From disorder to order, from the era of the Internet to the era of blockchain, the development of blockchain started from a string of codes, and moved from the edge to the mainstream.

To observe the development of an industry, it is indispensable to observe the most representative asset value of the industry. For the blockchain industry, Bitcoin is its most representative asset, but 2019 is a year of ups and downs for Bitcoin.

Driven by multiple events such as the release of the Libra white paper, the collective learning of the leaders of the Political Bureau of the Central Committee, and the launch of Bakkt, Bitcoin has experienced sharp rises and falls, but after a deviation, Bitcoin can always get back on track.

Bitcoin is about to be halved in 2020. Some people think that the benefits of the halving have been consumed in advance, and some people are firmly waiting for the market to come. What should we expect from Bitcoin?

On January 9, hosted by Odaily2020 "FAT" Summit Forum and Awards CeremonyAt the meeting, Yang Zhou, CEO of PayPal Finance, brought several new viewpoints.

In his opinion,Bitcoin is a long-term positive trend. The main contradictions affecting the price of Bitcoin are: the growing global money supply and the lack of basic value-preserving assets for the people.

In his opinion,The price of Bitcoin will still maintain a very good positive correlation with the supply of money. At the same time, as the global monetary policy continues to loosen, the price of Bitcoin will continue to rise, but this process needs to wait and "let the bullet fly for a while."

At the same time, with the development of the cryptocurrency industry, the encrypted financial ecology is also constantly improving. As the largest service provider in the Asia-Pacific region of the encrypted financial track, PayPal Financial Industry has summarized the changes in industry competition in the past year-from basic price competition to scenario competition, and future encrypted financial services are moving towards differentiation.secondary title

The following is the original shared text edited and organized by Odaily:

Ladies and gentlemen, good afternoon! Thank you for giving PayPal Finance this opportunity to share with you the review of last year and the outlook for this year.

Today, on behalf of PayPal Finance, I would like to share with you some observations made by PayPal Finance after doing some work in the development of the entire industry last year, and the future development trend of encrypted finance: from basic price competition to scene competition, further development in the future towards differentiated competition.

A topic that cannot be avoided when talking about encrypted finance is what the development of the industry is like. To look at the development of an industry, we must look at the performance of the most representative assets in this industry. Throughout last year, we saw a very good development in the industry. Of course, the entire financial market is also booming.

In 2019, as currency issuance continues to expand, it can be seen that the annual growth rate of the S&P 500 represented by this red line is more than 20%, and China's stock market CSI 300 has increased by 37%. You can also see Gold is also rising, so all major assets are rising, and even the renminbi has also risen.

Looking at Bitcoin, the most representative of the cryptocurrency industry, what is its change like? If you look at Bitcoin alone, you will feel that this year is quite magnificent, with a wave of skyrocketing and then plummeting. In fact, compared with other major asset classes, the annual growth rate of Bitcoin is particularly excellent, and the annual growth rate is almost close to 100%. . So the conclusion is that among all major asset classes last year, Bitcoin was the asset with the best growth rate.

Recently, some people often say that the Bitcoin market is facing a cold winter, but in fact, Bitcoin performed very well throughout last year. We should ignore the fluctuations in the market and look at its overall performance.

Why did Bitcoin soar and plummet last year? Because last year was an event-driven year.

On May 8, 2019, the Sino-US trade war conflict escalated and tariffs began to increase. Bitcoin soared by 30%; in June, the Libra white paper was released, and it skyrocketed again; at the end of October, the Political Bureau of the Central Committee collectively studied the blockchain, Bitcoin still skyrocketed.

However, the growth process was very tortuous, and Bitcoin also fell due to multiple events. On September 22, Bakkt went live. Bakkt is a channel for European and American financial institutions to buy bitcoin or trade bitcoin in compliance. On the first day of the opening, the transaction volume was only 8, which was very, very different from everyone's expectations. The market felt that it did not meet expectations, so there was another sharp drop on September 22.

The impact of these events on the market in the short term may be skyrocketing or plummeting, but we can see that these events are constantly pushing the cryptocurrency industry and the blockchain industry to the public and bringing new awareness.

In the process of bringing new cognition, we believe that Bitcoin is still positive in the long run.

What exactly determines the price of Bitcoin? In addition to everyone's contribution to the industry, we believe that the main contradictions affecting the price of Bitcoin are: the growing global money supply and the lack of basic value-preserving assets for the masses.

As you can see in the picture above, the yellow line is the global money supply, which has grown from 60 trillion in 2015 to 80.15 trillion by the end of 2019.

The price of Bitcoin is very positively correlated with the supply of currency in this process. Of course, there are two or three small decouplings. For example, the fork event at the end of 2018 brought about a passive change in the entire industry. This is because the microclimate replaced the main currency in the short term Contradiction becomes a factor in determining prices. At that time, after the fork event, the price of Bitcoin plummeted once.

In the fourth quarter of 2019, Bitcoin and other mainstream assets were decoupled again, because two things happened in the fourth quarter:

The first one is that there are some negative events in the industry. For example, funds such as PlusToken are cashing out and selling coins, which had a relatively large impact in the fourth quarter.

The second is that during the fourth quarter, during the vacation of traders in European and American countries, liquidity declined. At this time, futures replaced spot, or contracts and other derivatives replaced spot, becoming the main pricing market for prices. In the process, the price of Bitcoin has fluctuated.

From the overall trend, the price of Bitcoin will still maintain a very close positive correlation with the supply of money.

We believe that as monetary policy continues to loosen, the Federal Reserve continues to expand its balance sheet, and the People's Bank of China releases water, the price of Bitcoin will continue to rise. However, this process will not keep rising, and will also be adjusted. It can only be said to let the bullets fly for a while.

After reviewing 2019, let's look forward to 2020 and seize opportunities amid certainty.

In our view there are several definite factors that are very clear and obvious.

The most macro factor is the main contradiction just mentioned, that is, monetary policy.

This graph shows the changes in the Fed's balance sheet. Beginning in 2017, the Federal Reserve began to shrink its balance sheet, which means that the Federal Reserve will sell its holdings of U.S. bonds and withdraw the liquidity of the U.S. dollar. In this process, the money supply of the US dollar is reduced, which is related to the decline in the supply of the US dollar in 2018.

The change occurred in the fourth quarter of 2019. In just one quarter, the Federal Reserve released the holdings of U.S. debt that were reduced in 2018 to the market. market.

At the same time, on January 6 this year, the People's Bank of China announced that it would cut the reserve requirement ratio. Everything represented the failure of the third-generation monetary policy, and it was on a road that was difficult to turn back.

This means that as the money supply will continue to increase, that is to say, both ordinary residents and institutions need to find assets that can preserve value. Bitcoin, as an excellent option, is also an asset class that everyone is optimistic about.

From a medium point of view, in the past, people often asked how to determine the value of Bitcoin? In the past few years of research, several anchors have been found for the price of Bitcoin. An anchor is derived from what is known as Metcalfe's Law. Metcalfe's law used to be used to calculate the propagation speed of bacteria or viruses. The growth of Bitcoin users conforms to the propagation speed of bacteria and viruses, so we call this phenomenon the spread of Bitcoin consensus like a virus.

This model was first used in the valuation system of Internet companies, such as Facebook, where the number of users and valuation have a very strong correlation. When this model is applied to Bitcoin, there is a similar effect - the price of Bitcoin and active addresses are positively correlated.

In the past few years, during the growth of Bitcoin, there have been the efforts to land the industry just mentioned, the emergence of new asset classes, and the efforts of capital, all of which have led to a result that the number of Bitcoin users has continued to increase.

At the same time, driven by various events, geopolitics is tightening, and the global conflict index is rising, all of which make Bitcoin an option for residents of countries with unstable currencies.

From this model, what will happen to the price of Bitcoin? In 2019, the valuation of the model happened to be 7,800 dollars, which was basically the same as the closing price in 2019, only a few hundred dollars away, and there was no order of magnitude difference.

According to this model, the price of Bitcoin in 2020 will reach $460,000. Of course, this process requires everyone's continuous efforts to allow more users to use Bitcoin, cryptocurrency, and blockchain technology to find more industrial landings and more industrial applications.

The direct factor that affects the price of Bitcoin is the halving of Bitcoin. This is another anchor for the price of Bitcoin and the most basic valuation model.

There is a correlation between Bitcoin price and its so-called scarcity. What kind of asset valuation is the scarcity model generally used for? It is generally used for the valuation of precious metal commodities with limited supply of gold and platinum and certain application scenarios.

According to the scarcity model, the price of Bitcoin has been following the "script".

Although this year's script is slightly different, the rapid rise at the beginning of the year made it a little earlier than the previous bull markets - 2011-2013, 2016-2017, but it also quickly pulled back.

It is undeniable that the "script" may have changed slightly, but this "script" is still expected to be written in its own way and direction.

From this perspective, according to the valuation model, the price of Bitcoin may exceed $80,000 and approach $100,000 after the next halving. In other words, after the next halving of Bitcoin, the market value should be around 1.6 trillion, and the price of a single Bitcoin is around $80,000. Therefore, Bitcoin is still a very worthwhile investment asset.

Bitcoin is still worth looking forward to and looking forward to. Of course, this process is relatively long, and it will not be in place once this year.

After talking about the outlook, let me introduce you to PayPal Finance. PayPal Finance launched in July 2018 and has done a little bit of work over the past year. The happiest thing is that at the beginning of this year, some funds were injected into the entire industry in the "cold winter" and contributed to the recovery of the industry. Many customers did not sell Bitcoin when the price was very low, but in Selling when the price is high, indirectly earning hundreds of millions of dollars for customers.

At the same time, in the entire industry, we also became the No. 1 in the Asia-Pacific region this year, with a total loan amount of more than US$400 million and a loan balance of more than US$300 million, which indirectly supported the development of customers.

During this process, we established a global network of partnerships, expanded funding sources in many countries with low interest rates, and we also had some direct observations of the industry.

We feel that this industry has relied on price competition from the beginning, and later there have been many scene-based products, and the market will become more differentiated in the future.

The first stage is price competition. At the beginning of last year, the financing cost in the market exceeded 20%, but in the past year, when we were constantly looking for new funding partners, we indirectly reduced the funding cost from 20% to less than 10%.

The second stage is the competition in terms of scenes. In the past, people thought that there was only one scenario in this industry, which was lending. Now we have gradually expanded the lending scenarios, from miner lending to fund lending, to the use of leverage tools, to mining machine lending, and inter-institutional lending. In fact, the cryptocurrency industry has also established its own inter-agency lending market, and the inter-agency lending market has gradually customized interest rates.

The third stage is competition in terms of differentiation. From the simple loan service in the past, we began to seek more professional, more comprehensive and more customized services to bring better enjoyment to customers.

Today, also through this summit, on behalf of PayPal Finance, I officially released PayPal's high-end customer service platform - PayPal PRIVATE. As the first institution in the cryptocurrency industry to provide bank-level services, we hope that customers can get more customized services in PayPal PRIVATE.

In the process of serving high-end customers in the past year, we found that many customers not only have their own investments in traditional finance, but also have certain investments in the cryptocurrency industry. However, the services they enjoy in traditional finance, including customized financial products, are not yet available in the encrypted financial world.

For example, in traditional banks and private banking systems, customers can enjoy services such as the so-called VIP room, and the card month is still blank in the encrypted financial industry. We want to bring this service to them through PayPal PRIVATE.

At the same time, due to the rapid development of the cryptocurrency industry, the value-added of customers' assets is also very fast, so how can the money earned by luck and ability be preserved by ability. This is what we hope to provide customers with the PayPal PRIVATE service.

In short, thank you for your support to PayPal Finance in the past year. We look forward to providing customers with more professional, comprehensive and customized services through PayPal PRIVATE, so that more cryptocurrency users can enjoy the same professional experience as traditional finance. and excellent service.