As we hop into the year of the Rabbit we take a look a what 2023 might have in store, as we make our 2023 predictions. Plus we speak to Inmoo Hwang from ADDX and Toya Zhang from bit.com to find out why we should still trust trading platforms and what they can offer the investor.
Walter Jennings: Hello, and welcome to Waves in the Finoverse. I'm Walter Jennings, your host for this podcast.
As Asia returns from Chinese New Year break, we are leaping into the Year of the Rabbit.
Look, with many analysts kicking off the year with predictions, we thought we'd jump into in true rabbit style. So here are our predictions for 2023.
Prediction #1
Number one is there will be a war for Web3 talent. We've seen waves of layoffs in 2022, hitting the technology industry, many of those professionals will jump into good roles in banks, corporations supporting their digitization effort. But any of those folks with Web3 experience, blockchain engagement, they're going to land well, so I think we'll have quite an active jobs market in 2023.
Prediction #2
The second prediction will be the continued growth of payments, but I'm going to call it payments with benefits so that you're able to perhaps round up every one of your payments by 15-20 cents or $1 and suddenly save money. They're calling it impulse investing or impulse savings. So payment services have certainly grown this year. We'll see them next year at the consumer level, adding in rewards and benefits that really captured the consumer market.
Prediction #3
Our third prediction for the year is that here in Hong Kong and in other markets, we will see security token offerings on SFC regulated exchanges in 2023. And my hope is the first one out of the box is here in Hong Kong.
So those are some insights to 2023. However, for any of the above to come into fruition, and for us to finally escape the crypto winter, it all comes down to one thing, trust, which leads nicely on to today's episode. In true year of the Rabbit style, we're jumping right into a hot topic that's been discussed on Zoom calls and dinner parties for the past few months - the Crypto exchange.
After the FTX debacle last year, there is understandably a level of mistrust and concern when it comes to where you keep your crypto and how safe it really is. Today, we have two guests joining us in the Finoverse Inmoo Hwang from ADDX and Toya Zhang, from Bit.com.
We're going to be looking at what trading platforms can offer, more than being a glorified wallet, from education and IPOs to optimism and greed. First, I caught up with co-founder and COO of ADDX Inmoo Hwang. ADDX seeks to democratize access to private markets, making it easier and fairer to invest. Welcome to the show Inmoo.
Inmoo Hwang: Thank you. Thank you for having me here.
Walter Jennings: Not a problem now. Inmoo as we emerge from the pandemic, what do you think is the biggest opportunity for FinTech companies such as ADDX and investors?
Inmoo Hwang: So what pandemic really taught us, including myself, is how to leave the wall using online channels in a more digital way. So instead of going to the banking branch to make the transaction, they are now more used to make the transaction digitally, mobile, online internet banking, they're also doing e-commerce. Buying stuff online is more prevailing now. And because of they cannot freely move out, meet people or go to the mall. That's hard. So during this period, this is time where they really learn how to do all those, get used to it. So actually like FinTech like ourselves, who are providing the digital channels, so that they can actually kind of buy and look at the other product anywhere they go. These are more, I mean, really put into their lifestyle. So I think that's how the world has been evolving. And that's how the FinTech like ourselves, how has a play, ground play.
Walter Jennings: Yeah, I know, we're certainly doing things online that we would have only dreamed of three years ago. And it's amazing to see how much change happened to society in our habits in such a short period of time. Now, could you provide us a kind of elevator pitch to ADDX?
Let's assume we're on the 20th floor and the elevators descending? Tell us a bit about the company.
Inmoo Hwang: Yeah, so ADDX is private markets investment platform, where we provide easier access to anybody. More access to like a profitable products like hedge fund, private equity fund, VC fund, private reits, or which were more of only available for the institutional investors and the billionaires, what we are doing is we are fictionalising the investment ticket size from millions to $10,000 for each investment ticket. What makes investment more affordable to people who are using ADDX. At the same time, we also provide our exchange, meaning that we provide liquidity avenues so that they don't have to be locked up for five years, seven years, when they invest, we provide an avenue for them to exit if they only have two. So these are two unique value proposition we provide to the end users and only change in the dynamics are how people have to look at investing into the private markets.
Walter Jennings: No, that's fascinating, because obviously the public equity markets, you can trade on any exchange. However, private equity, which would be in advance of an IPO is the generally been reserved for the exceedingly wealthy or the institutional funds. So this now allows smaller value investors to invest in some of the larger private equity offerings, is that correct?
Inmoo Hwang: That's correct. So that is actually our dream, our vision to actually lead, democratise this private market to, so that more people, more investors can access this.
Walter Jennings: Now, why would you invest in private equity over publicly listed funds? What are the advantages?
Inmoo Hwang: So, there are actually three main reasons why you have to look at our private equity or private markets product. Number one, they tend to be uncorrelated with the private side. So when you invest into the private markets product, you have your returns and risk and return profile will change and you'll have a better diversification. At the same time, many report has been has shown that return from the private market has been better than the public side in the past 10 to 15 years. Lastly, it tends to be less volatile. So meaning that when the market turns down, public market, the volatility goes up. Whereas private market their volatility is actually less than the public markets.
Walter Jennings: Inmoo, I'm interested to understand how blockchain, the role of blockchain in opening up alternative investments to the wider public.
Inmoo Hwang: Yeah, so blockchain, they provide, for example, they provide fractionalization. It's actually very easy to do fractionalization, using blockchain and smart contract. But one can argue that actually you don't need blockchain to do fractionalization. As this is not a new concept, this concept has been around in the market for a long time. And actually technically you can do fractionalization with your Excel spreadsheet, you just need to record it properly, who owns what. But if you think about if you really want to do a fractionalization, offer it to the broader pool investor at scale, you actually need proper tech infrastructure so that you don't have to incur a lot of costs by doing so. So I think this is a very important part where blockchain will play, an important role blockchain will play make sure whatever we are providing the fractionalization, secondary liquidity, immutability of the record and so on and so on, we can actually provide to a broader pool of investor at scale.
Walter Jennings: Right. So it provides you in a really solid accounting method to keep track of the ownership and the transfers. Now, Inmoo, I know that investing in stocks and shares on public exchanges is generally well regulated and secure? How do you ensure the same level of security for investors in private equity?
Inmoo Hwang: So here at ADDX, when we first started, we actually thought about this from the beginning. That's why we went to MAS. We went through MAS sandbox programme.
Walter Jennings: MAS is the Monetary Authority of Singapore.
Inmoo Hwang: Yes, the regulator in Singapore. So we went through their sandbox programme, then we got the licence to operate the market. So we are licenced market operator here in Singapore, meaning that kind of the protection, consumer protections that are cyber security's framework, all of these are actually on par with all the banks or the market infrastructure operator around in Singapore. So actually, that's how we ensure the security and also does safeguard the investment that investors are making on the platform. So that's why we from the beginning, our study from the regulator field to make sure we provide a full investor protection in that regard.
Walter Jennings: Great Inmoo, tell me about the the size of your user base and the typical investor in the private equity deals.
Inmoo Hwang: So at the moment, we have around 2000 users from the different channel, but the tweaker typical, and so far, when we first started, our user base has been more professional, invest professionals. So meaning that bankers, consultants, lawyer who knows this market well, who knows about the private market, so they were very excited when we tell them actually you can invest in this hedge fund at 10k minimum. So they were the first to come to the platform, then that's where we started and then we are slowly moving to broaden our end user base to more mass of loan investors. That's where, as I mentioned, the education comes into play the bigger role.
Walter Jennings: So are we edging towards mass adoption of trading platforms? Or is it still only for the diehard crypto fans. Our next guest is interviewed by Anthony Sar, the co-founder and CEO of Finoverse. He talks to the CMO of Bit.com, to find out more about what she sees going on in this icy crypto landscape.
Anthony Sar: Hello everyone. This is Anthony Sar, the founder and CEO of Finoverse. With you today our special guest Toya Zhang, the Chief Marketing Officer of Bit.com. But we know, Toya and I have been known each other for a while since our first conferences took place in Hong Kong and back 2015-2016. Perhaps we could start a little bit of what excites you the most about this industry?
Toya Zhang: First of all, thank you for having me here. Well, at the beginning, because things change. Well, at the beginning, the industry is just different from everything that I understand. And I had been talking to many brilliant people at that time and saying, Okay, this is really breaking the financial industry what we understand. And this is the innovative and this is the future, this is going to change our world completely. I'm still holding that dream. But what keeps me in this industry now is really, things are happening so fast. Even people are thinking like, oh, when is the mass adoption coming? Like people asking this question a lot.
But really, if you see what have we been through for the past 5-6 years, the technology innovation never stopped. And we develop like the brilliant engineers, brilliant mathematicians, and developing all those DeFi formulas and making things better. And security is getting things better, the sharding raise solutions, making the technology throughput much better. This is indeed progression. And, of course, on the other side, the business model exploration is another side. So maybe mass adoption is not coming anytime soon. But if you look deeper, things are really, really happening and at a much quicker speed.
Anthony Sar: And could you share with us a little bit more about your recent job at the Bit.com. What brought you there, what you're doing and maybe tell us a little bit more about the Bit.com.
Toya Zhang: Yeah, so Bit.com is a cryptocurrency exchange, which offers crypto trading from the spot market, futures market and as well as the options trading. So this actually offers a very comprehensive financial markets, compared to the traditional finance. So traditionally, that's why during our panel, I also indicate that we have a lot to learn from the financial traditional finance market. Because the participation of hedge fund, like high net worth individuals asset management firms, is building a sophisticated financial infrastructure that actually helped to get to the traditional finance at a very healthy level, comparatively. So we are also doing search and pushing that from the crypto space as well. So this is necessary, like you have healthy infrastructure, people understand this. People know how to hedge that risk.
Being professional because it's undeniable that cryptocurrency has a price in the market, and people are taking advantage of the price. This has already built itself a financial markets, so you can't ignore it, you just need to, like navigate through it and master it.
Anthony Sar: There's a common sort of the opinion also, which is very popular within the sort of diehard crypto community, when where's the delivers, and we build this whole thing to actually distant firms, this traditional finance, to build a new system, more inclusive, more democratic, more liberal. And now we find ourselves and ending up working with this industry and bringing all this back together? What would you say to this?
Toya Zhang: I think I've never been a member of that group, diehard crypto. I've always believed that this is going to be a mixture, kind of hybrid that is tightly integrated with each other. Right? So we can take a comparison with the Web2. So the hybration is making it more easier to understand. So for example, the traditional industry like media printing, or like the restaurants, so during the Web2 booming, they are having web version. And during the mobile revolution, they're having the mobile version. So they are adopting as well.
But at the same time, it doesn't mean that they don't have a restaurant office, business or restaurant or print media business, right, the kind of business still exist. So for Web3, if that's the term that we're adopting here, for Web3 age is probably going to be the same. There will be Web3 native businesses, that is purely supported and circulated with digital token, there will also be traditional businesses adopting in that space and kind of adapting, and two spaces will work smoothly together.
Anthony Sar: And going back to your point about building a healthier ecosystem, I mean, obviously, from within a camp of naysayers, more like a conservative camp, there is a common opinion that the crypto industry is driven by greed.
There's a lot of scam. So, what we should do as an industry to really overcome this perception, and how we can actually improve this?
Toya Zhang: Greed is a good thing.
Anthony Sar: Why is that?
Toya Zhang: It is actually driving the human Revolution, if you think of it. Like making money, having a better life. This is on the individual level, actually driving the progression of human nature and culture, and technology. In the group level, or in the country level, getting a country out of its less advantaged state is also the motivation of getting country a greater place, right. So I'm not saying like, just when people are saying, because it's speculators and it's an unhealthy space,to some circumstances, yes. But you also need to recognise if this industry is growing, is inevitable, because they are the greatest drive of how things are developing and it is also to a certain extent, this is also going to drive the industry to go through the direction that is more catering the human need. So giving example that human needs a Metaverse game that is fun to play, instead of giving you high yield, because it's not sustainable. You need people who are paying in the game, to have a full ecosystem. So if you recognise what human need, which is greedy, you can build a better product.
Anthony Sar: We are coming through this crypto winter at this point, right, we talked about winter, but it doesn't really feel that cold to me. From speaking with people like you, who are professionally involved in this space, there's a lot of optimism, a lot of confidence. Where is it coming from
Toya Zhang: Comes from the experience of many winters.
Anthony Sar: It's not the first winter you are coming through.
Toya Zhang: This is not the first winter and is not going to be the last winter. And also we are in the environment, that macro economy is also going down. And we are personally, me personally, is extremely optimistic is because I see this is the opportunity actually is going to drive the whole macro economy up back. Because the value is going to be created in Web3 space, there will be some utilities, there will be people truly passionate and willing to pay for the Web3 services and products. And then that is going to gradually draw some of the economies out of deflation.
Anthony Sar: Well, we'll see how this will play out and how much time it will take. But when it comes to, you know, back on it, your experience working with a few ventures in the past few years. For those people who are looking for opportunity to jump into this sort of bandwagon and really capitalise on Web3, what would be your advice? Where to start? Whom to join? How to find this opportunity?
Toya Zhang: Things are really different now, compared to when I joined this industry. So when I joined the industry, people need to convince me and saying this is a very promising thing. They spend a lot of efforts trying to teach me what is this, based on my past profession, they're hiring me. But things are different. From my experience now. When I am hiring, I'm testing if they know about this industry. And that's actually is basically asking questions. What do you think of this? And what do you think of Dogecoin? What's the history of Dogecoin? So there are a lot of things, you can just get some general ideas back from the candidate. So that's actually a criteria nowadays.
So if there are a lot of materials available in the internet, based on your own profession, either you're in the marketing space or you're an engineer. Engineers is like they require more than other, than just reading news, they probably need to read a lot of documentations. And or you're in the compliance space, you're in a legal space. So because there is a lot to catch up, because it's not like very early stage when there is no establishment, nowadays is different. So have some previous knowledge and understanding, and judgement of the industry will be pretty required.
Walter Jennings: Now, one of the regular features on Waves in the Finoverse is tracks in the Finoverse where we ask people to think of the music they would take with them in the Metaverse or Finoverse. And is there any song that comes to mind that would power your journey?
Inmoo Hwang: I mean, recently my daughter recommended this song, which keeps pop up my head every few hours. Is actually As It Was from Harry Styles.
I don't know why but it's just keep popping in my head every few hours.
Toya Zhang: I didn't get much time to think about this question,but one thing popped into my mind will be Run the World.
Walter Jennings: Well, Inmoo Hwang from ADDX, thank you so much for joining us here on Waves in the Finoverse. It's been great learning more about your company and democratisation of private equity really appreciated having you as a guest.
Inmoo Hwang: Thank you.
Anthony Sar: Thank you so much, Toya
Toya Zhang: Thank you
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