5 cool thoughts on the financing event of the "Blockchain Queen"

Blythe Masters, a former executive of JPMorgan Chase and known as the "CDS Queen" of Wall Street, has been very popular recently. "Her Majesty" worked at JPMorgan Chase for 27 years and made outstanding contributions to Morgan Stanley's financial derivatives business. She was also a direct promoter of the 2008 US financial crisis. Blythe Masters once invented CDS, which is credit default swap (CDS), and became one of the most powerful female executives on Wall Street, and thus earned the title of "CDS Queen". As the designer of "CDS", the market size of financial derivatives she conceived once reached 58 trillion US dollars.

The name of the company started by the Queen is Digital Asset Holdings, and its product is to provide distributed ledger solutions for the settlement and clearing of financial institutions. Masters vigorously advocates and promotes blockchain solutions on Wall Street, and is therefore called the "Blockchain Queen" by her peers on Wall Street and the media.

What is surprising is that the first round of financing valuation of Masters’ blockchain startup was already 100 million US dollars. This may be a reference for the valuation of domestic blockchain startups. The author is more worried about whether blockchain startups will be on the track of capital bubble from the very beginning.

According to the New York Times, Goldman Sachs and Citigroup have two objections to Masters' startup company. 1. Since Morgan invested 27 million US dollars and it was the company where the Queen had worked for 27 years, Goldman Sachs and Citigroup were worried that it would be disadvantageous to them. 2. Currently, the technology of DAH (the Queen's startup company) was not independently developed but acquired. The author believes that the report of the New York Times is objective, and the concerns of Goldman Sachs and Citigroup are not unreasonable. The author speculates: If there is some kind of tacit understanding between Morgan and Masters, this investment may not be a good business for Goldman Sachs and Citigroup.

From the perspective of a Chinese venture capitalist, the author is full of expectations for the future of blockchain and is also paying close attention to blockchain investments in Europe and North America. However, looking back, there are still some points of sober reflection for reference by domestic venture capital institutions and students planning to start a business in the blockchain field.

First, the application of distributed ledgers has been proven to be a relatively mature direction for blockchain entrepreneurship. Domestic capital and entrepreneurs can seriously explore the direction of this field together.

Second, we must rationally and clearly realize that the financial environment in China is different from that in Europe and the United States. The blockchain application in Europe and the United States belongs to "credit upgrade", which belongs to the category of blockchain 2.0, while the financial environment in China must honestly start from the basic level. Fundamentally speaking, China is not qualified to talk about "credit upgrade" and cannot go all out for "credit transfer". The author believes that the first stage belongs to "credit optimization", which belongs to the category of blockchain 1.0. Therefore, it is not polite to say that the DAH and R3 models are not suitable for the current Chinese financial environment for the time being, but it may be possible in the next five years.

Third, "valuation culture" cannot be copied. China's culture of copying and copying is not the fine cultural gene of China for 5,000 years, but it is the "inertial thinking" of China's entrepreneurial culture. Capital is also accustomed to guiding Chinese entrepreneurs according to the Internet investment thinking of the United States. It has become natural for China's Internet entrepreneurship to copy the American model. "Actively or passively stifling originality" is what capital should review the most, and it is also what domestic entrepreneurs need to think deeply about. Blockchain entrepreneurship has a high threshold. The author believes that it will start with the turtle group with high education and high IQ. The turtle group is more sensitive to international financing events, so when valuing their own entrepreneurial companies, they will be more or less affected by European and American data. The author suggests that valuation should be calmly combined with China's current national conditions.

Fourth, decentralization does not mean ignoring Chinese laws. Since 2008, the Bitcoin wave triggered by Satoshi Nakamoto has allowed high-quality people in the world who yearn for liberalism to find an organization instantly. This organization reshapes the structure of society and tries to break the boundaries between countries. The will of democracy and freedom is equipped with the wings of technology to change the world and subvert the existing system. People who have grown up in a centralized system for a long time have gradually developed slavery and laziness, and are too lazy to think or doubt. Decentralization outlines a beautiful world. What I am worried about is that some students may ignore Chinese laws when starting businesses in the field of financial technology with the will of liberalism. After all, in a decentralized world, everyone can participate in the formulation of the "new constitution", but in the real centralized world, especially in a centralized system, this is almost impossible. The author seriously reminds that decentralization must abide by Chinese laws, first be a legal citizen, and then be a qualified entrepreneur.

Fifth, blockchain startups should not talk too much about disruption, but rather about technological innovation. Implementation is the hard truth. I will not elaborate on this point.

We hope that blockchain can see real-world cases and results in China as soon as possible. Strictly speaking, there has not been a single case in China where blockchain technology applications have received venture capital. Compared with the current situation of blockchain entrepreneurship and investment in Europe and the United States, China's current pace is a bit slow.

Author: Chen Gang, Financial Uncle, founder and managing director of Gaoronghui Capital. Observer of GRH Blockchain and Digital Asset Lab. Producer of Venture Capital Era. Consultant to many startups.