Opening Remark
Entrepreneurship in Web3, let's talk every Wednesday!
(Entrepreneurship in Web3.0) is a talk show initiated by Mankun Law Firm featuring interviews with Chinese Web3.0 entrepreneurs. Every Wednesday evening, we invite industry leaders, frontline institutions, and well-known entrepreneurs to share their insights, contributing to the compliant development of China's Web3.0 industry through positive voices, rational discussions, and experience sharing.
The Web3 wave is sweeping across the globe, yet security and compliance have become 'invisible minefields' for entrepreneurs. How to protect assets in a decentralized world? How should Chinese companies going to Southeast Asia respond to the opportunities and pitfalls of Web3 payments?
In this episode (Entrepreneurship in Web3.0), Mankun Law Firm's Lawyer Niu Xiaojing talks with Boesin CEO Joe Zhou. From the Hong Kong Securities and Futures Commission to exchanges, and then to Web3 security entrepreneurship, Joe Zhou shares ten years of industry experience, offering 'bloody lessons' and forward-looking insights on KYT (Know Your Transaction), providing entrepreneurs with a practical guide to Web3 security!
(The audio transcription text has been processed by AI and may contain omissions and errors.)
Welcome this episode's guest, please introduce yourself to everyone!
Joe Zhou: Thanks to Mankun for providing such a great sharing platform. Today, we are discussing Web3 entrepreneurship, and I will first share my experiences.
I didn't start out as an entrepreneur. After graduating from Chiao Tung University, I pursued an MBA at the University of Toronto, and then worked in Hong Kong, initially entering investment banking. Later, I had the chance to join the Hong Kong Securities and Futures Commission (SFC), overseeing the regulation of fund management companies and public funds. This experience allowed me to meet many prominent figures in Chinese-funded fund companies. At that time, it was still new for Chinese institutions to obtain licenses in Hong Kong, and as the only mainland compatriot at the SFC, I received various Chinese big shots from all over the world, witnessing the rise of Chinese institutions in the Hong Kong market.
In 2016, I joined the Hong Kong Stock Exchange as the Director of Market Development, responsible for attracting mainland investors to invest in Hong Kong stocks through Stock Connect. During this time, I interacted with many listed company owners who often asked how to invest in Hong Kong stocks and why they plummeted, which made me realize the importance of conveying positive market information and improving regulation. In 2018, with the rise of Bitcoin, I began studying blockchain technology and found it very interesting. In 2021, I joined Hong Kong's first licensed virtual currency exchange, OSL, and later in 2022 joined HashKey (the second licensed exchange), also briefly working with OKX's preparatory work.
These experiences have made me pay a lot of 'tuition', and also strengthened my ambition to start my business. In 2022, I founded Boesin, focusing on Web3 security and compliance, helping enterprises and individuals enter this industry and avoid pitfalls. I hope to use Hong Kong as a springboard to help Chinese companies go global, especially under new narratives like RWA, seizing Web3 opportunities and improving the domestic 'involution' problem. I look forward to sharing experiences today, and welcome many questions!
Q1: What was the turning point in your career from the Securities and Futures Commission to Web3 entrepreneurship?
Niu Xiaojing: Mr. Zhou's career is quite impressive, spanning from the Hong Kong Securities and Futures Commission to exchanges and then to Web3 security entrepreneurship, bridging regulation and industry. You mentioned your love for mathematics and programming; what opportunities triggered these career choices and transitions?
Joe Zhou: This is closely related to my background. I have loved mathematics and programming since childhood, being a computer enthusiast, particularly interested in new technologies. After joining the Hong Kong Stock Exchange, I happened to catch the Bitcoin boom in 2018, and we studied Bitcoin futures and blockchain technology.
I found that blockchain can greatly enhance the speed of transactions and clearing. For example, stock trading on the Hong Kong Stock Exchange is T+2 (settlement two days after trading) because it involves multiple institutions and manual operations, which are inefficient. However, blockchain's distributed ledger technology enables real-time settlement, with data that cannot be tampered with and anonymity, which is very revolutionary.
The essence of blockchain is a bookkeeping technology based on the internet, with records stored in online blocks, eliminating the need for banks or brokers, and wallets can display all assets. Transfers are visible in real-time, data cannot be tampered with, and anonymity protects privacy. These features accelerate the development of the financial ecosystem but can also be exploited by criminals. This has motivated me to dedicate myself to Web3, focusing on security and compliance.
After entering the industry, I learned a lot and discovered many issues, solidifying my belief in founding Boesin. Without diving into this field, I would never know how to operate!
Niu Xiaojing: I also recall first encountering BTC in early 2017, feeling it was like a 'trust machine', which was particularly shocking.
Q2: How has your experience at well-known exchanges like HashKey and OKX shaped your understanding of Web3?
Joe Zhou: I must clarify that the work of compliant exchanges is not entirely Web3; it resembles centralized platforms. Anonymity has been weakened by regulation because bad actors have exploited blockchain characteristics to do bad things, and I understand the necessity of regulation. However, my experience at OKX truly brought me into the Web3 world. They integrated centralized exchanges and decentralized wallets into one app, which opened my understanding of Web3.
Web3 is the third generation of the internet. Web1.0 is read-only, Web2.0 is read-write, and Web3 is not only read-write but also allows for 'ownership'. Your wallet is your asset repository, eliminating the need for centralized institutions, emphasizing personal autonomy. This makes Web3 diverse in gameplay and rich in interaction.
For example, small merchants in Southeast Asia can trade directly using Web3 wallets without needing a bank account, which is developing very quickly. This made me realize the power of Web3 and discover the enormous issues of security and compliance, reinforcing my determination to create Boesin to provide safety guarantees for the industry.
Niu Xiaojing: Moving from centralized to decentralized, the experience of exchanges has truly opened up a 'new world' in Web3; security and compliance are indeed industry pain points.
Q3: How can Web3 payments empower Chinese companies going overseas? What security barriers exist?
Joe Zhou: After Trump took office, the threat of tariffs became apparent, forcing Chinese companies to go overseas. From 2016 to 2018, I encountered owners of businesses in textiles, toys, and home goods at the Hong Kong Stock Exchange. They laid out plans for Southeast Asia early due to low tariffs, low labor costs, and a large young population, indicating significant market potential. The domestic 'involution' is severe, with e-commerce price wars reaching incredible levels; going overseas is a stepping stone.
Many residents in remote areas of Southeast Asia do not have bank accounts, and Web3 wallets have become tools for payment and earning money, with high penetration rates. WeChat Pay and Alipay are convenient in China, but they are not accepted in Southeast Asia; Web3 payments are a necessity. Chinese companies going overseas must embrace Web3 wallets and build relevant infrastructure.
But the security barriers are significant:
1. Fake Websites: I have fallen victim myself, accessing a fake website linked to my wallet, and my assets were instantly drained. The difference between a real and fake site can be just one letter, making it hard to distinguish.
2. Mnemonic Phrase Leakage: 90% of wallets are stolen because of stolen mnemonic phrases. Hackers implant trojans through false identities (like fake job recruitment websites) to gain computer access and steal mnemonic phrases.
3. Pig Butchering and Ponzi Schemes: Common in Southeast Asia, using wallet anonymity to carry out scams.
My suggestions are: first, carefully check the authenticity of websites and avoid recklessly connecting to projects; second, protect your mnemonic phrases and do not store them on computers or mobile phones; third, use Boesin's tools for prevention and tracking. These are all bloody lessons!
Niu Xiaojing: Web3 payments are an opportunity for overseas enterprises, but there are too many security pitfalls!
Q4: How does Boesin provide security guarantees for cross-border payments?
Joe Zhou: The biggest pain point in cross-border payments is anti-money laundering, making it easy to receive 'black U' (illegally sourced USDT), leading to wallet or exchange account bans. I have clients whose accounts were banned by Tether or OKX, and upon investigation, it turned out their counterparties were involved in money laundering. Boesin provides three layers of protection:
1. Security Labeling Database: We have a labeling database of 2 billion wallet addresses, covering tens of millions of addresses in Southeast Asia, marking high-risk addresses for money laundering, drug trafficking, human trafficking, gambling, etc., and updating in real time.
2. Transaction Monitoring: During each transaction, the system scans the counterparty wallet, and if the risk exceeds the threshold (for example, 0.1% from sanctioned countries), it will alert to stop the transaction.
3. Fund Tracking: If assets are stolen, we use blockchain to record and trace the flow of funds. If they flow into a KYC-compliant exchange, we can collaborate with Mankun Law Firm to verify and recover the assets.
These services allow enterprises to receive payments with peace of mind, avoiding account bans or legal risks. Our databases and algorithms are optimized with Chinese wisdom, offering lower costs than American counterparts and high cost-effectiveness.
Niu Xiaojing: A participant in the live stream summarized well: prevention (security audit), tracking (traceability platform), labeling (security labeling database).
Q5: Why is the concept of KYT important? How does it address Web3 compliance pain points?
Niu Xiaojing: Richard mentioned Boesin's KYT (Know Your Transaction) concept; could you elaborate on the origin, importance, and underlying logic of KYT?
Joe Zhou: KYT is a necessity for Web3. Traditional finance relies on KYC (Know Your Client) for anti-money laundering, requiring documents like passports and sources of funds for account opening. But the decentralization and anonymity of Web3 render KYC ineffective, making the identities of counterparties unknown and susceptible to receiving dirty money. KYT leverages the distributed ledger characteristics of blockchain to solve compliance issues:
1. Transaction Transparency: All transaction records are on-chain, allowing for retrieval of transaction history and counterpart wallets.
2. Risk Marking: Boesin's database of 2 billion labels marks high-risk addresses (such as money laundering and gambling platforms) and scans counterparties in real-time.
3. Threshold Alerts: Users can set risk thresholds (such as 0.1% dirty money), and if exceeded, a warning is issued to stop the transaction.
KYT is the basic compliance operation for Web3 payments, ensuring funds are legal and clean, avoiding account bans or legal risks. Our label database covers Southeast Asia and is updated in real time, particularly suited for overseas enterprises.
Q6: How can Web3 security awareness be enhanced? Is it a technical barrier or a psychological issue?
Joe Zhou: This question hits home! Every time I join a new company, the first thing is cybersecurity or anti-money laundering training, but everyone takes it lightly, including me, thinking 'who cares'. It's only when issues arise that we regret not paying attention. It's difficult to instill security awareness in a short time, as 95% of security incidents are caused by user negligence, like when I fell for a fake website myself.
Technically, Boesin can audit wallets and trace funds, but awareness relies on users themselves. I hope to raise everyone's vigilance through sharing articles and speeches, such as posting case analyses on LinkedIn, reminding people not to store mnemonic phrases or click on fake links. But frankly, many people only wake up after paying tuition.
My vision is to have everyone actively raise their awareness after listening to my sharing, avoiding detours. This is not a technical barrier; it's a psychological recognition issue that relies on industry calls and personal awakening.
Niu Xiaojing: Security awareness indeed requires industry promotion, but each person also needs to awaken themselves.
Q7: Who are Boesin's target clients and what are the thresholds? Can small merchants afford it?
Joe Zhou: Boesin is taking an international and institutional route, but at an accessible price, far lower than American counterparts (which can easily reach tens of thousands of dollars per year). We optimize algorithms with Chinese wisdom, serving project parties, financial institutions, and individual users.
Institutions: Such as cross-border payment companies, need KYT databases and anti-money laundering support.
Project Parties: Web2 platforms transitioning to Web3 need to build encrypted cash registers and security facilities.
Individuals: Ordinary users or small merchants need wallet audits and transaction alerts.
Regarding costs:
The annual fee for KYT is about $5,000 to $6,000.
One-time security audit costs about a few thousand dollars.
Building a Web3 system (including security and anti-money laundering) costs about $10,000.
Total cost is about $10,000 to $15,000, offering high cost-effectiveness.
Small merchants can afford it completely, especially users with high settlement needs; the cost of avoiding pitfalls far exceeds the service fee. We hope to popularize security services to support going overseas and the transition to Web3.
Q8: For individuals wanting to enter Web3, what career paths are available?
Joe Zhou: Web3 attracts many young people because it emphasizes autonomy, allowing them to work from home, make their own money, and not be subject to PUA from large institutions. But before entering, ask yourself what you can do. Web3 offers many opportunities, but skills need to match:
Technical Type: Good at writing code, can develop wallets and smart contracts. I have friends who entered the field directly by writing code.
Business Development Type: Suitable for organizing events and generating leads; Web3 community activities are numerous, and there is a high demand for BD.
Marketing Type: Enjoys socializing and can do market promotion and organize offline events.
My suggestions:
1. Assess your own skills; Web3 emphasizes autonomy and finding a matching direction.
2. Download a Web3 wallet, try some projects, and paying some tuition is fine; if you don't try, you'll never get in.
3. Attend more conferences, like Token2049, to meet big shots and immerse yourself in community culture.
Web3 logic differs from traditional finance; entering the industry requires tuition fees. I have been in the industry for five years, which makes me somewhat of a veteran. I advise young people to try first; long-term dedication will yield returns.
Q9: After just attending Token2049, what unique aspects does the Web3 conference culture have?
Joe Zhou: Token2049 originated in Hong Kong and is one of the largest gatherings in Web3; it's not an academic conference but more like a community party. Project parties promote themselves, and practitioners meet face-to-face in a relaxed atmosphere. Its value is:
1. Face-to-face Opportunities: Community friends who chat online can meet offline, enhancing trust.
2. Industry Trends: Side Events allow you to learn about new projects and peer dynamics in a relaxed environment.
3. Conference Culture: Web3 emphasizes community; founders are more approachable than in traditional industries, making them easier to connect with.
I am older now and no longer enjoy running, but I advise young people to go more often. Don’t just take home (T-shirts, slippers), do your homework: check the agenda, find target big shots, actively ask questions or exchange contact information.
When I was younger, I would run five or six events a day, chatting until three or four in the morning, meeting many big shots. Offline events allow you to see the audience's expressions, facilitating more interaction and being more intuitive than online live streams. The community culture of Web3 needs offline integration, which is the unique charm of Token2049.
Q10: The Boesin website mentions 'becoming the industry's safety base'; how do you define this vision?
Joe Zhou: Boesin's vision is to become the safety base for the Chinese Web3 industry. Blockchain has been driven by Chinese people, but most profits are earned by American companies. American security services are expensive and not tailored to Chinese habits. We optimize algorithms with Chinese wisdom, offering low costs and high efficiency, serving overseas enterprises and individuals, helping Chinese people reclaim their voice in the industry.
Recently, a certain U.S. state has listed blockchain assets as reserve currency, and the Web3 wave cannot be ignored. We hope to build a compliance alliance with Mankun Law Firm and other partners to educate the market and empower the industry.
Q11: Lastly, share a personal insight on the Web3 industry!
Joe Zhou: My insight is: do not follow the crowd, see through phenomena to the essence. Web3 is full of opportunities, but trends change quickly (from NFT and metaverse to RWA), so research is needed to find a suitable path for oneself. Like how I love fitness but hurt my knees running, entrepreneurship in Web3 is also about finding the right track. Young people should boldly try, combine their characteristics, avoid detours, and create their own success.
Niu Xiaojing: Seeing through phenomena to the essence is a compass for Web3 entrepreneurship. Thank you, Mr. Zhou, for your sincere sharing!
From the 'bloody history' of Web3 security to the compliance tool of KYT, and then to the conference culture of Token2049, it's full of valuable content! Web3 is an opportunity, but also a challenge, and security and compliance are the foundations.
Next month, we will focus on the RWA topic, welcome to continue following our live broadcasts every Wednesday! That's all for tonight, thank you all!
Entrepreneurship is not easy, but your story must be very cool!
Welcome to join Mankun's 'Entrepreneurship in Web3' column, injecting real and vibrant power into China's Web3.
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Author of this article: Mankun Brand Department
