Feng Han interview at Blockchain Impact [09-28-2019]
On September 20th, we were very pleased to invite Mr. Feng Han to be a guest at Blockchain Impact WeChat Group and share the global “data capitalization campaign”. Here, we share with you the highlights of Feng Han’s insightful interview.
About our guest Feng Han:
Feng Han is a visiting doctoral student at Columbia University, iCenter tutor at Tsinghua University, secretary-general of the DACA Blockchain Association, and director of the Elastos Foundation. He is the editor of the books “Blockchain: Blueprint for a New Economy”, “From Digital Currency to Creditable Society”, and “Blockchain: The Philosophy of Quantum Wealth”.
About the moderator Miao Yang:
Founder and CEO of Star Finance, HerTech Star Network Global Blockchain Women’s Community Co-founder, and former Sanyan Financial co-founder and editor.
Moderator Miao Yang: In recent years, especially after Facebook announced its cryptocurrency plan with a number of global big institutions, topics such as this disruptive innovation [blockchain] as a payment method and national digital currency are being discussed intensely.
Near the end of August, Mr. Feng launched a “data capitalization campaign” in conjunction with several of institutions in Shenzhen. Could Mr. Feng share with us how did he decided to jointly launch the “data capitalization campaign”? What were the pain points in the current world that had to be solved?
“The next round of bull market will be more vigorous”
Feng Han: Hello, everyone, the first question is quite a good one because it was also related to some of my recent activities in China. This was also a question that the crypto circle has always been very concerned about, i.e. “When is the next round of bull market?” and “What would the next round of bull market look like”? My point is that the next round of bull market will definitely come. In the next bull market, I think it will not be speculation-based. Bitcoin is a currency that is beyond any sovereignty. When it was first proposed in 2009, however, everyone felt that it was impossible. After several rounds of bull markets, Bitcoin has become similar to the concept of digital gold.
In 2017, many people felt that Ethereum would surpass Bitcoin, and it seemed that it had solved a pressing need for the issuance of digital currency. All sorts of coins came out at that time. Now, everyone knows that 90% of coins are scams without any value. They faded out as time passed. Now, only Bitcoin is truly digital gold. The next round of a bull market will not repeat the same story. I firmly believe that it’ll be more vigorous than the previous rounds of bull markets. So what market will everyone really invests in?
These matters have now become the focus, in fact. All these were very close to the release of Libra by Facebook. When everyone was still unclear about the situation, Facebook announced the release of Libra. The world immediately paid attention to it, especially China and the United States. The United States congressional hearing, and the central banks all came out and discussed it. This showed that no matter how the project develops, everyone is already eager to realize the future of big data.
“Future data is private”
At the same time, data capitalization would have a big influence in payments. However, its logic was easily omitted. I had particularly paid attention to Facebook’s development conference in March this year. Zuckerberg announced at the meeting that Facebook’s future development direction is to establish a data privatization platform with the slogan, “Future is Private”. The true meaning behind the slogan was that “the future data is private”.
The meaning of this is significant. It was equivalent to the transformation of the land and housing system of the Communist Party of China that happened around 1998. Housing was still publicly owned before 1998. It was only after the transformation that there was the concept of a (private) real estate license. Professor Zhiwu Chen of Yale University said that it effectively opened the door to wealth for Chinese people. An asset was privatized and safeguarded, and then it formed into a market; imagine how enormous the wealth effect was. If Zuckerberg privatized the 2.7 billion Facebook users’ data, imagine the effect. First thing’s first, if everyone’s data was privatized, there must be an associated currency for pricing and trading. More importantly, it needs to be able to execute smart contracts. This is to say, for data as an asset, its efficiency and costs must be executed with smart contracts. If it was to be executed by institutions such as banks, the cost would be considerable and data capitalization could not be truly popularized. Now, the currency concept such as a stable currency can be implemented to substitute fiat currency for the accommodation of future global data assets.
Facebook claimed to discover Libra, which made me realize that Zuckerberg had actually formed a set of strategies for privatizing data on behalf of Facebook. Of course, he was also forced to adopt it because he had been fined many times in recent years. In 2019, the United States fined him $5 billion. This showed him that he did not have much time. A business model that makes a fortune from user data on the Internet would no longer work in the future.
Moderator Miao Yang: Mr. Feng mentioned one of Zuckerberg’s speeches. I have an article to share: Facebook says the future is private, but what does that mean?
“Work on private data privatization, to give data ownership to every user”
Feng Han: Mr. Chen of Elastos also proposed to Bill Gates more than 20 years ago to establish a decentralized operating system on the Internet instead of Windows, which can protect everyone’s privacy and data security. Combined with blockchain, this made turning data into assets possible. It is also why we co-founded Elastos.
Facebook encourages me greatly. In the past, we were lonely explorers, and now with Elastos, we can firmly move toward the future.
Later, in order to better understand the domestic market in China, I had first contacted two giants in the industry. The first was Alibaba, and Tencent second. These two symbolized the current developmental trend of the Chinese Internet. Alibaba’s vice president, Hongbing Gao and I recently had an in-depth discussion. His financial point of view was that all credits were originally generated by banks in that credit cards and bank cards were issued by banks. However, why did everyone believe in banks and not the users themselves? It was because the bank was implementing one of the most straightforward business logics: building the most expensive building in the most expensive place.
There is a financial street in Beijing, which has become the most expensive section with the most expensive buildings. These luxurious buildings were all built by banks. Lujiazui is the Shanghai version. The Pearl of the Orient is now Shanghai’s landmark. New York is Wall Street. Usually, such business logic is against the logic of ordinary business. For any business, the core concept is first to reduce costs. However, this so-called path dependence in human history shifted from gold to banknotes. As banks began to generate credit, the path went to a model that covers the most expensive buildings in the most expensive places. There are almost no exceptions in the world. The so-called new era in the future would be that data can generate its own credit, which would be a jump out of the current logic. If this happened, it meant that big data privatization has appeared.
Hongbing Gao said that Alibaba can get more than 100 megabytes of data per user every day. In the future, there is a high probability that credit will be generated from it, which is much lower than the cost of the most expensive buildings. So humans would enter a new era of finance. Correspondingly, Alipay and Yuebao would develop accordingly. If not for the China Central Bank imposed monopoly management, these two companies that rely on user data can subvert the banks.
Engaging in data privatization and giving data to every user would have a huge wealth effect. After the privatization of data, the Chinese people might increase their credit limits. If everyone got 100,000 yuan, there would be total a 130 trillion yuan in China, which is equivalent to digging a big gold mine. In history, the discovery of the big silver mine in Mexico contributed a lot to the completion of the British industrial revolution. The large gold mine discovered in California brought the economic prosperity of the Great Railway era to the United States. The prosperity of the free market requires the injection of a large number of credit resources. Everyone must first be more credible so that they can increase transactions.
The concept of a blockchain private key was equivalent to issuing a private certificate for the data, ensuring that data belongs to you when you have the private key. This opens up a new era of finance. Many new projects are now working along this line, which was to realize that the ownership of personal data can exist and bits of data can become a person’s own assets.
Assuming that Libra is tied to the US Dollar, it does solve the problem of how the Dollar ties into the global payment market. The US dollar has dominance in the world, with more than 80% of global credit production going through the US Fed. However, most countries do not have a direct payment option. Once Libra is available, it would help the Dollar very much. It lets the Dollar enter these countries, and there is no foreign exchange control. Therefore, in theory, it should be able to be exchanged with all currencies.
The Chinese central bank feels the urgency, so you can see the intense development of digital currency & blockchain research in Shenzhen. Originally, with Alipay and WeChat payment, China was beyond the United States. But if Facebook really privatizes data, the entire logic of the original Internet would be subverted.
Jack Ma has announced his retirement. I believed that this project was not in his original development strategy. He did not mention this matter at the retirement press conference. I thought that Alibaba would not do it, so naturally, I could only look to Tencent. Through the introduction of friends, I found Long Wang, the Vice President of Tencent Cloud. Logically, he agreed. Elastos would truly protect user data and privacy if there was a trusted computing environment in the future. So later, in Shenzhen, Tencent Cloud hosted a data capitalization campaign. Zhijun Zhang, Chief Security Architect of the World Bank actively participated in it. Andrew Yang, the presidential candidate of the US Democratic Party also proposed that data capitalization would be the future. We have an appointment in Boston on October 24th.
Moderator Miao Yang: Thank you for your wonderful sharing! From the prediction of the next bull market, to the concept of Facebook’s super-sovereign currency, Zuckerberg’s speech, to the vision of a new era of financial, digital privacy protection, etc., the amount of knowledge and scope covered was very wide. Just now, you mentioned that you started the “data capitalization campaign” in Shenzhen with Tencent Cloud. I would like to ask Mr. Han to introduce what kind of work has been started with Tencent Cloud in “data capitalization”? How would the “data capitalization campaign” become mainstream?
Feng Han: This is a global movement, so I am even more convinced that the future bull market will reach the scale of a trillion dollars. Once data becomes an asset, the range of applications would be dozens times larger than the digital currency. Huawei was also developing in this area. Huawei knows very well about the information industry, in that they started their business in it. Imagine if there was a credible computing environment in the future, and blockchain could protect the data packets, then imagine how the future industrial landscape could be like. You can think of all the factories as a super 3D printer. They are not selling products in the future but designed data packages.
The “most expensive place for building the most expensive buildings” would disappear into history and would never return. This business logic would be subverted. If Tencent Cloud realized this data capitalization campaign, that will be very influential in China. Of course, Tencent Cloud will develop the project in low profile. The future trend is the privatization of data. To be honest, China has indeed not reached this level.
Moderator Miao Yang: Thanks to Mr. Han for his wonderful answer, the next question:
Xiaochen Zhang: How would you comment on the commitment of Elastos to the investors and the community? Were you satisfied with the development of Elastos? What is the most important plans or milestones for the future? What is the perfect result of the movement you envisioned when launching the data capitalization campaign?
Feng Han: The idea of Elastos was started when the founder Rong Chen was at Microsoft twenty years ago. He was the No. 10 employee on the IE browser team. He was indeed one of the rare Chinese who was able to conceive the future of the Internet from the root of the operating system. He just came to the conclusion when he was at Microsoft that the Windows operating system could not protect users’ privacy and data at all, leading to so many Internet giants using user data to make their profits.
We discussed a lot of key points in the first half of 2017 because we had clearly realized that a computing architecture such as blockchain alone could not protect everyone’s data privacy and data rights. Although Bitcoin has begun this concept of data privatization, it was almost impossible to run an application on its blockchain. You could send a coin without a problem, but applications just could not run.
We had to engage with credible environments, including for the coming cooperation with the World Bank. The trusted computing environment is partly based on hardware, and will further develop along this line. All in all, the promise made to the users by Elastos has not changed at all but had become more and more clear. I worked with Tencent Cloud on a trusted computing community, which is of a correspondingly higher level of data protection than even the World Bank might use. This is now starting and everything is going hand in hand. We hope that Elastos can be ahead in this area.
BiYong Community: Most of the existing Internet companies, such as Facebook, rely on advertising revenue. How does a company make a profit once the user data assets are privatized?
Feng Han: The original Internet relies mainly on advertising. Without the concept of assets, one could only make money in this way. In the future, users should first be allowed to mine with their own data. Facebook relies on user data to generate $40 billion in revenue. First, smart contracts should be established to pay dividends to everyone who contributes. If someone earned $70,000 by using other’s data, should he split half of the profit with the other? In the future, I firmly believe that once data is privatized, there will be a completely new world of wealth. The money that Internet companies can earn by relying on each person’s data would be far more than in the current situation.
Lemon Dabao: What does Mr. Han think about the field of developing wallets? When the era of virtual digital currency assets comes, what role will a wallet play?
Feng Han: This is a very good question. I have always thought that in the future, the wallet should be the gateway to the entire data asset world. The reason why it was not the portal was that exchanges were too dominating. However, after the release of Libra in the future, decentralized exchanges are more likely. In fact, the wallet is naturally a decentralized exchange, where various assets can be traded and transferred. The reason why the exchange is so important is that everyone has to trade with fiat currency, which lowers efficiency.
Therefore, I have now paid special attention to the development of the Elephant wallet in the Elastos community. Its long term goal is to be the portal. If Libra does succeed next year, then it would be docked immediately, together with various stable coins and data assets. With the trusted computing environment, it naturally becomes the platform of data asset trading. This is definitely a historical opportunity.
The one thing to remind everyone of is that the necessary condition for the future wallet has to be a trusted computing environment. Because the current wallet is too rudimentary, it is not useful if it can only be used for storing coins. Simply claiming that blockchain technology was used is not sufficient. The data of others would not be ported to the platform as they are completely unprotected. Therefore the future wallet should be a trusted computing environment, this is what we are doing in the trusted computing community.
BiShengKe: Hello, Mr. Han, the data capitalization campaign is the future trend. What do you think about the projects doing data leasing?
Feng Han: For data leasing, I think this premise is of course to protect user privacy. Because data is highly sensitive, once it is leaked, it will be a total failure. This is the most fundamental difference between it and the leasing of general stuff. That is why people worked so hard to engage in a trusted computing environment. Of course, I think that if you used a more fashionable name, you would call it data mining. You could give your own data to many people who need your data. For example, Facebook could be used to analyze user behavior in advertising and analyze the market. Of course, artificial intelligence would be key. So the future could have a concept of data mining.
Thank you very much for today. Our sharing ends here. Thank you all.