Interview with Yin Cao – Discussing China, Asia & Blockchain

Today, I am going to interview Yin Cao. I’ve known Cao for a few years now, and he’s a true believer and supporter of the blockchain industry. As he’s a person who travels a lot and has many different entrepreneurs and policy makers in his network, it’s always fascinating to chat with Cao, and to learn new things about China and where the industry is moving.

Enjoy!

Hello Cao Yin!

1. How and when did you discover bitcoin and blockchain technology? Why did you get interested? What’s your own background in blockchain space?

I bought my first bitcoin in late 2012, when I was an individual member of American Chamber of Shanghai. I participated in an very early event regarding bitcoin. I was instantly fascinated by the idea, because my major in Fudan University was software engineering, while another degree which I obtained is in Economics from Vienna University. The combination of these two educations enabled me to understand the potential of bitcoin immediately.

I then joined the China Cinda in 2013, a state-owned finance and asset management company in Beijing. I became their principle expert of digital finance. In that position, I kept monitoring the development of the crypto industry and invested into various crypto projects at the time. My first blockchain specific project was in late 2014. I was rotated to the National Energy Administration, a department like Department of Energy in the US. I was appointed to lead a special joint task force to draft a roadmap for the implementation of future digital technologies in the renewable industry. I proposed that blockchain should be one of the fundamental layers of information exchange infrastructure in the draft proposal. 2 years later, in 2016, the roadmap was officially approved by the Vice Primer and released. This is the first national policy in favor of blockchain in China.

I immediately created my own blockchain startup in energy sector after the release of the policy together with other partners. We provided blockchain demo products for energy companies. However, I was tired of the energy industry, so I sold all my shares to a fund. The next stop and current seat for my blockchain journey is at Digital Renaissance Foundation. I cofounded this firm with partners from Helsinki and Estonia. The DRF is an advisory firm based in Estonia, providing compliance and strategy consulting services to crypto companies in Asia, especially in China.

I was also a very early investor into ICOs. As it was the golden age of ICOs, I managed to invest into some very good projects like NEO, Qtum, Loopring, Kyber, and Civic. However, when it comes to other ICO investments, they’ve turned out to be rather poor ones.

2. Asian countries are particularly passionate about cryptocurrencies – what do you think is the reason for this?

Asian people are very speculative. If we dive deeper into the phenomenon, the extraordinary development and growth of the economy is fueling their speculative investment desire. It’s both financial and emotional attachment. Since Asians, especially Eastern Asians (including Vietnamese), have witnessed, participated, and have been benefiting from the unbelievable economic miracle in just one or two generations, they take the high return and high risk investment as granted. To them, crypto investment is just merely another kind of high return, high risk, high tech startup angel investment. Furthermore, with respect to technology, Eastern Asia culture is quite pragmatic. It means common people are more willing to embrace new technology even if we don’t know the exact mechanism of the tech. Besides, lots of early bitcoin investors and miners are in Asia, especially in China. Hence, lots of people heard about the gold rush fantasy. For example, one very famous true urban legend says that a poor young guy put together and invested around 16 k USD to the IOTA ICO, and the reward was around 43 million USD.

Last, but definitely not least, restrictive capital regulations in China, Vietnam and India are also strong drivers for the crypto fever in Asia.

3. Let’s talk about China a bit. China has a huge blockchain & crypto community – after all the scams and bear market of 2018, what’s the current mindset in Chinese blockchain communities – is the interest still strong, both from the investors and from the entrepreneurs launching new projects?

Even stronger! Ironically, that’s really the case. Folks in the community still deeply believe that bitcoin is the digital gold and blockchain is the next generation of Internet. We love revolutionary concepts. Blockchain is somehow like an ideology now in China, similar to how these bitcoin maximalists defend bitcoin. And now with the ongoing recovery of crypto prices, more outsiders and audiences are jumping into the arena.

4. Do you see any changes in the regulatory landscape when it comes to cryptocurrencies (in China)?

I don’t think they will withdraw or revoke their previous series of warnings against cryptos. According to my own experience in the government, to formulate and implement a new policy is very easy in China, however, to abolish one is very difficult. You should first prove that the previous law is wrong or outdated, especially with respect to crypto ban policies. These policies were jointly released by more than 5 departments just less than 2 years ago. It will make those policy makers lose face, which is the last thing you would like to do in the Eastern Asian countries. But some local governments, especially in those Southern parts of China, may alter their position in favor of cryptos. Actually, although crypto businesses have been prohibited at large since 2017, not one single exchange in China has ceased to exist due to policy. Some just die because of the fierce domestic competition.

Policy is policy, business is business, this is the 101 lesson of doing business in China.

5. What are some of the most promising blockchain projects currently in China?

Blockchain projects supported by big Exchanges, like binance chain, etc..

6. You travel a lot in Asia and especially in South-East Asia. In which other Asian countries besides China you see a lot of potential for interesting projects, a vibrant community and investor interest?

Vietnam, No.1. 94 million people. Not only 94 million people, but it’s also a young population. No religion burdens, well organized society, close to China, Japan, pragmatic and diligent culture, very long coast line, good relations with China, US, Japan, EU, almost all global powers. Vietnam is the very best country in Asia to start a business – it’s just the right time. Like China in 00’s and South-Korea in 90s.

7. In your opinion, which country in Asia has the best regulatory environment for cryptocurrency and blockchain industry in general?

Thailand, they have both ICO portal and exchange licenses, and banks in Thailand are also not hostile against cryptos, lots of big corporations in Thailand are looking for crypto partners.

8. There are many crypto projects coming out of China. For non-Chinese investor, it’s quite difficult to evaluate which project is legit (or just worthy of attention) and which is not – do you have any advice on how to conduct a proper due diligence on Chinese projects?

It is very hard for a foreigner to evaluate the legitimacy and potential of any Chinese project. What I suggest is to follow the people! Check the usual – Linkedin and Facebook bios of founders and google their storyline. But the best way is to turn to your reliable Chinese friends, since there aren’t many sources in English on the internet regarding the Chinese projects and team members.

9. How’s the STO (security token offering) industry developing in Asia, and what are the barriers and challenges for security token offerings to become a viable way of raising capital? Are investors interested in security token space?

Still in a very early stage, lacking of popularity among investors, and awareness among policy makers as well. STO is like an awkward compromise.

10. For the effect on the whole industry, which is the most important blockchain company in Asia?

Binance.

11. What are some of your own favorite projects, not only in Asia, but in general?

Polkadot, Etherum, Filecoin.

12. What’s the biggest myth/misconception about the blockchain industry in China (or Asia in general)?

Haha, maybe the biggest misconception is the role of government(s). I have heard lots of rumors from Westerners that the China government is going to ban or promote cryptocurrencies. Again, policy is policy, business is business. Westerners always overestimate the influence, the capability, and the determination of governments in Asia, especially in China.

13. If European or American blockchain companies would like to go to the Asian markets, whether it’s for fundraising or finding clients, then are there any particular recommendations you’d like to give? And is there anything you can help these companies as well?

Reliable local partner is the only secret source. Also, language is everything, you should promote in the local language and hire local people who understand the culture. And of course, try to learn the language. Do as locals do, as there have been many tech companies in the past who have failed by trying to implement the same ways and strategies that worked in their home markets.

14. How can people connect with you?

You can find me on Linkedin: https://www.linkedin.com/in/caoyin/

Thank you, Cao, for your time and answers, it was a pleasure!