Future Money Focus: Jon Matonis

Future Money Focus: Jon Matonis

A former foreign exchange dealer for Visa, CEO of HushMail, director of financial services at VeriSign and one of the founding board directors of the Bitcoin Foundation, Jon Matonis' career has blended the world of security, financial services and crypto technology - now Matonis is a public speaker and non-executive director for several startups in the space.

See Jon speak at the upcoming Finextra Future Money event, April 21-22, London where he will be speaking on the ‘Blockchain and beyond' panel.

When is it appropriate to have a decentralised platform instead of a centralised platform? 

My premise is that the blockchain is designed in the distributed decentralised fashion first and foremost for purposes of resiliency, which means that the majority of other applications not requiring that resiliency can be solved in a centralised platform. 

The security of the SHA2 proof-of-work concensus model is a “zero sum game”, which makes alternative blockchains somewhat self-defeating. 

How were you introduced to bitcoin?

I always used to receive strange e-mails from people who had inventions and one time I received a random e-mail from Satoshi [Nakamoto - the enigmatic, alleged creator of bitcoin] asking me to look at his system as I was writing a blog on crypto technology. He was the only miner at the start, he wanted to generate interest in it - I didn’t look at the e-mail, I filed it away. When I came back to it later on, that’s when I refocused my efforts.

How did the Bitcoin Foundation come about?

When ownership of codebase privileges was transferred to Gavin [Andresen - chief scientist of the Bitcoin Foundation] that’s when Satoshi bowed out. It was the summer of 2012 when five of us, the initial directors, launched the foundation as a method of compensation for the core development team. As board members were volunteering, and some were working for other companies - we wanted to provide transparency for developer compensation, we didn’t want people to think the open-source bitcoin core protocol was being funded by Beijing or Moscow.

How do you feel about Charlie Shrem (a founding member of the Bitcoin foundation) being indicted and imprisoned for the part he played in the Silk Road saga?

I was the leading advocate for getting him to agree to a dignified resignation - there were calls from the community to eject Charlie straight away - but we needed to give him an opportunity to resign on his own terms. I pushed for that. It’s really unfortunate what has happened but I think he has been made an example of. On the other hand, you can’t dispute the evidence.

What’s your response to critics of bitcoin’s reputation? And advocates of alternatives like Ripple, Stellar and Ethereum?

Ripple, Stellar and Ethereum are not bitcoin. They aren’t even derivatives, except for Ethereum to some extent. The other two are not decentralised, they have a central point and therefore a single point of failure. In the long run that makes them more vulnerable. Banks want to work with something that has a single point of regulation or reference - which is why those solutions are more attractive to FIs at the current moment.  

What do you think of technologies, like Epiphyte, that enable banks to work with bitcoin?

Epiphyte is brilliant. They’re providing an API as a method for institutions to leverage the existing bitcoin blockchain. They are a surrogate for a corresponding banking network - a precursor to other FIs using the bitcoin blockchain as a replacement.

If Citi or Barclays wanted to replace a portion of their correspondent banking network, they could do it with Epiphyte, it allows the bank to go to many end points - using the existing bitcoin network without relying on the trustworthiness of other banks and without unnecessarily tying up important float capital. 

Is bitcoin the be-all and end-all of crypto currencies?

Bitcoin has over 95% share of the crypto coin market - the apps that get developed will lean towards the platform with the most ubiquitous uptake. It doesn’t make sense putting resources into other crypto currencies, there is a large network effect you have to overcome.

We’re not going to end up in a world with 500-600 ways of measuring cryptographic token value or digital currency value, the human brain doesn’t work like that.

We have fahrenheit, celsius and kelvin. We don't need another way to measure temperature. 

Artificial currencies are borne from artificial political boundaries and the trend would be towards fewer standards of value.

Watch Jon speak at Finextra Future Money, 21-22 April, East Winter Garden, Canary Wharf, London. Register here.

With support from the UK Government's Trade and Investment body, leading innovators from across the European banking and venture capital industry will gather at Finextra Future Money to lead the debate and discussion around the evolution of fintech. 

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