Impression 1475: Clear skies and hidden dangers on the road to Filecoin investment

Chuchu: Hello, good evening everyone. I am today’s host Chuchu. I am very happy to meet you again. Welcome to today’s Impression 1475 column. Today we have invited the champion of the 1475 Cloud Computing Experience Officer Finals, who is also...

neat:

Hello, good evening everyone. I am today’s host Chuchu. I am very happy to meet you again. Welcome to today’s Impression 1475 column. Today we have invited the champion of the 1475 Cloud Computing Experience Officer finals and the founder of Taihe Capital, Mr. Wang Xiaochen. First of all, please allow Mr. Wang Xiaochen to introduce himself.

Mr. Wang:

Hello everyone, I am Wang Xiaochen and also the founder of Taihe Capital. I used to be the VP of the traditional VC Kexiang Capital and have been engaged in traditional primary market investment for a long time. I was exposed to the blockchain technology in 2014. In 2017, we transformed from traditional VC and entered into investments in blockchain, Filecoin and other fields. Now we have invested in more than 50 blockchain startup projects.

In the field of Filecoin, we actually mainly deploy from four levels:

Filecoin Mining Fund. We issued the Filecoin Mining Fund in April and May of this year.

Mining machines. In the field of mining machines, all our first-phase mining machines were purchased from 1475 mining machines.

Cloud computing power. We are also involved in cloud computing power products.

Futures. In 2017, we participated in private placement and also purchased a lot of FIL futures.

neat:

Welcome Mr. Wang to Impression 1475. Our theme today is: "The Clear Skies and Reefs on the Road to Filecoin Investment". I would like to know how Mr. Wang became interested in the Filecoin project, and what attracted him to Filecoin after paying attention to it?

Mr. Wang:

As an investor, I first learned about Filecoin in the form of private placement. But after two years of continuous attention, I found that Filecoin and IPFS are not empty projects, but actual projects. Back in 2008, when Bitcoin was just born, it was the blockchain 1.0 era. In the six years of blockchain 1.0, it only did one thing, which was the storage and transfer of value.

Speaking of Bitcoin, in fact, the original intention of Bitcoin is to solve economic problems through financial means for endless countries, so such a blockchain project came into being. In 2014, Ethereum was born and upgraded in the era of blockchain 1.0. It not only has storage and value transfer, but also adds smart contracts. At this time, it has become a trusted computing, which is some financial-related applications. In a decentralized way, there is no longer a centralized data organization or financial institution, and barriers are reduced to hinder the circulation of finance. This is the value that Ethereum currently provides: let smart contracts connect trusted computing.

Six years later, the Filecoin mainnet was launched this year. We believe that the launch of Filecoin will open another window. Because in addition to trusted computing, they also implemented trusted data, which greatly expanded the application of blockchain. That is, to calculate the data at your computing layer, you must still use distributed storage to make the data flow freely. This is the real way to achieve the ultimate trust from beginning to end. So we said that with these two feasible computing and trusted storage, there will be a final result, which is a trusted network. With a trusted network, the entire network can enter web 3.0.

So now we have entered the era of blockchain 3.0, which is a distributed, decentralized, trusted digital world. Let me give you two examples:

The first is the necessity of Filecoin. For example, the privacy data of our home cameras, personal financial data, consumption data, etc., all our data are now stored in centralized servers, such as Alibaba Cloud, Huawei Cloud, etc. There are also various APPs that we use to carry this data. In other words, all the so-called data rights are not in our hands at present, so privacy cannot be fully guaranteed. With Filecoin, some of our personal privacy information can be fully protected through the incentive method of distributed storage through ips technology.

In the second category, we have some medical records, education records, and some cold data in centralized servers, which may be lost in three to five years. Even if you use centralized servers to store data, the storage cost will be very high, but the probability and probability of cold data being used is generally low. So in the Filecoin network, first, it will help you save these cold data permanently, and second, its storage cost is also higher than that of centralized servers. So Filecoin is very necessary in our lives and can be directly thought of.

neat:

Okay, thank you Mr. Wang. I would like to ask Mr. Wang, as an investor, can you help us analyze why Filecoin is worth investing in?

Mr. Wang:

From the perspective of our organization and myself, I can share some opinions with you, but I still hope that everyone can have their own judgments and ideas. Because from our perspective:

First point: The development stage of Internet 3.0 cannot be separated from a trusted storage and a trusted network. Therefore, the project has a strong implementation and long-term development, and can have a real vision to represent the future. This is a basic condition for value investment, which represents the future. Our market research team also estimated the future size of the cloud storage market. In 2021, they may reach about 70 billion US dollars. By 2022, it will grow by 20% to more than 90 billion US dollars. In fact, the growth rate is very fast. Why? Because we see Amazon, Google, Facebook, Apple, and Microsoft. We have many domestic companies, such as Alibaba Cloud, and many companies, data companies, Tencent, etc., which control a lot of such data. However, there are many insecure places in this system. First, it may be attacked by hackers. Second, the storage cost is relatively expensive. Third, it is a centralized storage method, and then it involves a lot of trust issues between these companies, as well as openness issues. It is obvious that if there is some commercial competition, some data may be stolen from each other, or there may be problems such as mutual exclusion and so on.

Distributed cloud storage is not a system architecture that relies solely on a certain node. It is a multi-node distributed operation mode. When a certain node is attacked, it will not affect the stable operation of the entire system. This is a vision of the storage market, which is very grand. One of the things it leads to is that the common intervention method is ineffective in data intervention in the feedback. So this is the first point we think, it is a value investment.

The second point: We believe that in the short term, the current supply of tokens in the market is relatively small, that is, the market is still very hot, and it is easy to be in an unbalanced stage where supply exceeds demand. The total issuance of Filecoin is about 2 billion, of which 600 million are released linearly within six years. The remaining 1.4 billion are also released linearly to the contributors to this network. In fact, in the early stage, it seems that only the private placement of the year will be released on average every day through the method of June futures, December futures, and 36-month futures. Therefore, the amount of private placement released in the first one to two months is also very small.

Miners actually have a way to mortgage mining, so the actual volume is not very large, so it will lead to scarcity in the short term. So I think the price will reach the possibility I expect. But it is not ruled out that there may be more funds and fewer tokens in the market, so there may be higher volatility. This is possible, so risk control should be done in the short term.

The third point is that the project team is quite impressive. The IPFS team is the Filecoin team. When the Filecoin project was first launched in 2017, they had already completed the infrastructure construction. So the project is quite steady and has been developed for three years.

So let me summarize. At present, I think Filecoin is a project with potential and long-term landing, which is worth investing in. In the short term, the current supply of tokens is small, but the market is hot, so there may be some relatively good price expectations. The third point is that this project is currently quite solid. It is the longest-running project. At the same time, it is undeniable that its team has been doing things more steadily in the past four years than many projects that were active in 2017, and has achieved much more results, so I am still quite optimistic.

neat:

Okay, it seems that Mr. Wang is still very optimistic about our project. So, compared with the traditional financial industry, what are the similarities and differences when we invest in digital currency projects?

Mr. Wang:

Compared with the traditional financial industry, the two biggest characteristics of the digital currency industry are volatility and liquidity.

Volatility: It is much higher than that of traditional industries at present. If you have related digital assets in the secondary market on March 20, you should be very scared. Because it may drop by 40 or 50% on that day. For traditional institutions that have just entered the market, they need to quickly adjust their risk control strategies in the short term. They need to do some risk hedging in time. Don't be in traditional finance. The volatility may be only two or three points a day, or four or five points. Face the digital currency industry with a different mentality.

Secondly, I think the primary and secondary liquidity of the blockchain industry is much better than that of the traditional financial market. In the traditional primary market, VC and PE generally have a seven-year program cycle for a fund, while a block project may be able to carry out secondary circulation of tokens in just a few months, so this liquidity is much better than the traditional one.

In addition, value investment is still very important, whether it is in the blockchain industry, digital assets or some of our traditional companies, value investment is the real way of investment. This logic will never change. You must have your own commercial value, your own business model, and good cash flow. This is the reason to support a company to survive.

We have seen the development over the past decade. The only two projects that have really gained widespread popularity in the digital currency industry are BTC and Ethereum. The development of other projects may be niche or the consensus is not strong. It may take some time for them to develop. In particular, there are relatively few projects that have mature technology and commercial models and are in urgent need. But this cannot be rushed.

We can see that some traditional unicorn projects may be less than 0.001%, compared with the number of new startups each year. So this cannot be achieved in a hurry, and there are very few unicorns that can be created. The business rules are always cruel, but value investment remains unchanged.

neat:

Yes, just like Mr. Wang said, commercial investment is always cruel, but the value is unchanging. As we all know, the current popularity of risk control is really very high, and there are also good and bad people in the industry. I hope Mr. Wang can give us some suggestions as investors.

Mr. Wang:

I can't influence everyone with my own judgment, I can only share with everyone, everyone still has their own mental scale for investment. The first batch of Filecoin mining funds we launched in April this year also has a scale of more than 10 million, but we have been researching and involved in this industry since last year. We now have three criteria for judging. We divide Filecoin and mining into three parts. The first part is that the advantages of software algorithms are particularly important in the early stage. The corresponding indicators are packaging speed and effective computing power growth rate. The faster these two speeds are, the higher the block rate will be.

I think the most reasonable way of calculation is to take the block rate into consideration, because only when the storage power is converted into block rewards can it be considered as real income. I estimate that the official will also release a measurement indicator of computing power performance in the future. Only with the official indicators, the water in this industry will become more and more transparent and clear.

In the long run, it is the operation and maintenance and integration capabilities that allow distributed mining pools to work together and make distribution and storage more efficient, which is very critical for the promotion of application implementation. In the long run, if you want to be the leader in the industry, the competition will be very fierce. It is not only about the brand, but also the supply chain, the underlying design of the product, and the strong storage. We have a good distribution platform, and the ecological application in the industry must play an integrating role.

neat:

In my opinion, Mr. Wang's suggestions are very professional and worth your reference. Finally, I would like to talk to Mr. Wang about what you think of the current price of Filecoin? Can you help us predict the future trend?

Mr. Wang:

It is difficult to say the specific price, so we should be cautious. In the short term, as I just said, there may be oversupply, and there will be very few Filecoin tokens in the market, so the volatility may be very high. Because of the game relationship between funds and tokens, we must be prepared for high volatility. However, I suggest that investors should adopt a relatively long-term investment mentality to invest in Filecoin.

The stock market has been booming these past two days, although it may not be as prosperous as the cryptocurrency market. However, I believe that Filecoin will have a small popularity after it goes online in August, which may also have a lot to do with the bull market in our digital asset industry that has exploded this year.

I still have to remind everyone cautiously that after the Filecoin mainnet is launched, we expect the price volatility to be relatively large, but we cannot rule out that it should be among the top ten mainstream currencies. I personally think that it may even impact the top three, that is, it must be Ethereum and Filecoin. It will definitely be a mainstream currency, and its market value will be very large. I will not predict the price for the time being. We still look at the long-term development of this project to make investments. We will not say much about the price for the time being.

neat:

Mr. Wang’s sharing today was really full of useful information. We are honored to invite Mr. Wang Xiaochen to be our guest in our live broadcast room. Thank you Mr. Wang for sharing with us today. We also hope to have the opportunity to invite Mr. Wang to be our guest on another show. Thank you for your attention to the Impression 1475 column and the 1475 team. See you next time!