Chinese Bitcoin Gods

In 2008, a cryptographer named Satoshi Nakamoto published his cryptographic theory for digital currency. Satoshi Nakamoto was actually telling people one thing: when a thousand people say a strand of hair is worth money, it may be worth 1 yuan. When 100 million people say it is worth money, it may be worth at least 1 million. Bitcoin is even more ethereal than a strand of hair.

In 2013, as a senior Bitcoin miner, authoritative researcher, leader of the hottest domestic trading platform OKcoin, and the local digital currency Satoshi Nakamoto, and of course the big winners of Bitcoin, Deng Long, Han Feng, Xu Mingxing, Danny, and Wu Haisheng shouted that Bitcoin surpassed the properties of gold. They called on everyone to be the contemporary Zheng He and seize the "new world" of international finance.

Whether they are China's Zheng He or the world's pirates, at least one thing is certain: they are China's Bitcoin fanatics.

Bitcoin “decentralization”:

The world's top 100 most powerful computers combined cannot overturn the "Satoshi Rule"

Dr. Han Feng, who is committed to quantum information research at Tsinghua University, has established the "Internet Education Laboratory", a key project of the National 15th Five-Year Plan, at Tsinghua University. As a frontier researcher of quantum information in China, Han Feng's sensitivity to cutting-edge Internet information has surpassed many of his peers in the industry. As a top authority on Bitcoin research in China, he has held many Bitcoin-themed lectures at major universities across the country, such as Peking University and Tsinghua University, as well as financial research institutions, explaining to people what exactly is something that can increase in value 4 billion times in 4 years.

As a senior researcher of Bitcoin, he must also be its experimenter. After Han Feng first fully understood the digital currency Bitcoin, he immediately took out all his money, including credit cards, and invested in the risky practice of digital currency. Although he admitted that these coins have risen a lot now, Han Feng believes that the most important meaning is participation, and to experience the cutting-edge and fashionable fun life in the social era. What he wants is to jump into this new era with both feet.

In his view, Bitcoin is something new that has never existed in the history of securities, and it is the key point of human currency history to find a breakthrough in this era. In his eyes, the inventor of Bitcoin digital rules, whose identity remains a mystery, is the Hayek of the digital world. Hayek, a representative of neoliberalism, once proposed the theoretical concept of currency decentralization and free competition in his book "Denationalization of Money". Now Satoshi Nakamoto has formalized Hayek's concept through Bitcoin digital rules and has been conducting bold Hayek-style financial experiments.

"Satoshi Nakamoto has been admired by the world's geek community," said Han Feng. The cryptographic encryption rules of Bitcoin formulated by Satoshi Nakamoto in 2008 have not been found to have loopholes so far. Han Feng likes to explain the so-called "decentralization" of Bitcoin by giving the example of a football match. Satoshi Nakamoto is like inventing the football match system. The rules of football matches are completely public, and the source code of Bitcoin's digital rules is also public. He said, "Every player participating in the game is a builder and participant of the game." "Decentralization means that every player on the field must obey the public rules of the game, and a personalized center cannot change the rules of the game." No organization or individual can subvert the cryptographic rules of Bitcoin, which is the "decentralized" feature of Bitcoin.

Some people may question whether subverting this rule still depends on the powerful performance of computers. Han Feng categorically denies this point, saying, "Even if the world's top 100 most powerful computers were combined, they could not subvert the 'Nakamoto Rule'." Bitcoin has almost realized the dream of geeks: the world is programmed and cannot be changed artificially. Bitcoin first became popular in the geek world.

"Private" in quotation marks:

Bitcoin’s “Black Hole Evaporation”

Due to the point-to-point, distributed electronic information "decentralized" transaction characteristics of Bitcoin, Bitcoin's "anonymity" is determined. Han Feng introduced that Bitcoin wallets are randomly generated and accounts are completely private, which makes Bitcoin almost untraceable. Even if powerful computing machines are used, and under the premise of controlling the trading platform and thoroughly mastering private transactions and all transaction records, it is impossible to truly understand the person behind the randomly generated wallet IP address.

Therefore, the Bitcoin trading platform has become a hot market for pornography, gambling, drugs and money laundering in the world. Han Feng told a story about a hacker who hacked a batch of equipment and then traded through Bitcoin. The Bitcoin flowed through the account of the owner of the trading platform. Due to the "anonymity" of the Bitcoin wallet, the police could only trace the private account of the owner of the trading platform. When the plainclothes police went to arrest the owner of the trading platform, the owner thought he was robbed. Later, the boss said that fortunately he did not bring a bank card with 10 million yuan on him.

Han Feng joked that the "anonymity" of Bitcoin is likely to form a new way of accepting bribes. The briber may no longer take real money, but a small USB flash drive, which is just a set of codes on the surface, but the value of each special number is comparable to gold.

Danny graduated from the Chinese Department of Tsinghua University and has a great interest in literature, philosophy and religion. He is a veteran Bitcoin player and the head of Bitcoin Chinese website. He received $7 million investment from Softbank and Intel in Yunlian Technology, which created the Chinese local digital currency "Yuanbao Coin" this year. He and Han Feng are good friends. When Yuanbao Coin was only 1 yuan, Han Feng was ready to buy 10,000 yuan in Danny's office, but he forgot about it when he left. Now the highest point of Yuanbao Coin has approached 200. Han Feng now laughs and says that he threw 2 million yuan on the street.

Danny often compares the privacy issue of Bitcoin to Hawking's "black hole evaporation theory". He believes that just like a black hole has a strong suction force, but at the same time it continues to evaporate outward, Bitcoin's strong "privacy" has obvious fragile characteristics. Bitcoin is not as unregulated as rumored. Now in some countries, Bitcoin transactions must meet three conditions to restrict supervision: 1. Set a transaction limit; 2. Upload ID; 3. Mail paper identity information, and supervise Bitcoin in three ways. If a country's government requires the registration and supervision of its citizens' Bitcoin wallets, then the international characteristics of Bitcoin determine that the IP addresses of its citizens' wallets will have nowhere to escape worldwide, and pornography, gambling, drugs, money laundering and corrupt elements will not be able to make a fuss about Bitcoin.

Transaction time cost

Bitcoin’s development space is flawed

Han Feng said, "On average, the world can only process about 10 Bitcoin transactions every 10 minutes." With the widespread development of Bitcoin transactions, transaction time will become a major flaw of Bitcoin, and it is likely to be eliminated by digital currencies with better performance. Nothing on the Internet will last forever. There will definitely be newer products every two or three years. What will be the next product? Transaction time will become an important indicator. "Wu Haisheng, a senior Bitcoin player and head of Putiandai, told reporters with a smile that he once tried to order a takeaway with Bitcoin abroad, but because the Bitcoin transaction time was too long, the order in the morning was not completed by the afternoon, and he almost went hungry for a day.

The peer-to-peer and security features of Bitcoin mean that Bitcoin transactions can only be completed after receiving confirmation from multiple nodes. Bitcoin transaction bills are infinitely accumulated, causing newly generated bills to constantly confirm every previous bill in the entire network, resulting in the continuous increase of Bitcoin computing power and slower transactions. Now other popular digital currencies, such as Litecoin, have surpassed Bitcoin in this regard, and Litecoin is also easier to mine than Bitcoin, with a total volume four times that of the latter.

Fatal 51 Attack

The Unbearable Lightness of Bitcoin

The first risk of Bitcoin is its investment risk. There is no physical collateral behind Bitcoin, and its information comes purely from social recognition.

The huge fluctuations in the price of Bitcoin cannot be compared with those in the stock market. But its huge risk is also its excitement. In the history of Bitcoin, it has often fallen from thousands of dollars to a few dollars. There have been two big jumps this year, from 400 US dollars to 100 US dollars in April, and from 8,000 RMB to 300 RMB in recent times. Although Wu Haisheng has experienced success and failure in several fluctuations, he still has an almost obsessive confidence in Bitcoin. "Even the dealer can only raise the price by one or two thousand. The fact that Bitcoin has been able to stabilize at four or five thousand recently shows that the nature of Bitcoin currency has been accepted by the market, which means that digital currency has really begun to play an important role."

The legal risk of Bitcoin is already minimal. When the attitudes of China and the United States towards Bitcoin have become increasingly clear, the attitudes of other countries towards Bitcoin are no longer so important. Digital currency is a space for financial innovation, and China and the United States cannot ignore its existence, otherwise the other party will dominate. Han Feng said, "At the recent Bitcoin hearing held by the U.S. Congress, it was believed that if the United States gave up the Bitcoin market to China, then everyone present in Congress would be a victim." The United States has been rampant in the international financial system for many years. In theory, the growth of digital currency will likely erode the financial status of the United States, but the United States cannot ignore it and recognizes its status to some extent.

Therefore, there is no risk in holding and trading Bitcoin in terms of policy. The biggest risk for Bitcoin is still technical risk, which is known as the 51 attack in the industry. Satoshi Nakamoto's original intention was to allow every computer to have the ability to mine, but with the development of Bitcoin, mining requires high costs. Now only a very small number of people can use large mining machines to participate in computing power mining. Mining is about computing power. If a single user's computing power exceeds 51%, he can launch a 51 attack. Although the 51 attack cannot subvert the rules of Satoshi Nakamoto's digital algorithm, it can achieve the fatal problem of Bitcoin counterfeiting and repeated consumption.

Judging from the current situation of the digital currency market, the possibility of several major miners joining forces to launch a 51 attack is almost zero, because once an attack is launched, the devaluation of Bitcoin will not benefit the miners at all. From the perspective of motivation, the intention of launching a 51 attack on Bitcoin in the future may be the intention of other digital currency owners, in an attempt to devalue Bitcoin and increase the value of new coins. Another attack may come from state behavior.

Will online gold surpass physical gold?

Exploring Bitcoin’s gold-like properties

In Han Feng's opinion, for Bitcoin to become a circulating currency, it needs to overcome the following problems:

1. The transaction time is too long, causing payment obstacles;

2. Bitcoin prices fluctuate too much and lack the basic elements to be a currency;

3. The total amount of 21 million bitcoins is limited. Can they be divided?

4. As the difficulty of Bitcoin mining gradually increases, its scarcity leads to excessive appreciation expectations, resulting in hoarding and hindering circulation;

Xu Mingxing, general manager of OKcoin, the most popular bitcoin trading platform in China, responded to Han Feng's concerns. "The long transaction time is just a technical problem. Even if bitcoin has such problems, it will be solved in the future development of digital currencies. Many digital currencies do not have this problem now."

Regarding the issue of excessive price fluctuations, Xu Mingxing believes that this means that the socialization of Bitcoin still has more room for development. The more participants there are and the larger the market value is, the more problematic the price will be. "When the stock market was not very popular, there were many cases of several daily limit increases in a day." Now the global market value of Bitcoin is about 10 billion US dollars, and we have seen that the price of Bitcoin is gradually stabilizing. Xu Mingxing optimistically estimates that when the market value of Bitcoin reaches hundreds of billions or trillions of dollars, its price will be more stable.

There are always people in the traditional financial industry who ask Xu Mingxing, GDP is infinite, but the total amount of Bitcoin is limited to 21 million, and limited currency cannot meet the unlimited GDP development needs, so the prospects of Bitcoin as a currency will be bleak. "This is layman's talk," Xu Mingxing said quickly, "Bitcoin can be divided to 8 decimal places, which is easier to divisible than gold."

"Don't be afraid that people's expectations for Bitcoin's appreciation will be too strong, causing a large amount of hoarding to hinder circulation," said Xu Mingxing. The market will naturally divide the currency, and with Bitcoin's easier divisibility, there is no need to worry about the problem of deflation due to hoarding. In the history of currency development, gold has been redistributed many times. He said, "In ancient China, silk and porcelain were used to hoard a large amount of currency, so that the Queen of Spain could not afford to buy clothes. Finally, in the Qing Dynasty, the West could only use opium and cannons to deal with China to achieve global currency redistribution."

In Xu Mingxing's eyes, the value of Bitcoin is not just that it is worth $1,000 at the moment, but it also has a more profound value. He even believes that "the only value of Bitcoin is that people expect it to become the circulating currency in the future" and "the emergence and popularity of Bitcoin is also reminding people of something that is about to be forgotten: gold has long since withdrawn from the stage of history."

Since entering the Bitcoin market, Xu Mingxing has read a lot of foreign Bitcoin materials and books on the history of currency. He said that the history of currency is earlier than the history of the country. It is not in line with the history of currency development to say that currency is only issued by the country. Gold and silver have been circulating currencies for thousands of years, and legal currency has only appeared in the past 150 years. When the smallest unit of gold cannot meet the circulation of GDP, "gold standard currency" (legal currency) comes on the scene. In the era of legal currency, the United States has always suppressed the price of gold because its goal is to make the dollar an international currency.

He continued with great excitement, "But with the collapse of the Bretton Woods system caused by the US debt crisis in this era, the excessive issuance of currency has become more serious, the leverage balance has been unbalanced, people's confidence in legal currency has declined, and the era of the gold standard is coming to an end."

He said surprisingly, "Bitcoin is the first thing in the world that has gold-like properties and may make up for the shortcomings of gold." He summarized the five major properties of Bitcoin similar to gold:

1. Dispersed distribution. Gold is distributed roughly evenly around the world. If it were concentrated in just one company, it would not be able to become a currency.

2. The total amount is limited. The total amount of Bitcoin is limited to 21 million. The total amount of gold on Earth is also limited.

3. Mining difficulty is moderate. If the cost of gold mining exceeds its value, it cannot become a currency. If the cost of Bitcoin mining is too high, the same problem will occur. But if it is too easy, then they are worthless.

4. Easy to split.

5. Decentralization. The history of gold currency predates the history of the nation, and it was not a legal currency at the beginning; Bitcoin is completely decentralized and is not issued by a central agency or individual.

And in Xu Mingxing's view, Bitcoin is more superior than gold:

1. Bitcoin is more divisible than gold, and can be divided to 8 decimal places.

2. The circulation cost of Bitcoin is much lower than that of gold.

3. Gold has a loss problem, but Bitcoin has no loss at all.

"Zheng He" Xu Mingxing seizes the "New World" of digital currency

International financial innovation space and new channels for RMB internationalization

In 2005, Xu Mingxing graduated from the Department of Physics at Peking University and then started a master's degree, but dropped out immediately because he "didn't want to spend all his time on minesweeping". At Yahoo China, he was responsible for search technology. In 2007, Xu Mingxing met Lin Yaocheng, the founder of Docin.com. Docin.com started from scratch and soon made tens of millions of yuan a year. In 2012, as CTO, Xu Mingxing decided to quit Docin.com and start his own business.

When Xu Mingxing entered his 30s, his career and family became stable. He began to think about the life he wanted. As a "geek" and a CTO, he began to think about what he could do. When Xu Mingxing saw the paper of Satoshi Nakamoto, the father of Bitcoin, he felt that the design of Bitcoin was so perfect: decentralization, global circulation, exclusive ownership, low transaction costs, no hidden costs, and cross-platform mining. Bitcoin has created a new dimension of "geek" country. As a geek, he is extremely obsessed with technology. He basically spends his spare time studying technology and code. Discovering and experiencing the beauty of mathematics and technology is something he has always enjoyed. Gradually, he went from studying Bitcoin's P2P open source code to starting to buy and sell Bitcoin himself. He said: "It is my mission as a geek to devote myself to the social practice of Bitcoin!"

If Xu Mingxing's cryptocurrency trading story is converted into a house, he has already earned enough to buy a house. Xu Mingxing, who entered the Bitcoin field in 2012 after accidentally seeing the virtual currency Bitcoin while watching the American TV series "The Good Wife", is a latecomer. Even so, it did not prevent him from making huge profits in the process of cryptocurrency trading.

He has used almost all Bitcoin trading platforms at home and abroad. The products of major trading platforms and the many unsatisfactory user experiences made him start thinking about starting his own independent entrepreneurial journey from the trading platform. Because he was a CTO, the OKCoin Bitcoin trading platform was built according to the Internet thinking, with a friendly user interaction interface. Both Bitcoin and Litecoin can be traded, and real-time Bitcoin and Litecoin market information is provided. Recharge and withdrawal are safe, stable, fast and timely. These advantages have enabled OKCoin to accumulate a large number of loyal users in a short period of time, in order to continuously improve the user experience. Now OKCion has received an investment of 300 US dollars from Creative Factory. The daily Bitcoin trading volume is close to 500 million yuan.

In Xu Mingxing's view, devoting himself to the development and long-term growth of OKCion may have even more far-reaching significance. "Bitcoin's innovation can form a complementary relationship with the traditional financial industry."

Xu Mingxing joked that he is Zheng He of the Ming Dynasty. Bitcoin is a new creative space for international finance, and this space is the "New World". Whichever country can control Bitcoin may be able to control the future. We want to be Zheng He and compete with Columbus for the New World. We build a trading platform to let Chinese aunts go to grab this New World together. This process may promote the internationalization of the RMB in disguise. We cannot miss the opportunity of Bitcoin. If we miss it, it may be like missing decades of reform and opening up.

He said, "Our current economic takeoff definitely needs financial support. Now a new financial tool has emerged, just like adding a thruster to a rocket."

Han Feng also holds a similar view. He said that recent authoritative statistics show that 40% of the Bitcoin market is female, which may indicate that Chinese aunts have begun to gradually enter the Bitcoin market. Traditional international trade is only open to everyone due to the high circulation costs. Compared with traditional international trade, the circulation cost of Bitcoin's financial trade is very low. The development of Bitcoin will promote international trade to be popular and popular, and promote the hot international small-volume trade market. He said, "If you purchase a batch of goods from Africa in the past, it costs 5 yuan, and sell it on Taobao for 10 yuan, then through the Bitcoin market, the trade cost may only be a few dimes, or even a few cents, so the profit will be huge." In the eyes of Xu Mingxing and Han Feng, whoever can grab more Bitcoin between China and the United States is likely to control Africa and oil in the future.

For Xu Mingxing and Han Feng, Bitcoin is a social experiment, an experiment in new relationships between people. This experiment is full of opportunities and risks for Bitcoin adventurers, but it is full of infinite possibilities for the wider world and future time and space.

Dundee, the Yuanbao coin "Satoshi Nakamoto"

Bitcoin Gives Birth to Local Digital Currencies

Danny, who graduated from the Chinese Department of Tsinghua University and has a great interest in literature, philosophy and religion, aimed at this and invested in designing China's own digital currency "Yuanbao Coin". Danny is a veteran Bitcoin player and the webmaster of Bitcoin Chinese website.

I really appreciate the design concept behind Bitcoin. Satoshi Nakamoto, the designer of Bitcoin, is not only a technical genius, but more importantly, he (or they) have a deep insight into the economy, society and human nature, making Bitcoin one of the most significant innovations in the Internet and financial fields in the past 10 years. When Bitcoin was still in the design draft, Satoshi Nakamoto had already completed the foresight and layout of Bitcoin's development in the next 10 years.

Compared with Bitcoin, the advantage of Yuanbao Coin is that we can shorten the transaction time while maintaining security, and Yuanbao is more energy-efficient than Bitcoin. Currently, the world spends 3 million US dollars every day to maintain the Bitcoin mining network, which is 1 billion US dollars a year, equivalent to half of Tencent's profit in 2012. If the price of Bitcoin increases 20 times, the annual global mining expenditure will be equivalent to China Mobile's profit. The electricity consumption of Yuanbao Coin mining is only one-third of that of other currencies, and it will continue to decrease in the future, which greatly reduces the waste of energy.

His Yuanbao coin development company Yunlian Technology has received $7 million in investment from SoftBank and Intel.

He and Han Feng are good friends. When Yuanbao coin was only 1 yuan, Han Feng was ready to buy 10,000 yuan in Danny's office, but he forgot about it when he left. Now the highest point of Yuanbao coin has approached 200 yuan. Han Feng laughed and said that he threw 2 million yuan on the street.