祝维沙 · 56

Fiat currencies have different characteristics. Can stablecoin issuance be “one-size-fits-all”? ——Commenting on the HKD stablecoin issuance model

Author: Zhu Weisha, after Hong Kong's “Stablecoin Regulations” were introduced, I suggested in articles such as “The current method for issuing Hong Kong dollar stablecoins needs to be restructured” that the current plan has potential flaws (see the unlinked website for details). The purpose of this article is to further explain opinions from the perspective of fiat currency diversity and respond to readers' questions. The core argument is that there are fundamental differences in the credit base, circulation mechanism, and value stability of different fiat currencies, which determine that stablecoins are anchored, and their issuance method cannot be “one-size-fits-all.” What is particularly alarming is that the model of issuing stablecoins on top of what is already an anchor coin (such as the Hong Kong dollar) may amplify systemic risk. Cryptocurrency: A laboratory at the cutting edge of currency evolution In just 15 years, the cryptocurrency ecosystem has spontaneously evolved dozens of forms such as air coins, asset coins, trading coins, stablecoins, equity coins, governance coins, and NFTs, almost replicating the long process from original exchange to complex modern finance. This high-intensity, high-freedom testing ground has accumulated valuable insight into the nature of money, trust building, and value capture, and is undoubtedly a frontier position for human finance and monetary research and practice. If the implications of this “test field” are ignored, it may be difficult for regulatory policies to truly match the future of digital finance. There is an urgent need for financial practitioners to enter the cutting edge to make up for the shortcomings in their perception of cryptocurrencies. As one of the most successful applications of cryptocurrencies, fiat stablecoins have a design logic that not only relates to the issuance mechanism, but also requires a deep understanding of anchor characteristics and risk points. The introduction of the Hong Kong Stablecoin Ordinance reflects to some extent a lack of understanding of the relationship between stablecoins and anchors. A stablecoin is a type of transaction token, and a stablecoin linked to fiat is only one type of stablecoin. Compared to fiat currencies, it is very difficult to identify the “identity” of cryptocurrencies. There are often situations where one currency is used for two or more purposes. For example, Ethereum represents both trading and equity. If applied rigidly, the “collective investment plan” provisions of the current law may stifle innovation. The United States' exemption practice provides an example. Fiat money is simpler than cryptocurrency, but you also need to recognize its “color.” Identifying fiat currency: To understand fiat stablecoins in a “colorful” world, you must first understand their anchor—the huge difference between fiat currency itself: Fiat Currency (Fiat Currency) is a currency issued by relevant national (or regional) authorities to guarantee its legal status by law, and is supported by national credit. The strongest fiat currency is the basic currency. Standard currency (Standard Currency) originally meant “standard currency” in English. As the name suggests, it's a measure of the value of other fiat currencies. There are four conditions for becoming a basic currency under the condition of a floating exchange rate: 1. Stable value: Value is determined by the inflation rate. Theoretically, it is necessary to control the annual inflation rate of less than 2%. 2. Free global circulation: High degree of openness under capital. 3. It dominates global trade and financial settlements, and accounts for a significant share in global trade and financial settlements. 4. Central bank foreign exchange reserves: Occupies a large share of the market. The US dollar is currently the strongest fiat currency, and its credit stems from strong comprehensive national strength, deeply open financial markets, and global consensus. Therefore, the US dollar is the base currency. There are strong and weak basic currencies. Currently, only the US dollar is the strongest base currency, followed by the euro. The pound and yen are next. The settlement volume in RMB is not small, but it is a capital control that cannot circulate freely around the world and does not meet the definition of a basic currency. An anchor coin is a currency that anchors strong fiat currencies. The Hong Kong dollar is anchored to the US dollar through a linked exchange rate, so the Hong Kong dollar is an anchored currency, commonly known as a stablecoin. Vouchers are tickets, mainly for internal circulation. Tencent Q coins are a type of ticket. The principle of issuing RMB can be imagined as Q coins, but they are larger and more complex than the ecosystem of Q coins. Q coins only circulate in the Tencent ecosystem, and it is very inconvenient to circulate outward. The price of RMB refers to a basket of currency indices, and there is no public anchoring policy like the Hong Kong dollar. The RMB is a semi-market-based form of regulation. The amount of money in circulation around the world is limited (less than 3 trillion dollars, less than 1% of the broad RMB M2). The RMB circulates ecologically in China. Leaving aside the fiat currency shell issued by the RMB central bank, the RMB is an ecological voucher just like Q coins. The risk of issuing stablecoins “one-size-fits-all” is due to the fundamental differences in the underlying characteristics of fiat currencies. Using a logic that mimics the US dollar stablecoin issuance logic to issue various fiat stablecoins is unworkable, and may involve huge risks. Because the US dollar is the base currency, other currencies are not necessarily the base currency. The Hong Kong dollar is not the basic currency. The core problem of Hong Kong dollar stablecoins: The double superimposed risk structure The Hong Kong dollar itself is already a legal tender anchored to the US dollar, and its value stability depends on the linked exchange rate system. In addition to this, another “Hong Kong dollar stablecoin” claiming to be 1:1 anchored to the Hong Kong dollar will be issued,...

370d agoWendy#Wish Visha

When stablecoins tear apart banks' interest rate moats — re-evaluating the US stablecoin “genius law”

Author: Zhu Wisha The author published “Will the Stablecoin Act Trigger a Financial Tsunami After It Is Introduced?” This article mainly focuses on the risks posed by stablecoins. “Stablecoins: America's Way to Defend Financial Hegemony” answers questions about the “tsunami.” Since then, I have received comments from readers one after another, hoping that I can explain the “Way of Hegemony,” as mentioned in the article: “America's Genius Act follows the trend of history. What is the reason why “financial institutions such as banks that run slowly die first”? The answer is: stablecoins are disrupting the three pillars that banks depend on to survive — capital accumulation pools, currency multiplier effects, and financial intermediary privileges. A stablecoin is not a payment instrument; it is a currency with three characteristics: stored value, payment instrument (medium of transaction), and pricing unit (scale). After the introduction of stablecoins, relevant US and Hong Kong speakers said stablecoins were payment instruments. The reason is that the bill stipulates that stablecoins cannot pay interest, which artificially causes stablecoins to lose their stored value, thus making stablecoins not a complete currency. The Genius Act does not explicitly prohibit stablecoin lending; it only imposes many restrictions on stablecoin-related businesses, which may make it difficult for stablecoin issuers to carry out lending-related business. But how can stablecoin borrowing be prohibited after a few changes in hands? Currently, there are many cryptocurrency lending agreements. Common ones include Morpho, Compound, Aave, etc. Interest income from stablecoin loans is 3% to 8% per year. In the practice of cryptocurrencies, stablecoins have the full properties of money. Artificially creates protection for banks, and legislators have made good intentions to leave time for banks to transform and develop new businesses that are appropriate. The issuer's interest income from fiat currency assets cannot be given to stablecoin exchangers. The Act allows issuers to collect interest income from endorsed assets and prohibits payment to stablecoin exchangers. Bypassing this is easy. You can use exchangeable stablecoins to buy digital US Treasury bonds in the crypto market, and you can also reap the benefits. This is no different from using fiat currency to buy treasury bonds. Cryptocurrency loans, on the other hand, yield higher than treasury bonds. Large stablecoin holders must find a way to earn interest. There are many ways to get around it, and the market has decided that this rule is not viable. Such provisions may also be listed. In fact, these rules are very funny. The same dollar is only used for different purposes; one has interest and the other has no interest. The bill attempts to artificially deprive stablecoins of their stored value function by prohibiting interest payments, thereby downgrading them to “payment instruments,” but market practices (DeFi borrowing) and holders' demand (seeking revenue) will inevitably restore their full monetary attributes (stored value+payment+unit of measure). The bill fantasizes about using an “interest ban” to cast off the stablecoins' storage function, but it ignores a basic fact: the same dollar enjoys 2%-3% interest on a bank account, but is forced to return to zero as a stablecoin — this kind of arbitrage space is like a floodgate. History has long proved that interest rate controls in the 1970s spawned trillion-dollar money market funds, and today the same forces are driving innovation in DeFi protocols such as Aave's USDC pool with an average interest rate of 4.07% in the 2025 Q2. The harder regulation blocks open channels, the more the market will open up dark rivers — and this is the real reason why 'banks that run slowly die first'. The purpose is to protect the bank even though it is still holding on to pipa. This protection period will inevitably be broken by innovation, and some banks and other financial institutions that run slowly will lose out in the competition. Because the underlying logic of currency issuance has changed, the business model of commercial banks has been challenged. Stablecoins challenge banks' business models 1. Commercial banks' deposit and loan margin profit model is being challenged. The basic business model of commercial banks is to charge interest spreads, give depositors lower interest, and then use higher interest to lend money. Net interest spreads on bank deposits and loans in China are 1.27% to 1.87%, and large commercial banks are around 1.4%. Most banks in the US operate in a mixed business, and the net interest rate is higher than in China, around 2% to 3.5%. Banks exchange fiat currency for stablecoins and obtain stable returns from fiat currency purchases of bonds. This is an investment business. If banks buy US bonds with a return of 4.5%, excluding market fluctuations, a net return of 4% is very likely. A 2% return to stablecoin exchangers would have little impact on the bank's net interest spread. Seemingly a lucrative business for banks, it should not be restricted. The problem is that the basic business of commercial banks is lending, and it is impossible for companies that lend money to enterprises to spend it immediately. Funds stored in banks become capital deposits, so they can be loaned out again. Commercial banks are like supermarkets that rely on “commodity turnover”: under the traditional model, deposits (products) are transferred 4-5 times a year (V = 4-5), but when stablecoins withdraw 15% to 20% of current deposits, it is equivalent to 20% of the shelves being emptied. It directly leads to system turnover...

388d agoWendy#Wish Visha

A financial tsunami could occur after the introduction of the stablecoin bill

Authors: Zhu Weisha, Wang Yuxiao Stablecoin is a popular term. It refers to a type of cryptocurrency backed by secure financial assets and anchored in fiat currency in face value. It is the most realistic application of cryptocurrency in the world, and it has begun a process of financial transformation. Stablecoins are a key tool connecting traditional finance and the crypto ecosystem. The introduction of the US “Genius Act” and Hong Kong's “Stablecoin Regulations” marks the beginning of the global financial system to regulate this emerging field. Although the US and Hong Kong have introduced stablecoin laws for different purposes, they are all enacted based on the practice of cryptocurrency stablecoins, and they all hope to expand them to the current fiat currency system in a way that is beneficial to them. Comparing the similarities and differences between the two local laws helps us understand future trends in financial development. This is a great event of human progress, and marks another big step forward in the financial revolution initiated by a new generation of cryptocurrency elites represented by Satoshi Nakamoto. The content of the bill will not be detailed in this article, nor will it talk about the merits. There are already many related articles. We will mainly discuss the issues here. There are no final bailouts in either bill. The bailout measures are necessary for the stability of the financial system. The most famous one is the financial tsunami in the US from 2008 to 2009. Joint bailouts from the US government and the Federal Reserve only restored financial stability. As far as the US “Genius Act” is concerned, since reserve assets are strictly limited to high-liquidity, low-risk dollar-denominated assets such as short-term US bonds and US dollars, US bailout measures are necessary; the reserve asset class of Hong Kong issuing stablecoins allows the use of combined assets (including non-Hong Kong dollar assets) as reserves, and government bailouts do not seem that necessary for Hong Kong. In fact, stablecoins have been bailed out by the Federal Reserve. When the Bank of America's Silicon Valley went bankrupt in March 2023, USDC, the second-largest stablecoin, dropped by more than 10%. The Federal Reserve later bailed out the Bank of Silicon Valley. USDC was only able to preserve the 3.3 billion US dollars stored in the Bank of Silicon Valley, and USDC was restored to 1 dollar. However, in the US “Genius Act,” I only saw the supervisory authority: the Monetary Supervisory Service, but not the unit that could help — the Federal Reserve or a similar agency. When there is no licensing system for stablecoins, stability, security, and exchange are guaranteed by unreasonable “pulling the plug”. In the same incident mentioned above, Sun Yuchen and many other investors exchanged and redeemed large amounts of USDC, and large amounts of redemptions caused the price of USDC to drop. At the time, cryptocurrency and stock traders Robinhood, exchanges Binance, and Coinbase all announced the suspension of some USDC services, which meant that redemptions were prohibited. Also, USDT, the largest stablecoin in 2021, absorbed the $700 million redemption requirement within 48 hours, and only processed the $2 billion redemption request within 40 days, accounting for 22% of its reserve assets. In traditional finance, it's impossible to handle it this way. Once laws are enacted, they must be complied with. Judging from the idea of the bill, stablecoin issuance is managed according to traditional finance. The US reserve assets are clearly “dollar cash, US Federal Savings Insurance Company (FDIC) insurance deposits, US Treasury bonds with a maturity date of less than or equal to 93 days, overnight repurchases supported by the New York Federal Reserve, and central bank reserves.” In this way, the Federal Reserve's bailout is quite reasonable. The reserve assets required by Hong Kong cover a wider range of assets. Theoretically, the more types, the higher the uncertainty. USDC stored dollars separately in multiple banks, increasing the uncertainty brought about by banks, and it suffered when banks exploded. USDT, for the most part, bought into US debt and escaped the bankruptcy of individual US banks. Hong Kong's portfolio assets are broadly defined. The risk of reserve assets is higher than that of the US, and they are also more difficult to rescue. However, since most of the stablecoins issued are not HKD stablecoins, bailouts are not the responsibility of the HKSAR Government. The Hong Kong government handled this very smartly. From the standpoint of the US, does the government need to back up the US dollar stablecoin? It only maintains the stability of the US dollar. The stability of stablecoins is the responsibility of each issuer, and each issuer bears the responsibility if there is a problem. If not an ecosystem makes sense, just like cryptocurrencies don't affect each other. If it's an ecosystem, something is wrong with the chassis. For example, the cryptocurrency Luna has gone wrong as the foundation of the ecosystem, and all ecological projects are dead. In other words, something went wrong with Luna's mortgage project, dragging down Luna's entire ecosystem. All US dollar stablecoins are issued in the US dollar ecosystem, and judging from the practice of cryptocurrencies, they need to be backed up. Finance is a testing ground for society as a whole. There was no example before it happened...

397d agoWendy#Wish Visha #stablecoins #Federal Reserve #Financial stability

Buy Bitcoin or buy Nvidia?

Author: Zhu Visha on March 14 A reader asked me what I thought about Nvidia's sharp drop on March 11, buy Bitcoin or buy Nvidia? I have done research on Bitcoin and have no research on Nvidia, so I temporarily looked for information from Nvidia. So research on Nvidia is insufficient. As the leading brother in this round of rising US stocks, it has driven the rise of NASDAQ. Will it take the lead this year? Buy Bitcoin or buy Nvidia? I'm actually asking who is the leader of NASDAQ in 2024. Based on Nvidia's own data, Nvidia believes that in the next 2024 and 2025, the supply of semiconductors will not be able to meet demand, and Nvidia's expected performance is good. The first quarter results guide for 2024 was $24 billion, up 8.5% from the previous quarter. Based on this, revenue for the full year of 2024 is estimated to be around 110 billion US dollars. Using its market sales rate at the end of 2023, that is, the total market value divided by total operating income, and the 1264.5 billion divided by 60.9 billion dollars, the market sales ratio is about 21 times. If it remains the same, the market capitalization could reach around 2.31 trillion dollars in 2024. On March 15, Nvidia reached $2.2 trillion, and there is still room for 5% increase. At this point, we are not far from reaching the peak, and long-term capital will leave the market early. The practice of long-term capital is not to take the last bite. Once it leaves the market, it will not enter in the short term, disrupting the short-term balance of capital. Short-term capital is unable to drive up, and a two-sided pattern appears. At the time, some people estimated that the market sales rate would rise 25 times in January 2024. At 25 times the market sales rate, the market value for the whole year would reach 275 billion dollars, and there was still room for 25% increase. The rise in the market sales rate indicates that the 2024 performance will grow even faster than in 2023, and the first quarter earnings report is needed to perform. There is no news at the moment. There are differences in the market, which can also explain why the market is afraid to rise. This is also the reason for the sharp drop on March 11, and there may have been a double trend below $1,000, which is a very bad sign of peaking. There will be drastic adjustments if both parties are established. Figure 1 below shows Nvidia's annual chart. Figure 1 In Hwang's eyes, rival companies have rivals. Nvidia's helmsman Hwang In-hoon's view of competition is that almost all major companies in the world are doing internal development. Google, AWS, Microsoft, and Meta are all making their own chips. Nvidia GPUs are in the spotlight because it's the only platform open to everyone. A unified architecture covers all areas. Our CUDA architecture can adapt to any emerging architecture model, whether it's CNN, RNN, LSTM, or today's Transformers. Now, various architectures such as Vision Transformers and Birdseye View Transformers are being created, and all of these different architectures can be developed on Nvidia GPUs. Mr Wong meant they had a competitive advantage. What does Hwang In-hoon think of the whole industry? Hwang In-hoon said that accelerated computing and generative artificial intelligence have reached a “tipping point.” As revenue and profit have set records for three consecutive quarters, the fourth quarter results and the first quarter results guidance both exceeded analysts' expectations, and Nvidia's stock price once surged more than 10% after the market. As an upstream supplier, Nvidia mainly receives orders from downstream manufacturers, and the revenue from these manufacturers mainly comes from end users. We've seen almost all related apps added smart assistants this year, but how many are easy to use? It's still in the “smart useless assistant” stage. It's so beautiful to see what others make, and I just can't handle it myself. I think most users feel the same way about me. The terminal market is still a niche market and cannot support huge investment in artificial intelligence. Accelerated computing chips are used in artificial intelligence servers. I don't understand this, but generating artificial intelligence is a “tipping point” for technology, and the “tipping point” of the market has definitely not been reached. Sister Mu Dou and Huang Renxun have different opinions: the famous fund manager, Sister Mu Tou, invested in Bitcoin in 2015. Before the coin rose to a record high of nearly 20,000 US dollars two years later, it almost completely reduced her holdings of bitcoins held by her funds. Sister Mu Tou bought Nvidia as early as 2014, but it was almost sold out before it soared. She was able to measure ahead of time. She believes that the GPU shortage, which worsened last year with the spread of artificial intelligence tools such as ChatGPT, has now begun to ease. She notes that GPU delivery times are being shortened, and this is especially true for Nvidia, which has been reduced from 8 to 11 months to around 3 to 4...

887d agoWendy#ChatGPT #GPU #MicroStrategy #AI #Bitcoin #Generative artificial intelligence #Wish Visha #Nvidia #Hwang In-hoon

Before and behind the scenes of the US Securities Regulatory Commission's approval of a Bitcoin ETF

Author: Zhu Weisha 1. The duck is stubborn. Looking at the US Securities Regulatory Commission's SEC Chairman's approval of the Bitcoin ETF statement, how reasonable is the statement about SEC Chairman Gary Gensler (Gary Gensler). Reading the whole story is a feeling, helpless, and aggrieved. There are many issues in the article. The author only snippets the last two paragraphs for analysis: “Although we are neutral, I would like to point out that the underlying assets of precious metal ETPs (exchange-traded ETPs are equivalent to ETFs in the usual sense) have consumer and industrial uses. In contrast, Bitcoin is mainly a speculative and highly volatile asset, and is also used in illegal activities, including ransomware, money laundering, evasion of sanctions, and terrorist financing.” This statement contradicts the SEC's approval logic. Since we know that Bitcoin has so many problems, why should futures be approved in 2021. None of these issues existed at the time? What led him to approve futures? Spot ETFs are not approved, and now they are approving spot ETFs? It's reasonable to say that it's fair to say that there is fraud and market manipulation; approval also makes sense. Grayscale evidence was actually quoted at the time of approval, saying that futures and spot goods are more than 95% similar at the hourly level, which denies spot market manipulation. Where do you place the SEC's credibility? Power makes people lose their minds: Bitcoin “is also used for numerous illegal activities, including ransomware, money laundering, evasion of sanctions, and terrorist financing.” Is this a matter for the Chairman of the Securities Regulatory Commission to manage? Lao Zhan couldn't figure out the difference between consensus assets and fiat assets “Although we approved the listing and trading of some spot Bitcoin ETP shares today, we have not approved or endorsed Bitcoin.” The question with this sentence is: does the value of gold need to be determined and approved by the Securities Regulatory Commission? Not required. Also, bitcoin is not required. Both gold and bitcoin are consensus assets, and their value has been recognized by the market after many years of consensus. SEC Chairman Lao Zhan taught blockchain courses at prestigious schools, and it's hard to imagine that he wouldn't understand the conceptual differences between consensus assets and fiat assets. Fiat currency assets are credit assets, and credit endorsements are required. At this point, the Securities Regulatory Commission's determination plays the role of credit endorsement. Of course, gold, bitcoin, and fiat are all at the extreme of these two concepts. Among cryptocurrencies, there are many assets, such as Ripple, that have both consensus and the nature of fiat assets, so it's hard to tell them apart without a clear definition. He doesn't know the difference between consensus assets and legal assets. This is probably the reason Lao Zhan is afraid to answer questions from the US Congress positively. Being an ordinary person doesn't matter, but as the helmsman of the SEC, the “tsar” of global securities, uses expert standards to make requirements, it seems that Gensler is still a little worse. Furthermore, there are problems with his understanding that approving Bitcoin futures first reflects the basic professional issues of securities. Lao Zhan couldn't figure it out. Futures are actually not as good as spot ETFs. The origin of Bitcoin's important futures was to balance the imbalance in demand for large products. Locking in profits in advance to avoid the risks caused by the production process being too long is a correct design. The stock market is not a commodity; do we need to lock in profits in advance? There is a predictive benchmark for stocks, but there is no standard for what is overvalued and what is undervalued, and depends on consensus generated by capital preferences. Currently, the price-earnings ratio (PE) of the Nasdaq 100 Index is 35 times, which is an overestimate of 25 times according to past theories. If 15x PE is the center of value, does futures hedge against this risk? In the stock market, the advantage of futures is to hedge against the risk of excessive overvaluation of spot prices and is beneficial to stabilizing the market. But do futures play a big role in stabilizing the stock market or are they speculative? The benevolent see the wise see the wise. Generally speaking, the leverage of futures is generally much greater than that of spot goods. The market generally believes that futures are more speculative; in my opinion, it's just one more trading factor. The Chinese stock market is an example. Originally, there were no futures, but futures were added later, and there was no significant improvement in stabilizing the stock market. Futures also have a role in the stock market. They are really beneficial to large investors who have large positions and are not convenient to trade. Since most retail investors don't use futures, it seems like a fair policy, which is actually unfair to retail investors. What is the principle of protecting small and medium-sized investors? In fact, the use of futures in the stock market is already very limited. The biggest difference between Bitcoin and stocks is that there is no cap, there is no overvaluation or undervaluation; the rise and fall of the price only depends on the amount of capital. Since there is no valuation center or cap, what standards are futures operated according to? What we often see is a double explosion of long and short bursts. Isn't this market manipulation by bookmakers? This double explosion is worse than the stock market. On the face of it, Bitcoin futures are useful for the production of computing power and equipment producers. An increase in the price of Bitcoin will lead to an increase in computing power, but it will not lead to output...

895d agoWendy#Circle #Coinbase #SEC #Bitcoin ETF #Spot Bitcoin ETF #Mizuha #custodial #Wish Visha

How to value Bitcoin

Author: Zhu Weisha Yesterday, I wrote an article entitled “Why Bitcoin ETFs are the Best Wealth Management Products”, which was posted on the chainless.hk website. After the article was published, some readers asked the following two questions: 1. They believe that investing in Bitcoin has a huge advantage over stocks: investing in stocks requires first judging the macroeconomic direction, then judging the rotation of the sector, and finally finding the right leading stocks in the sector before it is possible to make a profit. Even if you choose the right direction and sector, you may end up losing money. However, with Bitcoin, as long as you have a correct understanding of the macro direction, it is possible to make a profit. This makes investing in Bitcoin relatively simple and has a higher fault tolerance rate. 2. They are puzzled by the idea that “Bitcoin has had almost no news-induced decline.” Because they often see the price of Bitcoin fluctuate greatly due to the influence of certain news, they may need you to explain this point of view more. To answer these two questions, we need to start with Bitcoin's valuation method. 1. Stock valuation is based on profit forecasting. Stocks represent the value of an enterprise. Normally, we use the fundamentals of an enterprise to express this value. Changes in corporate fundamentals are the root cause of rising and falling stock prices. Analysts will forecast stock profits based on possible changes in corporate fundamentals. Changes in the fundamentals of stocks can be divided into changes within the enterprise and changes in the external environment. Changes within the enterprise include an increase in market share, the development of new technology and the launch of new products, etc., all of which may lead to changes in the company's profits. We can call this change caused by “internal changes within the company” “the company's own news.” When good news comes out, if someone grasps this inside information and buys stocks before the company discloses the news, then they can make huge profits in the short term. This type of trading is known as “insider trading,” and it is illegal in the stock market. Changes in the external environment include industry policies, the emergence of alternative products, etc. External changes also include unexpected news. For example, as soon as China's education and training regulations come into effect, New Oriental lost money and couldn't even find a mother. The environment changes widely. For example, if the same stock is listed in different places, the valuation may be completely different. Just as China's A Shares, B Shares, and Hong Kong Shares have different valuations. Let's talk about gold again. Does gold have fundamentals? The characteristics of gold determine that its own change is zero. The increase in the amount of gold is predictively reported, so it is deterministic rather than a change. The new reserves are uncertain and involve changes in the total amount of gold. They can be classified as external news or as own messages (similar to internal corporate changes). Since total volume changes are involved, it seems more reasonable to classify them as internal changes. Without changes in fundamentals, valuation is simple; only external factors influence prices. Nakamoto understood the essence of gold and applied it to Bitcoin's design. Bitcoin's internal news is only a change in the program, and there has been no change in circulation for 15 years. Satoshi Nakamoto's “0.1 always” spirit finally made it to the day when he was admired by capital giants. 2. The valuation of Bitcoin is demand valuation Bitcoin has no fundamentals. Its valuation conforms to the characteristics of the product and is based on the relationship between supply and demand. However, the supply of Bitcoin and its transfer on the chain are clear brands, which is much simpler than the valuation of ordinary commodities. Bitcoin's valuation is affected by only three factors: supply, inventory, and market demand. External factors are mainly reflected in the impact on demand. Bitcoin's supply is known and fixed, and is halved every four years until the supply runs out. Currently, around 900 bitcoins are mined every day. Bitcoin's on-chain inventory and transactions are shown in Chart 1. It can be seen that after the Bitcoin ETF was approved, Bitcoin's untraded coins dropped from 70.72% to 68.97%. There were 36,750 fewer, while ETFs purchased around 80,000 units. The blue line in Table 1 represents stockpiling, and the yellow line represents trading. There is no chart for changes in demand since the approval of the Bitcoin ETF. In the 51-day period from January 10 to March 2, 2024, capital inflows were between 408-45.9 billion. The BlackRock family is close to 100 million! At the same time, stablecoin funds flowed into USDC 1 billion and USDT 4.2 billion, for a total of 5.3 billion dollars. This also exceeds the average inflow of stablecoins...

901d agoWendy#SEC #valuations #Bitcoin #Spot Bitcoin ETF #Wish Visha

A group of friends asked: What is the basis for Bitcoin's market capitalization to rise to 3.3 trillion dollars?

Author: Zhu Weisha answers questions from friends: What is the basis for Bitcoin's rise to 3.3 trillion dollars? Bitcoin's new inflection point yesterday was “How high can Bitcoin rise after the US approves the ETF?” This article answered a group of friends' questions: What is the impact of Bitcoin ETF funds on Bitcoin's trend? Overall, ETFs have fundamentally changed the status of Bitcoin and are the third inflection point in Bitcoin's history. Bitcoin's first inflection point was when the flatbread Glassow used 10,000 bitcoins to buy two pizzas, completing Bitcoin's thrilling jump from air to commodity. The second time was the first time Bitcoin was traded on the Mentougou Exchange, completing a historic leap forward for Bitcoin as a trading medium. Bitcoin's opening price increased 100 times in just 4 months. Why is the ETF an inflection point for the third time in history? Bitcoin ETF approval means that Bitcoin is recognized by mainstream capital systems. Despite being a belated benefit, and even though I don't like Gary Gensler's whining, the US Securities Regulatory Commission and he himself will forever go down in the history of Bitcoin development because they push humanity on the right financial path. This is a major long-term benefit that affects the fate of humankind. Benefits are divided into long-term benefits and short-term benefits. The impact of long-term benefits is calculated on an annual basis. It wasn't a year, nor two. It completely changed Bitcoin's development trajectory. Bitcoin left the small pond, jumped at the dragon gate, and the dragon returned to the sea. Next, I further answered the group and read “How high can Bitcoin rise after the US approves the ETF?” Question: “Can you explain more clearly at what time and how much is the lowest point, what time is the highest point, how long is a cycle, and what is the basis for predicting Bitcoin's $3.3 trillion market value?” ETFs play a decisive role in Bitcoin's rise The volume of ETF funds has played a decisive role in Bitcoin's rise. Bitcoin will depend on the face of Wall Street for quite some time. “How high can Bitcoin rise after the US approves the ETF?” This article introduced the factors and basis for Bitcoin's rise; I won't go into detail in this article. Bitcoin is halved every four years. Every time it is halved, supply is reduced by half. Under the condition that demand remains unchanged, it will inevitably rise. The lowest point of the current cycle was $16,000, which occurred in December 2022. Some people have summarized the cyclical effect of Bitcoin's 10-fold increase. Based on this, it is deduced that the high point is 160,000 US dollars, which is 8 times the difference between the high point and the low point of the previous cycle. Bitcoin generally has been in a bull market for more than a year, and a bear market for more than two years. A few months before the halving started, reached a high point six months to eight months after the halving, and then a bear market. None of these experiences were valid in front of ETFs. I wrote an article in the past predicting that I wouldn't even be able to get past 69,000 without an ETF. Demand is different now. ETFs have similar characteristics to bonds. The market capital is about 200 trillion dollars, and 1% of the capital goes into Bitcoin, and it explodes. Mainstream market capital has only been in 40 days. The trend is still undetectable, and the immortals can't predict it. Not all Bitcoin operation experience can be relied upon by ETFs to fundamentally change Bitcoin's technical trend. The original experience will have to be revised again. There will definitely be a big rise, not necessarily a sharp drop, because your opponent is a Wall Street preacher. Big fish eats small fish is the same logic in the capital market. If you can't see the future trend clearly, holding the coins unchanged is the best strategy. If one were to make a hard guess, it must be assumed that, based on data from the previous 40 days, ETF inflows remained constant. The average inflow of ETFs was 800 million dollars per day and 292 billion dollars a year, while stablecoin inflows were 29.2 billion yuan. The sum of the two was 31.2 billion dollars, and it was halved in less than three months. That is, assuming 30% of the total turnover, 321.2 billion dollars can leverage the market value of 1 trillion dollars. The currency price at this time was over 100,000 US dollars, which is a conservative estimate. Bitcoin halved in the previous cycle, and without the support of this round of 10-fold capital, it still increased 8 times. Therefore, this round of 10-fold effects should occur, and it will surpass, long-term favorable decisions, and rise to the point where you don't believe it. Will it keep going up? The basis for the increase to 3.3 trillion dollars is simply put, the market value of Bitcoin 3.3 trillion is calculated based on the unit price of Bitcoin of 160,000 US dollars multiplied by 21 million bitcoins. As mentioned earlier, ETFs are a long-term benefit. After Bitcoin was speculated in the past, due to subsequent capital not being able to keep up, it will inevitably fall down to digest the speculation bubble, and slowly rise from the bottom. This time, the inflow of ETF funds in the previous 40 days was 10 times that of USDT; a simple estimate is that it is 10 times more digestible. ETFs, in particular, are beneficial for the long term. They will change Bitcoin's original bull-bear time ratio. The bull market is not peaking; Bitcoin is not peaking. How long has this crazy bull been? This is for us to judge. How to judge? I still need...

904d agoWendy#SEC #Nakamoto Satoshi #halving #Bitcoin #Bull market #Spot Bitcoin ETF #Wish Visha #employing

How high can Bitcoin rise after the US approves the ETF?

Author: Zhu Weisha began speculating on the expectation that the US would approve a Bitcoin ETF (exchange traded fund) at the end of last year. Bitcoin rose by more than 50% in less than three months from $37,713 on December 1, 2023 to $57,200 today on February 27, 2024. Will Bitcoin rise again? This is a definitive answer. How tall is the key? In fact, Bitcoin's peak cannot be predicted in the short term. Long-term forecasting is trend forecasting, just one word: up. To predict the rise of Bitcoin is to talk about experience. Experience only shows the past; it is nothing more than finding a reason for the rise for yourself and the market. If everyone agrees with this reason, it will rise. Stocks have a phased peak. The valuation logic of Bitcoin and stocks is different. Stocks have price comparison effects between stocks and profit predictions, so they will generate a peak in valuation. However, there is no profit forecast for Bitcoin; it is the valuation logic of the product, that is, the price is determined only by supply and demand, so there is no valuation ceiling. The effect is that the increase in the top stocks is calculated as a percentage, while the increase in Bitcoin without the top is calculated as a multiple. On January 10, 2024, the US approved the ETF, and the price of Bitcoin rose to 57,000 US dollars from 46,122 US dollars to today, February 27. More than 40 billion dollars of capital flowed into the ETF in just over 40 days, showing strong demand in the market. This demand is long-term because ETF approval gave Bitcoin a proper name. Bitcoin is no longer air; it is an asset with financial attributes. Those who once said that Bitcoin is air were severely punched in the face. They misled the market and made believers miss historical opportunities. If the believers were anxious, people would rush to get on the bus. Why the rush? Compared to gold and US stocks, Bitcoin is undervalued because Bitcoin has yet to reach an all-time high of $69,000, while gold and US stocks have long surpassed historical highs. This demand is long-term, because America's leading effect will cause various capital markets around the world to launch their own Bitcoin ETFs one after another, further increasing the demand for Bitcoin. Supported by this long-term demand, from now on, more than $69,000 is a probable event. Once it breaks $69,000, it will fall first and then rise. A large influx of speculative markets will enter the main upward wave, and when it rises, it is Soros's backlash effect. The academic term is positive feedback. At this time, market sentiment affects prices, which has a good speculative effect. When demand is less than supply, the decline begins. Bulls are short and long, I don't know if it still applies? The greater the coin effect, the less supply, and the longer the bull market, so pay attention to Bitcoin's token index. Currently, 70% of coins are stored. By April of this year, Bitcoin will be cut in half, supply will be cut in half, and if demand does not change, the price should rise. How much it rises depends on demand. By observing ETF inflows, you can roughly analyze the extent to which Bitcoin should rise. In addition to observing Bitcoin ETF capital inflows, changes in the market capitalization of cryptocurrency stablecoins are also indicators. This indicator only increased by more than $4 billion from January 10 to February 27. It is clear that ETFs are the mainstream of the rise. Bitcoin ETFs are defined as alternative investments to hedge against the inflation risk of fiat currencies, and their role is comparable to that of gold. Gold is the boss of value storage, with a market capitalization of 13.7 trillion US dollars. Generally, the boss holds 70% of the market share. As the second-generation Bitcoin, it is possible for Bitcoin to rise to 4 trillion, or 30% of the boss. Bitcoin's increase has a 10-fold effect, that is, a 10-fold increase from low to high in a cycle of 4 years. If the rules don't change, the unit price of Bitcoin is 160,000 US dollars, and the total market value is almost 3.3 trillion US dollars. Generally, the 10x rule will decrease as the size of Bitcoin increases, but the currency is very large. If one percentage point more enters, Bitcoin explodes. Maybe the 10x rule continues to work. If Bitcoin rises again, surpassing gold, it will require a new narrative, a new demand factor, that is, the implementation of the Bitcoin standard. The Bitcoin standard is the idea of a two-track monetary system. The meaning is the parallel competitive development of the fiat currency standard and Bitcoin standard. For the principles of Bitcoin standard, see the “Implementation of DW20 Decentralized Basic Coin” on the Chainless.hk website (chainless.hk). Simply put, add a yardstick to Bitcoin, measure global economic development with Bitcoin, and replace stablecoins with DW20. Together, Bitcoin and DW20 form an inflation-free Bitcoin-based system. The distribution principle of DW20 is the same as Bitcoin, and it also requires a process from air to asset coins (stablecoins). The difference is that DW20 uses an airdrop method, and anyone can register to receive it at no cost. DW20 stepped on the Bitcoin beat and helped Bitcoin. DW20 is like Bitcoin in the early days. It's only easy to profit in the early stages, the sooner...

904d agoWendy#2023 market #Nakamoto Satoshi #Wall Street #Coin-based #institutions #Bull market #Spot Bitcoin ETF #Wish Visha #stablecoins

Three New Criteria for Judging the Advantages and Disadvantages of Web 3.0 Projects: Influence and White Paper Trust

Author: Zhu Weisha https://chainless.hk字数：1776引言 Web3.0 is also called Web3. In the eyes of professionals, the two concepts are different, and this article makes no distinction. As for the difference between Web3 and Web2 projects, simply put, Web3 owns more data than Web2. Most Web3 projects are open source programs and lack patent protection, so it's very easy to copy, and dozens of impersonations are very common. For example, after the Bitcoin BRC20 protocol came out, thousands of coin issuing projects suddenly sprung up using this open source agreement. These projects are mixed and dazzling. Web3 coin issuance projects generally issued and distributed coins in the early stages. The circulation of coins was equivalent to listing, and it was difficult for professional investors to determine the value of early projects, so how should ordinary retail investors judge this? Is there a relatively simple method? The competitive environment for Web3 and Web2 is similar, but there are also differences. In this competitive environment, in addition to the project judgment standards commonly used in Web2, new criteria are needed. Web3 emphasizes trustlessness. Instead of not requiring trust, it places higher demands on trust, such as machine-level trust. In a world where devil and hope coexist, how to gain trust is obviously a key issue, which raises the question of a new trust judgment mechanism that Web2 does not have. This article describes the unique trust mechanism of Web3 from four perspectives: pioneering trust, community trust, influence trust, and white paper trust. 3. Influence and White Paper Trust Influence Trust Web3 emphasizes democracy. It's ridiculous that celebrities and celebrity teams have more influence than Web2, which doesn't seem democratic. The reason is that Web3 is still in its early stages, and many projects are equivalent to seed rounds of venture capital. According to the rules of venture capital, the seed round looks at people, and the A round looks at people, and the model mainly looks at people. The only mature Web3 projects are Bitcoin and those Bitcoin imitations. When a project with huge uncertainty is issued, it is equivalent to a stock listing. How to judge whether the project is good or bad? Traditional venture capital and stock market valuation methods and data are insufficient to reflect the value of the project, and retail investors are even less able to judge. For retail investors, it's still easy to judge a person. This is trust in influence. Influence trust is a judgment of people. There are six points to observe: 1. Recommended by celebrities. This is equivalent to endorsements. If the project doesn't go well, celebrities will lose their worth. 2. Whether celebrities or institutions have invested, and whether they have been locked in for a long time. Real money investment is more reliable than endorsements. 3. What is the purpose of the celebrity platform? What is his relationship with the project? Tech giants and product giants are also considered celebrities. Are they famous? Or participate or lead? 4. Endorsements from outside celebrities attracted attention, but had limited impact on the development of the project. 5. Analytical reports from professional celebrities. 6. Objective evaluation by a third party agency. The above evaluation criteria are very unfavorable to grassroots entrepreneurship. It is important to point out that from a venture capital perspective, venture capital projects are divided into seed rounds, angel rounds, A rounds, and B rounds, etc. Cryptocurrency projects should not be externally funded in the seed round. Even for investment institutions, projects with external financing are at least Series A, and the business model is clear, so plans to match them can already be carried out. Observing the composition and past performance of institutional investors is definitely helpful to retail investors. Currently, the threshold for starting a Web3 project is very high; the era of making money by sending just one coin is over. The old retail investors who can stay in cryptocurrency have definitely been trained to become experts in investing. The white paper trusts the white paper like a campaign platform. Whoever wants to govern must publish a campaign agenda on how they are going to do it. The white paper is not for the public, but for experts. Experts use their influence and judgment to endorse the project. Even so, these are still early projects, endorsements do not guarantee success, and there is still a risk of going back to zero. Because experts only comment on the logic of the white paper, there are various problems that can cause failure when the same project is being executed. Bitcoin, pioneered by Satoshi Nakamoto, is an innovation in productivity and production relationships, so in addition to technology and products, Web3 projects also face the problem of innovation in a new production relationship structure. Not only can you start a business by understanding technology, but you also need to know a “production relationship” suitable for your project, such as incentives and governance innovation. Bitcoin's success is a success of comprehensive capabilities. If it were just a pure technical white paper, it is currently very difficult to develop. If a project doesn't have a white paper, then this type of project isn't eligible...

1048d agoWendy#WEB3 #Nakamoto Satoshi #white paper #neighborhoods #Wish Visha

New Criteria for Judging the Advantages and Disadvantages of Web 3.0 Projects 2: Trust in Community Governance

Author: Zhu Weisha https://chainless.hk字数：2295引言 Web3.0 is also called Web3. In the eyes of professionals, the two concepts are different, and this article does not distinguish them. The difference between Web3 and Web2 projects is simply that Web3 owns more data than Web2. Most Web3 projects are open source programs and lack patent protection, so it's very easy to copy, and dozens of impersonations are very common. For example, after the Bitcoin BRC20 protocol came out, thousands of coin issuing projects suddenly sprung up using this open source agreement. These projects are mixed and dazzling. Web3 coin issuance projects generally issued and distributed coins in the early stages. The circulation of coins was equivalent to listing, and it was difficult for professional investors to determine the value of early projects, so how should ordinary retail investors judge this? Is there a relatively simple method? The competitive environment for Web3 and Web2 is similar, but there are also differences. In this competitive environment, in addition to the project judgment standards commonly used in Web2, new criteria are needed. Web3 emphasizes trustlessness. Instead of not requiring trust, it places higher demands on trust, such as machine-level trust. In a world where devil and hope coexist, how to gain trust is obviously a key issue, which raises the question of a new trust judgment mechanism that Web2 does not have. This article describes the unique trust mechanism of Web3 from four perspectives: pioneering trust, community trust, influence trust, and white paper trust. 2. Community governance trusts the development context of the cryptocurrency community The application of the community began with the Bitcoin system. Satoshi Nakamoto has been involved in crypto punk mailing list groups since he was young, and he has a sense of community. After Bitcoin was released, the Bitcoin Forum was launched in November 2009. Since then, the Bitcoin technical community has also been established on the open source project hosting platform GitHub. This has always been a place for Bitcoin technical exchanges. Among them, the most valuable advance was the launch of the Bitcoin Improvement Protocol (BIP), which standardized technical exchanges. After Satoshi went incognito, the Bitcoin Forum gradually declined because it had no profit model, relied entirely on volunteer support, and was difficult to maintain as an interested community. The Bitcoin technical community is an exchange between the computing power side and the programmer. Essentially speaking, the computing power side is a direct user of the Bitcoin system. They are different from users who focus on transactions. Users who focus on transactions are the same as customers engaged in market transactions on the stock market. However, in reality, users who hold bitcoins have no say in the development of bitcoins, and the power of coin holders is not as powerful as that of retail stock market investors. The Bitcoin Forum does not represent user power; it is only natural for it to decline. Unlike Ethereum, it is a platform with three parties: the programmer, the bookkeeper, and the user. The users holding coins here are not optional, because the Ethereum platform has a large number of projects that compete against users. Users have become bastards, and users participate in the governance. It's a huge step forward for the community. This kind of community is more like a map of the structure of our society today. Does Ethereum have an actual controller? The idea of Bitcoin's improvement proposal was preserved by Ethereum, called the Ethereum Improvement Proposal (EIP). Proposal processing is called governance, and it is divided into off-chain governance and on-chain governance. On-chain governance embeds governance content directly into the blockchain, allowing automated token-based voting. Ethereum is more about off-chain governance, and issues that cannot be handled on-chain are coordinated through the Ethereum Foundation. Off-chain governance is unequal treatment, and the outcome does not depend on how many coins are held. Despite the consultation mechanism, it is to some extent the “dictatorship” of the Ethereum Foundation. Is this the right thing to do? When it comes to deciding technical issues, user voting is inappropriate; when it comes to issues of interest, anyone can try to understand it, so it is possible to implement on-chain voting when matters of interest are concerned. Unlike Ethereum and Bitcoin, Bitcoin is a mature project, so no major changes are needed; and if Ethereum 2.0 is launched a year later, the Ethereum platform will probably lose momentum. The Bitcoin community doesn't have Satoshi Nakamoto, right? That's not right. Because the Bitcoin user community is a complete waste. This is part of Bitcoin's unfinished work. It doesn't have a community of Bitcoin users, so Bitcoin won't necessarily beat fiat. Bitcoin is an unowned system. It is very difficult for an unowned system to defeat the dollar, which is armed to the teeth. If Bitcoin still has a chance under the same evolutionary conditions, but the competition conditions are unequal, the dispute between Bitcoin and the US dollar becomes an uncertain issue. For this, please refer to the unlinked website...

1048d agoWendy#WEB3 #decentralizing #Binance #governing #neighborhoods #Wish Visha