Host: Hi everyone! Welcome to CoinDesk! Today we are happy to have Justin Sun, founder of TRON, to share with us some of the trending topics in the crypto world. I am your host Yunping Mu. Also with us today is David. First, a warm welcome to Justin for joining us!
Justin Sun: Thank you!
Host: Thanks. My first question is that as a time-honored public chain that has been running since the last bull run, TRON has been closely following the latest trends in the crypto world, which, in recent days, is decentralized finance, or DeFi. In fact, many DeFi ecosystems have been built on TRON’s public chain. So can you give us a general picture of what the DeFi ecosystem is like on TRON?
Justin Sun: Sure, thanks. Overall, I think we have a comprehensive DeFi ecosystem with many layers. The bottom layer is stablecoin, which, in many people’s eyes, is the most fundamental layer in DeFi. Our stablecoin ecosystem has a similar scale to Ethereum’s, which is about $40 billion, among which there are over $20 billion USDT, $10 billion USDC, followed by BUSD, TUSD, etc.
Up until now, TRON has over 31 billion USDT, which is larger than Ethereum. We’ve already worked with TUSD, who launched around $100 million-worth projects on TRON. So this is the first layer — stablecoin, in which USDT is one of the mainstream stablecoins supported by exchanges. The second layer is decentralized infrastructure such as MakerDAO, Compound, AAVE, Uniswap, and SushiSwap on Ethereum. It supports decentralized stablecoin issuance, decentralized lending, and can act as decentralized exchanges. On TRON, we also have a sophisticated ecosystem. For example, JustSatble can issue USDJ. Besides, users can issue stablecoins by staking TRX. JustLend, like Compound, is a decentralized lending platform, and we have now supported the TRON-based BTC and Ethereum that can be swapped on Poloniex. Apart from JustLend, we also have JustSwap, or Uniswap as we call it now. So it’s a comprehensive set of second later infrastructure, which is pretty sophisticated. It’s worth mentioning that some people may be confused about where to swap their cross-chain assets. We partner with Poloniex so that TRON-related assets, be it Ether, LTC, or Bitcoin, can all be swapped on Poloniex.
This month, or at the end of this month, to be exact, Sun.io will launch the first decentralized stablecoin exchange on TRON, which is similar to Curve on Ethereum. This launch will endow TRON with almost all the DeFi products that are currently available on Ethereum. So I think TRON’s DeFi ecosystem is shaping up. Going forward, we’ll be focusing on synergy. We know that there are some synergized products like YFI on Ethereum, Binance and BSC, but I think what will emerge in TRON are synergized mining products. This is what the DeFi ecosystem is like on TRON at this stage.
Host: OK, thank you very much for your introduction! Apart from DeFi, what are other specific areas within the blockchain industry that you’re optimistic about? In what areas will TRON plan to make inroads into?
Justin Sun: Personally I’m very optimistic about NFT. Recently we offered support to a ground-breaking project titled APENFT (NFT), which was first launched on Huobi Prime where it gained enormous popularity. I think NFT is highly promising.
There are many reasons why it’s promising. First of all, every time cryptocurrency goes viral, there’s got to be an easy-to-understand concept behind it. DeFi is good, but many people in the crypto world often joke that a good DeFi project should make it invisible to me and SBF, otherwise its mining pool will be drained very quickly. Of course, it’s nothing more than a joke. DeFi is good, but many outsiders may not know what it is. What’s more, DeFi project is limited in the total amount of capital. As more people pour in, everyone can only get a small share. But NFT is different because even for the general public it’s easy to understand. As they know more about what NFT is, they may invest in it.
As is known to many, NFT is about collecting artworks. The initial idea comes from CryptoKitties, but now there are many other collectibles such as cartoon products, top-notch artworks, and cards and toys that we played with when we were kids. So it’s a concept that’s easy to understand.
Meanwhile many celebrities also find it easy to step into the NFT world. For example, Paris Hilton, Elon Musk and his girlfriend Grimes are issuing NFTs of their own, which can help the public understand more about NFT. That’s why we’re highly optimistic about it. The project that we support, APENFT(NFT), also works with Christie’s and Sotheby’s, and for the first time in history, registers artworks by Picasso and Andy Warhol as NFTs on TRON’s public chain. In short, I believe that going forward, more and more top-notch artworks and artists will ally with TRON.
Host: My next question is about public chains. We know that Ethereum has been dominating the field of public chains today, whereas it has a lot of conspicuous drawbacks such as low performance and high fees. Apart from Ethereum, there are actually many public chains that have their unique characteristics. As you just talked about TRON, it reminds me that the supply of USDT on TRON has exceeded that of Ethereum-based USDT. There are also other public chains launched by exchanges: BSC, a popular chain this year, is a good example. In this context, how do you see the competition of public chains in the future? And what are the opportunities for other public chains to challenge Ethereum when it already has such a strong ecosystem and consensus?
Justin Sun: As the industry evolves, I think there are three promising directions for public chains to grow in. The first direction is stablecoin payment, and in my opinion this is a field that TRON does best in. I believe it is very possible that TRON will become a global settlement layer, and this is also what we have been working hard to achieve.
The global settlement layer has, unprecedentedly, replaced Stripe and Square in the world of decentralization, while it offers the services of Swift for bank settlements as well.
A few days ago Elon Musk got kind of sarcastic about Bitcoin. When everyone was talking about Bitcoin payment, he tweeted “Hey cryptocurrency ‘experts’, ever heard of PayPal?” and mentioned that PayPal was founded by him. He was certainly joking, but I replied to this tweet and told him that the daily settlement volume of TRON is already five times that of PayPal. PayPal’s daily settlement volume or transfer volume is about two billion dollars, while that of TRON now basically stands at about ten billion dollars, five times that of PayPal. So I believe the global settlement layer is a good direction for public chains, and we have made considerable progress in this respect. This is my first point.
The second one is the DeFi boom. I believe the flourishing DeFi will give public chains tremendous opportunities. This is because I’m also an experienced miner on Ethereum and I know a lot about its ecosystem. Ethereum has been a little weak in innovation these days, probably because of the overall DeFi sluggishness.
After the last batch of well-performing DeFi projects, we can rarely see good new mining projects on Ethereum now. There are not many new mining projects that can have a TVL higher than 200 million. Most mainstream funds are concentrated on Compound’s and AAVE’s lending and Curve as well. These three projects have been all the rage.
In fact, both BSC and TRON are just a copy of the DeFi ecosystem on Ethereum. The funds are not loyal enough: they are always attracted to the projects with higher TVL. For example, Polygon has been in the spotlight recently. I checked it out and found that their token price went up despite their unsatisfactory user experience. From this perspective, I believe DeFi projects with feasible application scenarios are able to take away some funds and traffic from Ethereum to some extent.
When I’m a developer, I know what developers think about; and when I’m a miner, I understand miners’ psychology. Actually this is also why I’ve chosen to be a miner: to understand the needs of our users. In the long run, DeFi should be a space where multiple chains coexist. I don’t think Ethereum has any remarkable strength, especially when you take into account Ether’s plunge a few days ago which revealed a severe drawback of Ethereum: users were not able to avoid liquidation by repaying their loans due to the network congestion. As a result, some users’ assets on Ethereum were liquidated. This is my second point.
Thirdly, I believe cross-chain is our future. As I said earlier, Ethereum has been suffering from overcapacity. More and more capacity spills to BSC, TRON and other emerging public chains. When there are so many public chains running together, I find that cross-chain becomes our pain point. Users need a solution to transfer their assets, for example, from TRON to Ethereum or from BSC to TRON without delay. I think such a solution is needed in the market.
So, in my opinion, cross-chain is a good direction for us. On top of what I’ve talked about, cross-chain bridges can also be built between smart contract chains and non-smart contract public chains such as Bitcoin, Litecoin and even Dogecoin. I believe this will be a direction for this industry to thrive as well.
Host: I have a question which a lot of Chinese projects may be interested in as well. Today, the most successful blockchain projects are mostly from the West, in particular in the US. Many Chinese projects lose their momentum as soon as they expand into the overseas market. As a successful global project originating from China, how does TRON run its overseas communities? Could you share some experience with us on operations and communications?
Justin Sun: Sure. I think we still need further efforts as we’re really not a good player in these respects. Of course, we’ve set a high standard for ourselves, comparing us with Ethereum and other competitors. But I can give you an idea of some traps we have fallen into.
First of all, the developer culture of the West is quite different from that of the East. “Developers” are generally endorsed in Western investor communities and developer cultures. This may have something to do with the well-developed culture of open source communities in Western countries. In other words, due to the large programmer base and the long-established higher education in the West, there are a lot of programmers who are willing to and capable of contributing to open source projects.
For instance, Linux and Wikipedia are typical large open source projects from the West. In fact cryptocurrencies also used to be open source projects as such. Take Bitcoin as an example: Bitcoin is a long-standing open source project as well. So this is one of the classic features that distinguishes the West from the East: they have a culture of open source communities, while most Chinese programmers are paid to work. In China, no one would be willing to contribute to an open source project if they are not paid to. This is why we can see a lot of projects led by Chinese, like, to name a few successful ones, TRON and BSC. These are mainly led by developers or the project team, while the projects developed by Western developers are more decentralized. I think the differences are closely linked to our cultures. Therefore, we need to be mindful of the open source culture when we promote our projects to the West. To sum up, I think the cultural difference is my first point.
Second, I noticed that project transparency and fulfillment of promises are greatly valued in the West, while Chinese communities only care about whether the token’s price goes up or not. It is very different.
Western communities can accept price drops. However, they do hope to see the actual implementation of the project team’s promises and ideas. We experienced conflicts during our early communications with communities in the West owing to our negligence, because they take things too seriously. If you said something, they would expect to see the results.
Like I mentioned before, compared to Chinese communities, Western communities care less about price surges, while in Chinese communities, we often joke that price rises can solve all the problems in life. It doesn’t matter what the project is really about. Users will be delighted as long as its price goes up and things can be difficult if the price drops. In this regard, we can say that Chinese communities are price-oriented while Western ones are delivery-oriented. This is an issue faced by Chinese projects that wish to explore the overseas market. Take our own experience for example: we would post posters and updates in the communities before syncing with all departments of the company. This might be because our company was getting big and not everything was properly communicated. As a consequence, our community members would question us why the information released at first was different from the results achieved. To prevent such things from happening again, we improved our workflow to ensure transparency and openness, which better aligned ourselves with the Western culture. I think this is the second distinct difference between the two sides.
Now to my third point. Personally, I believe that English is just one of the things that Chinese projects should master to enter the Western world. Another very important element is the understanding of the Western culture. I reckon being familiar with Western social media platforms including Twitter, Instagram and Reddit can be crucial. It is just like if a Western project wants to enter the Chinese market, the project needs to be familiar with common Chinese social media platforms such as Bilibili, Zhihu and Douyin, as well as the “meme culture”, which is born on the abovementioned platforms. I believe this is very important. If you are only building up English communities but not putting efforts in operating accounts on mainstream social media platforms, you won’t achieve optimal results.
These are my three main points.
Host: Ok, thank you Justin! You just mentioned that you have a strong faith in NFT, and we know you have been active in the NFT world this year. For example we know that you participated in the auction of Beeple’s artworks and purchased many NFTs for very high prices. Apart from digital collections, do you think there are other areas where NFT can have a greater impact?
Justin Sun: Personally, I do have a strong faith in the NFT field. These are my reasons.
First, I think each generation has their own unique collections. I was left with this impression from my previous exchanges with staff of Christie’s and Sotheby’s. Nowadays, we see Picasso as a symbol of elegance and grace in art collections. However, it was a very common thing to paint and give your paintings to your friends during the years Picasso lived in. Such a culture still exists today, but it is just less popular.
In 19th century’s France, as you walked along the Seine River, you could see many painters painting. You could pay them to paint for you, which wouldn’t cost much and the painting would be in line with the aesthetics and popular culture of that time. Painting wasn’t only a luxury of the upper class and nor was it owned by the richest. Ordinary families can have such things as well.
This actually inspired me and I realized that each generation has different types of collections and collecting habits. In the 19th century, paintings by Picasso and Monet were popular while our generation may favor Beeple more. Maybe we just prefer digital collections today? At least very few of the millennials, people who reached young adulthood around the 90s in the States, liked to collect artworks or antiques. I remember my dad would collect antiques. It’s his hobby. But very few people in my generation still like to collect antiques. Most of us are collecting basketball cards, garage kits or sneakers by streetwear brands. You may have heard we say “shoe flipping is much crazier than crypto investment”, right? I think these are the collections of our generation. This is why I think NFT does fit the collecting habits of youngsters today.
From this standpoint, I think “collections for the new generation” can be a breakthrough point for NFT. It is possible that future collections will be presented in the form of NFTs. Recently, “metaverse” has been a very popular idea. I think item collection in the metaverse may also be conducted through NFT and corresponding physical objects in the future. NFT fits the new generation’s trend of collection, and this is why I have a strong faith in it.
Host: The next topic is quite interesting. In this year’s Buffett annual shareholders meeting, Buffett didn’t comment on crypto but Munger had strong opinions. According to our information, you had dinner with Buffett last year. What is your take on the fact that giants in the traditional financial market like Buffett are strongly against Bitcoin? Is it because they don’t understand crypto well enough, or do they have more profound reasons?
Justin Sun: I know a sentence that can answer your question very well. A few days ago the token SHIB soared, and many people said, “I finally understand why Buffett hates Bitcoin so much. It is just like why I hate SHIB.” Don’t you think it is quite interesting? I think Buffett and Munger’s disapproval of Bitcoin roots in the fact that each generation has a different understanding of what produces value. This is a quite important reason.
Warren Buffett’s generation and the general financial market they represent acknowledge value on the basis of a classic valuation model which we often refer to in the financial product field. It was created by Buffett, and you can still see it as you prepare for CFA and CPA exams, right? They’ll all need to study his theory. The theory I’m referring to here is the PS/PE valuation mode, which I believe most of you are familiar with. The PE valuation model, or Price-to-Earnings multiple, essentially measures a company’s cash flow. And the PS ratio is calculated by dividing a company’s market cap by its total sales or revenue. These two initial investment theories formulated by Buffet measure a company’s cash flow and dividends to reflect its investment value. It’s fair to say that the two classic financial theories have paved the way for today’s financial world.
Those who know physics may compare them to the classic Three Laws of Motion by Newton, which laid the foundation of physics as well. But one thing for sure is that physics and finance, along with other scientific fields, are all progressing forward and extending beyond the traditional. Take physics for an example. This subject’s focus began shifting to quantum physics since the end of the 20th century. The biggest difference between quantum physics and classical physics is the “uncertainty principle”, which states the impossibility to predict a value with arbitrary certainty, further giving birth to a set of theories including Schrodinger’s Cat. Even Einstein, who never accepted quantum mechanics, famously said that “He (God or Nature) does not play dice.”
Physicists are always hoping that physical phenomena can be explained by a set of theories rather than through the Large Hadron Collider as they are today. There are two reasons. First, the latter gives them a sense of immeasurability, and second, it simply differs too much from the classic approach. In my view, the same applies to the financial world. We’re seeing changes sweeping this sector that are not favored by Charlie Munger or Warren Buffett.
Here are some of my findings: social media is playing an increasingly critical role in investment, though it’s hard to determine whether the sign is positive or negative. Despite that, it’s an irresistible trend that we all need to face. I also don’t think it’s a flash in the pan, but it will be a long-lasting historic movement.
In the past, mainstream investors mostly put their money into funds, and fund managers were the ones to decide the investment portfolio after delving into research reports. Nowadays however, most people, especially Millennials, prefer investing on their own. This is because, first, they are not comfortable with giving money to fund managers; second, they are confident about their own investment insights; and third, technology has made the information they need close at hand.
For instance, you can directly download Robinhood or Coinbase for one-click investment without the need to open an account. In the meantime, more and more people are resorting to their friends or Twitter feeds for investment advice instead of their fund managers. In the old times, everyone had their own wealth managers and followed their investment advice, while now they tend to browse Twitter and Facebook for worthy investments to go all-in. A new investment model is on the horizon, under which the one that dominates social media dominates the stock market. Dogecoin is a good example. Another typical example is Elon Musk, who now holds even greater sway over the Fed Chair. This is not only an interesting thing to see, but may also become an overarching trend of the future. The Fed chief is nowhere near Elon Musk in charisma, am I right?
If charisma starts to play a crucial role in the capital market, then Elon Musk can easily beat both Fed Chair and Buffett. What I mentioned were only a few of the vast number of examples. The rise in similar trends and cases where technology reshapes our daily life results in a prominent gap similar to that between quantum physics and classical physics. There’s no right and wrong. In my view, it’s akin to physics. Same as how the physical sphere has transitioned from classical to quantum physics, the financial market will also witness more and more novel theories that cannot be explained by the existing theoretical framework. In this ever-changing society that we all live in, new theories will just keep springing up.
Host: You mentioned Elon Musk, whose recent tweets about Bitcoin and Dogecoin have stirred the crypto market. What he did actually sparked a lot of controversy, and we are hearing both positive and negative voices. As an equally influential figure in cryptoland, what’s your take on this?
Justin Sun: I recently saw an amusing meme declaring that Elon Musk is going to be the next Justin Sun. This might have come up because the twists and turns of Elon Musk’s tweets echoed what I experienced with the dinner with Warren Buffett. I personally find that comment quite intriguing.
Well, I myself am a huge fan of Elon Musk. It’s fair to say that I had become one of his most important supporters long before I ventured into the crypto space. I bought a large amount of Tesla stocks in 2012, which got me my first million.
So as a founder myself, it’s been my firm belief since 2012 that Elon Musk is set to replace Steve Jobs to crown the tech world in the US. And just as I expected, nine years later he became the wealthiest man in the world, something even Jobs failed to do.
Many people don’t like Elon Musk. That’s probably because people tend to have stereotyped ideas about the world’s richest or tech mogul. We presume that they are all gentle, cultivated, quiet and calm like Bill Gates or Warren Buffet. But Elon Musk, who is known to be temperamental with a strong personality, is radically different. In contrast, the world’s richest that we’re more familiar with such as Bill Gates, Warren Buffet and Jeff Bezos are more sedate, quiet on social media and reserved when talking about the markets.
I actually did a bit of research on these people. Bill and Melinda Gates, for example, post only once a month on social media. Last time they made it to the trending topics on social media was the time they announced their divorce. So they would only use social media to make really big announcements like CEO transitions or divorce, etc. They are quite the polar opposite of Elon Musk, who frequently interacts with people on social media.
I feel that we shouldn’t arbitrarily define the world’s richest to be people that are gentle, cultivated, calm, and that never use social media.
There is no such rule. I feel that Elon Musk has reshaped the image of the world’s richest and the notion of tech pioneers as much as how Donald Trump has changed people’s perception about American presidents. The US presidents before Donald Trump rarely use social media and are often viewed to be gentle, cultivated and reserved, whereas Donald Trumps is rather capricious.
Back then, from his first day as US president to his last, he stoked fear in both American markets and China’s stock markets.
Thousands of stocks slumped by their daily limits simply because of a remark from Donald Trump about economic sanctions. So in that regard, Elon Musk is comparable to Trump as they share similar traits. Let me continue the theory I mentioned earlier. I feel that we will be able to engage those great people who once seemed distant and unapproachable some day in the future.
I often run into this thesis, which is written in English and makes a lot of sense to me. It says that we are living in an era of Engaging God, where those god-like figures who were once distant from us are starting to engage with the public more often. Both Donald Trump and Elon Musk are walking manifestations of that statement.
This may be the trend of the times. So we and the financial market need to adapt to this change, where a specific figure may hold increasingly greater sway over the market and become the trend of the times whether you like it or not.
One important reason behind this change is that the older generations born before the 80s, who seldom used social media, had control over the majority of social resources. But now, people born in the 80s and 90s, who are turning 40 or 50, are becoming the backbone of the society.
As a result, social media and pop culture are moving increasingly into the mainstream. As cryptocurrency and social networks are better integrated into mainstream society, this phenomenon will become more ubiquitous over time, and not just a passing fad.
Host: Thank you Justin! Now let’s talk about the recent crypto plunge. I read on the internet that your 600K ETH positions were almost liquidated. If that happens, the price of ETH will plummet below $1,000. Is that true? Could you tell us what happened that day?
Justin Sun: That was indeed real close. No question about that.
It was our position on the Ethereum-based Liquidity Protocol, which is essentially an optimized version of MakerDAO. Liquidity outperforms MakerDAO in that it is more efficient at staking ETH to issue stablecoin. So long story short, we staked ETH for a huge amount of LUSD. We had sufficient funds, yet we were on the edge of liquidation, why was that?
It was because ETH plunged from over $3,000 to somewhere close to $1,500. And the liquidation price for our position is just around $1,500.
It was a real close one, but it didn’t happen. Even if we went into liquidation, we were at the end of the queue to be liquidated. Over 30K ETH were already wiped off ahead of us, and luckily we were at the tail of that queue. Still, it was quite risky. With hindsight, were the liquidation had happened, it would be when I was asleep.
It would be very risky if the crash happened when we were asleep. So this story reminds us that it’s better to keep lower leverage and not use it all the time to prevent unnecessary losses in extremely volatile markets like this. I believe my story could serve as a warning to most people. After learning our lesson, we further reduced the leverage. In an extremely volatile market, the first thing you have to do is lower the leverage ratio on your position.
Host: Another question. What do you think are the drivers of this crash? What are the short-term and long-term impacts?
Justin Sun: Sure. I think this crash is actually a good thing in the short run. The simple reason is that this one-sided market has lasted for an extended period of time. Except for BTC which experienced volatility, other mainstream tokens such as ETH and TRX were all having a one-way market prior to this crash. And BTC’s market share has slid from 50% to 40%. This downward market is an outlet of the market sentiment having been built up over the months. But I personally don’t think that’s a bad thing, as it paves way for a quick and good market correction, which will be a sign of a bull market.
Bear market tends to dip slowly but continuously, so it causes serious harm in an imperceptible way. Bull markets, on the other hand, tend to have sharp drops, make corrections in one move and then continue to rally.
So I think this round of overall decrease is an outlet for the bullish market sentiment.
I also believe that the trigger of this drop is the same as the reason Bitcoin plunged in 2017. It was that Elon Musk made a U-turn and started to attack Bitcoin, resulting in a short-term consensus turmoil in the field of crypto, or we can also call it value confusion caused by restructuring.
Most of the new individual token holders put Elon Musk on the pedestal and worship him as a new god. And Bitcoin is the old god. When there’s no conflict between the new god and the old god, the community is filled with joy and the market enjoys unilateral rise.
When the new god suddenly put forward a theory that criticizes Bitcoin for not being environment friendly and everything else, people’s perception was challenged and they were shocked. This resulted in restructuring of the existing consensus, leading to a breakdown in a short period of time.
But as you can see, the market bounced back pretty quickly. Anyway, I think Elon Musk’s attack on Bitcoin is the trigger, which challenged people’s attitude toward Bitcoin for a short while.
We also know that a 20%-30% correction of Bitcoin usually leads to a 40%-50% correction of the overall market. The logic behind is very simple — till this day Bitcoin is still the major token in many cryptocurrencies’ trading pairs. So other cryptocurrencies will be pushed lower when Bitcoin undergoes dramatic market changes. So, I think that explains the short-term market correction.
Host: OK, one more question about stablecoin. One of the recent major changes is that FTX will launch USDC, and in the future, Facebook may also make some new moves on the stablecoin front. Personally speaking, I think the direction Facebook will head towards is closer to cryptocurrency, a bit different from what they originally planned to do — develop an international mainstream digital currency. So my question for you is how will the changes in USDC and Facebook influence the landscape of stablecoin?
Justin Sun: USDC is undergoing rapid development and we are following closely. When the time is right, we’d also like to work with USDC and issue USDC on TRON. I think the growth of USDC as a compliant stablecoin is good. As a matter of fact, the growth achieved by all complaint stablecoin is pretty good this year. BUSD, USDC and TUSD all posted over 10 times of growth, so I think the overall development is not bad.
I’m personally very optimistic about the development of complaint stablecoin. The reason is that Tether does not have a stable on-and-off ramp while compliant stablecoin offers a very stable on-and-off ramp. That’s what I think of USDC.
Of course TUSD and BUSD can offer a channel like this as well, so I think they are useful supplements to the development of stablecoin.
To be honest we’ll try to see if we can work with Facebook’s stablecoin as well, but I am not very optimistic about it. Why?
Facebook faces a very tough choice. Open-source stablecoins should be as open as USDT and USDC and follow the open-source principles in the crypto world and even in human society. In other words, open stablecoins should be available for everyone, can go live on every exchange, can be received and transferred by everyone — just like how we use USDT and USDC now. But if Facebook complies with that principle, then its stablecoin will become vulnerable. It will therefore become extremely difficult for Facebook to report back to regulators in the U.S. and in the world, and that’s why it cannot realize free transfers. But of course, Facebook will inject value to its stablecoin once it achieves free transfers.
But I don’t think Facebook can ever allow free transfers. First of all, the public chain of Facebook does not allow anyone to be a node for it. And I don’t think it’s ever gonna happen. I heard that Facebook’s Diem will be issued on its own public chain. Unlike USDC and USDT which are issued on Ethereum and TRON, Facebook will issue its crypto on a network solely controlled by itself. Then it cannot call itself a public chain at all. It is essentially a private chain where Facebook can block anyone they want. Facebook can liquidate whoever they want and however they like, and it’ll be just another decentralized Amazon server. This is the first reason.
And the second reason is that even if we take a step back and issue tokens on a private chain like the situation with BSC, Facebook is in another dilemma — will everyone be allowed to use and issue tokens? Can everyone use it freely? I think Facebook might say that you have to use Novi Wallet, a wallet they have now, to use crypto.
For one thing, Facebook does not allow others to become nodes on the chain, as only someone in Facebook’s control will be allowed to do that. And for another, Facebook still hasn’t cleared one thing up, which is whether others can issue tokens. For example, is Poloniex able to do the listing?
If none of that is possible and only users of Novi wallet have access to crypto, then I think what Facebook is developing is just another WeChat Pay or Alipay only with larger scale. If that’s the case, I wonder how Facebook will ever be able to come on par with Stripe and Square?
Giant companies entering the field of payment is nothing new. That’s what WeChat and Ali have already been doing.
Facebook is not our competitor. What they really should focus on is how their business can compete with Stripe and Square. And that competition is going to be a fierce one. There’s no guarantee that Facebook can start doing payment business and just succeed. There’re many other more giant companies developing payment businesses as well.
For example, Apple has been building its Apple Pay for a long time. I use Apple Pay myself, and the level of banks connected to Apple is nothing like that of Facebook. Apple connects with every single bank you can think of, including Visa and Mastercard. On the contrary, Facebook, which claims that it is building a blockchain, has made Visa, Master and PayPal cut ties with it. So Facebook is essentially building a project that’s neither open as crypto nor centralized as Apple Pay. If Facebook wants to develop a centralized payment business, then do it seriously and compete with Apple. But I wouldn’t back Facebook if it does compete with Apple, as I’m not very optimistic about its project.
Host: OK, we are running out of time. Thank you very much Justin for joining our podcast. Thank you.
Justin Sun: Thank you!