"If crypto were a tree, we'd invest in its roots and leaves."

BMAN announced in June of last year that he was partnering with Huobi Co-Founder Du Jun to establish ABCDE Capital, focusing on supporting Web3 builders. After selling Huobi, Du Jun diversified his investments by restructuring and listing New Huo Tech on the Hong Kong Stock Exchange, laying out SAAS, media, developer ecology, and primary market direct investment in Singapore, partnering with BMAN to launch ABCDE, a US$400 million fund focusing on crypto early-stage. ABCDE is an outstanding "Capital With Ecosystem" in the Asia-Pacific region, providing end-to-end ecological resource support including capital, traffic, trading, licenses, and developers for initial founders worldwide. ABCDE includes Hong Kong-listed company New Huo Technology, Singapore SAAS company ChainUP, exchange Huobi, media company Cointime, and other ecosystems, with dual centers in Singapore and Hong Kong, and a 5,000 square feet physical Crypto acceleration hub at One Raffles Place in Singapore, representing "A Blockchain Centric Development Ecosystem."

BMAN, one of the early OGs in China's crypto world, has been in the sector for ten years, enduring many cycles and watching the ups and downs of Chinese Web3 globalisation. He has a thorough understanding of the industry. Simultaneously, BMAN's entrepreneurial experience in Web2, spanning both Web2 and Web3 technology waves and creating companies worth hundreds of millions of dollars, has positioned him as a "entrepreneur behind the entrepreneur" with hands-on experience. He, like most Web3 enthusiasts, believes in the concept of global citizenship and freedom, breaking the established inertia of thought in the crypto area. At the same time, he feels that Web3 requires a super application to deliver integrated service solutions, allowing more individuals to participate, which may contradict the perception of many Web3 participants.

During the Web3 Summit in Hong Kong, BlockBeats conducted an exclusive interview with BMAN, Co-Founder of ABCDE Capital.

BMAN's experience: Introduced to Bitcoin by an American soldier

BMAN, who firmly embraced Bitcoin during his student years, ventured into AI entrepreneurship in 2015 and has since established ABCDE Capital, always at the forefront of technological and industry development. What drives his direction choices?

BlockBeats: Newcomers to the industry may not be familiar with ABCDE Capital and BMAN's past experiences. Can you briefly introduce yourself, BMAN?

BMAN: Sure. My name is BMAN, and I first became interested in crypto in 2013. Ten years ago, I was a student and met an investor named Simon Black in Lithuania, Europe. I joined his investment team as an analyst. Simon is a legendary investor who initially studied intelligence at West Point Military Academy in the United States and later participated in the Iraq War. He was initially of typical American soldier style, but when his comrades were killed in action, he felt that his country, which he had pledged loyalty to, had betrayed him. He felt ashamed of invading other countries for oil and using "lust to increase crime," so he retired from the military, gave up his American citizenship, and became a global citizen, investing in more than 120 countries worldwide.

Also in 2013, Simon told me about Bitcoin and said, "BMAN, you must know about Bitcoin. It is the freest currency in human history." At the time, I was still a student and bought my first Bitcoin. In 2015, my best friend in college suggested we start a business together. The next day, I bought a plane ticket to Beijing and started a business with my good friend.

We founded a marketing technology company called Lijiaoshou and attempted to use AI to write advertisements. In 2017, we sold the company to Baidu. I also spent a year working on AI at Baidu. Today's AIGC big model content production was also attempted at Baidu. We basically used the same model to generate ads, which increased the conversion rate of ads. I am grateful for the experience I gained at Baidu, which allowed me to stand at the forefront of large-scale technological trends. At the end of 2017, I believed that Crypto would be a huge opportunity, so I left Baidu and went all-in Crypto.

Fortunately, I caught the 2017 bull market cycle and have been in Crypto industry ever since. I have made many investments and operated a trading platform, both successfully and unsuccessfully. To this day, I think my greatest passion is exploring the forefront of Crypto with some very innovative entrepreneurs. So last year, Du and I talked all night on his balcony overlooking the bay in Singapore and decided to establish ABCDE.

Why did we establish ABCDE? Apart from what I just said about my greatest passion being innovation and exploration in this industry, there is another point. Du entered Crypto in 2012, and I entered Crypto in 2013. We both have ten years of experience. Ten years ago, many people asked what Bitcoin and Crypto were and what value they could bring to society. Today, some people are still asking me this question, which makes me feel embarrassed.

BlockBeats: Why is it said to be "awkward"? Doesn't this indicate that there are still great opportunities in the crypto industry?

BMAN: It shows that those of us in the industry haven't achieved much in the past decade. Besides running some gambling sites and creating some self-circulating products, what have we really changed or created in terms of value? I think we need some projects and applications that can truly bring about change and breakthroughs in the real world. We also have the obligation to discover and support these true entrepreneurs.

BlockBeats: From your student days to now, you have always chosen to develop in the forefront of technology. What drives you to choose these new directions for development?

BMAN: I think I am an innovator at heart. I always want to innovate and do things differently, including failed derivative trading and leveraged ETFs. I enjoy talking to entrepreneurs who are exploring uncharted territory in innovation, and I feel passionate about innovation from the bottom of my heart. Therefore, I think the best job for me is investing. I never tire of talking to people who are doing innovative and entrepreneurial things.

ABCDE's investment Philosophy: If crypto were a tree, we'd invest in its roots and leaves.

Last June, BMAN and Huobi co-founder Du Jun founded ABCDE Capital, and have already led several investments in less than a year. From DeBox, NFEx, to Meta Trust and Polyhedra Network, under BMAN's leadership, ABCDE Capital has gradually shown its unique "root and leaf investment philosophy."

BlockBeats: The name ABCDE is interesting. Why was it named that way?

BMAN: To be honest, I saw Du Jun's domain name and thought ABCDE was the coolest name. From a branding perspective, it's easy to remember. When we designed the brand, we made it into a tetris game, with one block building on top of another, creating the next generation of the internet world. ABCDE can also be explained in various ways, such as "A Blockchain-Centric Development Ecosystem." But I just love ABCDE because it's an interesting, very crypto, very native name.

BlockBeats: What are BMAN's daily responsibilities at ABCDE?

BMAN: At ABCDE, I'm in charge of investment while Du manages resource allocation. So, I mainly have two tasks with the team. Firstly, I attend meetings with projects, and I participate in discussions with these projects. Secondly, I work with team members to build interesting things. We have an in-house development team, and everyone except Du and myself has a technical background. So, we often work on interesting ideas, such as when we saw that Arbitrum's sequencer was down due to being single-threaded, we wrote an open-source parallel sequencer and contributed it to the community. We also created a stress testing tool for layer2 sequencers, and even performed a stress test for Scroll and provided them with a report. In the future, we will also personally build many interesting infrastructure projects, not only for our own use but also for open-source contributions to the community.

BlockBeats: Speaking of investment, what is ABCDE's current investment strategy?

BMAN: If crypto were a tree, we'd invest in its roots and leaves. We have two trend judgments about crypto in the future.

Crypto has already reached the eve of crossing the chasm with 400 million holders, and it is estimated to have 1 billion users by 2026, making it the end of the demographic dividend. The essence of investment is to capture the dividends of trends, with the most important being demographic dividends and technological dividends.

Looking at the investment opportunities during the Web2 era, those who obtained great opportunities either captured the demographic dividend of users transitioning from non-Internet users to Internet users, or captured the technological dividend of various technologies, such as smartphones, AI, and 5G, entering the application phase. Therefore, when investing in crypto, our most important consideration is how to capture demographic and technological dividends, which are like the roots and leaves of a tree.

We have judged that crypto has important trends in both demographics and technology. In terms of demographic dividends, we estimate that crypto will reach 1 billion users by 2026. In terms of technological dividends, there are a large number of underlying technologies entering the outbreak and large-scale application phase, including modular technology stacks, ZK application scenarios, not limited to scaling and privacy, and even AIGC combined with crypto technology. A large amount of technology will enter the dividend period of application landing.

If we compare crypto to a tree, we view crypto's technological trends as the roots of a tree. The roots will become more and more vertical, more subdivided, and more hardcore, solving the hard problems in vertical fields. For example, we recently invested in Cysic, a ZK hardware acceleration project, and even looked at some chip projects, including Polyhedra, a ZK interoperability project, and ZK machine learning, which are very cutting-edge projects. The application of technological dividends needs to be found in subdivided scenarios. Therefore, from a technical dimension, it will become deeper and more refined, like the roots of a tree.

As for the demographic dividends of crypto, they are like the leaves of a tree. Our judgment is that crypto will become more and more accessible, popular, and prosperous, reaching at least 1 billion users. From an investment perspective, we mainly focus on development infrastructures or user interfaces that can drive massive adoption. There are two of the most significant things we'll focus on, the first is NFT, not only PFP NFT, but Utility NFT, which includes things like tickets, passes, gaming props, and will be an important vehicle for metaverse in the future. The second category is transaction types, because transaction is Crypto's most native application. So, in terms of technological dividends, I consider modular stack, ZK, Dev infra, and other new infrastructure, as well as various ecology head projects. For the demographic dividend, we concentrate on NFT carrying massive adoption and transactional user ports.

AI-generated assets are not assets, redefining scarcity

BMAN started his own business in the AI field with his friends In 2015. Now, with the popularity of ChatGPT, the AI industry has officially entered the mainstream. In the field of crypto,  many people have begun to imagine "decentralized AI computing power" and "AI + Crypto" concepts. What does BMAN, who has rich experience and deep understanding in the AI field, think of AI and "AI + Crypto"?

BlockBeats: After the collapse of SVB, we gradually saw the market's re-cognition of scarcity and real value. But as an industry as a whole, Crypto seems to be moving further and further away from concepts such as "scarcity" and "value storage". Do you think that crypto assets can accommodate people's re-cognition of assets in the future?

BMAN: I am personally very optimistic, as we just discussed, what is scarce for humans in the future. When the marginal cost of content is almost zero, the content is no longer rare, even intelligence and knowledge are no longer scarce. Because AI has broken through human language, after learning language, they have basically broken through all knowledge bases in human history and all knowledge on the Internet has become more easily accessible, even intelligence such as the Internet is no longer scarce.

Including energy, including the breakthrough of new energy technologies promoted by Elon Musk, in the future, the marginal cost of energy will also be almost zero, which will enter an extremely terrifying turning point. When the marginal cost of energy and intelligence is zero, AI will enter an infinite singularity, because AI can access all human intelligence on the Internet. When there is infinite energy to let it generate new knowledge with itself, the things that can be generated will be very scary, like a species explosion.

I often discuss with my team that when intelligence and energy are no longer scarce, there is something that is obviously scarce, and that is Bitcoin and Ethereum, whose scarcity is determined at the code level. They may become really scarce in the future century, and even higher intelligence and energy may be insufficient to change their scarcity. As a result, when humans enter that era, only genuinely scarce items will have value. Will the carriers of value continue to be today's fiat currencies? They are not scarce; only truly scarce items can be extremely valuable.

BlockBeats: Many investors from the market perspective believe that the next cycle still needs to be leveraged from the perspective of asset issuance. Does this have some relevance to the asset form innovation mentioned by BMAN?

BMAN: Yes, from an investment standpoint, each round of innovation must discover new types of assets. However, the barrier to entry for companies that issue assets or capture asset value is rising. This means that becoming an asset company in the metaverse will be more difficult than it was with ICOs. Only companies that can become IP companies or develop virtual world sceneries, such as Yuga Labs, will be able to genuinely form assets. However, with AIGC, we can now use AI to generate text, images, and even prompts to create various scenarios, making the entire process extremely simple in the future.

So what is truly scarce? When everything becomes extremely easy, creativity is scarce, the ability to form new consensus is scarce, and the ability to combine these things into a never-before-seen experience is scarce. Companies that have this ability possess the ability to create new assets.

BlockBeats: For example, large language models like Prompt that generate targeted content?

BMAN: The content generated by these AIGCs will form new scenarios, and these scenarios will precipitate new assets in the future. The circulation, ownership, trading, and distribution of assets will all take place on Crypto. When talking to some AI teams, many of them will eventually use Crypto as the underlying value layer. Crypto is actually naturally suitable as the underlying design value layer for AI, because Crypto's smart contracts that can be used as protocols, ownership and distribution are best suited for contracts between machines, between AIs, it is very suitable as the underlying production relationship layer for AI. 

BlockBeats: In which specific scenarios will assets generated by AI exist in the future? Besides generating text and images with prompts, what else will there be?

BMAN: AI-generated content won't be assets, the truly scarce things behind the content generated by AI will be assets, such as models, user data, and the closed loop formed by these scenarios will be assets. When content is no longer a scarce commodity, the scarce elements behind that content will be assets.

Be optimistic about the market

BlockBeats also asked BMAN about his views on the market situation, industry interconnectivity, industry trends, and the future of Web3 in Hong Kong.

BlockBeats: Many individuals or institutions are optimistic about the market in the first half of the year, but believe that there will be overall liquidity problems in the industry in the second half of the year. Does BMAN agree with this view?

BMAN: Personally, I am more optimistic. Ethereum has just completed the Shanghai upgrade, and I predict that the demand for Ethereum will skyrocket as a result.. Many institutions we spoke to believed that there would be a lot of selling pressure with people redeeming Ethereum and selling it on the market. However, we discovered the inverse to be true. Of course, having sufficient liquidity after the upgrade is a prerequisite for many large mainstream institutions to enter the market, as they believe it is safer, more open, and more flexible to exit.

After Ethereum generates greater demand, the demand for crypto will rise further. From a market perspective, I think we will see a turning point in the next one or two months, followed by a period of a consolidation and accumulation.

I am very optimistic about the opportunity for the three-cycle resonance next year:

First, the Bitcoin halving cycle will occur again;

Second, the US will end its interest rate hike this year and enter a period of interest rate cuts next year, although the pace of interest rate cuts will be slower;

Third, the US will enter a new election cycle next year and will take measures to stimulate the economy, which may lead to good performance of the US stock market. Because there is still a strong correlation between crypto and US tech stocks.

Due to the resonance of these three cycles, we are very optimistic about the opportunity in 2024. This is why we established ABCDE during the most bearish period in 2022, as we wanted to support some key ecological companies during the bear market, which could help them grow into great companies in the next bull market.

BlockBeats: Is ABCDE planning to invest frequently now or wait until the end of the year to lay out its strategy?

BMAN: We are currently very aggressive and frequently investing, and we are basically leading the investment round each time. We started investing since September of last year and have invested in about 12 projects in six months, most of which were led by us. We are currently discussing three or four potential projects that we may lead investment in, and the pace is about two projects per month, but we may accelerate a little bit recently.

BlockBeats: What is your interpretation of the correlation between Crypto and the US stock market? Can Crypto still present a situation of deviation from the macro environment as it did in 2017?

BMAN: Wall Street will associate Crypto with high-tech and see it as a technological product, so it will be more closely linked to the trend of high-tech companies. Secondly, in the previous cycle, there was a lot of interaction between Elon Musk and Crypto, and many funds managed by influential people such as Cathie Wood were invested in Crypto companies. These associations and consensuses lead Wall Street or institutional funds to allocate Crypto in the same way as technology stocks.

A currency crisis, I believe, cannot rule out the potential of a consensus explosion. Looking back at history, several waves were like this, such as the Crypto surge caused by the run on banks in Cyprus in 2013. Later, more and more countries such as Argentina, Peru, and even El Salvador, and recently Silicon Valley Bank, experienced financial collapses. Each time traditional finance collapses, just as stated in the genesis block of Bitcoin, it creates a self-fulfilling prophecy, forming a reinforcing loop and enhancing more consensus.

Economic crises will be divided into stages, with debt defaults being the first. Debt defaults will become economic catastrophes if they extend to the real economy. If economic crises worsen, they may turn into currency crises. If mainstream currencies experience such debt defaults and gradually degrade into currency crises, it could be the day when Crypto genuinely explodes on a massive scale with widespread acceptance.

BlockBeats: BMAN just mentioned the end of the demographic dividend in the Crypto industry. In your opinion, do individual investors still have investment opportunities similar to those in the early stages of the industry?

BMAN: I actually think it's just the beginning of the end. The innovation curve has several stages, including early adopters, early majority, and now we are entering the early majority stage. If we compare it to the Internet, the Internet didn't reach 400 million users until 1999, so there were many entrepreneurial opportunities at that time, but it did require very elite and forward-thinking entrepreneurs to seize such opportunities. The threshold for entrepreneurship today is higher, but I think it's just the beginning of the first wave of entrepreneurship, not the end of it.

I think the most important thing for individual investors today is to keep up with important trends and then make good investments within them. I am very optimistic about the trend of humans entering virtual space in the future. In terms of the amount of attention we give, most people have already placed the majority of their attention and time in virtual space. When AI's content production is no longer difficult, the barrier to entry for humans entering virtual space will be further lowered. The previous generation of AR glasses and VR devices are basically okay, but the biggest problem is the lack of content. However, today, AIGC makes content production extremely easy, and I think it will enter an era of explosive growth in content for the metaverse and virtual space. This explosion of content will further encourage us to devote our time and attention to virtual space. The explosion of content will also cause an explosion of assets because attention and time will become a carrier that is deposited and transformed into assets. Therefore, I am very optimistic about the virtual space and metaverse created by this wave of AIGC, and Crypto will act as the underlying carrier and distribution of rights and value.

Because I have witnessed the development of Crypto as an asset from 2013 to 2023, 1.0 was Bitcoin, and 2.0 was the asset explosion brought by Ethereum. But after the DeFi summer, Crypto entered a bottleneck. There is a 2.5 called NFT, which brought some new assets, but it has not completely entered 3.0 because a small picture cannot represent a new asset. I have been thinking about what 3.0 will be like.

If Crypto assets cannot break through further, they may enter a stagnation, but AIGC will bring a new carrier or a new type of asset explosion, because it will produce a lot of content, and there will be a lot of asset precipitation in it. For example, in the future, a model itself may be an NFT. Recently, we saw an ERC 6551, which set up an account for NFT. For example, a company in the future will be an NFT, and the NFT itself will have an account, and all the profits of the company's revenue will belong to the NFT account. When trading a company, it will be as simple as trading an NFT.

I think in a virtual space, the so-called metaverse, the virtual assets of most people around us have exceeded the assets in the real world. The attention and time spent in the virtual world far exceed the real world, so there will be a lot of new assets, which will make Crypto enter the real 3.0.

BlockBeats: How does BMAN view this Web3 conference? Can the Web3 industry benefit Hong Kong's development?

BMAN: I feel that these days are very lively, at least it has given Chinese entrepreneurs a home court. Jerusalem is the promised land of the Jews. It may not be clear whether Hong Kong is Jerusalem today, but at least everyone has one more place to stay. I think this is a good thing for all Chinese entrepreneurs.

In terms of atmosphere, I think it is much worse than ETHDenver. There are many developers in ETHDenver, but in Hong Kong, there are more VCs. But I am still very positive and admire the courage of the Hong Kong government. At least I think it will make many talents willing to settle in Hong Kong because where the talent goes, so do the opportunities. If you only look at one indicator, look at the number and rate of talent inflow in a location. What the world can witness now, at least in Asia, is a steady influx to Singapore. The United States is usually the gathering spot for the world's talents, will Hong Kong continue to attract talents who are ready to reside here? At least in terms of deeds and policies, we can see the Hong Kong government's sincerity, and we look forward to greater innovation in Hong Kong.

#Bitcoin #Halving #crypto #ABCDE

Selected Views

BMAN (Co-founder of ABCDE Capital): I am highly optimistic about the Crypto market in the coming year: 1. Bitcoin will halve again; 2. The US dollar will end its interest rate hike this year and enter a cycle of interest rate cuts next year, albeit at a slower pace; 3. The US will hold a new election next year, and the new ruling party will take some measures to stimulate the economy, so the US stock market may perform well. Because there is still a strong correlation between cryptocurrecy  and US technology stocks.

"If crypto were a tree, we'd invest in its roots and leaves."

BMAN announced in June of last year that he was partnering with Huobi Co-Founder Du Jun to establish ABCDE Capital, focusing on supporting Web3 builders. After selling Huobi, Du Jun diversified his investments by restructuring and listing New Huo Tech on the Hong Kong Stock Exchange, laying out SAAS, media, developer ecology, and primary market direct investment in Singapore, partnering with BMAN to launch ABCDE, a US$400 million fund focusing on crypto early-stage. ABCDE is an outstanding "Capital With Ecosystem" in the Asia-Pacific region, providing end-to-end ecological resource support including capital, traffic, trading, licenses, and developers for initial founders worldwide. ABCDE includes Hong Kong-listed company New Huo Technology, Singapore SAAS company ChainUP, exchange Huobi, media company Cointime, and other ecosystems, with dual centers in Singapore and Hong Kong, and a 5,000 square feet physical Crypto acceleration hub at One Raffles Place in Singapore, representing "A Blockchain Centric Development Ecosystem."

BMAN, one of the early OGs in China's crypto world, has been in the sector for ten years, enduring many cycles and watching the ups and downs of Chinese Web3 globalisation. He has a thorough understanding of the industry. Simultaneously, BMAN's entrepreneurial experience in Web2, spanning both Web2 and Web3 technology waves and creating companies worth hundreds of millions of dollars, has positioned him as a "entrepreneur behind the entrepreneur" with hands-on experience. He, like most Web3 enthusiasts, believes in the concept of global citizenship and freedom, breaking the established inertia of thought in the crypto area. At the same time, he feels that Web3 requires a super application to deliver integrated service solutions, allowing more individuals to participate, which may contradict the perception of many Web3 participants.

During the Web3 Summit in Hong Kong, BlockBeats conducted an exclusive interview with BMAN, Co-Founder of ABCDE Capital.

BMAN's experience: Introduced to Bitcoin by an American soldier

BMAN, who firmly embraced Bitcoin during his student years, ventured into AI entrepreneurship in 2015 and has since established ABCDE Capital, always at the forefront of technological and industry development. What drives his direction choices?

BlockBeats: Newcomers to the industry may not be familiar with ABCDE Capital and BMAN's past experiences. Can you briefly introduce yourself, BMAN?

BMAN: Sure. My name is BMAN, and I first became interested in crypto in 2013. Ten years ago, I was a student and met an investor named Simon Black in Lithuania, Europe. I joined his investment team as an analyst. Simon is a legendary investor who initially studied intelligence at West Point Military Academy in the United States and later participated in the Iraq War. He was initially of typical American soldier style, but when his comrades were killed in action, he felt that his country, which he had pledged loyalty to, had betrayed him. He felt ashamed of invading other countries for oil and using "lust to increase crime," so he retired from the military, gave up his American citizenship, and became a global citizen, investing in more than 120 countries worldwide.

Also in 2013, Simon told me about Bitcoin and said, "BMAN, you must know about Bitcoin. It is the freest currency in human history." At the time, I was still a student and bought my first Bitcoin. In 2015, my best friend in college suggested we start a business together. The next day, I bought a plane ticket to Beijing and started a business with my good friend.

We founded a marketing technology company called Lijiaoshou and attempted to use AI to write advertisements. In 2017, we sold the company to Baidu. I also spent a year working on AI at Baidu. Today's AIGC big model content production was also attempted at Baidu. We basically used the same model to generate ads, which increased the conversion rate of ads. I am grateful for the experience I gained at Baidu, which allowed me to stand at the forefront of large-scale technological trends. At the end of 2017, I believed that Crypto would be a huge opportunity, so I left Baidu and went all-in Crypto.

Fortunately, I caught the 2017 bull market cycle and have been in Crypto industry ever since. I have made many investments and operated a trading platform, both successfully and unsuccessfully. To this day, I think my greatest passion is exploring the forefront of Crypto with some very innovative entrepreneurs. So last year, Du and I talked all night on his balcony overlooking the bay in Singapore and decided to establish ABCDE.

Why did we establish ABCDE? Apart from what I just said about my greatest passion being innovation and exploration in this industry, there is another point. Du entered Crypto in 2012, and I entered Crypto in 2013. We both have ten years of experience. Ten years ago, many people asked what Bitcoin and Crypto were and what value they could bring to society. Today, some people are still asking me this question, which makes me feel embarrassed.

BlockBeats: Why is it said to be "awkward"? Doesn't this indicate that there are still great opportunities in the crypto industry?

BMAN: It shows that those of us in the industry haven't achieved much in the past decade. Besides running some gambling sites and creating some self-circulating products, what have we really changed or created in terms of value? I think we need some projects and applications that can truly bring about change and breakthroughs in the real world. We also have the obligation to discover and support these true entrepreneurs.

BlockBeats: From your student days to now, you have always chosen to develop in the forefront of technology. What drives you to choose these new directions for development?

BMAN: I think I am an innovator at heart. I always want to innovate and do things differently, including failed derivative trading and leveraged ETFs. I enjoy talking to entrepreneurs who are exploring uncharted territory in innovation, and I feel passionate about innovation from the bottom of my heart. Therefore, I think the best job for me is investing. I never tire of talking to people who are doing innovative and entrepreneurial things.

ABCDE's investment Philosophy: If crypto were a tree, we'd invest in its roots and leaves.

Last June, BMAN and Huobi co-founder Du Jun founded ABCDE Capital, and have already led several investments in less than a year. From DeBox, NFEx, to Meta Trust and Polyhedra Network, under BMAN's leadership, ABCDE Capital has gradually shown its unique "root and leaf investment philosophy."

BlockBeats: The name ABCDE is interesting. Why was it named that way?

BMAN: To be honest, I saw Du Jun's domain name and thought ABCDE was the coolest name. From a branding perspective, it's easy to remember. When we designed the brand, we made it into a tetris game, with one block building on top of another, creating the next generation of the internet world. ABCDE can also be explained in various ways, such as "A Blockchain-Centric Development Ecosystem." But I just love ABCDE because it's an interesting, very crypto, very native name.

BlockBeats: What are BMAN's daily responsibilities at ABCDE?

BMAN: At ABCDE, I'm in charge of investment while Du manages resource allocation. So, I mainly have two tasks with the team. Firstly, I attend meetings with projects, and I participate in discussions with these projects. Secondly, I work with team members to build interesting things. We have an in-house development team, and everyone except Du and myself has a technical background. So, we often work on interesting ideas, such as when we saw that Arbitrum's sequencer was down due to being single-threaded, we wrote an open-source parallel sequencer and contributed it to the community. We also created a stress testing tool for layer2 sequencers, and even performed a stress test for Scroll and provided them with a report. In the future, we will also personally build many interesting infrastructure projects, not only for our own use but also for open-source contributions to the community.

BlockBeats: Speaking of investment, what is ABCDE's current investment strategy?

BMAN: If crypto were a tree, we'd invest in its roots and leaves. We have two trend judgments about crypto in the future.

Crypto has already reached the eve of crossing the chasm with 400 million holders, and it is estimated to have 1 billion users by 2026, making it the end of the demographic dividend. The essence of investment is to capture the dividends of trends, with the most important being demographic dividends and technological dividends.

Looking at the investment opportunities during the Web2 era, those who obtained great opportunities either captured the demographic dividend of users transitioning from non-Internet users to Internet users, or captured the technological dividend of various technologies, such as smartphones, AI, and 5G, entering the application phase. Therefore, when investing in crypto, our most important consideration is how to capture demographic and technological dividends, which are like the roots and leaves of a tree.

We have judged that crypto has important trends in both demographics and technology. In terms of demographic dividends, we estimate that crypto will reach 1 billion users by 2026. In terms of technological dividends, there are a large number of underlying technologies entering the outbreak and large-scale application phase, including modular technology stacks, ZK application scenarios, not limited to scaling and privacy, and even AIGC combined with crypto technology. A large amount of technology will enter the dividend period of application landing.

If we compare crypto to a tree, we view crypto's technological trends as the roots of a tree. The roots will become more and more vertical, more subdivided, and more hardcore, solving the hard problems in vertical fields. For example, we recently invested in Cysic, a ZK hardware acceleration project, and even looked at some chip projects, including Polyhedra, a ZK interoperability project, and ZK machine learning, which are very cutting-edge projects. The application of technological dividends needs to be found in subdivided scenarios. Therefore, from a technical dimension, it will become deeper and more refined, like the roots of a tree.

As for the demographic dividends of crypto, they are like the leaves of a tree. Our judgment is that crypto will become more and more accessible, popular, and prosperous, reaching at least 1 billion users. From an investment perspective, we mainly focus on development infrastructures or user interfaces that can drive massive adoption. There are two of the most significant things we'll focus on, the first is NFT, not only PFP NFT, but Utility NFT, which includes things like tickets, passes, gaming props, and will be an important vehicle for metaverse in the future. The second category is transaction types, because transaction is Crypto's most native application. So, in terms of technological dividends, I consider modular stack, ZK, Dev infra, and other new infrastructure, as well as various ecology head projects. For the demographic dividend, we concentrate on NFT carrying massive adoption and transactional user ports.

AI-generated assets are not assets, redefining scarcity

BMAN started his own business in the AI field with his friends In 2015. Now, with the popularity of ChatGPT, the AI industry has officially entered the mainstream. In the field of crypto,  many people have begun to imagine "decentralized AI computing power" and "AI + Crypto" concepts. What does BMAN, who has rich experience and deep understanding in the AI field, think of AI and "AI + Crypto"?

BlockBeats: After the collapse of SVB, we gradually saw the market's re-cognition of scarcity and real value. But as an industry as a whole, Crypto seems to be moving further and further away from concepts such as "scarcity" and "value storage". Do you think that crypto assets can accommodate people's re-cognition of assets in the future?

BMAN: I am personally very optimistic, as we just discussed, what is scarce for humans in the future. When the marginal cost of content is almost zero, the content is no longer rare, even intelligence and knowledge are no longer scarce. Because AI has broken through human language, after learning language, they have basically broken through all knowledge bases in human history and all knowledge on the Internet has become more easily accessible, even intelligence such as the Internet is no longer scarce.

Including energy, including the breakthrough of new energy technologies promoted by Elon Musk, in the future, the marginal cost of energy will also be almost zero, which will enter an extremely terrifying turning point. When the marginal cost of energy and intelligence is zero, AI will enter an infinite singularity, because AI can access all human intelligence on the Internet. When there is infinite energy to let it generate new knowledge with itself, the things that can be generated will be very scary, like a species explosion.

I often discuss with my team that when intelligence and energy are no longer scarce, there is something that is obviously scarce, and that is Bitcoin and Ethereum, whose scarcity is determined at the code level. They may become really scarce in the future century, and even higher intelligence and energy may be insufficient to change their scarcity. As a result, when humans enter that era, only genuinely scarce items will have value. Will the carriers of value continue to be today's fiat currencies? They are not scarce; only truly scarce items can be extremely valuable.

BlockBeats: Many investors from the market perspective believe that the next cycle still needs to be leveraged from the perspective of asset issuance. Does this have some relevance to the asset form innovation mentioned by BMAN?

BMAN: Yes, from an investment standpoint, each round of innovation must discover new types of assets. However, the barrier to entry for companies that issue assets or capture asset value is rising. This means that becoming an asset company in the metaverse will be more difficult than it was with ICOs. Only companies that can become IP companies or develop virtual world sceneries, such as Yuga Labs, will be able to genuinely form assets. However, with AIGC, we can now use AI to generate text, images, and even prompts to create various scenarios, making the entire process extremely simple in the future.

So what is truly scarce? When everything becomes extremely easy, creativity is scarce, the ability to form new consensus is scarce, and the ability to combine these things into a never-before-seen experience is scarce. Companies that have this ability possess the ability to create new assets.

BlockBeats: For example, large language models like Prompt that generate targeted content?

BMAN: The content generated by these AIGCs will form new scenarios, and these scenarios will precipitate new assets in the future. The circulation, ownership, trading, and distribution of assets will all take place on Crypto. When talking to some AI teams, many of them will eventually use Crypto as the underlying value layer. Crypto is actually naturally suitable as the underlying design value layer for AI, because Crypto's smart contracts that can be used as protocols, ownership and distribution are best suited for contracts between machines, between AIs, it is very suitable as the underlying production relationship layer for AI. 

BlockBeats: In which specific scenarios will assets generated by AI exist in the future? Besides generating text and images with prompts, what else will there be?

BMAN: AI-generated content won't be assets, the truly scarce things behind the content generated by AI will be assets, such as models, user data, and the closed loop formed by these scenarios will be assets. When content is no longer a scarce commodity, the scarce elements behind that content will be assets.

Be optimistic about the market

BlockBeats also asked BMAN about his views on the market situation, industry interconnectivity, industry trends, and the future of Web3 in Hong Kong.

BlockBeats: Many individuals or institutions are optimistic about the market in the first half of the year, but believe that there will be overall liquidity problems in the industry in the second half of the year. Does BMAN agree with this view?

BMAN: Personally, I am more optimistic. Ethereum has just completed the Shanghai upgrade, and I predict that the demand for Ethereum will skyrocket as a result.. Many institutions we spoke to believed that there would be a lot of selling pressure with people redeeming Ethereum and selling it on the market. However, we discovered the inverse to be true. Of course, having sufficient liquidity after the upgrade is a prerequisite for many large mainstream institutions to enter the market, as they believe it is safer, more open, and more flexible to exit.

After Ethereum generates greater demand, the demand for crypto will rise further. From a market perspective, I think we will see a turning point in the next one or two months, followed by a period of a consolidation and accumulation.

I am very optimistic about the opportunity for the three-cycle resonance next year:

First, the Bitcoin halving cycle will occur again;

Second, the US will end its interest rate hike this year and enter a period of interest rate cuts next year, although the pace of interest rate cuts will be slower;

Third, the US will enter a new election cycle next year and will take measures to stimulate the economy, which may lead to good performance of the US stock market. Because there is still a strong correlation between crypto and US tech stocks.

Due to the resonance of these three cycles, we are very optimistic about the opportunity in 2024. This is why we established ABCDE during the most bearish period in 2022, as we wanted to support some key ecological companies during the bear market, which could help them grow into great companies in the next bull market.

BlockBeats: Is ABCDE planning to invest frequently now or wait until the end of the year to lay out its strategy?

BMAN: We are currently very aggressive and frequently investing, and we are basically leading the investment round each time. We started investing since September of last year and have invested in about 12 projects in six months, most of which were led by us. We are currently discussing three or four potential projects that we may lead investment in, and the pace is about two projects per month, but we may accelerate a little bit recently.

BlockBeats: What is your interpretation of the correlation between Crypto and the US stock market? Can Crypto still present a situation of deviation from the macro environment as it did in 2017?

BMAN: Wall Street will associate Crypto with high-tech and see it as a technological product, so it will be more closely linked to the trend of high-tech companies. Secondly, in the previous cycle, there was a lot of interaction between Elon Musk and Crypto, and many funds managed by influential people such as Cathie Wood were invested in Crypto companies. These associations and consensuses lead Wall Street or institutional funds to allocate Crypto in the same way as technology stocks.

A currency crisis, I believe, cannot rule out the potential of a consensus explosion. Looking back at history, several waves were like this, such as the Crypto surge caused by the run on banks in Cyprus in 2013. Later, more and more countries such as Argentina, Peru, and even El Salvador, and recently Silicon Valley Bank, experienced financial collapses. Each time traditional finance collapses, just as stated in the genesis block of Bitcoin, it creates a self-fulfilling prophecy, forming a reinforcing loop and enhancing more consensus.

Economic crises will be divided into stages, with debt defaults being the first. Debt defaults will become economic catastrophes if they extend to the real economy. If economic crises worsen, they may turn into currency crises. If mainstream currencies experience such debt defaults and gradually degrade into currency crises, it could be the day when Crypto genuinely explodes on a massive scale with widespread acceptance.

BlockBeats: BMAN just mentioned the end of the demographic dividend in the Crypto industry. In your opinion, do individual investors still have investment opportunities similar to those in the early stages of the industry?

BMAN: I actually think it's just the beginning of the end. The innovation curve has several stages, including early adopters, early majority, and now we are entering the early majority stage. If we compare it to the Internet, the Internet didn't reach 400 million users until 1999, so there were many entrepreneurial opportunities at that time, but it did require very elite and forward-thinking entrepreneurs to seize such opportunities. The threshold for entrepreneurship today is higher, but I think it's just the beginning of the first wave of entrepreneurship, not the end of it.

I think the most important thing for individual investors today is to keep up with important trends and then make good investments within them. I am very optimistic about the trend of humans entering virtual space in the future. In terms of the amount of attention we give, most people have already placed the majority of their attention and time in virtual space. When AI's content production is no longer difficult, the barrier to entry for humans entering virtual space will be further lowered. The previous generation of AR glasses and VR devices are basically okay, but the biggest problem is the lack of content. However, today, AIGC makes content production extremely easy, and I think it will enter an era of explosive growth in content for the metaverse and virtual space. This explosion of content will further encourage us to devote our time and attention to virtual space. The explosion of content will also cause an explosion of assets because attention and time will become a carrier that is deposited and transformed into assets. Therefore, I am very optimistic about the virtual space and metaverse created by this wave of AIGC, and Crypto will act as the underlying carrier and distribution of rights and value.

Because I have witnessed the development of Crypto as an asset from 2013 to 2023, 1.0 was Bitcoin, and 2.0 was the asset explosion brought by Ethereum. But after the DeFi summer, Crypto entered a bottleneck. There is a 2.5 called NFT, which brought some new assets, but it has not completely entered 3.0 because a small picture cannot represent a new asset. I have been thinking about what 3.0 will be like.

If Crypto assets cannot break through further, they may enter a stagnation, but AIGC will bring a new carrier or a new type of asset explosion, because it will produce a lot of content, and there will be a lot of asset precipitation in it. For example, in the future, a model itself may be an NFT. Recently, we saw an ERC 6551, which set up an account for NFT. For example, a company in the future will be an NFT, and the NFT itself will have an account, and all the profits of the company's revenue will belong to the NFT account. When trading a company, it will be as simple as trading an NFT.

I think in a virtual space, the so-called metaverse, the virtual assets of most people around us have exceeded the assets in the real world. The attention and time spent in the virtual world far exceed the real world, so there will be a lot of new assets, which will make Crypto enter the real 3.0.

BlockBeats: How does BMAN view this Web3 conference? Can the Web3 industry benefit Hong Kong's development?

BMAN: I feel that these days are very lively, at least it has given Chinese entrepreneurs a home court. Jerusalem is the promised land of the Jews. It may not be clear whether Hong Kong is Jerusalem today, but at least everyone has one more place to stay. I think this is a good thing for all Chinese entrepreneurs.

In terms of atmosphere, I think it is much worse than ETHDenver. There are many developers in ETHDenver, but in Hong Kong, there are more VCs. But I am still very positive and admire the courage of the Hong Kong government. At least I think it will make many talents willing to settle in Hong Kong because where the talent goes, so do the opportunities. If you only look at one indicator, look at the number and rate of talent inflow in a location. What the world can witness now, at least in Asia, is a steady influx to Singapore. The United States is usually the gathering spot for the world's talents, will Hong Kong continue to attract talents who are ready to reside here? At least in terms of deeds and policies, we can see the Hong Kong government's sincerity, and we look forward to greater innovation in Hong Kong.

#Bitcoin #Halving #crypto #ABCDE

Selected Views

BMAN (Co-founder of ABCDE Capital): I am highly optimistic about the Crypto market in the coming year: 1. Bitcoin will halve again; 2. The US dollar will end its interest rate hike this year and enter a cycle of interest rate cuts next year, albeit at a slower pace; 3. The US will hold a new election next year, and the new ruling party will take some measures to stimulate the economy, so the US stock market may perform well. Because there is still a strong correlation between cryptocurrecy  and US technology stocks.