From Bear to Bull — Blockchain Technology in the Midst of Markets: Du Jun and Peter Vessenes Weigh In
It has been ten years since Satoshi created Bitcoin. The blockchain and cryptocurrency industry has changed fundamentally. What will be the next trend of Bitcoin in the following decade? Right now, we are under a bearish market that comes after years of exponential growth. Under this situation, what should investors do to make the correct investment decision?
On August 28th, Du Jun and Peter Vessenes, the representatives of both China and US blockchain industries, had a fireside chat in Silicon Valley.
Du Jun, the founding partner of Node Capital, is a world-famous investor and manager of digital assets, and one of the earliest professional investors to invest in blockchain industry. He has worked at a number of well-known Internet companies such as Tencent and Discuz. With professional knowledge, rich experience and industry resources, he is the co-founder of many blockchain industry companies such as famous digital currency trading platform Huobi, professional blockchain media Jinse Finance and its blockchain application platform.
Peter Vessenes is the co-founder of the Bitcoin Foundation, and served as its first Executive Director and Chairman. He launched the first venture-backed Bitcoin company in 2011: CoinLab, Inc. He has consulted for and advised numerous groups about Bitcoin andblockchain technology, including the Department of Treasury, FinCEN and the US Senate GAO. He has introduced Bitcoin to and helped build Bitcoin practices at major law firms like Perkins Coie, and is a trusted advisor to big four accounting firms like Deloitte Touche Tohmatsu, Price Waterhouse Coopers and major Venture Capital firms like Lightspeed Venture Partners, DFJ, Ribbit Capital, Pantera Capital, Cedar Hill Capital and others.
True value of Bitcoin
In 2008, Satoshi released the whitepaper. In the past ten years, Bitcoin has gone through rises and falls. Has the value of Bitcoin been proven?
Peter Vessenes: The value of Bitcoin has definitely been proven through its ups and downs. However, Bitcoin’s value should not solely be determined by its price value. Instead, we should value the community and innovation it has brought us.
Du Jun: Value of Bitcoin should be reflected through applications, and definitely not fiat currency price.
Bitcoin going mainstream
Will Bitcoin become a mainstream currency?
Peter Vessenes: Bitcoin will not become a mainstream currency, it has stored value and people tend to hold on to it as investment -- like gold. It’s not realistic that it will become mainstream.
Du Jun: Bitcoin could become the mainstream currency of third world country, where their government cannot insure the value of fiat currency.
Peter Vessenes: I agree with that. For third world countries, like those in Africa, instead of using landline phones, they use cell phones because they cost less and have more efficiency. Therefore, Bitcoin could replace third countries’ currency in the future.
Utility or Memorable Value
When blockchain is adopted widely in the next ten years, what will be the future of Bitcoin? Utility value or just memorable value?
Peter Vessenes: Bitcoin has its utility value. We are still in the early stage of Bitcoin and blockchain development. Over the next 10 years, I’m hoping to see more applications that will solve our daily problems. At the same time, Bitcoin will hold its stored value.
Du Jun: Bitcoin is way too far from memorable value or collectives, application will help boost its value. Chinese have an old saying “The revolution has just begun, comrades still need to work hard to achieve goals”.
Market Potential of blockchain
When talking about market potential, people usually hold that most of the projects have not yet produced their value, even though the investment is still on the way. Have we already found a good business model? How to have more innovation to boost the whole industry？What innovation that has been achieved are very encouraging recent years？
Peter Vessenes: Money drives innovation. The current business model is only about 10% of what Bitcoin can do.
Du Jun: The business model should be focused on how to solve people’s daily challenges and living needs. We should bring more opportunities to help the industry in every possible way, such as community and education to boost innovation at same time.
Peter Vessenes: Token economy is an exciting achievement and boosting companies to grow faster has a direct impact to their consumers.
Du Jun: Ethereum has been, so far, the most innovation for its decentralized community, all the other altcoins are just copying the method, not making remarkable innovations after that. We are eager to see further remarkable innovations down the line. Also, bitcoin and blockchain is changing the world how we work and earn. Back in early ages, working units are families, then transferred to companies, now blockchain has empowered a community of million person to work towards the same goal, consensus.
Peter Vessenes: I totally agree with you and am looking forward to the real blockchain 3.0 and 4.0.
Public chain and ecosystem
Some believe that the investment in infrastructure such as public chain is relatively worthwhile and important, which is the basic premise of running applications; Meanwhile, exchanges and media also play a very important role in the whole ecosystem. Do you agree on such investment logic? How to create a stronger and healthier ecosystem together?
Peter Vessenes: Ecosystems and infrastructure development are very important. There is a lot of good work to be done, and lot of innovation that has not been done yet, but, we have to build applications on top of it instead of just building a tool and hoping something good will come. Making things that people really want to use is important.
Du Jun: I totally agree with that we should make a whole ecosystem in blockchain area and that is what we are doing right now, and Node Capital has invested in more than 200 projects. I agree with that we should have more applications to bring more users to come in. This is why we have asked CoinTime to have application set up and website launching. We have invested in two media in China, among them, Jinse Finance is No.1 blockchain media in China, the data has been using in the main searching engineers like Baidu, Sogou and so on, and we just open Jinse's API to the public. So, our content can spread to the greatest extent. On top of that, we have investment on over 30 exchanges such as Huobi, Bgogo.
Breakthrough of Blockchain
Although we have been promoting the blockchain industry for years, we have to admit that it is not the mainstream at present. Do you expect the blockchain industry to go mainstream as soon as possible? What will be the breaking points for this trend?
Peter Vessenes: The answer is application, the same thing as when the internet went mainstream, nobody cared about the technology. It’s about how we can use it, how it will benefit users. More will happen as more decentralized applications come out.
Du Jun: We are surly expecting blockchain to go in mainstream. I totally agree with you. It is not about how we can bring the trend to the market or how can we make it happen. I totally agree on you for that the users nowadays we don’t care about with is http protocol or SQL, all we should know is how to use google to search, that is why we are looking forward to having more applications on daily usage of people. Moreover, the trend could actually possibly for businessman who does not trust each other, that is what bitcoin designed for. That could possibly be the breaking point of blockchain.
Integration of Sino-US markets
At present, the blockchain markets of China and the United States are isolated to some degree, and there is a lack of understanding and trust. As an investment institution, what should we do to promote the integration of the two markets?
Peter Vessenes: I think the US companies have talent and brand at present, but they oftenneed capital. So, coming into the US market to do investment would be good. On the flip side, I think providing connecting services, like bringing projects to Asia, is necessary because we see the innovation and vision in Asia. Many projects in the US want to have real footprints in China, and now it is very difficult for a US company to do that. Usually, US companies have better education and training, but many excellent projects in the US don’t have enough engineers, or a leader that is aggressive enough to get into the market — the US looks to China for that.
Du Jun: That is why we are here. We have brought 200,000 ETH just to practice how can we invest into the US blockchain market.
Investment in Bearish market
What’s your investment plan on the next step? Could you give some suggestions to those projects from China and the US? How could investors make better investment decision in this bearish market?
Peter Vessenes: Generally, it is a good time to buy. If you have a very strong project, it is a good time to raise money because you have crypto upsides in fundraising. We have about forty active companies in our portfolio, some of them we are pushing very hard to get out of the door soon. I think in a bearish market we have to put our focus on the fundamentals. We are putting money into projects we think have social connectivity and impact. Projects in music and sports, and high-tech companies that can utilize cross-chain technologyto support many projects in blockchain base are two areas we are focusing on.
Du Jun: For the innovations that we are currently investing, we look at two different categories, first is like transactions, since right now the transaction is not as fast enough to support business development, so the good base protocols are what are looking for to make sure the blockchain actually have the business usage instead of just store of value; the other this is like services area on blockchain, expecting to find a blockchain based Uber or Airbnb.
Peter Vessenes: Yes, also, there are lots of things to be done on side chain high transaction volume. You can have fast local things and settle up to blockchain later. And, it is impossible to have a million transactions per-second on global blockchain to share consensus.
Du Jun: Blockchain is not supposed to replace the realtime payment. Instead, they are more supposed to replace bank wire system, that is what blockchain designed for.
Peter Vessenes: I agree on this. But, when you add in Ethereum innovation with programmability and coding function, it pushes innovation forward.
Executive editor： Red