Blockchain, Bitcoin, ICO: Are they all Ponzi schemes?

There are three concepts that have been hyped recently: blockchain, Bitcoin, and ICO.

One is blockchain, which is the blockchain mentioned in Xu Xiaoping’s leaked internal letter: “Those who follow it will prosper, and those who go against it will perish”;

The other is Bitcoin, which has been hyped for several years, with prices fluctuating wildly, but some people have been claiming that "each coin will rise to $10,000";

Another one is the ICO that Xue Manzi cheered and advocated a few months ago and was later paid close attention to by the regulatory authorities. Just the night of January 12, the day before yesterday, the China Internet Finance Association issued a notice titled "Risk Warning on Preventing Disguised ICO Activities", which named the digital currency "Chaink" (formerly "Wanke Coin") issued by Xunlei, saying that it "replaced the legal currency payment obligation for the services contributed by participants, and is essentially a financing behavior, a disguised ICO." As soon as the news came out, Xunlei's stock price fell sharply in early trading on Friday, US time.

Is “blockchain” reliable?

Xiao Tao believes that the only reliable concept among the three is blockchain technology, but it has been hyped up to be unreliable and greatly deified. When "street aunties" are also talking about blockchain, the risks of hype cannot be ignored, comrades!

Blockchain is a distributed accounting technology, which should be advanced in some aspects. But even if it is advanced, it is just an underlying technology that cannot be monopolized or exclusive by anyone. In this case, it is a technology that anyone can use. The difference is whether to develop the technology yourself or to pay a professional company to help develop it.

Technology has always been a means, not an end; technology has always been a tool, and the core of a tool is who it is used for and where it is used to solve what problem. If it is not used well, it is worthless, and only when used well can it create value.

Products always determine the market, and technology can only serve users if it is made into products. The basis for choosing technology for a product is not whether the technology is advanced, but whether the technology can solve the problem to be solved and its cost-effectiveness; whether a product can be accepted by the market does not depend on what technology is used, but on whether the product meets the needs of users and its cost-effectiveness.

Is blockchain technology useful? Of course it is useful. Is it a technology that all companies need? No. Is it a technology that all products need? No. Is it a factor that determines the life or death of a product? No. This is the essence of blockchain technology. If you deviate from these essences, you will deify it, and the result of deification is: awesomeness and shame are close together.

The history of human development is the history of the continuous emergence of new technologies, such as the steam engine, electricity, and double-entry bookkeeping in the distant past, and the Internet, Java, and cloud computing in the recent past... These are all advanced technologies and advanced production tools. Indeed, we need to embrace these new technologies, otherwise our efficiency will lag behind others and affect our competitiveness.

But we don’t need to adopt all new technologies. We only need to adopt those that are relevant to us and can be used by us. It doesn’t mean that everything will be fine after adopting new technologies. Technology cannot solve the essential problems of business. Just like double-entry bookkeeping can better record the financial status of your company, but it cannot solve the problem of whether the company is profitable or loss-making. Similarly, whether or not to adopt Internet technology and cloud computing technology in production has no direct relationship with whether your unsaleable products can become popular.

Therefore, as a person in charge of an enterprise, you should attach importance to and pay attention to new technologies, but you must not be superstitious about new technologies, let alone use technology for the sake of technology; you should not regard certain new concepts and technologies as a gimmick or a life-saving straw to change the fate of your own enterprise. You should still keep a close eye on the needs of consumers and choose and use technologies with the sole purpose of "solving consumer needs."

After the advent of electricity, two types of companies emerged: companies that use electricity and companies that generate electricity. The former are high-performing companies in all walks of life, accounting for the absolute majority; the latter are emerging companies in emerging industries, accounting for a very small minority; the same is true for blockchain. In the future, the majority of blockchain-related companies will be existing companies that choose to use blockchain technology, and a very small number will be emerging companies that provide blockchain technology services. In essence, this type of company is just a To B technology service company and is not very valuable, just like the value of the RMB does not mean that the mint that prints the RMB is valuable.

Bitcoin doesn’t solve any problems?

As for Bitcoin, Xiao Tao has always been a Bitcoin pessimist because in Tao Wen Tao Wen (WeChat ID: wjwzsn), Bitcoin does not solve any new problems. In other words, if there is no Bitcoin today, what will the world lose? Which people and transactions will be affected? The answer is that no one will be affected except for very special people. What are the advantages of Bitcoin compared to existing currencies? Stable currency value? Anti-counterfeiting? Low cost? ...

The decentralization advocated by Bitcoin is nothing more than evading regulation. It is like the goods between two countries have to go through customs, which has eight channels. Now you have built an underground channel. Although the distance may be shorter and many tariffs may be exempted, it is illegal and non-compliant. It is a typical arbitrage behavior to evade regulation. Solving one's own problems at the expense of social interests and order is itself undesirable and unsustainable.

What’s more, the huge amount of “mining” work invested in obtaining Bitcoin consumes a lot of electricity and computer computing power, but does not create any value. It is a huge waste of social resources. It is said that the cost of mining a Bitcoin has reached 3,000 to 4,000 US dollars...

“ICO” is a typical Ponzi scheme!

As for ICO, the IPO of projects claiming to use digital currency as a medium, they stick to their own hyped-up concepts and have ideas that they are not prepared to deliver on, or ideas that have almost no feasibility, and rely on a digital currency that has evaded regulation to get everyone to buy and hype up the price through a game of passing the ball around... This is a typical Ponzi scheme, or a disguised form of casino.

There are many such cases in history. A few years ago, someone divided a random painting into thousands or tens of thousands of shares, marked a price and let everyone buy and speculate; hundreds of years ago, the Dutch speculated on tulips crazily, and the price of one tulip could buy a castle... Everyone knows that this is a bubble, and everyone knows that the bubble will burst, but everyone hopes to take advantage of their neighbors and make a fortune before the bubble bursts...

Xiao Tao believes that many people who hype these concepts and operate these things are definitely not unaware of these things. Since they understand them, they still do them. Xiao Tao really disagrees with the moral bottom line of these people.