General Update & Interview with Jimmy Hu

The community management team recently got together with CEO Jimmy Hu for a candid conversation about APEX Network and the state of blockchain in China. During the talk Jimmy shared his views on important topics such as the differences and synergies between the various APEX blockchain approaches and some of APEX Network’s revenue streams and strategies. In addition, he went in depth about his views on the current change sin China’s stance on blockchain and what they could mean for blockchain and crypto in general. We hope our community finds the interview as interesting and enlightening as we did!

CM Team: Hello Jimmy, how are you doing? What have you been up to lately?

Jimmy: Hey guys, so far so good, thank you for asking. Things are still going along well and me and the developers are hard at work day in day out to complete the vision laid out in the development plan.

Let me provide you guys a couple of key updates on some specific matters relating to the project.

Financial strategy and personnel

Recently, I have appointed an internal team on the treasury side (i.e. myself and 3 employees) to manage best the funds that were raised. The goal is to look for monthly returns on the operational capital of the project and maintain not a slow drain, but actually a positive cash flow. More specifically, we are generating returns on the majority of the funds through low risk and defensive investments. So far this approach has worked out fine, and to date the team has realized a positive return of 15 to 20%. [More on revenue streams later]

In terms of HR, we are adopting a more lean and efficient structure for the company as a whole due to various macroeconomic factors including trade war etc. The blockchain team itself now counts 12 full time people, with APEX as a whole employing a total of around 90 people. We now try to get work done in more efficient and lean ways, not to say that certain things couldn’t be delayed due to the changes. Though, on the other hand, we might see acceleration in development due to more efficient cooperation between the different departments.

I want to stress that, at this time, the core team wants to focus on the longevity of the project and to ride things out until the overall market conditions are better. I do not need to tell you guys that currently the market for cryptocurrencies hasn’t been doing well. And there were some developments on the regulatory front as well, a subject on which I would like to share some of my views.

China’s government, blockchain funding and crypto

So, China has caused certain movements in terms of market conditions recently in which we typically see two opposing sides. On the one hand there is the global and western market, which is quite skeptic of the current “pump”, to put it bluntly. The Western hemisphere and global community is not sold yet on how long lasting this “pump” is, that was caused by recent Chinese news and developments. On the other hand the individuals in China & Asia are convinced that the recent series of events will have long and lasting effects on the entire blockchain environment, on development and on the speed of development in this industry.

Interestingly, lots of Chinese cities have already formed blockchain funds to invest in local blockchain technology. This is definitely something worth being excited about (though not directly linked to the crypto market). We tech entrepreneurs see that, for purposes of investing in blockchain technology and growing this technology, different government entities have already made millions of dollars available to invest on an equity basis (private equity) or a strategic basis (governmental). That is definitely something exciting and will propel the tech side of things and increase the maturity and use case plausibility side of things. My company, APEX Technologies, will try to be a part of this wave and try to grab additional blockchain technology development funding whether it’s from the government, local governments (municipalities) or private parties from China.

Hopefully this has a significantly positive impact on the speed of development of blockchain technology in the entire ecosystem (wallets, custodians, etc), so basically allowing for crypto to achieve more mainstream adoption. This in turn could create positive and bullish things for the crypto market as a whole and for projects that are still around and developing at that point in time.

As of now, we are mainly focusing on the continued development of the project and ensuring its longevity. From a personal experience I have witnessed that lots of other projects are running out of cash and development has ended. We are definitely in there for the long haul and want to reap the benefits of the different kinds of macro tools China brings to the table. We will be continuously focusing on further developing the tech, as well as engaging in more partnerships with other industry participants (in order to grasp and embrace these opportunities).

CM Team: Thank you for the elaborate answer. These local government funding programs, are these meant for companies developing local blockchain technology pilot programs?

Jimmy: It depends on what kind of funding that would be. Local government funding comes with contingencies in certain cases, i.e. you have to set up a part of your team in that area (the R&D team or back office) so it actually makes sense for that entity to invest. Though lately we are seeing more and more funding that doesn’t come with these contingencies. This type of funding would be optimal of course. These types of funding programs are meant for blockchain technology companies that have a particular use case that local enterprises can actually adopt to a certain extent and generate revenue with. At the end of the day, these are still strategic equity investments. It cannot just entail “I invest in you but you have no plan to commercialize, just develop the tech”.

Currently APEX Technologies is in talks with two funds and their respective investment organizations. A question that has come up quite a number of times recently is the one about the blockchain certification. As for us, we are in a process to get the blockchain certificate endorsed by the government. The reason it’s taking time is that we already have, under the same corporate entity, a certificate for being an artificial intelligence company and a big data service provider. The other blockchain companies have none of these and they are cleanly classified as a blockchain company. For us it’s different and our government has not seen a case like this, so it naturally requires more approval types and processes. The good part is that after talking to some of these funds, they do not require you to have this type of certificate in order to acknowledge that you are developing blockchain tech and subsequently it’s not required for any type of investment.

Private, Alliance and Public chain differences and synergies

CM Team: Will these investments you are talking about, mostly benefit the alliance & private chain versions of APEX Network? Or will it also benefit APEX Network (the public chain)?

Jimmy: There is no clear cut line as everything is managed in the same place (department). The so called alliance chain and private chain versions of APEX Network are very similar to APEX Network itself except the consensus, the way of managing and the use cases. Whatever is being spent on tech developing for the private chain and alliance chain can later be re-used and ported onto the public chain and vice versa. We are convinced that this way of working creates good synergies and self-reinforcing effects on the development of the tech.

Public chains have their benefit where some of the requirements are for things to be public, open and accessible. Now for an enterprise user that mainly cares about a consumer consent protocol and wants to develop a blockchain reward based system exclusively within its network of companies (or subsidiaries) then they don’t actually have to use a public blockchain (an alliance chain could fit better). But let’s say for example, in one year from now, a lot of the users of the public chain are actually smaller consumer oriented companies (some possibly start-ups), they are more agile and nimble in testing these technologies. Now these companies are more likely and willing to test their applications on the public blockchain. For them the public blockchain is a way of creating more liquidity for their assets (i.e. loyalty points) across this network of partners. It’s really a matter of wanting an open or closed ecosystem.

CM Team: Though, the private chain use case is not something that will benefit APEX Network users, they will not see anything of it on the public chain?

Jimmy: APEX Network users will not see it directly. Though, there are some indirect benefits to it.

Firstly, as mentioned before, tech that gets developed for the private chain and alliance chain can easily be ported on the public chain if it proves to be successful and vice versa. Secondly, we believe that there are certain private chain users that will eventually port certain use cases to the public chain once they piloted or tested it on the private chain to a certain extent. That is assuming that enterprise applications on the private chain is viable (in terms of the bigger picture — scalability, safety, etc), something which has been debated among industry giants. We believe it’s viable to a certain extent while others (IBM for instance) don’t believe that, though they are pushing their own agendas.

It’s still good to drive private chain adoption because we are still helping these entities drive the blockchain adoption, regardless of them being on the private or public version. Once the adoption of private chain components has settled, the road is cleared to public chain adoption. In terms of the private chain — public chain connection on ramp, we are still in the development of that, and there is no easy solution for this. This is the hardest technical problem at the moment. Currently, we are looking into ways for how private and alliance chains can be interoperable and connected with the public chain (hybrid gateway) as a couple of the potential enterprise pilots listed it as one of their core requirements (Spring Airlines for instance) or else they would have to go completely via the private chain route. For this reason, and because of additional work on the sidechain component, the development of the desktop node client is taking a bit of time and is expected to be released in December or once the sidechain component and gateway is more complete.

As a general trend we do notice that smaller companies (startups) are much more willing to try out blockchain technology (specifically incorporating public chain) as they are much more lean and agile while for bigger enterprises, it will take a lot longer for blockchain technology adoption and only a portion of them will develop on the public version.

More on Chinese regulations and government funding

CM Team: Which measures or steps are you planning or taking to approach the recent regulatory changes?

Jimmy: So, the past narrative has been focused on private enterprise cooperation, which is us partnering and working with private companies (basically for profit organizations) either as clients or within our own ecosystem. Lately, there has been a particular wave of a better attitude towards blockchain technology. The regulation hasn’t really changed, it’s the amount of government support which has shifted. They still do not per se support crypto (altcoin trading etc), though in terms of trading bitcoin itself — I can see it becoming looser over time. The government (central bank of China) is developing its own digital currency as most of you know. This may be used to discourage the use of Bitcoin. Having said this, the entire government attitude has changed drastically. A couple of months ago, governmental support was on the fence and “crypto” and “blockchain” were lumped together in this type of grey entity. They saw them necessarily linked together. Within the past month, both are separated and the government is strongly supporting blockchain technology.

The main benefit of the recent shift in attitude is the amount of funding that the government will pour into projects and companies developing blockchain technology. On the other side is government adoption and government application building using blockchain tech in various areas. There is increasingly higher demand from certain local governments as well as departments of governments, they are pushing out blockchain projects that they are searching for partners on. This ranges from inventory tracking systems, internal or local treasury systems, as well as controversial things like tracking where people are. So for working with local governments, opportunities have grown dramatically.

Now, this is interesting for us because: One, at this moment it’s a differentiator for the level of technology that you have, and that is being used by the government. And two, the monetary aspect — one of these types of projects can range anywhere from $500k to $2M in revenue. As you can see they pay extremely well.

It’s an opportunity for us. To say that APEX Network has partnered with local Chinese governments, I think that is a very good progress milestone as well as a sign that our tech has been bound to a certain quality, caliber, stage. It’s also a good source of continuous funding to build the tech and ecosystem even further for the project.

In line with our focus on project longevity and growing the capital of the project, way past what the fundraising was able to offer and in this particular environment, this is the ideal way forward. This is my view on working with the governments. We are already seeking opportunities and are scheduled for talks as early as this month.

Development; The road ahead, data cloud nodes

CM Team: Can you give us an updated roadmap? Or the things that lay in front of us?

Jimmy: So, as for the roadmap, the immediate next thing would be the desktop client — though do note my remarks from earlier. Following that, the data cloud node functionality, or more or less in that form, integrated into the desktop client. Going back to the subject of alliance chains and private chains, we expect to upload the source code for these two to Github in the coming weeks so that code savvy community members can assess the similarities and differences between the APEX Network public, alliance and private chains as they look at this point in time.

The feasibility of the data cloud nodes has been assessed and it’s hard to say until the tech is properly tested which use cases they are suitable for. The assessment is whether the performance and speed can fulfill most of the needs of real life applications. The original plan was to implement a non-IPFS version (quicker and easier) and then eventually migrate to an IPFS solution, which will have better performance but will take longer and could present complications to the blockchain.

One theoretical use case is a live analysis on large amounts of data requiring extremely fast response times and high bandwidth. A clearly limiting factor here is the performance aspect — if the response time just doesn’t make sense for the application, then it may not make sense in the long run. Desktop clients reaching a certain system spec are acting like cloud nodes, but for the above mentioned use case for enterprise applications this would not work at all. The system specs of an average PC (regardless of connection speed), can not actually fit the needs of that type of cloud node.

On a per consumer or user basis, the amount of data that is processed is not much at all compared to big data applications. This is not for data analytics, but for data level transactions. Based on that use case difference, typical data analytics, this is workable up to a certain data size per node. What we mean is that the data node is not meant for storing all sorts of data which may result in a large footprint. The purpose is to have certain data dimensions on the blockchain that will involve permissioned transactions. This would typically be chosen by the consumer. Storing all of the data of consumers on the blockchain is not necessary for the use cases at hand, as there are other technologies that are more suited to this type of distributed nodes.

This ties in with China having recently been paying more and more attention to data privacy, which is very consistent with the goal of the APEX public chain. To maintain data privacy while enabling computations / analytics on encrypted data, cryptography enables implementation of homomorphic encryption algorithms. On top of this, the concept of federated machine learning enables the training of a common robust AI algorithm across multiple separate devices holding only local data samples, without the need for uploading all the data to a central server. We are working on both of these aspects in relation to our data node system. At the end of the day, if data cloud nodes can run without a problem and with acceptable performance, as well as have the option/route to be upgraded to an improved storage mechanism with time, then it strengthens the use case for APEX Network.

That’s it for this update everyone — we aim to set up more talks with Jimmy in the future, so stay tuned and be sure to catch every update both on the tech development progress, Jimmy’s perspectives on China and blockchain, as well as surprise community activities during the month of December!

All the best,

Jimmy Hu and the APEX Community Management Team