Redefining Privacy and Data Ownership: An Interview with ARPA Founder, Felix Xu

Today, I’m joined by Felix Xu, the Co-founder and CEO of ARPA, who is working to make the blockchain space a secure place for individuals and businesses alike. His work with ARPA is having an overarching impact on the democratization of users’ data. 

In today’s conversation, I’ll be picking Felix’s brain for insight on data utility and ownership, and more. From the start of his blockchain journey to his thoughts on the future of NFTs, I think we have a lot to learn from him.   

Q1: Hey Felix, tell us a little about yourself and your professional experience. Also, how did your journey to building in the blockchain space get started?

Hey there! I’m grateful to be here. Thank you for the invite.

I’m Felix Xu, Co-founder and CEO of ARPA. I majored in Finance and Information Systems at New York University, and I worked for more than six years on venture capital investments in Fintech, Big data, and AI startups. In 2016, I worked with enterprise blockchains, no crypto or NFTs, and finally, in mid-2017, I bought my first Bitcoin.

After leading the blockchain sector research and early-stage investment at Fosun Group, I gathered myself and others to build ARPA in 2018. Our testnet went live in Feb 2019, and in Jan 2020, we launched the mainnet.

The vision was simple — to build a privacy-preserving, data-sharing solution. Here is when MPC - multiparty computation grabbed our attention. It aligned with our vision as MPC allowed parties to jointly compute a function using private inputs without compromising privacy. 

Q2: The popular narrative of privacy and security being mutually exclusive has been substantially true with respect to centralized data storage. What are your thoughts on a blockchain-centric ecosystem negating this narrative? 

Not entirely true, but YES, privacy and security have been mutually exclusive to a certain extent, thanks to opaque ways of storing data by centralized parties. Having forgotten that privacy is a fundamental human right, users’ details have been unlawfully leveraged by authorities for reasons best known to them. But for users, there is no way of confirming that their data was used.

Also, with regards to security, centralized data storages are a single point of failure. And we have seen several instances of security lapses and data breaches. 

With blockchain tech, we are relishing an opportunity to provide secure data sharing and analysis, along with encrypted data storage. A blockchain-centric ecosystem can burst the narrative using ZKPs (zero-knowledge proofs), MPCs, and other privacy-centric systems.   

Democratizing data storage and transfer using thousands and a growing number of MPC nodes addresses the scalability concerns of such solutions. We are aiming to create massive data synergies for multiple industries. 

Q3: “Separating data utility from ownership” is a line that encompasses the vision of ARPA. What does this mean to the end-user? And how does this function translate into real-life use cases?

The common culprits of any data storage or utilization acts are those that also possess data. However, with ARPA, enterprise and user data can be analyzed without directly accessing the data. This also means there is minimal scope for losing the data to any third party.

We have come a long way from the removal of single data storage points to using ARPA. And the basis of this evolution is ‘data renting’ using an MPC network. Blockchain comes into play here; the entire MPC computation can be simple plug-and-play. Since the computing stress is divided between many, the cost is minimal per node.  

Therefore, anyone can procure and organize data very easily. This decouples data utility from data ownership - the most fragile joint in our conventional data storage infrastructure. 

Now, banks can use ARPA to share credit blacklists to improve risk management, translating these offerings into real-life. And guess what, those banks don’t have to give up or expose information about their customers. Similarly, insurance pricing and zero-collateral lending can be improved using financial behavior mapped using data collated by ARPA.  

From credit anti-fraud to secure data wallets, the use-cases of ARPA are vast.

Q4: How does ARPA adapt to various international and region-specific regulations and laws attached to collecting and processing personal data?

Let’s make this clear. You talk about Europe’s GDPR, America’s CCPA, China’s blanket bans, Indian tax imposition, and any other regulations. They all demand the same two things: data security and data privacy. 

Since we have ARPA that pinpoints and solves the data privacy issues, adapting to various international and domestic regulations is easier. We also believe that privacy-preserved computation will be the future, and reaching a consensus with these regulators should not be an issue.

ARPA never circumvents any rules for processing personal data. On the contrary, we have established a sound data-renting model in which computation and analysis can be done without actual possession of the data. 

These two aspects give us enough confidence to be flexible enough to accommodate any special regulatory requirement posed by any authority. Over the course of building ARPA, we have also participated in establishing several international privacy computing standards. So, regulatory compliance should not be a major headache for us.

Q5: What do you have to say about the growing NFT ecosystem? Apart from bolstering the creators’ economy, how do you perceive the utility of NFTs can be leveraged? 

2021 was about all things NFTs. And I sincerely believe it’ll remain that way in 2022 and beyond, given how the NFT market matures daily, with utility taking precedence over monetary value.

After disrupting the artwork and collectibles industry, NFTs are taking giant strides into the financial sector. NFT-backed lending, derivatives, tokenized bonds, etc., are some iterations of how NFTs can be used in real-life. So, there is no reason why NFTs should be limited to the creators’ economy. 

Meanwhile, we see how popular brands are jumping on the bandwagon to gain the first movers’ advantage. This boosts the NFT economy as brands help their audience onboard into the NFT ecosystem. More people is always a good sign for a developing economy.

Let us not forget that NFTs act as the fulcrum for blockchain gaming and metaverse. So, I wouldn’t be surprised to see NFTs present in more industries shortly. 

Q6: After a whirlwind in 2021, this year has started on a rough note for the crypto and Web3 industry. How do you view the rest of the year to pan out regarding building solutions and infrastructure? Also, please give us insights into what is next for ARPA? 

Thank you for this question. I have an interesting take on bearish markets. I believe they are necessary to weed off the growing bunch of scammy projects. During bull runs, the overall optimism in the market helps even fraud projects gain momentum before ultimately pulling the rug. Bearish markets are like a surgery; painful but much-needed for a healthier comeback.  

Concerning building solutions and infrastructure (DeFi or Web3), 2022 will be an important year. Efforts are concentrated on the UI/UX side of things for end-users. No-code development is also gaining steam. Apart from this, interoperability is being pursued across the market, reflecting clarity in the direction of growth and development.  

And for ARPA, our focus is on authentic randomness in the form of Randcast, a verifiable Random Number Generator (RNG). Randcast shall fill inequality gaps as its encryption algorithms ensure that every party in the game or product enjoys an equal chance. 

We are also gearing up for the launch of a pilot program for Randcast to allow developers to stress-test the product and provide credible feedback. So, for the time being, we all at ARPA are dialed in on Randcast, its deployment, and changes.