Wang Yuquan, founder of Haiyin Capital, which has an annual investment of over 500 million yuan, praised Bitcoin and blockchain

Chapter 0 Introduction

Capital is smart, and venture capitalists are the drivers of capital. Today, Wang Yuquan, founder of Haiyin Capital, expressed his views on Bitcoin and blockchain in his column on the Dedao APP. What did he say?

Chapter 1 Wang Yuquan

Wang Yuquan is a big V. His column on the Get APP has 19,278 subscribers. It costs 199 yuan to subscribe to this. Nearly 20,000 people must be a big V.

His titles include founding partner of Haiyin Capital and senior marketing and strategic consulting expert. He is mainly engaged in investment in high-tech innovative enterprises in the United States, with an annual investment of more than 500 million (should be RMB).

I have been listening to his column, which mainly talks about high-tech news and investment opportunities in the high-tech industry. He is very good.

Today in his column he said, "If you are a blockchain expert, I can't wait to work with you."

I can't wait to write my review here.

Chapter 2 The Principles of Blockchain

Wang started by talking about the technical principles of blockchain, in a very simple sentence:

“Blockchain is the general term for all the supporting technologies behind Bitcoin, which means Bitcoin is a manifestation of blockchain technology. Blockchain is a permanent and irreversible record generated by stacking encrypted data (blocks) in chronological order (chain).”

This definition is clear and accurate, but there is an error in this statement . The data in the block is not "encrypted". The block is essentially a set of ledgers, just like our double-entry ledgers, and the data in it is a series of transactions. But the source and destination of these transactions are not encrypted. However, the "accounts and passwords" to which these transactions belong are generated by encryption algorithms. To be precise, the Bitcoin address and private key are generated by encryption algorithms, but when using Bitcoin addresses to transfer money, these transfer information will be packaged into blocks, but this information is open to the entire network and is not encrypted.

For example, when we use online banking to transfer money, the transfer information is encrypted. Others can eavesdrop on your transfer information, but they cannot decrypt it, which means they don’t know how much money you transferred or to whom you transferred it. However, transactions in Bitcoin are not like this. When you use Bitcoin to transfer money, the transfer transaction information is publicly available on the entire network. However, the account (that is, the address) used for Bitcoin transfer is generated by an encryption algorithm, which means that others can check the transaction information of this account, but cannot find the person behind this account.

"Blockchain is a permanent and irreversible record" sounds very cool , but not every blockchain product can easily achieve "permanent and irreversible modification". Currently, only Bitcoin has achieved this. Ethereum, the second largest blockchain product in the market, had its transactions reversed and modified last month. This had a huge impact on the entire Ethereum community, and even created two currencies. Its price also fluctuates greatly.

The best example of "permanent and irreversible modification" is Bitcoin. The first basis is huge computing power and decentralization. That is, there are many computers that record Bitcoin blocks, and they are in the hands of many people. No single person can control more than 50%. The second is decentralized storage of the ledger, that is, the Bitcoin blockchain ledger itself is redundantly stored in enough places around the world. The third is decentralized rule making. That is to say, anyone can propose and write code for the upgrade and change of the Bitcoin protocol, but whether it can be adopted depends on whether the people who control the computing power in the first basis can exchange for the support of at least more than 50% (currently more than 90%) of the computing power. These three decentralizations realize the "permanent and irreversible modification" of the Bitcoin block.

Although Bitcoin is only one form of blockchain, it is currently the only one that is “permanent and irreversible” as Wang said. Wang also used the following sentence to illustrate a similar point:

“The idea of ​​manipulating Bitcoin is basically impossible because its content is encrypted and the process is traceable, so it is safe and reliable.”

Chapter 3: Blockchain is comparable to the Internet

Wang has a very high opinion of blockchain:

“Blockchain technology is the prototype of the next generation of cloud computing and is expected to completely reshape the form of human social activities like the Internet.”

This is a comparison between blockchain technology and the Internet. The Internet is really great to the extreme. Our human social activities can be divided into three major flows: "information flow", "capital flow" and "logistics". The Internet has increased the flow speed of "information flow" to the speed of light. Before the Internet, the spread of information was very, very slow. A Chinese person could hardly communicate with an American because they were too far away. The Internet changed this, allowing two people far away to communicate unimpeded.

The Internet also wants to solve the problem of slow "capital flow" by encrypting "information flow", but it adopts a centralized approach. That is, if we want to enjoy the "capital flow" service at the speed of the Internet, we must trust centralized companies such as banks, Alipay, and WeChat Pay. But this is not a very good solution, because these centralized companies will go bankrupt or even falsify accounts. This is also why we have such high inflation, because these centralized fund custodian companies will use a large number of complex currency management methods to increase the total money supply of society. Another huge disadvantage of such centralized companies is that the cost is very, very high. We are all used to using Alipay for free, but you have to know that Alipay has thousands of people to pay wages. Where does their money come from? Banks are golden and brilliant, and all this money is cost. The World Health Organization claims that there are still 2 billion people in the world who cannot enjoy the benefits of modern credit currency because the system is too expensive.

Bitcoin and blockchain technology are a way to solve various problems of "capital flow", and it uses a decentralized approach to solve them. That is, we do not need to trust a central node when using Bitcoin. The nodes participating in Bitcoin accounting and processing transaction records are equal, and the failure of any of them will not affect the user's transfer and transaction. If any of the nodes wants to falsify accounts, it will be kicked out of the network immediately. This approach makes the "capital flow" extremely smooth. From then on, the "capital flow" is as borderless as the "information flow", and the speed is also very, very fast. Although it is still far from the speed of light, reliable transaction transfer time takes about 10 minutes. And the cost of the entire system is much lower than that of banks and third-party payment companies.

The Internet has solved the speed of "information flow" and other issues. If Bitcoin and blockchain can really solve the speed of "capital flow", it is definitely not an exaggeration to compare the two. We still have to be honest and say that so far Bitcoin and blockchain have not grown to solve various "capital flow" problems for many people. They currently only serve tens of millions of people in the world. Whether they can serve hundreds of millions of people remains to be determined.

Chapter 4: Investing in Bitcoin is a small but beautiful business opportunity

While Wang gave Bitcoin a very high evaluation, he also directly and highly recommended buying Bitcoin:

Bitcoin can be divided infinitely, so a small but beautiful business opportunity is to invest in Bitcoin. ... The current price is only about 3,000 to 4,000 yuan, and it will not be a problem for it to increase by more than 5 times in the future.

Investing in Bitcoin is indeed a very reasonable investment option. My basic logic is that the number of Bitcoin users is currently in the tens of millions, but its value and function is to meet all cross-border capital flow needs. The demand for Bitcoin alone is hard to imagine, not to mention that the value and function of Bitcoin is far more than just this one. The supply of Bitcoin is limited by mathematical laws, with a total of 21 million Bitcoins, and now 1,800 Bitcoins are issued per day.

So my reasoning is that the demand for Bitcoin is huge, and the supply is limited, which will inevitably lead to price increases.

Where are the main risks?

Bitcoin has no technical barriers, which means that any team that wants to make a currency product with the same functions or even more functions is technically feasible. But on the other hand, Bitcoin itself can also evolve. If other teams add more powerful functions, Bitcoin can follow suit.

The advantage of Bitcoin is the user barrier formed by the first-mover advantage. If you find a user barrier that destroys Bitcoin, you will find the biggest risk of investing in Bitcoin.

The first major risk is technical loopholes, because any code may have loopholes. Bitcoin itself has indeed had loopholes, but they have all been patched. When technical loopholes appeared in history, the price also directly plunged by more than 50%. This is fatal.

The second is policy regulation. The current attitude of the mainstream government towards Bitcoin is acceptable and supportive. But it is still not enough. The policy will affect the acceptance of Bitcoin by ordinary people. Historically, when the government releases regulatory policies on Bitcoin, it will greatly affect the price. For example, five Chinese ministries issued a statement at the end of 2013, which led to huge fluctuations in Bitcoin prices, and then Bitcoin suffered a two-year bear market. (I don’t know if there is a causal relationship here, but there is a correlation.)

The third risk comes from various nodes in the Bitcoin ecosystem. Bitcoin is still in its early stages of development, and the collapse of any larger Bitcoin company will have a significant impact on the price of Bitcoin. For example, an exchange was stolen 120,000 Bitcoins today, causing the price to drop by more than 10%.

The fourth risk comes from the technical threshold of Bitcoin, because saving Bitcoin does have some technical threshold. If you lose your private key or it is stolen by hackers, you will lose all your Bitcoins, and no one can help you get them back. If you entrust your Bitcoin to an exchange or other company or person for safekeeping, you have to trust the other party, and if the other party is stolen or runs away, your Bitcoin may also be lost. But in this case, there is a possibility of suing the other party legally and recovering it.

In general, investing in Bitcoin is an investment option with unprecedentedly huge returns but also considerable risks.

Chapter 5 Blockchain is a paradise for entrepreneurs

Wang also praised the entrepreneurial opportunities in blockchain:

This technology is loved by entrepreneurs because it can be combined with different industries to create startups with competitive advantages and barriers.

Even blockchain is compared to artificial intelligence:

Blockchain is a rare technology that is a bit like artificial intelligence, or even better than artificial intelligence. There may be many people who master this technology, but everyone can find their own opportunities and space.

Wang also envisioned the development space of blockchain in various fields:

“We have now entered the blockchain 3.0 era, and the application of blockchain has expanded beyond the financial field to include medical care, justice, logistics, government, science, culture, art and other fields.”

It is logically feasible to use blockchain technology in these fields. Many people are exploring this. But the logic and motivation for using Bitcoin and blockchain are more complicated than in the field of currency and capital. In the field of currency and capital, the main issues need to be resolved are security and cost. But in the fields of medical care, justice, logistics, etc. mentioned by Wang, there are a lot of issues related to fairness and efficiency. We have experienced the greatness of double-entry bookkeeping. It clearly solves the problem of ownership of funds and assets , and makes the great concepts of capitalism such as limited liability companies feasible. The most important reason is that double-entry bookkeeping reflects the fair ownership of funds and assets in digital form. In plain words, double-entry bookkeeping makes it clear who the money and things belong to. Bitcoin and blockchain technology can clearly express the fair ownership of more "things" because it is a "permanent and irreversible record", and these "things" can be medical care, justice, logistics, etc. mentioned by Wang.

However, it is certain that using Bitcoin and blockchain is a fairly good solution to the fairness and efficiency issues, but it is unlikely to be a complete solution. In other words, it is not very clear how much commercial value is contained in it. Of course, this also means that once you discover it, you can take the lead.

Wang also suggested that any person or team with skills, ideas and abilities could work with him, and he would be happy to do so:

If you have already mastered blockchain technology, have experts, a team, and entrepreneurial motivation, but just don’t know what field to work in, then please come to me directly. I have ready-made projects that guarantee you the opportunity to succeed in your business.

"Guaranteed to give you a chance to start a successful business." How tempting! Bitcoin and blockchain technology experts, come on! Haiyin Capital is waiting for you. (TMD I have no chance, crying)

Chapter 6 Conclusion

After Columbus discovered the New World, the epic Age of Exploration was launched. The initial motivation for the Age of Exploration was to pan for gold in the American continent. People from Europe went to mine without hesitation, creating one wealth myth after another.

Bitcoin is the gold of the Internet, the electronic gold that connects the atomic world and the Internet world. Humanity has once again ushered in a gold rush. The last gold rush was a competition of physical strength and luck, but this time it is a competition of technology and wisdom.