Jerry D. Chan, the newly-appointed CEO of TAAL Distributed Information Technologies Inc., has detailed his vision for the company and its role in a new economy. Predicting that “a new economic regime” will emerge from the current global pandemic crisis, he said TAAL can lead the way—redefining the purpose of a transaction processor not only in the Bitcoin industry, but in the wider world.
Chan was appointed CEO of TAAL on March 19, 2020, as part of management changes that saw former CEO Angela Holowaychuk become Chief Operating Officer and former Chief Mining Officer Joseph Chin leave the company (with the COO position assuming the CMO’s responsibilities). Bitcoin Association President Jimmy Nguyen also stepped down from TAAL’s advisory board in order to remain objective in the BSV space, and focus his activities on advancing the interests of Bitcoin across all business activities.
A 15-year veteran of the FX, FICC, and Equities GSAT trading desks at Goldman Sachs and JPMorgan Technology in New York City and Tokyo, Chan also headed the Digital Asset Solutions department at Japan’s SBI Group, and was the Japan/Korea Regional Manager of the Bitcoin Association. For several years he published opinions on the Bitcoin and digital asset industry under the name Wall Street Technologist.
CoinGeek spoke to Jerry Chan this week about how the current COVID-19 crisis (and specifically its economic fallout) has impacted TAAL’s operations and Bitcoin in general. He also spoke about how the role of TAAL will change as it and similar companies evolve from being “miners” to “transaction processors”—especially after the Bitcoin reward halving this year and as Bitcoin BSV aims to become the backbone for organizations large and small.
Where will you be based from now on?
For now, I’ll be based out of Tokyo and Vancouver, spending time where it makes the most sense and where I can be the most effective for the existing teams, which span the globe.
There are some plans down the road to open an office in Zug, Switzerland, but the recent operational security developments in the global COVID-19 situation have put those on temporary hold. This global strategy fits into the vision we have of transforming from a ‘crypto mining’ company to one that is providing professional-grade enterprise blockchain infrastructure platforms and solutions, in essence, a services company.
For this, we believe an internationally stable and digital asset friendly regulatory environment and support system is important. That being said, the outbreak of COVID-19 has impacted the global economy in a significant way, and in many cases have disrupted plans, events, and schedules. We would be lying if we said that we were immune to all this disruption. We will have to see how the situation of the coming months will unfold before we commit to uprooting anyone just yet.
Aside from the obvious current economic challenges from COVID-19 and its knock-on effects, what do you see as the primary challenge for TAAL in 2020-21?
Focus. We have a new mandate, a new mission, and for the most part a new team. We have to focus on delivering on our set goals so that we can anticipate and meet customer demand before they know they even have the need. Building capable teams that can deliver is always a challenge, especially in this economic environment, which has been exacerbated by the outbreak of the global pandemic.
Nevertheless, we can’t linger on the situation of the here and now, no matter how distracting, and we must continue to press on and focus on the tasks at hand. When the economy recovers, and we believe that it will, hopefully, we will be able to positively position ourselves as leaders of the new economic regime that will emerge.
Will your leadership be taking the company in any new directions, or areas it hasn’t explored before?
I would like to think of it as more of a change of focus, but yes. While respecting and maintaining what the company has built so far, my vision is that TAAL can be more of an innovator, leader and service provider, to a nascent industry. In fact, we are actively discouraging the use of the old ‘cypherpunk crypto’ terms used incorrectly which has cast such a negative shade onto what would otherwise be a perfectly legitimate business sector.
Terms such as ‘miner’ should be eschewed and ‘block builder’ should be used instead. Not ‘mining’, but ‘transaction processing’, not ‘cryptocurrency’ but ‘digital assets/currency’. Over the past 10 years, Bitcoin has matured, and the old misnomers continue to mislead newcomers to the industry every day. So the biggest part of the changes happening in TAAL will be in line with ‘professionalizing’ the business of supporting and building on a public blockchain infrastructure centred on the only public blockchain that has security, immutability, global scalability and a stable protocol, BSV.
What has your past professional experience taught you about the economics/business of Bitcoin mining (or rather, transaction processing)?
I think the biggest thing that my past experiences have taught me is that in order to run a team, project or a company successfully you have to sit at the balance point between, innovation, commercial mindedness, and pragmatism. Basically, you can’t be too ideological, too focused on the tech, or too protective of the status quo. Also, I learned that you can’t ignore economics. There isn’t any value to Bitcoin without a functioning economy. Nor is there any value to a global ledger if there isn’t the Rule of Law. This is because an economy cannot function without law and its enforcement.
Bitcoin transaction processing has up to this point been a silent business, operating in the fringes, because of the appeal that you could get paid without actually having a bank account (essentially off the radar). This is due in part because the reward from mining could be sold directly into unofficial markets. This is changing as the regulators, lawyers and industry watchdog agencies have caught up with the technology, spurred upon by the numerous damaging hacks and scams that have proliferated the unregulated industry so far.
Now as transaction processing companies are going to have to compete more and more in the open, transparent, and legal arena, forced in part due to the further halving of the block subsidy in Apr/May this year, they cannot afford to operate in the shadows. This is because the paid fees from transactions are going to have to make up for the dwindling profits from the system subsidy. The design of Bitcoin was that the subsidy would fund the initial bootstrapping stage of the network, and we have now past the point where most of the coins in existence have already been distributed and are circulating in the economy. We have now reached the turning point this year where we must focus on transaction processing, and not just ‘mining’ anymore.
What impact has the current turmoil had on TAAL’s hardware supply chains?
Well as I said I can’t say that we were not affected. As country-wide lockdowns are in effect, this means the global freezing of the economy, which means things don’t get shipped, lawyers aren’t at the office, workers are not at the docks loading things, and manufacturing has shut down. This will affect our buildout plans this year, but we have taken measures to mitigate the effect on our profitability in the long term. 2020 may well be seen in hindsight as a ‘hunker-down and retrench’ year for the digital asset economy.
What steps will you be taking in anticipation of next month’s halving?
We have been preparing for the halving for the last six months, and we believe we are prepared to weather the change while still being able to provide sufficient support for our transaction processing business and BSV blockchain security as a whole. A blockchain infrastructure provider like transaction processors has the job of securing the network and ensuring that transactions are processed and the integrity of the chain is maintained, and we have confidence that we will continue to be able to provide this service through the halving and beyond.
Other than mining/processing, what services will TAAL be offering to blockchain businesses?
The first thing on our roadmap is more comprehensive transaction processing features that enterprises, payment processors, and small businesses building on BSV would want.
Value-add services. These will allow more interesting businesses such as smart contract services and markets to evolve. Now that Bitcoin SV has been shown to be Turing complete and capable of general computational tasks, something that is interesting is that we may soon see specialized calculation servers emerge. These ‘calc servers’ will need to interact with the blockchain in order to operate and this will be something that TAAL aims to address.
Also, the market for microtransactions is extremely promising, as it requires a different set of supporting services to function, such as easy ways to set up payment channels between counterparties, and means to report on the transactions in aggregate.
These are just some of the things that we will be looking at, there are some more, but I’ll leave that as a surprise for later on. We are just at the beginning stages of this new economy. As an enterprise blockchain infrastructure company, if there is a demand from a business application, there will be a market for TAAL to address it.