Blockchain : Rise of New Technology

26

Sep,2018

By : Kie Tsukamoto

Beyond business fields and nationality, Asian Market Entry interviews interesting entrepreneurs found in Japan and features them in our blog posts. For this blog post, we interviewed Shogo Ochiai, the co-founder/CTO at Cryptoeconomics Lab. He is one of the  most well-known blockchain engineers and has done numerous seminars, tutorials and suggestions of experimental protocols for engineers in Japan. We asked him about his vision and passion for blockchain technology, how he has reached where he is now as a blockchain specialist and also how the major blockchain technologies differ from one another.

These interview posts are broken down into three parts:

  1. His Back Story
  2. Blockchain Technology and their Uniqueness
  3. Cryptoeconomics Lab and the Future

 

Part 1: His Back Story

Who is He

 

Kie: Can you tell me a bit about yourself?

Shogo: I majored in physics at Kyushu University. I was at the university for about 7 years but I never graduated. I have always been an entrepreneur, and it was in my 7th  year at the university that I finally decided to leave the school for good and startup. With this startup, I experienced my very first exit.

Kie: What startup was it?

Shogo: It was a hardcore tech startup. I am not too sure you remember a service called Firebase that offered easy server access and coding experience for application developers. They were bought-out by Google at about ¥8 billion. That was 5-6 years ago. What we were doing was actually exactly the same, but in Japan. Back then, such deep tech-based startups were not valued as highly in Japan that we only exited at about ¥500 million.

Kie: What did you after the exit?

Shogo: Well, as I said, I am very much an entrepreneur in spirit. I always wanted to do various businesses; thus, I was involved in forming startups by developing the right teams for each business. My turning point was with this new startup that ended in failure. This startup was like “Uber Eats” but they didn’t offer food, they offered cooks. So, with this C2C app, we matched people who could cook with people who needed a cook. I was involved as an engineer for this startup.

As you can perhaps tell, that service is not going to work in Japanese society due to socioeconomic factors and regulations. No wonder we failed on this. However, back then and now, I feel that if we did this service in Indonesia instead of Japan, it might have taken  off. There is no regulation to put a stop on this service and there is a huge population, with a big economic gap, which this kind of service business needs.

My takeaway from this experience was: a C2C service must match with the socioeconomic factors of the target market, such as regulations, population and economic gap. I knew that beforehand,  but with this experience, it became real.  Successful scalable services are not always about the service content, but how well they reflect the society in which they exists.

This experience truly pushed me to grow out of the bubble of engineering. I felt the need to be able to design a business as a whole—like designing dynamism. That was two years ago (2016).

Moving to Indonesia!

 

Kie: With that in mind, you left for Indonesia. What brought you there?

Shogo: I had a CTO position offer from an Indonesian e-commerce company called VIP Plaza. It came to me at a quite good time since I was actually looking to work abroad back then. So, I decided to take the offer and moved to Jakarta with my wife.

Kie: What was it like to work there?

Shogo: The development team consisted of 250 people there. Because of that size, one of the issues was the development speed. I was basically handling that issue, creating more efficient systems for the team.

Another thing I was involved in was the payment system. In Indonesia, only 3-6% of the population are credit card holders. On top of that, the majority of the population do not even have a bank account. Because of this situation, our e-commerce payment was usually  based on a bank transfer system—asking the customers to deposit money into a  designated account.

This payment system caused extreme inefficiency on our side. It is a human resource and time consuming process because every time the purchase happens, we had to check how much was supposed to be paid; when it needed to be paid; when it was paid and if the amount was correct etc. To make this process more automated, I created a system and implemented it. There are also other payment systems that I created/implemented. My mission was to increase the internal efficiency and also to increase the payment rate.

Back then in Indonesia, what I practiced pretty much synchronized with what was written in a book called Lean Analytics. First, you focus on the payment rate, then work on conversion rate. That is exactly what I did. I believe that I learned a lot and also gained a lot of know-how while I was at this company.  But, foremost, being able to physically observe Indonesian specific/unique services was a truly priceless experience. Jakarta is quite different from all other Indonesian cities.

The difference is quite huge. Thus, there are quite interesting C2C services that exist in the non-Jakarta area. Since the birth of the gigantic C2C business, Go-Jek, anything C2C is pretty much taken over by Go-Jek, but those very local specific services still exist due to the geo-socioeconomic differences.  Anyhow, my experience in Indonesia taught me that C2C services become the social infrastructure in that country due to the socioeconomic situation that this emerging economy is facing.

 

How Did he Come Across Blockchain Technology?

 

Kie: Then, how did your blockchain career all start?

Shogo: it was the time when I was still working on developing that payment system in Jakarta. During that time, Bitcoin and Ethereum started gaining attention. I think it was the winter of 2016. Then, Bitcoin cash emerged in the summer of 2017. It was a hot topic back then. Now to think of it, it was interesting timing for me to look at that technology because it was the time when I was working on the payment system. However, because of that situation, initially I was only looking at the technology as something like a “super server” that never crashes.

Because of that payment system development experience, I was personally going through the obstacles and hardship of building a massive system. But, with this new technology of Ethereum, it dawned on me that it might become possible to develop a system that is far greater than the existing centralized nature of everything. Then, I started to realize that what is great about Etherium is that it empowers a community to develop a service together rather than just one company developing a service and acting to take over the majority of the share. That is how I started getting deeper and deeper into the technology.

I started spending more and more of my time researching various blockchain technologies. Then, good news came: my wife was pregnant.  Because I need to work and devote my time to research as well, we decided that it would be best that we go back to Fukuoka, Japan, where our family lives. That is why I returned here early this year, 2018.

Kie: Since you returned to Fukuoka, what have been your main activities?

Shogo: With Fukuoka-based companies, we developed Fukuoka Blockchain Consortium* in July, 2018. Fukuoka is the 5th biggest city in Japan; although it is much smaller than Tokyo, I feel that this city is very keen to adapt new things and is innovation-prone by  nature. As a matter of fact, Fukuoka offers their city to businesses and startups as a business experiment field; and they are very open for deregulation ideas. Because of this culture, I feel that Fukuoka is a great place for startups and engineers.

(*we will feature this consortium in the near future)

Kie: Even during the time you were in Indonesia, you were taking up a lot of panel speaker/guest speaker positions at blockchain events in Japan. How did that happen?

Shogo: One of the negative aspects of Ethereum is its transection speed; and there is a sidechain technology—a separate blockchain that is attached to its parent blockchain that can accelerate the transection speed. From quite an early stage, I was very much interested in a sidechain technology called Plasma. Out of my passion, I translated a lot of technical documents for Japanese engineers and I was sharing them in an Ethereum community. Then, I started being asked to present about Plasma and Ethereum etc in Japan. I think that is how it all kind of started.

I still continue to research Plasma. I developed a community for Plasma for that reason. I created the community with Mr. Uno, Business Development Manager at OMISE GO, a Thailand-based startup. With this community, we like keeping things diverse—always trying to mix things up by inviting speakers from diverse pools to get various perspectives. As for the recent event, we organized it in Taiwan and created our T-shirt, too (something what engineers like doing!) For engineers, community is very important. That is why I try expanding that while enjoying it myself.

Kie: What do you think will come out as a Japan-specific or unique product/service by using blockchain technology?

Shogo: A cryptocurrency backed by a Japanese Yen Peg System, that’s something I  think  of. There are crypto coins like J-Coin already in existence; but, I’d like to see an entity like the Bank of Japan (BOJ) do something like that. An entity that is so trusted, like the BOJ, to actually issue those coins would be a game changer. I am quite serious about this.  If the BOJ, which already has a very strong trust base, taps into public blockchain*, it would be a paradigm shift.  (*Public and private blockchain technologies are explained in our next blog post.)

In order for cryptocurrency to become a true breakthrough, the existing international order needs to be shifted. If a major entity of trust can become the main body of public blockchain, it can solve many existing problems. Here, I am not just talking about the Bank of Japan, I am talking about central banks of other countries as well. If all those central banks come together as stakeholders and develop the cryptocurrency, this will not just change how business is operated but literally the whole system that we live in. 

Here is an interesting example case of that. Venezuela issues Petro, a NEM-based cryptocurrency backed by petroleum. What is interesting is that they asked India if they could use Petro to buy wheat from them.  If India were to accept the use of Petro, they would then reciprocate by offering them a 30% discount on petroleum purchased from Venezuela.  In the end, India refuse this deal. What we need to understand from this is that when Venezuela asked this deal, it was the time when the US posed financial sanctions upon them. One of the sanctions blocked their SWIFT.  If India (or any other countries) accepted that offer, this classic sanction can no longer stand as a sanction.

Although it was unsuccessful, this case really is a good example that demonstrates the power of technology—how significantly technology can challenge the existing system, and international order and balance.

It is impossible to put a stop on technological advancement and that is why I say that we must truly think deeply about what or how the international order/balance for humanity should be. There is no right or wrong, but how humanity is supposed to be and how we will realize it by using technology. This is not “their” topic of discussion, it should be “ours”—everyone.

Due to technological development, technology itself is becoming something that is so complex and hard to understand; yet, more than ever, policy makers are required to comprehend it. Of course, it is not just technological understanding that is required. More importantly, we all need to draw a vision of how core humanity (values that cannot be changed) should be.

I believe in democracy—equality and empowerment of individuals. To me, my role in this society is to create a system that can support democracy, empowerment of people and equality from a technological stand point. That is what I believe and how I am facing my research everyday.  I wish that all the policy makers can have the same pureness in heart: to create a system that can lead the world for a better future for all.

 In our next blog post, we ask Shogo Ochiai how those major blockchains are different from one another and ask him about his recent project. 

Click HERE for Part 2. 

Click HERE for Part 3. 

 

What is Coming Up?

  1. NEO Tutorial Session hosted by NEO Keymakers Japan (Sep 30th, 2018).
    For more details, you can click here!
  2. Technical Booklet for NEO is published on Oct 8th, 2018! For more details, you can click here.
  3. There is a blockchain boot camp coming up in Tokyo (Oct 19th~Nov 2nd, 2018), where you can learn about all these major blockchains: Bitcoin, Ethereum, NEM and NEO. Shogo Ochiai is also there to teach engineers about Ethereum. You can book your seat here .
  4. NEO Keymakers Japan is selecting their logo. Please vote for the one you think is the best to present NEO Keymakers Japan! Vote from here

Profile of Shogo Ochiai

Co-founder/CTO at Cryptoeconomics Lab
A blockchain engineer, specialized in Ethereum, Plasma and zk-SNARKs.

He is mainly devoted to OSS activities in relation to Staking, Formal Verification and so on that are essential to cryptoeconomics, which is the basis of Ethereum development; and taking numerous cryptocurrency development projects across Asia.

 

Message from Asian Market Entry

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