Speaker: Mai Gang, founder of Chuangye Factory.
整理：徐安/i黑马
The most essential thing in economics is currency.
Before the financial crisis, I read a book about a famous physicist. He said that for us science and engineering people, such as those studying physics, length, width, weight, and time are constant quantities. But you economists study variables.
For example: 'How much is a McDonald's worth?'
You need to ask whether it's the dollar, the renminbi, or the yen?
You need to ask whether it's the dollar of 1958 or the dollar of 1985?
After reading it, I realized that economics studies some changing things. I majored in economics, and I should go back and take a look at the most essential things that continually change within this discipline—money.
Later, there were some books, such as 'Currency Wars', which raised national attention to currency. I gained a relatively comprehensive understanding of currency, so when Bitcoin appeared, I could only say one word: 'Wow!'
Bitcoin captures the essence of currency.
What is Bitcoin? Explained in two sentences.
First, Bitcoin is a perfect currency simulated by mathematicians, geeks, and network scientists using distributed algorithms.
Second, this attribute is maintained by the immense computing power of distributed computers.
Bitcoin is this thing. All discussions, doubts, questions, and innovations about Bitcoin return to this framework. So, Bitcoin is not a conspiracy but an open strategy; what Bitcoin does is very clear. All Bitcoin data can be checked online at any moment by anyone.
Why can Bitcoin simulate perfect currency?
(1) Bitcoin's monetary characteristics surpass those of precious metals.
The history of currency spans five thousand years, and the history of nations spans three thousand years. Currency is a concept that predates the existence of nations. Therefore, Chinese currency has gone through various forms, from feathers, shells, stones, livestock, and even women as currency in some countries at that time, until the emergence of precious metal currency.
Precious metals cannot be forged, or the cost of forgery is extremely high. They have low transaction costs, are relatively easy to store, can be divided, and have relatively soft properties; these attributes are all reflected in precious metals. Therefore, precious metals are used as circulating currency. Gold transactions still have costs when exchanged from one place to another, with risks involved in delivery and payment. Many people are unaware of this.
The total amount of Bitcoin is limited and distributed, and as long as there are computers, anyone can participate; it is very equal. Bitcoin is a commodity simulated by mathematical methods, possessing all the properties of precious metals, and it surpasses the past precious metals in all aspects.
Moreover, the Bitcoin network can continue to upgrade, so the problem of gold exiting the stage of history and being insufficient won't occur. For digital currency, the issue of insufficiency does not exist.
(2) It is unlikely that Bitcoin can be forged in probability.
First, the computing power is immensely vast and grasped by various people around the world; it is difficult for one person to control so many human resources and computing power simultaneously.
Second, even if someone has the opportunity to grasp this computing power, from an economic and logical perspective, that person should control this network and not attack it, because their wealth is Bitcoin, and they would not destroy their own property. So, this is a probability problem, a logical problem.
Third, the transaction cost of Bitcoin is low, which is a particularly important feature. The total quantity of Bitcoin will be permanently limited to 21 million, and Bitcoin can currently be divided into a computational unit of up to 8 decimal places (0.00000001 BTC is the current smallest unit), which is the existing computational system of Bitcoin.
(3) The Bitcoin network is an advanced clearing and payment system.
The Bitcoin network is an automated clearing and payment system that is not managed by anyone. Bitcoin is the circulating unit generated by this network. This network is a natural clearing and payment system that does not require management, and the use value of Bitcoin is reflected in its role as a clearing network.
Western Union, an international remittance company in the US, has a history of over fifty years and earns billions of dollars in profit every year, especially widely used in relatively underdeveloped countries. It helps customers with remittances, which take one to two weeks to reach, charging 5 to 8 percent. What a profitable and wonderful business this is.
Bitcoin payments generally arrive within a few minutes or about ten minutes, with very low transaction fees. So, companies like VISA represent the technology architecture and foundation of our current financial circulation system and commercial banking system, while Bitcoin surpasses the past system with a new technology architecture and foundation. Therefore, this is where Bitcoin excels in circulation networks and the foreign exchange function of commercial banks.
Decentralization is the guarantee of Bitcoin's security and freedom.
There are three forms of currency in human society: one is a currency system represented by precious metals like gold, and the other is credit money supported by government credibility. In the era of credit money, the common problems we see are inflation, excessive money issuance, and currency wars. The currency system we are in today is represented by the US dollar, which is hegemonic and rampant globally, and people around the world, especially the suffering Chinese, are working for America. Why is it that American jeans cost $10 or $20 but sell for $100 in China? All of this is because the dollar is a universally accepted currency, and the dollar has achieved this through hegemony.
However, the emergence of Bitcoin has ushered humanity into the third currency era. The third era I speak of does not mean replacing the previous two. Just as the internet emerged, it did not replace fax machines and phones; they coexist. This is decentralization, a virtual currency built on the foundation of mathematical concepts, and decentralization is the guarantee of Bitcoin's security and freedom.
Bitcoin relies on credit for support, which will exist for a certain period.
Currency needs credibility to support it. National credit, national authority, national machinery, military, and law can support credit currency. So, what supports Bitcoin?
It's simple; there is a lot of credit in the world. Some swear, 'I will love you for a lifetime'; some promise, 'I will mortgage all my property'; I guarantee, 'I was a good student in the past'... These are all forms of credit. What is Bitcoin's credit? It is mathematics and probability; if you trust mathematics and probability, it exists.
I believe that Bitcoin will exist for a certain period in the field of circulating currency. In certain economic activities, especially those related to the internet, internationalization, and virtual activities, Bitcoin will exist as a form of circulation because it is unrestricted.
Bitcoin is a tool for multi-party games.
Let me ask a question: After Bitcoin came out, which country is most afraid of it? - The United States.
This explains why the EU was the first region to support Bitcoin because when the big guy gets hit, the second one benefits. So, this is a very subtle and interesting game. The California Congress has already declared Bitcoin a legal currency, but it still needs to go through the House of Representatives voting process. Bitcoin is a significant innovation in the financial field, and it will bring a series of new regulatory actions that we must study; this is the attitude of the US government. The Chinese government actually has a similar attitude; however, new things often bring new challenges.
I particularly want to emphasize that the Chinese government and people must understand the variability and long-term strategy of the US currency strategy, and the complexity of the global multi-country game. Bitcoin is not a carnival for liberals or anarchists; it is a tool for multi-party games.
Everyone should pay attention to and learn about Bitcoin.
I am not an anarchist, nor am I advocating that we should use Bitcoin instead of renminbi today. But I can tell everyone that in the future, within a short period of 10 years or a longer period of 30 years, the US will reconstruct a global currency system, and in this global currency system, the US will likely link the dollar with a new series of assets, including virtual currencies represented by Bitcoin. Before achieving this, the US only needs to do one thing: gain a voice in the Bitcoin field, which might be through computing power, reserves, or pricing power. Why does the US have an advantage in doing this? Because the US has Wall Street, which is the elite of the global elite.
I have a hypothetical story about Bitcoin. If in 30 years Bitcoin becomes a global asset, there might be a child having the following conversation with their father.
Child: 'Why are all the people with Bitcoin Americans and Europeans, but not Chinese?'
Dad: 'Baby, I'm sorry, when I was young, I still had money, but at that time money in China could buy love but could not buy Bitcoin.'
Child: 'Dad, where can I buy Bitcoin?'
Dad: 'If we continue making socks and shoes for another 30 years, we can exchange them for Bitcoin with the Americans.'
I hope everyone, including government institutions, realizes the greatness and complexity of the Bitcoin game, which truly concerns our descendants. Americans used the dollar's power in the last century to gain the right to mint dollars, making the whole world work for them. If Americans gain the power of Bitcoin in the coming decades, they will continue to make the whole world work for them.
I hope that Chinese entrepreneurs, Chinese companies, and ordinary Chinese people can gain a voice in the Bitcoin field, and I also hope everyone pays attention to and learns about Bitcoin.
