Hong Fang, CEO of OKCoin joins me to talk about:
- Her pathway to learning about Bitcoin
- Bitcoin’s current status in the market
- Funding Bitcoin development
- Focus and priorities for development
- Identifying talent
Links:
- Hong Fang: @hfangca
- Developer grants: https://developergrant.okcoin.com/
Relevant episodes:
Sponsors:
Stephan Livera links:
- Show notes and website
- Follow me on twitter @stephanlivera
- Subscribe to the podcast
- Patreon @stephanlivera
Podcast Transcript:
Stephan Livera:
Welcome to the show.
Hong Fang:
Thank you for having me Stephan.
Stephan Livera:
Can you tell us a little bit about yourself? I know you had a career before all this Bitcoin stuff.
Hong Fang:
Yeah. I’ve spent 10 years in wall street working as an investment banker at Goldman within financial institutions and FinTech. And then after that, I switched onto the investment side, mostly doing growth equity investment. And it was during that investment life when I came across Bitcoin and kind of started to really seriously take a look at it and falling in love with with Bitcoin and everything related to crypto. So that’s really how the whole journey started.
Stephan Livera:
So when you first heard of Bitcoin, were you like most of us, you disregarded it? Like, what was your experience like?
Hong Fang:
Yeah, I like first heard about Bitcoin in 2012 or 13 when I was at Goldman and there was this there was a MD on the structured finance side who is really brilliant and he’s Jewish and he talk about Bitcoin and how, how brilliant Bitcoin is and the price, you know, is is going to go up. I totally disregarded, yeah. With everything going on. I was just, you know, I was not even having a life as an investment banker, so I didn’t even have an opportunity to really dig into it. But then in 2016 when I was talking to star and the team looking at OKCoin and the business, I started to really look at Bitcoin and what it is about.
Hong Fang:
And I realized that it’s an innovation, it’s an experiment. It’s a marvelous experiment and it’s beautiful. And back then it was a lot of speculation trading going on within crypto, within Bitcoin. And actually a lot of the trading volume came from China. And from an investment perspective, you know, I was also debating whether it makes sense to do the investment. If it’s a speculative trading, does it last, will it last or will it just go away. And ultimately, I think what helped me make the decision is the the conviction I found in Bitcoin. I think that it, you know, back then it is a lot of it was driven by a lot of speculation, but I think ultimately there’s a beauty in it that sometime down the road, people more and more people will realize that Bitcoin is here to stay.
Stephan Livera:
Also, I think the thinking in the space there were some people who are writing from a very, you know, intelligent perspective, even in 2012 and 2013 in those days. But I would say at least in my experience, a lot of the people who were around in 2016, it was just kind of seeing like a toy sort of thing. And I think in more recent years, we’ve started to see more of a mature understanding around, you know, sound money and things like that. So, at what point did some of those aspects of the story come to you?
Hong Fang:
It was really around ’16 and ’17 because I think it’s hard, right? Because we grew up in an environment where we, you know, if we go to school learn about economics about finance and also, for me, I went to Chicago for business school. And then later on joined Goldman on investment banking side a lot of the driving forces, my belief in free markets. But it was ironic that it was not until I left Goldman. And then I realized, okay, actually the free market that we’re seeing today is actually not totally free because the market while the prices we’re seeing is reflected in, you know, USD and money, whatever, whatever other fiat currency that we have, and that fiat currency is not free. It’s actually you know, a central planning.
Hong Fang:
But that was generally, that’s generally invisible that every one of us and it’s, it’s taken for granted, and also the inflation concept is also taken for granted that the concept that inflation moderate and controlled inflation is good for economy is taken for granted with all the economic training that we receive. So yeah, I think it’s really hard, right? To challenge that assumption and challenge that money is probably something that doesn’t have to be created by government, because ultimately what creates money is the trust people’s trust that this is something that can actually hold value over time, across different spaces and in different scale. And historically that money format does not come in a format of government backed paper. It was only very recent that we see large scale money printing by government.
Hong Fang:
That’s not actually linked to gold or any other physical thing that has actual supply that is somehow limited. So I think challenging that assumption is really hard. So it naturally, it takes some time. And I think it makes sense that you know, Bitcoin was created in 2008, 2009 during the financial crisis period. And then the first wave of almost like institutional endorsement and kind of semi mainstream momentum also does not occur until 2020 when we see money printing again at large scale. So I think that that is really what’s going on. People start to see what’s going on with the Fiat system, with the current financial system. And then when they see Bitcoin over the last you know, 10, 11, 12 years when everybody was saying Bitcoin is going to die, and it’s just a speculative trading vehicle, and it’s just, you know, stay around. And there are a lot of price volatilities, but you know, it went down and go up again, and there was a steady trend line of going up, and there’s also a steady improvement in the underlying protocol level. That is really continuously pushing Bitcoin toward that goal of being a reliable, secure and scarce store of value. And that ultimately can become that global money. I think that takes time, but I think that ultimately will play out in a free market.
Stephan Livera:
When you speak to other people who came from the banking world. Oftentimes they’re stuck in a certain way of thinking, right? So they’re thinking, Oh, the world needs inflation or they’re thinking it’s just natural and it’s just like this kind of phenomenon that just happens and they’re not assessing well, hang on. Exactly. Why is that happening? What was it that led to you kind of challenging that view? And was it just was it just a matter of being exposed to the right resources or reading The Bitcoin Standard or things like that?
Hong Fang:
I think it also takes a little bit of reflection. You know, I joined banking in 2008, which was the, probably the most volatile timing to join investment banking. And I literally, you know, sat there with seeing my, a lot of quote unquote classmates in my class, at Goldman who are, you know, either like go and move around. And some of my other classmates at Chicago, they went to, you know Bear Stearns and Lehman brother and some of the other investment banks and their jobs just went out of the window overnight. But that was only just on the investment banking side. Right there’s a lot larger story out there. And you see all the distress throughout the financial system worked on many different deals.
Hong Fang:
Spin-Offs you know, M&A transactions, IPOs, secondary offerings, warrant offerings, and particularly around 2008, 2009 and 2010, there was a lot of banks who were under capitalized and then a lot of bad assets come that came out of securitization. And you know, banks were just under-capitalized. And then there was a lot of government coming out to save those banks that cannot fail to save Fannie Mae, Freddie Mac and put money, put taxpayers money out there to save them. At that point, I think it was quite confusing and, you know, something was wrong. But I couldn’t really tell what was really wrong. Obviously there was liquidity crisis, but what it really is going on, it was kind of hard to unpack. But I think over time and particularly after I, you know dive into what Bitcoin is about it occurred to me that actually was going on back then is because the system was built on top of a quote unquote inflation first system, and you just print money.
Hong Fang:
So basically back in 2008, when we had that situation, it was not because totally just liquidity issue, right. Is actually also a solvency issue. And the roots of the issue also went back to 2000 the internet bubble and to quote unquote, save the economy, dig the economy out of that hole the government led by Greenspan, the fed led by Greenspan then ended up printing a lot of money. So that kind of, it seemed to solve the problem, but actually planted a seed for larger problems later on. And I think we’re kind of in that cycle again. And it’s just hard to see how we can actually get out of it in the current setting without fixing the money itself because the government will continue to print and when there’s a insolvency issue plus a liquidity issue.
Hong Fang:
And when you have the government printing money, that money printing activity is almost just a money wealth transfer activity, right? So basically those with financial resources, they have the capability to wait for that investment opportunity. When there’s a lot of distress in the market, they have free money sitting aside and they can grab cheap assets where the risks are born by the government, by the taxpayer money. But those who are in the middle classes who are lower, you know, struggling day in and day out for their everyday life, they don’t really have any way to get out of it. And you know, we, this year, we see the all the global uncertainty brought about by the pandemic. We all know that something is wrong. That society, is undergoing a lot of distress economy is not doing well, but then we see all the confusing signals economic signals, where it seems like the equity market is going up, all the time high.
Hong Fang:
So I think those does reflect well, we currently have in the financial system where when the government print money, those money, doesn’t go flow into the real economy. It doesn’t really flow to where it should flow through, right. It goes to the capital markets and the financial assets form bubble, which is, you know, it is what it is because that’s, you know, that’s what human nature is about. You know, people are people, when, when you have financial resources, you, you seek to maximize those that’s what market is about. And I don’t think we should play market for it because that’s what market is about. That’s what human nature is about. But it’s really because the incentive that’s built into the system, that’s not directing the resources to the right place. The price is not giving us the right signal.
Hong Fang:
The price we’re seeing is not the real prize. It is the nominal price. It’s not the real price. Without the real price, reflecting the real demand and supply. And, and when you have all the, the return being maximal in the capital markets where people can just put money into the equity market, and then, you know when the price go up to the certain level, you take the chips off the table and bubble burst and the rest of the market heard it is that’s what the system is built for. And again, you will see, like for this cycle, again, we see banks coming out with very low interest rate. You know, there are a lot of real estate buying activities, mortgage, people taking on loans.
Hong Fang:
That’s again, encouraged by the inflation assumption in the monetary system. And the system rewards debt takers, it doesn’t reward savers. But there is, you know, there’s always rainy day when the economy really suffers and people start to see the divergence between the equity market and the labor market. Sometime at some point, the music will stop. And when everything crumbles down, you know, the banks who are putting out loans out there and made suffer. Again, people who are putting their hard, earned money into equity market you know, which ended up being a bubble will suffer again. So it’s just a vicious circle. So again, you know, it’s, it’s not I don’t think it’s any kind of one single moment that kind of bring light to it, but it does take time for me to realize that actually it is the system itself that that needs to be fixed and Bitcoin represents a very unique opportunity as a potential solution to that.
Hong Fang:
But again, I don’t think it is an easy path forward because there’s a lot of there are a lot of cultural and political elements in it, but I think that this is actually the first time in human society, that we see a digital and sound money that is global, that is verifiable and censorship resistant that can actually grow into a global reserve currency. I think that is really beautiful. Time will tell, but but I think as time passes as more and more people start to ask question our own assumptions and look at what Bitcoin potentially can present. I think that chance, of Bitcoin emerging as a more superior sound money can, can really grow.
Stephan Livera:
So as Bitcoin moves through these phases, as people talk about it, right. Collectible and so on. Where do you see Bitcoin right now in terms of its current development and what kinds of I guess upside do you see over the next year or so?
Hong Fang:
I’m happy to talk about it, but I will just caveat by saying that this is just my personal take, because I think there’s no science in saying, you know exactly where Bitcoin is. Because we are in today’s environment, it’s, it’s hard for us to look into the crystal ball and see how the future actually will evolve. But my personal take is that Bitcoin has come to the point where it has passed its first collectible phase where, only a small group of people really believe in it as future sound money, but most of the demand or speculative trading demand, I think right now we are at a phase where more and more people start to actually realize that Bitcoin can be a solid and superior store of value more and more people will start to want to put some of their money into it as a hedging tool and hold for longer term.
Hong Fang:
And this is when I think we started to see a lot more thoughtful adoption happens both on the institutional side, as well as on the retail side and actually I know that there’s a lot of excitement in an industry about institutional development and institutional adoption, which think is going to be critical and important for the continued growth of Bitcoin. But I also believe that it is going to the retail side of the adoption is still, has been, what’s been driving Bitcoins growth and will continue to be an important factor in its evolution and should be an important factor as in its evolution. When I think about the Bitcoin itself the reason I’m thinking of it as kind of coming into the second phase, there are two folds. One obviously has all the institutional endorsement there.
Hong Fang:
We’re starting to see particularly in this year. There are so many names out there that kind of start to collect mainstream attention focus mainstream attention on Bitcoin. We see the OCC allowing US banks to offer crypto asset custody earlier this year. We’ve got a lot of the heavyweights in the public company domain like square and MicroStrategy officially allocating their treasury cash into Bitcoin. We see PayPal coming up allowing American to buy and sell crypto on, directly on their app. Although I personally you know would want to see more out of them instead of what they’re currently offering, but we’ll see, I’m sure things will evolve. And also Fidelity has always been bullish on Bitcoin and, and they come out with, you know, a 5% allocation case recently that less continue.
Hong Fang:
So I think that’s one side of it and a lot of the wall street investors, hedge fund heavy weights they seriously look at it and start to kind of really support the idea of Bitcoin as a long-term inflation hedging tool. I think the other side of the story again, coming back to my investment roots is that when I think about investment it’s always important to go back to the foundational question of what it is like what it is for, where are the fundamentals, how strong are the fundamentals, is that something that can ultimately bring value to the table utility by value? I mean, utility versus just some potential short-term speculation. I think from that perspective, you know that’s also why we at OKcoin, we have been recently doing a lot of developer grant supporting bitcoin developer community.
Hong Fang:
That’s really the reason why I think it’s a very encouraging thing to see over the last few years on the developer side, because the developer community hasn’t been as visible to the larger audience as say Bitcoin price or other crypto asset price. However, that is really what you know, has anchored the healthiness and visibility of Bitcoin as a future sound money without, because Bitcoin, ultimately the network is a open source network. It’s a software, it’s an open source software, it’s digital and for this, and it’s not a debt thing, it’s a living thing, and it’s a continuously evolving thing. It’s a continuously evolving creature for the network to continue to evolve, to grow. You actually need developers to take care of it.
Hong Fang:
And I think in Bitcoin’s first say 10 years it, there are still a lot of, kind of debates within the community about, you know, for example, particularly around 2017 where Bitcoin should go how how to make it, is it a sound money? Is it a payment? What’s the right next step? So that’s when we see a lot of the controversy within the community, right? We see the BCH and BSV coming hard forking out of BTC. But we’ve been past that and we’ve been able to see three successful halvings since inception. The third one being the one that happened this year, which is great with everything else uncertain going on. This is actually something certain. And it happened as predicted which is again beautiful.
Hong Fang:
And also there are a lot of development level protocol, level progress that has been happening steadily over these these years. One some of those that are, I think most interesting and critical are the merge of signet and the Schnorr and taproot, and also the increased focus on first testing, all of these are really designed to enhance the privacy and the scalability of the network, which is again, crucial to the the characteristics Bitcoin as a store of value as a potential future reserve currency. So I think it’s really down to whether we have a healthy developer community that continue to work on the underlying protocol, continue to develop the protocol and continue to quote unquote nurture and guide the network in the right direction.
Hong Fang:
So I think, you know, with everything we see in, the developer community, what’s happening on that protocol level, what’s happening at the application level and also in 2020. And we’ve seen not just us coming out to support the sponsors on a no string basis, but also a lot more other parties and institutions coming out to support it, which is again, gate a great gave gave me personally a lot of confidence in keeping this live creature, live and steady. And, you know, the Bitcoin as the fundamental layer of money, it has to have be in very steady hands. And I think we are right now going in the right direction. So that’s really why you know, I feel like we are in the second phase where, and it’s still early stage because the mainstream adoption is just getting started.
Hong Fang:
We haven’t even you know, I think there, people must have seen a lot of the Google trend charts floating out there. We haven’t even get started on the retail side. But I think where we’re starting to head in that direction there’s still a long way to go. And the developer community also needs to continue to need a lot of support from the ecosystem to keep it decentralized and also independent. I think those are really important. But I think we are going in the right direction.
Stephan Livera:
On the developer grant program. Can you tell us a little bit about what your focuses are and what sort of things are you interested to see to sponsor?
Hong Fang:
Yeah, sure. So the way we think about our sponsorship there are a lot of different ways to provide sponsorship to developers. The reason we started with independent grant to developers is that we think that those are most direct. It’s probably not scalable because it’s very much developer based or project based, but we think it’s very direct and it’s also an easier way to keep it independent and decentralized. When we think about grant recipients and how we allocate those resources, we’re looking really looking at basically three main areas for our quote unquote long term investment. The first one is again around the protocol level, and we want to really see the developers who are passionate about and also have shown track record in working on the Bitcoin core protocol to improve security, to improve privacy.
Hong Fang:
And also so that’s really the number one investment area that we’re looking at. Number two is about adoption from where I’m looking at right now, I think the second phase as an investment as the store of value the payment side of things is not going to be as widespread as we would like what we would like. And if we have to choose again, this is my personal perspective. We have to choose for Bitcoin to function as a store of value versus as a medium of payment a medium exchange or as a payment, I’d probably choose the former versus the latter. If I have to give and take, however, I think over time, it will be very important and helpful to make sure that there’s that utility side of Bitcoin, not just as a store of value, but also can be used as a payment in the reality in real life to buy and sell.
Hong Fang:
So I think any projects that can help increase that that payment adoption of Bitcoin is well, we are interested in support supporting, and that’s where BTCPay comes in. And I think the third area that we’re particularly interested in particularly after spending a year, working with the developer community, is to figure out how we can better support the developer ecosystem. I help onboarding new developers, raising awareness in the importance of a Bitcoin core developer community and also testing frameworks because review and testing has been one of the bottleneck in Bitcoin core development. Not as high-profile and as visible again as, the Bitcoin price fluctuation, but I think it’s actually pretty critical. So these three areas are where we have been really focused on. And if you look at how the four recipients that we’ve got so far, all of them actually are pretty strong in either, you know, two or three of these areas. And they’re all pretty big on providing that mentorship and onboarding support to new developers. They either work on privacy or security and, or working on improving the testing bottleneck and the BTCPay again is around the adoption side of things.
Stephan Livera:
So when it comes to doing the developer grants program if you aren’t a developer yourself, sometimes it can be difficult to know who, who’s good and who’s not is, you know, who’s a charlatan and who’s actually genuinely a good developer or doing some interesting and valuable projects and work in the space. So can you share some insight into how you select developers and projects to support them?
Hong Fang:
Yeah, absolutely. It is where we need help from other people to be totally upfront. And that’s also where we are happy to share what we’ve learned with other exchanges who who are exploring the possibility of being a participant as well. So we have got a lot of help from people like Steve, like John basically, you know, they, sometime they came across candidates, they would refer those candidates to us. They would help us understand what those developers do, why their work is relevant, how relevant it is. And they would also make introduction to other people in the industry who can help us who can give us perspectives on that level of relevance and how that fit into our developer program.
Hong Fang:
So we’ve got a lot of help just in short terms. We’ve got a lot of help from the community in evaluating that. It also why initially I was, when I was talking about how we approach this our program is, you know we do it in a format of independent developer grant. I.e. Grant provided to individuals individual developers or individual projects. It is direct, but it’s not scalable because there’s definitely a pretty big threshold entry barrier, if you will, in terms of knowledge to be able to assess, you know, quote unquote, who deserve it, doesn’t mean that those who haven’t got our grant doesn’t deserve it. It’s just how some of the parameters of the grant recipients or prospects fit into our program.
Hong Fang:
But there’s definitely a lot of the soft qualities and, you know conversation and, evaluation going on, and without help from all of these friends and community participants, we wouldn’t have been able to do it. And also, I think that’s also why, for example, if you look at what Coinbase recently announced that they are trying to do something similar, they have assembled an advisory board, I believe who the members of that board basically are developers themselves. So they would be able to provide their perspectives on what makes sense for the long-term development of Bitcoin, from their own perspective. And then the decision is up to them or up to us. Right. So that format is, you know, it’s not scalable, but it’s, you know, it’s probably more direct.
Stephan Livera:
Yeah, I see. Yeah. And yeah, acknowledging that it’s not necessarily the most super scalable approach. Also, I presume you’re also considering, well, when we fund a developer or a certain project, is it tied to a certain outcome or is it more like, you know, we want you to do some testing and review and like, how do you sort of assess what’s you know, whether that developer is actually doing what you’ve asked them and that kind of thing.
Hong Fang:
Yeah. We don’t ask the developers to do anything. We don’t ask them to do anything that’s kind of tied to the grant itself. We would ask what they do, what they have done before making our decision to see whether their passion and their work are in line with how we want to structure our program. But once granted our grant is totally no string attached. We pick our developers because on a couple of, kind of I would say very soft standards. Again, we go with recipients who are very articulated and have a very demonstrated vision for advancing the ecosystem. We like developers who are very passionate about what they’re doing, share the vision that we have about Bitcoin.
Hong Fang:
It’s again, free of obligation, so they can go ahead and do whatever they want. And it’s not exclusive either if they feel like they need other support and they can go ahead and get that. And the same thing goes for project based BTC pay as well. We never really tell them, Hey, this is what we want you to work on. They work on whatever they want to work on. And that assessment happens before the grant is, is is given basically if we feel like there is an alignment in emission and passion of of the recipient and what we are looking for, we are happy to do it because ultimately, you know, we believe that Bitcoin fund developer funding should continue to be diversified, should continue to be independent and give developers a lot of option.
Hong Fang:
And ideally we can provide a lifetime career paths for developers for particularly high quality developers to join and contribute to build a Bitcoin network. However, ultimately I think, you know, the inline with the open source ethos it has to be the passion and personal conviction that drive the decision on the developer side. It’s doesn’t, it shouldn’t be anything related to the monitoring incentive. Monetary incentive is only there to remove the uncertainty but it shouldn’t be that incentive. So we don’t intend to be that economic incentive finding in whatever sense.
Stephan Livera:
I see. Yeah. And it’s an interesting thing in this space, because, well, just about with anything you need, you have to be able to present or get some level of attention on what you’re doing, and there needs to be value seen in what you’re doing. And so what I have seen in practices, people start doing something for free, and then if there’s enough people who value it, then someone might fund you for that. And so that’s maybe in practice what happens with some developers as well, if they’re working on a certain project or a certain piece of software or a certain project that really is seen as like a high value project. Well, then that’s where there’s more of a, it’s easier to make a case there for that person to get sponsored to continue doing that work and to keep that project running. Also wondering in terms of, you mentioned earlier that the individual grant funding model may not be as scalable. So does that mean potentially in future, you would look for other ways to try to achieve the developer funding grants program, or what are you thinking there?
Hong Fang:
Yeah, we definitely reflecting upon that and trying to explore different ways to make it more scalable. We haven’t, we haven’t got to the point where we’ve got tangible action points there yet. If we do, we’ll definitely let you know and let the community know. But we are exploring ways where we can provide a more scalable, ongoing support to both raise awareness and also help onboarding new developers make it easier to onboarding new developers and nurture new developers. But, you know it’s a very difficult task, to be honest. I don’t, we don’t presume that we can do it by ourselves. I think it probably takes industry-wide efforts to try different things and see what works because we, you know, on the one hand we want to make it scalable. But on the other hand, I think we don’t want to have any central point of failure. And we don’t want to distort the you know, take away the fun of working for Bitcoin itself, from the developers. So I think carefully designed. Yeah.
Stephan Livera:
And I guess, yeah, there’s probably different ways it could be done as one example. You might need someone on staff at, you know, at OKCoin who can assess contributions themselves and then guide you in terms of, Oh, okay. I think this is a good project to fund and that kind of thing, or otherwise you are, I guess, reliant on you know calling on other individuals in the space, people like Steve Lee and John Newbery, as you mentioned to sort of give you some sort of a steer.
Hong Fang:
Yeah, that’s definitely also on our roadmap we would like to, at some point have some in-house capability as well to help with that assessment. We’ll continue to evolve our developer program and our practice as well as our you know, understanding of the space continue to evolve. But again, I think the the goal is really to make sure that we are investing in this space long-term and we hope that other participants also see the importance of this and also invest in it because particularly when the adoption of Bitcoin continues to grow, it will be increasingly important to make sure that the underlying network is sound and safe and private and scalable. And that won’t happen by itself. It takes a lot of efforts actually. So yeah, I think it’s a very important thing for the whole industry,
Stephan Livera:
Of course. Yeah, definitely. I’m very happy to see that. And I think many of my listeners like to see Bitcoin exchanges and companies supporting Bitcoin development and technology that is, you know, Bitcoin adjacent, let’s say. So are there any other kind of areas where you think you’d like to see you know, further development happen? I mean things like lightning or perhaps things like in relation to Bitcoin mining infrastructure, or maybe another example would be stuff like some of these more infrastructure sort of things like Blockstream satellite and some of these ideas around ways that people can transact in under more adversarial circumstances, you know, and maybe an example there might be mesh networking or perhaps around security. Are there any other kind of focus areas that are, that come to your mind?
Hong Fang:
Yeah look, I don’t have an engineering background, so I feel like I’m getting out of my comfort zone. So getting the technical side of things. But the lightning is definitely something that we have been following closely. I think it will be a very interesting it’s been steadily growing. I think the ecosystem has been steadily growing the size of it is still very small. The size of transaction that happen at the second layer is still very small. But I think as the adoption gross for Bitcoin as the transaction volume overall as the network continue to grow at Bitcoin, I think at some point we may start to see a turning point for second layer solutions like lightning because you know, people will, you know, the people will need a faster payments of Bitcoin smaller amount Bitcoin right.
Hong Fang:
The larger amount they quite happen on the first layer like what we see today in the traditional financial market with why transfer it takes longer it’s a little bit more expensive, but some of the every day transactions has to happen with faster speed and less costly. So I think that will be a turning point to a critical mass down there. So that is an area that we has and will continue to follow definitely mining. I know that Steve and his team have been working closely on that front we’ve talked about supporting developers on that front as well. That’s on our radar. We just, haven’t got to it yet. But we will continue to follow that and support as we see fit and as our own resources allow we will also step in there and help and I think generally, you know, raising awareness working with the developer community to discuss some of those and also, you know bring the, a larger audience to the space is going to be helpful and interesting.
Hong Fang:
Ultimately we cannot bank on a handful of entities corporate entities to provide that financial support. I think ultimately if we can build a larger, wider base for providing that type of economic incentive is going to be a longer term healthy,
Stephan Livera:
Right. And as I’m sure, you’re probably seen and I think many people in this space comment on this as well. It’s just basically everything in this space is indexed to the price, right? So as number go up, we see, you know, more exchange sign-ups more wallet downloads, more podcasts downloads, more developers, more projects, more everything. Right. so I think that is perhaps one way where as number goes up, we start to see more people interested to fund different development projects and things. Actually another interesting point that might be worthwhile is around political risks. I know in one of the pieces that you wrote just recently you touched on this idea of political risk. What kinds of political risks do you see with Bitcoin?
Hong Fang:
Obviously, you know, with Bitcoin being positioned as future money, there’s always the possibility that the sovereign governments can come out and ban it because that threatened Fiat currency and potentially can take away the ability of the governments to basically quote unquote tax without taxing. But I think those risks are high in probably certain areas and also in earlier, years. But as the Bitcoin continue to build its momentum of adoption the worldwide ban is going to be harder and harder and it actually has never been it, we have never really seen a worldwide ban. And I think it’s probably not doable either just because there is no there’s no one single global government. If we have one single global government who has vision enough to see the future threat of Bitcoin and just kill it in the first, you know, maybe 10 or seven or eight years, then you know, the game was over.
Hong Fang:
But there were luckily there was no one global government, there are so many governments out there. Some governments maybe feel the threat earlier than others and will ban them either in fulsome or partially. And that has already happened with several in several cases. But as long as there are areas where Bitcoin is allowed you know, human nature will play the card. Bitcoin represents human nature and it brings better store of value to people. It brings a wealth preservation to people and with the right sound money system actually that can encourage saving. It can a lot of good things can happen, right? The market can actually function well in the future. So I think over time we will always have that political risk here and there in pockets where, you know, the threat to Bitcoin will exist, but there’s no way I don’t see the risk of Bitcoin being banned out of existence today.
Hong Fang:
I don’t, I just don’t think that is realistic. That being said that I do think that there’s still risk in because banning Bitcoin have two layers. One is the banning of Bitcoin as a store of value as an investment vehicle. The second is the banning of Bitcoin as a payment method as payment utility. I think the second risk is still there. I don’t think that is completely out of the window particularly because the there will be a pretty long runway where the Fiat currencies will co-exist with Bitcoin. And I don’t think that adoption of Bitcoin as the single payment currency will happen any time soon. So in that window you know, there’s always a chance that the government can allow Bitcoin as a investment vehicle, but does not allow it or put very strict requirements on Bitcoin being used as a payment medium, a medium of exchange. So I think that risk still exists. But I think over time that risk will also be reduced over time. Time should tell, but I think that that level of volatility will always be around with us. It’s just I think that’s probably part of Bitcoin as an experiment and as a quote unquote movement what that means, you know, it’s basically challenging the status quo and that status quo unfortunately is government.
Stephan Livera:
Right. And yeah, as you mentioned, I think the chances of an outright worldwide ban are vanishingly slim but maybe a more likely or possible scenario is one where it sort of gets captured and you know, maybe things, so some of these ideas are more like speculation or what’s possible, but, you know, there’s chatter about self custody eventually being banned. And I think that kind of thing it is an interesting vector to consider and perhaps it also highlights the importance of having open source software and tooling as well. What’s your view on that?
Hong Fang:
I think that will be really hard. I mean, there have been a period when in US, there was a ban on holding gold as individual was that ban successful? Obviously not government ban on owning guns, whereas, you know, some of the other stuff and it never has been successful as a whole, it may be successful in pockets of areas, but, you know, there are always ways for people to figure out how to actually go around it. So yeah, I think it would be really hard. You know, particularly when it comes to self custody Bitcoin is censorship resistant as long as there is that level of a global network, that’s still out there. It’s really hard for the government to make an effective ban on self custody without seeing large flee of capital because people vote with their money.
Hong Fang:
Right. So ultimately I think that economic power human nature will speak for itself. So I think time is our friend. Time is the friend to Bitcoin. And as long as there is sound development steady development at the protocol level and the industry work together to really promote long-term adoption. And, and I think, yeah, I think we’re going to go in the right direction. There’s always obviously it’s hard to tell when that ultimate situation will happen. I think that’s a million dollar question, but I think at some point it, we’ll see a glimpse of it, hopefully. But I think short term, it will be interesting to see how the this current institutional wave of adoption will affect Bitcoin short-term.
Hong Fang:
As we’ve seen recently, the price is going up, as you mentioned, Stephan, I think the Bitcoin’s price volatility itself is a great self marketing tool as the Bitcoin price continued to go up and, you know, pull back obviously from time to time, but have a upward trend over time. There will be a lot more newcomers starting to notice it, and starting to look into what it is about you know, started starting as a speculative trading or maybe just, you know, give it a try kind of investment mentality, but over time, if they really think about what it is about you know, hopefully there’s a chance that the conversion.
Stephan Livera:
So what do you think the next few years offers us in terms of people coming to understand the significance of Bitcoin? What sorts of I guess narratives and messaging do you think will resonate with the people coming in over the next few years?
Hong Fang:
I think Bitcoin really represents the human nature, right? It empowers people, it empowers individuals it gives the the money back to people. I think that’s going to be really powerful. The internet waves that we’ve seen over the last two decades has always been how we are using technology using internet to empower individuals starting from commerce, from information sharing from how we live our social lives going to media. We’ve seen how that changed the music industry. We’ve seen how that changed the social community recent rise of Tiktok all these, and also a lot more people like yourself having your own podcast that hasn’t really been possible before, but with today’s internet tools, individuals are empowered to be their own entrepreneur. But the previous tools of internet can enable P2P transfer of information.
Hong Fang:
But what it doesn’t, what it cannot do is that P2P transfer of value. And I think Bitcoin is that enablement the P2P transfer value. And when you combine the P2P transfer of information with the P2P transfer of value, that’s also aware for the first time in a human society, we can actually see a possibility of us building a digital life that we actually control ourselves. We can actually control our own data in today’s internet world, if you’re on the investment side what matters the most when you look at investment targets, it’s those platform that actually control data, right? It’s those big retail giant platforms that control retail data, data is the gold mine today. And those data are yours and mine, but we don’t own those data. But I think over time with the possibility of Bitcoin, which gives the money back to people.
Hong Fang:
And when you combine that with potential other technology development in blockchain and new projects coming up that enable that, I think that will be really powerful giving people back that ownership of their own assets, giving people back the ownership of their own data, that would be really powerful. They can actually, I think, lead to totally different business formats and social dynamics that we haven’t seen today. I mean, there are a lot of the disbelievers always say, you know, this hasn’t happened before, right. But a lot of the things actually we see today, haven’t happened before that, that’s how we make progress. And I think this is going to be extremely interesting to see the, but back to your point. What is probably the most powerful marketing line, for example, for Bitcoin, I think it’s really kind of, you know, be your own owner, be own your own asset, own your own financial asset. I think that would be really powerful.
Stephan Livera:
Excellent. Hong, where can listeners find you online?
Hong Fang:
My Twitter account @hfangca on Twitter, we can also find OKCoin at OKCoin.com. And I would also particularly say any of you are interested in learning more about developer, how to you know, understand what is going on with the developer community and understand what we are seeing doing here, and also give us feedback on how you want us to do to support developer community, come to our developer page. We have http://www.developergrant.okcoin.com and come back, you know, drop us a line. Tell us what you think. Happy to have you to explore what we can do together on that front better.
Stephan Livera:
Excellent. And listeners you can find those links in the show notes at stephanlivera.com/228 for this episode and Hoang. Thanks very much for the work you’re doing and supporting Bitcoin development. And thank you for joining me on the show today.
Hong Fang:
Thank you, Stephan. My pleasure. Thank you for inviting me.