Bitpie AMA: Listen to Jiang Zhuoer talk about BCH and mining

Time: April 1 (Wednesday) 20:00-21:00

Format: Live text broadcast in WeChat group, simultaneous broadcast on TV in other groups

Guest: Jiang Zhuoer - Founder of BTC.TOP, Bitcoin evangelist, big miner

The following is a transcript of the live broadcast:

Bitpie CMO Kong Weiguo: Mr. Jiang, please introduce yourself first.

Jiang Zhuoer, CEO of Litebit Mining Pool: Hello everyone, I am Jiang Zhuoer. Litebit is a mining group that provides one-stop mining services such as mining pools, mining farms, operation and maintenance, and joint mining. Recently, we have established a new sub-brand of joint mining - "Bi Wa", the website is B.TOP. Everyone is welcome to come to Litebit to mine.

01
Decentralization and Economic Freedom

Bitpie CMO Kong Weiguo: You often say that the greatest value of Bitcoin is decentralization. The economic freedom brought by decentralization is a rigid demand and is the greatest value of Bitcoin. Mr. Jiang, can you explain to everyone what decentralization and economic freedom are?

Jiang Zhuoer, CEO of Litecoin Mining Pool: What is decentralization? Or conversely, what is centralization? For example, Qvod is a typical example of centralization. It seems that there are tens of thousands of servers and nodes, but the entire architecture is centralized. As long as the central node, that is, Qvod, is attacked and closed, the entire Qvod network will be shut down.

Bitcoin is decentralized. Unlike Qvod, Bitcoin does not have a control center. Therefore, it is impossible to destroy or control Bitcoin by attacking or controlling the control center. Therefore, Bitcoin has a particularly important attribute: it can provide economic freedom.

What is economic freedom? For example, countries around the world have different strengths and different resource endowments. For example, Iran is rich in oil, and China is the world's factory. From an economic perspective, Iran should trade with China. Iran sells oil to China, and China sells products to Iran. In this way, through trade, the people of both countries can get the most benefits.

But the United States intervened. The United States declared Iran an evil country and imposed sanctions on Iran. Anyone who disobeyed and did business with Iran would be sanctioned. For example, Huawei's Meng Wanzhou was detained in Canada because the United States claimed that Meng Wanzhou did business with Iran. The United States also blocked Iran in international settlement systems such as SWIFT, preventing Iran from using the US dollar for foreign trade settlement.

The United States prohibits other countries from doing business with Iran. This is called a lack of economic freedom. Without economic freedom, the interests of Iran and other countries will be damaged. China cannot buy Iranian oil, and Iran cannot buy Chinese products.

Therefore, Iran has to find a way to save itself. Iran found that although it cannot use the US dollar, it still has a global hard currency - Bitcoin. The United States once announced that it would block the Bitcoin addresses of two Iranians, but in fact the United States cannot block them at all because Bitcoin does not have a center and the United States cannot detain Bitcoin like it did with Meng Wanzhou.

I posted a picture. The United States once announced that it would block the Bitcoin addresses of two Iranians, but the United States could not do it at all. So, this is the economic freedom achieved by Bitcoin through decentralization.

02
Bitcoin's Scaling Controversy and Forks

Bitpie CMO Kong Weiguo: The original Bitcoin expansion dispute lasted for several years, and ended with the birth of BCH in 2017. Since then, two independent main chains have appeared in the Bitcoin network. So what is the expansion dispute about? Mr. Jiang, please tell us about the Bitcoin expansion dispute and the far-reaching fork in 2017 from your own perspective.

Jiang Zhuoer, CEO of Litecoin Mining Pool: Let me explain first. When I speak below, I will use three different concepts: Bitcoin, BTC, and BCH. Bitcoin refers to the coin with the largest total market value between BTC and BCH. Currently, Bitcoin is BTC. If the total market value of BCH exceeds BTC in the future, then Bitcoin will be BCH.

The dispute over capacity expansion is about how big Bitcoin blocks should be. Currently, BTC's 1M+ blocks can accommodate about 3 transactions per second. Capacity expansion means increasing the number of transactions Bitcoin can accommodate per second. For example, if BCH is expanded to 32M, it can accommodate 100 transactions per second, which is enough for a long time. If needed in the future, it can be further expanded.

The block size is closely related to what I just said, the decentralization of Bitcoin. Supporters of BTC and BCH both agree that decentralization is important, but the key difference comes. The two parties have different opinions on what level of decentralization should be achieved.

The current Bitcoin development team, Core, believes that Bitcoin needs to achieve a very high level of decentralization, so even a microcomputer like a Raspberry Pi with very low performance can run a Bitcoin node. Therefore, the maximum size of a Bitcoin block can only be 1M, and cannot be larger.

The expansionists believe that as long as ordinary computers can run Bitcoin, ordinary people can run a node on their own computers, and it is decentralized enough. Ordinary computers can currently run about 100M blocks, so BCH sets the block size to 32M. If the number of transactions increases in the future, computer performance will also improve, and the block size can continue to be expanded.

The expansionists have a very justified reason. Satoshi Nakamoto also supports expansion. The 1M block is just a temporary limit added by Satoshi in the early days to prevent spam transactions. Satoshi Nakamoto said that he would remove the 1M limit in the future and even gave the rough code for the expansion.

Why does Core insist that 1M cannot be expanded and that Bitcoin must be able to run on the Raspberry Pi microcomputer? One reason is that there are many anarchists in Core who believe that the government will do everything it can to kill Bitcoin. However, the expansionists do not think so. They believe that as more and more people use Bitcoin, it will be more and more impossible for the government to kill Bitcoin, especially the governments of European and American countries. Due to the restrictions of the constitution and voters, as long as there are enough people using Bitcoin, the government has no right to kill Bitcoin.

Another reason is a conspiracy theory. The main members of the Core team pulled in a bunch of venture capital funds with banking backgrounds and founded Blockstream. This company makes profits by developing Bitcoin sidechains, such as establishing lightning network settlement nodes and developing Bitcoin sidechain Liquid. If the Bitcoin main chain is expanded, then sidechains such as the Lightning Network and Liquid will have no value at all. If users can issue Bitcoin directly on the main chain, then who would go to the sidechain to issue coins? Isn't this just taking off your pants to fart?

Therefore, the stronger the Bitcoin main chain is after the expansion, the less valuable the side chain is. The more congested the main chain is, the greater the value of the side chain is, and the greater the value of Blockstream is. The main members of the Core team, out of their own interests, violated Satoshi Nakamoto's expansion plan and opposed the expansion of the main chain. Of course, this is an unconfirmed conspiracy theory. We don't know what the Core members think. We only know that not expanding the capacity is in the interest of the Core team.

Of course, even if Core does not expand, no one will use side chains such as Lightning Network and Liquid, because they are too difficult to use. After Bitcoin experienced a super congestion in 2017 and the transaction fee increased to hundreds or even thousands of dollars, users were diverted to other competitors such as ETH and BCH, and did not use side chains such as Lightning Network and Liquid as Core hoped.

03
BCH and BSV

Bitpie CMO Kong Weiguo: Speaking of capacity expansion and large blocks, BSV also advocates capacity expansion. Can Mr. Jiang talk about the differences between BSV and BCH?

Jiang Zhuoer, CEO of Litecoin Mining Pool: Bitcoin can accommodate a certain number of transactions per second, and the size of Bitcoin blocks is not the bigger the better. This is a question of degree. Everything should be done in moderation. Excess is problematic. Too much is as bad as too little. Even though drinking water is a necessity for life, drinking too much water can lead to water poisoning.

During the development of BCH, there was a group of fundamentalists headed by Craig Wright who advocated very large blocks, 2G, or even infinite blocks. These extremists eventually split BSV from BCH.

BSV advocates that everything should be put on the chain, that the blockchain should be used as a network disk, and that a lot of things should be put into the blockchain network disk. This proposition exceeds the capacity limit of the blockchain and is unrealistic.

Let alone infinite blocks, even 2G blocks are far beyond the capacity of current computers. If we use blockchain as a network disk and increase the blocks to 2G, the only result will be a significant reduction in nodes, even to only a few nodes. At this time, the most important feature of blockchain - decentralization - will be gone.

In the example just mentioned, if the Iranians use BSV, what will be the consequences? The BSV block is too large, the nodes are too few, or even only a few nodes, then the US government can directly find the computer room where these large nodes are located and ask the computer room to stop these nodes. Such nodes that can accommodate 2G blocks require high-end server clusters and huge traffic to be connected to the backbone nodes, which cannot be hidden at all. If the US government kills these nodes, it can easily kill BSV.

Even hackers can DDoS these nodes without the US government, and shut them down at any time. BSV, which is known as the world's currency, can be paralyzed by a few hackers. Isn't that a joke?

Other claims of BSV, such as the lock-up protocol, are slogans proposed by Craig Wright to split the community through extremism. They are impossible to achieve. BSV is an Internet product. In the ever-changing Internet, have you ever seen an Internet product that can remain unchanged for decades, not adapt to environmental changes, and still survive well? It is impossible.

04
About Cash

Bitpie CMO Kong Weiguo: BCH is the abbreviation of Bitcoin Cash, and the title of Satoshi Nakamoto's white paper is also "A Peer-to-Peer Electronic Cash System", which also uses the word Cash. Is this one word difference the biggest difference between the two chains?

Jiang Zhuoer, CEO of Litecoin Mining Pool: Yes, BCH's goal is to become a world currency and a free currency, so BCH expands the block to increase the number of transactions that can be accommodated, and develops protocols such as Avalanche to complete 100% safe 0-confirmation transactions, so that users can confirm transactions in a few seconds without waiting for new blocks to be mined. However, BTC, with such high handling fees and such slow transaction speeds, is definitely not a world currency, so it can only focus on storing value and becoming digital gold.

Many people here have a blind spot, thinking that gold is suitable for storing value, but this is not the case at all. In theory, gold is stable in value preservation and will not be issued indefinitely, so it is more suitable for storing value than paper money, right? But what do people actually use to store value? Instead, they use paper money to store value. Among the 100 people listening to the lecture now, I can guarantee that 99 out of 100 people mainly use paper money to store value, such as deposits, financial management, and Yu'ebao, which are all paper money storage. As for the main use of gold to store value, including gold derivatives such as paper gold, there is at most one person, or even no one.

So this is very interesting. 30 years from now, gold is very likely to outperform Yu'ebao, but why don't you use gold to store value? Ask yourself this question.

The reason is very simple: because people don’t usually use gold, but paper money. With paper money, you can use it immediately after you deposit it, but with gold, you have to transfer it. People will use what has the most users and what they usually use to deposit money.

The same is true for BTC and BCH. People will use what they usually use to store value. It is impossible to expect to use BCH and then use BTC to store value. Therefore, people will use whatever is cash to store value. It is impossible to use a single thing that is not usually used to store value. This is a winner-takes-all game.

05
BCH's achievements and future expectations

Bitpie CMO Kong Weiguo: What achievements has BCH made in the development of digital cash? What are the things to look forward to in the future?

Jiang Zhuoer, CEO of Litecoin Mining Pool: BCH has done a lot of things to meet user needs, such as code optimization for large blocks, the Avalanche protocol that can make 0 confirmation 100% secure, the SLP protocol, etc., all of which are improvements to meet user needs and increase the number of users.

Therefore, we have seen that the number of BCH transactions is steadily increasing, which is like the tortoise and the hare race. Although BTC has a huge first-mover advantage, BTC has been locked in the 1M block. As you can see, the average number of transactions fluctuates around 300,000 per day and has basically not increased.

As long as BCH users continue to increase, it won’t be long before the number of users exceeds BTC, and then it will be interesting. I estimate that when the number of BCH transactions reaches 3 to 5 times that of BTC, there is a high probability that it will overtake BTC, and then the name of Bitcoin will fall on BCH.

On the other hand, this statistic also shows that the current price of BCH to BTC is underestimated. On April 2, 2019, the price of BCH to BTC was about 4%. Today, the percentage of BCH to BTC transactions has increased from 5% to 15%, a 3-fold increase. On the contrary, the price of BCH to BTC has fallen a little to about 3.5%. This is a typical example of the market underestimation of BCH.

At this point, someone may ask, if BTC expands, then does BCH lose its advantage? First of all, the advantage of BCH over BTC is not just the block size, but a more open and aggressive mentality. This is a bit complicated to explain, so I won’t elaborate on it.

Second, BTC cannot expand. Why? Because if BTC wants to expand, it must hard fork. If it does, some people will definitely stick to the original chain, stick to small blocks, and stick to absolute decentralization. Then BTC will split into two coins. At that time, the expansionists in BTC will find out, "Oh my god, isn't this the same scenario as the split between BTC and BCH in 2017?" Why do we need to do it again? Isn't it enough to just go to the Bitcoin that is expanding - BCH?

Therefore, people in the BTC community who have woken up and see BCH gradually growing and growing in transactions and users will gradually turn to BCH. BTC cannot gather enough power to promote capacity expansion, so BTC cannot expand. If BTC wants to expand, it will split, so it is better to go directly to BCH.

06
BCH version of USDT

Bitpie CMO Kong Weiguo: A few days ago, it was reported that Tether was preparing to issue stablecoins on BCH. I have to ask a few more questions about this good news: What is Simple Ledger Protocol? Why choose BCH? What other imaginable spaces will there be for BCH-based USDT in the future?

Jiang Zhuoer, CEO of Litecoin Mining Pool: SLP is a protocol that can issue tokens on BCH. The reason why ETH rose to prominence is because ETH can issue tokens, which brings a very important freedom: equity freedom. Those who have experienced the ICO craze know the importance of this freedom.

The tokens issued on BCH have lower freedom than ETH. You cannot program them yourself, and can only use several token templates built into the system. But what are the benefits? We know that the world is conserved. If you gain certain benefits, you must give up other benefits. As we said just now, if you want to decentralize, the maximum transaction capacity will decrease. You can't have both.

The benefit of BCH by giving up the advantage of programming flexibility is that the upper limit of the number of transactions is much higher than that of ETH. ETH now has an upper limit of 1 million transactions per day. This upper limit is not because ETH does not want to expand. ETH wants to expand very much, but this load has reached the performance and network limits of many servers. Ordinary computers can no longer run ETH.

BCH can accommodate 10 million transactions per day based on 32M blocks, which is 10 times that of ETH. If it is expanded to the upper limit of ordinary computers, about 100M blocks, it can accommodate 30 million transactions per day. If it is expanded to the upper limit of servers, such as servers with 3 times the performance of ordinary computers, it can accommodate 100 million transactions per day, which is 100 times that of ETH.

Why does the same server run 100 times more BCH transactions than ETH? Because ETH's flexible programming performance comes at a price, requiring huge resource consumption. Each node must run the unique code of the token, which consumes a lot of resources. The biggest advantage of Bitcoin's UTXO architecture is that it consumes very little resources and can accommodate 100 times the transaction volume of ETH.

I will not elaborate on what the UTXO architecture is. Why did Satoshi Nakamoto not design it as an account model like ETH in the beginning, but designed it as a very strange UTXO model? His idea is very profound. Satoshi Nakamoto was ready from the beginning for Bitcoin to accommodate everyone in the world.

Therefore, in the next bull market, and the next bull market, when tens of millions or even hundreds of millions of new users flock to the blockchain, they will find out which coin can accommodate so many users? If tens of millions of people use stablecoins like USDT, which chain is both decentralized and can accommodate a huge number of users?

BTC and ETH are already blocked, EOS and TRON are semi-centralized structures, and the government can regulate at any time if it wants to. Only BCH is the only chain that is decentralized and can accommodate hundreds of millions of users.

07
The future of crypto

Bitpie CMO Kong Weiguo: At a time when the world economy is shrouded in the pandemic and many mining machines have reached shutdown prices, what does Mr. Jiang think of the future of the entire crypto industry? Let me give you a wave of faith.

Jiang Zhuoer, CEO of Litecoin Mining Pool: I have talked about this issue in the previous two live broadcasts, so I will not repeat it. Please refer to an article I wrote before, "Recharge Everyone's Confidence - Why Credit Currency is Unsustainable".

To summarize briefly, first, after the collapse of the Bretton Woods system, the end of the gold standard, and the central bank entering the era of unanchored money printing, the credit system of unlimited money printing is unsustainable. Financial crises will only get bigger and bigger, from the East Asian financial crisis in 1998, to the subprime mortgage crisis in 2008, to this year's financial crisis, money printing cannot solve problems, it can only postpone problems again and again, and the more problems are postponed, the bigger they become, because the previous problems have not been solved. In the end, there will always be a time when the crisis is so big that the government cannot solve it, and finally the credit currency system will collapse.

I know many people don’t believe this, but we just need to keep waiting. Previous financial crises have been more serious than the last, and this is historical evidence.

Another point that is easier to understand is that the central bank has been flooding the market with money this time. You can look at this chart of the Federal Reserve's dollar supply. The climbing part in the front is the flooding of money after the subprime mortgage crisis in 2008, and the decline in the middle is the Fed's balance sheet reduction in the past two years, but it soon could not shrink any further and was forced to continue flooding the market with money.

The last part that stands up is the Federal Reserve's super-large-scale money printing during this crisis, and it is not over yet.

In comparison, the result of the money printing in 2008 was that gold prices rose from more than 300 US dollars to 1,800 US dollars two years later. After this market panic is over, all asset prices will inevitably rise sharply. I don’t know how much they will rise, but for a currency like Bitcoin that relies on the central bank’s money printing, I don’t think it will be difficult to increase more than ten times in two or three years.

08
Mining machine shutdown price

Bitpie CMO Kong Weiguo: Is the shutdown price calculation mentioned online reasonable? Has the S9 been shut down? Are those who bought the S15 already crying in the toilet?

Jiang Zhuoer, CEO of Litecoin Mining Pool: S9 has been shut down. Whether it can be restarted depends on the future price of the currency. After all, due to the sharp drop in prices, all mining machine manufacturers are focusing on survival, and the output of mining machines has been greatly reduced. If after the epidemic is over and the central bank's monetary easing is effective, there will be another surge in computing power, and the electricity price during the flood season will drop from 0.38~0.4 to 0.23~0.24, then S9 may still be able to start up.

This is a bit like the situation of T9+ during the Spring Festival in 2019, which was also not enough to pay for electricity. However, there was a round of surge in April, and the output of mining machines could not keep up. T9+ was revived and made several times the profit.

There is no need to worry about S15. If S9 can be powered on, S15 can be powered on as well. If S9 cannot be powered on, the computing power of the entire network will drop significantly. S15 still has a high probability of being able to be powered on.

In addition, the S15 was launched at the end of 2018. Our joint mining clients bought a batch of S15 in early 2019. They have already made back their investment several times over and there is no risk of loss.

This is also a feature of mining: after a generation of mining machines, preferably a major mining machine update, it is basically impossible to lose money when buying a mining machine. In other words, all those who have bought mining machines after all the mining machine updates in history have never suffered losses.

Because a generation of mining machines can mine for a relatively long time, such as the latest S19, because the power consumption ratio is very good, and the subsequent 5nm and 3nm updates are very slow, and the power consumption increase is not significant, so we expect S19 to be able to mine for 3-5 years like S9. In such a long period of time, there will definitely be a bull market, or even more than one bull market, so it is almost impossible to make a loss, and there has never been a loss in history.

So after the S19 came out, we purchased an S19 mining machine worth 21 million. The S19 is also our main product for joint mining.

09
Hedging

Question: I thought mining was a sure-win business, but now it seems to be high-risk. In order to deal with the risks, will the mining pool use some financial means to hedge?

Jiang Zhuoer, CEO of Litecoin Mining Pool: First of all, in order to deal with risks, we have adopted a lot of means, such as the purchase of the latest S19 mining machine mentioned earlier, which is an important means. Assuming that the new crown pneumonia cannot be controlled, the entire capital market continues to plummet, and Bitcoin falls back to 4,000, 3,000, or even 2,000, then buying coins and other mining machines will be a loss, but S19 may not necessarily be a loss.

Why? Because S19 has the best power consumption, other mining machines will shut down first, and S19 will definitely be able to start up and slowly recover the investment. In addition, the current coin price is not high, and the S19 is priced relatively low. In fact, Ant Financial was going to release S19 on March 16, but because the coin price was too low, it was impossible to set a price, so it was delayed for a week, and the coin price recovered a little before releasing S19.

This indirectly shows that the current price of S19 is not too high, 161 yuan per ton, which is even lower than the price of S17+ of 180 yuan per ton before the sharp drop on March 12. Therefore, those who buy S19 first can mine first and get their money back first. When the money is back to below Bitmain's production cost, it will be absolutely safe.

Therefore, this shows our thinking on risk control. In addition, I still think that it is the early stage of the bull market, especially after the central bank has released a large amount of money, so I think it is not suitable to short futures for hedging, otherwise once the currency price goes up, the short position will lose a lot, or even be liquidated.

Therefore, a better choice is to buy a product using options. This is a bit complicated to explain. I talked about it in the live broadcast with Xu Zhe on March 21. If you are interested, you can go to my Weibo to watch the live broadcast. I will not repeat it.

10
Cloud computing power

Bitpie CMO Kong Weiguo: Given the current scale of mining, is it very unlikely for ordinary people to participate? Is buying cloud computing power a new way to invest? What are the pitfalls to watch out for?

Jiang Zhuoer, CEO of Litecoin Mining Pool: First of all, any industry will become more and more specialized, large-scale, and centralized, and mining is no exception. You can watch a promotional video of Litecoin and you can see that individuals cannot participate in such a large-scale mining farm with a capacity of more than 100,000 kilowatts. The electricity and factory buildings alone require an investment of tens of millions, and the mining machines inside require an investment of hundreds of millions or even billions.

Promotional video of the Litebit Mine:

This also prevents individuals from participating in mining, and they have to buy products such as cloud computing power, but cloud computing power products carry great risks.

The first is the risk of overselling. Cloud computing power may not have bought machines at all, but is playing a Ponzi scheme. So when buying cloud computing power, try to choose a big brand. In fact, there are only a handful of reliable cloud computing power on the market.

Second, cloud computing power is often sold at a higher price. You can see this by comparing the price per ton of cloud computing power with the official selling price of mining machine manufacturers. The price per ton of sustainable cloud computing power is generally 30% to 70% higher than the price per ton of mining machines. Other electricity costs are also more expensive than the market price. Many cloud computing powers also charge various fees and management fees. This further increases the price of cloud computing power.

Third, the ownership of cloud computing mining machines does not belong to the users, especially since the electricity price of cloud computing is set relatively high. Often, when the cloud computing power is calculated with high electricity price, it is not enough to pay the electricity fee, and the mining machine has been shut down. But in fact, at this time, the mining machine still has a relatively high residual value in the market, and these residual values ​​do not belong to you, but to the cloud computing merchant.

Fourth, it is now popular to sell short-term rather than permanent cloud computing products, which further increases the price of cloud computing. Merchants can sell you a mining machine several times by dividing the cycle. The price of all cycles added together is far more than the price of a mining machine. In a nutshell: the buyer is not as smart as the seller. The buyer is definitely not cost-effective if the selling cycle is divided after careful calculation.

So, what methods can retail investors use to participate in mining? Here we recommend our joint mining product.

There is a fundamental difference between joint mining and cloud computing power. The idea of ​​cloud computing power is to treat miners as customers and make money from customers first. If I sell you a batch of mining machines, I will make money from you first. For example, if a mining machine is bought for 10,000 yuan, cloud computing power will sell it to you at 13,000 or 16,000 yuan, so that I can make money first.

The design logic of our joint mining is different, because the people who first approached me and asked me to take them to mine were all partners and friends in the industry, so I was embarrassed to make money from them. I usually buy a large number of mining machines, and then give them a small part and sell them to them at the original price. I don’t lack that little money, so I don’t need to make a profit. As for the electricity fee of joint mining, it is whatever the market price is. For example, during the flood season this year, I expect the water and electricity trusteeship price to be 0.22~0.24, and the joint mining will be based on this price at that time.

Now the question arises, I provide you with the mining machine and electricity at cost price, so when do you start making money?

We have designed a post-profit sharing agreement, which means that we will only share profits when you start making money. For example, if you spend 1 million to buy a mining machine, then start mining, and sell the mining machine at the end of liquidation, the 1 million will become 2 million or 3 million, and we will share the net profit with you at a rate of about 18% to 24%, depending on the number of mining machines purchased.

This has a great benefit, which is that it greatly reduces the possibility of losses for most miners. In other words, if joint mining is a loss, you will definitely lose more if you buy other mining products, and you may even lose more than 20% or 30%. So from this perspective, joint mining actually treats miners as partners, helping partners to make money first, and then when there is pure profit, miners eat meat and we drink soup.

In fact, many of our partners also mine by themselves, so why don’t they buy their own mining machines and then host them in a mining factory, so that they don’t have to share the profits with me? Because there are many pitfalls in mining. Anyone who knows a little about the mining industry knows that if you host your mining machines in a mining farm, the mining farm may not operate well, the mining machine failure rate is high, or they may steal your mining machines, or they may not let you withdraw your mining machines and force you to transfer your mining machines to them at a low price, or you may not get back the electricity deposit after withdrawing the mining machines, etc.

So, if I lead them to mine, there is a very obvious scale advantage. This scale advantage means that we are relatively large in size, and when we negotiate with many people, including some extreme situations, we can get some better advantages. For example, half a year ago, a fire broke out in a mine in Xinjiang, burning down a factory building and destroying thousands of machines. If you are a small miner, it is difficult to negotiate compensation conditions with the mine. We are relatively large in size, so in the end we pressured the mine to get the compensation back. In general, we can avoid many extreme situations, which is another advantage.

We can actually prove mathematically that joint mining is the optimal mining model, because joint mining is not profitable at first, which means that no product can compete with it in terms of price. The post-profit model of joint mining is also a very reasonable charging model. If a business model does not make money from you from beginning to end, it must be after your principal. I made it clear that joint mining is not profitable at first, but if it makes money later, I will share a share.

What we provide is actually a relatively complete one-stop service, including the selection of mining machine models. We will select the best ones from a large number of mining machines, and we often buy a batch of mining machines, and then take our partners to buy them, which means that the partners are in a follow-up model, so their risks are greatly reduced. For example, this time, the S19 was also determined by us first. We bought 21 million of them ourselves, and then we looked at how much the miners in the joint mining wanted to buy, and then placed an order together.

In addition, we will also know some issues that may not be very clear in the industry. Because we have a lot of experience. After all, we have purchased and operated hundreds of thousands of mining machines, and our experience in mining machines is unparalleled. We will have many optimization methods. For example, in the second half of 2018, after the price of the currency fell, all the S9s of cloud computing power were shut down due to insufficient electricity costs. But in fact, at that time, Ant released an AB optimization firmware that could reduce power consumption by more than 10%. We updated all S9s with this firmware and charged customers for electricity according to the reduced power consumption. We also tried to pressure the power supplier and the mining farm to lower the electricity price, so that the electricity cost of joint mining can be further reduced.

Therefore, if you bought a cloud computing S9 at the end of 2018, you would have been liquidated because you could not pay for electricity for 30 days. After the liquidation, the residual value of an S9 was still around 800 yuan, and this residual value had nothing to do with you. However, our S9 for joint mining not only survived the end of 2018, but also made a lot of money after the start of the small bull market in 2019. It had a net profit and was still mining before the big drop on March 12.

You see, our S9s have been mining for almost a year and a half longer than the cloud computing power S9s. If the price of the coin drops from 14,000 like in mid-2019, these S9s may continue to mine. So, all our miners say that we are very honest and treat miners as partners, not customers who want to make money.

This is the idea behind our entire joint mining product: to provide everyone with a nanny-like service. As long as you want to mine, or want to buy mining machines or invest in mining machines, just come to us and we will help you with everything, help you avoid many risks, and help you avoid many pitfalls.

11
Question and answer section

Question 1: Just because BCH is cheap, many people buy and use it. When BCH becomes expensive, believers and novices will directly buy BTC, right?

A: It is true that some people choose to buy cheap coins. But if BCH becomes expensive, it will have risen a lot compared to BTC. For example, if BTC is 20,000 US dollars, then BCH will be expensive only when it rises to at least 10,000 US dollars. BCH will be expensive only when the price reaches 50% or 30% of BTC. At that time, the price of BCH will be much higher than the current price of 3% or 5%.

In other words, if you buy BCH now, by the time BCH reaches the ceiling of "relatively expensive", you will have made a profit, ten times the profit of BTC, and even dozens of times the profit of RMB.

So this is a problem that you don’t need to worry about now. By the time you start to worry, you will have earned dozens of times. And if BCH has reached 50% of the price of BTC, then it has entered the stage of BCH’s turnaround, which is what I just said in the lecture. The number of BCH users is gradually increasing, gradually approaching the number of BTC users. When BCH rises to 50% of the price of BTC, it may turn around directly. That is, the price of 1BTC will drop directly to a very low level, and then BCH will become the real Bitcoin. This is what we should look forward to, instead of thinking that this is a ceiling.

Question 2: Mr. Jiang, what do you think about the unlimited issuance of USDT and the possibility of triggering a bubble? Thank you.

A: Regarding this question, first of all, USDT is not 100% margined now, because a portion of the US dollar has been frozen by the US government. And we can predict that USDT will definitely be killed by the US government in the future, because. For example, Iran, or other countries blocked by the United States, can use USDT for international trade settlement, which the US government will definitely not tolerate. The US government must ensure that the entire US dollar system is under its own supervision. The US government has not touched USDT yet, just because USDT is not big enough and not enough Iranians are using USDT.

When enough Iranians use USDT, the US government will definitely freeze all Tether's dollars, because all these dollars are in the bank accounts of the US dollar system, and the United States has the power to freeze the dollars of all countries. The US dollar is a central settlement system, and the clearing center of the US dollar is in New York. This settlement center means that if China wants to pay a sum of dollars to, for example, France, it is not directly transferred from China to France, but must be cleared by the clearing center in New York, USA. As long as the clearing center in New York, USA does not clear, the dollars in your bank are essentially passively settled.

Therefore, the US government is definitely capable of freezing Tether’s dollars, and it will definitely freeze them in the end. The United States cannot tolerate the existence of another central bank that issues dollars that it cannot control.

This is from a long-term perspective. But in the short term, the increase in USDT issuance is definitely beneficial to the price of the currency, because there is more money in the market. Whether it is real money or fake money, if you have more money, then some of it will eventually go to buy coins. Therefore, the bubble and increase in USDT issuance will definitely have a positive effect on the price of the currency. But I don’t know when it will explode, so it’s best not to keep USDT. If you need to keep fiat currency, you can even buy Bitcoin spot and then short one Bitcoin at the same time to lock in the position of this fiat currency. Don’t use the method of directly holding USDT.

Question 3: There is an address for mining Bitcoin in 2010: 1A6uonnTnTJaT6kyBn4hz4AFUWKzLUHLof has been sleeping for so many years and has recently started to transfer coins. It is said to be an exchange. I also tracked the last transaction of tx that was transferred in March this year. It is indeed not fake news. What do you think?

Answer: This is obvious. Because of the decline in US stock prices in this round, many people have to pay margin for US stocks. We even saw that on a financial program, the host actually received a call to pay margin. Then he was on the live broadcast site and quickly turned his head and slapped his phone. The audience was stunned.

So, why did miners sell coins in this early stage? It must be that other places need to make up cash. Otherwise, the currency price is low since they held it for 10 years and they definitely don’t want to sell it. But when other places urgently need money, they can only sell the most liquid assets and sell them immediately, and then exchange them for US dollars. Go to make up for funds from other places.

Question 4: What you say is subtle and slightly sharp when buying your own product. I want to hear about the shortcomings of BCH.

Answer: BCH must have disadvantages. First of all, the first disadvantage is that BCH is too small. Too small means that it may be affected by some unexpected events and even die. The most typical one is that Satoshi O'Chief split BSV. If Aosato splits, it will basically have no effect if it is thrown into the size of BTC. He can't take many people away, and at most he can split a small currency such as 2% to 3% of BTC, just like that BTG. However, Satoshi O'Chief can take away a considerable number of people in BCH, a relatively small community, and then cause a significant blow to BCH. So this is the first risk of BCH. Because it is relatively small, it may not be able to withstand some accidents and then die directly.

The second is that BCH still has not formed a closed loop in some things. For example, the income problem of developers we are chasing recently. Where does the developers' money come from? We planned to say that it could be donated by miners, but now it seems. It still can't be done. Then, now or my plan is. I might do something similar to the Nobel Prize, BCH's Nobel Prize, which we temporarily call the Satoshi Nakamoto Prize. Then this Satoshi Nakamoto Prize will award the developers for a while ago, if anyone develops or which team develops some better products with better features. Then this Satoshi Nakamoto Prize will award these developers to provide their income. And this award has an advertising effect. Therefore, companies will be willing to spend a part of the money to award BCH developers to improve their advertising effect.

The funds required by the development team are actually not much for a currency ecosystem. We can solve the funds required by these developers through this corporate advertising effect and award-giving method.

Question 5: Mr. Jiang, if the current currency price is still in the halving process, will it cause a mining accident? A new wave of stampede panic?

Answer: The mining disaster has nothing to do with the trampling panic. A wrong view of many people here is that the price of the currency determines the cost of mining, not the cost of mining determines the price of the currency. The cost of mining only has a psychological support effect on the price of the currency.

So, if the current currency price is still lowered, the first is that there is a six-month period of flooding during this period, and the electricity cost price will drop by about 40% or even half. This depends on everyone's power resources. Therefore, it can greatly alleviate the mining cost problem of most people.

Second, even if the water season is over, the price of the currency will not rise, so some mining machines will have to shut down. For miners, it may cause a mining accident, but it still has no meaning to the price of the currency. That is to say, if some mining machines shut down, it will not cause the price of the currency to fall. This is something that has no direct impact, and we can even say. If some shutdowns are shut down, it will even increase everyone's confidence in the price of the currency, because everyone thinks. The market is so miserable that many miners shut down, so the bubble in the market is no longer high, so the price of the currency may rise.

Question 6: BCH confirmation is too slow, is zero confirmation safe? What will the exchange support?

Answer: Zero confirmation can only be used for daily small-value transactions. If used for large-value transactions, it is unsafe, so the exchange will definitely not support zero confirmation. The exchange is conducting large-value transactions. So BCH is developing a protocol, which we call the avalanche protocol. I will tell you about the general logic, that is, to use miners or mining pools as weight nodes in the confirmation of DPoS. Simply put, blockchains such as EOS and Tron can confirm within a few seconds, relying on DPoS. That is, relying on some large super nodes to confirm transactions.

In fact, some nodes in Bitcoin can be used as super nodes. This part of the nodes are mining pools. First of all, assume that 51% of the mining pool's computing power will not do evil. If 51% of the computing power will do evil, this 51% of the computing power can directly launch a 51% attack on Bitcoin.

So I have an assumption that more than 51% of the computing power is honest, so we can take the second step, which is to let these mining pools act as super nodes to confirm transactions in advance. This is a bit like super nodes like EOS to confirm transactions, so the transactions can be confirmed soon.

Then I used the computing power to ensure that these super nodes are honest, which is what we used the previous assumption. More than 51% of the computing power is honest. Therefore, a super node composed of more than 51% of the computing power, which confirms transactions in a DPoS-like manner, can be guaranteed to be honest and safe. If this is not safe at all, then PoW mining is not safe. So BCH can ensure that zero confirmation is 100% safe after the development of the avalanche protocol is completed.

Question 7: Mr. Jiang, how do you view the exchange rate between BCH and BTC? It is now around 0.035. What do you think the exchange rate will be in a bull market?

First of all, in a bull market, there is a high probability that the price of BCH to BTC will increase, which is also a characteristic of a bull market, that is, currencies with small plates will rise faster than currencies with large plates. Currencies with large plates have low volatility. Because they are too big, they cannot rise. As long as a little capital comes in, the currencies with small plates will rise very quickly. Therefore, retail investors like to buy this small currency to speculate.

The second is that BCH has an additional bonus in the bull market, which we call a congestion bonus. BTC does not expand, so in the last round of the bull market in April and May 2019, BTC has been slightly blocked again. Core's measures such as isolation testimony and Lightning Network were finally proven invalid.

So, when the next bull market comes, BTC will definitely continue to appear. Similar to the super congestion in 2017, a transaction fee of several hundred, thousands or even tens of thousands of yuan is still possible. Or it should be said that it will definitely happen. At this time, a large amount of funds and attention will be focused on BCH.

So in this bull market, BCH rose faster than BTC, which is basically 100%. As for how much it will rise, it is actually hard to say. I tend to say that it can rise to at least 10%-20%. If it is above 20%, it has already entered the field of turnover, which is difficult to predict. I think that BCH still cannot turn over BTC in this round, and the number of users accumulated at present is not enough. It is possible that BCH can accumulate enough users to turn over BTC until the next round.

Risk warning: The content of this article is only the personal opinion of the guest and does not constitute any investment opinion or advice.