Han Feng talks with Jim Glassman, JP Morgan's chief economist

On the afternoon of March 28, JP Morgan's chief economist Jim Glassman (hereinafter referred to as G) met with Han Feng (hereinafter referred to as H), co-founder of Yilaiyun and a visiting scholar at Columbia University, at the JP Morgan Building.blockchain和digital goldThe discussion began with the fusion.

G:In China, I think it might be like this. I've always been skeptical that cryptocurrencies can compete with traditional financial payment systems because the overall idea is like this, right? At first it was about making transactions more efficiently, and blockchain technology allows you to do that. The problem is that regulators can carry out a major crackdown on this area. Just like our banks experienced, because of these regulations, bank practitioners must know what your customer's business is and who your customers are. So they're afraid to do (cryptocurrency) transactions, and we don't understand these transactions. I'm always worried about regulators: cryptocurrencies are powerful because you can avoid existing financial markets to trade, yet I've heard that regulators have this ability to crack down on the cryptocurrency system if they think these transactions involve illegal financial activity. So I was told that cryptocurrencies are under threat.

For me, the real benefit of cryptocurrency isn't an effective way to pay, because we're developing blockchain technology, so financial institutions can use the basic blockchain technology to suit their work. But I think it's dangerous if you're fighting against the financing system because it's strictly regulated. Although I don't think this is true, I've always believed that the main driving force behind cryptocurrencies is Chinese investors. I don't know if it's because this is a way to obtain funds from RMB and other fiat currencies; is there such a requirement? So the Chinese government is probably very nervous about this; they don't like it. I don't know how much the Chinese government can restrain.

H: Currently, I know that China may introduce some policies to raise electricity prices and limit themBitcoinmining activity.

G:I'm guessing different cryptocurrencies have different situations, right? What is a breakthrough factor? Is that what we're talking about right now?

Perhaps the central government issued some announcements, prompting local governments to raise electricity prices, leading to a ratioBitcoinMiners abandoned their pools locally. But I know some situations. Some local governments actually like Bitcoin mining pools because it's a local economic factor: the local community can't send electricity out through power transmission lines because the cost of electricity transmission is too high, and the better option is to allow Bitcoin mining pools to exist in their regions.

Other countries I know, like Canada, welcome Chinese miners because they have lots of power plants. There will be a major Bitcoin mining conference in Vancouver in May this year, which is supported by the local government.

In the last century, the dollar gave up anchoring gold, and now you are the largest producer of credit resources in the global economy. After that, most of the credit resources were only controlled by the center, probably the Federal Reserve, or maybe the Central Bank of China. Some central institutions may be able to create credit resources for the global market, but there are also many problems: in China, most credit comes from the central government, and their interests are controlled by companies or organizations closely linked to the government.

For example, large state-owned enterprises or real estate companies have the most abundant credit resources, while small enterprises or ordinary customers have limited credit resources. This imbalance causes China to produce many, many products but cannot digest them within the Chinese market, so they seek export. So why the US? Because the US can create most of the world's credit resources: you have dollar money printers and capital markets that can monetize the future, the US always has sufficient capital, so Chinese products are exported here.

However, I predict that in the future, blockchain technology can confirm everyone's information rights, big data can become everyone's asset, and credit resources can be created from the most basic level of the market. Recently, internet companies like Facebook have always collected their customer data and then used that data to make a profit. Alibaba and WeChat in China are doing the same thing: almost every internet company in the world uses the same business model to obtain user data and then sell it. Signing Bitcoin with a private key is the first one that really belongs to youdigital assetsIt can use blockchain to exchange data. If each user's data could become their personal asset, I believe such a credit profit system would be great.

In China, we face many problems because credit resources are only created by the central government and central bank. Blockchain is not only about improving payment efficiency; Alipay and WeChat Pay have done a perfect job in China. But Bitcoin has another problem to solve: it turns data into an asset.

G:I remember a very original version. We used to have an academic community where all participants could see dynamic files, any changes you made were locked, and someone could observe these changes. I'm surprised it took so long to develop this platform, so how do you turn these files into assets?

H: To achieve this goal, I believe the future blockchain industry not only needs some kind of chain, but also a trustworthy operating environment, so we needElastos. This operating system was founded 20 years ago by Chen Rong, a former Microsoft engineer. He is also Chinese, but he came to the US 20 years ago to help Microsoft work on the Windows operating system for nearly 10 years. Even twenty years ago, he gave Bill Gates some advice. An operating system like Windows is only based on a PC or phone, not the Internet, but how can Windows access the Internet? It just depends on every app, and then every app can become unreliable, and they themselves can become a virus. If you get an email with a link, it's most likely a virus. Our internet isn't secure right now because the operating system is only PC based, so is that why the information is controlled by central big companies? Because everyone thinks we have no information security, and we don't feel safe on the internet, I only trust a few centers, Google, Facebook, etc., and I can't believe anything else.

Chen Rong provided Bill Gates with a new Internet operating system based on cloud computing, but Bill Gates didn't believe in it, so Chen returned to China because he heard news that the Chinese government wanted to have its own operating system. Guo Taiming is the boss of Foxconn. He heard that some Chinese officials would allow the creation of a new operating system, so Guo decided to invest 200 million yuan to develop Elastos. Until a very large conference was held in Guiyang in 2015, many central government officials came here. Guo learned this information and brought Chen into the meeting, hoping to talk to those officials. He met with the Vice Premier and raised two questions.

The first question is, are we Chinese? Of course, the answer is yes. You're Taiwanese, Taiwan is part of China, so you're Chinese. Second question: Do you think our Elastos is the Chinese own operating system? The answer I got was: What's the third question? Then Guo was very disappointed. In Shanghai, he told Chen that he gave up continuing his investment in Elastos. But he's a good guy, and he hasn't withdrawn his previous investments. So Chen continued his development work. He met blockchain and me a year and a half later, and we talked a lot about the smart economy. We think the smart economy requires a blockchain-driven operating system like Elastos.

What is the smart economy? Because in China, I've talked to some economists at Alibaba. One of them is Alibaba's financial adviser Zhou Zipeng. He said, “Alibaba's success makes a lot of sense, because 200 years ago, the industrial revolution changed a lot, right? We have a big explosion of production, and we can automatically produce everything. Before such a revolution, people always used their hands to do things, but now they are much more efficient. But after the industrial revolution, humans could do everything with new technology.

To solve a person's (productivity) scarcity, they increased production speed and became faster, but they didn't solve the second problem; trade was still the same as traditional farming methods. He is worried about how humans can solve trade problems together after the industrial revolution. This is a bottleneck in the global economy, but now Alibaba has automated transactions through the Internet, and we can continue to trade for 24 hours. We can trade everything anytime, anywhere, using Alipay and WeChat Pay, and we can even automatically pay. It's a smart economy.

So the problem is, we remember 200 years ago, during the industrial revolution, we had to have more reliable resources in the market because many products needed to be sold. But historically, fortunately, from silver mines discovered in Mexico and Central America, the Spanish brought back many silver coins as reliable resources. As Americans' railroads grow their economy, you need more reliable resources. The second lucky thing is that you found a gold mine in California, and now trade in China has become huge, and we need more reliable resources.

So what is the new gold mine of the internet economy? The answer is big data.

G:I don't think young people have anything to do with this, and I don't think people who use it care.

H: But when they know big data can be their wealth, do they care? They'll get used to it, and no more customers care too much about their money.

G:I think the problem with Facebook is that they might not even understand themselves; data is being collected and used to understand and build profiles for each of us, so they can more effectively understand what you love to do.

H: But do you think young people would care if they know how their data is being used? Since they don't know blockchain, internet giants collect everyone's data, but customers don't notice, they don't know that data can be turned into their assets through blockchain.

G:I'm not sure what the problem is, because if you trust you can make me think, then a lot of people are worried that information about who I am will be leaked, and that feedback will only reinforce my thought path. This is my idea, but I don't think most young people care.

H: Really?

G:It feels like when you were in LA, if you recommended people what to do, people would do it, I think young people love information to help them understand choices, and I don't think they're manipulating their minds. The problem is that regulators are all older generations; they don't understand technology; they just compare; their ideas are different from what we've seen.

H: But do you think JP Morgan will just airdrop cryptoCoin marketA field?

G:What we're doing is jumping into the field of blockchain technology to develop our existing systems. I think it's an efficient system, but I'll connect it to some capital in Pennsylvania, and it will take a long time to complete this deal. why? I get everything automatically, and it tells you that the financial system has become obsolete. What is happening now is that in all of these fintech companies, there is a fear of replacing traditional financing because we are all regulated, we have a customer base, and it's easier for us to adopt technology than on our clients. So I think a lot of these technologies will be absorbed by these companies, and they spend a lot of money for it. This is much easier than financial technology companies to develop apps; you have to deal with regulators and some regulations.

H: So there are opinions that blockchain technology will destroy Wall Street.

G: Oh, I see.

H: But it gives them more opportunities to manage customer digital assets, and the fact that data becomes an asset means Wall Street needs to manage many other types of assets and capital.

G:The real value Wall Street brings is trying to understand events and probabilities, and trying to handle things that don't make sense more effectively, so anything that provides more information helps you get things done faster. There are thousands of tools used based on specific markets or specific assets, and it's always possible for this technology to understand what's going on and how this relationship should be. These technologies provide you with a better way to connect, and like big data systems, it can find patterns, and that's what this industry does. It's not just capital markets. It tries to evaluate certain things and connections. It will replace a lot of jobs because it will create new opportunities. I visited Amazon and when you walked in, they had an image of you, so when you take something off the shaft, you know what you're doing, and it's in your shopping cart. I went to the store and there was no checkout, no reason to check out, you just have to take what you want, leave, and pay with virtual assets. Millions of people will lose their jobs, such as checkout accountants.

H: However, there are opinions that blockchain is decentralized, which means that financial institutions may not need to do this kind of business in the future.

G:No, because people have more and more data to manage. Financial assets all reflect the value of what will happen to people in the future, so technology can help you find patterns, and it's more complicated. When people understand the risks, the process opens up to capital, and they'll be willing to invest their money. Anything you can do is to help people understand, just to add value to certain phenomena. This is the role of the financial system, creating a financial product with cooperative data obligations. You can see something, assign value to it, and create security, then someone will buy it and trade it. I think this process just creates more value for the financial system, because the economy of the financial system has been growing over the past few decades, and many banks have created their own marketing methods that can provide more revenue and get capital from those who buy assets to those who need it, so it has created more opportunities.

H: Do you think regulators would use securities to regulatedigital currencyThe market?

G:I think its value is that many financial activities are beyond their scope of regulation, such as illegal activities, terrorism, and regulators will be uneasy about this. If we don't understand, we have to ask our customers: what kind of business you have and how do you explain the nature of your business. It's easy to use financial systems to highlight illegal activity, and regulators are unhappy about this. It's hard to figure out, and if there's activity beyond their supervision, we might be concerned about how our currency is being used.

H: I just learned that you've worked for the Federal Reserve for many years.

G:Yes, but it's not a payment system. My friend Sam used to work in payment systems, and now he's a lawyer, he understands these steps more.

H: But what are your expectations for the future in the US and the UK?

G: I'm a little nervous about understanding and managing this. If they think there's a way to get around the system and get around capital, that's the problem. For the Chinese government, this could be an opportunity for people to make money outside and tighten their capital restrictions.

H: It's like a dictator manipulates everything.

G:As for the US side, it's more speculation because I don't really understand the mining process and don't know how long it will take. You don't understand how the supply side is being affected; it's hard to tell its value right now, and the miners are so excited about it. If miners keep moving forward, you're worried that they've created a (new economics) essence at some point, and I think that's why economists don't know this.

H: I think he wanted to express that Bitcoin will monetize digital assets from the internet. But in the future, we need trusted resources for digital assets, and Bitcoin can provide such value.

G: I wouldn't be surprised if regulators got more involved.

H: It's a global problem, and if one country controls it, then many people will leave. It's a simple matter: the money control room has the strictest financial control for individuals.

G:It's no different from this. If we hold this thing, supply will be weakened, but to some extent, it's linked to a broad international policy goal, so we trust it. Like Germany 100 years ago, we trust central banks, but the problem is that if you understand how the mining process works and how the money supply works, it may generate confidence in the global community.

H: Simply put, we only trust math and physical theorems. This is a hot topic right now.

G:Technology is really interesting because you have to keep up with the development of technology, and we have more human brains involved in this process. Maybe Americans don't like it because they're afraid of competition, but better than that, it has to be influential. Imagine what people knew twenty years ago, and what people are talking about today.

H: Many people like me think blockchain will bring a revolution similar to the Internet to this society, and even surpass the Internet; it will change everyone's wealth and assets.