— Applauding a 68-Year-Old Forbes Veteran’s New Venture
The “opportunity” I wrote about today may only become apparent when viewed from the future. When we look at so-called “good opportunities” in the present, they often seem exaggerated and fail to gain much traction or understanding. This is merely a record of my investment judgments for future trends.
Let’s start with a person: Zhu Weisha. He founded Yuxing Technology, the first privately-owned Chinese company on the Hong Kong Stock Exchange and a competitor of Duan Yongping’s Xiaobawang. He ranked 46th on the Forbes 2000 China Rich List. Zhu was a contemporary of influential figures such as Bill Gates, Liu Chuanzhi, Zhang Ruimin, Duan Yongping, and Duan Yongji. It is a photo taken during the Microsoft Venus Project. He was a major player in the capital market, with notable actions such as acquiring a significant stake in Founder Group and purchasing Jianlibao. However, due to the circumstances of the times, he was wrongfully imprisoned for over a year, ultimately cleared of charges, but missed the best period for development.
I got to know Zhu in 2022 after reading his series of articles on “Uncovering Satoshi Nakamoto” online. Using a method of comprehensive scanning and deep thinking, he solved the global mystery of who Satoshi Nakamoto is, identifying “Wei Dai,” a Chinese individual, as Satoshi. Over time, we became friends through our writings and discussions. I learned about Zhu’s decade-long perseverance and profound understanding of global finance and cryptocurrencies. Through our conversations, I also developed a deeper understanding of cryptocurrencies, not just from a financial perspective but also in terms of human development, philosophy, and monetary history.
Wealth is the manifestation of Knowledge, which needs no further explanation. Understanding future development trends is essential to strategically positioning oneself in the present for high-yield investments.
Based on Zhu’s project considerations, I will elaborate on three points:
1. What is a Standard Currency?
What is a standard currency? Both the US dollar and the euro are examples. In the cryptocurrency community, there is a belief that “Bitcoin standard” means replacing the US dollar with Bitcoin. They see the “Bitcoin standard” as Bitcoin’s most significant value. Still, no one in the cryptocurrency community has proposed a feasible path to achieve this. The most popular view is that when Bitcoin reaches a market value of $20 trillion to $30 trillion, comparable to the amount of US dollars issued by the Federal Reserve, it will automatically become the standard. At that point, Bitcoin’s volatility will be smaller than that of fiat currencies, and people will naturally use Bitcoin for pricing.
The question is, why would Bitcoin’s volatility decrease? Who sets the price for Bitcoin? What is the pricing logic behind Bitcoin? Even gold was abandoned by the financial markets in the last century, ultimately decoupling from the US dollar. Gold still did not become the “standard currency.” Bitcoin, at best, is similar to gold in its natural development and is unlikely to become the “standard currency” even after 132 years.
Imagine a scenario where, during Sino-Russian trade, physical transactions are settled in yuan or rubles. However, there is a mutual understanding: How much is the yuan or ruble worth in US dollars? This consensus is necessary for the transaction to be considered fair. Without this mutual understanding, no one would exchange rubles and RMB.
In other words, transactions require a standard measure.
After decoupling from gold, the US dollar became the world’s measure. This measure can be extended or shortened, enabling the US to reap benefits globally, which is unfair. Bitcoin and gold have similar functions, possessing scarcity, physical stability (data remains unchanged), and transaction liquidity (cross-border consensus), among other similarities.
The three fundamental attributes of money are store of value, medium of exchange, and measure.
Gold cannot measure specific goods or objects, so the US dollar replaced it. Bitcoin, like gold, can measure the world’s total economic output, and its value increases with economic growth.
However, Bitcoin, like gold, cannot serve as a measure for a specific good. For example, if the global economy grows by 5%, Bitcoin’s price should also increase by 5%. If the price of a product like instant noodles does not increase but is priced in Bitcoin, it would still need to rise.
It presents an issue.
Therefore, those in the cryptocurrency community fundamentally do not understand finance and economics; they are riding the wave of the times. Moreover, the payment speed is also inadequate. It is why Bitcoin, after 15 years, has shown slow development. A product that has been around for 15 years with no significant application is bound to be criticized by outsiders for having no value.
To develop into a “standard currency,” Bitcoin must be paired with a measure. This measure must be distant from “economic activities”; otherwise, it would still be the current “world suffering from the US dollar for a long time” scenario.
The measure should be independent of the objects being measured. However, fiat currencies are related to the measured objects and are unsuitable.
Zhu Weisha has spent years refining DW20, which provides a measure for Bitcoin. Zhu was the first to identify Satoshi Nakamoto as the Chinese “Wei Dai,” proving that Chinese people are brilliant, but inventions and innovations require more innovative environments.
Growing up in China, people are excellent at applications. Zhu is a world-class, outstanding product manager.
If his application product develops, it can potentially challenge Ethereum for second place in the crypto world.
At 68, Zhu Weisha is financially free but continues to “strive for a fairer world.” This embodies the entrepreneurial spirit of the 1990s in China. Where work equals joy, and joy is found in work. I am often impressed by his “vitality” and “resilience.”
2. The Valuation Logic of Bitcoin
Bitcoin differs from stocks in that its valuation logic is different. The stock market values for mature companies. Buffett starts from the stock market, believing that Bitcoin cannot be valued. The reason is that Buffett’s investment model is essentially for “Bitcoin system” investments, but Bitcoin is not the “Bitcoin system.” Therefore, Buffett does not consider it a productive asset. Buffett’s investment model seeks calculable returns, focusing on the latter stages of investment, i.e., mature companies. Early-stage and high-growth companies are not within his scope.
Bitcoin is not the “Bitcoin system.” It is not a company. Bitcoin’s value is solely related to “supply and demand,” which follows the logic of a commodity.
Its value is directly determined by demand and supply. It is simpler and more specific than any enterprise investment model.
Bitcoin has a solid price floor, which is the cost of mining. This is the cost line for miners. Each Bitcoin surge brings significant price differences, prompting rapid increases in computing power, thereby raising the price floor.
Regarding the top: as a commodity, its price will rise as long as there is demand. If the US aims to “re-anchor,” imagine its demand.
Consider why Hong Kong wants to approve Bitcoin ETFs and prioritize Ethereum ETFs before the US. This indicates that China’s high-level think tanks know US intentions and establish more local funding channels besides SWIFT.
3. Basic Concepts and Current Development of Bitcoin
First, let’s clarify some basic concepts people commonly confuse and then discuss the current development.
Bitcoin is not an air currency. Its value is derived from the conversion of electricity and equipment value, a process akin to how companies produce products. Bitcoin, like gold, is a commodity that represents assets. Unlike gold, a physical asset, Bitcoin is a string of digits. This is why Bitcoin is criticized as intangible. However, our bank deposits are also digital and not physical assets. Does this mean bank deposits do not represent assets?
Bitcoin has undergone an air phase: From 2009 to 2010, before the first transaction on May 22, 2010, Bitcoin was in the air phase despite having costs but no price. Bitcoin adheres to Mises’ regression theorem.
Bitcoin is an asset currency. It is produced using electricity and equipment, making it a commodity and an asset. It has most of the attributes of money. Asset currencies inherently have value, like gold, at least a store of value.
Bitcoin is not a credit currency. Credit currencies are backed by credit, and Bitcoin has no credit backing. On the other hand, Fiat currencies are supported by credit, specifically national credit. The legal status of a fiat currency in a democratic country is unaffected by regime changes.
Distinguishing asset, credit, and air currencies: Asset currencies are backed by realized assets, and credit currencies back future realizable assets. Assets backing asset currencies mean inherent value is less likely to disappear. Fiat currencies lack intrinsic value and will lose value with the erosion of national credit. Credit currencies without realizable asset backing are air-backed, thus termed air currencies. The elasticity of realizable asset backing is significant, especially for intangible assets, where uncertainty is high and realizability is poor.
Having explained the basic concepts, let’s move on to the current development.
To this day, blockchain remains a unidirectional ledger system with no substantial progress over the past decade.
What is the core of decentralization? Is it a distributed ledger? Is it distributed storage? Is it a blockchain ledger?
In reality, according to Satoshi Nakamoto’s white paper, the concept of cryptocurrency is “openness,” leading to transparency, non-manipulability, and credibility. It is the simplest way to enhance trust and reduce regulation. A suitable method must be simple.
Simplicity enables widespread application.
Currently, the technical personnel in the crypto community are focused on technological innovations, thinking only from a technical perspective. They are not good product managers, which prevents Bitcoin from significant development.
The leaders in the crypto community are early beneficiaries of the times, with average capabilities. This has resulted in Bitcoin’s slow progress over the past 15 years. Outsiders still disdain it. Although the crypto community appears innovative, it is actually clinging to outdated practices, lagging far behind the development pace of the Web 2.0 world.
In recent years, what has risen in the cryptocurrency rankings? The most notable are exchanges and stablecoins. They are centralized. Despite centralized exchanges misusing customer funds and lacking transparency, users still choose them. This is because so-called blockchain projects are either too expensive or unusable. Ironically, centralized development surpasses decentralized efforts in the crypto community.
Zhu Weisha’s application designed a reconciliation system that requires no centralized human intervention and is far more advanced than cryptocurrency transfers. Using “transparent centralization” to replace blockchain ledgers is a major conceptual shift.
Zhu’s “transparent centralization” achieves the essential feature of “decentralization,” which can replace the Ethereum system. Ethereum is difficult to use, leading to many alternative public chains.
Finally:
Why write such an obscure article that outsiders may find difficult to understand? Mainly to document that in 2024, I witnessed the start of a world-class application. What is the largest commodity market in the world? Money. What is the largest application system in the world? The monetary system. What is the largest project in the world? Establishing an asset currency financial system to replace fiat currency systems.
At this stage, the world has suffered from the US dollar for a long time; weak sovereign countries need to break away from dollar credit partially, and the US itself wants to use Bitcoin to “re-anchor” and maintain its financial hegemony. This is an excellent opportunity. Modern monetary systems have become so complex that finance has become an independent sector apart from industry. It is no longer a service institution but a power institution. They understand that financial instability is highly probable. They have learned to shift crises, stabilizing the economy through fiat currency operations while interest groups remain unscathed.
Finance has become a monster exploiting industries. In a particular country, eight of the top ten listed companies are financial firms, with the first and tenth being liquor companies. Agriculture, industry, and services are the three major sectors. Yet, finance, a part of the service sector, occupies eight top ten spots. We know the excessive profits in the liquor industry, where material costs are about 10%. Finance rivals this with similar exorbitant profits. Satoshi Nakamoto said, “Banks only have little capital, yet they lend out money in a bubble way.”
Your money is earned through labor, with every dollar dripping with sweat. Banks use your money to make money, which might circulate without generating real value. They are bubble creators and problem makers but not the ones paying the price, euphemistically called “too big to fail.” This is absurd and reflects the exclusive benefits enjoyed by interest groups granted by fiat currency.
I know a utopia does not exist, nor is there a purely “decentralized world.”
However, if Zhu Weisha’s designed product succeeds, it will be a significant step towards a fairer world for humanity.
It is the entire meaning.
Zhu is a designer, a card player, and my guide in the crypto field.
If you have DW20 or start paying attention to chainless projects, you can treat it as garbage or see it as a treasure.
We can only judge each person’s vision and cognitive abilities by looking back at history.
