Shiwen is a part-time freelance writer, aspiring entrepreneur and overall generalist interested in exploring, researching and writing. Disclosure: The interview subject is an investor in the Bitcoin sector.
Sammel Nigel, a Singaporean pilot and data privacy advocate, is the founder of Find Your Bitcoin Sweden (FYB-SE), the European base of a Bitcoin trading platform founded and located in Singapore. It serves the Nordic nations of Northern Europe.
He has a diverse professional background: after graduating with a computer science diploma from a local polytechnic, he went on to become a fitness trainer before transferring over to the aviation sector as a pilot.
At the beginning of 2013, he put his flying career on hold to take his Bitcoin preoccupation full-time.
Tech in Asia: What sparked your interest in Bitcoin?
Sammel: I’ve always been interested in disruptive technology, particularly areas concerning cryptography and privacy. It probably comes from my family, which consists of several academics and professionals with financial, economic, and math backgrounds. One of my uncles, an accountant and lawyer, used to come over every Sunday to my place and tutor me in current affairs issues when I was younger. I guess this made me interested in what was happening around me, and I quickly realized that technology was always key as it has been repeatedly used to change the world.
When I was introduced to Bitcoins, I was intrigued by its concept and decided to research it, as I’d already been trading on the side during my time as a pilot. Ultimately it pulled me into a whole new world and I ended up starting a Bitcoin exchange.
So what makes you such a strong proponent of Bitcoin?
On a personal level, I find Bitcoin to be an expression of libertarian values combined with mathematics and economics; that appeals to me in a great way. It brings together a diverse community of libertarians, economists, developers, crypto-mathematicians and various others into a single community, enabled by p2p (peer-to-peer) open source technology. Its open source and de-centralised nature of existence is the icing on the cake.
What got you into Bitcoin trading?
An old college mate once mentioned Satoshi Nakamoto (the supposed creator of Bitcoin) during a Facebook chat session in which we were sharing ideas about the current economic situation. I was intrigued and decided to do some research on this entity (I don’t think that there is an individual Satoshi Nakamoto but more likely a group using it as a pseudonym). What I learned showed me a whole new world. That was the start of my Bitcoin adventure and it started with trading fiat currencies for Bitcoins.
How did FYB-SE start?
When I first started Bitcoin trading, I was using FYB SG, amongst other exchanges. After a while, I realized that an old friend was the one managing FYB SG. I told him that I could help him expand into Europe and made a proposal to set up a Swedish exchange. I then partnered up with another pilot and close friend, Björn Nilsson, and started on legal compliance procedures in the beginning of 2013 and got approval to launch it in July.
What are the differences in the Bitcoin markets between Asia and Europe?
At this point, It’s much more established in Europe but some of the largest exchanges are in Asia – Japan and China having some of the largest trading volumes. The second largest exchange after Japan is in Slovenia. Japan, Slovenia and China have the largest exchanges at present, in that order. Note that these are only where the exchanges are based and where the trading occurs.
The largest markets remain the EU and the US, but the major exchanges are based in East Asia and Eastern Europe. There is higher penetration and adoption in Europe but Asia is slowly growing, with China leading in terms of current growth rate.
So where is Sweden right now, in terms of trading volume?
Sweden trades in excess of about $1 million per month. It’s quite a sizable market and it’s growing rapidly.
What is the European clientele like and how are they compared to the Singapore clientele, in terms of trading behaviour?
There is minimal difference between either, as far as I know. However, in any exchange, you’re dealing with three distinct groups. You have the traders, who arbitrage and/or trade for profit, speculative investors who buy and hold on to their Bitcoins and consumers who use it as a medium of exchange for goods and/or services.
What are the developments you see between now and 2016 in the Bitcoin market?
I think we’re going to see more adoption by merchants as a payment network, since Bitcoin has very low transaction fees compared to traditional payment channels. It’ll possibly be used as a payment gateway for remittance and international trade too. Bitcoin is essentially a programmable API for cash and there are countless ways of using it. The best analogy I have heard is its email for money. I say its programmable cash.
The thing is Bitcoin is a virtual currency and also something you’ve described as programmable cash. Shouldn’t that raise concerns about security vulnerabilities and other forms of manipulation, since it’s all just code?
Everything is code, the digits you see on your browser when you log into your bank account is also code. Bitcoin is not just a virtual currency, it’s a math-based crypto-currency. Attackers will have to hack SHA-256, the algorithm being used in Bitcoin. It’s the same encryption method used by governments and the military to encrypt their secrets.
Dan Kaminski, a cybersecurity consultant that’s worked for Avaya and Cisco, and a team of arguably the world’s best hackers tried to hack Bitcoin and failed. Ultimately, I don’t assume it’s unhackable but at the core it’s very secure code. It’s open source nature also allows for improvements to the code and protocol add-ons, allowing for a gradual evolution in quality, security & ease of use over time.
Are there any future expansion plans?
We’re a Singapore entity, but I’m primarily concerned with operations in Northern Europe. I’m planning for possible expansion into the Danish, Norwegian, Finnish and Icelandic markets in the future.
How do you respond to criticisms leveled at Bitcoin, primarily with regard to its use for payments for illicit drugs and its potential use as a tax evasion method?
Critics will always be present. None of them seem to care about fiat being used for illicit drugs. Firstly, Bitcoin transactions, while generally providing privacy, are pseudo-anonymous. All transactions are publicly viewable on the blockchain and are ultimately subject to scrutiny. Just ask the FBI (as they found out after the Silk Road seizure).
Only the natural person identity is private, and even that can be traced, given time and effort. All Bitcoin transactions are publicly available and can easily be verified, the same cannot be said of fiat currencies like the US dollar or Singapore dollar, which are subject to centralized control and with many transactions not being subject to independent verification or the public record. People will use currency as they deem fit, but that doesn’t make the medium of exchange any less effective.
I’d like to point out some research that’s been conducted by George Mason University and USC, Berkeley. Again – Bitcoin is not as anonymous as people think. Berkeley and GMU developed some very sophisticated software tools to monitor transactions. The end-result is that they found Bitcoins are traceable as they are recorded in a publicly accessible ledger. This makes them subject to an independent audit by anyone. The person making the transaction is unknown and with a protected identity up to a point. Unlike fiat currencies, Bitcoin can be audited, reviewed and verified independently despite its de-centralized nature.
To answer the previous question, Independent research suggests approximately 0.5 percent of Bitcoin transactions were used for illicit purposes. That’s mostly in relation to the Silk Road and it’s honestly minor by comparison. As the shutdown of Silk Road has proven, there was barely any effect at all in price and the transactional volume is exactly the same and increasing steadily.
Back in 2009, the University of Massachusetts in Dartmouth did a study and found that 85 to 95 percent of US dollar bills in circulation had traces of cocaine, up from 67 percent in 2007 when they did a similar study. So it’s a disingenuous comparison to say that. With Bitcoin, the natural person identity is private but the transaction can ultimately be verified. If I remember correctly, a researcher, Sarah Meiklejohn, did a project with Forbes to show how it could be tracked. And I believe she managed to pinpoint Forbes’ Bitcoin address and tracked its “illicit” transactions.
How does Bitcoin compare to other emerging virtual currencies, e.g. Litecoin & Novacoin?
Bitcoin is the father of popularly traded de-centralized math based cryptocurrencies, that says it all. Alt-coins, as they are called, are a necessary step in evolution and innovation should definitely be promoted. However, sadly, most of the alt-coins are merely spinoffs off the bitcoin protocol with no real innovation or ideology. Having said that, there are some that show promise and I am obliged to mention two in particular – primecoin and namecoin.
These two, in my opinion, should definitely be watched. They show great potential to be very disruptive technology. Primecoin’s proof-of-work system searches for chains of prime numbers while Namecoin is an alternative distributed Domain Name System (DNS) on the basis of Bitcoin software. It expands the software to support transactions for registering, updating, and transferring domains to serve. Both appear extremely enticing to me from different technological aspects.
What do you think of Singapore as a potential Bitcoin hub?
Honestly, there’s a small population of Bitcoin users in Singapore. Due to it being a conservative and controlled society, the libertarian philosophy behind Bitcoin is lost. Most people – anywhere in the world – don’t understand how currencies function. But the good thing is that there’s a lot of wealth in Singapore, with plenty of investors and businesses that stand to benefit greatly from adopting Bitcoin. Singapore has great potential, due to it being an existing financial services hub and with so many investors present here.
How should the Monetary Authority of Singapore (MAS) respond to the emergence of Bitcoin?
I’m merely offering an opinion: MAS should definitely engage in researching Bitcoin more in-depth and then issue detailed advisories, as well as possibly recognize it as private money. In terms of policy, Germany provides a good example of how to make an initial policy approach, by classifying it as private money and a legitimate currency as well as issuing advisories. It could essentially replicate this approach.
So what should the public policy of the government in response to this be, in your opinion?
I think the authorities should look at Bitcoin as a store of value, given the deflationary nature of Bitcoin. It fulfills the sixth distinctive principal of money. It preserves value and offers capital preservation in the long run. However, it’s still in its infancy and requires a continuously evolving approach. It would help hedge against the hyped up inflation we’re seeing in the economy.
I’d honestly like them to release an advisory and take a lead in developing public policy for it, as Singapore is a financial hub and it could easily build upon this existing status to develop even further. For now, MAS should release well-researched advisories on Bitcoin, whether good or bad, but only after thoroughly researching it.
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Meiklejohn,S. & Associates.(2013). A Fistful of Bitcoins: Characterizing Payments Among Men with No Name (PDF). Association for Computing Machinery.
Brito,J. & Castillo,A.(2013). Bitcoin: A Primer for Policymakers (PDF). Mercatus Center @ George Mason University.
(Editing by Terence Lee)