Russian exchange founder opposes extreme regulations



By Kang Seung-woo



Blockchain, a decentralized system used for exchanges of virtual money such as bitcoin, still hasn't scratched the surface but it will become a mainstream platform soon, according to Alexander Ivanov, the founder of a distributed exchange called Waves.



"This will happen over the course of the next two to five years. It will be like the internet _ a curiosity at first, with some clunky websites in the 1990s and very basic e-commerce. Now, though, you cannot imagine a business not having a website," he said in an e-mail interview.



"The difference with Blockchain will be that it is largely under the hood, so it will make businesses more efficient and effective behind the scenes, and will be integrated with apps and services without customers necessarily needing to engage directly with it as they generally have to now."



The entrepreneur admitted that there are challenges for blockchain such as huge energy consumption, slow transaction speed and lack of scalability. But he was optimistic about the technology's future.



"There are certainly problems to overcome before blockchain can become a truly mainstream solution, but we're already doing that. Speed, scalability and usability are all things that Waves is working on and has already made huge strides forward," he said.



"The sector is just nine years old, counting from bitcoin's first block back in January 2009. We have come a long way very quickly, and the benefits of this suite of technologies is so great that we will certainly overcome the obstacles."



Although most people and governments care more about cryptocurrencies rather than blockchain technology, the CEO said that things will change soon.



"Korea is right to ensure its citizens have the protection they expect in other areas of the financial services industry, and this has happened simply because this is the most immediate aspect of blockchain technology that has come to public attention," he said.



"It tends to be the same with every government and jurisdiction that has become interested in blockchain technology, as well as most ordinary people: the rising price of the currencies is what first brings it to attention, and once they've got past that then the value of the underlying technology becomes more apparent. We'll get there."



The Korean government has flip-flopped over its bitcoin regulations, from banning all exchanges to encouraging blockchain technology. Against this backdrop, Ivanov advises Seoul not to take too extreme measures.



"Our hope is that regulation around the blockchain industry will be proportionate, rather than extreme. Waves has been working with Deloitte to shape the regulatory landscape and help ensure regulation doesn't stifle innovation," he said.



"Collectively, it's still early in the day for blockchain, and we're still finding our way. That's why it's so important to be proactive and do everything we can to further this technology within the most appropriate framework."



Blockchain's strong feature is that there are no third-party intermediaries. But exchanges of digital tokens not based on blockchain technology involve third-party middlemen. Waves is trying to change the picture through operating a blockchain that can take advantage of the open system, which is highly transparent and secure.



In other words, Waves is a decentralized exchange, or a peer-to-peer engine.



Will bitcoin continue its runaway leadership among digital tokens? Ivanov said that some others will be able to exceed bitcoin in terms of market cap although he doesn't believe the concept is a good metric to measure their significance.



"Over the last couple of years, bitcoin has carved out a very specific niche for itself: digital gold. It has become a network for high-value storage and transfer, rather than a transactional currency. The door for such a currency, or currencies, is still wide open. We will likely see several major cryptocurrencies used as cash in the near future," he said.



"One or more of them, or another application, may capture a large enough part of the mainstream market to overtake bitcoin in terms of market cap, though who knows when that might happen? But it's an apples-and-oranges comparison, to measure digital gold against virtual cash, and market cap isn't a great metric anyway."

