Ethereum things happening in Asia?

Transcript

so our third speaker John lilac did you so he's based out of Hong Kong and he works with consensus in business global business development and strategy and he'll be talking about sort of what he's been doing in Asia and what he's been observing in the space thank you okay thank you well good morning everybody my name is John I guess I'm the consensus guy so thank you for having me it's very nice to be here it's funny a couple things I was noticing you know lately Vlad's and

fear has been talking about governance and all sorts of things and he's been questioning you know like existential things about the technologies were building and and I and I was thinking about that earlier because the coffee machine is like a technological dystopia I don't know if any of you tried to use the high-tech coffee machine but it's programmed to not work until 12:00 p.m. there's literally nothing you can do ok so ok so what I do at consensus is I used to do a lot more technical stuff before these days I do more like business stuff and I've been focused in the asia-pacific region it just so happened to work out that way because I used to live in Hong Kong and I lived in

Shanghai and when consensus started there there was nobody else that we had out of the handful of people that were around so Joe sent me over there to try to figure out what to do and over the years I've learned a lot a bunch a bunch of stuff and hopefully I can share some of it with you guys today I did this talk at SCC but I think I did a crappy job so hopefully I'll do a better job this time I would say the current state of the market one good way to build a mental model is you sort of have China you have Japan and then you have the rest of Asia Pacific and we'll kind of dive into some of the differences there with respect to Japan part of its over

the last few years I've been very fortunate to spend a lot of time in Japan and I've learned quite a bit first of all the food is spectacular the Japanese like the French get obsessive about high-quality food so that's one really good reason to go and not only do they make great Japanese food but they make great everything else like great pizza great curry everything else and of course there is a very large economic and demographic shift that's happening in the country the Japanese are living much longer much much longer and they are sort of not reproducing and lots of and so the birth rate is actually declining and lots of what's happening in the economy is a reflection of that and the reason that's interesting is

because if we start to think about aetherium or if we accept the notion of aetherium as a global settlement layer and if we accept the notion of re-architecting a lot of the political social and economic operating protocols for the planet it's really useful to try to understand what's going on at a high level very often and this was my naive view point before I kept hearing oh quantitative easing the Japanese government keeps pumping money into the economy and crypto is going to somehow save it actually over the last 20 years quantitive easing has been a spectacular success in Japan and I'm not sure that crypto is going to come and save Japan from its spectacular success so the and and another thing you might hear quite

often is that the Japanese the Japan has a very high debt to GDP ratio like 247 percent or something like that and that's higher than most industrial nations and this is also a sort of a type of systemic risk that crypto could potentially save it from when in fact the Bank of Japan owns tremendous amount of assets I don't know if there's a yeah there you go it's sort of like yes they have a lot of debt but they also own a lot a lot of assets and so the Japan is actually much more stable than we when we give it credit for one really interesting example and an opportunity that I think our technologies could pursue is looking at in in detail

segments of the market in Japan where things tend to be very stable but perhaps not liquid like the REIT market the real estate investment trust market where there's 160 hundred seventy billion dollars worth of assets and maybe less than 20 million a day and trading volume this is sort of like a perfect use case for decentralized exchanges and tokenization of of assets I would also like to highlight that Japan is going through a tremendous deregulatory or deregulation process the energy sector for example TEPCO which is the largest utility in Japan used to be a natural monopoly the entire energy sector has been deregulating so

if we talk about the decentralization of the grid and there's lots of instances of that happening in our ecosystem of course Grid plus or a grid singularity the paradis project is going to launch very soon it's a spectacular aetherium derivative product grid plus I'm sorry grid singularity which is now the energy web foundation grid plus is a consensus project as well and there's others and so Japan is a really interesting market in that context and likewise this is this is sort of another big deal to the the deregulation of the financial services market in particular allowing non-bank firms to handle money transfers so if you're going to be building applications that do things like allow

fungibility of or really democratize liquidity and decentralize trading of assets that are fungible like tokens this is sort of a really important thing for you to consider and then and then also for those of you that are thinking about financial use cases the world of API is is opening in in the Japanese banking sector at a pretty epic scale and what's really interesting is Japan is certainly very certainly high-tech and that's sort of demonstrable and we all know that but actually the financial sector is quite low tech it's spectacularly low tech and there's tremendous room for innovation so this is a market I would I would certainly

encourage everyone to really think about there was a lot of speculation around Bitcoin crypto crypto mania all of that kind of stuff to the point where it was 0.3% of the GDP according to Nomura in 2018 which is kind of a nonsignificant revealed number and and so one of the things you'll discover if you are very talented software engineers or developers there's a natural type of alignment that you can find between many friends in places like Tokyo and Osaka where they have tremendous amounts of capital but not a lot of strong software developer communities we've had great success I've been very fortunate to go

to many places including tel-aviv I spent a lot of time there and we've had great success connecting a lot of the super smart Israeli techy people with Japanese investment in capital so that's another area I would look at particularly if your teams looking for partners and what you can do in 2019 I would say make friends with people in Japan for sure and think about hiring someone to speaks Japanese one of the one of the things unlike Hong Kong unlike Singapore unlike the philippines people in japan don't really speak English very well so that's an important part of your strategy I would say okay let's go to China real quick so China before we had a big speculative element

lots and lots of funny projects like these things popping up some of them I remember I was like no I will not invest in Tron Tron is stupid I will not invest in it then it went up thirty thousand percent or something ridiculous and so obviously there was a tremendous tremendous speculative element we in our crypto community have I think particularly in the West we have some naive notions about China or especially around its governance and the way the government actually works and we sort of say well they hate Bitcoin for these reasons or now I you know for a host of reasons when in fact and they're trying to control and this and that when in fact the Chinese government and and I

found this out a couple of years ago I mean these guys are not politicians they're all saying distant engineers all the top ranking members of the Politburo most of the top ranking members of the party and in China is going through rapid rapid transformation into a technocratic State for better or worse I'm not making a political commentary on whether it's a good thing or not I'm just saying that once they understand the technology they and once they craft what they think is sensible legislation that fits into the worldview then it's like all you know it's like a big go signal and and we're seeing that a tremendous scale in China and so one of the things that I would I think is happening right now is is sort of realignment towards in particular

proof of state systems recently they've come out and said well proof-of-work is inefficient use of energy I think this notion that well because all the mining operations are in the sichuan area near the Three Gorges Dam that they're just consuming clean power so therefore bitcoin is promoting clean power that's kind of a silly argument because energy still a scarce resource so the government has recognized that that resource should be repurposed for more useful things and they specifically identified aetherium in its transition divorce proof of stake and proof of state systems in general so I think we're entering into an age as our technologies mature okay as we are able to deliver more efficient systems where we're potentially going to find natural

alignment with the government in China and and and I think that's going to result in things like thousands of small medium enterprises doing things you know doing putting equity on the blockchain for example so hopefully that's a sensible worldview I don't know that's one that I've been developing lately and then of course you can sort of see some of this some of the activity some of the news and and it's it's really interesting because I think in our ecosystem there's a disassociation between what the authorities are actually saying what policy actually looks like and what speculators who happen to own media publications are in the crypto space are actually putting out okay and then finally just to wrap things up a bit I'll talk a little bit

about the rest of Asia Pacific and and so I've been very fortunate to spend lots of time in the Philippines places other place like Vietnam I spend lots and lots of time in Hong Kong and in Thailand as well and so the Philippines is a great example of I guess it's a cliche this technology hop thing but actually they don't have legacy infrastructure like we do there's a hundred million people it's the most heterogeneous population in Asia that natively speaks English with a hundred million people and 70 million don't have any financial services and because it's an archipelago imagine living on a remote island relegated to the local cash economy in this case the Filipino peso which you can't even exchange it for Hong Kong dal I mean

it's absolutely the antithesis is the opposite of a hard currency it's pretty much worthless except in the Philippines and so if you're relegated to that local cash economy in a remote island you're sort of guaranteed to be poor forever so we've done things like build I to I which is rural payments network it just went live there's a 130 rural banks that have connected the reason that's important and the reason it's built on aetherium is because we spent lots of time in the province working with the ruler banks and realise that it's very hard for them to stand up in maintain IT infrastructure and when they settle it's usually a person sort of inputting manually inputting transaction data into a spreadsheet emailing it to a big bank

in Manila and 52% of the time they make some kind of data input error so the whole thing is messed up and it just doesn't work this kind of an approach I think throughout the region has a lot of promise like oops oh yeah likewise this is a really interesting one coins dot pH it's sort of like the coin base of the Philippines I think they have 7 million customers now so they've done a tremendous tremendous job very quickly very quick uptake and and and and it's kind of like 7 million users using a blockchain app that pretty much nobody's ever heard of and and then of course you see things like Thailand and lots of great

development there I think Vitalik spent time there are many others from the etherium ecosystem have spent time there and then when you look at other places like Vietnam particularly on the technical side there's just tremendous tremendous communities of developers very smart people and so you've got a rope a region that is developing trim at a very rapid pace and and I and I would suggest that as you build your applications as you build your products that this is this part of the world potentially could be your first go to market strategy so thank you very much for your time till I got great thank you so much John I guess a lot of people

would sort of think about Asia or more in terms of like infrastructure you've got finance and you've got you know it's it's the place where a lot of people have centralized infrastructure like WeChat is that sort of the observation that you've made having spent time in Australia versus for example in America where people sort of associate more with like cypherpunks and old-school cryptographers what's what's what's your view on that well my view is that irrespective of whether it's something like finance or whether it's something truly very decentralized in this ethos that you're describing and it might even be more like a Berlin sea based type of ethos but what what the relevant the salient point I think is is that in the

United States or in Western Europe we tend to think very highly of ourselves if we build an application that has like a million users it's like oh my god I have a million users and then you meet these dudes in China and they've built applications routinely that have 50 million or 150 million users so this or in Vietnam they're you know so the scale of it is very different I think I think the competitive drive the opportunity in the space is tremendous specifically for Australia - what's really interesting is there's a lot of really good developers here and there's a growing pool of talent and I think looking into these markets because they're I guess it's an eight or nine hour flight to Manila or Hong Kong or 10 hours that's like a short hop from here and so it's very

accessible as far as Australia goes and I would certainly look to pair the great developer talent that's brewing here to the market opportunities there but also being mindful and learning from from the developers up there especially some of the some of these people in China who have built applications that you know tens of millions of people routinely use good thank you thank you