As part of the Digital Currency Council’s Continuing Education partnership with Inside Bitcoins, DCC interviewed thought leaders who will be speaking at the Inside Bitcoins Conference in San Diego on December 14-16, 2015. Today, we share an interview with Mitchell Dong, the Managing Director of Pythagoras Investment Management LLC.
Tell us about how and why you got involved in Bitcoin and digital currencies.
I have been an entrepreneur in early stage industries for my whole life. For example, I was the first to do energy audits after the first Arab oil embargo in 1973. I was the first to be a financial trader of uranium in 2003. I like new industries where there is less competition and the perceived risks are high. In these environments, I can develop a competitive advantage. When I heard about bitcoin, I thought that I could learn this business and develop an edge. When I was looking for new business opportunities two years ago, I looked at 3D printing, robotics, and bitcoin. And bitcon won out. I have a background in finance and securities trading.
There’s a lot of attention on Chinese exchanges right now. Tell us some of the differences between Chinese and US/EU bitcoin exchanges.
The biggest difference between the Chinese and western exchanges is that the former are viewed by the Chinese retail customers as a place for financial speculation. A few years ago when bitcoin prices ran up to over $1,000, there were stories of Chinese punters who made millions. Current Chinese traders dream of making millions in the future by speculating on bitcoin. The Chinese exchanges have zero trading fees, so that eliminates barriers to frequent trading, causing huge trading volumes. The Chinese government does not allow the use of bitcoin, so the primary use for bitcoin in China is for trading and speculation.
Western exchanges have much more institutional clientele, although some have a significant retail component. The western exchanges are more regulated and have stronger KYC/AML programs. Trading volumes are much lower since all the western exchanges charge trading fees.
What are you most excited about in digital currencies and blockchain technology right now?
I’m excited to see that banks and security exchanges are experimenting with the blockchain technology for settling and clearing securities trading transactions. The blockchain technology could really disrupt the middle and back offices of banks and securities exchanges – so that securities trading and wires could be settled in T+0 or instantly, rather than in T+1 or T+3 currently and at 1/10th the cost. This would be a stepping stone to banks adopting bitcoin.
What do you see as the greatest challenge facing the industry?
The greatest challenge facing the industry is merchant and consumer adoption of bitcoin. Bitcoin won’t become mainstream until it’s commonly used as a method of payment and is competitive with the use of credit cards, Venmo, Alipay, PayPal, Apple Pay, etc. The next challenge is for companies and retail consumers to use bitcoin as a method of transferring money internationally, e.g. if bitcoin can be used to replace bank wires or to send money abroad, e.g. remittances. If bitcoin can break into these markets, then bitcoin could grow into a huge mainstream business.
What’s on the horizon for you? And what are you looking forward to hearing about at Inside Bitcoins San Diego?
We are international traders of bitcoin and look forward to the market growing by a factor of 10x, 100x, 1000x so that trading volumes could be as big as the equity bond markets some day in the future.