Why we left government to join the Bittrex exchange
By Kiran Raj and John Roth
Dec. 14, 2017
After long careers in national security and law enforcement, the two of us have taken jobs at a digital-currency exchange. This probably would surprise anyone who has heard the critiques of cryptocurrencies: They’re potentially lucrative, but only as a short-term investment. Or they’re a vehicle for criminal enterprise. The most cynical might call the entire concept of digital currencies a fraud. The skeptics may be right for a limited set of cryptocurrencies, but they miss the inherent value of the technology.
Cryptocurrencies use blockchain technology—a public ledger that keeps track of transactions and is secured by strong encryption. But bitcoin and other currencies are far from the only applications of blockchain technology. Many digital assets today take advantage of this public ledger technology, and many more are currently in development. They do not have the same characteristics of bitcoin. For example, one of these digital assets—often referred to as “tokens”—allows for decentralized posting of content online in a manner that helps evade authoritarian government censorship. Another token enables cheap, secure and decentralized cloud storage. The potential uses are limited only by the imagination of the innovators.
It should come as no surprise that blockchain technology also can be used by law-enforcement and national-security professionals. It is especially helpful when tracking terrorists, hackers and financial fraudsters. As this technology becomes more ubiquitous, it will offer even more ways to improve the justice system and keep Americans safe.
A digital-currency exchange serves as a nerve center of the blockchain ecosystem. Trading platforms ensure the security of the blockchain by, for example, making it extremely difficult to engage in certain types of cyberattacks. Additionally, they allow the marketplace to determine the value for a digital asset. This, in turn, fosters innovation. As with any new industry, there will be winners and losers. Not every idea will come to fruition, and that is the beauty and curse of the free market.
We find ourselves in a unique position to shape the development of the blockchain technology in ways that benefit the overall industry and the U.S. This is, in part, why we chose to join the largest digital currency exchange in the U.S. and third largest in the world by volume.
Blockchain technology reminds us of the internet during its earlier years. Not everyone understood it. They just knew it was big and transformative. Much as the growth of the internet brought us innovators like Amazon, Google and Facebook, so, too, can the growth of blockchain technology drive the next digital revolution.
While the U.S. is well-positioned to be a leader in the industry, it is off to a bit of a slow start. Compared with three years ago, much of the innovation in blockchain has moved overseas, as other countries created regulatory sandboxes and other incentives to lure business away from the U.S. Many countries, including Russia and China, do not want the American system to prevail, particularly in an industry that could rival the internet in terms of wealth creation and transformative change.
Because of our experience as public servants, we know that driving innovation in the U.S. will require a smart approach that includes partnerships between the federal government and trusted industry players. And we plan to work with our former government colleagues to bridge the gap between the industry and policy makers.
Everyone in this industry can do better. That includes the company we decided to join. But as blockchain technology evolves and grows, we urge U.S. regulators to move carefully and judiciously to avoid driving more innovation outside the U.S. and harming the legitimate industry players.
Why did we join the largest digital currency exchange in the U.S.? We maintain the simple belief that we can help the industry develop in a way that benefits the U.S. economy and protects this country’s security interests.
Mr. Raj was a senior official in the departments of Justice and Homeland Security. Mr. Roth is a 25-year Justice Department veteran and former Homeland Security inspector general. They are, respectively, chief strategy officer and chief compliance and ethics officer at Bittrex.