Emily Parker, cofounder of Longhash, describes what the company, which has an Asia-focused incubator and data media site does, how she ended up launching an Asia-focused company, why she’s seeing US crypto teams and ICOs going to Singapore, why the Chinese government cracked down on crypto, and what misconceptions she sees about crypto in China. She explains how the Chinese still trade Bitcoin and cryptocurrencies despite the ban, why Tether plays a big role, how the China ban has affected crypto entrepreneurship and how the upcoming People’s Bank of China digital currency could impact crypto. We also discuss how the attitude toward crypto has changed in Japan over time, why so many crypto teams are settling in Singapore, and whether or not the philosophies of censorship-resistance or decentralization resonate in China.
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Episode links:
Longhash: LongHash.com
Longhash’s Twitter: https://twitter.com/
Emily Parker: Emilyparkerwrites.com
Emily Parker on Twitter: https://twitter.com/
Emily Parker on LinkedIn: https://www.
Longhash’s incubator: https://incubator.
BTC trading by US EST and PST vs. China: https://www.longhash.
Bitcoin metrics on Longhash: https://www.
Emily’s interview with SEC commissioner Hester Peirce: https://www.longhash.
Unchained interview with commissioner Peirce: https://
Longhash article showing more ICOs in Singapore than in US in Q1 2018: https://www.longhash.
Longhash’s graphic showing money transmitter laws in the US: https://www.longhash.com/
Longhash on ICOs fleeing the US: https://www.longhash.com/
Unchained interview with Primitive Ventures: https://
Unchained interview with Da Hongfei and Patrick Dai (not Lai!): https://
Unchained interview with CZ of Binance: https://
Emily’s interview with Coincheck’s president: https://www.
Longhash deck of cards of crypto players: https://www.longhash.
Transcript:
Laura Shin:
Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I am your host Laura Shin. In case you haven’t heard, I have another crypto podcast called Unconfirmed. It’s shorter and newsier and comes out Fridays. If you haven’t yet, go subscribe now wherever you get your podcasts. Also, find out what I think are the top stories in crypto by signing up for my weekly newsletter at Unchainedpodcast.com.
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Laura Shin:
My guest today is Emily Parker, co-founder of LongHash. Welcome, Emily.
Emily Parker:
Thank you, so much, Laura. I’m really excited to be here.
Laura Shin:
You are the co-founder of LongHash, which people may be familiar with for its data journalism, but there are actually two parts to the company, so can you describe what LongHash does?
Emily Parker:
Sure. So, the most general purpose of LongHash is to serve as a gateway to Asia, and both parts of the company try to achieve that goal, so on the incubator side we help blockchain projects reach Asian markets, and we also try to help Asian projects go global, so we have offices all over the Asian region, and then we also have a data media platform, as you mentioned, in which we use data to help investors understand blockchain and cryptocurrency with an emphasis on Asian markets.
Laura Shin:
And what’s your background, like how did you come to the blockchain space, and then end up founding LongHash, which you obviously you sound American, which I believe you are, which…
Emily Parker:
Yes, I am.
Laura Shin:
Has a focus on Asia.
Emily Parker:
Okay. A very reasonable to ask. So, I have been interested in China for a very long time. I started studying Chinese in high school, and basically, I’ve done a lot of different things in my career. I started out in journalism. I worked at the Wall Street Journal, and also at the New York Times, but I also served in the US government as a policy advisor at the US State Department, and then this is my second startup, so I’ve done a lot of different things, but I think the one consistent trend in my career has been Asia and technology, so when I was at the Wall Street Journal in Hong Kong I actually wrote a column looking at how…the impact of the internet in China, specifically, and then I went on to write a book looking at how the internet was changing lives in China, Cuba, and Russia, and I’ve just been going back and forth to Asia for many, many years, and I’ve also spent a lot of time in Japan as well, and so cryptocurrency kind of got on my radar when I saw how big it was in China and how it was blowing up in China, and this kind of caught my interest because it reminded me a lot of the internet, because it was this decentralized technology that was clearly making the Chinese government nervous, and one thing that I had learned from looking at the internet in China for many years is that it’s very hard to shut it down.
You can censor it, you can restrict it, but there’s always going to be information that gets through, and so my instinct was that cryptocurrency would be similar, and you could even argue that the stakes were even higher because the internet is this spread of information and cryptocurrency is this spread of money, sometimes huge volumes of money, so I got very interested in cryptocurrency in China when I saw, A, how big it was becoming there, and B, when I saw that the Chinese government was trying to reign it in, and I kind of wanted to see what would happen, and that was sort of my entry into the crypto world was looking at it from the Chinese perspective.
Laura Shin:
And what year was that?
Emily Parker:
That was 2017, so it was right before…right around the time when China was signaling that they were going to be cracking down on cryptocurrency.
Laura Shin:
Oh, interesting, and then how did you have the idea to build the business this way, half incubator and half journalistic…or media outlet?
Emily Parker:
So, I went to China and I was kind of really…I met a lot of the people in the crypto world there. I met the people that would become my co-founders, my partners, and initially, the idea behind LongHash was more of a straight data media platform, this idea that there’s so much data in blockchain. Everyone always talks about that, right, like how the data’s transparent and you can see all this data, but it’s not very easy to make sense of it and it’s not very easy to know which data you should be paying attention to, so our initial idea was okay, let’s do not just a media platform, sort of a hybrid, like a data media platform, because we’re not a media platform, like CoinDesk for example.
Most of our stories use data analysis, but we’re not a pure data platform either, so basically what we’re trying to do is take data and tell stories around it and help people understand that data, so that was kind of the initial idea, and the other thing we really wanted to do was have a really global platform. My partners were in Asia. Asia, which I’m sure we’ll get to later, is a huge part of the crypto world. Some people would say it’s the heart of the crypto world and we wanted to increase of those markets. In LongHash our data media platform publishes in English, Chinese, and Japanese, and we also really try to cover those markets.
Laura Shin:
For the data side, what types of data do you typically utilize for your stories?
Emily Parker:
So, we use quite a wide variety, but we use a lot of unchained data, we use price data. I mean, sometimes we’ll do more creative things where we’ll look at the number of meetups in a certain country to gauge interest there. We’ll look at social media data. It’s a pretty wide variety, but our main focus, whatever data we use is to really try to tell a story around it and not just put that data out there and have people have to make sense of it for themselves.
Laura Shin:
Yeah, I was kind of poking around and I thought some of these were very interesting. There was a story that showed the Bitcoin price against the different time zones, eastern time in the US, pacific time, and then actually I forget the last one but it was an Asian, maybe Beijing time or something like that, and the conclusion when you looked at the different graphs was that basically, at least for the last few months, the US crypto market has been more enthusiastic than the Chinese one, and then some others were like what is the price premium on CoinBase versus OKCoin or tracking the bitcoin price against Baidu searches for bitcoin, so these are really interesting.
Emily Parker:
Thank you. I’m glad you think…yeah, we do a very wide…we really try to do a wide variety of analyses. We do things like we have a stable coin health index where we try to rate the health of stable coins using various factors. Again, we try to look at the level of social media interest in China, in cryptocurrency, for example, so yeah, it’s pretty broad but our main point is to just try to make these stories understandable.
Laura Shin:
And are there any types of data about the blockchain and crypto space that you find are actually still difficult to get despite everybody touting how transparent it all is?
Emily Parker:
Oh yeah, so many. Well. Yeah, the first point is that everyone says how transparent it is, but how many people actually know how to make sense of blockchain data, right. I mean, everyone’s like oh, you can see everything on the blockchain, but it’s not like the average person can just go and see everything on the blockchain and take a story away from that, right, A, but B, yeah there are a lot of missing pieces to the data, and particularly…I mean, I think China is a case and point because when China cracked down on crypto exchanges after that, in late 2017, a lot of…China became a real black box, and I think for those of us who have spent a lot of time in Asia we know that there’s a lot happening in China.
We know that China has active trade but it’s really hard to find those numbers. It’s really hard to prove that, and so I think China’s a really good example of there’s just not a lot of specific data about what exactly is going on there. I mean, in general I think geographical data can be very difficult. I mean, and a lot of people point to data from local bitcoins, for example, but that’s obviously not conclusive, and part of the problem is a lot of these exchanges it’s unclear where they’re actually based, and unclear who the majority of their users are, so it can be very difficult. I’m personally very interested in geographical data, and it can be difficult to find.
Laura Shin:
Yeah. Well. Probably part of that is because since you are…you do have this geographical focus and then within Asia itself there’s so much variety. I could imagine you trying to parse the signal is country by country. So, just to kind of set the terms here how do you define Asia, at least for your site, or what areas of Asia are you focused on?
Emily Parker:
Yes, a very important distinction, because yes, you say Asia and obviously Asia is…different countries have different rules, and not only that, the rules are changing constantly, it’s a very dynamic space, so I would say that the countries that we are really the most heavily focused on would probably be China, and Japan, and also Singapore. We do have a presence in Hong Kong as well, but I’d say China, Japan, and Singapore at least, and those are the three places that I personally, I think, know the best.
Laura Shin:
And is that why you decided to focus on those areas, simply because that was your knowledge base?
Emily Parker:
Not exactly. I think those three markets make a lot of sense. I mean, China is a very important market. I think it will continue to be, regardless of the regulatory obstacles. Japan, just on the retail trading side, on the retail investing side is still huge, and Singapore, I mean, you’re just hearing more and more about how Singapore is kind of this paradise of crypto and that they have friendly regulations. I think Singapore is a place that I just hear talked about a lot, so I think those three places are…they do make a lot of sense strategically. Obviously, another important country is Korea. We don’t really have a presence there yet. I think hopefully, eventually, we will, but yeah, that’s kind of the missing piece of that puzzle.
Laura Shin:
Yeah, I was going to say, because I even noticed…I think one of the articles on your site showed the various trading pairs and that was the third-largest. It was USD then…
Emily Parker:
Yeah.
Laura Shin:
Yeah, the Japanese Yen, and Korean Won.
Emily Parker:
Yes, Korea is no doubt important.
Laura Shin:
So, very broadly, how would you characterize the differences between the crypto markets in the west, or maybe even in particular in the US, versus Asia?
Emily Parker:
Yeah, so it’s a really…it’s a tough question, so I think recently…so, I just interviewed an SEC commissioner, Hester Peirce, who I know you interviewed her as well. It was a great interview, and she was visiting Asia for various reasons. She had various things that she was doing there, but one of the things she was doing, in Singapore at least, was trying to see the lay of the land and meet blockchain projects and learn about the crypto space there, and so I was talking to her specifically about this question, how she sees the US crypto landscape as compared to the Asian crypto landscape and she was pretty direct in saying that a lot of projects I’m talking to are avoiding the US, and Singapore. For example, seems to have a more open approach to regulation, and so that’s something that I feel like you kind of hear a lot these days, in the Asian crypto world, that the US is seen as either very strict, or I think more important, very confusing.
I think that’s kind of…and that’s what the commissioner was saying, is that it’s not so much a matter of strictness it’s that the US is just confusing, and cryptocurrency is confusing enough, right. It’s already confusing and then you add a layer of…I mean, with the US for example, you have different regulatory bodies that are involved in crypto, A. Then you have different states that have different rules on money transmission, so we did…one of the visualizations we did at LongHash some time ago was we did a map of the United States, looking at different approaches towards money transmission, and kind of separating them by color, and it was like this rainbow map, right. It didn’t make any sense, and then so you have the different regulatory bodies, and then you have this kind of rainbow map, and then you also have what is a security, what is a utility. You have the Howey Test that…there’s just a lot about the US environment that I think seems like you kind of need to be a securities lawyer to understand.
The commissioner at the SEC was basically acknowledging this and saying that we just don’t have enough clarity, and I feel like if someone at the SEC is saying this how is just a blockchain project going to figure it out, and I think there’s this fear…I mean, the US is obviously a very important market, and I think a lot of people want to be in the US but there’s this fear that you could break a rule without even knowing that you’re breaking it, and who’s going to want to take that risk?
Laura Shin:
Well. so, for that reason, I mean, are you seeing that there’s then a lot of movement the other way, because the way you’ve been phrasing this it’s a little bit like oh, Asian projects maybe are scared to go there, but then are you seeing projects where maybe the teams are from the US but then they go to Asia?
Emily Parker:
Yeah. I mean, again, anecdotally. This isn’t something…I don’t know how big this phenomenon is, but yeah. I mean, I think you definitely hear about companies that are registering in Singapore. ICOs, we ran a story about ICOs are leaving the United States. There is some data on this, right, so Elementus that does really good work in data, they did…they released a report where last year, in August, for the first time, August 2018, Singapore ICOs…the number of Singapore ICOs surpassed those of the United States, which is kind of remarkable, given that you’re comparing the size of Singapore and the United States, so I think there’s a bunch of data points like that where you’re just seeing this move, and new exchanges that are opening up in Asia, and yeah, and projects that are…they just see places like Singapore as more welcoming and more clear, and I don’t…just to say, I don’t think it has to be this way.
I don’t think it will necessarily always be this way, but that is kind of the feeling right now.
Laura Shin:
And out of curiosity, do you think that some of that might be…obviously, ICOs have been banned in China, so is some of that demand in Singapore Chinese people who somehow are able to participate in Singapore? Do you see what I’m asking?
Emily Parker:
Yeah, of course. Sure. So, that’s kind of the really fascinating thing about Asia is that it’s so dynamic and even in the two years, or so, where I’ve been watching Asia very closely there’s been so many changes, and it’s almost like whack-a-mole, like where something gets…some country clamps down and then all of the activity goes somewhere else, and I feel like I’ve been watching this spread throughout the region. When China cracked down on ICOs, or when China sort of cracked down on the crypto a lot of activity went to Japan and Korea, but then Japan and Korea have sent mixed signals.
Japan, for example, in early 2018 became a lot more strict on cryptocurrency, and then I think at that point Singapore started looking more friendly, so yeah, it has been moving around the region for sure, and I think a lot of people who are kind of leaving jurisdiction’s that are not friendly to go to places like Singapore that are seen as more friendly.
Laura Shin:
Oh, that’s really interesting. Yeah, I guess it would be like if…I don’t think Europe has a super unified policy, but if the different European countries had different policies then you might see movement. One other thing I wanted to ask was that in a previous episode Eric Meltzer and Dovey Wan of Primitive Ventures were saying that they thought the decentralized networks tended to be…have more western founders, I guess, and that there were more really good projects around infrastructure, around trading and exchanges and stuff, that were coming out of Asia. What do you think of that take?
Emily Parker:
Well. There definitely are projects that have a background in Asia. I mean, yeah, I think it’s true. Again, I don’t know how to quantify that to say what percentage of these projects because it is very decentralized, and sometimes a country…sometimes a project will have Asian founders but then they’ll be incorporated somewhere else, but you look at, for example…I mean, you look at Binance, you look at NEO. These are some really important players. I mean, you look at TRON. I don’t know, because people have different opinions about TRON, but these are kind of interesting projects that have…or exchanges that have come from Asia.
Laura Shin:
Right. Okay. Well, so let’s kind of dive into the different markets within Asia, and I know that China is a particular market that you have special knowledge in, so broadly, how would you describe the industry and the markets there?
Emily Parker:
In China?
Laura Shin:
Yeah.
Emily Parker:
I think it’s…I would describe it as full of contradictions and very different from how it appears, would probably be the easiest way to describe it. So basically, what happened in China, just a short history of Chinese crypto markets, is that trade was booming. Bitcoin trade in China was huge, and then ICOs were also exploding, and then the Chinese authorities got very nervous and they kind of clamped down on Chinese crypto exchanges, specifically looking at trading Chines currency directly for cryptocurrency, and then they also banned ICOs, and so ever since that point…and then at that time, I think, the price reacted very strongly, the bitcoin price reacted, but it’s since came back, and I think China is still a vibrant place for cryptocurrency. It’s just a little bit harder to see, so China, for example, still has a pretty active OTC market, so even though…so you can still trade Chinese currency for cryptocurrency you just have to do it via an OTC platform.
There are still definitely projects coming out of China, so there are definitely startups in China, and also the other kind of…I don’t know if it’s a contradiction, but distinction is that the Chinese government may be very wary of cryptocurrency but they like blockchain. They like blockchain technology, so there’s kind of these two things going on where you kind of have the authorities sending positive signals about blockchain but negative signals about cryptocurrency, but I think the other important thing to say here is that cryptocurrency…like bitcoin is not illegal in China, per se, and China cracked down on some very specific aspects of the industry, and I think…for example, ICOs, and at the time when China cracked down on ICOs, frankly, almost everybody I spoke to in the Chinese crypto world supported that crackdown because they felt that ICOs in China were kind of getting out of control. There were a lot of frauds, and there were a lot of scams, and that it was bad for the industry, and so I think that actually…I heard a lot of Chinese crypto enthusiasts say that that wasn’t actually the wrong decision.
Laura Shin:
Yeah, all the way back when the ban happened, I did an episode with two founders. It was Da Hong Fei and Patrick…I’m just blanking on his last name. Anyway. They were from NEO and Quantum and they were giving some examples of some of the really, really eyebrow-raising ICOs and one of them as a business around mooncakes, and I remember being like okay, so yeah. It obviously was getting, super, super, super frothy over there, but then when you were saying that people can still trade OTC, and stuff, what does that look like? Here OTC I feel like generally means people who are spending more money where they…or moving large amounts of money where they might be worried about moving the price on an exchange or something, and then obviously you have maybe, I guess, kind of a local bitcoins model, but what does OTC look like there?
Emily Parker:
So, OTC looks like basically an online platform that sort of matches buyers and sellers, and that’s where you can trade Chinese currency directly for cryptocurrency, and then what a lot of…what some people in China do is then they will get USDT, tether, and then they will use that to trade on exchanges like finance, or WaBi, or something like that, so the first step is OTC, kind of getting…using your Chinese currency there and then getting into maybe a stable coin like USDT and then using the USDT to trade on one of the larger cryptocurrency exchanges, so even if you’re not able to trade directly from Chinese currency into bitcoin you can trade from USDT into bitcoin, and that’s why USDT is actually quite a big phenomenon in China. It has a little bit of a different connotation there.
Laura Shin:
Okay. Okay. This is really interesting. So basically, it sounds like it is really like a local bitcoin, where it’s kind of like a Craigslist style, hey I’m selling for this amount, or I want to purchase at this amount and then people can match with each other, and then once people get their bitcoin then they exchange for USDT, or…I don’t know how that works.
Emily Parker:
It’s more like once they get their USDT then they trade it for bitcoin.
Laura Shin:
No.
Emily Parker:
Yeah, so like…yeah.
Laura Shin:
Where do they get that?
Emily Parker:
So basically, you can look at some of the OTC platforms as kind of like the onramp from fiat currency into cryptocurrency, and then once you have USDT you can trade directly on some of these larger exchanges, Binance, or whatever if that makes sense.
Laura Shin:
Oh, okay, so the initial…the OTC transaction is actually for USDT.
Emily Parker:
In some cases, yes. I mean, you…yes. You can use it for other things as well, but at least from…that’s the use case that I’ve heard from some people in China is that they will try to get USDT first and then use the USDT on the more mainstream exchanges.
Laura Shin:
Interesting. So, then for these Chinese exchanges that basically still exist, I guess maybe they’re not domiciled anymore in China, like WaBi, and OKCoin, and Binance. Do you think it’s affected their volumes, or maybe it sounds like it really hasn’t?
Emily Parker:
I mean, it’s so hard to know. I mean, it’s kind of another funny thing. So, Binance, for example, was in China and according to CZ they let China before the crackdown because they kind of saw the writing on the wall, and then from then on Binance kind of exploded, right, and it’s not…I don’t know if it’s necessarily due to China or in spite of China, but these exchanges have done really well post-China crackdown. I mean, maybe part of it is because they were sort of forced to go global, but yeah. I mean, it hasn’t really…I mean, look at Binance, right. I mean, look at Binance…I mean, you did a great podcast with Binance, right? I mean, look at their explosive growth. I mean, a lot of that happened after the crackdown, right, so it definitely didn’t hurt them.
Laura Shin:
Yeah. Well. One thing I remember CZ saying is that with the ICO ban the different projects were told that they had to refund investors who wanted to be refunded, but because the BNB tokens had risen nobody wanted to give back their BNB tokens, and then on top of that the exchange had actually done a few token sales on the platform itself, and so then they offered to refund any investors for those tokens, and I can’t remember…I’ll have to check this, but I think…it was in the single-digit millions that they spent on it, and if I remember correctly I think it was six million that they spent, and they only raised 15 million on their ICOs, so it was kind of a big step they were taking, but they felt like they should do that for their customers, and he said that he felt like afterward then he just won the loyalty of all of these customers.
It sounds like…because I guess the thing that I was curious about is I feel like in the US if there was some kind of ban like this then I don’t know if you would still see a ton of entrepreneurial activity, like it might kind of attract people who were more of the outlaw type or…whereas it…yeah, just I’m curious to know in China are these entrepreneurs more of that type, like the kind who aren’t afraid to have a brush with the law or are they entrepreneurs who are just kind of normal, operating above board type of people who don’t feel like they’re going to get in trouble. Yeah, how has it affected that?
Emily Parker:
Yeah. I think that’s a really good observation and I think you’re probably right about the US, I mean in terms of if something like this happened in the US, I think the reaction would be different. I think part of it is, again, there are…China didn’t ban cryptocurrency totally, right, so…and I think people can kind of see that distinction, that if you’re a blockchain startup you’re not necessarily doing something shady. China is worried about some very specific things, like using ICOs for public fundraising, right, so it’s kind of clear what they’re concerned about, but yeah. I mean, you could say that they are sending a signal is not particularly liked, but again, it’s a conflicted signal because sometimes they don’t seem to be sending that, but I think the larger message here is that entrepreneurs in China, I think, are just kind of used to restrictions.
I mean, China bans a lot of things, and I mean if you look at…like look at the internet for example, right. I mean, there are so many restrictions on the internet in China. This is a fact, and yet, what’s happening in the internet in China is kind of amazing, right. I mean, it’s still an amazing industry. I mean, and in some ways if you look at WeChat and just how incredible a product that is, and that was born in a very, very, very restricted environment so I’m not praising Chinese restrictions, but I’m saying that I think entrepreneurs there they just…they know how to work around them and find the glimmers of opportunity in a very restricted environment, and I think cryptocurrency is very much the same way.
Laura Shin:
I want to learn more about that in a moment, but first a quick word from the sponsors who make this show possible.
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Laura Shin:
Back to my conversation with Emily Parker of LongHash. So, you mentioned, right before the commercial break, that you see some parallels to the book that you wrote, which I’ll just read out the title for people, Now I Know Who My Comrades Are: Voices from the Internet Underground, and as you mentioned, it talks about how the internet is changing life in China, Cuba, and Russia. So, what parallels are you seeing to the development of crypto and the internet in China?
Emily Parker:
Yeah, so that’s…I mean, that very question is exactly what got me interested in cryptocurrency. It was kind of like are there parallels here, and I think there are a lot of parallels in the way that the internet and cryptocurrency are developing in China. I mean, I think the biggest parallel on the most macro level is that these are two examples of a decentralized technology that is very difficult for governments to control. This is true of the internet, and this is true of bitcoin, and I think with the internet…there are a lot of opinions about the internet in China. I think right now a lot of people in the west see it in a very negative light. Oh, it’s so censored, it’s so restricted, nothing is happening there. I don’t really agree with that. I mean, I think yes there is a lot of censorship but I also think that there is a lot of innovation and there’s a lot happening on the Chinese internet and there’s a lot more happening there than ever would have happened in the period before the internet, and I think the internet in China has had a huge impact on just a lot of people’s individual lives.
So, the other thing about the internet, and I’ve sort of been saying this for years, and I continue to say this, despite censorship, despite restrictions, it is just not possible for any government, really, to completely control the flow of information on the internet. It’s a decentralized phenomenon and it’s just not possible to completely shut it down, and I think that’s very true of cryptocurrency as well, and I think…I don’t think the Chinese government attempted to completely shut down cryptocurrency, but even if they had I think it would be incredibly difficult, so I think what…in some ways, you can also compare kind of the way that authorities look at the internet and look at crypto. I think in both cases…for example, Facebook, Twitter, these are all blocked in China, but with a little bit of effort you can get to them. It’s not so hard.
I mean, you get a virtual private network, or whatever, but I think what the goal was, was to kind of raise the barrier to entry, right. It wasn’t to completely snuff all of these things out it was to say okay. We’re just going to make it a little bit harder for you to do this, and the same holds true for cryptocurrency. It’s not like China was saying we want to get rid of bitcoin entirely. They were raising the threshold. They were saying okay, if you want to…you need to know a little more, you need to make a little bit more of an effort, because it was kind of at the point where just anybody was kind of getting involved in this market, so I think in both cases, in China, if you want to go see Twitter, if you want to go trade bitcoin you can but it’s just a little bit harder. You kind of have to try a little bit harder, but I think…it’s a very interesting phenomenon, because I think when China cracked down on cryptocurrency, or on exchanges in ICOs specifically, there was kind of this feeling like okay, is this the endgame.
Bitcoin in theory, right, is supposed to be able to survive any kind of government repression, but China was so important. I mean, China was such an important market, and I think there were questions at the time, like can bitcoin survive this, and not only did Bitcoin survive, I mean, it thrived, right. I mean, that was kind of like…we kind of entered a bull market, so I think that was just sort of a really strong example of no government can kill bitcoin. No one government can kill bitcoin and I think that’s true of the internet as well.
Laura Shin:
Yeah. Actually, yeah, let me not ask the question that way. I was going to ascribe some kind of intention to the Chinese government, but let me just ask in general, obviously, the PBOC, the People’s Bank of China, is going to be releasing its own digital currency. So, what impact do you think that will have on interest in crypto in China?
Emily Parker:
You know, it could go either way. I think it’s a very similar conversation as to the one we’re having about Libra, right. I mean, I think there are people who would say oh, this is bad for bitcoin. It’s going to replace it but then there’s other side saying well, not necessarily because just…it might actually increase interest in cryptocurrency, increase awareness of digital currency, and also, I mean, I think…and this is my personal opinion. I mean, I think this is going to be such a different animal that I don’t think…someone who’s inclined to use bitcoin is not going to be easily persuaded to use this instead, and you could even argue that it will make the case stronger for a cryptocurrency like bitcoin because bitcoin is not controlled by a government. It is decentralized. It has more privacy, so I think it’s just a completely different beast.
Laura Shin:
I wonder if it’s going to drive interest in tether in China even higher.
Emily Parker:
So, that’s interesting. So, we had a writer for LongHash wrote about this, and he just kind of mentioned it, and he actually had a different interpretation. He said well, maybe it will be good because maybe it will be used instead of tether. Maybe that will be the onramp. I mean, who knows but he seemed to think that maybe it would become an alternative but who knows, right. I mean, there’s still so much we don’t know about this, and you just…I mean, I really think it’s very similar to Libra, right, like how it will play out is really anyone’s guess.
Laura Shin:
But I don’t understand. I mean, if they’re currently banned from trading Renminbi into bitcoin then why would…I just feel like then the government’s incentive to allow people to turn Renminbi into tether, which people know…which the government would have to know is being used to buy bitcoin, that…I just feel like the likelihood that they’re going to allow people to do that is low, but I know nothing about the Chinese government. You know way more than I do, so what do you think?
Emily Parker:
I mean, who would’ve expected any of this, so I really…I just really feel like it’s anyone’s guess. I think how that’s going to play out is just impossible to predict. I think it’s going to have a lot of interesting uses, but I…it’s really hard to know.
Laura Shin:
All right. Well. Let’s turn to Japan since obviously, that’s also a market you know really well. In Japan they suffered the largest crypto hack…or crypto exchange hack of 500 million dollars at Coincheck back in early 2018, and then obviously before that there was Mt. Gox, so what is the atmosphere there like now?
Emily Parker:
Yeah, so Japan is really…I mean, even in, again, two years I think Japan has undergone several different cycles, so when China initially started cracking down a lot of that energy went to Japan for sure. I mean, we kind of saw that. There were reports about that. I mean, Japan it was like this is Japan’s chance, right. Japan is going to become the new crypto paradise, and Japan as already heading that direction. I mean, A, there is a really strong…I spend a lot of time in Tokyo. There’s a very strong crypto community there. There’s Mt. Gox, they have a long history, there’s…Satoshi Nakamoto has a Japanese name, whether he or she is Japanese or not is a whole other question, but yeah, there’s…Japan has kind of a long…relatively long affiliation with cryptocurrency, and I think…at least the impression I had in 2017 was that the Japanese policymakers were…kind of saw cryptocurrency as an opportunity. They saw it as an opportunity because FX trading is very strong in Japan. I think a lot of those people are interested in crypto.
I think there were even some people who thought okay, maybe this will be good for economy. Japan had been battling deflation and economic stagnancy for a very long time, and I think there were some people who were like maybe…what do we have to lose? Let’s try this. Let’s see if this will stimulate consumption, this will be kind of like a break for us. I think there was a little bit of that attitude. I think, also, Japan was thinking okay, let’s…this is maybe our chance to become a Fintech capital to attract startups here, so that was the mood that I was picking up in 2017, was like oh this is kind of exciting, and just the visuals. You would go to…I think it was in Shibuya and there was this huge bitcoin ad, and you’d see them on the subways. I mean, it felt like…and especially compared to China, right, it was like okay this is totally different, right.
China is sending a signal of we don’t like this, and Japan is putting up billboards. I mean, private companies are putting up billboards. Anyway. So, that was the mood, and then as you just said, early 2018 Coincheck is hacked, largest crypto exchange hack in history, over 500 million dollars, and then basically things kind of ground to a halt, and I think this is one of those things that I don’t know if that translated so clearly here in the United States. I don’t know if people really knew that because I felt like even after that happened people were still kind of describing Japan as a crypto paradise, but after that it definitely was not. I think policymakers were super freaked out, and all of a sudden, exchanges had to undergo a much more rigorous process. There were a lot of inspections. It became very difficult to get a new coin listed in Japan. I think it was like…from that hack it was at least 18 months for a new coin to be listed, so the mood in Japan after that hack was pretty dark.
I think the media, which had been kind of positive about cryptocurrency kind of became a lot more muted and I think…yeah, I think just average…ordinary Japanese people were more likely to see crypto as something that’s shady and associated with criminal activity or hacks, so that’s been the mood in Japan, and I think recently we’re starting to see a little bit of a thaw, and I think…I’m sensing a little bit more of optimism that the regulators will kind of loosen up and that there will be more activity in Japan, but yeah, there was very big changes in Japan over the past two years, but you know…for example, Coincheck, when they were hacked, they were operating under a provisional license, and then they finally got an actual license, so there has been progress, and now they’re one of the biggest exchanges in Japan.
In Japan, if you look at…at least according to some data, if you look at which national currency is most trade against bitcoin number one is the US dollar and number two is the Japanese Yen, so it’s still a pretty big important market there, so I don’t know. I mean, I think, again, this could go either way. I mean, Japan definitely had a tightening but they were also very ahead of the curve on the regulatory front, early on, and so the questions is, is this tightening just going to lead them to a better place where exchanges are more secure or are they going to kind of go overboard, and I think…I’d say the mood in Tokyo now is cautiously optimistic, so we’ll see, but it hasn’t been very friendly for the past year or two.
Laura Shin:
And what about the entrepreneurs in Japan? What you were discussing is kind of around the trading and the acceptance of bitcoin as a national currency, but are you seeing that entrepreneurs there are kind of interested in getting into the space and building stuff?
Emily Parker:
Yeah, I think they definitely are. I mean, and this is something like our incubator. That’s kind of one of the things we do is try to help people get into the Japanese crypto space, but I think it’s…again, it’s a little bit slow. I mean, I think Japan still has a little bit of a big company culture. I think that’s changing, for sure, but I think that that’s not necessarily as much of a crypto phenomenon as a startup phenomenon, but yeah. I think you are seeing…I mean, I think just in Japan and Tokyo…I mean, I’ve been going back and forth to Japan for so many years and I think the crypto environment there is vibrant. I mean, there’s definitely a lot of meetups, you meet a lot of startups, but I do think that there were people who were freaked out, or alarmed by the regulatory crackdown, and just the difficulty, for example, of listing a coin on a Japanese exchange, so I think over the short-term some people probably have shied away from the Japanese market, but they could come back, so yeah. I think, again, cautious optimism about the Japanese market.
Laura Shin:
And we kind of briefly touched on Singapore earlier when you were contrasting it with the regulatory climate here in the US, but I was curious to know, as we mentioned Singapore is a small country, a somewhat small market, so what kind of activity are you seeing there? Is it literally just people being like hey, this is a place where we can experiment, so is it just like a lot of entrepreneurs, or who’s going there and what are they doing?
Emily Parker:
Well. So, as we saw there were definitely a lot of ICOs there, definitely companies registering there. I mean, it’s not uncommon where you see come company where they’re in some whatever country and then you look at their…you see that they’re actually registered in Singapore. You see that a lot. That’s been going on for a while. I think just…yeah, people who are kind of building companies, moving there, all sorts of activity happening. I mean, it just feels like…I mean, just even…even just on the conference level it feels like there’s conferences. I mean, there’s blockchain conferences everywhere every second, but in Singapore, it feels like there’s constantly something happening there, so yeah. I mean, Singapore just when you go there you really feel that there’s a lot of momentum, and I think in general Singapore is kind of seen as welcoming to innovation. I think the regulators in Singapore, you hear them talked about as being relatively welcoming, relatively open, you can kind of talk to them, and also compared to the United States the regulations are described as relatively clear. At least I’ve heard them described that way by the SEC and others.
Laura Shin:
So basically, it sounds like we might continue to see the ICO trend just live on in a place like Singapore or something like that.
Emily Parker:
Or the IEO trend, yeah. Yeah, so change the letters.
Laura Shin:
You did say earlier that Korea isn’t one of your main areas of focus but since you are in Asia a lot, I just wondered what do you hear about what’s going on in Korea and what that part of the crypto scene looks like?
Emily Parker:
Yeah. I mean, I guess, my main impression of Korea, and I’m hesitant to riff on Korea only because I know sometimes these countries are so much more complicated than they look, so my impressions are fairly superficial, but my impression of Korea is just that yeah, I mean, it’s a classic case of a real boom. I mean, there’s a real…it’s a huge market. There was a huge boom there. A lot of people lost money, and I think the authorities got very nervous about that, so I think there’s definitely that tension in Korea where the government is understandably concerned about speculation getting out of control, but yeah. Again, I don’t want to speculate too much about Korea, because people know much more about it than I do.
Laura Shin:
Yeah, I can imagine so many people lost money there because not only was it that so many people in Korea were buying during the latter half of 2017 when the fever was at its pitch but then on top of that there was the kimchi premium, so they were already paying higher than normal prices, which is unfortunate.
Emily Parker:
Yeah, and I mean the one thing I do remember noticing about Korea was that, again, after the Chinese crackdown Korea was definitely sending mixed signals about what their attitude towards cryptocurrency could be, and there was a lot of confusion there about if these exchanges would be allowed to thrive or not, so I think there’s some…yeah, there was definitely a lack of clarity, at least coming from the initial. I don’t know if that’s still the case.
Laura Shin:
And then you did mention that one of your other offices is in Hong Kong. What are your observations about the crypto scene there?
Emily Parker:
Yeah, it’s funny. I was asking a friend, the other day, about it and we had a piece on LongHash about Hong Kong, which was basically…the basic argument was Hong Kong is doing nothing on crypto regulation and it’s great. Basically saying Hong Kong was pretty much hands-off, and that’s been great for crypto there. Again, what’s happening in Hong Kon now is kind of overshadowed by just all of these other things that are happening in Hong Kong, so I think there’s…so it’s kind of hard to talk about any…I don’t really know the status of anything in Hong Kong right now, but yeah, that was at least something that…that was kind of how we covered it, is Hong Kong being pretty hands-off and how that was a good thing. I mean, obviously compared to mainland China that’s a very, very different approach.
Laura Shin:
Yeah, which is basically why I think people in that country are having trouble, and it’s totally understandable why maybe the status of the crypto industry there is on hold right now because I think they’re busy doing other things, have much more important priorities.
Emily Parker:
Yes, that’s exactly right. I actually asked a friend in Hong Kong, just recently, oh so what’s the status of cryptocurrency there and his attitude was kind of like really? We have so many other concerns right now. Yeah.
Laura Shin:
Yeah. Yeah. Well. It’s sad. I really sympathize with them a lot, but speaking of which, so one of the drivers of interesting crypto here, at least in the US and I think some of the other places in the west, is this principle of decentralization, which obviously brings with it the inability for others to sensor or surveil your transactions, or maybe not the inability always but at least on the surveillance side, but it makes it difficult, and so obviously…I don’t know a ton about it but obviously I do know that the stereotype, at least, or the common observation is that the villain that has a poor track record on these issues is the Chinese government, so I was just curious to know are concerns like that around decentralization, or censorship, or whatever, or surveillance do those drive the Chinese at all? Are they unhappy about having their transactions surveilled on Alipay and stuff?
Emily Parker:
It’s always so hard to speak generally about what’s motivating anyone in China. Just, A, because there’s so many people, and B, there’s not a lot of public opinion polling on this kind of thing, so I can only really talk about people I’ve spoken to or kind of my very anecdotal impression. I think…look, I think there are plenty of people in China who are trading bitcoin because they like bitcoin and they like cryptocurrency and I don’t think they’re thinking about more than that, right. I mean, I think they’re just trading it the way anybody else would trade it, but of course yeah, I…
Laura Shin:
To make money, you mean.
Emily Parker:
Yeah. Yeah, exactly. To make money, or for whatever reason, but not necessarily out of some larger mission. I think that’s true all over the world, right, but yeah. I do think…I mean, whether or not people are thinking of bitcoin specifically as okay this is in direct opposition to some kind of regimen, or…I don’t know if they’re thinking about it that way, but I do think bitcoin, by its very nature, it’s a currency that’s not tied to…that’s not controlled by a bank, that’s not controlled by the government. It is a way of asserting your independence from the system to a certain degree, and how much…I mean, I think some people probably think about that a lot. Maybe people think okay, my money is safer here because it’s…my bank account can’t be frozen, and they can’t just take it away. I mean, I think there’s maybe some people that think that way.
Again, I don’t know how directly people make this connection, but I do think there is this idea that yes, bitcoin is…it’s a form of independence, and in that sense yeah. I mean, it’s a form of asserting your autonomy from the system, and I do think people are very of that, for sure.
Laura Shin:
Right. I mean, I guess, my question is just a little bit more, here I feel like one of the main populations, I guess is the word, or just…yeah, amongst the different groups that are really interested in bitcoin one of the ones, maybe, that I would call out is this libertarian type crowd, which is a little bit against government involvement, and so…but I just wondered, was that a noticeable segment of the bitcoin enthusiasts in China?
Emily Parker:
They definitely exist for sure. There are definitely crypto thought leaders in China who think this way, that yes, this is kind of…this technology that…yeah, I mean, again, grants them an independence from the system and they’re thinking about that in a political way. How widespread that way of thinking is I’m not sure, but I’ve heard it. I’ve definitely seen it and I’ve heard it. It’s just hard to know the scale of it, and if most people are thinking that way I don’t know.
Laura Shin:
Oh, okay. Oh, interesting. So, then here we have Libra potentially, also, being released. If that goes through what impact do you think that will have on the crypto scene in Asia, and do you think it’ll be competitive with the PBOC digital currency?
Emily Parker:
Well. I mean, it seems like China is super aware of Libra and it seems like that’s part of their motivation for this digital currency, right. I think they’re more concerned about Libra accelerating dollarization, and I think that’s part, so who knows, right. I mean, Libra, again, it’s this really open question of whether Libra will kind of serve as some sort of replacement to cryptocurrency, which I don’t really think it will, or if it will actually stimulate and accelerate interest in cryptocurrency like bitcoin, which I think…actually, sometimes I think that’s more likely, but how it will play in Asia…I mean, China’s made it very clear that they have concerns about it, for sure, so yeah. I mean, I think that’s, in part, what’s driving them.
Laura Shin:
Throughout this conversation, we’ve been talking about bitcoin a lot, but obviously we have all of these smart contract platforms that are…well. There’s obviously Ethereum, which is dominant currently, and then there’s a whole bunch of other that are trying to launch and maybe compete with Ethereum, and I wondered what your observations are about interest in smart contract platforms in China, or elsewhere in Asia, and what perceptions you have about which one of these is gaining more interest?
Emily Parker:
I mean, I think that’s a good question about bitcoin versus just all the other coins out there. I think there’s definitely different projects that are seen differently across the region. I mean, you definitely do still hear about Ethereum. I mean, interestingly…I mean, this is kind of a different example, but Gavin Wood, who’s co-founder of Ethereum and now is working on Polkadot, and he’s…Polkadot has done some work with LongHash, and Polkadot…Gavin has been doing a lot of outreach in Asia, and one of the things he said…I saw him when he was in Shanghai and I was kind of asking him his impressions of Shanghai and he was saying that this is like…the Chinese grassroots environment was really, really vibrant and he seems very impressed by the crypto culture that he was seeing there, so it’s interesting.
I mean, I think…I don’t know. Just in terms of other coins, I mean, you…yeah, I think there’s…it depends a lot region to region. You hear a lot about XRP, for example, in Tokyo. I know it’s a little different from the question you’re asking, but yeah. I mean, in terms of the x bitcoin, I mean, it’s…yeah, there’s definitely a…that’s also very dynamic, I think, in terms of what coins people are looking at. I know that Ethereum, specifically, was quite hot in Korea for a while. I think partly that, at least, was in part due to the fact that I think Vitalik himself had some outreach there, but yeah. It’s a constantly shifting landscape.
Laura Shin:
Yeah. Yeah, I think Vitalik spends a lot of time in Asia. Although, maybe a little bit less than he once did. So, then my last question for you is just about, actually, the other half of the business, which we didn’t really talk about a lot, but I was just curious to know more generally about the kinds of companies, or projects, that LongHash invests in, and how separate that is from your media property.
Emily Parker:
Yeah, so it is separate. So, philosophically it’s united, in the sense that we see both as a gateway to Asia and that our mission is untied, but I think…but technically speaking they are separate, in the sense that we don’t use the media platform to promote the projects. I mean, we try to keep them separate just so that the media platform has independence because otherwise it would be seen as PR and we really try to avoid doing that, so they’re separate in that sense. It’s a decentralized organization, so for example, Singapore and Tokyo…Singapore and Japan have slightly different approaches. If Singapore invests in and incubates early-stage blockchain companies, kind of like highly technical blockchain companies, it’s a pretty wide range. They put money in exchange for equity in our tokens, and then Singapore also has a 12-week program for mentorship and strategy, and fundraising, and most important helping them break into the Asia market.
Japan is a little bit different. Japan also helps startups with BD and Asia, or BD and Japan specifically, but it also works with larger Japanese companies and helping…who are interested in blockchain and connecting them with startups who are developing blockchain applications, so the two offices are a little bit different, but again, the general approach is all like…because Asia is a…as you can see from this conversation, it’s a confusing market. All of the different countries have different regulations, they have different approaches and it can be kind of hard to go in there if you don’t know what you’re doing, and if you don’t know who to deal with.
Laura Shin:
Yeah, for sure. They sound really different.
Emily Parker:
Yeah, they sound really different, and again, constantly changing, and I think there’s also a trust question, right. I mean…which is true in crypto everywhere, right. It’s like you just don’t want to get involved with people who aren’t trustworthy, right, or anywhere. This is true anywhere, but I think when you’re going into a new market you just want to make sure you have the right partners.
Laura Shin:
Yeah. I actually thought of one more question. It’s a fun one.
Emily Parker:
Sure.
Laura Shin:
You guys recently came out with that deck of cards that had…
Emily Parker:
Yeah.
Laura Shin:
Yeah, of different crypto people.
Emily Parker:
That had you.
Laura Shin:
And disclosure, you did give me a deck, which I was so grateful for. It’s super fun to flip through. So, how did you guys come up with that idea, and why are you not selling those packs?
Emily Parker:
Yeah. I mean, we really…I mean, this might not sound true, but it really was just for fun. It was kind of like a fun thing we wanted to do. It’s not supposed to be that serious. It’s not supposed to be like okay, these are the best people in blockchain. Of course, it’s not. It’s just kind of like these are…it’s very subjective. Just kind of like…it was really just for fun. It’s like let’s just make a deck of cards. We put a wide range of people on there. Some of those people are not very liked. That’s okay. It was more like here are some people that are making noise in the blockchain industry, and here’s a deck of cards with their faces on it, and we just put a lot of time into making them. I think they look cool, and it’s a deck of cards. It’s kind of like a collector’s item. Really there wasn’t any very high purpose of doing it. I mean, it was just sort of like to just kind of…let’s say to capture a moment in time. That’s what we were trying to do.
Laura Shin:
I love it. I love it. They’re so great. All right. Well. Where can people learn more about you and LongHash?
Emily Parker:
Well. Very easy, longhash.com. That’sour data media site, and yeah. I think that is a good place, and then you can also learn about…I mean, you can go…you can also go to incubator.longhash.com. So, longhash.com is just for the data media platform and incubator.longhash.com is more information about the incubators.
Laura Shin:
Okay. Great. Thanks, so much, for coming on Unchained.
Emily Parker:
Thank you, so much, for having me.
Laura Shin:
Thanks, so much, for joining us today. To learn more about Emily and LongHash check out the show notes inside your podcast player. If you’re not yet subscribed to my other podcast, Unconfirmed, which is a shorter and a bit newsier, be sure to check that out, also, find out what I think are the top crypto stories each week by signing up for my email newsletter at Unchainedpodcast.com. Unchained is produced by me, Laura Shin, with help from Fractal Recording, Anthony Yoon, Daniel Nuss, Rich Stroffolino, and Josh Durham. Thanks for listening.
