Leon Li, the CEO and founder of Huobi, shared his views on digital currencies with Forex Magnates today, and the conversation naturally evolved around the latest crises at MT.GOX.
The former largest Bitcoin exchange in the world, Mt. GOX, failing to keep up with withdrawal requests, has announced today that there is a problem with the Bitcoin protocol itself, enabling users to make a transfer from a wallet but keeping the coins in it at the same time, and that it will therefore not process withdrawals until further notice when the bug is fixed.
The company at first claimed technical difficulties were the reason for client reports of it withholding withdrawals, leading many to question the new explanation now given by Mt. GOX and causing a backlash from other Bitcoin related businesses as the price came crashing down.
At the start of 2014, we reported that a Bitcoin exchange called Huobi or Fire Currency in Mandarin, previously unheard of outside of China, became the largest trading venue by volume in the digital currency, creating rumors and speculations of fraud.
Please tell us about your background and what made you decide to become an entrepreneur in the Bitcoin field?
First of all, I want to say that I don’t have any special background. I’m simply an internet entrepreneur. Graduated from Tsinghua University (Editor’s note: ranked No.2 among Chinese universities and No.1 for Chinese technological universities), I once worked at Oracle for two years and after that I set up my own company. My background is very common in China. As to how Huobi reaches today’s position, I think Huobi is only one of the large exchange companies. The key is that we don’t charge exchange fee and keep this strategy all the time and at the same time provide quality product and service.
Does your company have a global expansion plan or will you stay a China-only business?
Huobi definitely has a global expansion plan and USD exchange will be the most critical part of it. But before we go global, we need to first strengthen our stand in China and maintain our leading advantage as well as building up our competitive edge.
Huobi’s trading volumes have surpassed all other exchanges and it is now the biggest exchange in the whole world. How many users trade on an average day to generate such high volumes and how do you explain the unusually high numbers?
Having large volumes is related to our no-exchange fee strategy. Besides, China is a huge Bitcoin mining country and also a country of more hot money. These are all our advantages. As to the question “How many users trade on an average day?” It involves our website operating data and I cannot give the exact number to you. It is over ten thousand. And this number, compared to the vast population of China, is still very small. Therefore there should be more space to grow.
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Are any of your clients actually using Bitcoin for shopping or is it all speculators at this time in your view?
Currently in China, Bitcoin is not allowed to enter the circulation and used as currency. Therefore most of Bitcoin traders in China are investors.
A lot of people outside of China fail to understand the current legal situation regarding Bitcoin in your country, please explain how you see it.
The Chinese government policy of Bitcoin is clear: they do not accept Bitcoin as currency and do not allow Bitcoin to enter the market circulation as value marker or payment method. However, the government allows Chinese citizens to consider Bitcoin as investment to be invested and traded freely. At the same time, the Payment and Settlement Department of the People’s Bank of China (Editor’s note: the Chinese Central Bank) specifies that third-party payment companies in China cannot provide Bitcoin payment and settlement service in RMB.
This is the well announced policy in China. As to how the Bitcoin policy will be in the future, it is highly unpredictable.
When do you plan to offer other popular currencies such as Litecoin, Dogecoin or any others?
We’ll evaluate the virtual currencies’ general market value and its circulation to decide whether to include them. Litecoin is in our plan. We need more observation of the situation of Dogecoin.
Have you ever encountered something like the bug MT.GOX claims and what do you think about the situation?
Wallets sometimes experience small technical problems, but all of them can be fixed and thus won’t cause large-scale withdrawal problem. We are aware of the technical problem that Mt. GOX raised and our Technical Department is working on the details.
How do you envision the future of digital currencies?
Digital currencies will become one of the most important inventions that fundamentally change the world’s economic and financial system in the Twenty-First Century. They will continue to mature and develop alongside international politics and economic power struggles and they represent the direction of future currencies. This trend is inevitable but the path is still hard to predict.