Reflections on a week talking crypto in Hong Kong

The Block/Benjamin Friedrich

Quick Take

  • Market sentiment is more bullish than anyone expected in Asia, certainly much more optimistic than in the West
  • Application-level development appears to be in full swing, particularly focused on games
  • Entrepreneurs are trying aggressive and differentiated playbooks relative to Western counterparts

This week I was at a cryptocurrency event, Token2049, in Hong Kong. Like any industry conference, far more interesting than the panels were the hallway and nighttime discussions with dozens of people spanning public blockchain projects, executives from major exchanges, and investors of various flavors.

What follows is an assorted sampling of observations from my experience. While heavily reliant on anecdote, this is what I saw as meaningful signal, specifically focused on where development and ecosystem activity is divergent from Western understanding.

On market sentiment

Token2049 was an event straight out of the bull market with events all week fueled by ICO-subsidized alcohol. By my count alone, between Justin Sun’s exclusive penthouse party and other events, I probably took down $100-150 worth of poison juice from the TRON treasury.

Marketing was on full blast, with any time traveler struggling to distinguish between today’s event and sentiment in Q4 of 2017. Free swag was everywhere and pitches were overheard all over with projects still strongly pushing social proof, new investment rounds, and investors clamoring to get into “hot” deals (though today’s deals looked more like Binance’s launchpad spinouts than 2017’s Western ICOs).

Events attracted hordes of rabid fans, all interested in seeing progress (though I suspect even more were driven by “When moon?” type questions).

More poignantly, any expectation that “this bear market isn’t over until all of the [things I don’t like] are washed out of the market” is silly—far too much money was thrown off by the speculative mania of 2017 and the massive revenues exchanges pulled down for this party to stop anytime soon.

Asian cryptocurrency builders’ ethos

Regardless of whatever descriptive view you believe about the future of cryptocurrency (or priors you hold about early movers like Bitcoin, Ethereum, etc.), it’s more obvious than ever that the money and energy in Asia simply does not care. There is a long-tail of projects with dozens, if not hundreds, of team members and they have the same fervor (if not even more zeal) than U.S. teams. The teams’ orientation is also strikingly different: it feels like many cryptocurrency enthusiasts in the U.S. have an indefinite pessimistic view—”cryptocurrency is insurance”—while the dozens of Asian teams I spoke to have a definite optimistic orientation.

In many ways, however, the focus and ethos is different: while North American and European teams I know are focused on the merits of decentralization, the paradigm in Asia is very much focused on migrating everything to the emerging “stack”. While I have my own views on the feasibility or logic behind this, I’m now more convinced it may be possible some form of “decentralize everything” might emerge, even if specific to certain regional nexuses, purely on the strength of Asian teams being able to brute force their way there.

What are people building?

There are more efforts to build a new or improved base layer public blockchain than anyone in the West realizes. This is one case where I think most early movers have an advantage too substantial to maintain, e.g. Bitcoin (brand, ethos, size, security), Ethereum (Western developer traction), EOS (Eastern developer traction), TRON (sheer capital), etc. and I anticipate most teams working on as-yet-unlaunched layer-one chains will consolidate efforts. Aside: anecdotally, openness to “unorthodox” business moves is much higher in Asia, from exchanges thinking of novel issuance models to projects focused on different user acquisition channels.

There seems to be a strict focus on adoption tech out East, I was pitched dozens of different projects working on real-life use cases ranging from messaging products to games. Games in particular were a hot category, ranging from collectible-driven role-playing games to simple gambling products that entrepreneurs were optimistic would drive adoption.

What’s the future of West East crypto?

Though it may appear Asia-based teams are on a collision course with Western teams, more and more it seems clear that any substantive Asian cryptocurrency ecosystem could develop entirely independently of the West. While Asian projects and entrepreneurs are operating highly collaboratively, it’s principally within the local ecosystem.

For entrepreneurs interested in cryptocurrency development across the protocol and application stack, paying attention to application-layer development in Asia may be of increasing importance, particularly as potential adoption of a breakout app is high. While founders of public blockchains have tried applying the same playbooks (e.g. starting a foundation and establishing an “ecosystem fund”) across the board, in Asia, entrepreneurs appear to be breaking the mold, pumping more money than anyone would reasonably expect in marketing. With this and more aggressive developer acquisition tactics (combined with lower developer cost), application development could gain meaningful traction in the East before the West.