Da Hongfei’s Interview with WSJ’s Neanda Salvaterra at Web Summit Lisbon
NEO founder Da Hongfei attended the Web Summit Lisbon on November 8th, 2018. Please find the video of the interview below,
A full transcript of the interview:
Host: Our next speaker is widely regarded as one of the top principal figures in the cryptocurrency world, especially when we’re talking about the cryptocurrency adoption in China. So let’s explore his vision for the future of blockchain, its regulation, and also discuss how to grow developer community across the globe. In conversation, with Wall Street Journal’s Neanda Salvaterra, please welcome to the stage, the founder of NEO, the benchmark of Chinese cryptocurrency, and a world leader in the blockchain industry, Da Hongfei.
Neanda Salvaterra: Hello, everybody! And we have Da Hongfei in the house from NEO. And I am very excited to speak to you. How are you?
Da Hongfei: Good. I’m also very excited to be here. Yeah, this is my first time in Portugal.
Neanda Salvaterra: Awesome. So, um, I know that probably everyone in here knows what blockchain is. But I was just talking to Da. And I said to myself, you know, this is not a private club. Blockchain is not a private club. It’s something that I think the people who are pushing it want to make accessible to the entire world. So we’re going to give Da like a couple of minutes to explain what it is just for the audience here and as well as globally. What is blockchain?
Da Hongfei: I think the audience here probably has some kind of a technology background. So I won’t go into the details of those technological details. My understanding that blockchain at first it’s a software and then it’s also a platform. So you can build your decentralized applications on top of the platform. And also it’s not just a centralized platform that is managed by some party. It’s an open platform. It’s more like a protocol. You can follow the protocol, build your own implementation, and connect to the network, it’s open network. Last, it is also called the Internet of value today, since the internet is good at transferring message or information. But a blockchain is good at delivering values. And last, I also believe that blockchain is more than the technology. It’s a new institutional tool, a new institution of paradigm. We can use blockchain, the spirit of blockchain, to have new ways to collaborate at a very bigger level than today’s collaboration.
Neanda Salvaterra: So to put that in language that I would understand, I did understand, but if this guy thinks trust is so passive, right? We should take trust out of transactions, that’s what you’re saying?
Da Hongfei: I’m always saying that trust is very expensive. And besides that, it is also very time-consuming. So if imagine you want to, if you want to send a message from any point in the in the in the in the world, it only takes milliseconds to do that. But if you want to send a message that involves with trust, let’s say, I want to send you $10 across the border, you need a trusted third party to facilitate that. And the cost is very high. The time, it also causes delay. So with blockchain technology, the trust is built in with technology, with open source, with the protocol. So it will dramatically lower the cost of trust, and split everything up.
Neanda Salvaterra: Got it. Now beyond, you know, I’m always thinking about money. So beyond sending money, what, you know if you can name one or two transactions now that a blockchain can be applied to that are interesting, what would those be?
Da Hongfei: There are many interesting applications of blockchain technology. The most interesting one would be gaming. There are lots of, there are many games that are these days are developed on top of blockchain or utilizing blockchain technology. I’m thinking maybe in the next few years, we will see very large scale games similar to Into the Sky or Star Citizen that will build a parallel universe. And the monetary system, the economic system in the universe, the new universe will be used with blockchain technology.
Neanda Salvaterra: Got it. How many gamers in the house? Alright, some. All right, does that sound exciting? A parallel universe? Sounds interesting to me. Um, now what’s the biggest difference between NEO and Ethereum, which I know that you’re often compared to, to your chagrin. But I still want to hear you talk about that a little bit.
Neanda Salvaterra: Yeah.
Da Hongfei: Yeah, we can, sometimes probably, we need to step aside and walk around the wall. So I think that’s the biggest difference between NEO and other projects.
Neanda Salvaterra: You talk also about NEO, you being, you know, ready for the formal economy. So you have different features like being able to ID people and transactions.
Da Hongfei: Yeah.
Neanda Salvaterra: Is there something you want to talk about in terms of that? What how, how did you think about that? How did that come to be?
Da Hongfei: Regarding identity or digital identity? I think it’s inevitable for blockchain to have the digital identity and to link or map real word relationship between entities onto blockchain. Let’s look back at the Internet, back to maybe 1997. You don’t know who is behind the screen. But gradually more physical business, more traditional business, real economy are moving on to the internet. So these days, everybody uses their real name on Facebook or other social media. So it’s inevitable that we will have identities on blockchain.
Neanda Salvaterra: Got it. Now, are you hoping that blockchain will take over the world and as of now, what’s the most welcoming country or regulatory environment in the world for these kinds of technologies? And I’d love to hear also your take, especially on China to compare what’s going on in China?
Da Hongfei: Sure. I don’t think the blockchain will take over the world. I’d say it’s a kind of technology and some most of the time it’s working behind the scenes. Yeah, regarding regulation, different jurisdictions, it just varies very much, like Malta and Japan. They are issuing licenses to cryptocurrency it’s changed Like in Singapore and Switzerland. They are these states are kind of offshore foundation center, a lot of cryptocurrency foundations of blockchain foundations are setting up entities in Singapore and Switzerland. The US is a very interesting jurisdiction. There are 50 states, they all have different laws. So it’s very difficult to start a cryptocurrency business in the US.
Neanda Salvaterra: Okay
Da Hongfei: Yeah, let’s go back to China. The Chinese government is very welcoming or encouraging blockchain technology, the development of technology itself. But they are not welcome anything that fuels speculation. So ICO and cryptocurrency exchange is illegal in China. So you can do the development of the technology itself. But you cannot do ICO meaning raising funds through a general public or run a cryptocurrency exchange in China.
Neanda Salvaterra: Got it. And we actually have an interesting question from the audience. Someone asked when do you estimate China may stop the ban on crypto?
Da Hongfei: China didn't ban crypto, just like I said, it baned ICO and cryptocurrency exchange. Processing Bitcoin or other cryptocurrency or token in China is still legal. And if you do a trade or transaction between peer to peer, to person, it is still legal. But if you want to run a business to facilitate the trading of tokens, it very likely is illegal.
Neanda Salvaterra: Got it. And should banks be afraid of you? You know blockchain is a disruptive technology that takes out the middleman will we see like banks going out of business or also any other kind of business where blockchain is applied?
Da Hongfei: I see the bank, the physical bank would disappear in maybe five or ten years. I haven’t visited a bank in China for maybe two years.
Neanda Salvaterra: Wow.
Da Hongfei: Yeah. So everything we do in China, we do everything with Alipay, with Wechat so you can use that to pay. You don’t really need to go to a physical bank. But banking will stay. But the banking will use new technologies, including blockchain, including AI, and other different technologies.
Neanda Salvaterra: Privacy is something that’s been, you know, in the news quite lately, mostly related to other social media and other aspects. But, you know, even with blockchain technology, a lot of people’s information will be out there and we on the blockchain. How do we protect people’s information? How to make people comfortable using that technology?
Da Hongfei: Blockchain is a way to maintain a ledger, the ledger will be synchronized across different nodes or players. So all the information are transparent to all the participating nodes. That’s a big challenge for privacy. But thanks to those cryptographies, like NEO cryptography schemes, we have zero knowledge proof. We have homomorphic encryption, we have a secure multi-party computation, we can use those cryptography schemes to protect people’s privacy. You can do a lot of things with encrypted data without releasing any privacy. And also from the systematic point of view, blockchain eliminates a lot of single point of failure. So you don’t need to prove every information on to one place. So even if a hacker hacked a place. All they got is limited, or a small part of the private information.
Neanda Salvaterra: Got it.
Da Hongfei: Yeah.
Neanda Salvaterra: Someone was wondering what the most promising applications or on NEO right now, is there anything that you’d like to bring up?
Da Hongfei: There is a game. It’s a racing game, you can buy Ferrari, you can buy any fancy cars with a game and you can equip it with your own customized tire and engine or whatever you want. And then you can race with other people all around the world. I think it’s a very funny game. The good one.
Neanda Salvaterra: Um, I was also wondering a little bit, what about people like me who kind of like middlemen you know, if something goes wrong? I can always complain to the middleman entity or a regulator, you know, who’s gonna watch the watcher, you know, are we going to keep the blockchain community honest, really, something goes wrong.
Da Hongfei: There are many people in the blockchain community, they are anarchists, they don’t like government, they need zero government, zero regulation. I am not an anarchist. I think we are not ready for zero regulation. So we still need some regulation to protect some people. In China, if you want to do blockchain that is related to securities, you are regulated by CSRC (The China Securities Regulatory Commission), the counterparty of SEC in the US. If you want to do money business, you are regulated by PBOC (The People’s Bank of China) or the central bank.
Neanda Salvaterra: Okay. Um, interestingly enough, I found out that you are a dad.
Da Hongfei: Yes, yeah.
Neanda Salvaterra: Um, so I wanted to ask you a little bit about her and what you work with blockchain technology. I don’t know if you’ve heard but there have been recent articles showing that Silicon Valley parents are very concerned about their children’s access or use of iPads and all that technology. So what do you tell your daughter about blockchain? Stay away?
Da Hongfei: No, I explained to her what I’m doing. And she really understands. Yeah, there is a quote from a famous writer, science fiction writer, Douglas Adams. He said that any technology that is invented before I was born, it’s normal. It’s part of the words and any technology that is invented between my age 15 to 35. It’s a new, exciting technology, and I may get a career out of it. And any technology that is invented after I’m 35, it’s against nature. So there are some people that think they think AI will be a terrible idea, would distract you, will distract the world. I am not thinking so. I think people are human beings are really smart. We have invented many new technologies, and we will figure out how to deal with it down the road.
Neanda Salvaterra: Got it. And I also was thinking about a little bit you know, your company was founded in China, but I know that some people sometimes mistakenly think it’s just a Chinese company. What would you say to those people?
Da Hongfei: We started from China? Yeah, actually, these days, NEO has nine core developers, two out of nine are Chinese, the other seven are located in the US, in Europe and North America. So it’s a quite, I would say it’s quite global. And we have developer communities in different countries, in Japan, in South America, in Europe. So this month, we did three hackathons in Europe, one in Berlin, one in Zurich and the other in Rotterdam.
Neanda Salvaterra: got it and because, interestingly enough, even though you’re a quite diverse company, you started in the emerging market. I was wondering, you know, how you think blockchain can be transformative, especially from frontier in emerging markets elsewhere in Asia, also in Africa, you know, how can blockchain be applied in a way that that could really especially help some of these countries to develop?
Da Hongfei: Yeah, people say that blockchains that disruptive technology, I think being disruptive is good. But it doesn’t mean you need to crack down the old building to build a new one. So we see emerging market it’s a like a virgin land, you can do anything, you can build things from scratch, and you have the opportunities to do it right with the most advanced technology for it.
Neanda Salvaterra: I want to take a last question from the audience. Will NEO hard fork next year? And what is the roadmap for the cross chain?
Da Hongfei: it’s still under discussion. We have a plan to launch NEO 3.0 and we are still discussing internally and also with the community, whether we need to do a hard fork or even a new Genesis block with NEO 3.0. So it’s an ongoing topic.
Neanda Salvaterra: Got it.
Da Hongfei: Yeah.
Neanda Salvaterra: All right. I’ve learned quite a lot. So I want to thank you. That was very nice talk to you. All right.
Da Hongfei: Thank you.