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Notes from Blockchain Ukraine

March 24, 2017

Did a talk on Blockchain Ukraine about bitcoin and blockchain at the end of the American empire.  Some random thoughts….

A lot of what I was doing was “rah, rah, come to Hong Kong”.  It looked like I was one of two bankers there and also one of the few people from Asia.

The stuff that people are working on in Kyiv is so much ahead of Hong Kong that it is unreal.  It’s really important that HK start reaching out in order to avoid getting hopelessly behind.  Hong Kong likes to think of itself as in the big leagues, but when it comes to startups and fintech, Hong Kong is not only falling behind London, New York, Silicon Valley, and Singapore, it is getting trashed by Kuala Lumpur, Kyiv, and Mumbai.  On the other hand, this might be a good thing, because it’s becoming obvious to everyone that the tech situation in HK is bad enough, so that people are starting to do stuff, and we really need people from other places to come to HK to take advantage of the good stuff and fix the bad stuff.

One reason the tech situation in Hong Kong is terrible is that the banking cartel and the land barons are just killing the city.  I was thinking about cartels when I noticed that everyone was using Uber in Kyiv, whereas they are just fighting to keep licenses from being revoked in Hong Kong.  Also just before I left, I submitted a renewal application for my money lending license.  I was in the office for an hour as a person helpfully corrected some of the mistakes in my application (i.e. I didn’t put in the character code, and the fact that I moved meant that I had to fill in a section which I thought I didn’t have to do).  Everything is in paper, and I was told that it would take three months to review my application.  The bureaucrats where as always, extraordinarily nice and helpful, but I felt as if I was in the 19th century and doing stuff with quill pens, and a lot of why people keep doing things the same way has to do with the high cost of living in Hong Kong.

One thing that really disturbed me is how cheap everything was in Kyiv, and that the fact that everything was cheap, meant that people could make do with a small income and still have a high standard of living.  I have to make a salary that would be huge by Kyiv standards just to pay my rent and send my kids to school.  I’m one of the few people with enough savings to do that, but the high rent makes it impossible to do anything unconventional for most people. One reason that people don’t do anything that unconventional in HK so that if you do that, you might lose your job, and the cost of living is high enough so that you’d quickly run out of money if that happened.  So people are forced to play things safe.

No, I don’t think we can dramatically reduce the cost of living, but we need to at least admit that it’s killing Hong Kong, and think of ways to work around the problem.  Some of these solutions could be win-win.  For example, one thing that Cyberport could do is to set up some cheap dormitories and hostels.  If you go to the shops at Cyberport they are half empty, and if you put in some cheap dorm space, then you get foot traffic for students.  Also a lot of companies that would like to visit HK fly coach and stay in inexpensive hotels.

The reason that things will change is that the current system just doesn’t work even for the current power brokers.  It would be one thing if the banks and land barons were making tons of money, but revenue and profits are going down for them (i.e. the shops in Cyberport are half empty), and they are smart enough to know that their goose is cooked, so they are really interested in making some deals.

The good news about the tech situation is that the tech in Kyiv was so advanced, that a lot of the stuff that I thought would take a year to get done, I think I can get done in the next month or two.  They have production ready systems.  Also you have many, many businesses that want to get set up in Asia and to tap the China markets and the corporate markets, and I’ll be helping them get set up in Hong Kong.  I was just bashing the land cartel, but the big barrier is the bank cartel.  If I go into a bank and say that I want to set up an account for a Russian payments company, the odds that they will open the account is so small that I’m not going to even bother.  However, it turns out that the companies have bank accounts outside of HK, so the work will be to figure out how to do the things that you’d normally need a bank account for (like pay employees), but there are ways around that using digital currencies.

I did most of my talk on payment systems because getting money out of China is the big headache in this part of the world.  It turns out that no one there was particularly interested in payments issues, but what they were interested in was to get setup in Hong Kong so that they can tap the China market and also the Western financial company market.  Also my impression is with Russian companies is that they move shockingly fast, and aren’t tied down by bureaucracy, whereas in Hong Kong everything is about bureaucracy.  There is a lot of money to be made by linking the systems, but it’s going to take a bit of work meshing the cultures.

The thing that worries me now is that not that HK is behind in tech (since that it a given), but it is so far behind, that it won’t be able to interact with the new financial system.  It’s one thing if you are flying propeller planes while other people are using jet engines, but HK is getting so far behind you end up trying to explain people with stone spears what an airplane is.

I don’t want this to sound pessimistic.  Sure there are a lot of problems, but there always are, but I left the Ukraine feeling pretty optimistic about Hong Kong’s futures.  All of the problems I mentioned are manageable, and there are tons of money to be made by fitting things together.

Strangely enough the fact that the tech situation in Hong Kong is so terrible is one reason I’m optimistic.  One problem with Hong Kong is that things worked well enough so that no one was interested in changing things.  If you look at where the fastest most innovative stuff is happening, it’s when things get so bad that people are desperate for an alternative, an which point you have a game of leapfrog.


From → hong kong

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