To issue money and finance, you need to make a clear cut

I. Introduction

In the field of blockchain, there are two sentences that are widely spread, but these two sentences sound like a little contradiction:

The first sentence is: the essence of the blockchain is the currency. Only the currency can effectively coordinate the various stakeholders in the distributed system to effectively quantify the incentive.

The second sentence is: 99% of digital currency is air currency, and ultimately it is going to be zero.

One said that the blockchain is not developed from the coin, and the other said that the coins issued by the blockchain are all air coins. Are there contradictions between these two sentences? If there is a contradiction, which sentence is correct, which sentence is wrong?

I think these two sentences are actually not contradictory. On the one hand, the blockchain does not leave the development currency. After the currency is used, the currency acts as an equity carrier, which can revitalize the economic ecology of the entire project and quickly enable enterprises to digitize assets. On the other hand, at present, many air coins have been capitalized, but they have not created corresponding values, and they have not been able to land. As a result, most of the coins have eventually gone to zero and become air coins.

The real key point in these two sentences is whether there is financing after the currency is issued.

Second, the currency can be, financing is not feasible

Some time ago, China issued the "Announcement on Preventing the Risk of Subsidy Issuance Financing" and the "Notice on Carrying out the Work of Clearing and Rectifying the Subsidy Issuance and Financing", and clearly defined that all acts of financing using digital currency are illegal fund-raising.

The text used is this:

Token issuance financing refers to the so-called “virtual currency”, such as bitcoin and Ethereum, which is raised by the financing entity through the illegal sale and circulation of tokens. It is essentially an unauthorised illegal public financing , suspected of illegal sale. Counterfeit tickets, illegal issuance of securities, and illegal criminal activities such as illegal fund-raising, financial fraud, and pyramid schemes.

From the date of issuance, all types of token issuance financing activities should be stopped immediately. A detailed analysis, in this notice, the state's statement is that "all acts of financing using digital currency are illegal fundraising", the point is: the state is opposed to the currency itself, but to the use of digital currency for financing .

In the vernacular, the currency can be, but it cannot be financed.

I personally support the state's regulations because it is really necessary. At present, there are too many chaos in the market to use digital currency financing. There are countless project parties who come to this market in the will of fraud. At the same time, there are countless investors who have lost their hard-earned money, even wife ions. The illegal and fund-raising behavior has seriously affected the stability of the society, so it is appropriate for the state to introduce such a policy.

But this is also worth our in-depth thinking: is it only feasible to issue currency, not financing? Under what circumstances can I only issue currency without financing? If you don't use digital currency financing, what kind of financing do we use?

1. The token financing of many projects is not in compliance.

In traditional markets, project financing is a very difficult task. Take the IPO as an example. If your project is going to be listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange for an IPO, it needs to be sponsored by the broker. It will take several years to reform, and it will undergo strict financial review and continuous supervision. All of these are met. Ability to enter exchange-listed transactions.

Moreover, the IPO is already a relatively late stage of the capital market. If you are financing in the early stage and need to look for VC and PE, then the situation will not be much easier. You may need to see hundreds of VCs in a short time, see more than a dozen in a day, see VC in the meal, see VC in the car, see a few VCs before going to bed, and then keep being Rejection, non-stop rejection, this situation has become a "standard" for financiers.

Financing has always been a serious and difficult thing, because you are taking the vision of your own project, to exchange for someone else's real money, and often in exchange for large sums of money, even hundreds of millions of dollars. Nobody's money is a big wind. This is a very serious process of business value exchange . You must show the potential of your project. You must show what value you can create for society. You must prove how much you can bring to the capital. With the added value, you will be able to successfully finance.

But in the current ICO situation, many digital currencies have nothing at all, not even a white paper. Only one concept begins to raise funds. Some projects are initially fraudulent. Some projects are not fraudulent, but even the founder himself does not know where the project will go, and the white paper of the project is changed. The current version is changed from the original version to the main business. In the case of such a business, such a business is simply unable to meet the financing conditions.

2. The equity corresponding to the token is uncertain.

Now everyone seems to be used to thinking about the issue from the perspective of tokens, but in our tradition, we think about these issues from the perspective of stocks. Tokens and stocks have very big differences, basically belonging to two different thinking paradigms. .

When we have stocks, we know very well what rights we have. For example, we have the right to distribute dividends. If the company makes a profit, we can pay dividends from it; we have the right to vote. If the company encounters a major event, we can participate in the general meeting of shareholders, and determine the company's relevant operations according to the number of votes; There is still recourse for remnant assets. If the company is facing bankruptcy, then we can obtain certain residual assets according to the priority of the settlement according to the number of shares.

These rights are standardized, and you have the right to own it, no matter which company's stock you hold, but when we hold the token, these things are different.

Take the most common exchange tokens. For example, if you hold exchange tokens, you don't enjoy the exchange's dividends. That means no matter how much money you make, it is not directly related to you.

There may be some project parties who are more conscience and there will be a corresponding repurchase mechanism. However, on the one hand, the share of repurchase is relatively small, and the common one is 20%; and generally, it is repurchased by profit. The profit is a very virtual thing, because income is reduced by cost, which is equal to profit. Although income is generally open, The cost is completely calculated by the project party, so the amount of repurchase is actually the project party has the final say.

In addition, why is the proportion of this repo not 50%? Why not 80%? Why not 100%? Why is it 20%? These things are worth discussing.

The only role of most exchange tokens is to deduct the handling fee, but there are many ways to offset the handling fee. For example, there are many ways to discount the traditional stock brokerage business.

Some of those who trade stocks may be the one-and-a-half fee. Some people are in the third place. Some people may only have a handling fee. The current mainstream fee for digital currency transactions is one thousand and one thousand. In contrast, the transaction fee of stock trading can be kept at a very low level without any deduction. That is to say, in the whole ecology, it is not necessary to use the token to deduct it. The currency is optional, so what is the meaning of financing with tokens?

As long as these tokens begin to circulate in the secondary market, they will generate price fluctuations. It is already a financial product in the de facto sense. It is a financial product with price fluctuations, which is theoretically packaged into a financial product with price fluctuations. It is difficult to talk .

The exchange's tokens are already more reliable projects in the blockchain industry. It is a real project. There are many blockchain tokens, representing points, representing the time of celebrities, representing some more. The strange "equity" does not mean that these rights and interests cannot be represented, but these rights themselves are not suitable for financial products, and should not be used for financing.

3. The price fluctuation of the token has a great negative effect on the project.

In the case of points, many real-life projects require points, which can attract consumers' participation, but does the score itself need such high price fluctuations?

For example, the live broadcast platform is very hot. They all have things like airplanes, rockets, big swords, and fish balls. These things are fixed with the price of the renminbi, so you can guarantee that when you give others rewards, you know that you How much money is spent; when others receive your reward, others know how much they have received.

This is a certain relationship, but if these reward points are converted into a thing that can fluctuate after the pass, then those who are rewarded or those who accept the reward may not habit. The rewarding person will think, I will reward 100 pieces now, will it become 1000 pieces tomorrow? This seems to be a bit unreasonable; those who accept the rewards will also think that I have received 1000 pieces today, will it become 100 pieces tomorrow? Should I cash out immediately?

In this case, the volatility of this token is of no practical significance. Not only in this scenario, in most scenarios, the true evidence of the landing, the real use of the certificate, the volatility is too high for the project is a disaster .

3. Under what circumstances can I finance?

According to my observation, the current use of tokens for financing is only necessary in a few cases:

1. Token is only a tool, and it is essentially a traditional financial product and financial interest.

For example, I am the management of a non-listed company. I want to do equity management within the company. Under the traditional circumstances, I definitely want to go to the Trade and Industry Bureau to register. The equity change is subject to the industrial and commercial registration.

In the case of the current currency, I will first go to the Trade and Industry Bureau to register (or the industrial and commercial bureau will recognize the industrial and commercial changes in the blockchain, this step can be omitted), but I also use the pass as a carrier. Manage the company's internal equity and use smart contracts to further fine-tune management, such as automatic sales restriction, unlocking, such as voting functions.

This is equivalent to saying that at this time, the pass is actually a stock in the traditional sense, and still has the rights and interests of all the traditional stocks. It is only the original use of the share certificate, and now it is replaced by an equity carrier. In this case, if the project party uses this token to finance, this is a very normal situation, just like financing in traditional business.

I personally feel that the "traditional financial + certificate technology" situation should become the mainstream of the next blockchain industry financing. In this case, the card is only a new technology, basically does not change anything in traditional business and finance, nor does it change the entire financing process and the regulations that need to be observed.

There are many such products, such as financial products in the traditional sense: equity, futures, options, warrants, and trusts fall into this category.

2. The project has strong decentralization features, especially those that use proof of workload.

When a blockchain project uses a workload proof mechanism and has strong decentralization characteristics, the traditional financing method basically does not work at this time, and the project does need a token at this time. It is determined by its inherent economic characteristics.

When your project has strong decentralization characteristics, it is essentially a kind of distributed cooperation. You need a lot of ecological parties to participate in, for example, each ecological party needs to participate in contributing computing power, and a large number of Computational contributions also cost money, so in order for them to cover these costs, they need to provide them with economic incentives. At this time, they need tokens and token-based financing, such as the Ethereum.

However, it should be noted that even projects that use proof of workload do not need financing. In the case of Bitcoin, Bitcoin, although it has issued currency, has no financing, and the price of bitcoin is naturally generated. It is derived from intrinsic value and is a relatively natural state.

Of course, there may be some projects that cannot be financed by traditional means, or you can try to use the form of tokens to finance, such as the popular self-organizing DAO, but the current situation of this project is still a minority.

In addition, most other projects do not require a new model of “finance financing” and “celebrity time financing”, which is sufficient for financing through traditional equity. This is compliance and landing. The shortest path of the road .

Fourth, the conclusion

To issue currency and financing, these two actions require a clear cut;

The currency is important, but the currency and financing are separable;

Coins can be issued, but only a few companies that meet the criteria can be financed.