Why China Will Be the World's Largest Token Economy - Tony Tao, X-Order, Neo Global Capital

Transcript

[Music] hello and welcome to the blockchain and us we're pioneers and thought leaders talked about their journey in blockchain technology crypto assets and a token economy and I'm your host manuel staggers this episode has support from my very own the blockchain and us newsletter get an email from me every two weeks with a very short summary of new podcast episodes so you can immediately pick those interviews you'd like to listen to to stay up-to-date just visit www.cannainsider.com/careers [Music] Corder a token virtual economy

think-tank and investment fund he is the founding partner of neo global capital a member of the Olly microfinance forum expertise group and Tencent tengan think-tank group the co-writer of blockchain blueprint for a new economy and blockchain technology from digital currency to credit society and now to the conversation with Tony Tao hi Tony and many thanks for taking time today yeah yes I'm here menu you run a blockchain investment fund out of China and you have a very long history with digital payments for example with with UnionPay so how did you cross over from the more

banking applications to crypto and blockchain technology okay when I was working in the banking system especially in Chinese UnionPay or Standard Chartered Bank yes I feel very strange it's like I don't know what is my job in Japan or in the system in the company I even don't know what is the function or what is the banking system could help the financial system of the world I was wondering and what I can help to do something

in this company so I changed my job in four years I changed three or four jobs but always always within the banking sector in China yes yes in China so when he has done a chartered bank and the other one is China Chinese Union pay the server and also one is a payment company you know like hey but when I was focusing on the payment since I found that in the world you know I have to search for the news of the world to do some research shop then I found in 2013 there are a

lot of news which is attacked by payment actually about Bitcoin it's very strange in 2013 for me who is a payment industry in per year to find out that bitcoin is very popular in the world in payment industry mm-hmm yeah I discovered more in Baku and found that the colon is very very special and I thought at that time it has the future so I quit my job and yes I I contact GCC mm-hm

the oldest exchange in China in picot industry so this is my first step in picot industry mm-hmm got it int and you never looked back and you never thought old it was nice there at the bank hmm how do you see it and I'm a person who is very and very easy to feel tired you feel it should need to refresh my self to you know to find out new things but in picot industry I can even now I can still feel that every day there are a lot of fresh things to contact you feel to fulfill me

mm-hmm were there are many people interested in Bitcoin for example your colleagues from the bank what did they say when you told them about what you found actually there are two things actually and one see that we are talking about Bitcoin is the price is going sharply up and then when the crisis is going down slowly and it seems that people are recording about it for you obviously you said this is the future you want to work with this and you want to change something where you can have an impact but what was it like with you know your former colleagues maybe who were still

working at UnionPay or other Chinese banks that they also see it that way or were they also more skeptical about it and for my colleagues the UnionPay are in the payment companies most of them do not understand what is the importance of Bitcoin what they are understanding at the price is going up you see has a very good chance to do the speculation to do the training under the mining but it's very hard for them to tune to read some the deep knowledge is like the white paper of Bitcoin in 2013

and 2014 why are I when I contact her PGCC I found stew there's a little group of people even in China yes a very interested in Bitcoin not only the price but also the knowledge another purpose back then what what did you guys talk about you know regarding the purpose of Bitcoin I mean what did you see that it could be doing firstly if we have noble : the believers alpaca industry in their heart living freedom you know yes it's just Bitcoin that

could remind us of the freedom to speak out freedom the Kony is like a target that we can talk about freedom with Bitcoin I think you see a Ledge what why did you think you understood but other people didn't I mean what what do you think was the difference there it's very easy actually when I talk about your current you my colleague is even to my friends they are very surprised that it seems I am truly believing pick one in 2014 you know they laughed at me it's very

easy to recognize that they do not understand the corner because they laughed at me ok yes not only as well but also most of Chinese people in 2014 we what they are looking at the coin yes that it is something forbidden by the government and it's like a very big bubble it's a Ponzi game do not touch the coin if you touch it the result in the end of my of me would not be the good and it must be a bad ending this is what they are

thinking but has that changed now in recent years of course and the story ending of the story of me and my friends is not very good even if now adays I have a little success in crypto industry because I cannot contact my friends like my young terms anymore no we we cannot to go to go back to the to the time when we are young it's very hot hmm it's very hot I think that happened to several

other people as well but maybe it's it's easier for somebody in America or Europe you know who first people were laughing at them and and then they made it and and now they understand but maybe it's maybe less forgiving and people have lost face almost in China or in Asia and so it's more difficult yes yes so now now you're working with several different projects I mean other than BTCC in China I mean you were working with neo and first I'd like to speak about your project X order can you briefly explain what X order is okay so it always very hard to explain X order this is because it's very hard to

explain cryptocurrency it's very similar in the earlier times else cryptocurrency hmm you know and when we are talking about the future being the blockchain or the Indo cryptocurrencies we are always saying that it's not only about freedom is not only about technology and it's not only about the money yes it is multiple things combined so I think X order is the same thing I'm interested in vestment frustrating and signally I am very interested in research especially a economy's research so in

the economy research and there is some methodology which has called complexity theory so when I was young I do not understand with what she is finance or what she is economy but where contact complexity theory and where I contact the coil there and I combined these two things together combined complexity theory and McCoy industry the first one is a theory the second one is real market the real world seems so I can find in the Pico industry

the complexity theory is very very right and the first person in the crypto or how do you say the most hard thing to live in the crypto is to understand the world to do the right thing even if your crypto what is very crazy you have to behave you have to have some belief not only the price so I have to find some methodology to understand it or I maybe I have the only theme most Chinese people is looking at you the price you

know so I have to find one methodology to understand reward and that you understand the price and how do you go about it I mean is it is it mainly agent-based modeling or or how do you go about finding out those those mechanics of the markets mmm nowadays it's mostly based on aging based modeling yes comedy theory contains many scenes which I found mostly in the Bitcoin industry is choosing one years evolution the other thing is dynamic view so in the financial world despite of the Bitcoin

so let's talking about the bank system that it's very hard for me a small and per year you understand how the banking system is working it's very hard for me to understand what is my job the importance of my jaw how my jaw works but in the Beco industry Stu even even now it's it's to a small industry compared with the financial system a big financial system existing so I can understand Bitcoin because it's single it's not very simple but is relatively simple and it's ns4 so I can

see the you know the other thing is that the coin is growing very very fast so I can see when has dynamic growing the second thing is that it is involving yeah by year you know how the folks develop a good job since that's and if I look him back in through the bank system it's - I see it growing very very slowly even it stops it's gross but when we are talking about crypto we are we're very very eager to find out the new things the next things not only because not

only even Syrian all the crypto industry attendees are eager to find out new things what our current research questions that you investigate I'm trying to find out solution or how to say a new model to price one project you know in nowadays in the secondary market we we have some model financial model to do the pricing but most of them are based on cash

a questa on profit without cash and profit it's very very hard to do the pricing model no but but in the crypto world cash is very very hard to find out even if there's not a lot of cash a perfect like Bitcoin elacry serum but do not care about the price its do not care about affect the value of the coin or a Syrian people are talking about that the coin is a bubble it only contains Christ not condensed profit but the truth is that after 10

years people do not care about the profit or cash cash flow about McCoy it grows very very healthy and the industry the total world recognized age one thing could live with large cash flow could live without profit what I wanted to find out is that to do the evaluation model the pricing model of the new world technology you know in the technology technology solution our technology companies the intrapreneurs to start to start up technology companies it is very

hard to do the evaluation what I want to do is to evaluate them even if I do not provide cash flow or the profit and how do you do that I mean what kind of variables do you look at in these models maybe there are some ways you know nowadays there are more and more people using some like metric of loss or some Fisher Fisher modeling true to the evaluation of Bitcoin Metcalfe's law I think that is the more nodes are connected in a network the more valuable

the network gets yes yes we live in the network ages the evaluation or the value of one thing may change it about according to the network effect mostly so this is very important but the pure Metcalfe loss may be hard to edit a lot something to fit more not even midcal but also some other things the cosmetic copy is not a new model which has appeared for many years during these

years the research has grown a lot being especially in complexity theory and what we are doing now is to do model just according just focusing on a coin we are trying to find out why Nicole could exist and why PA : could be extended you but you're also with X order you're also investing okay you see as the second thing I want to explain so in my point of view in the

future in the investment history there will be full of researchers or scientists with how do you say algorithm scientist with AI centrist where the tomah experts in the investment industry say work together to do the investment this is the future in my mind because now we can see there are a lot of quantity of trading things appeared in The Wall Street in the secondary market especially but the primary primary

market investment the scientists order algorithm do not affect a lot but since has been a is changing now we have more data about the primary the early-stage company mm-hmm data is going more and more now we have the tools like the knowledge graph like many other ISM who do to chew jaw to make the database all ready to be used to do the algorithms things and so we can expect that in the primary market in

VC industry the researchers or how do you say the algorithm could be more popular in the future but jus it's not the end I think there should be some cooler things to be more cool how do you say you know what I expect is that a computer to do the investment itself is what I want to do in a long term so firstly computer have to be intelligent enough or how to say they have to be have to own the real intelligence not

only the machine learning machine only can achieve the core relationship result it's very hard for machine learning for AI now to to to syncopation show an election in comments cause and effect so now we can see this year in 2018 there are more and more scientists and researchers are focusing on attorney get away into cultural relationship so in the future maybe when one day the computer could have is real intelligence so um but maybe it will take a lot of

years to achieve it maybe after five years or ten year I don't know nowadays the cost for investors to find out the real value is very very very high the reason is that the cost is based on human beings and human beings cost is very high but are you already investing currently with X order yes yes of course any X order we have a fund which is called topology fund a project owner you can see it's very network effect found boxia Network things for example what are examples of

projects that you found interesting in the fund hmm Kumada fund years token-based fund it's only investing token scenes though which I believe in your - in the next five years token would be the most popular investment trust or investment standard in the world let's take a quick break for a message from our sponsors this episode has support from my very own the blockchain and us a newsletter get an email from me every two weeks with a very short summary of new podcast episode so they can immediately pick those interviews you'd like to listen to to

stay up to date just visit www.hsn.com and sign up today what is the focus of these projects I mean today for example you know do they work on AI do they work do they create new and more effective blockchains or what are they working on the only target to folks is to focus on which would grow mostly shoe box er which project those project could grow very very large very fast and to provide more money back mm-hmm I do not care the detailed mechanism which I cared here's

that it can be growing very fast to do the right things which projects are those at the moment do you think nowadays we are have demo small trying in investment in the topology fund now our portfolio is like below like how to say over 30% of our portfolio is to USD mmm called USD and 20% of the portfolio is Bitcoin a reason we have 20% of the : is

that we have to wait and to the Bitcoin as currying pouring up sharply or going down sharply and to do the margin trading then also there are there's a little portfolio which is eating 0x and choosing my token and the other thing is Pascoe one coin ask oh so what I what I often see when I speak with people they say there will be new blockchain projects or new blockchains emerging but at the beginning we have to invest a lot meaning we have to make sure we have

to basically bear a loss at the beginning until people adopt right until they until we see a mass adoption and I'll until those incentives kick in that will sustain the price and the blockchain what is your opinion there hmm actually it's it's not in my mind it's not about to the beginning or the end since what I care is demanding you know how it can fulfill the demand of the world let's talking about Bitcoin now you know we when we are talking about Bitcoin

we could not talking about the profit or its cash flow because it do not provided a profit or cash flow but we also recognize that the current habits value it's valuable why I think the reason is that you can code for few some amounts some amounts which could not discover very easily it's deeper it's deep so we have to discover it which demands the coil is already for free the result here that we can use Bitcoin to do the curls

broad investment and we can use the coil to do the crossword trading and we can use a coin to do some buying or selling in the dark market or saying that peace this fulfill the demands of small group of people not all the people but small of small group of people without by : these smoker of people could not use as things to fulfill that amounts so in these small group of people the calling

is very very important and they cannot find out when seeing that can can replace Bitcoin so I can see monopole yes because in this industry is not monopoly and we can see Bitcoin have its value and for the other things the other projects this is the same methodology or same mechanism for me to find them we if I if I check if one project yes valuable for me to do the investment

I will the industry or the amounts behind of it frustrate you see if there is even a small group of people mediate to fulfil that amounts where I will have like I have said I am questioning 0x this is because I think to decentralized exchange yes the things that could fulfill the demands of a group of people which freight of the regulation which who could his peoples are very like to to be freedom and the other thing is

that when we looking about the future about the token numbers yeah it is very very possible that in the future there contains a lot of token more more than thousands of tokens maybe millions of tokens in the future but to contain millions of tokens in the future there should be a lot of markets not only Nasdaq not only Chinese market but also very very small market containing in centralized exchange markets so I think it is it painful few

the amounts alright interesting and when you for example let's take zero X as an example I mean that story makes a lot of sense to me right with the decentralized exchanges it's definitely has a very good value proposition in the medium and long term but what else do you look at as an investor I mean for example the team the track record what else okay hmm know where we are do some DD due diligence about a project there are a lot of things to do the most important thing is team there are team members yeah especially there are core team

members and when we are talking about team members and there's some key things is that say how to say say community they are position in the industry let me explain it when we are talking about the Zarek's team especially the directs behavior in a serum ecosystem we we could find out that metallic would think that Sarah X is a good project and in a

serum ecosystem there are other called team members would think that directs is also a good project so 0 x position of 0 X team members in the serum ecosystem they are inter center albeit not not the very center but very near the center of the auto serum ecosystem so when we are talking about the network we can see that the center of the ecosystem here the metallic and the ETH caught him and also

some cheap with drawn to the center it cerium eco-system Center central nodes yes their work is very near the central nodes and as a we we can see it in my mind that directs itself is a central nodes of the a centralized exchange in the a serum ecosystem I want to see if they are the central central nose if say very good friends and then we will check about his community the community is very important because the community

would not cheat us and we are talking about amuse talking about some press release it's always contains some fixings but the community would provide some real things also we will check about the caches the coding coding would not cheat us so you can see we will find out some solid proof meant to before we do the investment after we have found out that the project is very solid and that team is very good in the central

nodes I'll groove on the central nodes of the cerumen ecosystem then we will fund we were wage and true the price is good I mean when the price is going down and yeah and then we were buying cool I just wanted to ask that I wanted to ask if you are comfortable being the first investor or if you prefer to wait and actually I am not very good at waiting so where that this is a problem you know when I see that this is a good project so I just buy it immediately but my team member also talked to me that you need

to wait wait wait so it's very hard mmm-hmm but for the price to go down the tokens have to be listed right what do you look at OTC traits mmm yes OTC is a very good way to buy some how to see some tokens have some poor liquidity in the exchange and we could do the OTC trading but if some some tokens have a scutella create behaviors we would do the trading in the exchange you know being last year or two year in a past time we could do IC o----

by ourselves without kyc without gravity oh yes but nowadays you can see IC o---- is very very hard to fund there's only a little only only three or four I cos one months or two months well most of the projects only do private sales and then go to the secondary market so as for the topology found yes of course we could do some very serious things but it it's a no it's another story for us to build a you

know the privacy or team to do it it needs a team it's not we are not good at yet which were could add years due to send error market things so mostly you invest in the secondary market in tokens of projects I have told you a : like qu est like the other things we bought or in the secondary market okay cool what's your view on China as a location for blockchain projects mmm China let me sink in the near future China is still not a very good country

for the tokens to appear because of the regulation scenes you know but extremely long term in the future may like five years later or 10 years later I just think China will be the most important country for the tokens because mmm as Chinese people yes very in OGF innovation yes man yes yes very good at innovation very cool dad engineer so one day the token would be very popular in China I believe in it

mm-hmm but you are based in China currently with your project yes and it's are there any I mean do you see any drawbacks to that for your own work mmm no chai is very very good for international communication I contact her many many foreigners say oh look Shanghai yes this is advantage for us to live in Shanghai to do the work but in another the another story is that in Shanghai it's very hard to do to engineer things because cogency

the policy of the militant in Shanghai great and the policy is very very hot meaning people can't move where they want to want to move right me yes so it's very hard for us to do the hiring interesting yeah when I when I look at some of the Chinese WeChat groups for example there's there's many conversations about the evolution of the token economy but in China you know itself but then I always wonder how exactly how far is China on that trajectory and you just said it yourself it's several years in the future maybe but when do you think that token economy will kick in in China

I have only my guess let me see like five years I think what do you think we'll I mean you said it yourself right there's regulation and you know many people aren't necessarily on board with with cryptocurrencies and tokens what do you think will be the pushback then from these you know from these entities who don't necessarily like what's happening in a crypto economy because they lose control what kind of push backs do you foresee in in about five years

hmm so do you say that nowadays when we are talking about iceo or tokens in China it's like 2014 when we are talking about a coin in 2014 the other people will see that okay it's forbidden do not talk to me about a coil so it's very similar when we are talking about tokens and I cos people will say that okay it's forbidden you don't talk it to me so I just thought in the next round after four years or five years when world accept

the token when the token should be the next standard or financial of you know the market standard so Chinese China would have to or obviously accept tokens again mmm interesting Tony in your work in your work what are you still learning at the moment English firstly okay and and beyond that and yes I am learning how to how to be mmm a team leader or me a community leader I don't know because

it's my first time to do the entreprenuer things you know I I I have a little success in the investment in crypto in the last four years but it means nothing now oh it means nothing in the future the only thing I have is a little money but it's useless if you do not have some solid internally so I have to to make our team to do their best or how to say not to their best to Lester how do you

say yes empower themselves yes yes you know I myself is always thinking about if I am right or wrong in the collision you know my my my team always have their and what would ask me for if they can do this or if they can do that and I answered yes or not you can do this l you can do that this is not the right way I think but in the earlier stage maybe it's the right way but later I want this thing to be change it

fortunately we have changed a lot but not a lot enough mmm cool Tony when we spoke first toward the beginning of this conversation about Bitcoin you mentioned free them what is freedom for you mmm very good question and I just thought freedom is a changing changing things for me you know three years ago I sought freedom yes that I own like five thousand USD dollars and I could be freedom for total

year to do nothing but nowadays I just see freedom and yes that in the future I can do nothing under let the Machine money for me to do the investment for me this is what I sought freedom now for me but maybe in the future freedom will change again but in China freedom has another meaning you know in China we were talking talking about freedom firstly you have to own one beep Chien XI Corps across the great fire world this is the freedom in China

generally and then when we are talking about freedom it's like you can you can communicate with the world you can I'm going into the future with the world this is freedom for one normal Chinese person you know nowadays it is very hard for us to see the real world ok cool did I forget to ask essayist and there is something which I thought is very important is that research I think especially research you know after

Bikila period people what to chew and you see research again to find research okay you know before your colon research is very hard to to be commercialized but one every token not every token but almost every talker have to have white paper which should buy the paper and saute till the research so we can see the token world the total token industry in the industry with the research to commercialize to be commercialized so research in the future

I will see its industry have very very high potential should be tokenized I would focus on research mm-hmm ok cool interesting point that's good to know because I'm often doing research and also now I'm writing a white paper for a project so modulation yes I really enjoyed this conversation and really appreciate your insights and your stories about your experiences and about what you're observing in China in the blockchain space in general so thanks a lot for taking time today thank you thanks so much for joining us today more info on our guests and our sponsors it in the show notes of this

episode and on the podcast website the blockchain and ask.com to help people find this podcast it's important that you download subscribe and give it a top rating and review on itunes or on the podcast platform of your choice i'm manuel staggers and i thank you very much for listening you [Music]