The cryptocurrency exchange Bitchain seeks to become a market for security token trading. Bitchain CEO Lee Kyung-won said the security token offering (STO) would replace the initial coin offering (ICO) to become a dominant player in the cryptocurrency market.


In an interview with the Block Media, CEO Lee outlined his vision for the STO market in South Korea.

Question: Do you think the STO market would prosper as an alternative to the ICO.
Lee: Many cryptocurrency exchanges mushroomed on the back of cryptocurrency investment boom in late 2017. Many exchanges earned windfall gains. However, the government’s crackdown, together with a series of hacking and business downturn, has driven many exchanges to the brink of bankruptcy.
Investors became cynical about the cryptocurrency market. Since late last year, many exchanges relocated their head offices overseas.
Many people dissuaded me against creating the cryptocurrency exchange. However, I decided to launch the STO exchange, rather than the ICO exchange, to open a new chapter in the cryptocurrency market.


Q: What’s your view on the cryptocurrency and blockchain industry in South Korea?
A: The government’s crackdown has amplified uncertainty in the market. Against this backdrop, it was not an easy decision for me to start the STO exchange.
However, the blockchain industry is at the taking-off stage, and on a long-term basis, the industry has an upturn potential. But startups would be successful only when they have viable technology and attractive business model. Blockchain would reduce the current inefficiency in our society and change the current asset system.


Q: Why did you decide to found theBitchain Exchange?
A: Currently, different prices exist for a same cryptocurrencies at various exchanges. These exchanges have yet to establish strong security against hackers. Some exchanges are engaged in bogus trading without holding cryptocurrencies.
Thus I decided to establish a blockchain-based decentralized cryptocurrency exchange.

Q: What’s your plan to run the Bitchain?
A: Our exchange would share income among investors according to their contribution. As the exchange is decentralized, investor confidence would rise. I will run the exchange in strict compliance with the law and the government policy although it may take time.


Q: Can you explain what is the STO decentralized exchange?
A: The security token has an underlying asset, which regulators should regard as financial instruments, which are subject to the Korean capital market and financial investment laws.
Thus, a security token price should be the same at multiple exchanges. The decentralized exchange is necessary for token trading. All decentralized exchanges would be linked through blockchain technology.


Q: You said the blockchain protocol is necessary to create the decentralized exchange. Many experts say developing the protocol is quite tricky. Have you completed the development of the protocol?
A: We have started the development. We will soon complete the development. We are searching for securities companies for token trading.


Q: Do you think the speed of the protocol is fast enough to process massive trading?
A: Quickening the speed of blockchain processing is not easy, Transaction per second (TPS) is critical. At the end of this year, about 20,000 transactions would be possible per second.


Q: What’s your plan?
A: For the past two years, many blockchain developers raised money only by publicizing White Papers, without showing viable technology. Many of them turned out to be scams, and many investors lost money. I believe the decentralized exchange is the best alternative to removing the scams.

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