Creating a Payment Solution in Cryptocurrencies: A Conversation with OmiseGO
Last month BCK visited Japan to check out the cryptocurrency scene. One of the places that we went to was OmiseGO (OMG), an Ethereum-based financial solution being created by developers who are based in both Japan and Thailand. One of the biggest problems that they are trying to tackle is the use of everyday payments. With the rise of transaction fees and issues of scalability on both Ethereum and Bitcoin, OMG could fill that void that was previously filled by ETH and BTC. We sat down with Hitoshi Kakizawa, Business Development Manager of OmiseGO.
***03/09/2017 Editor’s note: We previously posted a photo of our team below claiming it was with OmiseGO. This was the incorrect picture and it has been replaced with the correct picture. We apologize for the confusion.***
First an introduction: what is Omise and OmiseGO? How did you join the team?
I came to OMG as a business development manager. I was a wholesale and corporate sales banker in Mizuho Bank, and also an auditor at Deloitte Japan for IPO preparation. I also helped out startups as a blockchain representative at Deloitte Tohmatsu Venture Support for two years, and then finally I came here.
Omise and Omisego are two entities under Omise Holdings; we have already Omise, which works on the acceptance layer by providing payment services to help online operations accept and process payments.
OmiseGO is the blockchain entity which is working on an Ethereum-based financial technology to enable decentralized exchange; tackling a fundamental coordination problem amongst payment processors, gateways and financial institutions. The project started back in 2015 when the Omise Blockchain Lab was formed to carry out research and development. Today OmiseGO is a growing team of more than 30 engineers, designers and business developers, based around the world in places such as Thailand, Sydney, Poland, and me in Japan. Total we have about thirty people for OMG, but day by day we are increasing our engineer pool for OMG.
How did you gather your team?
That was the most challenging part. Putting together a team is not only about bringing together intellectual power that will push through boundaries, but it’s about finding the right people to form a unified team. We have been able to bring together talent from around the world. OmiseGO is not restricted to our headquarters or offices, we have teams working globally from various locations, from Silicon Valley to Bangkok.
Do you already have a prototype that is working?
Our white-label wallet SDK is currently in development and is on track for Q2 2018. Development of our blockchain and decentralized exchange is in the pipeline.
You have some partnerships with some companies right? Can you talk about them a little bit more?
We have built strong connections with strategic partners across Thailand, Japan, among others across the region. We announced a blockchain startup fund and blockchain coworking space in Shibuya with the Japanese venture capital fund Global Brain two weeks ago.
With Global Brain, we will make an incubation program (i.e. activation program for blockchain startups). We provide funding, knowledge, and networking assistance. It will start small, so the max number of people will be 40 members. When it becomes more profitable, we can expand. Now we are planning coworking space in Japan and Thailand, and also alliances with other coworking spaces in other countries.
Is coworking space a new concept in Thailand?
The idea of co-working space is gaining popularity in Thailand over the past year or two, but a blockchain co-working space would be something new. We’ve always had strong connections with the community since OmiseGO kicked off, and whenever there’s opportunity to contribute back or to further enhance the ecosystem we are more than willing to do our part.
Where can I find more information about the coworking space?
Right now we are preparing the website for registration and facebook, in the coming months we will open the site and start the pre-sale, where we will accept bitcoin or Ethereum, and we will accept fiat currency but the price will be higher?
What’s your perception about bitcoin and the crypto-space at the moment? Do you think it’s a bubble?
I think nowadays in Japan the people who don’t understand cryptocurrency or blockchain are also saying to buy bitcoin or some alt-coin, so a little bit of a bubble. I think right now it’s only early investors, but we are seeing commercials from Coincheck, and advertisements relating to cryptocurrency. I believe 2018 will be a big year of growth for new investors and traders.
However this year for ICO, there will be slight shrinkage due to regulation from the Japanese Financial Services Agency. In Japan, the issuer of a coin (ICO) has to register as an exchange, or all amount of the coins must be sold on an existing exchange, which could lead to just big profits to those exchanges which is a bit inept.
About regulation, is there anything that concerning the industry or company?
Yeah, I worry about the regulation very much, specifically about taxation. Trading cryptocurrency or joining an ICO falls under individual taxes, and are going up. If there is a profit made, it is considered as other income and not capital gains. The max amount of the tax could possibly be 55%. Also, if you buy bitcoin, and then you buy other coins with bitcoin, then the profit you make on other coins is compounded with the profit from bitcoin. To keep track of all this, the tax office recently probed the exchanges.
Coming back to OMG, to proceed with the transaction, you will need some kind of fast transaction processing. At the moment Ethereum is quite slow, so I guess you are waiting for some solutions such as Raiden network or Plasma?
We plan to use plasma as a scaling solution for the network. We don’t use side-chains; every block/payment is on chain. Right now we don’t have any plans to use Raiden network.
What have been challenging points so far in the history of OMG?
Since we’re building something new we have to be super careful with security. For established networks with many investors/users like Bitcoin and Ethereum, PoW or PoS is already working. However for new/emerging alt-coins, it is important to have as many participating in the network as possible to ensure security and stability. When we had the ICO, there was a cap for each investor so that we could be sure that the nodes are as widely distributed as possible. Furthermore, 5% of the tokens had been set aside from the total issuance, and was distributed by automatic airdrop to addresses on the Ethereum blockchain.
Where do you see OMG in the next five years?
We recognize two issues in the market: one is initial inclusion of people with access to financial instruments, the second is payment systems are highly siloed; value exchange is restricted between organizations or jurisdictions. For example Suica is only accepted in Japan, or a user of a particular wallet can only carry out transactions with vendors that accepts the same.
So now the existing payment system has so many intermediaries such as major credit card companies, so we made a new digital wallet payment P2P network. However because the existing blockchain is very slow, we have to make a scaling system, and because so many values are being exchange on that chain, so we are making a DEX on that scaling chain.
