Karpeles: Cryptocurrency Security Needed to Unlock Full Potential
SNA (Tokyo) — Mark Karpeles, former CEO of the now-bankrupt Mt. Gox bitcoin exchange, expressed his belief in the potential of cryptocurrency as a viable method of payment while recognizing that there is still serious work to be done regarding security. He was speaking at a press conference held at the Foreign Correspondents Club of Japan.
In Karpeles’ new book, Cryptocurrency 3.0, he goes into detail on what has been achieved in the past with cryptocurrency, the issues that remain, and he explores what can be done in the future to make it more viable. “I believe the value of bitcoins is more of its nature as a cryptocurrency rather than a crypto-asset. Payment methods will become more important in the world in general as time goes by… rather than investment, it should be more of payment method that should be explored,” asserts Karpeles.
Despite the negative connotation associated with bitcoin due to its drastic fluctuations in value in the past, Karpeles believes that these problems “will be gradually resolved” as the technology further develops. For cryptocurrency to become truly viable, however, Karpeles admitted that substantial improvements and changes must be made regarding security.
To this end he has decided to stay in Japan, “starting from zero,” and working with Tristan Technologies with the hopes of realizing bitcoin’s potential as a currency.
Seeking to address the major issue of security, Karpeles has announced that the company is working on development of an entirely new, blockchain-based operating system. The development and application of this new system presents its own set of problems that are less apparent, as the current security method has been in use since the beginning and is “locked in.”
The Elliptic Curve Digital Signature Algorithm (ECDSA) is used by cryptocurrencies such as bitcoin to ensure that only the owners can spend their funds. This system is essential for transactions to occur. Because this method of cryptography is the standard and established within the infrastructure of the current system so thoroughly, the shift to another, potentially more secure method will be difficult.
According to Karpeles, his intentions for this new venture are to place Japan back at the forefront of the engineering world by improving upon the existing blockchain technology. As it stands, the United States dominates in many areas of tech such as cloud computing. “I believe in the potential that Japan has and I would like to develop that,” he told the assembled journalists.
When asked about the future of cryptocurrency and the risk of monopolization by a handful of large companies, Karpeles offered his belief that there will always be a place for entrepreneurs. As an emerging technology, the innovations and ideas offered by these smaller companies are things to be embraced.
Although the regulation of cryptocurrencies such as bitcoin will continue to be difficult, its necessity remains. “Regulations are a good thing, as they define a framework… how things should be done correctly. But, at the same time, regulations shouldn’t stop the evolution of new technologies,” Karpeles explained. A caveat to the further institution of regulations is that they must not be restrictive to the point that they hinder progress: There must be a balance.
Prior to the collapse and bankruptcy of Mt. Gox, the company was handling over 70% of bitcoin exchanges around the world. A massive hack led to around 850,000 bitcoins being lost, with many investors still seeking compensation for their missing coins.
Karpeles, who was arrested by Japanese police in August 2015 and detained for eleven months, has since been cleared of the charges of breach of trust and embezzlement. However, he was found guilty of data manipulation and given a suspended sentence due to his lack of a criminal record. He is currently appealing.
“I do not hold any cryptocurrency right now,” Karpeles stated when asked.
Despite his experiences both during the downfall of Mt. Gox and afterward, Karpeles genuinely seems to believe in the potential of cryptocurrency. As for the investors who are still wondering where their money went, it is safe to assume that some of their opinions may differ.
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