How did you first hear about Bitcoin?
I first heard about Bitcoin in late 2011 when working in Sydney, Australia. My role back then was Regulatory Reporting Technical Developer for an Investment Bank called Macquarie. This role combined an avid personal interest in both technology and finance. Two of my colleagues asked me what my opinion of Bitcoin was. Knowing they valued a personal opinion based on my interests, I started to research the digital currency. After just a few hours of reading about Bitcoin, I was hugely impressed with the Blockchain’s approach to eventual consistency in a public ledger.
When you left your job at Macquire Bank in 2013, there must have been some skepticism about Bitcoin. Was this the case? What do/did banks think of Bitcoin?
Banks, as a whole, cannot touch unregulated financial products. Given that their banking licence is at stake, it is safer for them to observe now and act later. When we look at the recent history of the banking industry, this does not come as a surprise and this serves to protect the end-consumer.
When I left Macquarie Bank, my decision was met more by intrigue than skepticism. Since the global financial crisis, I felt the sentiment was that banking, as an entire industry, is expecting massive disruption in the years to come.
During your time in investment banking, what was the most important thing you learnt?
Fiduciary duty. This is a duty that should underpin the entire financial system. At its core, it essentially states that, with all moral obligations declared, you should act with the highest level of care with funds that belong to your clients.
Knowing how an investment bank operates was a valuable lesson in fiduciary responsibility: when done right it helps economies flourish and companies grow.
Have you done any bitcoin trading yourself? And what results did you get?
After buying my first bitcoin at $2 each, I asked myself what I could do with them. At the time there was not much, so I focused on buying and selling them across different exchanges. At first, the ability to trade and send bitcoin around between exchanges seamlessly was novel.
During this period, I noticed that pricing differences were significant allowing me to apply my first trading strategy of arbitrage between exchanges. What I found was that newer exchanges sold bitcoins for a higher price due to a lack of supply. Anybody willing to have accounts at two exchanges could buy bitcoin on the cheaper exchange to then sell at the smaller exchanges, profiting from the difference.
What grew out of casual interest in my free time soon became an obsession as I watched the Bitcoin ecosystem grow and grow.
Can you share any trading strategies that worked well for you?
My first trading scripts were written to perform simple arbitrage but my interest at this point dominated my free time. I learnt about ‘triangular arbitrage’ and started to trade against USD and AUD simultaneously.
Fueling my fascination in finance, I learnt about market theory from a famous book on trading called ‘Reminiscences of a Stock Operator’. The lessons I learnt are to identify the cyclical behavior of the markets. Ultimately markets are driven by the two predominant human emotions: fear and greed. Knowing this, I used technical analysis to come up with a trading strategy dependent on market price, and not emotion. My strategy was to trade small amounts of bitcoin, using the basic premise of buying when the price was low (when people were selling in fear), and selling when the price was high (when people bought in greed). This strategy, based-off the very simple moving averages, helped turn an initial $100 investment into $200,000.
As CEO of BTC.sx, how would you describe your main roles and responsibilities?
On a day-to-day basis, my biggest responsibility is ensuring the full accountability of all client funds every minute of every day. This may come in the form of ensuring every trade we receive is placed out to market successfully, to ensuring that profits are paid in full for every single trade.
What do you love most about your job?
What inspires me the most is seeing the brightest minds I have ever known dedicate their working lives to building a financial services sector for Bitcoin. The people I meet on a day-to-day basis give me a sense that an incredible influx of talent is being attracted to Bitcoin and its accompanying startups.
Do you have any advice for other entrepreneurs in the Bitcoin industry?
Place fiduciary duty as your number one priority. MtGox is one of many businesses that have gone bust due to immoral business practices. Remembering that you are dealing with other people’s funds, above all, will put you in a good position to act responsibly.
As we approach 2015, do you have any predictions for Bitcoin next year?
Regardless of price, what we do know is that adoption is continuing. I’ll be looking out for a critical mass to be reached and consequently a huge explosion in the growth of crypto-related projects. My prediction? By Q4 of 2015, we will see more mainstream use-cases and wider adoption.
