area of finance,” said Gomez Lozada, who
was chief technology officer of fixed income, currency and commodity
technology in Merrill Lynch’s Asian offices and also served as chief
information officer at Credit Suisse’s Tokyo branch.

Bitcoin is a cryptocurrency launched in 2009 and operated
via peer-to-peer networks that are used for services like Skype, which
connects users’ computers directly to each other instead of via a main
server.

One advantage of bitcoin is that small amounts can be sent to other people worldwide at any time and almost free of charge.

A core technology of bitcoin is the block chain, a public
ledger that has recorded every transaction in the currency since its
launch. The chain is maintained by bitcoin users known as “miners.”

Miners use extremely powerful computers checking on whether
people are trying to alter the records kept by the block chain and
receive bitcoins as a reward for keeping the ledger accurate. Such
efforts are dubbed “mining.”

Since the block chain is maintained by users, it can realize
a legitimate currency system without any central authority like banks
and governments, an innovative aspect for many technology experts.

As Gomez Lozada became acquainted with bitcoin, he said he
began to view it in terms of “the next generation (model) of how people
will be doing banking in the future.”

Technology has drastically changed the industrial landscape
over the last decade and more, especially in such areas as photography
and the video-rental business, and “finance and banking is one of the
last remaining industries,” he said, adding this is why he decided to
launch Quoine and run a bitcoin exchange.

Bitcoin is known for its high volatility. While 1 bitcoin
currently trades for around $250, in November 2013 it peaked at about
$1,200.

He also said that although the block chain technology is
powerful and innovative, many bitcoin exchanges do not seem to possess
know-how on operating online financial services, a reason he believes
Quoine’s technological knowledge and experience can work to its
advantage.

“From our technology perspective, the exchanges that existed
(before us) were not built with banking processes in mind. They were
just put together real quickly,” he said.

Gomez Lozada said Quoine is taking measures to protect customers’ bitcoin accounts.

For instance, the company keeps customers’ bitcoins offline,
so that even if hackers break into Quoine’s system, they cannot steal
the currency. Also, the firm runs a check of all accounts at least once a
day to monitor for any suspicious record that might be the result of
manipulation.

“This is pretty much in line with what banks do,” he said.

Mt. Gox. reportedly lost its customers’ bitcoins over a long
period of time and was not even aware of it, which Gomez Lozada said is
unthinkable by today’s high standards of international banking.

Aside from top-level security, Gomez Lozada said Quoine
offers a variety of trading options via bitcoin. While many bitcoin
exchanges usually provide a simple buy-and-sell trade, Quoine offers
margin trading, lending systems and other derivatives, he said.

He said Quoine’s top priority is the Japanese market, where the firm has attracted close to 6,000 clients so far.

“The business that we are doing in Japan is larger than I expected, which was a quite pleasant surprise to us,” he said.

He added the peak daily volume of transactions in Japan was
around 200 bitcoins a day around January, but that figure has now risen
to around 780 bitcoins.

Quoine earns revenue from commissions on trades, and Gomez
Lozada said the firm will probably start seeing profit within several
months at this rate of growth.

Quoine is also in talks with a payment company in Japan to
apply a bitcoin payment option to the latter’s roughly 20,000 merchants,
which will contribute to spreading bitcoin in Japan, Gomez Lozada said.

Other than Japan, Quoine runs its business in Asian countries including Singapore and Indonesia, he said.

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