Last year, the concept of the blockchain was on fire, some people made a fortune, and there were millions of investments turned into bubble. Is blockchain in the end a bubble or a revolution?
Equity investors who are optimistic about the blockchain outlook compare it to the early Internet and call it the Internet Second Revolution. “Before and after the humans in the Internet look back in the future, they will partition humans before the blockchain. Humans behind the blockchain.”
However, there are still many people who are cautious about the blockchain. The dramatic fluctuations in the prices of digital currencies, the improbability of numerous blockchain projects, the uncertainty of their application prospects, and the gradual tightening of regulations have made blockchain a “mystery” to many people.
Compared with the fiery phenomenon of the investment blockchain concept project in 2017, it will return to rationality in 2018. At the 12th China Investment Annual Conference held in the recent annual summit, venture capitalists believed that 2017 is a speculative year for the blockchain, and this year it has become an investment watershed and has entered the value investment year. Is it really the truth?
Blockchain still have a pain points
It has been 10 years since the 2008 bitcoin white paper and the first founding plan. Since the beginning of last year, the blockchain has really entered the mainstream, but for most people it is still a mystery.
Many people in the investment community have talked about the blockchain and have compared the stage of the current blockchain to the early stage of the Internet. They think that the blockchain is the second revolution of the Internet. Whether or not they are comparable. There is still a question mark to be drawn at present, but the blockchain has become an exploration field that the investment community cannot avoid.
“The development of blockchain is very similar to the Internet, except that the blockchain has a shorter period of turmoil.” Zhu Bo, founding partner of the Dreamcatcher Fund, believes that now is a good time for blockchain investment and entrepreneurship because today’s blockchain is just like the Internet dialing in the late 1990s and early 2000s. “At that time, it was impossible for you to look at the multimedia of the Internet video and Internet. Just like today’s public chain, you want to make a big ecological application. Possibly, because the entire TPS is also a big problem.”
Speaking of the application of blockchain, the joint chairman of the star Guo Yuhang believes that in some scenarios, the value of the blockchain has gradually been recognized, such as the storage of third-party information, the registration of ownership, and the transaction of real estate. The use of personal information, if protected in the blockchain, may result in better publicity of personal rights.
“Our earliest and most specific application was transfer,” said Zhu Weiyu, founding partner of NEO Global Capital. “If the operation is successful, it will take several days to make a cross-border transfer without any misunderstanding”. The digital currency is from in a cross-border transaction that China transfers to Japan, it can arrive within half an hour.
However, the market is more skeptical about this. Apart from issuing coins, what can the blockchain do? Some people point out that a so-called killer application is not available today, and it is a far behind the Internet.
Even equity investors who are optimistic about the blockchain’s prospects know this pain point well, and blockchain technology can’t be settled in many scenarios.
“Now the application of the blockchain industry is still good, or the underlying infrastructure, or are still very primitive. No matter in the performance of the blockchain itself, or in the user’s friendliness and the friendliness of the developer, There are still a lot of problems worth decrypting,” said Zhu Weiyu.
Wang Ping, a partner of KIP’s Korean investment partner, also believes that the entire blockchain is indeed a very early point in time. Basically, it can only be applied in the B2B domain and it is difficult to enter the C-side.
“The blockchain is not a brand-new technology, it is a combination of multiple technologies, and it has a lot of technical problems that have not been overcome, such as security and efficiency — will certainly be sacrificed in the case of increasing transaction frequency per second. Safety.” Guo Yuhang believes.
In addition to technology, Zhu Yifan, partner of Yong Xuan Venture Capital believes that there are three other factors that hinder the development of the blockchain. First, the direction of choice, the blockchain needs to be clear whether its application direction is the industry’s ecological platform or applied to business. The problem, “So far there is no blockchain technology to solve the problems in life”; in the choice of the scene, the scene needs to be grounded in the project to meet the real needs; in addition to the need to develop a consensus agreement.
Of course, the supervision of digital currency is also an issue that cannot be solved in the development of blockchain. On the one hand, it is difficult to reach consensus between the regulatory and blockchain entrepreneurs on the issuance of tokens. On the other hand, facing certain challenges, the industry is chaotic.
“The reason for the confusion is not that things are not good because of the lack of supervision. I very much hope that the government will introduce policies that can really manage the blockchain and turn the blockchain into an orderly development.” Founding Partner of Lebu Capital Yang Ning said.
What about 2018?
“At this stage, the immature stage is the happiest stage for investors, because everything is perfect, and we are all investing. So we still have to find relatively less mature areas.” Zhu Weiyu stated the reasons for investing.
Zhu Bo expressed a similar view. The bubble is not terrible. At the beginning of the new era, there will be a lot of silt. Just 90% of the projects in the beginning are not reliable, but more and more value will be over time. Investment and founders come in, making the industry a good money driving bad coins.
In addition to FOMO, the high rate of return and blind investment in the investment zone last year may also be the reason. “We have invested in 12 blockchain companies. It is about 14 times higher value now when the bear market ended. It may be also several times higher, because it has risen again,” said Zhang Yinhai, chairman of ChainFunder.
Luo Chen, Founding Partner/Management Partner of Qingchuang Ginkgo, shared a story. Before and after 2005, there was a project that challenged Microsoft hegemony as a system. After being invested $50 million, it was not developed and was later bought by the industry. However, it did not develop and was finally sold off. Because of the hot blockchain last year, this project has fused to 500 million U.S. dollars.
“Last year was a speculative year for the blockchain. Everybody didn’t care whether this project could come down.” Zhu Bo revealed that it would be very difficult to get a white paper this year to raise funds. Many speculative investors and investing entrepreneurs have stood by it over time. Just left the field, but “I saw more value investors entering the market and very good entrepreneurs entering the stadium. I think this was before and after the Internet bubble came in 2002.”
Whether 2018 is the year of blockchain value investment as stated in the industry, it is still to be seen. Standing in the current position, the equity investment community is how to see the blockchain investment logic in 2018, which is also a major reference.
“This year’s bubble is something that we will never see again. Instead, it is a better time for everyone to slowly develop the mechanisms of performance, the developer’s environment, modules, user experience, compliance, and self-discipline that helps the industry. This is a very valuable thing, Zhu Weiyu said.
Zhu Yifan believes that in 2018, the industry has returned to rationality. There are two major options for investment. The first is the choice of the scenario, and the second is the choice of the consensus mechanism.
Zhang Yinhai said that there are four levels of blockchain investment: the first is that the technology has revolutionary innovation and the team is reliable; the second is that the technology is reliable, has breakthroughs, and is not innovative enough; the third is technical reliability and no innovation; fourth are industry applications.
In addition, industry investment sources have reminded that although blockchain projects now seem to be banned by law, they still need to pay attention to legal risks. Entrepreneurs and investors must be prepared for this and remain cautious.
Author: Marko Vidrih