Li Xiaolai, a notable blockchain investor and bitcoin tycoon in China, recently has been appointed a manager of a $1.6 billion government-backed blockchain fund, dubbed “Xiong’An Global Blockchain Innovation Fund”. And in Wednesday evening, Li said in an interviewed with former Senior Vice President of Sohu.com, Fanggang, that he has no belief in bitcoin, and China has potential to become the largest market for blockchain.
Is it possible to use bitcoin as a form of payment?
Li: I personally think that Bitcoin is a clearing system to solve the double spending problem.It has not been designed as a payment system from the very beginning. In addition, a system featuring inflation is suitable for payment, while a deflation system like bitcoin will cause many inconveniences when used in payment.
How about other coins?
Li: In recent years, we have seen many “decentralized stable currency” solutions featuring as what they describe stability, efficiency and decentralization, but I have doubts about them. These solutions can only occupy two out of the three characteristics, therefore, it is safe to say stable cryptocurrencies are lacking efficiency.
Is it feasible for bitcoin to be used in the venture capital investment in the primary market?
Li:Theoretically, most of the cases that use bitcoin to invest in starups will fail because few entrepreneurship programs can outperform bitcoin in terms of investment income. I have tried it before in a systematic way, and have experienced the event of “a narrow escape from the death”. It is likely to remain the same in the future.
Do you think cryptocurrency is in a bubble?
Li:I think there is no reasonable method to value cryptocurrencies now, so the bubble indeed exists in the space. However, different people have different understandings of the bubble. Some people think they will never invest in bubble-like things, while some others want to get a taste of the “bubble”.
Assuming you are a financial regulator, how do you plan to regulate the cryptocurrency world? What is the core problem in supervising digital assets exchanges?
Li:I think the distribution of tokens is theoretically a “global version” of crowd funding, which is difficult to put a lid on. The regulation on cryptocurrencies always faces two restrictions: one is geographical restriction, for example, Canadian laws do not necessarily regulate the Chinese; the other is the functional restriction, you cannot require the law enforcement officials to collect taxes, for instance. Thus blockchain assets, from the outset, are globalized things, and they hardly seem to be limited or regulated by a single country.
I hold a different view on the exchange regulation. Actually, it is very easy to regulate those cryptocurrency exchanges. Put simply, regulators need to require cryptocurrency exchanges to make their bank accounts public for investigation.
The last question, are you ready to immigrate?
Li:In 2014, I told my lawyer to cancel the immigration plan. Since then, I have never thought about it. China will be the largest market for blcockchain in the future, as well as the fastest-growing area. I don’t necessarily want to leave China.