"Interview Date: October 9, 2023"
1. You can briefly introduce yourself
Hello everyone, I am Hong Shuning. I am the author of China's first Bitcoin research paper. I graduated from the Department of Computer Science at Tsinghua University. I have worked for a long time in the Nanjing Branch of the People's Bank of China. In recent years, I have served as the deputy director of the Financial Technology Research Center of Suning Financial Research Institute, the dean of Shanghai Jinqiu Blockchain Research Institute, and a senior blockchain expert at Jianxin Financial Technology.
2. Can you share your opportunity to join the circle?
After graduating from the Department of Computer Science at Tsinghua University in 1992, I have been working in the IT and financial fields. I worked in the Nanjing Branch of the People's Bank of China for a long time for 20 years, and was involved in many fields, including payment and clearing and credit management. In 2011, when I was engaged in payment and clearing, I began to study Bitcoin in depth, read the Bitcoin white paper and studied its source code. I realized that Bitcoin has the potential to change the future and was deeply influenced by it, so I wrote a paper published in the "China Credit Card" magazine, introducing Bitcoin to people and making three suggestions: First, as an employee of the People's Bank of China, I suggested that the People's Bank of China use national computing power to mine Bitcoin. Second, it is recommended to establish a Bitcoin bank in order to combine Bitcoin with financial business, especially with legal currency, which must be achieved through the National Bitcoin Bank. Third, a new legal currency with Bitcoin as a reserve is proposed to cope with the competition of traditional reserve currencies such as the US dollar.
At that time, Bitcoin was not widely known and these suggestions were not taken seriously. But in recent years, I have been pleased to see that some countries, especially El Salvador, have begun to recognize the importance of Bitcoin and incorporate it into their legal tender system. I believe that more countries and central banks will pay attention to these suggestions in the future.
In 2017, I left the People's Bank of China and joined Suning Financial, devoting myself to blockchain research. I established Suning's blockchain laboratory in Nanjing. Although I no longer had the opportunity to work on Bitcoin, I focused on areas such as alliance chains and application implementation. Since then, I have also worked in some other IT companies, including as the dean of Shanghai Jinqiu Blockchain Research Institute and the financial technology company of Construction Bank, and have been committed to the research of alliance chain applications and Bitcoin/blockchain Web 3.0.
Core content: In 2011, I started to study Bitcoin and wrote a paper proposing three suggestions: first, use the country's computing power to mine Bitcoin, second, establish a Bitcoin bank, and third, use Bitcoin as a legal currency for reserves. Although it did not attract attention at the time, some countries have begun to recognize the importance of Bitcoin in recent years. In 2017, I left the People's Bank of China and joined Suning Financial, focusing on blockchain research, established Suning's blockchain laboratory, and continued to work on alliance chains and application landing. Later, I also worked in other IT companies and continued to study alliance chain applications and blockchain Web 3.0.
3. Can you introduce what you are doing now?
Since I have been engaged in research in the field of blockchain and Bitcoin for a long time and participated in this field early on, I have also done a lot of work in promoting the publicity and education of blockchain and Bitcoin, including writing articles, giving speeches in China, and participating in the formulation of policies and standards. I also helped some local governments to formulate relevant plans and popular science activities.
After years of research and consortium chain construction, I began to feel that consortium chains, or so-called private blockchains, have serious limitations. I believe that blockchain technology needs to return to Bitcoin’s model based on game theory and economic incentives to fully realize its potential. Purely private blockchains are of little significance in playing the role of blockchain technology. Therefore, in the past two years, my research focus has returned to Bitcoin, exploring how Bitcoin can be more widely applied and implemented in addition to being a currency, which has become my main research direction.
Core content: I have been engaged in blockchain and Bitcoin research for a long time, actively promote and educate, and also participate in policy formulation. Although it has dabbled in consortium chains, it is believed that blockchain should return to Bitcoin’s game theory and economic incentive model to unleash its potential. Private blockchains are limited, so recent research has focused on returning to Bitcoin to explore its broader applications.
4.What is your most meaningful experience in Web3?
I actually tried to make some first-level investments in Web3, but most of them failed. Among them, I think the most meaningful experience is about Ethereum’s ICO. At the time, I studied Ethereum in detail but was not involved. Why didn't you participate? Because I think the vision of Ethereum and the goals proposed in the white paper can theoretically be realized on Bitcoin, but the technical path has not yet been found at that time. Vitalik (the founder of Ethereum) started Ethereum because he believed that Turing-complete smart contracts could not be implemented on Bitcoin. But I believe that although we don’t know how to achieve it at the time, the technical capabilities of the Bitcoin community should soon be able to find this way, making the emergence of Ethereum unnecessary. Therefore, I did not participate in Ethereum’s ICO.
Of course, I also missed that opportunity that could have brought 1,000 times the profit, but now it seems that my judgment is still correct, but it was many years later. Now, Bitcoin has found the technical means to implement the smart contract functionality of Ethereum. This is also the direction of my current research.
Core content: The most meaningful experience was the ICO of Ethereum, which I did not participate in. Because I thought at the time that the vision of Ethereum could be realized on Bitcoin, but the technical path was unknown. Now it seems that my judgment is still correct, although I missed the opportunity 1,000 times. I am currently committed to studying the direction of Bitcoin to realize the functions of Ethereum.
5. Can you share the skills or areas that you think you are good at?
I am a technical person who graduated from computer science. I have worked in banking and finance for a long time, and later entered the blockchain industry. My advantage is that I have all kinds of knowledge required in the blockchain field, whether it is programming, cryptography, security, finance, currency, securities investment, etc., I have dabbled in it. This allowed me to gain a comprehensive understanding of the blockchain industry, specifically Bitcoin and Ethereum. Compared with experts who enter different fields, I am better at quickly judging the future potential and prospects of a certain field or technology, and then focusing on in-depth research and following the development in this direction. To sum up, I think what I am best at is quickly finding the development direction of a field and working hard in that direction.
Core content: I have a computer science background and have worked in banking and finance for a long time. Later, I turned to the blockchain field. My advantage lies in my extensive knowledge of blockchain, including technology, security, finance and other fields. Compared with experts in other fields, I am good at quickly judging and deeply studying the potential and prospects of a certain field, and I follow the development direction with concentration and perseverance.
6. How do you view investment or what investment methods can you share?
In the field of investment, I mainly entered from the perspective of theoretical research and did not participate too much in investment. I am a committed coin hoarder who has continued to buy Bitcoin and have never sold. Although I am not good at investing and trading, my suggestion is that for people like me who are not good at trading, don’t use your weaknesses to try to trade frequently. Instead, you should choose to hold it for the long term and stick to it once you find the right direction. I think once you find the right direction, you should hold it until you reach the desired goal, and then consider other transactions.
Core content: I mainly focus on theoretical research and am not good at investment and trading. I am a firm long-term holder, focusing on buying Bitcoin and never selling. My advice is that if you are not good at trading, don't try it easily, but choose to hold it for a long time and wait until you reach your expected goals before considering other transactions.
7. Do you have anything you would like to share?
I want to emphasize that I have been thinking about the future cognition and understanding of Bitcoin. Especially after the Bitcoin fork in 2017, the Bitcoin community became very conservative, viewing Bitcoin as a mere means of storing value, not suitable for applications. This led to the entire community abandoning the application field, while public chains such as Ethereum began to develop rapidly. Before 2017, there were many attempts at beneficial applications on Bitcoin, but they were basically abandoned after that. The development of Ethereum proved that the economic incentive mechanism of tokens can bring innovation. Although there are also many negative effects, it has also spawned many beneficial innovations. Web 3.0 based on tokens has also become feasible and has gained consensus. If those events had not occurred that year, which led to the conservatism of the Bitcoin community, if a large number of application technologies could be developed rapidly on Bitcoin, then the current Web 3.0 field might be completely different. Therefore, in order to achieve our ideals or goals, we should continue to try to develop applications on Bitcoin.
This effort has been ongoing in the community, albeit stalled for a while. Especially in 2022, with the emergence of inscription technology and other factors, the entire Bitcoin community has undergone significant changes and become more positive. People are no longer as conservative as they used to be because they realize there is huge value in creating tokens on Bitcoin. Therefore, in addition to Ordinals, many new projects have emerged, including client-side verification technology.
Client-side verification technology is not new in theory and has been around for years, but it has not been widely used for a long time, whether on Bitcoin or other public blockchains. Recently, due to the emergence of RGB and other projects, people have begun to pay attention to client-side verification technology. This technology makes it more feasible to leverage off-chain computing to execute smart contracts or issue assets on Bitcoin. In fact, these projects have already been developed, and it can now be seen that it has become completely feasible to create smart contracts and token systems using Bitcoin.
The next key is to apply these technologies on a large scale and re-implement the various innovations on the Web in the past few years on Ethereum on Bitcoin. Due to different technologies, this will produce new technological innovations, which may bring unexpected changes to the Web 3.0 ecosystem on Bitcoin. My opinion is that a complete Web 3.0 ecosystem utilizing client-side verification technology will be established on Bitcoin, including application scenarios that have already been seen, and even some new scenarios. A key differentiator of client-side verification technology is that it operates completely off-chain, making it potentially infinitely scalable. This means that it is no longer restricted by the performance limitations of the blockchain, similar to traditional Web 2.0, and can realize everyone's ideal of Web 3.0. This path will help to truly apply and implement external applications, not just for transactions or simple investments.
Core content: Before 2017, there were useful application attempts on Bitcoin, and the success of Ethereum proved the possibility of innovation brought about by the token incentive mechanism. If there had not been conservatism at that time, the current Web 3.0 field may be different. In recent years, with the development of technology, the Bitcoin community has become more active, especially in 2022, some new technologies and projects have emerged, such as inscription technology and client verification technology, making application development on Bitcoin more feasible . The key now is to apply these technologies on a large scale, re-implement the innovation on Ethereum, and build a complete Web 3.0 ecosystem on Bitcoin. Client-side verification technology is characterized by running off-chain, with potentially unlimited scalability, and is not affected by the performance limitations of the blockchain, which will promote the implementation of Web 3.0 and is not limited to transactions or simple investments.
