Bitcoin past: Wang Xing of Meituan has held Bitcoin for eight years and made a hundred times the profit. In theory, Satoshi Nakamoto is already the richest man in the world

Key Points

1. In December 2013, Wang Xing bought Bitcoin. This investment has returned 100 times so far, exceeding Meituan’s equity in the same period.

2. Coinbase went public with a market value of $65.4 billion, surpassing China's largest brokerage firm, CITIC Securities.

3. In January this year, about 1 million users bought Bitcoin for the first time through Square's products. Financial innovation has made Bitcoin truly accessible to the public.

4. The most successful startup in the field of digital currency is to help investors buy and sell Bitcoin. Binance, Coinbase, Grayscale Fund, and Square have achieved huge commercial success.

5. One Bitcoin costs 64,000 US dollars, which is more than 400,000 RMB. The annual income of most ordinary people in the world is not enough to buy one Bitcoin.

6. In the past ten years, Bitcoin has risen from $0.1 to $64,000. Unfortunately, almost all investment institutions in the world have missed it.

Author: Wu Tinggang

Editor: Shen Chong

Source: Tencent Technology

“In theory, Satoshi Nakamoto is already the richest man in the world.”

Just two months ago, when the price of Bitcoin exceeded $50,000, Wang Xing, the founder of Meituan, spoke on Fanfou on February 16. Satoshi Nakamoto is recognized as the father of Bitcoin and owns 1.12 million Bitcoins.

Just two months after Wang Xing's speech, the price of Bitcoin rose another 30% to over $64,000.

The wealth-making myth of Bitcoin goes far beyond this. On Wednesday, Coinbase, the largest digital currency exchange in the United States, went public and closed at $65.4 billion on its first day, surpassing China's largest brokerage, CITIC Securities.

Wang Xing is a supporter of Bitcoin. At the end of 2013, Wang Xing bought Bitcoin, "using practical actions to pay tribute to this creation of extraordinary imagination."

The investment brought a return of about 100 times, even exceeding Meituan, one of the most successful technology companies in China in the past decade.

Bitcoin is seen as a currency that can be used for wealth storage and payment, just like gold. Few of China's Bitcoin supporters come from the financial industry. Most supporters, like Wang Xing, come from the Internet.

Xu Zhihong, a partner of Biyou, is one of the earliest investors in Chinese concept stocks. More than a decade ago, he told his brokerage firm that he wanted to buy Sina and NetEase stocks. The American who received him was full of doubts - are there still Chinese people investing in Chinese concept stocks?

In 2013, Xu Zhihong received a wedding invitation from a friend. Unlike the previous big red envelope, this time he prepared a special gift - a bitcoin, worth about $300.

“You must keep this bitcoin. When your child gets married, it can buy a house in Beijing.” After giving it away, Xu Zhihong was still not at ease and asked his friend to hold it for a long time.

Over the past decade, the price of friendship has remained stable, while the price of Bitcoin has skyrocketed. Nowadays, no one gives friends Bitcoin as a wedding gift anymore.

"Bitcoin will quickly (within 1.5-2 years) approach 80% of the market value of gold, or $400,000 per coin," predicted Chen Weixing, founder of Kuaidi. After merging with Didi, Chen Weixing once invested in blockchain and founded the taxi chain. As Bitcoin rises, similar predictions are increasing.

If all the gold in the world were gathered together, it would be a cube with a side length of 21 meters, with a market value of about 11 trillion US dollars. Bitcoin is called digital gold, and its total market value is equivalent to 10% of gold.

One cannot help but ask, what force has supported Bitcoin, from an unpopular token to an unparalleled epic success step by step?

Ross Ulbricht: The Man Who Saved Bitcoin Is in Jail

Compared to the glory of Bitcoin today, its birth is insignificant.

On January 3, 2009, Satoshi Nakamoto personally created the first block, the Genesis Block of Bitcoin, on a small server in Helsinki, Finland, and received the first reward of 50 bitcoins automatically generated by the system. The first Bitcoin was thus born.

For a long time afterwards, the world ignored this new invention - what is the use of this thing? Satoshi Nakamoto is a recognized genius, and he did not answer. In December 2010, Satoshi Nakamoto left his last message on the Internet and never appeared again.

In the first one or two years after its birth, the price of Bitcoin remained at $0.1 per coin. The famous story of exchanging 10,000 Bitcoins for pizza happened at this time. Bitcoin has a genius design, but it is a useless design.

Satoshi Nakamoto was like Shakespeare, who wrote a perfect script, but no one could perform it. Until Bitcoin met another "genius".

Ross Ulbricht, born in 1984, has been involved in drug trafficking since college. The US government has strict control over drugs, and Ross has never been able to expand his drug manufacturing and trafficking business. It was not until 2010 that Ross heard about the existence of Bitcoin from his customers, which became a turning point.

Ross Ulbricht

The core of the government's crackdown on illegal activities is the supervision of funds - the core behind it is the banking system, which is firmly controlled by the government. Bitcoin is the payment tool that is separated from the banking system - until now, banks and Bitcoin still go their own way.

In January 2011, Ross, who was only 26 years old, founded a "deep network", commonly known as the dark web. Ross named this website Silk Road, which means a place for commodity trading.

The Silk Road does not trade tea, silk, or porcelain. It is the most famous and notorious "dark web" in history. The main trading objects of this website are drugs, sex slaves, child pornography, private killers, arms trade, and identity fraud.

All illegal transactions were gathered on the Silk Road. In the end, even Ross himself was deeply involved. He once hired a killer with a high deposit to kill a Canadian user who hacked into the seller's computer and blackmailed him.

With the rise of Silk Road, Bitcoin finally found its first application scenario - a payment tool for criminal transactions. Data shows that Silk Road once circulated more than 9.5 million Bitcoins, accounting for 80% of the total Bitcoin circulation at the time.

Screenshot of the Silk Road website

In August 2013, Ross was arrested at a public library in San Francisco. In 2015, he was sentenced to life imprisonment without the possibility of early parole.

Black demand is also demand, just like the consensus of fools is also consensus. Driven by criminal transactions, Bitcoin ushered in its first surge, reaching $31 in June 2011. Two months after Ross was arrested, Bitcoin rose to $1,100 per coin.

In conclusion, Ross Ulbricht is an extremely important figure in the history of Bitcoin development. When Bitcoin was about to be ignored by the world, he ended the history of Bitcoin as a toy and gave it real-world significance - serving crime.

"Criminals are the most likely to embrace new technologies," said Xu Zhihong, a partner at Biyou. But in the long struggle, the police department mastered the traceability technology of Bitcoin. More black transactions turned to digital currencies such as Monero, which are more difficult to trace. Bitcoin started a long bear market that lasted for several years.

This round of bull market has spread the seeds of Bitcoin to the world. Across the ocean in China, a Bitcoin trading platform called OKcoin was quietly established. This exchange, known as the Huangpu Military Academy of the Chinese cryptocurrency circle, was founded by Xu Mingxing. Like Wang Xing, Xu Mingxing also came from the Internet industry. He was previously the CTO of Docin.com.

There are a large number of people who are doing the same thing as Xu Mingxing. They are committed to solving another fundamental need - how to make it easier for ordinary investors to buy Bitcoin.

Cryptocurrency Exchange - The Greatest Bridge

There is a huge technological gap between the world of digital currency and legal currency, like a huge river. Before the birth of exchanges, investors needed to swim to the other side naked and bear various transaction risks. This was destined to be a game that only a few people could participate in.

Miners need to pay electricity bills, mining machine companies need to develop more advanced machines, and development teams also need to be maintained, all of which require money - Bitcoin needs more support from the fiat currency world, this is a matter of life and death.

After the first big bull run of Bitcoin, digital currency exchanges began to flourish. Exchanges such as OKcoin, Huobi, Binance, Coinbase, bitFlyer, BitMEX, and Bitfinex began to rise.

Cryptocurrency exchanges have built a bridge that allows investors to buy Bitcoin as easily as opening a stock account. For quite a long time, cryptocurrency exchanges were even the only place for the public to buy Bitcoin.

No matter how Bitcoin rises or falls in the future, wealth from the fiat currency world continues to flow into the digital currency world, supporting the trading price of Bitcoin and allowing various innovations in the digital currency field to continue.

A poster of an exchange. The "marketing level" of the cryptocurrency circle is first-class

Since its inception, exchanges have been using various methods to expand their client base in the fiat currency world.

Most of the exchange's customers are investors who prefer new things and high-risk investments. But for Bitcoin to truly enter the real world and reach the general public, more financial innovation is needed.

Bitcoin ATMs make it easier for investors to buy Bitcoin and are one of the main directions of innovation in the digital currency world.

Bitcoin rejected by institutions

Bitcoin supporters often mention the word "faith". Only those investors with "faith" can step over the thorns, hold Bitcoin through the bull and bear markets, and gain huge wealth.

Those who founded exchanges to help investors buy Bitcoin more easily are more like evangelists. Do they have faith in digital currency?

This is probably difficult to answer, and the founders of the exchange do not necessarily need to answer this question, because the exchange is really a very profitable business. With the efforts of the exchange, the goal of Bitcoin entering the accounts of individuals and ordinary families was soon achieved.

There are two bigger peaks facing Bitcoin - how to enter the investment portfolios of mainstream financial institutions and how to enter the balance sheets of listed companies - which is very difficult.

Bitcoin is like Sun Wukong, jumping out of a stone. It is different from all asset classes and incompatible with modern financial institutions. The market value of Bitcoin is already comparable to that of silver, but you cannot keep it in your bank account.

Over the past decade, Bitcoin has been the most popular investment product in the world, rising from $0.1 to $64,000. Unfortunately, such an investment product has been ignored for a decade, and almost all investment institutions around the world have missed it.

"Currently, most financial institutions and banks cannot buy Bitcoin, and it will take a long time to reach a consensus," said Zhu Xiaohu of Jinshajiang Venture Capital, who has invested in a series of cutting-edge technology companies such as Didi, ofo, and Inke. He is where the wind blows.

"The biggest limitation for institutions to participate in Bitcoin investment is still the financial regulations of various countries," said Yuan Yuming, CEO of Huochain Technology. In 2018, Yuan Yuming, who was still the chief TMT analyst of Industrial Securities, announced his job change and joined Huobi China, which caused a sensation in the industry.

When asked why there was this new round of market, almost all practitioners in the cryptocurrency circle gave the same answer - the United States.

"The center of blockchain innovation has always been in the United States, but the innovation of blockchain and Ethereum in the past two years has basically nothing to do with China." Chen Yong, the founder of Biyou, said that before entering the cryptocurrency industry, he was the senior vice president of Cheetah Mobile. "It is still impossible to change the situation that the foundation of financial innovation in the United States is still there."

Finance and technology are the two cornerstones of American prosperity. During the dramatic rise of Bitcoin, Wall Street and Silicon Valley did not stand idly by but were deeply involved in it.

Wall Street and Bitcoin

An American asset management company that breaks the boundaries between the world of digital currency and traditional finance - the industry generally calls it Grayscale Fund.

In the world of Bitcoin, those who hold 1,000 Bitcoins are called whales, and there are about 2,000 whales in the world.

Among all the whales, Grayscale Fund is undoubtedly one of the largest whales - it manages more than 650,000 bitcoins. At the current price, Grayscale has at least $38.5 billion in assets, which is enough to rank among the most successful asset management companies in the world.

Barry Silbert, founder of Grayscale Investments

Through the innovation of financial products, Grayscale Fund has for the first time reduced the difficulty of purchasing Bitcoin assets to that of buying U.S. stocks. As long as you have a U.S. stock account, you can trade GBTC like buying and selling stocks, without having to consider the complicated deposit process or worry about the platform crash.

For a long time, Grayscale Fund has been growing rapidly at a scale of 2,000 bitcoins per day. Its innovation is very simple: a trust fund for crypto assets is established to hold bitcoins, and investors hold trust shares and can trade them in the secondary market.

"There are currently two main ways for institutions to directly participate in Bitcoin investment in the United States. One is to purchase shares through trust fund products (ETPs) operated by institutions such as Grayscale and 21Shares. The other is to purchase directly through compliant trading platforms such as Coinbase," Yuan Yuming introduced.

In the United States, the annual management fee rate of trust funds is generally 0.3-1.5%. The annual management fee rate of Grayscale products ranges from 2% to 2.5%. Even if Grayscale does nothing, it can still extract tens of thousands of bitcoins in management fees every year.

Grayscale is a typical example of all Bitcoin startups. It makes it easier for more investors to hold Bitcoin and get huge returns. The profit-seeking behavior of these financial institutions has brought a steady stream of investors to Bitcoin, driving the continued rise of Bitcoin.

"Bitcoin is an extremely inefficient way to conduct transactions, and the energy consumed in processing these transactions is staggering." U.S. Treasury Secretary Yellen once denounced Bitcoin, saying, "Bitcoin is often used for illegal financing, and investors should be careful."

Although Yellen does not like Bitcoin, this does not affect the financial innovation of the United States on Bitcoin. In September 2017, the People's Bank of China and seven ministries and commissions stopped ICO. But three months later, the Chicago Mercantile Exchange launched Bitcoin futures.

Today, the world's top asset management institutions such as Bridgewater and BlackRock are eager to try. As long as they can receive management fees, financial institutions can use your money to buy any assets.

Silicon Valley and Bitcoin

Jack Dorsey, the founder of Twitter, is a well-known American technology leader. He is also a more staunch supporter of cryptocurrency than Musk. He believes that cryptocurrency will become the world's "single currency."

Twitter is well-known, but it is not the most successful business founded by Dorsey. Dorsey's Square is a pioneer in Bitcoin innovation and currently has a market value of $120 billion, twice that of Twitter.

If Grayscale Fund is like a pump that pumps water from the fiat currency world to the Bitcoin world, then Silicon Valley technology companies have invented new tools to eat away at Bitcoin stocks like ants moving house.

In January 2018, Square's Cash App launched a new feature that allows users to buy Bitcoin. "In 2020, a total of 3 million people bought Bitcoin through Cash App, and 1 million more people bought Bitcoin in January 2021." Data disclosed by Square's CFO shows that Bitcoin is entering the wallets of the general public in various ways.

Under pressure from competitors, in October 2020, Paypal, the world's most important online payment tool, announced that it would support the purchase of digital currencies such as Bitcoin and Litecoin.

On the one hand, the Federal Reserve provides an endless flood, while traditional American financial and technology companies act as water pipes for fiat currency and digital currency - making buying Bitcoin as easy as turning on the tap at home.

There are too many new investors, and Bitcoin is no longer enough

One Bitcoin costs 60,000 US dollars, which is more than 400,000 RMB. The annual income of most ordinary people in the world is not enough to buy one Bitcoin.

But this does not prevent the supply of Bitcoin from exceeding the demand. According to Satoshi Nakamoto's setting, there are a total of 21 million Bitcoins, of which about 18.6 million have been mined.

"Due to the low price of coins in the early days, a large number of bitcoins were lost. It is estimated that 3 to 4 million bitcoins can never be recovered," said Xu Qing'an, a cryptocurrency analyst.

According to the rules, 328,500 new bitcoins will be mined each year. Every four years, the output of bitcoin mining drops by half and the difficulty of mining doubles.

"The inflation rate of gold is only 1.7%, and the inflation rate of Bitcoin is also about 1.7%. As Bitcoin halves, the inflation rate of Bitcoin will become lower and lower." Xu Qing'an believes that it will become more and more difficult to buy Bitcoin.

More and more customers are withdrawing coins, and the amount of Bitcoin in exchanges is decreasing

Research shows that the number of bitcoins stored in exchanges has dropped from 3 million to 2.2 million in the past year, a decrease of 800,000. The number of bitcoins stored in exchanges continues to decrease.

If the amount of Bitcoin on the exchange continues to decrease, the difficulty of buying Bitcoin will increase. In the off-market, there are even larger groups of big players buying Bitcoin.

In February 2021, Tesla announced that it had bought $1.5 billion worth of Bitcoin and announced that Tesla cars could be purchased with Bitcoin. The price of Bitcoin instantly soared by 10%.

Musk also announced that customers will be able to purchase Tesla vehicles with Bitcoin, which Tesla will not sell.

Tesla is not the first technology company in the world to try this. In 2020, Square invested about $50 million to purchase 4,709 BTC. Square's attempt made Bitcoin appear in the balance sheet of a US-listed company for the first time and was recognized by accounting standards.

Another most direct example is Microstrategy. Since August 2020, they have continued to purchase more than 70,000 bitcoins through self-held cash and issuing convertible bonds to raise funds, with a cost of more than US$1.1 billion.

China's Meitu has also purchased $100 million in Bitcoin and Ethereum, making it one of the few Chinese companies that publicly holds Bitcoin.

The limited amount of Bitcoin and the increasing demand are creating an increasingly serious contradiction between supply and demand.

Where is the sky for Bitcoin?

At the beginning of the article, the friend who received Bitcoin as a wedding gift eventually surrendered his chips after Bitcoin rose tenfold. The story of Bitcoin's rise was repeated by new investors.

Grayscale, Square, Binance, Huobi, Coinbase, all entrepreneurs who have broadened the connection between the fiat currency world and the digital Huobi world have received generous rewards.

New financial innovations never stop. The world's first Bitcoin ETF has been listed in Canada, with a scale of 17,000 Bitcoins, and more than 10 Bitcoin ETFs are waiting in line for listing.

Can I still buy Bitcoin?

"You can use a small portion of your assets to buy Bitcoin, which is worth considering as an asset allocation," said Zhu Xiaohu of GSR Ventures cautiously.