Blockchain : Rise of New Technology 3/3



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 Technologies and their Uniqueness
  3. Cryptoeconomics Lab and the Future

This is Part 3.  If you like to check Part 1 & 2, please click here for Part 1 and here for Part 2.


Part 3: Cryptoeconimics Lab and the Future


Blockchain Technology and Asia


Kie:  How do you think this blockchain technology will impact Asian business or more specifically Japanese business?


Shogo:  In developing countries like Myanmar, there is no trust in their own currency.  I would say that for Asian governments with similar credibility issues, the compatibility of cryptocurrency to those societies is quite high.   However, in terms of regulation, it is a bit more ambiguous.  For instance, the Philippines is quite positive while Indonesia is more cautious and protective against crypto coins.  China is somewhere in between I would say.


Thailand is quite interesting to look at.  They actually developed an STO (Security Token Offering) market.  This means, we can actually perform security token exchanges and of course be listed there as long as we satisfy the listing criteria set by the regulators, for instance, using coins certified by the government.


Kie:  How strict are the regulations in Thailand?


Shogo:  I feel that their regulations are reasonable.  To be honest,  they are very forward thinking when it comes to financial matters, not just crypto.  That is why they can implement and adopt innovative and new fintech solutions at a relative early stage.   Although people think of Singapore when discussing fintech and Asia, it is actually Thailand that takes initial action on financial matters.


Kie:  I feel that Singapore is not so liberal in terms of STO.


Shogo:  That is true.  It is the case here in Japan as well.  When it comes to crypto, I feel that we need to see it more without feeling “special” about them and view it rather as a means.  For instance, there are a lot of stock exchanges in regional areas of Japan with a low trading volume.  This means that those exchanges are also at risk of being shut down; this could mean that STO could be their solution.  That is why regulating all is not an answer, but we have to take a look at it situation by situation and how or if tech can solve those issues.


Personally, I want Fukuoka city to take the lead in Japanese blockchain technology since we founded the Fukuoka Blockchain Consortium*.  Also, Fukuoka makes its city available for business experimentation for startups and corporations.  I like their innovative and active stance like this.  That is why I would like to see advanced business case studies of blockchain happening from this city.  STO case is one of them.

*We will cover this in a future blog post.


Kie:  That would be a very interesting case to observe.  For example, it would be quite interesting to see a Japanese-city government pay their public officers’ salary, of which 50% is paid through crypto currency that depreciates (Silvio Gessel’s free money concept.)


Shogo: That would be very interesting.  Theoretically speaking, political authority is “decentralize-able.”  In the future I do not think that it will be as centralized as it is right now; besides, I feel that the societal trend is moving toward the empowerment of individuals.


The empowerment of individuals is definitely strengthened by the power of the internet and products/services that exist around the internet, such as social media.  Social Media like Instagram gives power to individuals for both spreading and accessing information.


When talking about crypto in terms of such empowerment, blockchain technology is enabling individuals the right to issue their own currency.  Ethereum, by its very nature, gives the right to individuals, and it cannot be broken down.  Looking at this technology, I am more interested in how emerging countries will act/react to this technology.


Kie:  Especially, the countries where their own currency is at risk, right?


Shogo:  Right.  I talked to JICA  recently; their support program for emerging countries include intangible efforts as well and they asked me what type of intangible support I think is suitable for those countries.  So, I told them that they should definitely look at an anonymous voting system backed by blockchain.


As I was in Indonesia, I saw no transparency when it came to the elections; and this is always a cause of chaos.  By implementing this anonymous election system, you can actually prevent extremists from targeting people who voted against them.  This will be the strongest peace keeping infrastructure in the world.  I believe that this will be the very initial yet critical step for a peaceful society; and that is why I think that a humanitarian organization should push this forward.


However, this system requires very advanced technology.  More specifically, you need to utilize anonymity technology on a sidechain like Plasma.  Many governments tend to ban all kinds of anonymity technology because they like to put a stop on money laundering.  If the topic is specific to money laundering, it totally makes sense; yet, they have to understand that they cannot ban everything altogether.


The anonymity technology itself is not evil.  How and for what it is used is the key.  Blindly banning this technology goes against the spirit of democracy; and governments/societies need to be extremely cautious about this.

What is Cryptoeconomics Lab?

Kie:  You also have your own company Cryptoeconomics Lab.  Can you explain what it is?


Shogo:  It was established in April, 2018.  Right now, we are focusing on public blockchains; and we provide our clients consulting and development services.  Our team consists of three core members and 100 team members.  In addition to that, we have 100 people in our community.  Our community is membership based and we only invite people that we think are most suitable/needed for the community.


The community members are crypto-specialists coming from all over the world, but mainly from Asian regions.  In this community, we share information regarding regulations, trends and business etc of the world in relation to blockchains.


Kie:  Can you tell me some projects that you are working on right now?


Shogo:  We are developing a protocol for Staking.  Staking is a concept that is often compared to mining.  For mining, you purchase a mining machine, which costs you quite a lot, and do the mining and you get rewarded for your work.  That is mining.


For staking, you do not purchase any machine, but you lock your money and you get profit depending on the amount of money you locked.  That is Staking.  You can imagine banking, it is similar to that (similar to having a savings account).


This system proves the value of the currency on the platform.  What I mean by this is that it motivates users to “behave” (not to do any funny business on the platform because if that happens, the value of the platform decreases, which none of the users benefit from.) Many crypto coins are available on the platform; and many sidechains, like Plasma, use it as well.


In a sense, Staking is like “taking a hostage from you while asking you to do something; but you get something in return if you comply,” so it can become a win-win situation and that is why this system can support the permissionless system to function.


I call this phenomenon cryptoeconomics.  I founded my company to research and even further develop/advance this cryptoeconomics.  Of course, blockchain consulting, development and protocol development are something we provide as a service as well.  However, I feel that there is no clearly drawn line between technology and business in this field.


Kie:  Can you tell me a bit more about the staking platform that you are working on?


Shogo:  What we are working on is a Staking Pool.  What this does is analyze all staking projects (all the decentralized applications (dapps) and sidechains like Plasma) in order to determine the best yield for users; and this analysis is done by a contract (computer protocol) not by a human.  That is why it is safe because there is no risk that someone will run away with your invested money.


We are developing this protocol right now.  It is like a banking system that runs by Staking.  We issue our own token called Spool Token: let’s say they buy one Spool (by using a specific crypto called Dai that is backed by USD), then you sell 1 Spool after one year.  That 1 Spool is valued at 1.2 Dai after a year.  This 20% return comes from Staking.


If it is a bank, there always is a depreciation risk.  If it is the Staking Pool, although there is a bit of variation at the proof of stake, such depreciation risk is much lower since the contract can create a very balanced investment portfolio.  You can just simply buy a pool of Spools, and the secure investment is done.


With this Staking Pool, the securities characteristic is quite apparent, that is why we have to be very careful regarding the legal side.  We will do more research and development for this project from both the technical and the legal side, and we aim to do STO and get listed on a legal exchange.


Kie:  What motivated you to establish this Cryptoeconomics Lab?


Shogo:  I was researching Plasma back then, and so was this guy called Kataoka, who also became a co-founder of Cryptoeconomics Lab with me.  He was helping my research and we kind of landed on the same conclusion: although Plasma is a scaling solution for blockchains, it actually manifests the cryptoeconomics itself.  It is not just programing knowledge, know-how etc, but it actually requires you to have solid understanding of economics.  Otherwise, you can never scale up the transaction throughput with just sidechain alone.


That is what we were discussing back then, and that is why the name came very natural to us.  It is not a Plasma lab, or an Ethereum lab.  Rather than limiting us to one specific technology, what we pursue to dig deep into is cryptoconomics itself.  This is how we decided on the company name, and what is behind this company is our pure passion for research.  At our lab, we only want to work on projects that are fundamentally meaningful.  The anonymous voting system is definitely one of them.


What drives me is to view this world and to ask myself “what does this world need to become a better place for all?”  With this drive, I face technology and use technology.


You know what engineers or tech savvy people say these days?


“Code is the Law.”


That is what they say, and I strongly oppose that.  Because if that is true, any code can become the law, but it should never be that way.


Ethical anarchical code, THAT is the law.


I believe in the power of this ethical anarchical code to change the world for better and I will always drive it that way.


More about Blockchain?

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


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