On April 9, a private event themed "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.

Liu Guoming, founding partner of Hong Kong Compliance E Fund, was invited to attend and deliver a keynote speech entitled "Diversification of Bitcoin Ecosystem: From Digital Gold to Diversified Investment".

The following speech content is simplified by ChainDD based on the on-site content:

Liu Guoming, founding partner of Hong Kong Compliance E Fund

Hello everyone, I am Liu Guoming, a veteran in the Crypto circle, and I have been in this industry for almost 10 years. I come from a financial investment background, and I first worked in the financial and securities systems. I came out of CICC, and after entering the Crypto circle, I have been investing in this field.

I was thinking about what to talk about today, based on the investment content of Bitcoin. I think all the friends who came tonight may be very familiar with it. Then I thought about it and decided to share and communicate with you based on my experience stories in this circle and some thoughts in the investment process. This may be more attractive than directly talking about the underlying structure and ecology of Bitcoin. The changes in our investment logic after several cycles are more meaningful to everyone.

The diversification of Bitcoin ecology has gradually become stronger in recent years and has caught everyone's attention. Today, everyone thinks that Bitcoin is the "King of Coins". Bitcoin accounts for more than half of the entire Crypto market value, including this year's possible "Bitcoin Ecosystem Summer". Especially this year's rise of inscriptions and runes, including the previous atomic swaps and the extension of the lightning network to L2, but the Bitcoin network has been running for 15 years so far. The development of Bitcoin in these 15 years has not been smooth sailing, with alternating bull and bear markets, the 94 incident, double-spending attacks, 51% attacks, forks, etc., and concepts are constantly iterating.

We know that there is a saying in the cryptocurrency world that “one day in the cryptocurrency world is like 10 years in the real world”, which is not an exaggeration at all. We were originally in Beijing, at the China Investment Center, at Garage Coffee, and there were many friends working together. Now they may have moved to Southeast Asia, Hong Kong, and Dubai. The world is changing very fast. Today we have established the first compliant fund in Hong Kong, and we also need to make some appearances and communicate with more old friends. Today this matter is already compliant and legal. But in the past, all the investments and things we did had to bear a lot of regulatory pressure, and changes in regulatory policies are slowly becoming more friendly.

The regulatory environment has been quite friendly in recent years. We can sit here and talk about Crypto openly. It is completely legal and compliant in Hong Kong. Just like today, this venue is a store that can trade digital currency and legal currency. This kind of transaction is already legal and compliant.

The consensus is that Bitcoin has been able to achieve its current rapid development in recent years is based on its underlying characteristics: immutable total amount, non-tamperability, and value-carrying characteristics.

The value bearing is mainly reflected in the fact that it takes a lot of manpower, material resources, and electricity to create Bitcoin. It locks up a lot of value. Miners often talk about the shutdown price of Bitcoin, which requires the market to have a strong price support. It’s like digging for gold in nature, which requires a lot of cost. In fact, the price of Bitcoin has gradually stabilized since 2014 and 2015.

In the early days, we bought Bitcoin on Taobao. Many exchanges that traded Bitcoin in the early days ran away. Many of you may have bought Dogecoin on exchanges and the exchanges ran away. These are the paths we have taken and the pains brought about by the development of the industry. But precisely because of this, new life and opportunities will be born.

The development of the Bitcoin ecosystem requires not only technology, but also the support of upstream and downstream industry chain hardware and software. For example, mining machines have formed a very complete industry chain. In fact, in the past few years of Sino-US confrontation, the development of the mining machine industry has preserved a good spark for our chip industry. If there were no Bitcoin mining machine industry, our chips might have been suppressed and suffered even more serious losses. This can be regarded as an unintentional achievement.

Bitcoin's current position in the global economy is increasing. The underlying logic of Bitcoin's survival is to provide a value support for the global gray industry and dark web transactions. Where there is light, there is always darkness, which is equivalent to the two sides of things, like shadows, one yin and one yang. Bitcoin has survived this period and has now come into the sun, shining in the fields of global payment, finance and trade. Some of my friends have begun to support Bitcoin payments in international trade, including buying crude oil, gold, and bulk commodities. Bitcoin payment efficiency is higher than traditional interbank payment efficiency and security is also stronger. The anti-freezing effect is better.

Some current applications of Bitcoin, such as international remittances, are that Bitcoin can be divided to the 18th decimal place, with a unit as small as one satoshi. During the transaction process, it can be subdivided into very small units, so some micro-transactions can be carried out. Of course, due to the increase in gas fees, the gas fees it consumes may be higher than the transaction amount.

With these changes, the diversified development of Bitcoin has changed the underlying logic. Previously, it may have been a more grassroots, chaotic or grassroots way of playing. But now, traditional financial institutions have begun to enter the market, and even some sovereign state regular forces are entering the market.

The underlying transaction attribute of Bitcoin itself has become a financial attribute, and this financial attribute has extended to many derivatives. Including the financial product innovations we are familiar with. The earliest Bitcoin futures that connected with the traditional financial field were actually the Bitcoin futures and Bitcoin futures ETFs in the European market, which were earlier than the Bitcoin spot ETF.

But why has it not attracted much attention? Because Bitcoin futures and futures ETFs are essentially financial derivatives, which is equivalent to a contract with a Bitcoin as the underlying asset. What is bought and sold is the contract rather than the Bitcoin itself. The ultimate flow of funds for spot ETFs is to allocate spot assets, which is equivalent to mainstream funds being able to trade directly with digital currencies. Of course, Bitcoin ETF can only be traded with Bitcoin, and Ethereum ETF can only be traded with Ethereum. Everyone should understand this concept clearly.

On January 11 and April 30 of this year, spot ETFs were approved in Hong Kong and the United States, bringing new vitality to the industry. In particular, Hong Kong was the first in the world to approve the Ethereum spot ETF. From its growth in the barbaric era to the emergence of compliant products and institutions today, the entire history has been pushed to a new height. This is the impact of ETFs on Crypto.

Let’s talk about investment. When we first entered the circle, we all bought Bitcoin first, either from Taobao or by mining ourselves, and went to miners to buy Bitcoin. Later, we extended it to using Bitcoin to invest in research projects, and then we started using Ethereum for investment. Later, in the “DeFi Summer” of 21, and then in this cycle, everyone can directly use legal currency to trade, and there are spot ETFs in Hong Kong and the United States. In fact, our investment channels have been greatly enriched, providing a simple path for more investors to invest.

We run a compliant E Fund, which is the first and only compliant secondary private equity fund in Hong Kong that invests 100% in encrypted digital currencies. The difficulty of filing the fund is beyond everyone’s imagination. We have oversubscribed twice in a row since the successful filing of the fund on January 14.

The first fundraising scale was US$50 million, and it was oversubscribed before the Chinese New Year, mainly because some family offices and traditional financial institutions rushed into the market. The second time we adjusted the fund size to US$100 million, and it was oversubscribed again before the end of March. Therefore, we directly adjusted the fund size to US$500 million this time.

If you are interested in our fund, you can participate as an LP. If you have relevant investors around you, you can recommend them to work with us as our BP.

Our fund has already had a base of 100 million US dollars so far. The past few months of May, June and July are very good opportunities for us. The fund raising period may be until August this year, or at the latest until the end of the year. We will not raise funds all the time, and our investment is also carried out according to the cycle. The scale of this time is based on 500 million US dollars, and the investment period is 2+1, of which the closed period is one year, which is actually a soft lock, and can be flexibly redeemed. There will be a redemption fee during the closed period, but there will be no redemption fee outside the closed period.

We mainly invest in the secondary market, and our investment targets are the top 200 tokens by market value on CoinMarketcap. Our exchanges are Hashkey and Coinbase designated by the Hong Kong government. We are compliantly registered with the Hong Kong government and operate in compliance with its requirements. The funds are not in our hands, but in banks and trusts. The US dollars raised are kept in banks and are subject to the Hong Kong government’s regulatory framework. Relevant monthly reports must be prepared every month, and relevant audit reports must be prepared every year.

Why did we scale up two rounds and basically oversubscribe twice, and both times we oversubscribed within a short period of one or two months, because this era has arrived.

For example, we invested in an artificial intelligence and DePIN project some time ago. We believe that artificial intelligence and DePIN are a very large track. It has just been launched recently. In just six or seven days, the number of coin holding addresses has exceeded more than 20,000. The total output of coins is now more than 5 million. As of today, nearly 50% have been destroyed, so the iteration speed is very fast.

The same goes for our fund investments. We are now competing for angel investors. We are not aiming to grow infinitely. The fund size may be 500 million. We invest in relatively low-priced Bitcoin in this cycle and exit in the next cycle. When the fund reaches a certain level, other funds are still raising funds, and we will call you and ask you to redeem your funds.

Because we only follow the cycle, we may withdraw from this cycle around 27 years and then continue to wait for the next cycle.

The above is the content of my speech. If you have any follow-up communication needs, you can contact me privately. Thank you.