Bobby Lee: Blockchain Only Suitable for Crypto, Not Real World Activities
Bobby Lee, co-founder and former CEO of the oldest Chinese bitcoin exchange BTCC, was one of the keynote speakers at BlockShow Europe 2018 in Berlin in the end of May. As he already did it on previous occasions in the past, Bobby Lee was expressing his exceptionally critical views on today’s financial system and the role bitcoin and other cryptocurrencies could potentially play in the future.
According to Mr Lee’s LinkedIn profile, previously he was the CTO of SMG BesTV New Media, the largest IPTV operator in China with the most subscribers globally. He moved to Shanghai in 2007 and started off at EMC’s China Center of Excellence, as Director of Software Engineering, with responsibilities for Cloud Computing and Cloud Storage.
Since early 2010’s Booby Lee was a vocal speaker for Bitcoin also running arguably one of the biggest bitcoin exchanges on global level. Things changed last year when Chinese government announced a series of crackdowns on crypto activities in general.
In his live Q&A session during BlockShow Europe 2018, where Forklog’s Andrew Asmakov was present, Bobby Lee discussed issues ranging from the Chinese government influence on the industry to more specific questions regarding blockchain as a conception.
Thus, speaking about why Bitcoin should be taken into account by any shrewd investor and what is needed to enhance its mass adoption, Bobby Lee said:
“Many people are asking what is crypto, why it is a new asset class, why it is an information based class, how it is different from bare assets like gold, how it is different from securities and traditional market. This is the book I am going to write later to address a more general audience and to give it an understanding what is Bitcoin, what is its impact and how it really gives you freedom. So that’s what is really important: education and knowledge.”
According to Bobby Lee, this will take time, though.
“We are now only in the tenth year and only a hundred million people understand it. So it will take time to get to one billion people and so on. And then there’s another aspect which is price and how it is forming. Today Bitcoin is over $7000, and there is around $150 bln worth in bitcoin in circulation, something that is known as market cap.
So what is happening is that with only $100 to $200 bln worth in bitcoin you can’t do much. But when one day all the biggest companies all over the world will do the global commerce in crypto, like increasing this number to 1 per cent, 5 per cent, 10 per cent, 50 per cent, things will change. It’s already happening on individual level, I am personally doing my payments in crypto as do other people in companies in the industry. But the question is when traditional companies start, it doesn’t matter whether it’s a movie theater, or a doctor’s office, or an airline. It will happen in 5, 10 or 20 years, it is a big time range, but it is ok.”
After that Booby Lee discussed a broader range of issues in the crypto industry
Question: There was time when additional e-commerce payments were just becoming a thing and people were pretty afraid of putting their credit card details, and today we don’t even question it. And the same, I think, is with cryptocurrencies, it’s a financial step, and a lot of companies are trying to build an ecosystem of partners, not just other blockchain companies but rather traditional companies, companies that already have good market share or a good standing. So what do you think the community needs to do to engage further with traditional companies and to potentially overcome the negative narrative in the mainstream media towards cryptocurrencies?
Bobby Lee: I don’t think about telling the traditional companies that they should be using crypto because the message never sounds genuine, it always sounds fishy. It’s all about having trust and ultimately they don’t have it, and everything just sounds wrong. But what I think will happen is that one day all these traditional companies will wake up and choose to use crypto because the alternative, which is the traditional money, is unbearable.
As a businessman running a company, BTCC, for all these years I’ve encountered more and more trouble with existing financial system. I am talking about everything from personal accounts to suspicious activity reporting, and more and more innocent people are being trapped by these money laundering laws. The bankers are even asking you questions when you send money to your own account that happens to be in a different country. Listen, it’s my money, I should buy a house or a car there. Apparently, they are either jealous or they suspect me of doing something illegal, which I’m not doing since I pay my taxes.
So when innocent people and innocent companies are being pressed by these high anti money laundering officials, it becomes all too inconvenient with all those payments not shown up because the traditional bank wires are so error prompt. So I think the traditional fiat money system is nearly at its few last breaths and more and more companies will realize that should have crypto on their balance sheet.
Question: China has always been an important player the crypto industry but your government has been pretty tough in its approach to it in the past 18 months. ICO’s were banned, many companies left the country, and there are even rumours of mining operations being possibly closed down. Taking all this into account, what role China will play in the future of the industry?
Bobby Lee: Yes, there was a crackdown since last September and the official policy today is that China doesn’t welcome any crypto activity like exchanges, payment providers or even conferences. The reason for this is that China is a central authoritarian society and they want to ensure peace and harmony. And it’s not just physical peace and harmony but also financial peace and financial harmony. They don’t want to lose money, they want people to have save investments, they don’t want any riots or street protests when people lose money in certain projects. So in order to minimize that, in order to reduce the potential society unrest they outlawed the ICO fundraising and did other things.
However, there is nothing permanent under the moon, and it could be five years, it could be five months, it could be fifty years or several decades, but I think that one day China will reverse its course on this ban on crypto. There are two sides to the whole story: some people want this tough stance to last for long time, other people want it to be overturned.
Question: Do you share the optimism expressed towards a possibility of the Chinese ICO ban being lifted at some point and exchanges going back home, as some of the local media reported?
Bobby Lee: Once in a China we had one child per family policy, and forty years later it was lifted.
Question: Recently it was announced that BTCC is about to launch a new exchange with its own token. What are the reasons behind this decision?
Bobby Lee: I think you are talking about BTCC Exchange so I need to clarify my role. I am a co-founder of BTCC and BTCChina and I’m very happy to have run them, but I am no longer CEO. We sold the company to the investment firm form Hong Kong in January this year. So there’s new management and they are the ones who are going to launch the new exchange.
I hope one day I will be able to tell you more about this but today I cannot comment on this.
Question: Still, there is an enormous amount of companies around running ICO’s and even exchanges issuing their own tokens simply anywhere it can be done. What do you personally think of this ‘tokenization’ model hype?
Bobby Lee: Overall I am not supportive of this model, I don’t like this tokenization concept. I think it gives a wrong impression of the incentives of the founders of a company and the users, it sort of mixes the incentives. I personally prefer a more traditional model: I founded the company, I sold the company, I worked with investors and I am myself an investor.
Unfortunately, I didn’t go in detail to see what each exchange, be it Binance or any other exchange, offers, but overall if it is a utility token I am not in favor of it, if it is true equity token then I think it can work. But as you know the challenge of equity tokens is regulation and jurisdiction because if, for example, I am an American citizen I cannot buy equity tokens.
Question: What is the current situation with the bitcoin mining industry in China. Are fears that it will be a subject to more crackdowns justified?
Bobby Lee: The thing is mining in China is still allowed by law, it’s not something that is forbidden at all.
As everywhere else, In China there are things that are allowed by law and there are things that are not allowed by law, but there’s also a large grey area that is not specified. So Bitcoin mining is in that grey area, but at the same time something that is allowed by law is not enforced, and the same is true to things that are not allowed. So there are things that are illegal but people still do that sending things to the grey area.
As for bitcoin mining in China there’s nothing against it written in the laws, but what isn’t allowed is stealing electricity. If you steal electricity it doesn’t matter what you actually doing, bitcoin mining or anything else, it’s illegal. If you steal electricity to put it into your mining machine someone will come and enforce the law.
Question: If Chinese authorities find a reason to actually ban mining, does BTCC have a Plan B?
Bobby Lee: At the moment BTCC is an international company based in Hong Kong, and as it was before, the company is not involved into actual mining activities. BTCC offers a mining pool, and people have to understand that running a mining pool and mining crypto is two different activities. When you are involved in mining you are investing in hardware, you purchase ASICs or whatever and just mine coins; with mining pool we just offer a software platform where miners can exchange information.
Question: Let’s talk a little broader about the whole ecosystem. There are plenty of people who consider starting their own projects and trying to bring something new and innovative. And even though things are changing pretty fast, there should probably be some general principles the people who launch projects should stick to. What would be your advice to those who want to give it a try?
Bobby Lee: Today, in 2018, there are too many founders both in crypto industry and non-crypto industry that are doing fundraising and trying to put blockchain wherever they can. And my opinion after having this experience for the last seven years is that blockchain is actually not suitable for any real world activities. This might sound like a very controversial statement, but what I’m talking about is that I am only negative for blockchain for real world. I am positive for blockchain for cryptocurrencies.
Blockchain is great because it’s immutable, meaning that it cannot be changed, and decentralized. It is also a ledger containing a record of data, and what people often forget is that data has to be publicly verifiable. If data can’t be verified publicly it is called private data, and most blockchain projects today, most ICOs, what they put on blockchain is just private data, a private database. I’m not against databases like airline miles which is great for customers, but that is not blockchain. So if you want to use blockchain with general data base that would mean that we’ve lost our ability to be intellectually honest, and I don’t want people to be intellectually dishonest with me.
Question: Then, we all these statements about blockchain changing the future, how it can actually change the future?
Bobby Lee: It can change the future through cryptocurrency when the information is purely mathematic and you don’t need to prove opinions and subjective data. So today when I see all these so called blockchain projects and people ask me to be their advisor I always say ‘No way’. Be intellectually honest with me, tell me that you are doing a database project, and maybe after that I will say ‘Yes’.
Question: What’s your opinion on the so called stable coins like USDT and their recent followers?
Bobby Lee: I haven’t studied stable coins too deep and I’m afraid I’m not educated enough to comment on this.
Question: There was a recent study by some Chinese state authority, a kind of a cryptocurrency rating that saw Ethereum being placed on top of the list. Bitcoin, the first and the oldest, was at number 13. What was all that about, who actually needed this sort of thing and what for?
Bobby Lee: To be honest I don’t know who did this, and I’m not sure about the possible reasons behind.
Question: Some members of the community weren’t too happy with some of your views regarding Bitcoin Cash splitting off the original chain last year, and, since there’s always a certain rationale behind entrepreneurs’ motives, what side in this ongoing blocksize increase debate are you actually on?
Bobby Lee: Bitcoin (BTC) and Bitcoin Cash (BCH), they are both my children, I love them both.
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