Where is the next step for resource upgrade? We chatted with many senior practitioners of crypto finance
It is often said that if you want the track to develop quickly as well as the dish to expand quickly, it is indispensable for that admittance of institutional traders and high-net-worth individuals.
From probably the most anticipated Bakkt release in 2019, it could be seen that folks in the crypto globe want forward towards the participation of the financial giants with huge amounts of funds to participate in cryptocurrencies. Being an encrypted financial service provider, they are the group closest to high-net-worth customers. They know the needs and preferences of institutional traders best. Just how do they interpret the crypto globe in the eyes of professional traders? What are the road blocks preventing institutional customers from entering the market with huge amounts of money? On The month of january 9th, in the 2020 "FAT" Summit Forum and Awards Ceremony hosted by PayPal Finance Co-founder Wang Li, BitUniverse founder Chen Yong, Axonomy founder and CEO Tao Quming, Cobo Senior Vice President Li Yao, and RenrenBit co-founded Ren Wang Wei and deputy editor Hao Fangzhou had a conversation about "Tomorrow of Asset Upgrade." With this round-table dialogue, we not only discussed the high net worth individuals' preferences as well as the cryptocurrency industry to them, analyzed the future of the explosive DeFi in 2019, but also brought store investors about how exactly to find high-quality products. Assets and suggestions on how exactly to allocate assets. The following is the edited and shared original text, enjoy: How to permit high-net-worth users enter the market Hao Fangzhou: Many new entrants come to the currency circle using a gambling mentality. They may be selling coins, starting high leverage, and doing one. Do financial derivatives. We know that it is very difficult to change the behavior of this group of people or switch their perceptions, so when we perform the market, we still have a tendency to focus on the best players first and discover high-net-worth people. So I wish to ask all of the guests in the stage, when confronted with the very distinction between traditional finance and the existing user portraits in the foreign currency group, and what better ways to be in the market and how do the real rich people in China be able to see Bitcoin? Chen Yong: It just so occurs that because I have already been working on the web for a long period, I was previously at Jinshan and later on at Cheetah. A lot of my close friends finally visited Xiaomi and Tencent. At least they are also considered high net worth users. I believe you can find two types of high-net-worth user groupings today: The initial category is to treat Bitcoin as asset allocation. On their behalf, if they allocate property, one is to possess a secure buy channel to solve the OTC requirements of over-the-counter dealings, and another is to secure the storage and financial requirements of bitcoin after the transaction. The next category is the domestic high-net-worth user group, more that will adopt a general method like investing in a mining machine (allocating assets). What do they think of this business? Frankly speaking, all rational people still understand this business in the long run. For Bitcoin, they are unanimously optimistic. A influx of relatively advanced high-net-worth user groupings regards Bitcoin as the second currency that may hedge against all central loan provider sovereign currencies, therefore some people have some Bitcoins at an extremely early stage. Furthermore, the 1CO wave drove the entire cryptocurrency industry, especially the rise of Ethereum, helping to make more people understand Bitcoin more deeply. With the rise of brand-new cryptocurrencies, Bitcoin is becoming increasingly more approved and identified by high-net-worth user groupings. Tao Quming: The existing financial system continues to be gradually established over the past few hundred years. And Bitcoin has only been ten years since its inception. The complete encrypted digital business or digital property has already reached a range around 200 billion U.S. dollars from zero to today. Actually, it is rolling out very fast. With regards to choosing large customers, I believe whether it is digital finance or traditional finance, the type of business has not changed. Blockchain does not change the type of business. The most important thing in the financial business is risk control. Practitioners in the blockchain business have to create genuine value for customers on the one hand, and while creating genuine value for customers alternatively, they must also face many specialized risks and business risks in brand-new systems like blockchain. The fact that there are risks in all respects. For all teams, everyone is still trying, exploring, and constantly innovating to understand from customers where the forex market really can bring true value to users. Needless to say, the comparative rationality of large customers will undoubtedly be higher. Li Yao: What we should see in the market is that China's large miners, asset administration teams, and early-stage traditional bigwigs hold at least 80% of digital assets. Even though number of retail traders is large, their assets are actually very small. Let me prolong the main topics how high-net-worth users see Bitcoin, and how do traditional financial institutions view this industry? Because Cobo acts as the custodian and contains contact with a lot of traditional budget, so far you can find four challenges that have made traditional financial institutions afraid to enter: The initial challenge is the license. There's currently no custody license in China. Cobo has attained a Hong Kong permit and Singapore has opened an trade license, but in a rigid sense, it isn't a pure digital asset custody permit, but an extension of the traditional license. A particular continent has just opened programs for digital foreign currency custody licenses, which may be considered a plus. The second is insurance. In traditional industries, especially large custodians, you can find insurance firms to provide insurance coverage services for financial institutions. Consequently, once traditional financial institutions enter the industry of digital assets, they'll also request us whether we've insurance, but such questions are very challenging to reply because of the particularity of digital assets and having less effective information. The third is auditing. Up to now we can see that PricewaterhouseCoopers and KPMG can audit digital assets, however the industry is quite, very complicated. For example, a day's snapshot information size of an exchange could have dozens of gigabytes of space for storage, which will greatly increase the workload and trouble of auditing companies. The fourth is how to make legal currency compliance can be found in. If we are able to solve the issues just mentioned, insurance coverage, permit, audit, and lawful currency compliance, it'll be really attractive for traditional financial institutions to enter this business. of. High-net-worth customers entering this business must depend on whether traditional financial institutions can enter. Traditional financial institutions can only attract these to enter. Their cash is generally utilized by traditional financial institutions to greatly help invest. In the event that you ask high-net-worth customers what they think about Bitcoin, they generally define Bitcoin as an "alternate resource" for construction. The first step to allow them to enter on a big scale is to allow traditional financial institutions to enter this industry 1st. Is DeFi the latest item in 2020? Hao Fangzhou: What do you think of DeFi 2020? Wang Li: There is no absolute centralization, and there is absolutely no absolute decentralization. A lot of self-proclaimed DeFi will have different examples of decentralization. From the purely financial perspective, the basic business in finance is deposit and loan foreign exchange. The core of the deposit and loan business is leverage, as well as the deposit and loan business is not suitable for decentralization. When the credit intermediary is removed, in fact, there will be no leverage. Only when there is credit, there's leverage. Of course, you can find scenarios that not require leverage or credit, such as remittance services, such as decentralized exchanges, such as transaction and bill arrangement in traditional finance, decentralized custody, etc. direction. In the current DeFi industry, only MakerDAO has managed to get. The others are usually basically imitating, therefore everyone is involved in deposit and loan business. But I believe this is a bit limited, most of which are simply incorporating leverage to Manufacturer leverage. The higher the leverage, the simpler it is certainly to plunge. My optimistic path is decentralized hosting. Because custody is the almost all in need of trust, if no one can provide this sort of trust, any current centralized management business actuary cannot calculate the risk of loss of bitcoin or digital property, and cannot cost the risk, therefore No one can cover it. Chen Yong: Nowadays, increasingly more decentralized finance evolved from DeFi. Its specialized design is more complicated than the previous simple currency style, and it has not been examined for a long period. The completeness and richness of the technology itself must be tested, and it will take longer to see decentralized finance. It doesn't make any sense to simply talk about centralization and decentralization, because their beginning points are different. Tao Quming: It's been less than two years since the term DeFi came out. I believe Bitcoin is the very first DeFi product. From scratch, the web is rolling out to a particular stage, from details processing to the beginning of Bitcoin. It can handle the storage and exchange of value. DeFi and CeFi aren't an antagonistic romantic relationship, but continue steadily to expand the limitations of business invention and create more possibilities. Just as we talked about today, the country in addition has begun to take into account stablecoins. Everyone will see that both government and Web companies like Facebook have observed genuine disruption and large efficiency improvements. So, everyone may also learn from it, and do different scenes in different scenes. Therefore, whether it is CeFi or DeFi, it is going to return to the essence of business and finance-the improvement of efficiency as well as the creation of genuine value. With the development of days gone by 12 months, we've seen that quite a few things are regularized, and we are able to initially see that there are some phased conclusions. Maybe DeFi things are more suitable for future digital finance, therefore i prefer to contact DeFi open finance. Through the web, new financial providers can be released efficiently with low cost. I personally believe that DeFi could be more suitable as the infrastructure of open up finance in the foreseeable future, as being a car chassis, engine, and tires, that are directly dealing with retail users and mass users. It is not the time yet. At the moment the host asked if there is a chance to see the integration with the real economy in 2020. Personally, i think that I might not view it this year. The reason is simple. The actual blockchain can assurance is the so-called immutability of the property and data in the string. If you put physical property or any real business credit and data in the string today, the foundation is now more chained, and there are still many infrastructure problems to be solved, which is nevertheless impossible. These exact things are still a long way away from us. We are more optimistic about the combination of Bitcoin and DeFi. At present, the market capability of DeFi is most likely only a few billion dollars at most. If Bitcoin could be added, I believe it will increase the existing DeFi by at least a hundredfold. Wang Wei: What we should do is finance, managing money for that rich and funding for that lacking. When we understand this matter, we first go through the user's application of the product, including the current centralization. A lot of users say they don't realize the product. It really is as well complicated. In the end, it is more complicated than Alipay. There is no way. Should you choose DeFi again, customers will not realize it a lot more. This can be a product application. The second is if the product can meet more needs. This is actually the issue of Bitcoin that buddy just talked about. Now it is just Ethereum. So how do you put Bitcoin in? This takes a time period, however the customer's requirements are there. It depends on how quickly you can fulfill him and allow him appreciate blockchain-encrypted currency financial services. This is actually the first priority. Secondly, where are usually DeFi and CeFi tending towards? What type of thing to solve? Personally i think that DeFi should be the best form in the foreseeable future, and the most important issue is to solve the issue of trust. The DeFi program code is directly on the string. Anyone who understands the program code can check his execution outcome and check his execution program code, no one must endorse it. But the query of product applicability just talked about, the query of whether it can meet the requirements of users might take quite a while to undertake, it may be two to three years, or even 3 to 4 years. Li Yao: We discovered that in the first 1 / 2 of 2019, the entire DeFi market was worth just 270 million US dollars, and it ought to be 890 million US dollars today. The almost three-fold increase shows that the market is in an exceedingly stable rising stage. In other words, there must be opportunities, otherwise so many entrepreneurs won't come in. Let's focus on the task. The guests just mentioned that the first operation threshold is too high, which is difficult for common people to enter, so we are able to see that you can find currently significantly less than 20,000 DIFI customers worldwide; the second reason is the contract level. Large-scale DeFi items are usually developed based on Ethereum contracts. Are Ethereum clever contracts safe? It may not be correct. When customers put all $1 billion in clever contract-based products, I believe that hackers are usually motivated good enough to grab $1 billion at a cost of $100 million. If DeFi wants to be better implemented in the foreseeable future, one is to improve its simplicity, and another is to improve its safety. For 2020, I'm personally more optimistic about the implementation of DIFI items in the Bitcoin level. In the end, its activity is definitely 3 times that of Ethereum. RSK will be a good attempt. At the same time, additionally it is optimistic about the program of decentralized insurance coverage and decentralized offer chain finance. Hao Fangzhou: I have asked this query before in the DeFi special, but I favor today's version. Analyzing DeFi through the perspective of CeFi, everyone could be much less commercial and much more authentic. How to find high-quality property Hao Fangzhou: The third question wish to ask you how to find true high-quality property? Wang Li: Actually, the world will never lack property, but high-quality property. How did we do it? PayPal only allows Bitcoin as pledge before September or Oct, but Ethereum does not accept it. This can be a very simple logic: From the business perspective, start with the best property. If the very best property are bottlenecked, then go directly to the following level of property. Lack of property is a issue that all practitioners in this business will encounter. This behavior reaches a very early stage. There are some high-quality property that everyone can acknowledge today, and everyone could have different standards. Bitcoin is considered a consensus with this business. Many people with this business don't recognize Ethereum. This is actually the first level of property, and there are many more property above it. For example, Bitcoin's over-collateralized financial debt, this asset is a really advantageous asset. Furthermore, the top trade can be a really good asset, as well as the exchange is a sub-industry with an extremely solid Matthew effect. In general, the industry is too small, nonetheless it is rapidly expanding, and much more and much more excellent folks are needed to can be found in, and bring the adult business models, financial choices, and humanity things in the traditional world to digital currencies and blockchains. On the market, many high-quality property naturally come out. From my perspective, the only real high-quality asset at this stage is Bitcoin. Chen Yong: I believe there are hardly any high-quality assets on the market today. EASILY were to find assets today, I would consider it from three perspectives: The foremost is to select Bitcoin, that is the very best high-quality resource. You can participate in any way that allows Bitcoin to help keep changing. The second is some products using a clear business model, which currently appear to be exchanges or wallets offering financing services, and tokens issued by them. The third is a product with traffic and specific user usage scenarios. Li Yao: Look at the industry's development over the past decade. Before few years, it was mainly retail traders, with gold almost everywhere and assets almost everywhere, so long as you persist. Later in 2017, institutional customers came in. Predict the way the entire business will develop in 2020. For upstream mining device manufacturers and mining swimming pools, we state that Bitcoin will undoubtedly be issued 3% every year prior to the halving, and 1.5% after the halving, so it's problematic for the mining industry to become mainstream high-quality Race monitor. In the future, mining and mining device manufacturers could have a progressive trend in their position on the market, because their property are limited. Which assets will improve? It ought to be agents and exchanges, because trading exists for a long period. This is similar to the Shanghai STOCK MARKET and Shenzhen STOCK MARKET in China and the brand new York STOCK MARKET and Nasdaq in the United States; and their liquidity is principally provided by agents. At the same time, the proper to talk for future agents will increase. You have to know that the existing flow of agents on digital foreign currency exchanges is nearly over 70%. Consequently, as long as some property are derived from the trading side in the foreseeable future, they will certainly become the main track and High quality property. This conclusion may also be corroborated by the entrepreneurial track that the head institutions bet on. Before few years, among their investments has been a trading track, and the second reason is a compliance monitor. For transactions like a trading track like a brokerage firm, business owners from Goldman Sachs and Morgan Sachs will flood into this path; compliant trading technologies such as investment and conformity anti-money laundering monitoring methods, which includes compliant custodians. These could be better asset ends. Asset allocation tips Hao Fangzhou: For common investors, what tips do you have when doing resource allocation in 2020? Wang Li: According to personal risk urge for food, hold as many bitcoins as you possibly can, reasonably allocate some leverage, not too much leverage, hold as many bitcoin positions as you possibly can, set your own stop loss cost, of course, make sure to When the danger is controllable. Chen Yong: When coming up with investments, everyone should be aware of what they know better than other people. Tao Quming: For common investors, Bitcoin is simple at this stage. If you nevertheless want to beat the market above Bitcoin, this is a reliable currency-based financial product based on Bitcoin. Wang Wei: In 2020, we have to see the fact clearly, and the whole market isn't particularly good, including the true economy, that is not really good. Enhance your cognition, because your cognition exceeds most people and you'll make money. Li Yao: For retail traders, this is a fixed investment decision of Bitcoin.
