c2c #26: Real-time payments, Hong Kong, Snow Crash

I’m the author of Cowries to Crypto about the history of money, and the c2c newsletter is my personal take on innovation in finance and capital. In here you will find:

1.???Work from the Week: highlights from my day job covering fintech

2.???Talk of the Town: internet hot takes on tech and finance

3.???c2c: thoughts on innovation and related topics

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1. Work from the Week: stories from DigFin, June 26-July 3: Ripple, Hong Kong regulators, awards

Real-time payments | Navin Gupta, Ripple | DigFin VOX Ep. 32: No part of financial services has been more impacted by fintech over the past decade than payments. Yet we still have not seen practical changes to enable companies to make instant, cheap cross-border payments.

Ripple is one of the companies trying to make it happen. It uses a digital currency, XRP, as a bridge token between two near-instant fiat transactions, instead of facilitating a traditional foreign-currency exchange. But do we need a blockchain-based solution? Is XRP a distraction – to wit, the company is still locked in a legal battle with the SEC about whether XRP is a security?

Check out Gupta’s responses to my questions. I think the most important part is his assertion that Ripple simply has a network that is nearing critical mass. What is implied is that it doesn’t matter whether Ripple has the best solution. What matters is adoption.

Hong Kong regulators on crypto: same risk, same regs: This story is not really about crypto regulation in Hong Kong, which is pretty clear now. It’s about Hong Kong today.

This weekend marked the 25th anniversary of Hong Kong’s status as a Special Administrative Region of the People’s Republic of China. I arrived here six months before that, so I have seen a lot.

The HKMA and SFC, along with HKEX’s Gucho, used a local fund-management conference to praise the city’s attributes. Everyone knows the city’s feeling down, so it’s good for authorities to make the case.

Heck, I even made the case – in a webinar I organized for the Fintech Association of Hong Kong aimed at fintechs in Europe looking to scale. When it’s up on YouTube I’ll share it. Plus last week’s webinar on wealthtech and the GBA. So I agree, Hong Kong's future is tied to integrating with the mainland while maintaining links with the international financial system.

But there’s also something disconcerting about having the main authorities selling Hong Kong to their own industry. It’s like they’re worried about people leaving!

HKEX’s CEO made a case that is built on some pretty sunny assumptions about growth and policy in mainland China. The regulators said they’d love to do more with GBA integration if decisions were actually up to them. Then the conference, which was for the Hong Kong Investment Funds Association, ended on a weird note, featuring a doctor concerned about mental health.

To conclude: We’re selling you unlikely benefits, we can’t actually make these things happen, and please don’t jump out your office window.

On a more positive note:

Be sure to check out the AMTD DigFin Innovation Awards 2022. I’d love to see your firm throw their hat in the ring.

2. Talk of the Town

?Let's look at the parts of crypto that seem to be holding up.

Adam Cochran is always a thoughtful poster. The thread is worthwhile to get his take on Circle and its USDC stablecoin, and why he is confident about it, unlike others. A good reminder that just because there are badly designed business models and bad actors, doesn't mean the technology is a failure. Solid governance and integrity remain just as important.

Ahem.

It seems that some whales would rather change the subject.

It's true, I checked.

To be fair, so far, the most decentralized of the DeFi players, like Maker and Aave and Compound, have not been caught up in the crash. It's the centralized TradFi imports that are in trouble. That said, the entire space is predicated on tokenomics - the monetization of participation. Is this better or worse than buying Google, Facebook, Netflix etc services with either your money or your data? I don't know. But it does seem like this crash requires purveyors of Web3, in which blockchain infrastructure supports user-participation economics of internet applications, to rethink.

I have to wonder about how the values and practices of so many in this space have contributed to the industry's current state.

Much of crypto seems to me a dead end. It's a distraction to building actual fintech businesses that deliver tangible (and regulated) benefits to society. As with digitizing old-fashioned banks:

Yet from the ashes of the past decade, new things will emerge. If it wasn't for Facebook's Libra, I don't think central banks would have taken CBDCs seriously. Programmable cash, though, could be a major change to financial markets and infrastructure.

While no one is going to mourn Zuck pulling the plug on this, this doesn't mean blockchain-based finance is over. It might only be at the beginning.

3. Weekly c2c: Snow Crash by Neal Stephenson

Last year Mark Zuckerberg renamed his corporate entity Meta and declared he was all-in on the Metaverse. This came at the peak of the crypto boom so it set off a firestorm of crazy optimism about NFTs as intra-Metaverse tokens and other “Web 3.0” boosterism.

This also generated a lot of press for the American science-fiction author Neal Stephenson, because his novel SNOW CRASH was the first to describe and name a Metaverse, and the avatars that people use to inhabit it.

I decided this was a good excuse to read SNOW CRASH. I’ve read a few of Stephenson’s other books so I had an idea of what to expect. SNOW CRASH focuses on two characters, Hiro Protagonist, a pizza delivery guy and sword-wielding programmer, and KT, a well-equipped 15-year old skateboarding Kourier who ends up working for the Mafia. It’s set in a 21st century USA that has become fragmented into many “franchises”, locally sovereign corporate, national, or criminal entities, with the US Government, aka “Fedland”, reduced to the same. (There’s a very funny passage late in the book about daily life working for the Feds – nothing but pointless bureaucracy, which back in the day was a very good joke.)

The over-the-top plot is an elaborate excuse for Stephenson to dig into Sumer, the nature of language and communications, the links between ideas and viruses, power and the spoken word. It’s cool. Definitely hits a lot of nerd chords. But funny, and a lot of action.

Mostly though the book is just an amazing imaginarium. Stephenson’s vision is remarkable. The book came out in 1992 so he was working on it during the late 1980s. Remember, this is before there was the World Wide Web, and here he is, describing an Internet-dominated world with pretty good precision. I think because he’s also a computer scientist, Stephenson has an appreciation of glide paths, tech debt, and historical baggage. He connected the dots and pointed them into the future.

So yes he describes the Metaverse in a way that adheres to what we think we expect from a better virtual-reality world (people log in via goggles instead of bulky headsets). Whether this fully realized vision emerges is questionable: we’re all still using mobile phones, and that’s one major invention that SNOW CRASH didn’t predict. Whatever Stephenson’s idea of the Metaverse is, it would have to reconcile with the reality of how we interface with technology today.

On the other hand, Stephenson predicted even more things in SNOW CRASH than he gets credit for. He’s got descriptions of QR codes, hot-desk work environments, Google search, Google Earth, and no-code software. All before any of these things existed.

Today’s world is not that of SNOW CRASH but the book is worth reading because of Stephenson’s exploration of the power and meaning behind these creations. (Oh yeah, and because it’s fun.) It’s these deeper ideas that we should keep in mind when we look at all the ways people are trying to create virtual realities.

?See you next week

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About Jame

Jame DiBiasio is a book author, financial journalist, media entrepreneur, and a speaker/moderator. In 2015 he launched DigFin, an online media covering digital finance that is now driving the digital arm of Hong Kong-based financial group AMTD. Jame is also a member of the board of the Hong Kong Fintech Association.

He is author of “Block Kong” (co-authored with Charles D’Haussy) profiling 21 blockchain entrepreneurs in Hong Kong; and “Cowries to Crypto: The History of Money, Currency and Wealth”. He is currently working on a book about the venture capital industry.

Jame has also written books about Asian history, including “Who Killed the King of Bagan?” and “The Story of Angkor”. He writes thrillers too. You can find all of Jame’s published books on Amazon.

A native of the United States, Jame has been based in Hong Kong since 1997. Follow him on LinkedIn and Twitter.