Morning Keynote: Bobby Lee
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Morning Keynote: Bobby Lee

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BitcoinConfHK

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  • Include more info about 2011-2012: other exchanges online and then offline? <br /> Volume peak > 149, <br /> Add date to PBOC statement (dec. 5th) <br /> Call it “Bitcoin ATM” not btc atm <br /> Picasso not to be confused w/ atm <br /> Apr 5th- launched china’s first atm, and world’s first “soft” atm <br /> More on China, less on BTC China (users, miners, etc)
  • Order by start date <br />
  • Don’t call on BTC Charts, <br /> “chinese exchanges continue to occupy top spots; well represented among top exchanges” <br /> Clear up both lines under wallet/storage <br /> separate mining/demand <br /> regulation doesn’t touch it
  • Don’t call on BTC Charts, <br /> “chinese exchanges continue to occupy top spots; well represented among top exchanges” <br /> Clear up both lines under wallet/storage <br /> separate mining/demand <br /> regulation doesn’t touch it
  • Test stats on cost per kwh in Shanghai, do some checking on different cities’ costs <br /> Format for price: $0.XX per kWh
  • More emphasis on this topic <br /> Missing: <br /> Hackers <br /> attacking companies, exchanges, various attack types, fraud, etc.,
  • Earlier slide: compare price of BTC with price per unit of other commodities
  • Use consistent formatting on grammar symbols (english vs. chinese formatting)

Morning Keynote: Bobby Lee Morning Keynote: Bobby Lee Presentation Transcript

  • Website https://www.btcchina.com/ Contact business@btcchina.com Bitcoin in China What is Next? Bobby Lee @bobbyclee CEO, BTC China Board Member, Bitcoin Foundation June 24, 2014 Hong Kong
  • Agenda I. Bitcoin’s Development in China II. Industry Landscape Today III. As Store of Value IV. Regulation V. Bitcoin and Internet Finance VI. What’s Next in China
  • Bitcoin’s Development in China HOW DID WE GET HERE?
  • Bitcoin’s Development in China 2011 • BTC China goes online as the first Bitcoin Exchange in China 2012 • Average 24hr trade volume remains in the hundreds • Avalon ASIC Mining manufacturers announce crowd funding initiative • Activity largely dominated by mining 2013 • A suite of new exchanges emerge • Nov 30th BTC China Price peaks at RMB ¥7,588 • Dec. 5th, PBOC releases first formal statement on BTC • Dec 7th BTC China trade volume peaks at over 150,000 BTC • Dec 16th PBOC adjust regulation via Verbal Guidance 2014 • Feb-Mar: Continued regulatory uncertainty impacts the price • BTC Price recovers to > 50% of 2013 peak • Apr 15th China’s first Bitcoin ATM sponsored by BTC China • May: More PBOC regulation affecting bank deposits • Exchanges all switch to using Voucher method for deposits 195 136 320,000 News Articles containing “比特币” (Baidu News Search) (January – Today) 295,000 Image source: bitcoincharts.com
  • Exchanges Come and Go… Bitcoin Exchange Started Closed Duration Vircurex October, 2011 March 18th , 2014 29 months Linkcoin Sept 25th , 2012 May 1st , 2014 12 months FXBTC January 1st , 2013 May 10th , 2014 17 months BitXF 比特先锋 March 25th , 2013 August 17th , 2013 5 months GBL May, 2013 October 26th , 2013 6 months Renmeng人盟比特币 May, 2013 April 30th , 2014 20 months GoxBTC June, 2013 January 18th , 2014 7 months 808BTC December, 2013 18-Mar-14 4 months Money.cn 钱途在线 December, 2013 February 19th , 2014 3 months Bitexian 比特线 2013 May 5th , 2014 Bitema 比特吗 February 27th , 2014 May 30th , 2014 3 months Dcoin 2-Apr-14 31-May-14 2 months 9 months Average!
  • Bitcoin Exchanges What Does It Take? • Trust and Loyalty • Security & Reliability • Best Practices & Policies • Customer Focus
  • 3-Years Old Happy Birthday! China’s First Bitcoin Exchange World’s Longest Running
  • Bitcoin in China INDUSTRY LANDSCAPE TODAY
  • Bitcoin in China: A Delicate Balance Strong Domestic Demand Regulatory Pressure
  • The Industry Today: China Payments Wallets Exchanges (Speculation) Mining
  • Mining • China accounts for 284 reachable nodes on the network (4%), the 7th most of any country • China is home to the second largest mining pool, Discus fish (13% of hashrate distribution) A Global Hub • China’s electricity costs are significantly lower than the global average • Bitcoin Magazine estimated mining in China costs $2/GHash, compared to $7-$8 for some US mining pools Cost Advantage • China is home to many of the world’s major mining equipment manufacturers • Examples: Avalon, ROCKMINER, AntMiner, HashRatio, Gridseed, SilverFish and Zeus Major Manufacturers
  • Exchanges Low Fees Strong Demand Great Service Global Relevance Speculation & Trading
  • Wallets and Secure Storage Wallet Popularity Active mining Sector Demand for Storage Unaffected by regulation
  • Payments Demand Regulation Chicken and Egg Problem!
  • Continued Threats to Bitcoin Bad Actors • Poorly or unfaithfully managed Bitcoin enterprises: • Damage faith in the industry • Prevent wider adoption Volatility • For some short- term speculators, volatility is appealing • Bitcoin’s continued volatility remains a barrier to broader adoption Regulation • Global regulatory framework is taking shape • It is important for responsible industry leaders to take an active role in this dialogue Hackers • DDOS, Social Engineering, variety of methods to steal • Drive up operating costs • Further damage to confidence in industry
  • STORE OF VALUE  ASSET CLASS What Drives Bitcoin Today?
  • Store of Value Asset Class Price (USD) Silver (oz) $21 Stocks (S&P 500) $67 US Corporate Bonds $99 Crude oil (barrel) $106 US Real Estate (sq. foot) $122 Bitcoin $600 Gold (oz) $1,320 Manhattan Real Estate (sq. foot) $1,398
  • $1,320 $600 $122 $106 $99 $67 $21 - 200 400 600 800 1,000 1,200 1,400 Gold (oz) Bitcoin US Real Estate (sq. foot) Crude oil (barrel) US Corporate Bonds Stock (S&P 500) Silver (oz) Relative Price (USD) On a per-unit basis, Bitcoin is rather expensive
  • How to Normalize Prices? How to you compare something physical with something virtual?
  • Value “Per Capita” Asset Class Total Value Value Per Capita Bitcoin $7 billion $1 USD Money Supply (M2) $1.3 trillion $183 Oil $32 billion $485 Gold $7 trillion $1,000 USA Real Estate Market $35 trillion $5,000 Govt. Bonds $41 trillion $5,900 Corporate Bonds $42 trillion $6,000 Stock Market $54 trillion $7,500
  • Asset Price Per Capita (USD) $7,500 $6,000 $5,900 $5,000 $1,000 $485 $183 $2 $1 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 On a Per-Capita basis, It’s pretty cheap!
  • Bitcoin’s Appeal • Scarce Commodity: – Only 0.003 BTC for every person on Earth • The total USD value of all Bitcoin in circulation equals: – $1.09 per Person, Globally – Less than 0.02% of current global stock market capitalization – Only 0.1% of all gold in circulation
  • OVERCOMING UNCERTAINTY The Regulatory Environment
  • China has NOT banned Bitcoin China has NOT banned Bitcoin! It is being Suppressed… 
  • Interpreting PBOC Regulation • Rumored Statements + Western Press = New Regulation? • Many believe that China has “banned” Bitcoin (…again) • The December 5th “Notice on Defending Against the Risks of Bitcoin” remains the definitive statement of the PBOC’s stance towards Bitcoin: – Bitcoin is not a currency of “real meaning” – It is a special class of virtual commodity – Buying and selling Bitcoin is a form of online commodities purchasing behavior; Individuals have the right to participate, provided they are willing to undertake the risk The Central Bank has NOT banned Bitcoin. It has enforced a stricter interpretation of its Dec. 5th, 2013 statement.
  • PBOC Regulation 2013-2014 • The Central Bank has more strictly enforced its initial statement – Disallowed Payment Processors (Dec 2013) – Disallowed Banks (May 2014) – Disallow Vouchers? • Causes of Uncertainty – Discrepancies in enforcement timelines and jurisdictions – Incommunicative nature of the People’s Bank of China – Information vacuum that gets filled by speculation (and speculators!) • It is important for China’s industry leaders to communicate clearly and effectively on this matter – However, our ability to do so is often determined by the extent to which regulators communicate with us
  • PBOC Attitude Zhou Xiaochuan, PBOC Governor (April 2014) • “Banning Bitcoin is Out of the Question” • 谈不上取缔比特币 We are safe for now. 
  • PARALLEL PATHS? Bitcoin and Internet Finance
  • Internet Finance in China Wealth Management Products • The largest money market fund in China is not run by a financial institution • Alibaba’s Yu’E Bao has more investors than the country’s equity markets • Tencent’s WeChat, with users roughly equal to the US population, offers a WMP with annualized return of 7.4% (commercial banking sector’s average return: 6%) Peer-to-Peer Lending • Over 1,000 platforms in China • P2P loans reached 68 billionn CNY ($11bn) in 2013, 3x times 2012 levels • VC’s take notice • Renrendai obtained $130 million in funding (2014) • 74 closed or went bankrupt in 2013 Virtual Payment Systems • In 2013, commercial banks handled mobile payments worth 9.64 trillion CNY ($1.6 trillion) • Without even going to the bank, you can: • Pay the utilities with AliPay (AliBaba) • Pay for a taxi with WeChat (Tencent) • Pay for just about anything on Taobao
  • Internet Finance in China •In the past several years, large tech companies moved aggressively •Services include investment and payment products Technology Innovation •Released competing products •Pushed for regulation Banks React •Encourages “healthy” Internet Finance activity •Blocks Tencent and Alibaba’s virtual credit card services •Future regulation uncertain Government Regulation
  • Wealth Management Products •The largest money market fund in China is not run by a financial institution •Alibaba’s Yu’E Bao has more investors than the country’s equity markets •Tencent’s WeChat, with users roughly equal to the US population, offers a WMP with annualized return of 7.4% (commercial banking sector’s average return: 6%) Peer-to-Peer Lending •Over 1,000 platforms in China •P2P loans reached 68 billionn CNY ($11bn) in 2013, 3x times 2012 levels •VC’s take notice •Renrendai obtained $130 million in funding (2014) •74 closed or went bankrupt in 2013 Virtual Payment Systems •In 2013, commercial banks handled mobile payments worth 9.64 trillion CNY ($1.6 trillion) •Without even going to the bank, you can: •Pay the utilities with AliPay (AliBaba) •Pay for a cab with WeChat (Tencent) •Pay for just about anything on Taobao •In the past several years, large tech companies moved aggressively •Services include investment and payment productsTech •Released competing products •Pushed for regulation Banks React •Encourages “healthy” internet finance activity •Blocks Tencent and Alibaba’s virtual credit card services •Future regulation uncertain Central Govt. Internet Finance in China
  • GOING FORWARD, GOING GLOBAL What’s Next for Bitcoin China
  • Going Forward, Going Global 2014 Grow Along with Global Trends Wait and See: Regulation in other Countries Continue to Serve China Domestic Market Bitcoin in China: A Future For Certain
  • Current Trends in China • Mining Continues to Lead • More Professionals, Speculation • Offline Buying/Selling, OTC – NEW: BTC China: Mobile Picasso – “ATM” Sell for Cash • Bitcoin 2.0 Developments • Bitcoin Investments Programs • More Alt-Coins
  • THANK YOU! Bobby Lee @bobbyclee CEO, BTC China Board Member, Bitcoin Foundation