Bitcoin’s Tangible Innovation

Huobi.com's Bitcoin factory is located in Inner Mongolia. These mining machines are operating at high speed every day.

In the Internet era, "intangible assets" include not only air, but also Bitcoin. Two years ago, the popularity of Bitcoin made Bitcoin exchanges quickly popular, and Huobi.com, founded by Li Lin and others, became the world's largest Bitcoin trading platform. After Bitcoin trading was restricted by domestic regulators, Huobi.com faced transformation. On the one hand, Huobi.com CEO Li Lin expected the clarity of the US Bitcoin policy to spread to China; on the other hand, he also hoped to make some international financial innovations through Bitcoin and build Huobi.com into a bridge connecting Bitcoin and the world.

The third entrepreneurial "adventure" to play with Bitcoin

Transformation is necessary at a certain point

If you persist in the period of confusion, there will be light at the end of the tunnel.

More than 20 years ago, Shangdi was just an unknown place, but now it has become a paradise for high-tech entrepreneurs in Beijing. Li Lin, who was born on the banks of the Xiangjiang River, is pursuing his entrepreneurial dream in Shangdi, Beijing. Li Lin, who graduated from Tsinghua University in 2007, did not choose to start a business immediately. Like many Tsinghua students at the time, he chose to work in a Fortune 500 foreign-funded enterprise after graduation, earning an annual salary of more than 100,000 yuan and living a nine-to-five life. For Li Lin, who has always had a dream of starting a business in his heart, under the "attack" of the national entrepreneurial trend, he resolutely resigned from his job in a foreign company and started his first entrepreneurial journey.

"At that time, I took out 100,000 yuan that I had saved from my early work and founded a social network, Youyi.com, with several colleagues from Oracle. We all believed that this would be the Facebook of China," Li Lin said with a smile. The dream was full of hope, but the reality was very bleak. Youyi.com ran for less than a year and only accumulated more than 70,000 users. In May 2010, Li Lin and several early partners decided to abandon the project and began to look for new entrepreneurial directions.

"In 2010, group buying websites were very popular and the threshold was not that high. I had a strong feeling that we needed a group buying search website, so I founded Renrenzhe.com. This website was in operation for more than two years and ranked second among independent group buying search websites at the time. We made several million yuan and earned the first pot of gold in our entrepreneurial history," recalled Li Lin.

Li Lin soon realized that the space for group buying search websites was limited. Later, Li Lin, who was good at grasping social hot spots, saw the popularity of the Bitcoin market at the time. Finally, in March 2013, he chose to start his third business in the Bitcoin industry.

After half a year of preparation, Huobi.com was finally officially launched on September 1, 2013. Fortunately, after Huobi.com was launched, Bitcoin ushered in a new round of skyrocketing, with the price soaring from 800 yuan/coin to 8,000 yuan/coin. At that time, not only many IT professionals traded Bitcoin, but even Chinese aunts began to enter the Bitcoin market. Huobi.com, which insisted on not charging handling fees, became the largest Bitcoin trading platform in China.

Internal segmentation survives the long bear market

Make the platform run faster through capital

Finding a direction for transformation in the Bitcoin bear market

From trading platforms to building the entire Bitcoin ecosystem, Huobi has become a leader in the Bitcoin industry.

"Starting a business is about choosing and being chosen to succeed." Soon after Huobi.com was founded, Li Lin began to think about how to make the platform run faster through capital. At that time, he brought in two angel investors, one of whom was Xu Xiaoping, one of the founders of New Oriental, and the other was Dai Zhikang, the founder of Kangsheng, which was acquired by Tencent. The two big names gave several million yuan in angel investment.

In 2014, because the financial industry needed large-scale capital to develop itself, Huobi.com began to plan for Series A financing. After three months of searching and three rounds of negotiations, it finally received a $10 million investment from Sequoia Capital. However, after experiencing a surge, Bitcoin ushered in a long bear market, falling from 8,000 yuan to 1,000 yuan. With high operating costs and a significant reduction in revenue, Huobi.com's only way out was to transform and seek a new development direction.

At the end of 2014, Li Lin proposed at the board meeting that he would consider designing products for Huobi.com's investment users from the company level. The initial idea was to establish a one-stop trading platform, Caimao.com. In order to make the platform more professional, Li Lin invited Gao Yaohua, his roommate at Tsinghua University, the former VP of CITIC Securities and the world's best analyst, to serve as the COO (Chief Operating Officer) of Caimao.com. Gao Yaohua was once known as the strongest brain among securities analysts in securities companies.

There are always unexpected difficulties on the road to entrepreneurship. For example, after the establishment of Caimao.com, it welcomed its first stock allocation product, which created a miracle of 1 billion yuan in trading volume within less than two months of its launch. However, due to the suspension of the regulatory authorities, the stock allocation business has been forced to suspend.

"If I only do stock allocation business, I will not join the Huobi team, because stock allocation business is not difficult to do and does not require much technical content. Initially, we also hoped to promote the Caimao.com brand through the allocation business and slowly start to layout the global investment and wealth management market." Gao Yaohua said.

"If Huobi is the bridge connecting Bitcoin and the world, then Caimao, as a startup project within Huobi, ultimately aims to build it into a bridge connecting investors with global assets. We hope that Chinese investors will be able to purchase investment products in the global capital market through appropriate channels, and foreign investors will also be able to purchase investment products in the Chinese capital market through legal channels," said Li Lin.

Policy risks remain, and we look forward to a bright future

Today, the Bitcoin market still faces policy risks

Expecting policy clarity

"It's not that I don't understand, it's that the world is changing fast." At a time when innovations in the Internet financial industry are emerging in an endless stream, the regulators responsible for managing risks can only minimize the risks. From the end of 2013 to 2014, domestic regulators introduced a number of measures to curb speculative trading of Bitcoin, and the price of Bitcoin fell accordingly, and the activity of exchanges dropped significantly.

In December 2013, the central bank and five other ministries and commissions issued the "Notice on Preventing Bitcoin Risks", which clarified the nature of Bitcoin and believed that Bitcoin is not a real currency. The central bank also stated that Bitcoin transactions are a commodity trading behavior on the Internet, and ordinary people have the freedom to participate under the premise of assuming their own risks. This also left a way out for the Bitcoin industry.

"Huobi.com is also facing great policy risks now," said Li Lin. However, the US regulatory authorities' recognition of Bitcoin may promote the clarity of Bitcoin at the policy level. Currently, the US has begun to issue Bitcoin licenses, treating Bitcoin as an asset, allowing users to buy and sell Bitcoin to companies in the United States. Li Lin said that most countries will refer to the US policy trends, and he hopes that China will also issue Bitcoin trading licenses in the near future.

Li Lin is also optimistic about the prospects of Bitcoin. As policies become clearer, many mainstream funds will definitely enter this industry in the future, and the Bitcoin market will usher in greater development. Beijing Business Daily reporter Yue Pinyu

Entrepreneurship Profile

Founded: September 2013

Industry Category: Digital Currency

Start-up stage: Series A financing

Industry status: China's largest Bitcoin trading platform

Journalist's Notes

Entrepreneurship is about doing things that others dare not do

In the early days of Bitcoin, most people would ask what Bitcoin is. Bitcoin is a code that generates technology through a specific algorithm and a large amount of calculation.

You may also think, what is the use of Bitcoin? In the United States, it can be used to pay for goods on the well-known e-commerce website eBay. In China, it can only be traded as an ordinary commodity. For example, if I am optimistic about Bitcoin and expect it to appreciate in value in a few years, I will hold it.

Although the real innovation of Bitcoin has not been recognized by domestic regulators and the outside world, it is undeniable that digital currencies such as Bitcoin are indeed a relatively innovative form of currency. We cannot deny innovation because of reality. Maybe in a few years, digital currencies such as Bitcoin will become mainstream currencies. Relevant data show that digital assets are growing at a rate of 10 times per year, accounting for 7% of China's GDP. With the rapid development of the Internet, standardized digital assets, such as digital currencies and non-standardized digital assets are increasingly becoming an important part of the market economy.

For innovative enterprises, only by keeping up with the times, constantly innovating, and slowly letting the outside world accept things that are currently considered impossible, can they be considered as real entrepreneurs. If they just copy other people's entrepreneurial models, entrepreneurship is just empty talk.