Jennifer Zhu Scott (Yale Executive Leadership Program 13), Founder and Principal at Radian Partners
Jennifer Zhu Scott is the Founding Principal of Radian Partners, a private investment firm focusing on Artificial Intelligence, blockchain, and renewable energy. Previously, she was Head of Business Development & Strategy in APAC for Thomson Reuters. She co-founded one of the first education companies in China and exited before moving to the UK as a senior advisor to the education subsidiary of Daily Mail & General Trust.
In 2013, Ms. Zhu Scott was honored by the World Economic Forum (WEF) as a Young Global Scholar. The following year, she was appointed one of the 18 council members of the China Council, which was convened by the WEF’s Global Agenda Council think tank. In 2016, WEF re-appointed her as one of the 20 members of the inaugural Council of The Future of Blockchain. At the 2018 World Economic Forum at Davos, Ms. Zhu Scott debated against Nobel Prize-winning Yale economist Robert Shiller and Swedish Central Bank Deputy Governor Cecilia Skingsley on Crypto Assets. The same year, she was listed on Forbes World’s Top 50 Women in Tech.
The Politic: Background?
Ms. Zhu Scott: My last corporate job was the head of strategy and business development strategy for Thomson Reuters in the Asia Pacific. Thomson Reuters was a technology and data company for the financial industry. My role allowed me to work with some of the largest financial institutions in the world. I learned the financial industry was technologically backward.
I paid attention because the price went up to $300 dollars. I participated because of the price, but after I read Satoshi Nakamoto’s White Paper, I realized that ironically price was the least important part of Bitcoin. Having worked with data and technological side of the financial industry, and having studied Applied Mathematics, I appreciated the use of mathematical measures to reconsider and reimagine currency, money, and monetary policy. Satoshi Nakamoto revolutionized my view and the fact that he/she/they decided to stay anonymous in order to truly honor decentralization is astonishing. Even today, it blows my mind that nobody knows who he/she/they are–it’s quite extraordinary.
For 300-plus years money and monetary policy comes from centralized institutions in every country–and Bitcoin started to question that norm. Regardless of how realistic it is to truly decentralize these institutions, I think this question and reflection is healthy. That was the main point of my debate with Professor Shiller in Davos last year.
Did you change Professor Shiller’s mind?
When I was at Yale in 2013 to attend this Executive Leadership Program, Professor Shiller actually gave us a lecture the day before he was announced for the Nobel Prize Laureate. The entire thesis of modern economics is very much on how you manipulate interest rates, understand macroeconomics, manage the economy from a top-down level and change the foundation from individuals to institutions.
But Bitcoin challenges the underpinning of this thesis. It says that you don’t need an institution– all you need is to use computing protocol to mathematically meter the monetary system. Decentralization means there’s no Bitcoin Central Bank, Bitcoin Corporation, Bitcoin CEO, or Bitcoin Governor to decide the policy behind the crypto asset. 10 years on, Bitcoin is not perfect – but it does call to question our monetary norm.
I’m not saying that Bitcoin will be a completely decentralized monetary system that replaces the status quo–but I do think that having that as an alternative and that kind of questioning and reflection is not necessarily bad for society. If track technology development at large, there’s a very clear trend of decentralization, and blockchain is one part of that trend.
3D printing is enabling local manufacturing. Renewable microgrids are allowing people to live off of the utility grid. IoT sensor-to-sensor connection will create most of the data. The computer in our pocket is more powerful than the one NASA used to send the first human to the moon.
Another point of this reflection is important: the context of the birth of Bitcoin. Satoshi Nakamoto created Bitcoin in the ashes of the 2008 financial crisis. Financial institutions (banks, funds, and pension funds) that have centralized power completely betrayed the trust of their customers–and they failed. The sovereign, centralized institutions used taxpayers’ money to bail out those institutions which failed in the first place.
Bitcoin was a response to this complete failure of trust by the centralized institutions. It’s therefore hard to argue with a straight face that Bitcoin has no merit while claim you don’t have any biases for the established institutions.I don’t think I can change Prof Shiller’s mind and I totally get it. But if some of my points resonate with the audience, I’d be quite happy with the outcome.
It’s been a bull market. Is Bitcoin something that will only thrive when the market is doing well?
Since the inception of the Genesis Block in January of 2009 ( the first block was connected), there have been so many different projects using blockchain that try to solve real-world problems. In my view, many of them are actually misguided. But since the inception of Bitcoin, so many well respected public intellectuals have predicted the death of Bitcoin. During the debate, I argued that Bitcoin will always be around: If you want to kill Bitcoin, then you have to kill the internet. Even in countries like China where Bitcoin is banned, if there’s even one VPN that works, people will be transacting and mining Bitcoin.
I think that’s the power of decentralization–it’ll always be around. Even some established institutions started to cater to their customers’ need to hedge against the monetary institutions and policy within the financial industry.
In many ways, Bitcoin could be disrupting gold rather than any currencies. That being said, the speculation element of Bitcoin is way higher than that of gold, and there are still too many bad players in the crypto space. There are some people who pretend to understand the space despite not really understanding it, and there are some people who understand the space very well but intentionally hype crypto to make quick cash. I am hesitant about most of the crypto projects is because there are too few sophisticated and ethical players today.
Let’s talk about Libra.
It’s no secret that I’m not a fan of Facebook or Libra. Facebook has a 50-50 chance or perhaps less to launch Libra due to regulatory concerns and the company’s fatal trust deficiency. In terms of the reactions within the crypto community, I find it ironic that people who disowned all of the banks and other centralized institutions are now cheering for one single mega-organization and commercial enterprise entering the space, especially the organization has consistent record of abusing consumer interests and privacy in order to make a profit for themselves. It’s important to differentiate that Bitcoin is meant to be decentralized. The concept of Libra is so far removed from Satoshi’s original spirit and focuses on mega dominance by one giant company.
Facebook missed the boat on payment. They should have launched payment capability when WeChat and Tencent released their payment platforms. At the very least, they should have launched payment when they bought WhatsApp. I consider it a significant strategic misstep.
What would Satoshi say?
I would love to get into Satoshi’s head, but interpretations of his spirit may differ. From my point of view, I think he/she/they would want to see the individual triumph over the centralized institutions. He would want the winners to be people, who regardless of their nationality and location, are tired of being beholden to centralized institutions– whether that’s China, the U.S., or Africa.
These people will be able to access decentralized money; they will have access to financial services that were traditionally excluded for them.
How’s the US doing compared to China in terms of crypto? If U.S. regulators block Libra, won’t other countries just step in to fill the gap?
I don’t think the binary answer of ‘winning’ or ‘losing’ can truly capture what’s happening. The U.S. has many large tech companies in the space. The majority of crypto mining takes place in China.
An interesting space I saw last year (and wrote about it) is Central-Bank-backed-Digital-Currency (CBDC). In my article, I argued that one of the most powerful applications of blockchain–again, antithetical to Satoshi’s intentions–is China’s central bank’s digitalized renminbi (RMB).
China is already the largest cashless economy in the world. Online payments amounted to $112 billion in the US in 2016. Apple Pay really pushed this upside in the following year and reached $314 billion. In China, online payments were $8.16 trillion in 2016, $15.7 trillion in 2017, and $24 trillion in 2018. For context, Mastercard and Visa combined to process $12 trillion globally in 2017.
China’s already the largest cashless economy but the online payment system is controlled by the duopoly of Alibaba and Tencent (through WeChat Pay). There’s no way that China will allow this digital currency shift to be controlled by two private companies.
PBOC, China’s Central Bank has collected the most patents related to blockchain in the world. Sure enough, PBOC recently confirmed that it will issue digital RMB soon. For details, please read the article here.