Why Dogcoin soared 100 times?20,000 words to decipher the underlying logic of the digital economy

Recently, the cryptocurrency world has become a “dog and pony show” – the original Bitcoin dominated the rise and fall of the cryptocurrency world, but now it has become a mutual rise and fall.

Why Dogcoin soared 100 times?20,000 words to decipher the underlying logic of the digital economy

Recently, the cryptocurrency world has become a “chicken and dog” world – the original Bitcoin dominated the rise and fall of the cryptocurrency world, but now it has become a mutual rise and fall. Dogcoin (DOGE) has surged nearly 400% in the past week under the strong lead of Musk, and the cumulative increase so far this year has reached a maximum of 14,000%; on May 8, the price of cryptocurrency Shib (commonly known as Shibcoin/Shitcoin) once rose wildly by more than 251%, and the trading volume reached 40.3 billion yuan. “Bitcoin (BTC) has fallen 27.5% since mid-April, while Ether has rebounded around 15% in the same period. On April 30, Mr. Liang Xinjun, co-founder of Fosun Group, gave a keynote speech “The Future Has Come – Twenty Years of Blockchain and Data Economy” at the Technology Entrepreneurship Center of Nanyang Technological University in Singapore, which integrated the latest development trends and investment hotspots of the blockchain industry and brought a wonderful feast of ideas to the audience. The speech was a feast of ideas for the audience. Morning Sentinel M&A has been authorized by Mr. Liang Xinjun to publish the full speech.

Summary of golden words

1、The Internet has been working on digitizing all the contents, the mobile Internet is digitizing goods and services, and blockchain will digitize all the assets of all categories. So if there is something that is not digitized at hand, I believe blockchain can eventually find a way to digitize it. Blockchain is the technology that really transfers the physical earth of human beings to the digital earth.

  1. Blockchain accounts are downward compatible, and all mobile Internet, including all the functions of bank accounts, can be realized by blockchain accounts. But there are many functions in blockchain accounts, such as smart contract function, which mobile Internet accounts do not have. What does the exchange of information and value between accounts rely on? The difference between a token and an ordinary message or an ordinary electronic currency is that a token can carry a smart contract. Therefore, blockchain without token is completely neutered and worthless, because it does not play the role that blockchain should play.
    3、In the end, more digital fiat currencies and all community coins need to be seamlessly linked to each other in order to finally promote the development of the whole data economy.
    4、The total size of crypto assets on the current native chain is about $1.5 trillion, of which Bitcoin accounts for $1 trillion, Ether accounts for $300 billion, and Coin accounts for $80-90 billion. It’s very concentrated, but not very large. If there is an opportunity to convert a part of the two or three trillion assets of traditional finance into token, the imagination of the scale of blockchain data economy is very big, and it is valuable for investment banks.
  2. Under the increasingly strict privacy regulations, it is difficult for companies to profit by taking the right to use user data for free. In the future, in the case of blockchain and Internet of Things, data will become assets.
    6、We should remember that NFT is just a blockchain application on the front page of entertainment, it does not represent the real large-scale application of blockchain, and the real large-scale application of blockchain is DeFi.
  3. What can be predicted is that traditional banks may lose a lot of deposits, so is it really an antagonistic relationship between banks or financial institutions and DeFi? I think not, traditional institutions can benefit from the growth of DeFi.
  4. Why is there a discount for Grayscale recently, but not for ETFs? Because grayscale doesn’t allow customers to redeem bitcoin, you can only do that by selling shares. But ETFs do allow redemptions, so the principal is not lost, which is a bit different.
  5. In this case, if you feel that you need to invest rationally, the first is according to the amount of apps that can be carried on the chain, the amount of DApps. Second, according to the number of users inside the DApp and the user’s activity, and then calculate its GMV is the total economic volume of the scenario it can be applied. If you think about it rationally like me, I suggest you stay away from dogcoin.

The following is the full speech.

So far, many people around me, whether they are professors, industry, or business, have heard a little bit about the “data economy” because they’ve heard about Bitcoin, but most of them really don’t know much about it and don’t understand it. That’s why I used the term “the future is here”.

I personally believe that the main driving force of the global economy in the next 20 years must be blockchain and data economy, I will show you later.

Today, I will tell you four main points. First, we all know that we are still in the middle of an epidemic, and we may not have a chance to take off the masks completely until next February. These things bring us a lot of bad things and a lot of good things.

For the data economy, the overall benefits are benefits. The first benefit is that as a result of the response to the epidemic, many countries have introduced very accommodative monetary policies, and such monetary policies have greatly facilitated the growth of data assets. So now you hear so many NFT (non-fungible Token), including the recent high rise of ETH, BTC, BNB (Coinancoin), I think it is more or less related to the massive release of fiat currency, which is the tactical level.

From a strategic point of view, because of the home isolation, including social distance to be implemented for some time, it does make the data economy is in the process of rapid maturation, so if you carefully go to measure, you will find that in the physical earth we live around, in fact, there is already a digital earth vaguely, in the digital earth there are all your social relations, business activities, social activities.

Third, I tried to answer, and a question often asked by many people doing industry, what exactly is the use of blockchain? Two years ago I told them online gambling works pretty well because it’s reliable and the bookmakers won’t blackmail you; cross-border transfers still work pretty well, they’re cheap and they’re fast.

Now, many people hear about NFT on the entertainment news, as if they have heard that it is very large, and the one that is really the largest and can be compared to traditional finance is, in my opinion, DeFi, decentralized finance. I’ll tell you more about that in a moment.

Also, there are many listeners who are interested in whether they can still invest in crypto assets. I will also talk a little bit about crypto assets.

First, the global monetary release in response to the epidemic has greatly contributed to the growth of crypto assets

The first issue I have just mentioned is that the outbreak of crypto assets is related to the issuance of currencies in various countries. In the past, currency issuance seemed to be somewhat restrained, and I used the word “seemed” just now in quotation marks. You have the impression that it is restrained, but in fact it is not restrained, and it will be even less restrained in the future.

The need to find a credibility due to such unrestrained behavior has given rise to the recent rapid growth of blockchain assets. This table shows the performance of broad asset classes since the first quarter. Bitcoin has gone up 100% in the first quarter of this year, besides Bitcoin the faster risers are crude oil and copper, then real estate and food etc. have also risen well, then after that are stocks, except for mainland China of course, which is a bad performer. The worse performance is the currency and treasury bonds, the debt market is relatively bad. The worst is gold, gold probably also decreased by about 11%, on the first quarter of this year. In general, the performance of the major asset classes can confirm what I said earlier, crypto assets are performing well.

Now let me give you a serious explanation of whether or not government money issuance has been restrained over the years.

We can see from the historical data: from 1932-2019, the UK’s GDP growth rate was 2.5%, but the M2 growth rate was 8%, far exceeding the GDP growth rate. The same is true for the US dollar, from 1934-2019, the annualized GDP growth rate in the US was 3.7%, but the growth rate of M2 was 7.4%, which also led to an average annual increase of 4.9% for gold against the dollar. So many people have been struggling with whether it’s a good idea to buy gold. I don’t think it’s a problem at all, you want to solve the problem, start by asking the right questions, and you’re asking the wrong questions.

Why Dogcoin soared 100 times?20,000 words to decipher the underlying logic of the digital economy

Looking back to 2020, the situation of monetary over-issuance has not improved either. In 2020, M2 in the United States grew 24.9% year-on-year, close to 27% during World War II; M2 in the euro grew 11% year-on-year; M2 in Japan grew 14.7% year-on-year, all very high growth rates. The impact of the high rate of currency issuance on the population can be very intuitively felt through an example: in terms of purchasing power, $100 in 1913 will only have $3.87 left in 2019, and if we keep cash, it will be close to depreciating to 0 in only four generations, with an average annual depreciation of 3.4%. I think it’s quite unchallenging to be an investor and still use the CPI as a benchmark today, 2.0 to 3.0 percent.

You have to at least take the M2 of the past 80 years or so as a benchmark, the historical average of M2 is about 8%, which is very high, the courage and execution of the government printing money is far more than you can imagine.

Looking at China again, China’s M2 grew by 18.1% year-over-year in 2020, the highest since 2011, and that growth rate is impressive. Likewise, we can see: in terms of purchasing power, $100 in 1987 will be only $22.70 in 2019, an average annual depreciation of 5%.

The issuance of crypto assets is still relatively restrained compared to countries that issue currencies without restraint. Note that I have not been using the term “crypto coin” but “crypto asset” or “digital asset” because it is not a currency at all, so don’t mention the wrong name “coin” but it’s really not a currency.

Bitcoin (BTC), for example, has an inflation, or issuance rate, of about 2-3%, which will be halved to 1-2% in about three years.

Ether (ETH) issuance velocity is about 4% right now, and it will probably drop to about 1% this year if it switches to a POS consensus mechanism. When we say deflation and inflation, we mean comparing with CPI, the issuance speed is higher than CPI, we generally call it “inflation”, and lower than CPI, we generally call it “deflation”. We generally say that gold is a deflationary product. By this standard, bitcoin and ethereum will be a deflationary product in the second half of this year.

Digital currency issuance methods and rules for issuance are transparent and fixed

BNB cumulative issuance 200 million, in the past 15 quarters, each quarter about 1% destroyed, so far it has been cancel, burn 15%. At this rate, BNB should also be a deflationary coin. The most audacious issue rate is EOS, which claims to have to issue 5% every year. Because of this fixed issuance rule of EOS, its price is very weak. The other BCH, which is bit cash, is issued at exactly the same rate as bitcoin, that’s at 2-3%.

Second, the prolonged social isolation and home measures in response to the epidemic have spawned a data economy and facilitated the rapid formation of a digital planet

Next, let’s give a word about strategy.

Due to the epidemic, the strategy led to the rapid maturation of the data economy. Xiao Feng, chairman of Wanxiang Blockchain Holdings, has spoken about a point that we have been discussing whether there is a parallel universe in modern physics, and he said that if we look at the perception of human beings, the parallel universe already exists because around the physical earth you live in, you can see yourself having all identities electronically, and all your social relationships and economic transactions have a backup electronically; in addition, due to this social isolation, the data economy Rapid maturity, for example, the growth of the online household market, in the past we online family activities is online shopping, but now very many family activities online, for example, like children’s education, etc. are through online. There is also online commerce, online government, online meetings, online finance, which is also growing very fast.

There is a view that the Internet has been working on digitizing all the content, mobile Internet is digitizing goods and services, and blockchain will digitize all the assets of all categories. So if there is still something on hand that is not digitized, I believe blockchain will eventually find a way to digitize it. Blockchain is the technology that really transfers the physical earth of humanity to the digital earth.

I just mentioned the question, how do we invest to beat M2 at 8% per year?It’s very difficult. Here’s the trick, if you find the main driver of the economy of an era, this thing is not difficult.

I have listed the changes in the top 5 companies in the United States in the past 100 years, you can do it yourself if you are interested, each region, each country you can do it again, I believe the conclusion is the same as I. Before 1917, the main driver of the economy is natural resources and basic raw materials, that is, oil, coal, steel, cement, so the largest companies, the main economic driving force must be these companies. The biggest companies, the main driving force of the economy, must have been these companies. In fact, you can also see that there are two steel, a telecommunications, an oil, a food company, this is 1917, by 1982, the economic driver of the whole society is advanced manufacturing, so then it became what GE, GM, IBM and so on. Then around 1998, Microsoft emerged, and that’s when we entered the IT era, and companies like Microsoft and Intel came out. By 2017, it was all mobile Internet companies.

So who are the top 5 companies in terms of market capitalization in the next 20 years? I can tell you the answer now, must be the data economy companies.

When you are still struggling with where to invest your future retirement money and future long-term strategy money, you should not hesitate to choose the data economy. What is the data economy? The mobile Internet giants, the digital economy, or something else?

With the application of the Internet of Things and blockchain technology, the range of companies with data assets has been greatly increased. For example, hospitals, mobile communication companies, all these companies have a lot of data, but first, they won’t use it, and second, they are not qualified to use it because of the privacy protection issues. With the introduction of blockchain and privacy policies, especially the Internet of Things, which will greatly increase the amount of data, the simple definition of “who owns the data” will change. In general, I think the fact that blockchain and data economy will dominate the economic development of the whole planet in the next 20 years is unchangeable. If you want to invest, you should focus on this direction.

Some people have been putting this news continuously for some time recently, saying that the stock price is overvalued and should be adjusted back. You can give these people a resounding slap in the face, why? These people are all copying around, they never seriously to do research. I show you a data, the largest companies in the United States FAANG accounted for 540 NASDAQ companies accounted for the problem. First look at the market value, these five companies accounted for 540 companies 29% of the total market value, market value has been up and down, but the overall trend is up; and then look at profits, profits accounted for from the original relatively low 23-24%, all the way up to now account for about 43%, the increase in profits is more than the growth of market value. Why do you still feel overvalued?

Since the main driver of the economy is the mobile Internet, it does behave that way in the market. The profits of the whole market are increasingly concentrated in mobile internet companies, and the data economy will show the same in the future.

Look at the Chinese example again, BAT + Meituan + Jingdong + Jindo. Let’s compare these Chinese mobile internet companies with CSI 300, currently these mobile internet companies account for 60% of the market value of CSI 300 and 26% of the profits. Objectively speaking, the United States FAANG these companies than the Chinese mobile Internet companies or cheaper, but if you look at the trend, you can clearly see that more and more profits will be concentrated to these mobile Internet companies. So, investment still needs to figure out what the future economic drivers are.

Back to the data economy. We often hear people say that blockchain is great, but crypto coins are bad, so we want a blockchain without crypto coins, so that seems to be a very trendy and safe statement. Is this statement right? More than half of it is wrong. Such a statement is a neutered blockchain that does not achieve the effect of blockchain.

Blockchain has three basic elements. The first element is that there must be a smart account, that is, a blockchain account, which is compatible with all mobile Internet, including all the functions of a bank account. But there are many functions in blockchain accounts, such as smart contract functions, which mobile Internet accounts do not have. The difference between token and ordinary message and ordinary electronic money is that token can carry smart contract, so blockchain without token is completely neutered and worthless, because it does not play the role that blockchain should play. Therefore, the second element of blockchain is the expression form of token, there are stable coins and community coins or a scene of what coins, but it is always awkward to call coins, because a “coin” makes the regulator very sensitive and the central bank has to control it, so it is better to call token, or can it be called t community in the future?

What is the third element? It is the asset.

Now there are about 1.5 trillion dollars of crypto assets on the blockchain, which are all native to the blockchain and not yet interconnected with the real world, which has about 200-300 trillion dollars of financial assets. When more and more realistic and regulated financial assets are tokenized, it is the blue ocean of the whole blockchain finance. I will also mention later that the real financial assets that have not been expressed is data assets. Now there is no data assets at all, but there will be in the future. When the technology is mature and the data can be expressed as assets, we will be able to see it.

Besides, the development of blockchain technology, including the maturity of data economy, there are two other elements, the first is the regulation, and the second is the intervention of industry, which we call the scene. Regulation is government regulation. Now there are many practitioners of blockchain economy, who are more reluctant to government regulation. I think in another 3~5 years, we are likely to see two worlds, one is regulated blockchain finance and blockchain economic activities after KYC, which may account for 80%. The other is unregulated, No KYC, and all anonymous, and this blockchain economy and assets may only account for 20%. Currently it is the opposite, it is 99.8% may be anonymous and 0.2% is regulated by KYC, but in three to five years it will be completely changed. So if people want to start a business to invest, I think we should focus on the part of the high growth, not always focus on the stock of that stuff.

Countries like Singapore or other countries, to promote the growth of the data economy, what should be done? The first step is to promote the tokenization of payment, the second step is to promote the tokenization of assets, and the third step is to promote the assetization of data.

The first part is that the central bank has the responsibility to issue the token of fiat currency, or to study and do it.

Singapore has been studying the digital currency plan Ubin, China has also issued a digital yuan, and more and more countries will issue digital fiat currency in the future.

At present, using the blockchain cannot be tampered with, distributed bookkeeping, can be widely verified these technologies, has long issued private stable coins, that is, private fiat currency, for example, like USDT (Teda coin), USDC, and like BUSD, which is the USD of Coinan, etc.. The BUSD and USDC are audited and can be checked in the blockchain. If you deposit $1, you will be issued $1 in stable coins. So I think if the government doesn’t do it, there will be someone to do it, and it will certainly be better if the government does.

Ultimately, there needs to be a seamless link between more digital fiat currencies and all community coins to be able to ultimately facilitate the development of the entire data economy.

Let me give you an example of a cross-border transfer. There have been questions over the past few years about what blockchain can do. In fact, blockchain has been able to do cross-border transfers from the very beginning, and very quickly. Let’s say you’re in Singapore and you want to send $10 million to India, and although India is geographically close to us, the speed of the transfer would be very long. It’s Friday, you notify your bank now to send the money, the bank will say they will do it for you on Monday, then after making the call on Monday to do the KYC, it will be ready on Tuesday and Wednesday, and then tell you that it’s a little difficult to arrive on Friday and it may not arrive until next Monday. So it will likely take 10 days from the time you initiate the transfer to the completion of this transaction, even if you are a VVIP of this bank, it is estimated to take 2~3 days, and during this time your money leaves the bank, you have no idea where it is and the bank has no idea.

Data source: coinmetrics; https://etherscan.io

Data taken from: January 1, 2021 to April 19, 2021

What is the rate for this transaction? Swift charges at least $6 for each amount, and the transit bank may charge 0.1 to 1%, so you should actually pay about 1% for wiring a sum of money, and it is a long time.

What happens if you pay with USDT, USDC or Ripple (Ripple)? First of all, it is very fast, as fast as 5 seconds and up to 20 minutes. The cost is also low, about 5 cents per payment. The person who does the service for you may charge a little, but it’s not as dark as the previous one, most of the time it’s $5-6, up to $10, even if you send $200 million it may be $9. The remittance experience is very good.

Now some people say that such a cross-border remittance is anonymous and non-compliant. But there are many customers who don’t need anonymity, I’m willing to use my real name, I’ll use Zhang San’s real name to remit to Li Si, and it’s perfectly fine with this technology.

How large is this thing? There’s probably about $1 trillion in cross-border remittances through Swift every day, $8.2 billion through USDT, $4.8 billion through USDC.

However, some governments are wondering if the issuance of digital fiat currencies will lead to these currencies being controlled by cross-border forces and affect the financial stability of the country. Such a concern is reasonable, but be easy, why? You see how large the USDT and USDC, which are the largest cross-border remittances, are now; USDT is less than $50 billion and USDC is only $10.9 billion. Do you know the total amount of currency issued in Singapore? Singapore is one of the most restrained governments in the world in terms of currency issuance, and more restrained than Singapore is Switzerland. The M2 of these two countries is very well controlled, and as of the end of last year, the stock of Singapore coins added up to $537.3 billion, which is not very big, and it only takes 2% more issuance to reach the level of USDC.

Issuing 2% of the token does not affect the volatility of the Singapore dollar. There are many countries where M2 exceeds 2% per year, what is the difficulty in issuing 2% token? It’s not a problem, the problem is understanding that some of the concerns are unnecessary.

On the issue of payments, regardless of what the central bank thinks, more and more commercial institutions are now recognizing in promoting digital currencies, for example, Visa has fully supported USDC since March this year; Musk also announced that the purchase of Tesla cars in the United States can use bitcoin for payment; credit card giant Mastercard Group also said in February that it plans to start supporting direct payments in cryptocurrencies this year; last year Payments giant PayPal announced in October that it was joining the cryptocurrency market, allowing customers to buy, sell and hold bitcoin and other cryptocurrencies using the company’s online wallet; mobile payments provider Square also announced that it would allow users to buy and sell cryptocurrencies. There will be more and more institutions supporting digital currencies in the future.

Unfortunately, so far I haven’t seen any support from Singapore’s payment institutions, but I believe it’s only a matter of time.

Next, let’s talk about the tokenization of assets. The total size of crypto assets on the current native chain is about $1.5 trillion, of which Bitcoin accounts for $1 trillion, Ether accounts for $300 billion, and Coin accounts for $80-90 billion. It’s very concentrated, but not very large. If there is an opportunity to convert a part of the two or three trillion assets of traditional finance into token, the imagination of the scale of blockchain data economy is very big, and it is very valuable for investment banks.

In the past, investment banks have received money from customers, helping them to do IPO, additional issue, all these things circulating in the market investment banks have already received money once, but now can earn again. The company has already issued shares to discuss with the listed company to come again token, tokenize the stock, can collect another money. The new issue of stock and debt can also be discussed whether it is all paper or part token. this matter is very meaningful.

Recently, Coinan just launched the tokenization of Tesla and coinbase, JP Morgan made a platform called quorum, specializing in gold real estate art.

DBS Bank (DBS) has made a crypto asset exchange locally and is also engaged in asset tokenization. I understand that they will soon push a token debt, and the local HSBC Bank has made a token debt jointly with SGX, so everyone is actually working on it.

I think the epoch-making impact is not the above, the real epoch-making new thing of data economy is the assetization of data.

We all have a vague feeling that so many Internet companies, their basic model of making money is to return to themselves the right to earnings of data that originally belongs to the user. These private data are the user’s, some Internet companies cash it into shopping, some companies cash it into the game, some companies cash it with advertising, and some companies cash it with finance, which are dependent on the user’s data, the native owner of the data did not receive any money, just enjoy the convenience, so it is also acceptable.

Under the increasingly strict privacy regulations, it is difficult for companies to profit from the right to use user data for free. In the future, in the case of blockchain and IoT, data will become assets.

Recently, the IoT has a technology to ensure that this data is real, because it records geographical information such as time and space where the data was generated, and when and where the data was generated is traceable and cannot be tampered with.

In this way, people will tend to think that the data is real, and credible data is the basis for forming data assets.

If the data is fake, how can we talk about assets? Therefore, after IoT is grafted to blockchain, the source of data is very well solved. Further down the road, to turn data into assets, there are several big issues to promote.

The first is the issue of privacy law, to ensure that you have the permission of the Owner before using these technologies.

The second is the issue of privacy computing, that is, whether there can be a calculation method, without touching the sensitive information of the Owner and at the same time can take out the training results, and then can also be part of the training results generated by the revenue distribution to him, this is the privacy computing.

The privacy computing and then to think big, in fact, is now the last few years very hot AI. AI sounds very high, but if you think carefully is actually very low-end. Why?

How does AI work now? A computing center has dozens or hundreds of computers, deploying an algorithm of their own on it, like what adversarial learning method and so on, and then copy the data back from outside and train it in their own closed computer room. This is probably the routine. The AI in the house cannot be touched by others, because once the computational model is given to others there will be a risk of compromise.

This is similar to the way we used to play single-player games, where you log in to a single-player game on your own PC and play it yourself. Single-player games must be prescripted, but when the game can be online, the scenario changes completely, allowing for more ambitious scenarios to be designed and the fun of the game to be improved.

So imagine if there is a privacy protection technology that allows AI model inventors to stop worrying about the model being copied and data providers to stop worrying about data being violated, and all computers with computing power can use this model and data to compute and finally synthesize the computation results into one. This Internet form of AI distributed privacy computing brings the experience is excellent and the cost will be greatly reduced.

There is a company that does privacy computing technology called PlatON, which is based in Singapore, and their main chain is already online. One of the scenarios they have been working on recently is to help a top 5 bank in the US and a top 10 bank in China to do Open banking work.

By Open banking, it means that starting from a certain month, all the data of the new bank is divided into two, one set of data exists on the mobile internet, and another set of data is desensitized and put directly on the blockchain, which can be checked and backed up by all and cannot be tampered with.

In this case, any AI can directly have an API interface to test the efficiency of using these data for your AI, and when you think it can be used, the price will come out immediately, and you can know how much money you need to buy these data to train AI. therefore, I think the imagination of the space here is very big.

This chart below sold for $69.3 million. Don’t underestimate this picture, it took an artist named Beeple 13 years to complete, one digital work per day for 13 years, and finally put it together and sold it. The auction fetched a high price of more than $69 million.

Why Dogcoin soared 100 times?20,000 words to decipher the underlying logic of the digital economy

NFT is hot, but that doesn’t mean it will develop in the future as well. But the NFT model is very fun in that it can identify the original source of any piece of work.

When we, as a casual viewer, use this $69+ million work of his out of personal appreciation, we can just download it from the internet, which is fine.

But if Nanyang Polytechnic (Singapore) downloads it as a textbook, or if any teacher uses it as a textbook, and the textbook is charged to the students, then this is a commercial practice. The consequences of not paying for a commercial practice are very serious, so when you download it, this picture will remind you that non-commercial use is OK, and if it is commercial use, where you should pay.

This picture is intelligent, it will automatically report to Owner’s wallet that Zhang San Li Si used me once but did not pay. Once it is reported, you can hardly deny the fact.

Twitter CEO’s first tweet NFT was sold at a price of over $2.9 million. There are actually a lot of firsts that can be sold, but you can’t prove it’s a first. If you use NFT, you can effectively prove this thing. So I think NFT can play very many tricks and people can think seriously about it.

Since this year, the NFT market volume has been exploding. The world’s largest NFT trading platform OpenSea, for example, in January 2021, the platform’s trading volume was close to $8 million, grew to $90 million in February, and exceeded $100 million in March. April I have not yet counted, I guess it may be two or three hundred million. Recently I see that Coinan just got on an NFT platform, so I believe the growth will be fast.

But remember, NFT is just a blockchain application on the front page of entertainment, it does not represent the real large-scale application of blockchain, the real large-scale application of blockchain is DeFi.

The largest blockchain application that grows at will: DeFi

DeFi relies heavily on two basic technologies, Uniswap and Compound, which are defined as an automated market maker and Compound as a decentralized algorithmic bank. Compound is a little bigger, but not much bigger than Uniswap.

These two technologies have enabled DeFi to grow at a rapid pace. One month ago, the DeFi pool was $43.5 billion. A week ago, the DeFi pool was $61.1 billion. This evening, the size has reached $103.4 billion. Originally I conservatively estimated that the size of the pool should be $200-300 billion by the end of this year, but now it is estimated that $500 billion can not be beaten, and if it is not good, it will reach the size of trillion dollars.

Last year was the first year of DeFi, the ecological user volume surged, from the beginning to the end of the year grew 11 times. In the first quarter of this year, the number of users grew by another 50% to 1.75 million. 1.75 million users have a deposit size of nearly $100 billion, so you can see that the capacity is very high.

The top three participating DeFi protocols in terms of user growth are Uniswap, 1inch, and Kyber, and the top three DeFi pools in terms of market size are PancakeSwap, Uniswap, and Compound, all of which are above $9 billion.

Next I’ll tell you about DeFi’s lending model and risk control model.

First of all, if I were to keep my money in a particular bank today, the annualized interest rate for demand dollars is less than 0.1%, but if I put my demand dollars in Compound, PancakeSwap, Uniswap, I can get 2.8% to 7% interest rate. I am curious why it can pay me that much? What are its underlying assets? Is it safe?

How does it give me such a high interest rate, then we have to talk about the risk control model of his pool. It is a model from the loan, if a person wants to borrow from the pool, a reasonable lending rate is expected to be about 5 ~ 8%, the actual annualized interest rate can be loaned to about 7 ~ 8%, but it is a demand, can be paid back at any time, it 15 seconds to record an interest, so you just do not use the money immediately can be paid off.

Then if you want to take out a loan at 7-8% interest rate, you need to pledge assets. Yesterday, for example, if you pledge 100,000 yuan, the lowest pool you can only lend to 24,000, the highest pool can be lent to 63,900, so the pledge rate is actually quite high. And the pledged assets are also all highly liquid, and for the time being can only accept pledges like ETH and BTC.

In the Compound interest rate model, the loan APR is affected by the following factors: prime rate, utilization rate, and add-on rate.

1) Loan APR = Base Rate + (Utilization Rate * Add-on Rate)

2) Annualized Deposit Rate = Annualized Loan Rate * Utilization Rate * (1 – Retention Ratio)

The entire pool of money has a certain percentage of money that is not moving, which is a sum of money that is agreed in principle not to be used in the white paper, for example, if there is $10 billion of money, $500 million or $1 billion is not used. And then the actual percentage of lending out is called the use ratio. For example, if we have a pool of $10 billion and we don’t lend $1 billion, we have $9 billion to lend. If not a single penny is released, then the utilization rate is 0. If 9 billion are released, the utilization rate is 100%.

There is a prime rate for loan interest, say around 2.8%, when the utilization rate is 0, the loan interest rate is 2.8%. It is equal to the prime rate. When the loan rate is 2.8%, the deposit rate is approximately minus 2.5% of the Interests Gap, so the deposit rate may be 0.3%. In fact, if the utilization rate is 0, I believe the deposit rate is also 0. He won’t give you interest because no one will give you interest, so how will you get interest?

This is probably the case, when it is close to the highest percentage of utilization, for example, we just talked about 10 billion of funds, we have 1 billion is provisioned, because it is demand. When the size of the loan interest rate loan reaches 8 billion, you will see a sharp rise in interest rates. The original loan should get 7 to 8% interest rate, but when the loan goes out 8 billion or more than 7 billion, the interest rate will rise to 14.8%, 40.8%, 70.8%, rise until you do not want to loan. At the same time, because the loan rate minus 2.5% is the deposit rate, which is very attractive to people who deposit.

So it is a kind of interest rate incentives to ensure the safety of the balance of funds, that is to say, if it has approached the maximum utilization rate of funds, it uses a very high interest rate to cause people do not want to borrow, while using a very high interest rate in the absorption of deposits to accept deposits to reduce the proportion of use. These two models have been executed very well.

At this stage, the pledges are mainly BTC and ETH. the trading volume of BTC in the past 24 hours is $120 billion and ETH is $97.3 billion. there are few assets in the world with such high liquidity. In the future, I think pledged assets are expandable.

At present, because the Tokenization of assets has not been completed, the pledgeable assets are only those on the native chain. If the Tokenization of assets is completed in the future, highly liquid and safe assets such as Singaporean treasury bonds, US treasury bonds, Japanese treasury bonds, German treasury bonds and Chinese treasury bonds can be pledged. In addition to treasury bonds, some high-security stocks, such as Apple and Tencent, I believe can also be pledged. So in the future, after Tokenization, the pledgeable assets will be even more abundant.

Then I’ll talk about the current DeFi problem.

If you look carefully, there are only two products that can be traded at the moment, one product is spot and the second product is a pledgeable loan. Spot is the equivalent of aggregated trading automated market makers anyway, you give me dollars and I give you bitcoins. It’s simple, spot transactions clear 1:1. Loans with pledges as mentioned earlier, it doesn’t have the two things that are now inside traditional finance. First, it doesn’t have credit lending, you can’t lend without collateral. Secondly, it does not have leveraged transactions or interest rate markets. The reason is that anonymous transactions are now used, and anonymous transactions cannot generate individual account credit, so it can only be executed by pledging assets. But as I just mentioned DeFi’s future prospects will definitely not be limited to anonymous transactions.

With more and more KYC and traditional finance interventions, I believe that in the future, DeFi will be regulated by government regulations while doing KYC.

There are many people who, upon hearing this, simply understand it as usury. I must say objectively, the interest rate is not high. If someone in China’s capital market is willing to say they will lend you money immediately with an annualized interest rate of only 7~8%, all private companies will find it reasonable. Even to Singapore, large enterprises may find 7-8% to be expensive, but it is reasonable for SMEs. If you go to Vietnam, to India, 7-8% interest rate that is just a big pie in the sky, very cheap.

DeFi doesn’t care about the country the borrower is in, so I think 7-8% is a reasonable interest rate. Of course, if a lot of money comes in in the future, I think the interest rate may be lowered, but I don’t think it will be as low as traditional banks, and it will probably end up being the world average, probably at 5-8%.

There are several differences between DeFi and traditional bank lending, I can’t say it’s an advantage, but we should see it. The first, highly pledged, pledge rate is actually a little higher than traditional banks, a little more secure. The second, automatic liquidation.

The ETF blockchain is a 15 second account, and every time it does, it will clear the price and understand the utilization rate of the funds. Because it is automatically cleared every 15 seconds, I think its asset protection is much higher than that of traditional banks. In turn, it makes the matter more credible and reliable.

Of course there are many people doing DeFi technology and many pools doing it. If you want to participate, I think you should choose a pool with a larger deposit volume and a longer operating time to do it, rather than simply going for a pool with a very high interest rate. If the program itself is not safe, it may cause you losses.

We all feel that this is a very big challenge for traditional banks and traditional financial institutions. What can be predicted is that traditional banks may lose a lot of deposits. So is it really an adversarial relationship between banks or financial institutions and DeFi?

I don’t think so. Traditional institutions can benefit from the growth of DeFi.

Who will be the first to benefit? Insurance companies. As I explained to you earlier, when I first decided to save some money in DeFi, I was actually curious and worried about how it could give me 5%-7% interest on demand. The reason is that it has a high asset pledge at the bottom, which is automatically cleared and cleared every 15 seconds, making it very safe. It also has the mechanism of bottoming out, not lending money, and when it is close to the limit, the interest rate will change dramatically so that it can maintain, etc.

But if you really ask a traditional bank depositor to take out some of his money and put it into DeFi, he will still have concerns. So if an insurance company comes out with a product that protects the principal of the money that a traditional bank depositor puts into DeFi, I believe that such an insurance product would be very popular. And the annual fee of the insurance product can be higher, because the user will do a comparison: the return of the traditional bank is 0.1%, and the DeFi can achieve 5%, and then he is willing to pay 1% to the insurance company, whether to pay 1.5% can also be discussed, the final yield is at least much better than 0.1%, the user will calculate this account.

For the insurance company, it is very good to develop this product and share the revenue.

So is it something bad for banks? I don’t think so. First, the user now pays 0.1% interest per day if he keeps his fiat money in the bank. Now the bank introduces the user to deposit money in DeFi, instead they can charge him 0.3% commission. If the bank introduces and serves the user, the user is willing to pay the fee because he can receive 3% or 4%, so why wouldn’t he be willing to pay 0.3%?

Second, no one wants to borrow money other than the user? If you want to take out a loan, you have to have some token, right? You have to have btc, ETH, so where do these btc, ETH exist? If you want to exist in the recently listed coinbase, you have to pay about 0.6% a year. token in the bank, the bank not only does not have to pay interest, but also can charge an additional custody fee.

The third thing is that you have to do KYC, so do you want to buy token in fiat currency, USDT or USDC? You have to do KYC for fiat deposits, right?

So for banks, I think this is a very good business, not to mention that after the money leaves the bank and goes into DeFi, it is off-balance sheet business, does not consume capital, and the bank’s intermediate business revenue increases a lot. So I believe that the first banks to embrace DeFi will soon leave those traditional banks behind.

The same applies to investment banks, which have already done an IPO and reissued, and can now do it again, all the things they have issued can be tokenized again, and they can collect another sum of money. In addition, the new issue can also mobilize him to issue token, can also collect a sum of money, so for the investment bank is also very good.

It’s also good for exchanges and retail brokerage firms. In addition to developing more traditional regulated financial assets (sto) that can be listed and traded on exchanges to be listed on exchanges and traded by brokerage firms, they can also be pledged to traditional exchanges to be listed and the token can be traded, which can also collect a sum of money.

In addition, we can also open up the price formation mechanism, open up the prophecy machine to you, I can also collect another sum of money. The so-called prophecy machine on what I just said, Uniswap and Compound, every 15 seconds they will capture the market price, according to the market price to decide whether to liquidate. The market price has to be grabbed from the market, the market from the exchange to grab, the exchange can charge a fee to ensure that this information is true.

There is another business that can be done, which is wholesale banking. So much blockchain finance is growing at a fast pace, then the wholesale banking business of giving loans to blockchain financial institutions can also be done.

There is also a central bank, the central bank is responsible for the tokenization aspect of the currency payment, the fiat currency of the stable coin or the stable coin of the fiat currency, the central bank has the responsibility to issue. A lot of KYC infrastructure should be done by the central bank, including the universal identity ID.

The so-called universal ID, when we all emphasize the KYC, you will find that today to buy a USDT here to do a KYC, tomorrow to buy a DeFi something to do KYC, will be very troublesome. The central bank should make a rule, make a blockchain ID card, just scan a code and everyone should recognize it. This is something that the central bank should do.

So I think that all financial institutions can find the opportunity to survive and grow on DeFi, and the corresponding responsibility.

Further down I’ll talk about wholesale banking on the blockchain, which is real. The current largest wholesale bank in blockchain finance is called genesis, and the total loan volume of genesis has reached $3.8 billion. All wholesale banks worldwide have a loan volume of $10.6 billion and a pledge volume of $14.7 billion by December 31, and it is a very friendly loan with a pledge ratio of 72%. The DeFi retail pledge rate I talked about is 24% to 64%, which is great for a bank to have a 72% pledge.

So what is the interest rate in this case? 5.7%. What bank wouldn’t want to do with 5.7% interest on a demand loan? Traditional banks don’t even know now that there is such a big business to be made. By the end of last year, the interest income was $610 million, and this year it may be $6.1 billion, which is a big business.

Investment in Crypto Assets

Let’s talk about investing in crypto assets. Again, I hope all the students who have listened to the lecture today will not answer the question “Is crypto coin a currency”, which is not a good question at all.

Crypto coins are not currencies, they are assets, and we usually call them crypto assets. The amount of traditional finance involved in crypto assets is quite large now.

Let’s look at two sets of data first: 1) Global digital funds under management are about $25.1 billion as of October 2020; 2) Greyscale Bitcoin Trust products have reached $35.3 billion as of April 23, 2021. Adding in ETH funds, the grayscale alone is close to $50 billion, and the speed and scale of traditional funds entering the crypto asset market is growing at a phenomenal rate. So, the high growth of crypto assets in these few months is very impressive.

Why Dogcoin soared 100 times?20,000 words to decipher the underlying logic of the digital economy

Currently, besides Grayscale, compliant ETFs have been issued, that is, those that we ordinary people can buy, mainly in Canada. Canada is not well known, and it is generally understood that Singapore is the most blockchain-friendly country, but in terms of issuing ETFs, Canada seems to be the most friendly, which also surprises me.

Of course, why does Grayscale have a discount recently and ETFs don’t have a discount? Because grayscale doesn’t allow customers to redeem bitcoin, you can only do that by selling shares. But ETFs do allow redemptions, so the principal is not lost, there is a bit of a difference between that.

According to data from the end of April 2020, if you look at bitcoin as a stock, the trading volume of one stock, bitcoin, is equivalent to three times the trading volume of more than 1,800 stocks in Hong Kong. It’s equivalent to 1.2 times the 2,500+ stocks on the SSE, so think about how liquid it is. the same goes for ETH, and that number refreshes to whatever time you want, it’s the law I’m talking about today.

Data source: HASHGLOBAL, COINMARKETCAP and YAHOO FINANCE

Also we will mention the daily volatility. If you’re going to get involved in investing in crypto assets, I personally think you should get a medical checkup first to make sure your heart and brain are healthy because this stuff tests your heart and brain levels.

How scary is the volatility of crypto assets? The average daily volatility of each day is 3% to 6%. Those who have been in the stock market should have a feeling that if a day is going to fall 6%, it is a stock market crash day, which can’t happen once or twice a year, right? Cryptocurrency is a stock market crash every day, and every day is a day of great joy, so you will be very painful or very happy. I think you need to have the ability to harness dopamine before you can play around with it.

In turn, I also remind everyone that there are still people willing to do leveraged trading on such a volatile asset, I think how much water has to go into your head before you dare to do this thing? You shouldn’t do leveraged trading at all.

When we talk about the cost of mining bitcoin, we should have an impression that the price of coins is related to demand, that is, if the price of an asset is in high demand, the price goes up.

The recent growth of Bitcoin, ETH, and Coinancoin are all related to demand. The reason is that more and more traditional financial institutions are starting to allocate, a lot of allocation, 200 million, 500 million so buy, so is not the price to buy up?

When it plunges, its decline is related to the cost, it can not deviate too far from the cost, if you deviate too far from the cost, no one will dig.

Then it comes to the question of mining, what is the cost of mining? For example, I just mentioned that we now have a total of more than 500 billion U.S. dollars in Singapore dollars, in order to allow people around the world to use Singapore dollars, you can swipe your card, you can settle, you can transfer, so our central bank in Singapore has a very large computing center, and there must be a disaster recovery center, maybe even more than one. In addition, there is a heavy guard to prevent terrorist sabotage, there must be security measures to prevent network attacks, there are a bunch of equipment, there must be someone on duty every day, does it consume electricity? Must consume electricity, right, 24 hours 365 days absolutely can not lose power.

So to maintain a commodity trading system, currency trading system clearing, always need to consume electricity. Some people will be more fraudulent, he only tells you that bitcoin consumes electricity, why he does not say whether the Hong Kong Stock Exchange consumes electricity, the SSE consumes electricity? You have to talk about that too, otherwise it’s not fair. The conclusion is that they all consume electricity.

The second problem is that it costs. In the past probably the cost of electricity accounted for about 60% of the cost of bitcoin, and now it’s the miners that are going up very fast, because recently bitcoin has gone up so fast that the cost of miners now accounts for more than 50%. So it’s not a good smart decision to go mining at the moment, because now is the most expensive time you can buy a miner, and it should be a bear market to buy a miner to mine, not a bull market to mine.

The current cost of mining a bitcoin is around 22,000. When bitcoin does drop to 24,000, 26,000, I would recommend that you don’t hesitate to buy it, because that’s the cost.

The other thing is the user growth, which is also an exponential curve, and the vast majority of charts in the blockchain are exponential curves. Bitcoin has 71.68 million wallets; Ether has 148 million users; Bianchi has 65 million, which is an amazing growth.

I would like to mention Facebook, which has been rising in price in the past two days. I have just mentioned that the next 20 years will be a data economy, and it is very likely that the Internet companies will be the ones to take the lead in the data economy, but there are very few Internet companies that have transformed and developed into blockchain.

Facebook has specific actions, this year it wants to build a global zero cost or low cost a payment system – diem. diem payment is token, at first want to do a basket of currency token, later by many central banks to be wary, now it is doing a single currency token. Now it is making a single currency token, such as a stable coin corresponding to the US dollar, but will allow Facebook users to make global transfers and small payments for free.

This is very interesting, Facebook now has 2.7 billion users, if 10% of them are greedy for a little cheap, want to use the free system transfer, then his Facebook account can not be transferred, you must use the same name to open a blockchain account, then you can transfer money, I believe many customers will not refuse. Just think about the 148 million users now, what will happen if another 270 million users join?

I think more and more companies with scenarios will be involved, which will make this blockchain show explosive growth.

I’ve already talked about the power consumption problem, and I’ll give you a real number. The government will not even approve a power plant with less than 1 million kilowatts of installed capacity a year. 3 million kilowatts is a very small power plant, and the government will only think it has a scale effect.

I’ll tell you about the value of ETH. We basically talked about bitcoin earlier, and there are two very important changes in ETH this year that will help its value.

First, it will change from PoW to PoS. I’ll briefly help you understand, in the past, people helped ETH bookkeeping for clearing and settlement, and the system will automatically reward a bit of bitcoin or ETH as compensation for the work done, and sell these things to pay off loans, electricity, depreciation, and the rest is profit. This is called PoW, which means that you get rewarded for the work done.

What is PoS? Now you can’t directly participate in mining, bookkeeping, getting bitcoins, ETH. first you have to have money, you have to pledge 20,000 or 100,000 ETH, or 1000 bitcoins first. After pledging the coins, you can only get the right to mine on the network.

This results in more and more coins being locked up, and adding a miner requires locking up a lot of ETH, which is equivalent to taking liquidity out of the market.

The second thing that is taking away liquidity is DeFi. I just mentioned that all the DeFi, including the Coinan smart chain, use the ETH infrastructure. If you want to borrow money on DeFi, you have to pledge bitcoin and ethereum, and if you pledge a trip, you’re locked out, and you can’t trade, so there’s no more market.

So as I said earlier there are 103.4 billion total deposits, if loans are calculated at 70% on average, there are more than 70 billion loans out, the pledge rate is 23% to 64%, we count 50% well, on average there are 140 billion bitcoins and ethereum locked up. That’s going to siphon off liquidity and cause prices to go up.

So if you believe that DeFi is going to skyrocket, then ETH is going to go up as well. Of course, besides ETH, there’s another coin that’s very similar, which is Coincoin, because Coincoin is also doing DeFi.

Of course, I think many people still don’t feel much about blockchain investment, and there are many people who are keen on speculation and talking about ten times coins and hundred times coins. If you hear someone tell you that buying a product will go up 10 times or 100 times, I can tell you that this person is a liar 990 times out of 1,000. As long as someone tells you that a thing can earn 10 times, your first reaction should be to sweat, not blood, because it must be false.

Of course, the truth is, someone did make 10 times, and that’s a scammer cutting leeks. What are you going to be a leek for? So it is said that people who promote ten times coins hundred times coins thousand times coins, encounter this kind of people you stay away from him the better, it is best not to let him involved in your circle of friends, do not enter your WeChat group. Such people are almost liars, except me, today I am lecturing.

Then we look at a coin, look at the value of an application, you can return to the traditional evaluation method, do not because of the blockchain you feel do not understand, you know the Internet, know VC people can go to the evaluation as well.

When we look at a coin or an ecosystem or the value of a platform, the first logic is to see how many applications are running on the platform, the more applications the more powerful. The more applications, the more powerful it is. The equivalent of youtube you have to look at how many people he has live on it. You look at WeChat, you have to see how big the application of small programs on WeChat.

This is called APP on the internet, how big is the carrying capacity of APP on a platform, or like you look at Taobao, then you have to see how many people are in e-commerce. On the blockchain is called DApp, that is, decentral App (decentralized App). Anyway, DApp is also App, it is the same.

The first is the number of App, the second, through these App can touch to, can directly register the amount of users how big, the more users the better.

Third, how big is the amount of active users. The more active, the better.

Besides these, the biggest difference with traditional Internet is GMV. traditional evaluation method also focuses on GMV, i.e. total economic volume. But the total economic volume in blockchain is the most important, and the total economic volume should be put in the first place.

The mobile Internet cares a lot about the daily activity volume, which is 600 million or 300 million, right? When you hear that the daily activity is only 1 million, you will not even look at it, but 1 million daily activities in the blockchain may be very big.

So forget about these things, you have to look at GMV first. GMV is how big is the transaction volume of one day and one week a year through the chain or through this platform. The larger the transaction volume is, the larger the volume of 1/10,000th or 1/1,000th it collects in the middle.

If you’re looking at these indicators, ETH is extremely important. btc can’t run smart contracts, ETH can, and almost all smart contracts are on ETH now.

The second is the coin, coin is actually also very fun. Just talking about ETH, there are more than 2,700 DApps running on it, and there are more than 400 running on the Coinan smart chain.

Now there are two coins, one is the coin exchange, which is centralized. There is another one called Coinan Smart Chain, called BSC, which is decentralized. I am now talking about the Coin Smart Chain, but the Coin Smart Chain is also to use the Coin coins, the form of Coin coins is somewhat similar to the ETH, DeFi this model to lock more and more Coin coins.

The management of Coinsafe has done a better job, its early founders have been insisting on destroying Coinsafe coins, about 1% per quarter. I calculated for him in the first quarter of this year, the coins destroyed in the first quarter, if converted into U.S. dollars, is about $600 million, equivalent to its quarterly profit of $ 3 billion.

The same report for coinbase is published in the first quarter of how much? So if coinbase claims to be the number one trading center on earth, then coinan is probably the number one trading center in the universe, obviously much bigger than coinbase. I think coinan is a system that is also worth looking at.

All in all, I think that if for some investors or white people, speculation in coins is very risky, firstly because of the great volatility, do not do leverage. The second is that many coins are air coins, which are not worth it at all, and have no value at all. If you must do it, I think you can consider taking a look at bitcoin, ethereum, coinancoin first, learn to learn, learn out of experience before moving up.

But I still mobilize people not to be obsessed with speculation in coins, and try to do this blockchain itself seriously to grow the application. We have spent so much time talking about it, and we can see that it is tomorrow and the future, and there are too many scenarios that can be used. How can you spend this time on coin speculation? You should go to develop applications.

So I’d like to introduce these to you, thank you. And then see what questions the students have.

Five, question and answer session

Thank you Mr. Liang for the wonderful speech, I remember full of dry goods, I feel that is 8 words, the tradition is still there, the future since, then I have a few questions, the first one is a more fun question recently is the dog coin, including Musk is also giving him the goods, just want to ask Mr. Liang’s view on the dog coin. Another one is that DeFi and many other blockchain applications, what kind of impact will there be on traditional banks and lending?

And the last question is, the People’s Bank of China, the Securities Regulatory Commission and the Insurance Regulatory Commission have interviewed 13 financial institutions, so I would like to ask, what do you think the prospect of the application of this kind of DeFi and this kind of blockchain crypto technology in China? Thank you.

Answer.

Dogcoin is a hot spot. Dogcoin has ranked 7th among all coins by market capitalization, and the market capitalization of Dogcoin has reached 40.5 billion, with a trading volume of 9.4 billion in the previous 24 hours. We have just spent a lot of time talking about what kind of applications can be born from blockchain, and it still needs some infrastructure to bear the applications. Then there is nothing useful, can not carry the smart contract is bitcoin.

Bitcoin is a useless blockchain, a utopia, because it has a wide consensus, but it is essentially unable to do smart contracts and applications of the blockchain.

It also counts as a success because there have been no successful attacks on it from ’09 to now by hackers, but there hasn’t been a single bitcoin forged out of it, so it’s a no-brainer. Bitcoin has also been officially recognized by almost no government since its inception. Of course Japan recognizes it as a currency, and the United States recognizes it as a non-financial asset that does not require regulation and can be traded, but it does not give it full legitimacy.

First, it has survived the theft and hacking of so many people, and the technology has evolved very little, and it has survived very well. Secondly, so many governments do not support it and live a very prosperous life. So in this situation, I doubt that a completely useless dog coin can replace it.

I think there are some people who have some emotions and anti-traditional ideas, they think this is very fashionable, I use dogcoin is more fashionable than you use bitcoin, this is possible, but how long can a fashion item last?

Just like you like Nike today, tomorrow you like Li Ning Nike you throw aside, when you first like Nike is not loved to death? The first thing I’d like to tell you is that it’s useless and can’t carry any smart contracts.

In this case, if you think that investment should be rational, firstly, according to the amount of apps and DApps that can be carried on the chain. Second, according to the number of users in the DApp and the activity of users, and then calculate its GMV is the total economic volume of its application scenarios. If you think rationally like me, I suggest you stay away from dogcoin.

The second issue is the impact on traditional banks.

I think that if traditional banks don’t use Fintech and don’t actively lean on blockchain, then the good days are actually gone since yesterday. I would be very surprised if they survive for another 10 or 15 years without making changes.

I’m not very nice to say this, but I think you can recall that in ’03 or ’04, when you saw these portals on the Internet, there were definitely people who started to worry about whether newspapers, radio stations and TV stations could still survive, right? So when did the newspapers really can’t survive? When will TV really not survive? This day will surely come.

So if you invest, I would advise you to be very careful, do not go to invest in traditional banks, do not go to invest in these traditional analysts, because he did not even look seriously. I think it’s better to look at the future, to invest in the future.

Investors have to buck market sentiment. If these leading companies, like FAANG in the U.S. market, BAT, Jingdong, Meituan and Jindo in China, fall due to regulatory reasons, it will be your lifelong regret if you don’t buy them.

Do not go with the market sentiment, think these companies are finished, to collapse. I think the regulation itself will indeed make the market healthier. Although there may be times when the regulation lags behind, or the size of the regulation will fluctuate, but overall it will be better. But I think as an investor, you should not doubt the strength of state support for Fintech because of regulation.

The quality of the punished companies should not be doubted because of the regulation, you are qualified to be punished only if you have good quality. Good companies should be bought when the price falls must be bought ah.

In addition, someone asked how to view the business stable currency, but then listed a RMB. I would like to say that the Chinese RMB DCEP, the central bank repeatedly stressed that it is not a RMB token, it is an alternative to the RMB M0 for cash use, for small, C to C payment use, and repeatedly stressed that it is not a fiat currency token. so I think this question does not need to be answered, if you say the RMB as a stable currency, the DCEP is not. That’s what the central bank said, not me.

But secondly, I think commercial stablecoins have their own problems. If you say that commercial collateralized stablecoins like USDT and USDC have opened up the market, you think there is no room for DCEP, I think it is wrong. First, the central bank said DCEP is not a stablecoin, which is true. But I think like the Ubin or TON that contains Singapore, whether it’s RMB or Singapore Dollar or USD, it definitely needs a central bank version of token.

If the central bank does not do it, the private sector will do it, but if the central bank does it, of course it will be better and more recognized, for example, USDT and USDC are now very big, but I ask a simple question, how many banks in Singapore can accept USDT and USDC deposits and transfers? OCBC (OCBC) does not accept them at all.

But if it is the central bank’s token, will the bank accept it? They will definitely accept it, that’s the significant difference.

So I think government-led fiat currency token is very valuable, and I also think it is something that the government must do in the ecosystem.

Then the second question speaks to say, due to ETF this year high Gas, do DeFi, its transaction fees are very high, thus giving a valuable opportunity for Coinan to have a bend, he asked to several other chains, such as like DOT these have no opportunity?

I think there are opportunities. I think this successful transformation of the Coinan smart chain has given everyone hope, people generally think that Coinan is very centralized, but they firmly went to develop a Coinan smart chain when many people were not optimistic, and it proved that he grew very fast.

Of course he is also very smart, he did not do all the competition with ETH on the smart chain, but made a piece of application of DeFi which is too congested on ETH, and replaced or competed with some applications on ETH through the application, this logic is valid.

But now if you make a new application to compete with DeFi, I think the formula is a bit old, you are not the first one to compete, and there is nothing fancy to do the second one. I think with the continuous expansion of blockchain application scenarios, you can find a lot of room for transformation inside the new scenarios.

The last question is a good one. If quantum computing succeeds, will it make bitcoin lose its price instantly?

This question is asked every day. Blockchain’s privacy computing and cryptography applications are already far more than traditional finance, thousands and thousands of times more than traditional finance. If there is a quantum computing it can break all the blockchain’s passwords, why would he go steal from the blockchain? Isn’t it better to steal directly from the Federal Reserve? The Federal Reserve is hundreds of trillions of dollars, so why do you want to go to the blockchain of hundreds of billions of dollars, right?

If one day such cryptography is mature, I believe the world’s banks will be looted first, because it’s easier to steal from banks, and then you can go back and steal bitcoins from people. So I think this is not a real problem, but of course this kind of problem is easy to circulate in the weibo circle, because many people do not understand.

I believe that after such a lecture today, I hope you can form an impression that the first bitcoin or ethereum these companies these things are not coins. The person who speaks again about what a currency it is means that he has not heard this lecture and has not evolved.

Second, power consumption is necessary, because all trading places are consuming electricity, and bitcoin’s power consumption in terms of the possibility of environmental protection, why is this truth? Think about it, in Xinjiang Inner Mongolia Sichuan mountains inside those hydropower, local and no application, no big industry and consumption, so he has to pull a line thousands of kilometers to pull out to get the user. The loss of every 1000 kilometers is 8 cents per kWh. Then you set up the circuit itself is a very high cost, so this electricity is basically regarded as waste electricity are wasted.

But if this electricity can be turned into foreign exchange income by mining bitcoin for bitcoin for clearing, isn’t this a very good environmental story for our country to export garbage electricity to generate foreign exchange? How can you feel bad?

So some experts are fooling around every day, just counting the total amount. He calculates the power consumption of bitcoin, he doesn’t count whether the exchange consumes electricity or not, and whether his central bank consumes electricity or not. And then he doesn’t think about it, does Bitcoin consume electricity in Shanghai? Or does it consume electricity in Singapore? No, it’s all garbage electricity. I’m sure I’ll get a lot of flack for saying this, but I think it’s a true voice.

Thank you all!

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-dogcoin-soared-100-times20000-words-to-decipher-the-underlying-logic-of-the-digital-economy/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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