Confessions of Chinese crypto insiders

A liberal translation of 深访币圈：享受过一夜暴富，你再也忘不掉捷径 by 甲子光年(Jazzyear)，edited by 甲小姐，采访and written by 火柴Q (Manqi Cheng) 😎_)_ (All content credit goes to the writers above; you can give me just a little credit for my flowery and liberal translation This is part of a new series of translations that I will be working on to help illuminate thoughts and trends in blockchain and cryptocurrency in China. I noticed that there is a yawning space between what is in the Chinese public consciousness, and what the rest of the world knows about it. As a friend once put it, “It’s like there exists two media worlds, one in China and one in the Western world as I know it.” This particular piece was chosen because I recently helped with their China launch; and as part of the launch, they worked with , a Chinese cryptocurrency wallet who pulled in 6 VIP figures in the Chinese crypto world to launch their app together with CryptoKitties in China. Many have asked me who these people are (in English), and I chanced upon this article that featured their stories. CryptoKitties Cobo I’ve written comments in quotes where I see them being useful. Generally, I’ve adapted every single word, line and expression into something accessible in English, and have added lots of dramatic flourish to the writing style to make it interesting for you guys. Enjoy! In Chinese, there is a pithy saying: 生死有命，富贵在天，天堂地狱，一念之间。 Life and death is a matter of destiny, Rags and riches, simply serendipity. The space between heaven and earth, Exists only in perceptual difference. In a whirlwind of a month, we chased crypto investors and believers through China and the US: The most knowledgeable of insiders; an investor who made billions; the owner of the largest Litecoin mining pool in the world; a fourth-tier city public official who invested 200K and only made 40K back… : Currencies all in Chinese Yuan / RMB unless stated as USD Comment This crazy cryptocurrency trend has created a stage for the rawest of human emotions, constantly on performance, : greed, fear, suffering, and despair at the loss of a “crypto religion”. The forces of crypto are larger than the roles themselves, the actors helpless in the face of the tide. Even if you joined early, are technically savvy, and are well-connected, that still doesn’t guarantee that you’ll leave the scene 100% intact. full of sound and fury, signifying nothing Some camps believe “you shouldn’t invest in what you don’t understand”, like Warren Buffet, while significantly more believe “without risk, there is no reward”. People in China are now constantly goading themselves to exhaustion with this question, day-in and day-out: You’ve already missed out on the Internet boom and the housing boom, do you really dare miss out on Bitcoin this time? For the more fortunate who made money, once you’ve made big money once, and enjoyed overnight success with the huge ego boost that comes with it, you can no longer get used to the depressive state of “making less money”; you can no longer give up the thought that there must be an easier and faster shortcut to making more money. have In a world where wealth rushes you by, you’ll probably be disappointed a disproportionate number of times. The billion dollar meetup What if you could overlay aggregate personal wealth over a map? If you did, then on a winter night in 2017, you’d realize that a coffee place near the FFC building in Beijing had suddenly lit up with an astronomical number. A billion US dollars would be an understatement of the year. As a crypto influencer puts it, “The wealth in this industry is something a layperson can’t even begin to imagine.” That night was a private gathering featuring various blockchain investments. In this place, smaller than 300 square meters, stood 70 on the left and right of the seating area; the outer ring held more than a 100, and people spilled from the second to first floor over the stairs. Within the chaos, lay a semblance of order — blockchain, after all, is a decentralized technology, and that meetup was a decentralized meetup: You could tell who were the pioneers, who got into the industry earliest; they weren’t in a hurry to find a place to sit, and weren’t paying any attention to what was happening on stage. They seemed to naturally convene at the side of the venue, next to the stairs. There, they were busy greeting friends they’d only known online, striking up partnerships, scanning QR codes and dropping line after line of “nice to meet you” and “good to see you in person”. The attendees were clearly demarcated into the “in-group” and the “out-group”, a reflection of the current state of blockchain and cryptocurrency players in the community. When we say “community”, it consists of discussion forums, chat groups, blogs and social networks that were created by the earliest adopters of cryptocurrency in the country. At this event, the “in-group” gathered at the back row. They were either technical, blown away by the genius of and the underlying technological promise; or they were hard-ass investors who didn’t care about the technology, but could smell an opportunity when it was presented to them. bitcoin Those in the front row and on stage, then, were the “out-group”: They came on the tide of the mainstream, as individuals and organizations drawn in later. Although their names would mean plenty outside of the crypto in-group, with the likes of IDG, Sequoia and ZhenFund, here… here, those in back row aimed indulgent and lightly patronizing smiles at them, murmuring their true opinion of them under their breaths: “Look, a fish.” : Called 韭菜 in Chinese, which is an amaranth (a type of vegetable), or fish in English context, is someone who entered the market late, bought high and sold low. So by all counts, a noob investor. Comment When ZhenFund’s partner, Yusen Dai, appeared that day, he also joined the back row. There is a recent rumor that he recently lost $500K in the market, but the other rumor is that he made way more before. Half a month later, ZhenFund’s founder, Bob Xu, jumped right on stage in front of a large social audience: With a directive stating “do not divulge this” accompanying his message (which, of course, instantly got reshared so many times it went viral) he bellows his call-to-arms: “Dear CEOs, the revolution is here. This is a technological revolution in which those who follow prosper, and those who rebel die.” blockchain The next day, public stocks with a blockchain angle explosively gained 5.47% in value. Conspiracy theories soon arose, pointing to Bob Xu for deliberately manipulating sentiments through his “information leak”. In any case, even if Bob Xu did turn up, it would probably have been hard for him to beat the shine of Shuoji Zhou, the founder of FBG Capital, or as they call him, the “clan leader” of the crypto community. This VC firm has undeniable standing within the community — the moment the clan leader arrived at the back row, people swarmed around him in droves; hands extended to him in every direction, and a host of iPhone X’s reached out to scan his WeChat QR code to send friend requests. He donned a standard programmer’s ensemble, and stood smiling in a checked shirt and a pair of teacher-like gold-rimmed glasses. Even though he seemed slightly awkward in general, this only served to underline the truth of the matter — if you were truly a person of gravity, you don’t need to worry about mere pleasantries. When asked about blockchain and crypto, he replied simply: “I won’t make a sound in Chinese media.” Unlike Bob Xu, who revels in hollering in 500-people groups, this clan leader’s natural preference lay in being low-key. There were no drinks served that night, but the conversation in the back row was more intoxicating and exhilarating than alcohol. Someone said they had received licenses and were preparing to start an exchange in the Middle East; another mentioned that they were opening an IFO round next month; and yet another was coming to a conclusion on new ICO allocations on the spot. Of course, there was another profile in that coffee place as well, representative of the majority of the people on the street: Complete newbies, a.k.a. “No Coiners”. If they’re not careful, they’ll become a fish. “Do you know what 梭哈 is?” a young man, born in 1996 asked, after he was hounded about his views on blockchain for more than 30 minutes. (loosely translated: stud poker) “Yes, that’s a poker card game.” All around, five or six people started breaking out in laughter. “How could you not know? It means to shove money into ICOs.” He administered the strongest shot of alcohol that night: “Did you know? Today, there was someone who put 20K in, and through shoving it in an ICO, he’s already made 200 million!” These “stud poker” people. June 2017: Xiaolai Li’s PressOne project conducted an ICO; before they even released their white paper, they had already raised US$82 million in tokens. The BAT ICO, by JavaScript founder Brendan Eich, was so popular that their token site crashed; they wanted to raise US$15 million in ethers, but in just 24 seconds, the ICO already raised US$35 million. This meetup felt like an exemplification of the “stud poker” wave; as the market roared and tumbled, those on the fringes reared their heads in a show of strength — while those originally in the best seats lost their edge. When VCs wanted to get in on ICOs, they were basically being pushed out of the market as all the allocations got snapped up by those in the back row. Those in the back row, they know this best. Someone there stated: “It’s only when a project is despised by the community, that a VC even has a chance to get their hands on it.” “If you want to come and play my game, you’ll have to play by my rules.” Although, to be fair, in this free, fresh and unregulated world, there no such things as rules. are I entered this race to make money, but it became my religion Just looking at the past few years, you’d be hard pressed to find a generalization for how people made money in crypto. Some mined their way to wealth, some started mining pools, some traded in the markets, some issued tokens, and some shoved money into ICOs in their “stud poker” game. It’s hard to tell how much each person holds in crypto. In the news, Xiaolai Li previously revealed that he had six figures worth of bitcoin; Pumpkin Zhang, whose mining company recently applied to be privately traded, once owned 60,000 bitcoins; the Winklevoss twins hold 100,000 bitcoins; and Roger Ver, nicknamed “Bitcoin Jesus”, owns 30,000 bitcoins. This is not a comprehensive number — but right now in the major exchanges, there are more than 1600 coins, with a total liquid market cap (excluding locked up coins) of over 5 trillion Chinese yuan, and a daily trading volume of 500 million yuan — a daily trading volume that can match that of Shanghai and Shenzhen combined. YanChunFangNiuLang (a complicated Chinese nickname, translated “Releasing shepherds in a smoky village”), a commentator, once wrote: “After interacting with many investors who jumped from stock investing to crypto investing, in 2017, 10x return is just the beginning, 30x return barely meaningful, and only 100x return is worthy of praise.” As the saying goes, “One day in crypto world is one year in the real world”. With the wild swings in crypto, it is unparalleled in comparison to any other asset class in the whole of history — and as such, it has also created so many untold stories of loss. 大空翼 (translated as “Large wings”, romanized “Dakongyi”) is a legend in the community. You can’t even see him at the back row of the meetup, since he simply doesn’t show up in person to events. As the rumors go, Dakongyi, who was born in the 90s, has already made billions playing in the crypto markets. “Billions?” Dakongyi barked out a laugh. “There must be people in China who have made this much.” He quickly follows up with, “Although half of me knows people who already did.” He says the total size of his original investment was just 20K yuan. In 2013, during his sophomore year in college, he returned to China from the UK. He went on Taobao and carefully scrounged around for parts that he eventually put together as a mining rig; the total cost to fix up that rig was 20K. At that point, the computing power of GPUs wasn’t enough to mine bitcoin, hence he mined all kinds of random altcoins like WDC and FeatherCoin. By the time his summer break ended, he had mined enough to exchange for 80 BTC. At that point, BTC was worth 4K yuan, and that was how Dakongyi made his first 10K profit in crypto. “At first, I joined this market because I wanted to make money,” Dakongyi said, but as time went by, he realized his attitude started changing. “I became a true believer.” His initial belief came from the admiration of the exceptional people in the community. Dakongyi believed that the world’s top talent and thinkers were all in the Chinese crypto community. These talents were pushing the concept of decentralization hard, working tirelessly on the underlying protocols, but always shared the spoils of their work with the community. Based on his understanding, the reason for the meteoric rise in the market was in recognition of their efforts, and in validation of the technology. The early culture of the community in China was reminiscent of the “hippy movement” in the Bay Area in the 1970s. Its members championed anarchism and liberalism, and rejected overt supervision and restraint. The wrinkle is that an anarchist utopia has never come to pass in the history of humankind. It used to be that, in the early days of the Internet, the same promises were made in the name of anonymity and decentralization. After decades of development, however, the promised land of the Internet has now evolved into the reality that we recognize today: monopolies, centralization and regulations. And so, from the shadows, blockchain has surged forward to take the place as the flag-bearer in the revolution for these causes; it is here to serve the original believers of the Internet, where the current state of the Internet has failed them and broken their hearts. Unfortunately, nothing under the sun is ever really new; Bitcoin, which heralded the resurgence of a decentralized ideal, has now become increasingly centralized. According to Credit Suisse’s analysis of trading addresses, 97% of the world’s supply of bitcoin is owned by 4% of participants. A tiny proportion of the population already controls a massive share of computing power and allocation of bitcoin. Although making money is a good thing, for the religious, the increase in value represents recognition of the community and the realization of their beliefs. And what really made Dakongyi his fortune was a later, legendary release: IOTA. IOTA is an exemplar of the Chinese expression: “After ten years’ hard study noticed by none, his fame fills the land once honours are won.” :十年寒窗无人问，一举成名天下知 can be more literally translated as, “After spending 10 years in front of a cold window, a sudden rise to fame and the whole world knows you.” Comment Being a non-blockchain cryptocurrency, IOTA was developed on a new form of distributed ledger — built upon the Tangle. Its uniqueness comes in the form of zero transaction fees, quick transfers and its potential to be used for small purchases on the Internet. Dakongyi said that when IOTA raised their ICO at the end of 2015, China only had seven or eight participants in that round, and only two of them have anything remaining: Him, and Jimmy, IOTA’s Chinese community manager. At the time, IOTA raised over 1300 bitcoins, with a value over 3 million yuan; — and each IOTA token was only 0.001 yuan. From the end of 2015 to June 2017, IOTA was really cheap. IOTA’s Chinese QQ group consisted of less than 300 members until May 2017. When the ICO madness started in June 2017, IOTA suddenly shot up in value, with each IOTA costing 36 yuan in December 2017 — 3,500,000% increase from the original ICO price. Dakongyi hence became a “world legend”, and Jimmy reported that IOTA’s QQ group grew to 4500 members. Little Youth (as translated from his Chinese moniker 小青年, romanized “XiaoQingNian”) was one of the members of the IOTA community group. His alter-ego works as a fourth-tier city public official in a province in the South of China. Since he started investing in bitcoin in March 2017, Little Youth has been constantly distressed that although he entered into a bull market, he didn’t actually make much money. In truth, when he started getting into these high-profile QQ groups with whales, Little Youth begged his way into owning about US$60,000 in value across various types of coins and tokens — through his knack for complimenting and bootlicking others. Sadly, he lost all of these tokens after September 2017 on short-term speculative trades. On Bitfinex, he leveraged 3.3 times on margin trades to short multiple currencies, and lost 200,000 yuan in the end. He squandered everything, right down to his original investment and bounty for doing part-time work in the IOTA community. He later calculated and realized that if he had just held the tokens he earned back then, he would have owned 5 million yuan of value at the peak. In this year of speculative trading, Little Youth spent every single day living in the shadow of uncertainty and anxiety. He would compulsively check market data at least once every hour. He believed he sold too early in April; even though he made 200,000 yuan from that bout of trading, he was still extremely unhappy. He watched as the markets climbed ceaselessly, and became depressed. He witnessed as community members in the QQ group showed off their accounts, where they had put in 20,000 yuan in capital and made 8 million yuan in one year. On the other end, there he was, putting in 200,000 yuan in capital and only making 40,000 yuan. Itinerating around the same spot for a year, without losing money but without making much either, Little Youth felt deep in his core that he was a loser. “I’ve never heard of people who lost money massively, so I was the worst of the lot. I entered this market and didn’t even make a million dollars. I am an utter failure.” In spite of his depression, he still vicariously experienced how others made their wealth — and so, he continued to unconditionally believe in the future of crypto. His conclusion is to look long term, and HODL to his deathbed. He paid to join a group, with a 2018 plan to join the whales in “value investing”. Subscriptions to these groups were 388 yuan for bronze membership, 2 ETH for silver membership, and 1 BTC for gold membership. The group owners promoted various ICOs and new token types in this group, and Little Youth bought a new token called Hshare (HSR). : Hshare funnily gained momentum when it was dubbed “braised pork” in China for its initials HSR (romanized “HongShaoRou). Comment In China, there was a service called 小密圈, translated “Little Secret Group” enabling influencers to monetize their access to firsthand information, or their qualified opinions, by posting to groups. People pay money or crypto to join these groups for privileged information, and the influencers make money from these subscriptions. It was taken down for hosting too many unregulated groups, but is now back in business, rebranded as知识星球, or “Knowledge Planet”, following the same paid model. Comment : HSR has already been pumped and dumped, so when Little Youth bought it, it was at 190 yuan, but at the time of interview it had already slid to 140 yuan. “But I won’t change my mind anymore,” Little Youth said with conviction, “They say it’s a pump and dump, MLM (multi-level marketing) coin, but I won’t change. I’ve experienced it, I won’t move my stance, I strongly believe that it will definitely rise again.” “Don’t just watch the thief enjoy his pickings, watch when he suffers the beatings” : Another expressive Chinese proverb, 别看贼吃肉，要看贼挨揍 basically means that you shouldn’t only admire people’s success, but also understand the difficulties they endured for them to get there. Comment Again, we turn back to the poem that accompanied the start: Life and death is a matter of destiny, Rags and riches, simply serendipity. The space between heaven and earth, Exists only in perceptual difference. It’s not a stretch to say that this epigrammatic saying perfectly encompasses the rise and fall in the world of crypto. The world’s largest mining pool for Litecoin is f2pool. Its founder, 七彩神仙鱼, alternately called “Bitfish”, “Godfish”, more literally “Magical Discus Fish”, or romanized “Shenyu” says: “Recently within the community, people have taken to taking pictures with their index fingers pointing upwards, signifying ‘It will keep going up.’” : Or in our equivalent catchphrase, “Up and to the right!” Comment At the end of 2017, there was a small market collapse, which saw bitcoin falling from US$18,000 to US$11,000. “In those few hours, the normally boisterous community fell completely silent, with nobody saying a word,” Bitfish commented as he stood near an elevator in a Beijing building, recalling the event. It was a weekend, but Bitfish and his team often work overtime and over the weekend. “Finally, someone broke radio silence, and their first question was: ‘I just bought a ton at the bottom, anyone else did that?’” Just as he was recollecting that shorting incident, his phone buzzed with new updates — this was from an app that his team had built, crawling and monitoring real-time news on the whole network for information relating to important movements in the crypto markets and mining. With a background in communication engineering, having built businesses in mining chips, mining rigs and mining pools, and now diversified into running a crypto quant fund and a wallet application, Bitfish is what people consider the “tech tribe” in the crypto community. He has been in this community since 2010, and has experienced the explosion in computing power from CPUs to GPUs to FPGAs to ASICs. But even being technically proficient doesn’t guarantee you stability. Many of the long-time participants in the market since 2013 often say that “HODLing is like widowhood” and “Don’t just watch the thief enjoy his pickings, watch when he suffers the beatings”. “Where has ‘Grilled Cat’ gone” is one of the top 10 mysteries in the Chinese crypto community. 烤猫, translated to “Grilled Cat”, was a top student at the Chinese Academy of Sciences. In 2012, he crowdfunded within the community to build “Butterfly mining rigs” (蝴蝶矿机) — this was the earliest forms of ICOs in China. Signs of trouble came when, during the Spring Festival (Chinese new year) of 2015, the project was late in distributing bonuses — and Grilled Cat became uncontactable in January that year. Many of his shareholders, who elevated him to the level of “mythical giant”, saw their belief tumbling and shattering before their eyes. A community insider revealed that Grilled Cat’s disappearance is highly complex and multi-faceted: Firstly, at the start of 2015, the value of bitcoin desperately fell; secondly, Grilled Cat’s mining farm crossed arms with the local water and electricity bureaus, even though his operation was not against the laws — under these dog-eat-dog circumstances, Grilled Cat’s mining rigs were all detained; and at the same time, his family was going through an emergency. “And so, he ran away, maybe out of country. Nobody knows if he’s alive or dead today.” Perhaps others who have also suffered setbacks were luckier than Grilled Cat, although past experiences have left a hole in their heart. The current operating owner of the blockhain media platform, 区块链铅笔 or “Blockchain Pencil”, is 暴走恭亲王 or (badly-translated) “Rampaging Prince Gong” or romanized “BaoZouGongQingWang”, which we shall going forward call “Baozou” (because the English translation makes no sense). He once collaborated with Bitfish on the “Silver Fish” (银鱼) mining rig project. They designed an ASIC chip that would be used specifically for Litecoin mining, and started mass production with Taiwan Semiconductor Manufacturing Company. : His name is absolutely hard to translate. 暴走 (baozou) is often used in the gaming context as “rampage” i.e. 4 consecutive kills in League of Legends, which is what I guess is the origin of the word. Another interpretation is a blander Chinese translation of the act of hiking, which I don’t think was the inspiration. Comment The original Prince Gong was an influential prince in the Qing dynasty who is often credited as a pioneer of modern diplomacy in China, signing the Convention of Beijing after negotiating with the British, French and Russians. He also presided over many reforms during his reign. Ultimately, in 2014, Litecoin fell from 380 yuan to 5 yuan, and plateaued at about 10 yuan. As such, Bitfish’s ambitious goals for the “Silver Fish” project fell into ruin. As Baozou puts it, “All the whales I know have already inflated and won’t be inflated again.” 2013 was the first “inflation period”, where there were people in the community who went to Beijing and started exploring which to buy. However, when bitcoin nosedived in 2014, from 8000 yuan to 2000 yuan, many bit the bullet and exited, losing even their capital to leverage. entire buildings When the mining rig project ground to a halt in 2014, Bitfish returned to his hometown to simmer for half a year. He had poured his blood, sweat and tears into that mining rig project, and really enjoyed the process and satisfaction of seeing each particle form into a chip; but in the end, the market was ruthlessly cold in the face of his expectations anyway. In the same year, Dakongyi blew the million yuan he made until he was left with about 100,000 yuan. Even though he still flipped a few times more than his original 20,000 yuan investment, he still felt down in the doldrums. “People just don’t know how to be contented. I was slapping my thighs every day, thinking to myself how great it would have been if I’d just sold earlier.” Dakongyi was so absorbed in crypto in those two years that he just didn’t have the energy left to put into this studies. On Zhihu (the Chinese equivalent of Quora), there is a question which has been viewed more than 2 million times: “Does the story of bitcoin prove that how your life turns out is fated?” Blockchain lover, 神马疯了 (translated “Magical horses have gone crazy” or romanized “ShenMaFengLe”) gave a highly-rated answer: “You’ve only seen the smooth-sailing year of 2017 for bitcoin, where it grew and flipped 20x, suddenly breaking past a hundred thousand yuan. But you didn’t witness 2016, when the world’s largest exchange Bitfinex was robbed of 120,000 bitcoins — how many people committed suicide because of leverage? You weren’t there in 2015, when bitcoin massively fell to 200 USD, how many bitcoin lovers sat at home in the lonely night, eating instant noodles? You didn’t feel how in 2014, some community leaders endured tremendous pressure selling their house for 480,000 yuan to trade, struggled for five months, and then were cruelly forced to leave the market for 180,000 yuan? You didn’t experience the tragedy in 2013, while bitcoin was leaping upwards in December, how a ban caused bitcoin in China to dramatically drop 40%? If you had entered the bitcoin market in 2013, there is a 99.99% chance that you did hold it till 2017, and had already tortured yourself into insomnia with all the pain and anguish you were going through. So the truth is, you avoided all these risks while happily playing your games, eating your pizza and buying Snapchat — what’s not to like?” not Many of the people in the Chinese crypto community have a shared experience with regards to this mentality, as mentioned at the start: When you make huge amounts of money for the first time, and enjoy the happiness and self-confidence that that overnight success brings you, it’s very difficult after that to get used to the stark reality of “making less money”. You get depressed, and you’ll find it hard to reconcile to the fact that you can no longer find another shortcut to the same wealth and success. Who is like the bird startled by the mere twang of a bowstring: the individual, the corporation, or the country? Crypto is a multi-faceted, multi-player game; it is not only the individual who has had their fate indelibly rewritten, but the corporation as well. On the same day that Bob Xu’s chat history went viral, the 129-year-old centenarian Kodak Company announced that they will be releasing KODAKCoin. Their share price skyrocketed 120% within the same day. Even before that, in August 2017, Shenzhen Xunlei Networking Technologies Co. Ltd. (NASDAQ: XNET) announced their intelligent hardware “OneThing Cloud” and its related token, “WankeCoin” or “OneCoin”, now renamed “Lianke” or “Link Coin”, preparing to take the blockchain world by storm. Their market cap for the year soared 400%. On the night of January 9, 2018 Chinese time (GMT +8), Xunlei Group CEO Lei Chen was still in Las Vegas attending CES, where he was highly sought after to talk about his perspective and strategy for Lianke. Just dozens of hours after, on January 12, Xunlei was singled out and criticized by regulators for running a disguised form of ICO, which is prohibited at this point. Xunlei subsequently released a statement that they are willing to receive guidance and supervision. On that day, XNET fell 27%. A later announcement then confirmed that on January 31, Lianke will completely halt transfers. On the other hand, there is Bitmain, which started being a mining company. It has since developed into a full-fledged AI leader and all-around rockstar company, paving a bright future for itself through aggressive corporate transformation and expansion. The clever part about Bitmain is that it didn’t couple its destiny too tightly to that of the crypto community. Perhaps as a company they deeply understood early on how, in this tide of riches expounding anonymity and decentralization, the flip side of freedom is a corporation and individual that is often naked and at risk in an unprotected and unregulated world. Today, many whales holding large amounts of crypto are growing increasinly worried, not just for the security of their fortune but their personal security too. After all, digital assets are just strings of characters. Will they be kidnapped? In fact, in recent times, the number of people in the crypto community who are willing to accept press interviews have dwindled. One concern is exposing too much about their wealth, and the other is a sinking feeling that new regulations are slowly creeping up on them. Regulators are grappling with unprecedented challenges in the cryptocurrency regulations territory. On September 4, 2017, seven ministries issued a joint statement banning ICOs. A few days later, PressOne and other ICOs progressively released plans for token return from ICO participants. Even though the Chinese government forcibly banned ICOs, enterprising Chinese teams embarked on a journey in the “Era of Great Migration”, settling in Japan, Korea, Singapore and the Middle East, and continued to prosper there. Due to the property of decentralization in cryptocurrencies, stringent control requires concerted effort and consensus by all governing bodies involved, an impossibility for most countries. In reality, some countries have already assembled “country teams” to enter the market: North Korea was found to possess active mining nodes; Venezuela issued a token called “Petro” pegged to oil, diamonds and gold; and in Japan, cryptocurrency is widely accepted as a payment method even in brick and mortar stores. Individuals are afraid of missing the boat, countries are too. Some countries have gone further in their pursuit of digital currency and blockchain, putting their national pride and survival on the line, thinking: If you do not seize the opportunity right now, then your superiority as a nation may be upended in future rounds of intense international competition. The crypto community is contemptuous of this turn of events — blockchain technology and cryptocurrency, at the genesis of its design by Satoshi Nakamoto, was colored by anarchistic and anti-regulatory underpinnings. How ironic that it is now considered “a new national competitive means.” The topic of whether there be regulations, and what those regulations should look like, exposes a deep rift within the community where discrepancies in opinion abound. should One train of thought is that fiat and crypto will undoubtedly battle it out. The two different forms of finance are fundamentally built upon disparate societal norms and organization, and this battle has only just begun. Someone in the community resolutely stated that “bitcoin either goes to zero, or it will rise to the heavens, there is no in-between state.” He chooses to stand on the side of cryptocurrency, claiming that he has not cashed out any of his assets but rather has left it to bolster the community. Another long-term community member, who declined to be named, follows the alternate train of thought that there should be appropriate regulations. His contrarian view is that, unlike popular sayings, China doesn’t constitute the largest trading volume of bitcoin anyway, and never had pricing power over bitcoin. He started an initiative with a few good friends, spinning up a database to analyze the global trading volume of bitcoin and actively communicating to various government officials and banks. He wanted to “let them know the truth, the reality of the situation”, to pave the way towards reasonable supervision and well-developed regulatory frameworks. To active HODLers in the community, the worst case scenario is that even holding will one day also be considered illegal. Even though crypto has the element of anonymity, there’s no complete assurance that no physical or audit trail had been left behind. In some circles, recent rumors tattle about bank accounts of OTC exchanges in Heilongjiang, Hunan and other areas being seized and shut down by banks. just When asked about the relationship between crypto and fiat, the same guy above, who has bore the brunt of several rounds of regulatory changes and enforcements, mildly responded: “If the state says I can hold, then I’ll hold. If they say I can’t hold, then I won’t hold. Sigh, I’m already like the bird in the proverb, all strung out from the fright.” “Do you feel 100,000 yuan is overpriced?” We asked many people this question. No matter how sensational the bubble warning is, many people still want hurl themselves into the tide. What began originally as a small circle of enthusiasts now stirs the collective anxiety of every white-collar worker in the city. The reason why people feel suffering and loss is because history has given them enough “lessons”: In the last 2 decades, 2 trains have whizzed by — and your life can only change when you get on one of them. The first was housing prices, and the second was the Internet boom. : Where we tend to say “miss the boat”, the Chinese tend to say “miss the train” or “being on a train”. Comment However, in the past, most Chinese only had the experience of “standing in line” and not the cognizance to actually “get on”. After these 20 years of “training” mired in the realities of life, most hardworking people have been struck with an epiphany: It is impossible to climb the social ladder just by relying on a salary. Existing income and protection cannot counter potential risks on the winding path of life. You get on a train once in your life; if you don’t, you’ll be left abandoned in the wilderness. must Now, the “first-class train” of cryptocurrency and blockchain is blaring its horns so loudly, even those living under a rock have heard it. That is the question. To get on the train or not? At the eighth Silicon Valley Summit for Intelligent Systems conference on January 14, Tsinghua Silicon Valley Capital decided at the last minute to set up a blockchain project roadshow and investor seminar. It ended up attracting a ton of guests from home, on top of the regular attendees of the seminar. Every VC on stage belted out that this was a bubble, but every one affirmed that cryptocurrency and blockchain were valuable in the long term. After six back-to-back presentations, a panel started to explore the outlook of investing in 2018 and the investment techniques to employ. As time overran, attendees continued yelling out: “Just let everyone speak for another 10 minutes each!” A burning question at the back of our minds: “Do you think bitcoin is expensive right now?” The founder of an Internet finance company, who doesn’t hold the crypto at present, believes that the price of bitcoin is too high right now. If the prices moderate a little, he will buy it. On the contrary, IOTA’s community manager Jimmy gushed incredulously: “You think 100K per BTC is expensive right now? It’ll go to a million in a few years.” Bitfish believes that bitcoin prices will keep rising based on simple logic: Fiat (legal tender) currency can be issued incessantly, but there are only 21 million bitcoins in the world; so compared to fiat, bitcoin will always go up. Xunlei CEO Lei Chen didn’t answer this question head-on. Instead, he sidestepped by saying that it depends on the small population who hold majority power over bitcoin — how magnanimous and enlightened they are. Because her tenant introduced her to bitcoin in 2017, someone sold her house for 2.4M yuan and put it all into BTC. Although the crypto community is full of HODLers, she is adamant that she won’t do the same. She once sold more than 100 BTC at 17,000 yuan: “It’s okay, let me just buy it all back at 100K then, I really can’t take the emotional stress.” Just buying into bitcoin has enlightened her world considerably. She expressed her gratitude for living in this era: “There are always opportunities, it just depends if you grab the bull by the horns. If you spend the time that you use to read Chicken Soup for the Soul or grouching about the realities of your social class, into discovering new opportunities and doing some meaningful things, this world will transform into something wonderful.” And there are other pockets of people who feel that this world has been besmirched considerably. The new fish who enter the market will find traps and trickery everywhere they turn. For example, the “investment schemes” that have popped up, claiming to be syndicates that look for ICO projects to invest in. The masterminds behind these schemes don’t even bother spending time on getting ICO allocation. They just pour the money they’ve pooled together into their own investment, and once they’ve made a return on their capital, they will refund the amount to the gullible fish with the excuse that they couldn’t get allocations in the projects. An even more direct way of “harvesting” fish is to attract more of them, and then leave the market when the price is high. The average retail buyer simply is not privy to enough information, and cannot know when the “dealer” will scoot. It’s extremely likely that he will be locked in at high-price positions. For all of these individuals, even if they don’t lose their capital, going from hundreds of millions to tens of millions is enough cause a mental breakdown. The worst of it is not the loss of wealth, but rather the loss of self-confidence and the collapse of their faith. The scam cases listed above have engendered many tragedies, and created a more insidious impact: For those who truly believe in the blockchain, such scams are smearing the blockchain technology name, making it notorious while the underlying premise is laudable. The CEO of a company half-joked, half-commiserated: “The business model has gone from B2B to B2C, and later B2G (government), B2VC, and now it’s to B2F (fish).” If Satoshi Nakamoto, the creator bitcoin is watching all of these events unfold, how would he feel about it all? Whether or not to hold crypto has already deeply influenced people’s perceptions of the world: Whether your era is considered wonderful or absurd, depends entirely on whether or not you are holding crypto. In statistics, there is a concept called “survivorship bias”. Since most of the results we can speak of come from survivors — and history is written by victors — so our statistics often misrepresent the truth because “the dead cannot speak”. There will always be a majority of failures who have been forgotten. As another wonderfully pithy Chinese saying goes, “A victorious general leaves behind 10,000 skeletons” — in these progressive times, the plot development hearkens back to old classic tales. : 一将功成万骨枯 is refers to how, in the Chinese societies of yonder, in order for those of high social status to succeed, they often sacrificed those of inferior social classes to achieve their goals; and in the context of war, for a general to declare victory, thousands of soldiers would have died for his glory. Comment History may not repeat itself, but it may provide strong hints. Everyone should enjoy the tidings of this era, but don’t forget this profound warning: If you wanna roll in the hood, you have to pay the price. Epilogue The crypto circle embodies fragility and fate. During the interview, we also encountered many unexpected stories. A Russian translator helped a number of Russian projects by translating their white papers into Chinese during the ICO boom last year. The community believes in “contribution incentives”, so as a result, he has collected a large number of tokens from each project he aided. He’s made huge profits from this, and is now worth millions. The story of Bitfish and his wife even perfectly combines two irrational aspects of humanity: Bitcoin and love. more In 2012, Bitfish came to know his future wife on a bitcoin QQ group. Two years later, on May 8, after they registered their marriage, Bitfish was having a celebratory lunch with his wife. While eating, he was busy arranging for the mining of bitcoin blocks, deciding to dedicate 1 block, or 25 BTC, to his wife as a wedding present. Halfway through lunch, the block successfully confirmed, and Bitfish stored it into a carefully-calculated account address, starting with “1LoveU”. Unexpectedly, in less than a minute, he actually mined another highly connected block. “This was too lucky, because mining has a strong element of luck in it. Sometimes, you can’t even get a new block in the entire network, one hour apart.” way In the transaction records for these two blocks, Bitfish wrote: “Hand-in-hand, we shall grow old together. Bitfish to Dongdong.” He is a straight-haired, chapped-lipped, dark-skinned, overworked geek. His image makes it hard for anyone to connect him with the notion of being romantic. Bitfish says: “Bitcoin and love are the same, both are religions.” (￣^￣)ゞ ☆ END .*:ʕ•ᴥ•ʔ:*. Thanks for reading! I hope you managed to gain a little window of insight into the thoughts and fears of the crypto community in China. (I probably found their nicknames as hilarious as you did.) If you enjoyed the content and writing style, do follow me and look out for new pieces and translations coming soon! Lots more good stuff on the way…

Confessions of Chinese crypto insiders

Too Long; Didn't Read

People Mentioned

Companies Mentioned

Coins Mentioned

@carylyne

RELATED STORIES