Japan Has Chance to Be ‘Crypto Hub of Asia,’ Says Ethereum Cofounder Charles Hoskinson
20:00 JST, October 4, 2024
Fifteen years ago Bitcoin was first launched, giving investors a new way to speculate. A few people have made hundreds of millions of yen speculating on cryptocurrencies. On the other hand, they have been a hotbed of fraud and crypto exchanges have been hacked, with billions of yen stolen in one case.
This has left many wondering if crypto will ever meet the lofty ideals that have been dreamed up for it.
Charles Hoskinson, cofounder of blockchain platforms Ethereum and Cardano, sees a future for cryptocurrencies and blockchain that would completely change the global systems that govern us.
Hoskinson’s interest in cryptocurrency started in his 20s.
“I was very interested in cryptography and mathematics and also I liked Austrian economics and the whole concept of sound money. And all those concepts kind of converged together with the internet and social media, and it became Bitcoin,” the American entrepreneur told The Japan News during a recent interview in Tokyo.
Hoskinson, 36, found crypto easy to wrap his head around. To him, it was like “email for money.” And he was drawn to the prospect of a programmable currency that “we can modify and grow,” and that he says offers people a larger say in global systems.
“This is something that’s deeply appealing to me, because it maximizes personal freedom and also allows us to get along in a global world with less conflict overall,” he said. “We’re getting a lot more conflict now because the old governance systems are not able to run this type of world, and we need new governance systems for it.”
Cryptocurrencies, unlike the yen or dollar, are not backed by a central bank but by blockchain, or decentralized peer-to-peer networks that record and share all transactions. In other words, value is not decided by a government but based on math that Hoskinson calls “an objective truth.”
Blockchain has facilitated fast, low-cost transfers of money around the clock. Hoskinson says use of the technology has now expanded beyond cryptocurrency, to supply chains, voting, games, intellectual property and other areas where trust plays a key role.
However, many people still have no first-hand experience of the technology.
Many consumers will likely first encounter blockchain “under the hood” of products they are already familiar with, such as if Sony were to incorporate the technology into PlayStations, Hoskinson said, adding that the spread of such new technology will be exponential.
Even so, challenges remain for building what is supposed to be a system “for a billion people that never turns off, is cheap to use and self-evolving and has no central authority controlling it.”
For starters, there is the question of how to reintroduce identity, since transactions currently take place without any discussion with the other party, and you do not know with whom you are doing business. Traditional banks use identity to prevent money laundering and to counter terrorism, but blockchain generally lacks this ability.
“We have to add identity back, in a high integrity way, and we haven’t quite figured out how to do that as an industry yet,” Hoskinson said.
But once this and other problems are resolved, “then you could start talking about a decentralized YouTube and a decentralized Facebook and decentralized AI to compete with OpenAI and all these consumer products that we’re very excited about.”
Crypto in U.S.
In the United States, whether cryptocurrency gets a boost from government policy could depend on the upcoming U.S. presidential election. In July, Republican nominee Donald Trump, who once called cryptocurrency a “scam,” promised to make the nation the “crypto capital of the planet” in his keynote address at a Bitcoin conference. The event raised $10 million for Trump, Hoskinson said. Two months later, Trump unveiled a new crypto asset business.
Trump today has a very different view of the U.S. government than he did in 2018, according to Hoskinson.
“It’s important to understand that people go through journeys and evolutions based on lived experience,” he said. “Today, [Trump] thinks that the institutions of the United States are corrupt … and are persecuting him. So he’s very distrustful of government.”
These experiences, on top of the fact that his inner circle has changed, have made him “more open to alternative ideas.” Joe Biden’s approach to crypto has also “created a political opportunity for Trump,” Hoskinson added.
Domino effect
If the United States decides to promote crypto, then Japan will follow suit, leading to “a huge spike in adoption,” argues Hoskinson. And with China unlikely to warm to the technology, the title of “crypto hub of Asia” is Japan’s to lose, he says.
Hoskinson expects the Japanese government will come around to crypto eventually, though it will take time. Japan’s anti-crypto stance might soften if major brands, such as Mitsubishi, Toyota and Sony, can say, “We figured out how to make it safe.”
“Japan has a way of learning from the West, taking the best lessons home, and after figuring it out within 10 or 20 years, becoming a world leader. We’ve seen that happen multiple times,” said Hoskinson, who has funded blockchain research at the Institute of Science Tokyo — formerly the Tokyo Institute of Technology — since 2017.
“But the biggest issue for Japanese adoption is there needs to be a Japanese Vitalik Buterin,” he added, referring to the young cofounder of Ethereum.
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