New story after BTC halving - USDS

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At 16:00 on March 7th, Bixin launched the second phase of Bixin insiders on the first live broadcast. Vice President of Bixin, Xueqiu Big V, Frank Ling, the outputter of hardcore opinions, and the founder of Brain Hole, Xu Zhihong, are all air, chatted with you about the new story after the halving and the stable currency USDS that everyone is more concerned about .

brief introduction

Halving is a major event that the whole market is looking forward to, but what about after halving? This year’s encrypted asset market is lackluster, with almost no new stories, and all kinds of original concepts have reached the moment of realization that cannot bear to look directly at. In 2020, after the halving, we think the stories that should be told most revolve around BTC: reshaping the BTC standard, unifying the market, and commoditizing computing power.

What is your standard? Do you understand the unified market and commercialization of computing power? Are you interested in USDS?

In this issue, insiders in the Bixin circle have an in-depth talk with you about returning to the currency standard, the payment field of BTC, and the network dividend of commodityization.

Introduction to USDS

USDS (USD Standard Token) is a stable digital currency (1 USDS=1 USD) that anchors the value of the US dollar (USD) through Bitcoin acceptance. Based on the corporate credit of Bixin, the bookkeeping voucher based on the value of BTC acceptance is used as the liquidity settlement unit in the Bixin ecosystem. USDS is anchored to the US dollar 1:1 in value. Users who hold USDS can redeem USDS on the Bixin platform. That is, when using USDS to buy BTC on Bixin, 1 USDS is equivalent to 1 USD. Users can buy and redeem USDS through USDS-based trading pairs in the currency exchange.

USDS is a Token that helps BTC transactions and circulation. Every 1 USDS can be exchanged for 1 USD equivalent BTC according to the real-time price of BTC spot on the compliant exchange. USDS can only be obtained by selling BTC, and can only be redeemed by buying BTC. Each issuance and redemption of USDS is completely decided by the user, and it is a 100% transparent and credible accounting tool. USDS will be issued based on ERC-20, and Bixin will gradually open functions such as spot trading, leveraged trading, deposit/withdrawal, and over-the-counter trading.

No fundraising! No fundraising! No fundraising! Say important things three times!

secondary title

Topic One Coin Standard

Keywords: liquidity, infinite denominator, USDS

Frank Ling：

——BTC is the value foundation of this industry.

The currencies on the market are very dependent on USDT. The total number of Bitcoins is limited to 21 million, and these 21 million correspond to unlimited US dollars. Let's look at a formula, "BTC/USDT", which has a finite numerator and an infinite denominator. This will bring an advantage and a disadvantage. The advantage is that the unlimited USDT corresponds to the limited BTC, and BTC can theoretically rise; but the disadvantage is also obvious. In the case of a limited numerator, as long as the size of the denominator is controlled, the market can be completely controlled. So in January 2018, when the market peaked and started to plummet, we found that was the first rate hike in the U.S. dollar in 24 months. I have a very clear impression that during the Chinese New Year from January 2018 to 2018, I copied the bottom of 35,000 RMB, but at that time everyone did not link this plunge with the interest rate of the US dollar. It was not until the interest rate rhythm of the U.S. dollar changed again at the beginning of 2019 that we discovered that the BTC market did not change according to our consensus and the growth of users, but instead rose and fell according to changes in the U.S. dollar. U.S. dollars can enter and exit the market at will, while unlimited U.S. dollars control a limited number of bitcoins. At the beginning of 2017, many people would do "LTC/BTC" trading pairs, using BTC as the standard. Later, they found that the bookkeeping was not clear, so they simply used USDT, because USDT is the most convenient for traders. USDT has indeed contributed to the market, and it is indeed a convenient stable currency, but if USDT is based on the US dollar, it will make the encryption market lose its liquidity.

BTC is the underlying asset for the capitalization of the entire industry, bringing personal wealth, asset liquidity, and basic credit to the entire industry, which is more important than the real estate industry to the country. With the rise of stablecoins and the popularity of the US dollar mortgage model, USDT brings transaction convenience to the industry, but also brings huge risks and long-term impacts. On the one hand, more than 80% of the current transaction volume (spot and its contracts) occurs on the "BTC/USDT" currency pair. USDT is already the top five Tokens in the market after ETH, and it is also the largest transaction volume. The largest centralized fiat currency standard Token. On the other hand, the original share of BTC in payment and settlement has been continuously squeezed. USDT has drawn huge liquidity from BTC, and the entire encrypted asset industry has become a virtual stock market dominated by the US dollar. So we need to return liquidity to BTC, otherwise BTC will become an accessory of the dollar, so that it will not achieve the final pattern of value storage. In the "BTC/USDT" formula, the important thing is the denominator, because the numerator can be any currency, and now the most important thing for us is to rebuild the denominator, whoever the denominator is, the liquidity depends on who.

So Bixin did one thing and launched its own bookkeeping tool Token——USDS. If the formula is "BTC/USDS", the numerator and denominator must share a market depth. Like Huobi’s HUSD and OK’s USDK, they didn’t go out of the exchange in the end. The reason is that they all use the US dollar as the core collateral and issue stable coins in a trust manner. Going out of the exchange not only needs to be 1:1 with the US dollar, but also bears arbitrage while doing off-site transactions, which will lead to the tragedy of being sucked to death by traders. Different redemption prices on various sites and inconsistent liquidity will inevitably cause arbitrage to collapse. With the advancement of the compliance process, it is impossible to obtain benefits from non-compliant capital flows, and stable coins with a split structure will gradually withdraw from the market.

The way Bixin solves the problem is to ensure that 1 USDS can buy a certain share of BTC, regardless of legal currency. In this way, BTC is equivalent to real estate, and USDS is equivalent to the real estate, and they share the same depth. From the realization of hedging, in the futures contract market, we do hedging through perpetual contracts, without touching legal currency. Secondly, USDS does not need to bear the burden brought by the US dollar, as long as it can ensure the purchasing power of BTC. We hope to return market liquidity to BTC through such an attempt. USDS does not use U.S. dollars as collateral, but relies on the exchange price of "BTC/USDS" to be consistent with the market.

Then everyone has USDT, why not use it? It can be used, but there is a problem with USDT, which is that it has a chance to push the entire encrypted asset industry to the opposite of most governments. There are three risks:

1. Most countries are unwilling to see electronic dollars flowing in users’ mobile phones, because this move completely bypasses anti-money laundering and other regulatory measures, and presents a posture of overhead legal currency. The convenience of transactions and the politicization of the industry even completely stand on the opposite side of the policy, which is quite risky.

2. In 2020, with the gradual acceleration of the global encryption asset compliance process, the regulatory risks faced by USDT will also be accelerated, and the freezing or even confiscation of USD pledges will bring a huge funding gap. If the industry foundation is in a fragile gray area, it will be difficult for the upper-level applications of the industry to continue to develop. 900 million U.S. dollars was frozen before, what should the U.S. government do if it freezes TEDA again?

3. As the core underlying asset of the entire encrypted asset industry, the liquidity and payment and settlement capabilities of BTC are crowded out by USDT, which increases the vulnerability of the system in the long run.

So we essentially need an accounting tool. Bixin must ensure that the purchasing power of the accounting tool against BTC is consistent with the spot market price. The USDS launched by Bixin is an industry initiative. We encourage every platform to do similar work:

2. The molecule and the molecule are exactly the same, and the market liquidity is returned to BTC. The market depth of USDS is completely dependent on the BTC market, and there is no liquidity difference to integrate BTC into more trading scenarios. At present, it has been able to provide instant trading of 100 BTC, and at the same time, it will only pay an impact cost of less than US$0.5. The natural structural advantages ensure the best depth advantage, and it will be one of the best choices in the market in the future.

Xu Zhihong:Xu Zhihong:

Frank Ling：To give an example outside the currency circle, the entire Asian currency has only two denominators, one is CNY and the other is JPY. For example, the liquidity of CNY for Thai baht and Vietnamese dong is not bad. In addition, the currencies of other small countries in Asia are very painful against other currencies. Like Cambodia, there is no denominator, and USD is used directly. So if you really want a currency to realize value storage, you need to push it to the settlement side, so that this currency can appear in daily settlement. The current USDT is essentially the shadow of the U.S. dollar, and it is a grassroots U.S. dollar. It has brought a huge transaction volume to ETH, exceeding 40%, but this does not mean the glory of ETH. Because for USDT, ETH is the best choice now, but not forever. USDT is always looking for the next faster public chain. Therefore, the reason why stablecoins other than USDT have not been developed is that they evade supervision, because under supervision, it is difficult to make an OTC acceptance in the US dollar market and the purchasing power against BTC at the same time extremely smooth. Given the choice of only one, we would definitely choose BTC.

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Topic 2 Payment

Keywords: payment tool

 Frank Ling：

—— Only by cutting into the payment scenario and serving the people can we realize the real "value storage".

The second issue during the halving process is that we need to bring BTC into the e-commerce field through a stable tool such as USDS to expand demand. We will never overissue USDS, because our USDS is obtained by selling BTC, and then settled into BTC, or we can directly settle USDS off-site. So in essence, we want to let BTC enter the entire transaction scene by pushing the USDS certificate. The USDS function of Bixin is closer to the stable currency of the US dollar. It is the first BTC-based "accounting unit" in the whole market. It is a transparent accounting unit based on the BTC standard. Anyone can exchange 1 USD unit at any time of BTC. In the early days of the emergence of BTC, there was a sweet time when Amazon supported the use of BTC for payment. Later, due to insufficient users and settlement difficulties, it was not able to continue. Today, we hope to use BTC-based tools such as USDS to help BTC enter more independent e-commerce scenarios and become one of the most important payment tools, especially in overseas markets and cross-border shopping. Only when BTC becomes better, can support more financial transactions and physical transactions, and is no longer extracted from liquidity, will the wealth of the entire industry be able to truly grow.

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Topic Three Commodities

Keywords: Internet bonus, settlement

Frank Ling：

——There is no old market for no reason, all value is the result of everyone's joint creation.

We have also talked about it before, and now the only thing that can become a big company in the entire Internet field is e-commerce. The Internet has experienced three waves of dividends, and these three waves of dividends have all commoditized services.

The creation, pricing and exchange of the first wave of commodities - "traffic" was completed by portals such as Google, Baidu, and e-commerce. They launched a globally unified advertising production and procurement process, turning users' attention into The first bulk commodity was created and the first wave of value creation was completed. It is equivalent to creating a transaction pair of "traffic/USD" or "traffic/CNY". Such a transaction pair brings dividends and wealth.

The second wave of commodities - "cloud computing services", companies led by Amazon have virtualized services such as computing equipment and operation and maintenance security into quantifiable and billable standard products, supporting global website operation and maintenance and the new U.S. The rise of a round of giants means that it has become a trading pair of "cloud service/USD". In addition, games and videos are considered cloud services.

What is the next wave?

The first two waves are settlements in fiat currencies, and the last wave is settlements in BTC, which requires the joint efforts of the entire market to achieve. So we need to really bring BTC into the trading scene. It is precisely because it has not been realized now that many people will ask whether BTC is a safe-haven asset. The safe-haven asset is that you are willing to use BTC to buy a box of masks at a critical time. You will think that it can meet most of your needs, but now it is not. Now BTC is only counted as an investment product priced by USDT. Speaking of the trading pairs mentioned earlier, only when BTC is used as the denominator can the industry move forward.

Xu Zhihong:Xu Zhihong:

Frank Ling：Yes, from e-commerce payment to pan-scenario payment. But this is not what our family can promote. It requires the joint efforts of the whole market. We have only made models now. BTC mining itself is a decentralized account book for group accounting, and BTC mining pool itself is a cloud service model and billing model, but whether these models can be promoted to various fields is very challenging sexual. Everyone used to call BTC 1 million US dollars, but now everyone is calling 16,000 US dollars, the confidence has become less, and where is the difference in confidence? Because everyone knows that the whole market is now promoting arbitrage, and a large number of quantitative institutions come in to cut leeks, and what they cut is USDT. There is only so much money in the market, and it is all being pumped out, who is filling it in? It is impossible to let people fill in later, we need more application scenarios for everyone to operate in this pool. Otherwise, the current halving is very dangerous, because the halving of BTC means that the cost is the same and the income is halved.

Xu Zhihong:Xu Zhihong:

Frank Ling：Halving is a very interesting design of Bitcoin, because it allows everyone to pay attention to this asset in a short period of time due to the halving of constant cost income. The past two times have had very good results, and of course not just because of halving. There are other reasons.

We have an infinite pursuit of BTC becoming the denominator.

Xu Zhihong:Xu Zhihong:

Frank Ling：The development of a large number of derivatives will bring about a problem, that is, the amount of currency held by a single user will decrease. In the long run, the loss ratio of the derivatives market is very high. In addition, almost everyone will turn the spot into a casino, which will bring a lot of business risks. For spot products, the major exchanges have more cooperation, but for derivatives, the major exchanges may become enemies. Derivatives are based on ledgers. Once you return to derivatives, it means that the industry has degenerated. Of course, derivatives are useful, and we practitioners need to use them for hedging, but if they are over-developed, they will overdraw the vitality of the market. Just like the gold market, in the past few thousand years, the scarcity of gold has not been lower than that of BTC, and the reason why gold has not risen to the sky is because it has returned to the derivatives model.

Xu Zhihong:Xu Zhihong:

Frank Ling：So for this year's halving, we need new stories after that.

Netizens ask:Netizens ask:

Frank Ling：USDS has not yet officially flowed out. It is now called pre-release, that is, it has not been circulated in the market, but only circulated in Bixin. Only by selling BTC will there be USDS. If you do not sell BTC, there will be no USDS in the market. There is no upper limit on the total amount, and you can sell BTC at any time. Our essence is not to sell this currency, but to provide a trading tool. Your trust in this tool is equal to your trust in Bixin Wallet. We also welcome other peers to imitate this approach, because we expect liquidity Back to BTC, which requires cross-site liquidity, and USDS is used for bookkeeping. USDS can provide a lot of liquidity. How much is the dollar standard against BTC? It becomes an accounting tool, so this accounting tool is still based on the BTC standard. Use USDS to buy equivalent BTC, thus bringing BTC into the payment field . As for forced exchange back to BTC, you can deposit it into your Bixin wallet and exchange it for BTC to withdraw.

Xu Zhihong:Xu Zhihong:

Frank Ling：Like Amazon, which supported BTC around 2013, it will do some e-commerce things first. Now the whole world is preparing for BTC compliance, including Singapore's license, BAKKT, etc., so we have to prepare for compliance. Since we need a unit of account, liquidity, and risk avoidance, we need to leave the fiat currency itself and work around the BTC standard. USDS is a bridge for us to enter the payment scenario. There is a company in Canada called Shopify, which is equivalent to the micro-business platform in the United States, and it has grown rapidly; Pinduoduo has risen in China. New giants are constantly developing in this market, but now e-commerce basically has national borders, and BTC can push globalization forward. In the end, we can use the electronic version of legal currency issued based on BTC as the national payment certificate, and use BTC for settlement.

Netizens ask:Netizens ask:

Frank Ling：We do not compete with fiat currency, because we cannot stand against fiat currency. First, it depends on the international market; second, it needs to be a virtual market and commodities whose value is difficult to estimate. I have seen a platform in Europe before that does traffic and tasks. It is a bit like 58.com. For example, the task is that you pick up someone for me. Many Filipinos are using this platform, and the task is to download the APP to help people make calls. The scenario application of BTC is here, because this is a European website opened by a German, and the service target is Filipinos. If payment is made in legal currency, no business can be carried out. If you want to exchange foreign exchange, the handling fee and time consumption are very high, especially in small countries. In contrast, the transaction cost of BTC is very low.

Netizens ask:Netizens ask:

Frank Ling：USDS does not use U.S. dollars as collateral, but relies on the exchange price of "BTC/USDS" to be consistent with the market. For example, now 1 BTC is 9100 USD, which is also 9100 USDS, which can be traded anytime and anywhere. The means of hedging is the BTC-based perpetual contract, which is equivalent to reverse the derivatives into spot. Because the hedging means are transparent, everyone can use them with confidence. Moreover, we have a very powerful trading system, which is needed on all platforms around the world to support the concurrent volume.

Netizens ask:USDT has been overissued, will it eventually collapse? Or is something else going to happen?

Xu Zhihong:Xu Zhihong:

Frank Ling：China's OTC market is a bit strange, because the flexibility of domestic banks is particularly high. Suppose you use a single account to frequently transfer small amounts to many other accounts, it will be frozen soon, causing the OTC market in China to be very active. There are about 3 trillion yuan in domestic transfers every day, and this is just an internal transfer. Banks in other countries levy taxes on individuals and transfer money to others abroad. If the purpose is not specified, the bank will call you to ask you; if you receive a sum of money without specifying the purpose, it will be treated as personal income without paying taxes. Very serious consequences. Therefore, there is a reason for USDT to live so well under domestic characteristics, and the status quo of USDT in China cannot be regarded as an inevitability, but a product of special events and special stages.

Netizens ask:Will the issuance based on ERC-20 be considered an ICO?

Xu Zhihong:There is a big misunderstanding on this issue, because people in China have not seen more applications of ERC-20. ERC-20 is actually just a tool. I can issue various certificates through ERC-20, including exit slips as certificates. Therefore, as long as there is no fundraising behavior, the issue of ICO is not involved.

Netizens ask:How do you see the lending market?

Xu Zhihong:Xu Zhihong:

Frank Ling：The loan market is huge, with a mortgage rate of 75%, which is higher than that of real estate. The creditor's mortgage rate on your assets represents the actual value of the assets. For example, banks have different mortgage rates for real estate at various stages, which is close to the real valuation of real estate. The popularity of the lending market is a benign development, and the ability to use Bitcoin to withdraw money proves that the recognition of BTC is increasing. I think there is no real overlord yet, and there is still a lot of room for development.

Xu Zhihong:Xu Zhihong:

In fact, the example just now is not very appropriate, because the real estate certificate is a voucher loan, and you can borrow money after registration, which has no effect on the right of residence of the real estate. BTC loans are physical loans, and BTCs belong to the creditor when mortgaged, which is why the mortgage rate of BTC loans is higher than that of real estate.

At the end of this article, it is emphasized again that USDS is an accounting tool and a stable medium that can be converted into when the market fluctuates, and the cost of holding positions is borne by Bixin.

No fundraising! No fundraising! No fundraising! Say important things three times!

Please look forward to the next Bixin insider live broadcast~

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