On July 30, 2022, during the WIM2022 Day 2 event, Xi Chen, Scott Qu, Paul Triolo, and Frank Yu participated in our Blockchain Panel, and shared their thoughts and insights during the panel.
Discussion Q1:
Scott: First, let’s focus on blockchain technology. Right now, we have seen a lot of pictures in the blockchain. What excites you the most about blockchain, this underlying technology? What do you think are the most valuable use cases of blockchain?
Xi: Past year, there have been a lot of improvements in the blockchain world. We should pay attention to a few directions in the blockchain world. And there are several fundamental features of blockchain. The first one is permission. For example, in terms of whether it is distributed or not distributed, distributed is a technology towards blockchain. If you use defied project, no one is going to ask for your privacy form. You are responsible for everything of your own assets, and the changes. The second one is that blockchain has a new power. For example, it could break the economy. The traditional Web 2.0 cannot achieve this. You could also easily create a small economy within a small community. But Web 3.0 can provide more sharing convenience. Finally, blockchain has its own ability to build community, especially among young people. Working as a new tool to build a new environment or community is important.
Frank: Professor Xi did a great job explaining the benefits and opportunities of blockchain. I will explain this more personally. I have been in this industry for 20 years. I do not think that I have seen the speed of capital building over the past 20 years. I totally believe that in blockchain, there are a lot of opportunities. However, there are a lot of problems. I think the market could be manipulated. It is not fundamental value driven. The only hottest use case of cryptocurrency is Bitcoin. In usual life, transferring money might be a problem or cause a delay. It might be due to the transfer of banks or permission from the Central Bank. However, Bitcoin can be paid mostly immediately wherever. And this is a good thing about blockchain. I think cryptocurrency is a game. I like this feeling of games. And now, it is working for Metaverse, which I feel excited about it. And people have been investigating Metaverse for at least ten years. We have already had several small examples to help us imagine what Metaverse is. If we, in the end, solve the problems, we will see what the Metaverse is.
Paul: Blockchain is a critical technology that has all sorts of different applications. One thing that would be able to make micropayment anywhere in the world, the only possible way is to go through some versions of blockchain and cryptocurrency. Besides, you could also have control over your data. Blockchain will enable much more granular control of your own data and monetize it. What makes it possible is what I would call a device-centric self-sovereign world. And that is what we are shooting for here when we are discussing Web 3.0 and the Metaverse. We are talking about financial inclusion for billions of people worldwide that may not have access to traditional financial services, for example. I think the exciting part of the blockchain is that it enables this decentralized world, including things like decentralized finance. All sorts of other things are enabled by the blockchain. Therefore, there are lots of different use cases that will be beneficial to the device-centric self-sovereign world. It is the payments part of the payment platforms for Web 3.0 if we think that Web 1.0 is decentralizing information, and Web 2.0 is more towards commerce and buying stuff online. The current Web 2.5 is where there are some abilities to pay with the traditional financial system, and moving into this world where there will be different kinds of payments and capabilities that could be enabled by the blockchain and cryptocurrencies. It will be an exciting world we are entering, and I am happy to be here to discuss it with such great panelists.
Discussion Q2:
Frank: One of the things I learned is that China is quite advanced. The first cryptocurrency in the world came from China. It was QQ points from Tencent. It is the first digital currency in the world. There are also a lot of things that originated and were created in China. Everything you see in the crypto now, China has some versions of them with more centralized forms created even before that. Crypto is mainly based on communication. And the situation has changed quickly. For example, if you wanted to raise money from a token project four months ago, you could raise 10 million easily. Now it will be too lucky to raise that amount. A lot of people are transferring from Web 2.0 to Web 3.0.
Paul: All the stuff is new. Only cryptocurrencies, in general, have generated a tremendous number of concerns, particularly from the regulators. They are worried about how these new financial tools can fit into the traditional system here. In the last few months, we have seen a very serious collapse of the Luna, Tara, and the whole stablecoin ecosystem around them. And, of course, the collapse has generated more concerns. The biggest challenge for the globe, especially for the United States, is finding a balance between allowing all the innovation to occur, which is happening with great companies, and bringing the sector under some regulations. The United States government tends to focus on the regulation side. One of the fears I hear from some of my clients is that the United States is going to become more hostile toward the regulatory environment. And soon, a lot of innovations are going to move offshore. And it is likely that the United States cannot get the balance right between regulation and innovation.
Xi: People used to be skeptical about deep learning and machine learning. Similar to this, people are skeptical about blockchain. Most Web 2.0 does not need economists. However, in Web 3.0, it is necessary for companies to hire economists.
Discussion Q3:
Scott: This question is particular for Professor Xi from a professor’s perspective. What are your suggestions for universities, scholars, and students to participate in this Web 3.0 innovation?
Xi: The series of studies in universities are very limited. First of all, there are some universities opening new classes and programs. Some of the courses or programs at this point are limited to being online. But I believe there will be more coming up. And there will be new research in this area. And the research needs people from all different kinds of fields. Secondly, there has not been enough funding. Research labs need donations, maybe from VC, big technology, or Web 3.0 companies. Finally, more and more students are welcome to join in the innovation and the research. People should not be only for money. Much serious research should be done.
Discussion Q4:
Scott: It is the crypto venture here at this point. There might be up and downs in this industry. How do you view this season of crypto venture?
Frank: When you invest in this market, you know that this market is unstable. And the market might be manipulated. But there are many opportunities in this environment. If you are a banker or somebody in the financial service, this might not be a new thing to you. But if you are a student or a researcher, this might be something that you should do. New ideas are always happening. Right now, raising money could be hard. But things might change within several weeks or months. In terms of opportunities, there are many different ones. And people might view it differently. Nobody actually knows how and what is the correct one. The only thing I suggest is to know what you want to do, to understand the market, and to stick to it. You do not need to understand the world. If you really want to learn more, there are many YouTube videos and courses that are really good. If you want to learn a language, you might want to learn JavaScript. Programming is important to understand things deeply. If people think of big tech companies, they would think of Google and Apple. They started during a downturn economy. Maybe if a company is in a downturn, there actually could be much more efficient. They might not have plenty of money. Therefore, they were careful about their cash and investments.
Discussion Q5:
Scott: What is the future of the current decentralized finance?
Paul: We are experiencing a Crypto winter or slate freeze right now. But it is also a blockchain spring here. The difference here is the presence of decentralized finance. Before, we were in a world where people were buying Bitcoin and some other tokens. Now we are in a more complicated and diverted ecosystem around blockchain. A lot of things are going on. It is not only about speculating on a particular currency. Some of the drivers of the recent downturn was a fairly complicated set of decentralized finance protocols. Anchor ended up collapsing unexpectedly. This, again, has drawn the regulators’ attention. That is still going to be playing out, in terms of how long and how sustainable the downturn will be. A lot of companies are probably over-leveraged and not well-run. The good thing is that there will probably be a shake out there. Stable projects, players doing better, and a more stable business model could help the business survive under this macroeconomy. There should not be surprising that we can get some shake out here. But I think a lot of decentralized finance projects are doing quite well. There might be many mergers in October. There are many other things over the basics of the theory. The world of decentralized finance is landing. People feel panic due to the recent collapses. The most important thing to look at is whether the collapse of a stablecoin could influence the overall stablecoin arena. There are many stablecoin choices around in the industry. If one coin that is used by many people collapse, many people and the industry are going to be influenced. So regulators start turning their attention. Finally, regulators are looking are whether things are securities. Coinbase’s securities issue could be an example. We might see more intervention from the regulators. You might want to buy low now, and wait for the increase. I think the current downturn is completely different from the previous ones. The current downturn is a much bigger space, with lots of projects, problems, developers, and regulatory overhang resolving some uncertainties. Over the last two years, investors invested in a lot of projects. And some of the projects have a lot of problems here. Investors are not investing in a speculative way. They are investing in projects that they believe will be good projects going forward and support aspects of Web 3.0 development. It is different from 3 to 4 years. It is not about the price of Bitcoin. It is building a platform for future Web 3.0 and Metaverse applications.
Discussion Q6:
Scott: Do you see the future of blockchain in China? If yes, what is that?
Frank: China loves blockchain but no cryptocurrency. It is more about the control of monetary supply. China will probably be focusing on blockchain. Blockchain could increase a lot of conveniences. You can trace everything we have, from every block to another one. It is the source of information. However, cryptocurrencies can actually be traced by any government. It only needs time. They actually not only trace whoever it bought but also the whole transaction.
Xi: I agree with Frank’s idea that China government loves blockchain, but no crypto. From Yao Qian, the Chinese government has already spent a lot of money on building the infrastructure of blockchain and distribution systems. There could be innovation, but with well-governed. Hopefully, China has led some common standards in the world of blockchain. This is also the goal China must be clear with taxation. China also wants to build some legal frame for blockchain.
Paul: China has taken a hard approach in terms of its decision on cryptocurrencies. China’s government and people in Chinese decided that they were not going to tolerate any decentralized finance that they did not have control over. China is way ahead of the world. China loves blockchain. I am impressed by the development of blockchain in China. The Metaverse of China might be different from the ones in any other country. The regulators in China want the Metaverse to develop in a more orderly way. China also has so many good companies on the gaming side. The gaming side might be an approach to China’s Metaverse. There might be two different Metaverses. Or there might be an overlap between the two Metaverses at some point on the consumer side.
Discussion Q7:
Scott: What do you think NFT is and what is the future of NFT? How can NFT be used in games?
Frank: NFT is collectible art. NFT has a real purpose, such as ownership, a future beverage, or an identity. NFT has a lot of opportunities.
Xi: I agree. The next generation of NFT might be related to utility, as Frank said. It might be proof for some occupations. NFT also has the opportunity to be a real one. People might call it the smart contract. From an AI perspective, it is not smart. From a contract perspective, it does not have jurisdiction over it. Under the situation that if you invest in a singer and own a little bit of the copyright, at the time when the singer becomes popular, NFT might be treated as a good investment.
Discussion Q8:
Audience: Are regulators a tool to secure NFT?
Frank: NFTs are treated as property. The ownership of NFT has a lot of problems. There has not been legal jurisdiction towards that. Whether enforcing NFT rights and whoever has the ownership, problems are still there on the surface.