The expansion of Bitcoin from the battle for Vanke's equity

Chapter 0 Introduction

As a former hero, I have always been unable to understand why Gavin was abandoned by the community so quickly. The political conspiracy theories and radical technology theories on the market are simply not enough to completely overturn Gavin's reputation. Until the recent equity battle between Vanke and Baoneng, I seemed to see something.

The hottest news this month is the battle for Vanke's equity. The battle between Wang Shi and Baoneng has set off all the media. My friends have also spread a lot of interpretations, but most of them are conspiracy theories. They either criticize Baoneng or think Wang Shi is stupid. I think it's very strange. Today I read a few news articles carefully and roughly figured out the reason for this equity battle.

Because I have been paying attention to Bitcoin for a long time, I have the habit of attributing everything I see to Bitcoin, and these equity battles have reminded me of the world of Bitcoin.

This article attempts to express my association between Bitcoin and companies with sufficiently dispersed equity. Please forgive me if it is not well written.

Chapter 1: Let me first describe the battle for equity between Vanke and Baoneng

Vanke went public 30 years ago after the stock reform. As the founder, Wang Shi held less than 1% of the shares. For a long time, the largest shareholder of Vanke held no more than 15% of the shares. Vanke's equity structure is extremely dispersed. This equity structure leads to a very strange situation, that is, no one can decide any major matters of Vanke alone. In other words, this is a "socialist" company, or a company "owned by everyone", which is actually a "ownerless" company. Wang Shi is not the boss, he is just a professional manager.

In the real world, the principle of obtaining ownerless things is often first come first served. For example, the chairs in the park have no owner. Whoever sits on it first will temporarily own the chair. As long as he does not stand up, the chair is his. Now Vanke is such a chair. The first person to sit on it was Wang Shi. But he is not the actual controller.

Because of the A-share crash this year, Vanke's stock price was seriously undervalued. Baoneng judged that Vanke's stock price was low enough and began to buy Vanke's shares in the secondary market, eventually absorbing 24.26% of the chips. Baoneng became Vanke's largest shareholder, with nearly 1/4 of the voting rights. If Baoneng vowed to drive Wang Shi away, Wang Shi would almost be finished.

It must be said that Baoneng's move was brilliant. It absorbed 24.26% of the shares and spent 30 billion yuan, but it did not make Vanke's stock price multiply. The whole process of manipulation was really done by a big banker. Of course, this was due to the fact that a large number of people sold their stocks after the stock market crash.

Now the largest shareholder is forcing Wang Shi to leave and asking him to take over the chair. Wang Shi has lost the initiative and is starting to drag his feet, suspending trading and hoping for asset restructuring.

This is just a rough outline of what has happened so far. I don't see too much conspiracy. Baoneng is just doing things within the framework of the rules, and Wang Shi was careless. Of course, the various conspiracies reported in the media focus on where Baoneng's money comes from. Whether the source is unreasonable is another matter, but this time Baoneng's sneak attack on Vanke did not see any forced buying or selling, and all were reasonable transactions.

This is another vivid lesson I have seen in the capital market, just like when Steve Jobs was kicked out. I wonder if Wang Shi will be kicked out of Vanke this time.

Chapter 2 The Supervisory Power Behind Bitcoin Expansion

We regard Bitcoin as a DAC公司, that is, a distributed autonomous system, which is actually ownerless. As long as you want, you can become one of the owners of Bitcoin.

Since the second half of this year, the Bitcoin block expansion has caused chaos in the community, splitting it into various factions. BIP 101 and BIP 100 each have their own supporters, and many other improvement protocols have also appeared. The main issues on the table are the differences in opinions among the core development team members and the trade-offs between various improvement protocols by Chinese mining pools.

If we compare Bitcoin to a company, we will find that Bitcoin has no actual controller. There are four main participants in this expansion storm: one is the core development team; the second is the miners represented by Chinese mining pools; the third is the major exchanges and Bitcoin companies; and the fourth is the numerous Bitcoin holders.

At the heart of the dispute is the weighing of various Bitcoin Improvement Protocols proposed by various members of the core development group.

Bitcoin is an open source project. Anyone can propose improvements to the protocol. In fact, Bitcoin is ownerless. Currently, the core development team is responsible for the development of Bitcoin. They have no boss to report to, no CEO to assign tasks to them, and they don't seem to receive any salary. But can they do whatever they want? No!

At Vanke, Wang Shi is the leader of this "ownerless" company. Although the company's shares are too dispersed and there is no boss, he cannot do whatever he wants. If the company's management represented by Wang Shi makes a mess of the company, then the company's stock price will inevitably fall sharply. What will happen at this time is not that shareholders will be held accountable, because the shares are so dispersed that shareholders as a whole are scattered. Instead, it will invite wolves into the house. Some institutions may take the opportunity to absorb a large amount of chips. When they collect enough chips to become the controlling shareholder, the original management may be fired and the company's assets will be reorganized. This is what Baoneng does.

The same thing happened with the Bitcoin expansion controversy. Before the expansion controversy, Gavin's reputation was at its peak. But Gavin pushed Bitcoin XT. As a result, some people claimed that XT would increase the orphan block rate, some claimed that it would lead to centralization, and some claimed that it was an altcoin. But there was a deeper reason behind it, which was that it would cause the price of Bitcoin to fall. In fact, Bitcoin has indeed been in an oversold state for a long time (whether there is a causal relationship with the expansion controversy is unknown). What happened later was that Gavin became a traitor in the entire community, and accusations came one after another. On Bitcointalk and Reddit, discussions about XT were even banned in the Bitcoin section, and all were moved to the altcoin section.

It is precisely because of the existence of institutions like Baoneng that the management of "ownerless" companies like Vanke dare not neglect their duties and must manage the company conscientiously and fulfill their responsibilities to all shareholders. Otherwise, the dispersed equity will allow institutions like Baoneng to take advantage of the chaos to control the company and then fire the management. This is the supervisory role played by the design of the capitalist market system, which allows listed companies with sufficiently dispersed equity and no clear boss to maintain basic efficiency.

As a DAC company, Bitcoin may also be like this. It is incorporated into the design of the capitalist market system without any action. Whenever someone stirs up trouble and causes the price of Bitcoin to fall, or causes the entire community to expect the price to fall, there will be a force that will unite to resist. It is precisely because of this potential unifiable force that Bitcoin developers seem to be watched by one eye without any constraints.

Chapter 3 What mistakes did Wang Shi and Gavin make?

As analyzed above, it was because Vanke's share price was too low that Baoneng dared to spend 30 billion to absorb funds and try to control Vanke. So why is Vanke's share price so low? Is it because Wang Shi did nothing or made trouble? It seems not. Vanke is one of the greatest companies in China in recent decades. There are Vanke buildings all over the country. Which city does not have Vanke? It can be said that the performance is outstanding. Therefore, the low share price is not a problem of Vanke's management, but the "systemic risk" in the stock market. That is, listed real estate companies as a type of stock are generally not optimistic this year. In addition, the central bank led the release of money into the stock market, messed up, and caused a stock market crash, which led to Vanke's share price being lower than its due value. In addition, Vanke's equity is highly dispersed, so institutions have the opportunity to continue to absorb funds at low prices.

When Steve Jobs was kicked out of Apple, it was his own fault, as he made the entire company a mess. Unlike Steve Jobs, Wang Shi does not seem to have made any mistakes in his management duties. However, he did not consider the issue of stock price, but let it go up and down. Even if the overall environment is not good, letting the stock price slump is a mistake. Because Wang Shi's real customers are the majority of shareholders, he will eventually have to answer to the shareholders. Vanke's CEO Yu Liang warned in 2014 that low stock prices have the potential risk of management collapse, and during the stock market crash in June this year, Vanke also launched a 10 billion stock repurchase plan, but the actual action was only symbolic.

What about Gavin? Did he make some mistakes that led to him being abandoned by the community? How did launching Bitcoin XT hurt Bitcoin? Launching a specific expansion implementation plan based on the consensus of expansion is an optional solution. There is nothing wrong with this. I don’t believe in the conspiracy theories that Gavin’s actions are part of a political struggle. With the example of Wang Shi, it is easy to understand.

Gavin once tweeted that his mistake was not considering the ideas of Bitcoin investors. But the text did not sound like an apology at all, just a harassing remark, as if accusing investors of short-sightedness. Judging from the case of Vanke, Gavin's harassing remark was right. As a DAC institution with decentralized "equity", Gavin's modification of the Bitcoin protocol is ultimately to serve the price of Bitcoin. If it is not conducive to the price development, or not conducive to the community's expectations of the price, Gavin's plan will not be exempted from accountability, and some forces will stand up to resist.

Chapter 4 What kind of improved protocol can be adopted?

Gavin has repeatedly claimed that the BIP 101 protocol is designed for future success. In his eyes, it is perfect, and he has therefore pushed BIP 101 to be included in the Bitcoin protocol. However, we have found that whether certain systems in society can exist is not because they are perfect, nor because they are more objective and correct, but because they bring the least disturbance and controversy.

For example, China's "primogeniture system" is a system of selecting the crown prince that has been in place for more than 2,000 years. And there have been countless times when capable second sons or other younger brothers have launched revolutions to seize the throne, but even if they succeed, they still have to continue the primogeniture system. This is not because the eldest son is more virtuous, but because it is the system that causes the least quarrels.

From this perspective, an improved protocol can only win if it can establish an emotional connection with more Bitcoin users. But you must say, this is nonsense. I think this is nonsense. The implication is that perfection and objective correctness may not necessarily gain emotional recognition from users. (It seems very muddy, I hope I am wrong.)

Let’s take Wang Shi as an example. When Wang Shi was waging a war of public opinion with Baoneng, he very cleverly said, “This is a war between us, the trustworthy people who represent the interests of small and medium shareholders and do business honestly, and the barbarians of capital.”

This is a beautiful statement, but I think it does not reflect the objective facts. The reason why Wang Shi was successfully attacked by Baoneng is because he ignored the interests of small and medium-sized shareholders. If he really cared about the shareholders, he should have implemented the plan of repurchasing 10 billion shares in June. Baoneng doubled the stock price, which made the shareholders happy. But Wang Shi's words successfully established the emotions between the bystanders, thus gaining a moral advantage.

Back to the controversy over Bitcoin expansion, Gavin and Mike talked about how good their XT was from beginning to end, and talked about the tests they had done. But at the Hong Kong conference earlier this month, there was a particularly interesting tone in the discussion between the mining pool and the core development team. They all claimed that they were not monopolizing Bitcoin. They all did not want bystanders to think that they were "dictators." The most popular one was "Segregated Witness", but almost everyone believed that it was a stopgap measure. The consensus development plan subsequently released on Bitcoinr.org put "Segregated Witness" at the top of the list.

I have no idea which improved protocol will win. But I think it must not be the perfect one, because we need a solution that everyone likes, but it may not be the most correct and objective one, or the most correct and objective solution itself cannot be recognized by everyone by consensus. Just like me, I don’t understand technology. I spent three nights looking at the “Segregated Witness” solution and harassed several experts on QQ and WeChat before I understood it a little. I don’t believe I can choose which one is perfect.

Chapter 5 Conclusion

The Wanbao battle is a vivid lesson in the capital market, and this year's Bitcoin expansion controversy has also given the community a semester-long education.

What is certain is that these arguments are full of personal will and ideas, and they shine with the wisdom of the community in pursuit of truth. They are a spiritual baptism, a feast of knowledge, and a test of will. All the arguments ultimately bring about the progress of Bitcoin and the enhancement of the community's self-awareness. This kind of argument will continue, and everyone who is thirsty for knowledge should not miss it.

Whichever protocol wins in the end, it will be good for the development of Bitcoin.

Thanks for the reward last week @老刘网@Path

If you find the article useful, please give me some Bitcoin to encourage me to continue writing.

Author: tan90d (Weibo @LightningHSL WeChat tan90d)
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