Time flies, another year.
For the blockchain industry, this has been a year of ups and downs.
Bitcoin, a barometer of the blockchain industry, has been uncharacteristically uncharacteristic this year, losing the sense of annual direction it has maintained for 10 years.Bitcoin in 2019 is not like the rocket-like skyrocketing in 2017, nor is it like the negative and negative declines in 2018, but the ups and downs of major events affecting the industry, and the continuous bull-bear conversion.
Since the trough of the bear market at the beginning of the year at 3,000 points, Bitcoin has rebounded vigorously under the modes of IEO and Staking. During this period, the Libra white paper debuted, igniting a new round of global digital currency boom, and also pushed Bitcoin to a new annual high of 13,000 points. However, Libra's progress was not smooth, and the follow-up of the digital currency was weak, and Bitcoin fell all the way to around 7,000 points. Subsequently, Chinese leaders learned about the blockchain, which revived the confidence of the market and pulled Bitcoin above 10,000 points in one fell swoop. However, after the hustle and bustle, calm investors suddenly realized that the country's attitude towards blockchain and digital currency is completely different: the country supports the blockchain with a carrot in one hand and smashes the digital currency with a big stick in the other. As a result, Bitcoin quickly returned to the starting point before the surge, and oscillated around 7,000 points, seeking a new direction for the next round.
Undoubtedly, the year 2019 of blockchain and digital currency is an event-driven year. Therefore, it is very necessary to review and evaluate the events and impacts of global blockchain and digital currency this year, so as to help us go through bulls and bears and clarify our thinking , see the future clearly.
1. The release of the Libra white paper:
Influence index: ★★★★★
The much-anticipated Libra finally released its white paper in June, announcing to the world the grand plan to build a global inclusive financial system with digital currency. Libra users will cover 5 billion people around the world, covering all aspects of life such as shopping, traveling, and taxis.If it can be successfully realized, Libra will become the greatest miracle in financial history; even if it fails, Libra can be called an unprecedented financial experiment.
Because of Libra's huge influence, its every move attracts the attention of the world, and it is destined that Libra will not be smooth sailing. After the announcement of the Libra white paper, central banks and regulators around the world questioned and opposed it in unison, causing members of the founding alliance to withdraw one after another, and the US Congress held several Libra hearings to express doubts. Although Libra started unfavorably and suffered a lot of setbacks, its influence is far-reaching and extensive, because it first questioned and challenged sovereign currencies: Can multinational corporations use digital currency technology to issue currency? Can a non-sovereign alliance digital currency be accepted by today's financial system?Regardless of the outcome, Libra has driven the upsurge of digital currency and has become the main driving force for the digital currency market in the past year.
Trend Forecast:Libra will have to bow to reality, and it is very possible to implement a stable currency of a single currency in stages and regions, such as using it in the Facebook system first, or gradually launching LibraUSD and LibraEUR.
Links to related articles:
Cai Kailong: How does Libra get out of the predicament
2. China attaches great importance to blockchain:
Influence index: ★★★★★
Under the external background of Sino-US relations taking a turn for the worse, Sino-US confrontation shifting from trade to technology and finance, and in the internal environment where the domestic economy has entered a new normal and growth points are weak, the Chinese government regards blockchain as an important breakthrough for independent innovation of core technologies. Strongly support blockchain technology and encourage its application in digital finance, Internet of Things, smart manufacturing, supply chain management and digital asset transactions.
Trend Forecast:The demand for blockchain education, training and consulting is surging, and a large number of individuals, corporate institutions and government agencies are eager to obtain comprehensive, objective and neutral blockchain knowledge and advice to help them realize the blockchain+ of their business. With the strong support of policies, the underlying technology of public chains and alliance chains will make great progress. The BaaS of large domestic Internet companies will gain a broad market, and the investment enthusiasm for blockchain technology and applications will also be ignited.
Links to related articles:Exclusive interpretation of China's new blockchain policy
3. The launch of Bakkt and the evolution of the derivatives market:
Influence index: ★★★★
Intercontinental Exchange's volatile Bakkt exchange is finally launching a physically-settled bitcoin futures trading product after more than a year of delays. However, on the opening day of Bakkt, there were only 72 bitcoins and a dismal trading volume of 600,000 US dollars, which was in stark contrast to Bakkt's star halo, which is all in one, and made competitors laugh out loud. However, Bakkt finally lived up to expectations and demonstrated its true strength with actions. In just three months, Bakkt's bitcoin futures trading reached a new high of 124 million US dollars, and at the same time launched bitcoin options, bitcoin custody for institutions, and a number of businesses for bitcoin payment for individuals.
Now it seems that everyone still underestimated Bakkt’s ambitions. She not only wants to dominate the derivatives market, but also wants to carve up some shares in the highly competitive spot market, not only to cover institutional customers, but also to snatch individual customers.With its advantages in license, capital and resources, Bakkt's potential is immeasurable.
While Bakkt is proving its own strength, the existing derivatives trading market is also undergoing drastic changes. Due to the fierce spot competition, the existing leading exchanges have launched derivatives trading business one after another. OKex has a long history in the derivatives business, and Bitmex is the uncrowned king of derivatives trading volume. Huobi and Binance have also launched contract transactions one after another, and their performance is also very impressive.
Trend Forecast:The derivatives market will continue this year's momentum and further grow, while the two-tiered differentiation of derivatives exchanges is becoming more and more obvious. Bakkt has become a thriving regular army, constantly expanding the institutional and individual markets, while OK, Bitmex, Huobi, and Binance belong to the field army, not only facing competition between the same camps, but also the constant erosion of external Bakkt enemies. We look forward to more derivative products, lower costs, and higher quality services in 2020.
Links to related articles:Cai Kailong: Can Bakkt detonate a new bull market with the launch of physical delivery bitcoin futures?
4. Canaan’s listing opened the door for digital currency to enter the capital market
Influence index: ★★★★
Canaan Zhizhi was listed on NASDAQ, finally taking the first step for digital currency to enter the traditional capital market.
The capital market has always held a very cautious attitude towards the listing of digital currency-related companies. The main reason is that regulatory compliance risks are uncontrollable. In addition, the company's value is highly related to the digital currency market price, resulting in a high risk of market fluctuations in the company's own value. A number of digital currency-related leading companies, including Canaan and Bitmain, have tried to list in Hong Kong to no avail. Later, Huobi and OK chose the tortuous route of backdoor listing through the acquisition of a Hong Kong shell company to indirectly reach the capital market. Today, Canaan has become the first digital currency stock. This is due to China's change in attitude towards mining and mining machine production, which reduces compliance risks. Earning fluctuations provide a good tool. Of course, the most important thing is Canaan Creative’s full preparation for listing. The company’s structure and financial reports meet NASDAQ’s standards.
Although the stock price performance of Canaan Zhizhi after its listing is quite unsatisfactory, being the first blockchain stock to be listed is of great significance.It provides an effective model for mining machines that are going to be listed later, and it also allows the capital market to truly feel the ups and downs of the digital currency industry.
Trend Forecast:Digital currency needs to enter the traditional capital market step by step. Mining machine companies are undoubtedly the first step, but the most difficult thing is the exchange. Because the exchange’s regulatory compliance risks are more uncontrollable, and there are more unpredictable risks such as hackers and technology iterations. If the exchange can also be listed, then the third digital currency service companies behind, such as consulting, media and rating agencies, can hope to obtain the blessing of the traditional capital market.In the future, mining machines will be listed one after another, and the exchange will still need a long preparation,Most likely, the first listed exchange can only be produced among Coinbase or Bakkt. The reason for this speculation is very simple. In the eyes of traditional financial institutions, only they are qualified regular troops.
5. China tightens regulation on virtual digital currency
Influence index: ★★★★
Regulation will be late, but it will not be absent, especially for digital currencies.
China's supervision of digital currency has suddenly become stricter after the country supports the blockchain: closed 6 newly discovered virtual currency trading platforms in the country; blocked and processed more than 200 platforms whose servers are located outside the country and actually operate in the country; frozen More than 10,000 electronic payment accounts; more than 300 related WeChat applets and official accounts were closed. Financial regulators in Beijing, Shanghai, and Shenzhen have also launched illegal investigations into virtual digital currencies.
Trend prediction: Any prediction on regulation is futile because there are too many uncertainties, but the overall direction is traceable. In fact, China's regulatory policies have not changed, and they all follow the 94 ban jointly issued by multiple ministries and commissions in 2017. However, in terms of the intensity and scope of implementation, it changes with the needs. The tension will remain high. Of course, judging from the three important policy releases in 2013, 2017 and 2019 and the subsequent market trends, the period of regulatory impact on the industry lasts no more than 2 months, that is to say, the long-term development direction of the industry is more What is determined by the industry itself will not change due to regulation.
6. China's central bank digital currency DC/EP
The history of China’s central bank’s digital currency can be traced back to the Central Bank’s Digital Currency Research Institute, which was established in 2014. In 2016, the institute fully elaborated the prototype and goals of central bank digital currency, which did not attract much attention at the time. Until 2019, Libra triggered discussions on stablecoins from all walks of life around the world, and central banks of various countries also accelerated their research plans on central bank digital currency CBDC, and the Central Bank of China is a well-deserved global leader. It can be seen from the central bank's repeated public mention of the central bank's digital currency plan that the upcoming central bank's digital currency is a digital currency and electronic payment system (DC/EP), which is an alternative to M0, that is, the digitization of banknotes. What is more is a two-tier operating system, which maintains relative anonymity and technical neutrality, and aims to build another currency and payment system parallel to the existing system. It is reported that the four major state-owned banks and the three major telecoms will pilot DC/EP in Shenzhen and Suzhou in the near future.
The history of China’s central bank’s digital currency can be traced back to the Central Bank’s Digital Currency Research Institute, which was established in 2014. In 2016, the institute fully elaborated the prototype and goals of central bank digital currency, which did not attract much attention at the time. Until 2019, Libra triggered discussions on stablecoins from all walks of life around the world, and central banks of various countries also accelerated their research plans on central bank digital currency CBDC, and the Central Bank of China is a well-deserved global leader. It can be seen from the central bank's repeated public mention of the central bank's digital currency plan that the upcoming central bank's digital currency is a digital currency and electronic payment system (DC/EP), which is an alternative to M0, that is, the digitization of banknotes. What is more is a two-tier operating system, which maintains relative anonymity and technical neutrality, and aims to build another currency and payment system parallel to the existing system. It is reported that the four major state-owned banks and the three major telecoms will pilot DC/EP in Shenzhen and Suzhou in the near future.
Trend Forecast:2020 is expected to see the initial landing of DC/EP, but many people will be disappointed. It’s not because the central bank is not doing well enough, but because all walks of life have too high expectations for DC/EP, imagining that DC/EP can quickly advance and undertake responsibilities far beyond its capabilities, such as the internationalization of RMB, such as replacing the existing payment system wait.
Links to related articles:Cold thinking about the central bank's digital currency
7. The Rise of DeFi and the Difficult Road to Decentralization
Influence index: ★★★
The core of DeFi (Decentralized Finance) is to provide an open decentralized financial platform with encrypted digital assets as the target, smart contracts as the technology, programmable and composable.2019 is the first year of DeFi, and various DeFi products and business models have sprung up within a year:The asset mortgage platform MakerDao, the lending platform Compound, the trading platform dYdX, and the contract agreement UMA are among the best. The total amount of DeFi assets has also tripled from the beginning of the year, reaching a scale of 670 million US dollars.
Trend forecast: DeFi will continue to develop, but it will gradually face bottlenecks in the number of users, activity, asset classes and total volume. DeFi currently relies too much on Ethereum, and the upgrade of Ethereum next year will have a huge impact on DeFi. But DeFi will not have regulatory compliance risks in the short term, because first, DeFi is currently small in scale, second, most of DeFi is currency transactions, not connected to traditional financial markets or real assets, and third, in the eyes of supervision Here, the transparency and fairness of DeFi meet the requirements, and relatively speaking, centralized exchanges are the focus of supervision.
Links to related articles:Interpretation of Blockchain Decentralized Finance (DeFi)
8. Binance Hacked
Influence index: ★★
The spear-and-shield battle between hackers and exchanges started from the first day the exchange was established.
Since digital currency is difficult to trace, and most exchanges are not yet subject to national supervision and policy protection, it is difficult to recover digital currency through law enforcement agencies after it is stolen, and most hackers are at large. The sharp contrast between high returns and low risks has attracted countless hackers. Security has become the first lifeline of digital currency exchanges. There have also been many sensational exchanges being hacked in history. However, relatively speaking, the public security incidents in 2019 are fewer and lighter than before in terms of the number of incidents and their impact. And Binance was stolen 7,000 bitcoins, worth 40 million U.S. dollars, which is considered a relatively prominent security incident this year. Binance chose to handle it openly, using its Security Asset Fund for Users (SAFU) to fully compensate users for their losses and win back the trust of users.
Trend Forecast:Incidents of hackers stealing exchanges occur frequently, but most exchanges choose not to make it public. Binance’s choice to make public and use the security fund for full compensation will be followed by major exchanges in the future. However, when the technology is "one foot high, the devil is one foot high", striving to obtain a legal license and protected by the state is the ultimate weapon for the exchange to resist hackers.
Links to related articles:How to treat the incident of Binance being stolen
9. Professor's Academic Research Proves Bitcoin Price Manipulated by Tether
Influence index: ★★
The manipulation of the digital currency market is the most concerned issue of the regulators, and it is also the most important reason why the regulators have been hesitant to bring the digital currency market into regulation. University of Texas finance professor John Griffind and Ohio State University finance professor Amin Shams published an academic paper titled "IS BITCOIN REALLY UN-TETHERED" ("Is Bitcoin Really Unrelated to TEDA?") in top academic journals. In this uproarious paper, the two professors used blockchain and market data from March 2017 to March 2018 to prove that the price of Bitcoin was manipulated by Tether through a variety of rigorous methods and different angles. Tether is currently a veritable "central bank" in the digital currency world. The USDT it issues has actually become the "dollar" in the digital currency world and is widely used in various trading scenarios. Today, the daily transaction volume of USDT has far exceeded that of Bitcoin. .
Trend Forecast:Economists are becoming more and more interested in the digital currency market, because digital currency provides an excellent experimental place for academic research. In the future, research on digital currency pricing, market structure, risk, and regulation will continue to emerge in the economics circle. Industry and regulators provide useful references. If Bitcoin, which claims to be absolutely decentralized, will be manipulated, let alone other digital currencies. Scholars' reports have a strong influence on supervision, so supervision will become more cautious in promoting the digital currency market. Tether and the Bifinex behind it have long been the subject of regulatory attention, and there will be constant lawsuits in the future. According to reports, a number of lawyers have begun to prosecute Tether and Bifinex in three states.
Links to related articles:
Cai Kailong: Bitcoin price is manipulated! Do you still dare to hold it?
Uncle Kai’s quick comment: Have you ever lost money in the currency circle? Get it back!
10. Justin Sun invited Buffett for lunch
Influence index: ★
Justin Sun of Tron successfully bid for Buffett’s lunch with the highest price in history—US$4.56 million. However, at the last moment, he said that he was in the hospital for treatment due to sudden kidney stones and canceled the lunch meeting with Buffett, which aroused attention from all walks of life and extensive media coverage. Afterwards, Justin Sun posted on Weibo that he was deeply guilty of his excessive marketing and enthusiasm for hype, and expressed his sincere apology to the public, media and regulatory agencies. Of course, an apology is an apology. The controversial Sun Yuchen is still often in the headlines and hot events, whether he created it on his own initiative or he rubbed it, such as repaying debts for Wang Sicong and Luo Yonghao, setting up a dream fund QR code to throw money, and even Weibo has been blocked recently.
Trend Forecast:epilogue
epilogue
History will not repeat the details, but the process will be surprisingly similar.
Many people in the industry are worried about the arrival of the cold winter in the industry. Uncle Kai suggested that they look back at the industry trough from 2013 to 2017. Most of the blockchain and digital currency companies fell down before the arrival of spring. The companies that survived have now become industry leaders.
The so-called "cold winter" is not a disaster, but a necessary stage in the growth and maturity of the industry.Those practitioners who are really capable and have the pursuit and dream of blockchain production need not panic at all, and those who freeze to death in the cold winter are crooked melons and cracked dates.
The edge of a sword comes from sharpening, and the fragrance of plum blossoms comes from bitter cold. Don't worry, winter is coming, can spring be far behind?
======== PS ======
Uncle Kai spent most of this year reading and writing. In the eyes of most people, he is not doing his job properly. However, I don’t know if there are so many articles and columns written this year, so let’s take this article as an example. This is the last article of this year, and I will leave it at this point. Taking advantage of the few days at the end of the year, and the balance in 2019 is not enough, hurry up and do some "business" by recharging.
Uncle Kai sincerely thanks the readers for their consistent support, and I wish you all the same surprises as Uncle Kai in 2020 :-)
