The hottest topic and word in 2018 is undoubtedly blockchain.
Where will blockchain go this year?
Recently, 94% of ICO projects have broken their issue prices, and the price of coins has plummeted. 90% of coin speculators said that they have started to lose money, and the era of getting rich quickly is over.
What’s interesting is that despite the sharp drop in the price of coins, the discussion on blockchain has been booming, and people are more enthusiastic about the technology than speculating on coins;
At the same time, more and more traditional investment institutions have announced that they will “all in” on blockchain. They are changing their simple and crude “throwing money” investment methods.
The concept of Token economy has emerged, and the cryptocurrency and blockchain circles, which have been competing for three years, have begun to merge in a certain sense.
In 2018, the entire blockchain industry is changing.
In 2018, the industry bubble will burst, the era of throwing money will end, and the era of value has just arrived.
01 The era of throwing money
The era in which everyone in the cryptocurrency world can make money without doing anything is over.
In major cryptocurrency trading forums or chat groups, 90% of cryptocurrency traders said that they started to lose money.
According to statistics from mainstream exchanges on Coinmarketcap, the rate of new coins breaking issuance prices after 2018 is as high as 94%.
There are still 156 stocks that are breaking even, accounting for 83.4%.
The "ICO myth" is showing signs of collapse.
Most cryptocurrency traders have given up on small currencies and turned to relatively stable mainstream currencies such as Bitcoin.
But mainstream currencies also performed poorly.
On March 7, after the Binance hack, the price of Bitcoin fell by more than 10% within an hour, falling below the $10,000 mark.
After the new year, Bitcoin fell by about 50%, while other currencies fell by as much as 70%.
Why has the cryptocurrency market performed so poorly recently, and even shown signs of a “slow bear”?
Statistics show that there are about 5 million cryptocurrency traders in China and 50 million players worldwide.
In the early days, those who entered the cryptocurrency circle were bold players, gamblers, and profit seekers. There were very few true believers in blockchain technology.
They invest based on the logic of throwing money around, and believe that “you won’t lose money even if you invest with your eyes closed.”
First of all, "the heat of industry development far exceeds the growth rate of leeks," said Zhang Jian, founder and CEO of Bochen Technology and founder of Gezhe Capital.
Secondly, the second wave of cryptocurrency speculators are fundamentally different from the first wave.
During the Spring Festival, the "3 o'clock sleepless blockchain group" became popular.
How lively is it? According to reports, there are tens of thousands of messages in the group every day; the red envelopes given by the bigwigs during the Spring Festival are more than one million; after Xue Manzi shared on his birthday, the red envelope rain lasted for 20 minutes; every time Chen Weixing appeared, the song "Stars Light Up the Lights" was played in the group.
In just a few days, "3 o'clock" became the first blockchain community.
The word "3 o'clock" has become the standard name for blockchain discussion groups, and countless new "3 o'clock blockchain groups" have quickly spread.
At the same time, the blockchain-related media industry has also become popular.
According to an investor, there are now as many as 5,000 media outlets of all sizes related to currency and blockchain, and the market has gone from a red ocean to a bloody ocean.
Traditional media have opened up special blockchain sections, new self-media continue to pour in, and capital is also continuously increasing its layout.
Mars Finance, Deepchain Finance, and Babbitt have successively announced that they have received financing.
In the blockchain self-media rankings during the Spring Festival on Xinbang, most of the top rankings are public accounts that share cryptocurrency trading news.
What’s interesting is that what has attracted much attention recently is not only the price of the currency, but more the technology and concept of blockchain.
The significance of Tokens, dialogues with Yuandao, and Zhang Shousheng’s insights into blockchain have all sparked discussions that have gone viral.
Regarding "blockchain", people have begun to analyze it from various angles, from databases to theology, from human history to the physical world.
"The earliest group of cryptocurrency traders were bold profit-seekers who came for the wealth effect. But those who are now entering the blockchain field are the elite class," said Chen Bin, a senior expert in the blockchain field.
The entry of the elite class proves that this industry is truly awakening.
The new wave of cryptocurrency traders have some understanding of blockchain, have enhanced their judgment of projects, and will no longer invest “blindly”.
They are more rational and objective. They are waiting on the sidelines with their funds while waiting for the regulatory situation.
Almost everyone understands that the "money-throwing era" of blockchain is over, and the good times when everyone can make money by lying down are gone.
A new era is coming slowly.
02 Investment exit
In addition to changes in the population of cryptocurrency traders, the industry's investment methods are also changing.
After the 9.4 regulation, ICO withdrew from the domestic market, but after a period of silence, it made a comeback.
In fact, ICO has never really withdrawn from the domestic market. The driving force behind it, "investment agent", has always been the link between the project and domestic investors.
"There are two forms of agency investment: private placement and public offering, also known as ICO." Ren Qian, who often participates in agency investment, explained to a blockchain book. There are some mysterious people "operating" behind these two methods.
During the private placement stage, the blockchain project party will allocate shares to some digital currency institutions.
"Some institutions cannot take up the entire share, so they distribute some to investment agents, who then look for retail investors to raise Ether." Ren Qian said that the price of private placement will of course be cheaper than that of public offering.
Generally, the agent will charge retail investors a handling fee of 5% to 15%. For example, if the exchange rate between Ethereum and SGD is 1:100, the agent will charge 5 to 15 SGD.
Another type is investment on behalf of public funds.
Although ICOs are open to the world, some projects are not directly open to Chinese citizens due to regulatory reasons.
"So overseas Chinese with green cards or international students will encourage their foreign classmates to apply for public offering shares and then resell them." Ren Qian explained, "This situation is rare because the price is not very favorable."
Those who do private equity investment are generally senior people in the cryptocurrency circle and have extremely high credibility.
Top-level investment agents can mobilize thousands or tens of thousands of Ethereum with just a phone call or a WeChat group. Smaller investment agents can accumulate 100 to 200 at a time.
But under the temptation of interests, the so-called credibility becomes insignificant, and investment on behalf of others becomes a "conscience job".
Recently, a group of Ncash investors have been pursuing a proxy investor named "Wang Jun" across the entire Internet.
Because he appropriated the Ncash tokens that should have been given to investors and only returned the Ethereum coins raised in the early stage to the investors.
At this time, Ncash had been listed on Binance and rose 5 times at the opening. Wang Jun directly swallowed up 10 million in profits.
Investment agents once became the connector between retail investors and projects, and were also the most profitable link in this industry chain.
"Apart from this chaos of 'coin deductions', proxy investment is just a product of a certain stage." Despite being an in-depth user of "proxy investment", Ren Qian believes that this method is extremely irregular, and individuals rely entirely on their reputation for guarantee, and the model is barbaric and extensive.
In the investment field, real players have begun to enter the market.
03 Real players enter the market
After the collective anxiety, the entire capital market began to move this year.
According to ITjuzi statistics, among the 46 newly established VC institutions in 2017, 9 investment directions focused on blockchain, accounting for nearly 20%.
At the beginning of the year, Xu Xiaoping "called on everyone with all his wisdom" to rush into the blockchain wave.
Prior to this, ZhenFund, IDG, and Sequoia Capital had already invested in blockchain projects early on; and some traditional VCs also established specialized digital currency funds and entered the market one after another.
According to a Crunchbase News report, as of February this year, venture capital raised by blockchain-based companies has reached more than 40% of last year's total.
Zhang Jian, Yuan Dao and many other senior industry professionals also jointly founded Gezhe Capital, which is positioned as an industrial fund and is committed to laying out the upstream and downstream of the blockchain.
It can be seen that more and more professional players are entering the field.
"We have started to go all in on blockchain." Li Yejun, a partner of an angel investment institution, said that angel investment institutions have a natural advantage in turning to blockchain.
Because most ICO projects require cornerstone and angel start-up funds, they can directly trade and exit after listing on the exchange.
That is to say, except for angel funds, the entire process from the later A round to listing can be omitted.
“So, everyone says that ICO is going to revolutionize, but in fact it is revolutionizing mid- and late-stage investment institutions. But for angel investors, it is a huge opportunity.” Li Yejun said that they established a blockchain team before the New Year.
It is easy for angel funds to turn around, but other investment institutions were extremely panicked at one point.
"We are now called the 'classical Internet'." The head of an investment institution smiled bitterly. The feeling of being crushed by the wheels of the times was particularly strong.
"Is it too late for us to enter the game now?" he once asked a senior figure in the cryptocurrency circle.
"It's never too late. In the end, the world still belongs to you," the other party responded.
Previously, the main investment logic of the bigwigs in the cryptocurrency circle was to "spend money by showing your face."
"We know everyone in the cryptocurrency circle. They come to us and ask us to invest. We are all friends, so we will invest a little because we can't refuse." In the cryptocurrency circle, most people follow this simple and crude model.
After the new year, a large number of projects began to fall below their IPO prices, and the bigwigs in the cryptocurrency circle felt that the situation was out of control.
"Investment is still a professional matter. At this time, we still have to rely on the project judgment ability of professional VCs." Li Yejun said that the initiative in the industry will once again shift to their hands.
"What we need to do is to return to value investing." Zhang Jian believes that 2017 is the period when the blockchain bubble expands; in 2018, the bubble will gradually burst, and blockchain will enter the real "value investment" era.
"The world is back in the hands of the elite," said Li Yejun.
04 Integration of the coin and blockchain circles
Another interesting trend is that the “cryptocurrency circle” and “chain circle”, which once despised and disagreed with each other, have actually shown a trend of integration.
This is mainly due to the rise of the concept of Token economy.
In the past, the currency circle and the blockchain circle were clearly divided, and the criterion for division was whether the project "issued coins".
And this token is Token, which is now translated into "passport".
“It is a big mistake to translate Token as ‘token’,” said Yuan Dao, one of the earliest Chinese advocates for blockchain. Even if this translation has become a convention, it must be changed without any leniency.
“I even think that the significance of the token is more important than the blockchain.” Yuandao said.
Zhang Jian also praised Token: "Token can be compared to the birth of a company. It changes the production relations and releases productivity."
First of all, Token can record physical assets and virtual digital assets in a digital way, greatly enriching wealth.
For example, the more common items that are currently recorded include tickets, points, contracts, certificates, point cards, securities, permissions, qualifications, etc.
In this way, a large number of dormant assets will be activated and can be cut, traded and circulated.
On the other hand, Token can activate the enthusiasm of each holder.
They will work hard to obtain more tokens or make the tokens rise higher.
This forms a "self-ecology".
Therefore, the cryptocurrency and blockchain circles have reached a certain degree of consensus - believing that the value of tokens is infinite.
Blockchain begins to become the underlying technology, and Token becomes the external manifestation.
The previously clear distinction between the two sides became blurred and began to intersect and merge.
On one hand, the cryptocurrency bubble is bursting, and on the other hand, value investing is returning.
The return of value is undoubtedly a good thing for technology itself.
Blockchain technology may need to get rid of myths and stigmas before it can truly begin its journey to implementation.