With the seemingly neverending bear market that has hung over the cryptocurrency industry for months, it can be difficult to see the big picture. Where are we headed? Why are we doing this? What are cryptocurrencies like Bitcoin any good for, anyway?
However, there are still some individuals who have managed to keep fresh and innovative views on what crypto may be capable of in the future. One of these individuals is Miko Matsumura.
Among many other things, Miko is the Cofounder of the Evercoin cryptocurrency exchange and General Partner at Gumi Cryptos.
Recently, Finance Magnates spoke with Miko about his belief that “money is software”, as well as Evercoin’s role in the present and future cryptocurrency economies.
Miko has spent about 30 years in Silicon Valley working with venture capitalists, building startups, and working on open-source software. His first interaction with cryptocurrency was when he encountered the option to checkout with Bitcoin at a cafe in Palo Alto.
Eventually, “what I came to realize is that we weren’t talking about open-source software, but open-source money,” he said, referring to a statement on Bitcoin.org. Miko explained that open-source software has “dominated”, and pointed out several recent acquisitions that are evidential of this, including IBM’s recent acquisition of GitHub.
“My thesis has always been that open-source money will seep into every single crack of proprietary money. It’s going to take over every money use case,” he said, adding that this concept is “predicated on the idea that money is software.”
”Money In Today’s Modern Context Expresses Its Meaning Through Software”
“I’m not trying to redefine money according to my own terms,” Miko said. “The thing that I’m trying to get people to wake up to with the phrase ‘money is software’ is not that the definition of money is dependent on software, because that’s provably false.”
However, “Money in today’s modern context expresses its meaning through software, and is therefore largely dependent on software.” He went on to say that if the listeners of the interview thought about the last ten interactions that they had with money, it’s likely that the vast majority of those interactions happened with the swipe of a card or a click of a button.
I get a bit personal here with my journey to what I call Open Source Money and my reasons for being a part of it. This is on the American Dreams Show with Alan Olsen. If you’re curious about what to do in Bitcoin and why I’m involved, please check it… https://t.co/fPdCSqvtdj
— Miko Matsumura ㋡ (@mikojava) November 20, 2018
If you go to a place like Starbucks, “Even if you pay with cash, the person who takes that money has to enter that fact into a cash register, and that cash register has to electronically reconcile custody of that cash asset.”
Miko explained that once the assertion that “money is software” has been established, there are several other assertions that “really skew the debate further.”
One of these assertions is that “you really need to understand how software behaves in order to reason about what will happen to money.”
”Money is Software”–Not Data
“There are people that do accept that money is digital, but one of the biggest misconceptions about that is that they think that money is data,” he said, adding that this assumption will get you “into trouble.”
“If money were data, and you had ten dollars, I would pay you a dollar and you would have eleven dollars. Technically, I would still have ten dollars.” The reason for this, Miko explained, is that the nature of data is copy. The dollar that one person receives would simply be a copy of a dollar that another person gives.
The real problem with this assumption, however, is that data flows easily across what Miko described as “packages”–different pieces of software that are accessible to users. If money was data, “you would have, essentially, a monolithic software that addresses all money use cases.”
The point is that “if you go to Starbucks and buy a coffee, you could buy with cash, but you can also buy with a giftcard, or with a credit card, or a debit card.”
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“The thing that I’m trying to elucidate here is that every single payment channel is actually a unique software package. And similarly, ACH or SWIFT–every single money use case has different packages of software.”
Miko said that because a lot of people miss this notion, “they end up with weird assertions, like ‘Bitcoin can’t be money because it only handles one money use-case, which is apparently this sort of Swiss-bank account, censorship-resistant store of value type of use case, with partial pseudonymity.”
— Miko Matsumura ㋡ (@mikojava) December 12, 2018
“If you go into GitHub and you look at software, you’ll realize that there are databases and there are web application servers, but there are very few monolithic database web application server combinations.”
Therefore, “The insistence that any single so-called ‘cryptocurrency’ handles every single possible money use case is definitely a fundamental misunderstanding.”
“We’ve had essays in even the New York Times by famous economists that say things like ‘you can’t buy a sandwich with Bitcoin, therefore it’s not money, therefore it’s worth zero,” he explained. “Even if you start with faulty axioms, that’s just logically rubbish as an argument.”
Don’t Enter the Matrix
“Evercoin is–to me–a very optimally designed infrastructure,” Miko said, particularly with regards to cryptographic custody.
“Custody is very simple,” he explained. “If you buy a house, the first that you ask is ‘where’s my key?’…and ‘does anyone else have a copy of that key?’”
“The thing that people don’t do [in finance] is that they don’t ask that question,” he said. “And it’s because they’re not used to it. In traditional finance, banks are banks, and customers are customers. In crypto, customers are banks.”
What we’re up against https://t.co/FvtgMl7V34
— Miko Matsumura ㋡ (@mikojava) January 16, 2019
However, “I know one of the former encryption key holders at Wells Fargo bank. And guess what–Wells Fargo bank encryption key holders are using paper wallets, and the paper wallets are stored in–guess what–bank safes.”
“The thing that’s astonishing about all of these little revelations is that effectively, the security that a typical Bitcoin will have over their own wallets is not materially different [in a matter of businesses processes] is not different from a bank.”
“What Evercoin has developed is an incredibly sophisticated user experience that is similar to that of a custodial experience, but it’s all been built in self-custody.”
“I see this world a little bit like the Matrix, which is that if you go to a custodial exchange, you’re now in the Matrix. You’ve recreated the banking system. People think they’re transferring Bitcoin into their account at an exchange–like, the blockchain doesn’t think that’s what’s happening.”
“Essentially what Evercoin has developed is a user experience that is very similar to the kind of consumer-enjoyable luxury experience that you get when you’re living inside the matrix with fake money, when you’re creating a kind of fake centralized bank that’s largely unregulated.”
“Instead of going into that, [Evercoin] is creating a world that’s as pleasant as being inside the matrix but creating that outside of the matrix.”
This is an excerpt. To hear Finance Magnates’ full interview with Miko Matsumura, click the Soundcloud or Youtube Links above.