On May 9, a private event with the theme of "Unlocking the Future: Exploring the Next Wealth Outlet of the Bitcoin Ecosystem" was grandly held and successfully concluded at the junction of Carnarvon Road and Picnic Road, Exit D2 of Tsim Sha Tsui MTR Station in Hong Kong, co-organized by ChainDD, Techub News, Uweb, and the Asian Blockchain Society, with strategic support from GreenMeta, and in collaboration with Evolving Capital, Hailstone, BitRoo, CGV, NiuDAO, and Future Trust.
In the roundtable forum "The Road to Bitcoin Ecology: Bitcoin Financial Market in Hong Kong", ChainDD Editor-in-Chief Dorji talked with three guests: BitRoo Chief Customer Service Matt, CGV Researcher Cynic Song, and Mindfulness Capital Head of Ecosystem Stephy Shi.
From left to right: ChainDD Editor-in-Chief Dorji; BitRoo Chief Customer Service Officer Matt; CGV Researcher Cynic Song; Mindfulness Capital Head of Ecosystem Stephy Shi
The following speech content is simplified by ChainDD based on the on-site content:
Dorji, editor-in-chief of ChainDD: Hello everyone, please introduce yourselves first.
Matt, Chief Customer Service of BitRoo: I am Matt, from BitRoo. BitRoo is a platform that allows ordinary users to easily participate in Bitcoin mining. Its main business is to provide one-stop mining machine hosting and commercial leasing. We have two mines in North America and Central Asia, with a total capacity of 2 million loads. Thank you everyone.
CGV Researcher Cynic Song: Hello everyone, my name is Cynic Song, from CGV. CGV is a Crypto investment institution headquartered in Tokyo, Japan. We have offices in Hong Kong and Silicon Valley. We also look at AI and DePIN related. Thank you.
Mindfulness Capital, Head of Ecosystem Stephy Shi: Hello everyone, my name is Stephy Shi, and I’m the head of ecosystem at Mindfulness Capital.
We are an early Web 3 VC founded in 2018, and have been deploying the Web3 ecosystem in all aspects. Our previous investments include The Sandbox, Bitmain, etc. We also participated in Bitcoin mining in the early days, and were once one of the top computing power trading institutions in Asia. This year, we are actively deploying in DeFi, GameFi, DePIN, Bitcoin ecology and other tracks.
ChainDD Editor-in-Chief Dorji: The prosperity of the Bitcoin ecosystem is inseparable from all market participants, including investors, exchanges, project parties, miners, and investment institutions. Each party needs to work together to promote the ultimate development of the Bitcoin ecosystem. For example, miners, as the halving effect passes, if the Bitcoin network's transactions and user base are reduced, how can miners maintain the huge network? How do miners tend to upgrade the Bitcoin network next? For example, ecosystem builders, many people are copying the Ethereum ecosystem to develop the Bitcoin network. What do you think is the biggest difference between the two ecosystems? For example, investors, real money investment determines the future development direction of the market, so I hope everyone will start from their own industry and talk about the pain points facing the current Bitcoin ecosystem and the problems everyone faces in industry construction, and how to solve them.
Mindfulness Capital, Head of Ecosystem Stephy Shi: Our perspectives may be different because we participated in mining in the early stage and have a better understanding of the entire Bitcoin mining ecosystem. In the last cycle, everyone was talking about whether Bitcoin could be used as an alternative asset. Comparing it with various indexes such as the S&P 500 and its correlation with gold gradually established its attributes as a safe-haven asset.
But mining and Bitcoin ecology are two completely different logics. Mining is a relatively pure supply chain industry. Bitcoin is a UTXO model, which is different from Ethereum's Account model. Our previous experience of investing in Ethereum ecology and other public chains is completely different from Bitcoin ecology. So at the beginning, we had a lot of internal discussions. The Bitcoin ecology was too fragmented in the early days. Miners, fundamentalists, and BRC20 trading users are different interest groups with different positions. There are doubts about how these groups can reach a consensus and how to support a network like Bitcoin that requires a lot of infrastructure.
Last year, our final preliminary conclusion was that the transaction volume of BRC20 Token proved the transaction demand of the Bitcoin ecosystem. Therefore, only when there is transaction volume, popularity and demand can it drive miners and developers in reverse. Miners can get more rewards, and developers see the popularity, liquidity and funds, and have the foundation and motivation for entrepreneurship. Everyone is happy to solve this demand. This proves that the Bitcoin ecosystem has a large number of unresolved transaction needs, and at the same time, it also requires everyone to work together to build infrastructure to solve the problem of expansion. We think this is an interesting ecosystem.
CGV Researcher Cynic Song: When it comes to the development of the Bitcoin ecosystem, one of the characteristics of Bitcoin is that it is too stable, and it is difficult to change the consensus. However, there is a big problem in trading on Bitcoin now: scalability and programmability.
It is not programmable enough now, and many people are trying to do one thing: programmability, for example, we want to promote OP_CAT. The previous guest also said that Bitcoin is now walking the same path that Ethereum has walked. Ethereum's current more mature path is ZK-rollups. The most critical point of ZK-rollups is how to make Settlements, which is currently insufficient based on Bitcoin's computing power. If we promote the improvement of programmability, and even come up with an OP_CAT, we can make a truly native, secure, decentralized and trusted Bitcoin ZK Layer2 on Bitcoin.
After the Bitcoin halving, miners will get very little reward from Coinbase, and can only rely on transaction volume, which must be derived from Layer 2 data. The path is here, but as I said earlier, it is almost impossible to change the Bitcoin consensus, so everyone is now exploring many alternative solutions, such as how to make a relatively safe entry and exit. The most critical thing about Layer 2 is how to get in and out.
I personally think that at this point in time, the Bitcoin ecosystem needs to explore what possibilities it can bring us based on existing operations.
Matt, Chief Customer Service of BitRoo: The pain points of Bitcoin: The transaction speed will be slower and the handling fee will be higher. I actually want to analyze from the perspective of miners what adjustments mining companies have made to the situation of Bitcoin.
There are three advantages to mining: mining Bitcoin at a lower cost and exchanging time for profit; second, it is against human nature. For example, if you sell the coin when it soars, but you still have output the next day, then you will continue to get high returns the next day. But if there is a sharp drop, you will avoid selling the coin out of panic because you have a mining machine in hand;
The third advantage of stock price is that you can reinvest to maximize your returns. For example, you can go to our BitRoo APP to buy commercial funds or mining machines to reduce costs.
In response to the halving of Bitcoin, we will eliminate some low-computing power and low-capacity mining machines and upgrade them to high-capacity mining machines such as Ant S21 and Ant T21. This is the most basic mining machine upgrade.
The second point is the Bitcoin ecosystem. In addition to mining, our miners will also earn fees for broadcasting Bitcoin node transactions. The Rune version of the protocol was born on the day of the fourth halving, and the fees were particularly high, which indirectly stimulated the prosperity of the Bitcoin ecosystem and also brought additional income to our miners.
ChainDD Editor-in-Chief Dorji: Looking ahead to the future, will the post-halving Bitcoin market further increase the scarcity and value of Bitcoin, and drive a new bull market? Can Bitcoin's L2 become the driving force for the large-scale application of Bitcoin?
CGV Researcher Cynic Song: After the Bitcoin ETF was passed, the trend of Bitcoin is now linked to the U.S. stock market. Basically, we can tell the rise and fall of Bitcoin on the next day or the same day by looking at the U.S. dollar index. It is already a strong correlation.
How to promote the explosion of Bitcoin ecology, or the surge in Bitcoin, ultimately depends on the release of water. I don’t think the halving can bring much market impact, because 95% has been mined. On the contrary, because of the halving cycle, it can step on the cycle of the traditional economy, leading to an influx of off-market funds and a surge in Crypto funds.
I personally think it is quite pessimistic. I don’t think Layer 2 can promote the Bitcoin ecosystem to any extent. It is too early for the Fed to release money. At present, the macroeconomic situation has to wait until September and October, and the expectation of interest rate cuts has reached two times. It may not explode until funds come in.
Matt, Chief Customer Service of BitRoo: When will the Bitcoin bull market come? We think it has not come yet. We have analyzed historical data. In the three previous Bitcoin halvings, the bull market cycle was basically about half a year to a year and a half after the halving. In the current situation, we are definitely in a period of volatility, and the price will rise and fall from time to time. This situation will shake out short-term speculators. For long-term holders, there will definitely be a doubling of the market and a higher price.
Will Layer 2 bring prosperity to the Bitcoin ecosystem? I think it definitely will. First of all, Layer 2 freezes or migrates Bitcoin assets, which deepens the liquidity of on-chain assets, brings in more new users, and indirectly promotes the prosperity of the ecosystem. In addition, the inscriptions and runes that were popular some time ago, as well as some other asset issuance protocols, or NFTs, etc., these things combined together will make a better contribution to the prosperity of Bitcoin on the chain.
Mindfulness Capital, Head of Ecosystem Stephy Shi: I think not in the short term, but yes in the long term. What we call the cycle theory is a post-summary, a declarative statement and narrative. We say that Bitcoin halving is a cycle, but it is essentially an event. All assets have cycles. In fact, generally speaking, the halving narrative is that the price of Bitcoin has already been priced in between half a year to a year before the actual halving. This was also the case in the previous cycle. Including the price of mining machines, computing power, Bitcoin, and the price of secondary ETFs, they all have time differences and price differences, and they are not synchronized. From a secondary perspective, there is room for arbitrage. So to some extent, we don’t think we are in a bull market in the short term, but we may be in the long term, because in the end we may attribute this stage to the next round of bull market.
For example, at the beginning of last year, the entire market was quite pessimistic, and the industry was not in a good state. But by the end of last year, everyone realized that last year was a technical bull market, because the price of Bitcoin rose from 16,000 US dollars to more than 40,000 US dollars, and many trading strategies did not even outperform the increase in Bitcoin spot prices. So I think each round of bull market is different. I have also talked with many other VCs, and most of them concluded that the current bull market is different from the past.
The bull market in the last cycle was led by Ethereum, such as DeFi Summer and NFT Summer, including Uniswap, which also rose in the last round of bull market. This cycle is actually a Denomination of Ethereum. We have seen the rise of many other public chain ecosystems and the diversification of the entire Web3 industry.
Can Bitcoin's L2 become the driving force for the large-scale application of Bitcoin? I don't think so. There are two logics. First, how to define a bull market? New funds enter the market. We are discussing incremental funds, not existing funds. Who does the Bitcoin Layer 2 expansion problem solve for? It is for most miners who have already mined Bitcoin, as well as a large number of static Bitcoins currently deposited in the Bitcoin network. To some extent, it is to activate existing funds, and it will not stimulate the entry of new funds.
Secondly, what promotes the arrival of the bull market? Only applications, that is, the demand side, are the core catalysts of the bull market, because applications bring incremental funds and incremental users, and only then can there be a bull market. Let's jump out of Bitcoin and talk about Web 3. Let's take a look at meme, which is an interesting highlight in these waves of market conditions. The transaction cost of meme is very cheap in other public chains besides Ethereum, including Solana, Telegram network, and some L2, such as Base, Arbitrum, etc. You will see that meme has promoted a lot of new things. It may have small funds, but it does attract new users. It has even become a way for some public chains to cold start in this cycle. This is actually very interesting. Going back to what brings about the bull market, it still needs max adoption and real user demand. There is still a long way to go.
From the perspective of channels, the current daily trading volume of Bitcoin ETF in Hong Kong is not high, and traditional financial institutions such as licensed securities firms are needed to do more preaching and educate investors outside the circle. As well as the implementation and promotion of Hong Kong’s stablecoin and the opening of the fiat currency channel, new incremental funds can be gradually attracted to promote the arrival of a bull market.
