Feng Lun: My view on Bitcoin is somewhat different from Munger's

Source: Feng Lun Feng Ma Niu

Question: Uncle Feng, in recent years, I've heard many people talking about Bitcoin. Some say it's a 'decentralized currency' that represents the future, others say it can be used as an investment, while some view it as a speculative product, and there are those who hold very negative opinions about it, like Munger. At this year's Berkshire Hathaway annual meeting, he said: 'I certainly hate the success of Bitcoin. I don't welcome a currency that is so useful to kidnappers and extortionists, and I don't like giving extra billions to someone who just invented a new financial product out of thin air. I think I should humbly say that I find the whole damn development disgusting and contrary to the interests of civilization.' I'm very curious about your views on Bitcoin.

Uncle Feng: On this topic, my view is quite different from Munger's. I am more optimistic, and I think I can discuss it from an innovative perspective.

Many innovative things, when they first appear, are seen as monsters by so-called normal people, who reject them and point out their many flaws. But interestingly, in the end, it is often these new things that overcome the old ones and ultimately become dominant.

A very simple example is online dating. When online dating first emerged, there was a lot of discussion, and many parents thought it was simply immoral. They believed that dating through the internet, where no one had met anyone else, would definitely lead to deception and crime.

However, now online socializing and dating are so common that many young people initially meet online, then move to video calls, and eventually meet offline to date. Many people can now chat with someone they didn't know before through the internet, and society has accepted this situation.

In fact, many things have been like this over the past 40 years. New things come out, and at first, they seem strange, but then they are gradually accepted.

The same goes for stocks. In the Western market economy, stocks may seem very ordinary. But here, in the early days of reform and opening up, research on stocks only slowly began in the early 1980s. I remember when people first started studying stocks, the research on 'joint-stock systems' was criticized by many, let alone stock trading.

Of course, by around 1992, a trial regulation on joint-stock companies was introduced, which not only established joint-stock companies but also created stock markets and stock trading.

When the stock market first emerged, some investors, when they lost money, even shouted about wanting to smash the exchange. Now, people see the ups and downs of the stock market, and losing or making money has become normal. I think Bitcoin is similar. At first, it went unnoticed, but suddenly it caught everyone's attention, and debates began.

In fact, discussing Bitcoin should also involve understanding blockchain. The advancement of blockchain technology has led to many financial operations and the emergence of many digital currencies similar to Bitcoin.

This is how I see it: if humanity is bound to move towards a digital society, then finance will certainly be digitalized. Financial digitalization will inevitably require financial technology. Blockchain, artificial intelligence, and so on will definitely be utilized. In this process, the form of currency will first move from paper-based to paperless transactions, and finally to digital transactions.

As a unique and new form of currency, digital currency has some advantages over traditional paper money, such as being safer, more confidential, fairer, better for recording, and easier to trace.

Because of these advantages, digital currency will definitely replace traditional paper money in the future. So I view this matter quite optimistically.

Of course, in this process, with changes in transaction frequency and usage scope, relevant regulations will certainly become more numerous and more standardized, just like the development of the stock market and stocks back in the day. Sooner or later, the whole world will have to face this.

As for whether people use it for speculation, I think that's not important. Why? There are people who drink to get high and some who drink themselves to death; we can't say that because someone died from drinking, we should ban alcohol. There are also people who commit marriage fraud; we can't say that because someone committed marriage fraud, we should cancel marriage. Those who commit marriage fraud should be punished, right?

Bitcoin and other digital currencies are the same. With the improvement of systems and laws, if someone breaks the law, they should be punished. But we can't say that because some people speculate with Bitcoin or use it for other purposes, we should deny the rationality of the thing itself and its future trend; I think this distinction needs to be made clear.

Question: Speaking of innovation, what do you think is important for businesses or entrepreneurs?

Uncle Feng: I think innovation comes partly from the entrepreneurial spirit within the company and partly from external institutional factors. For example, the venture capital mechanism, property rights protection system, ease of capital flow, and openness of capital markets, etc.

I believe that China currently does not lack entrepreneurial spirit, but other aspects can still be improved, such as a market culture that 'allows for mistakes and wrongdoings.'

Isn't it normal to take the wrong path, spend money incorrectly, or love the wrong person? If someone is born as an 80-year-old man who does nothing and makes no mistakes, what is the meaning of life? The same goes for society; it must allow for mistakes; how can we innovate without making mistakes?

Last year, a child imitated a teacher and was talked to; why can't they imitate a teacher? Who knows, maybe a second Zhao Benshan will emerge in the future. If we don't allow imitation, and the child behaves well, what innovation will there be if they stay obedient all the way?

Returning to business, why are there fewer venture capital investments now and more private equity investments? Venture capital is like a timely help for businesses, while private equity investment is like icing on the cake.

Now, there are fewer people willing to take risks and start businesses compared to the past, and one factor is that the current error tolerance mechanism is still not perfect, and there is not enough tolerance for mistakes.

Why did Musk, Bill Gates, and Jobs all emerge from Silicon Valley? It's not about money; it's about the entrepreneurial spirit and the institutional environment that stimulates innovation, angel investment systems, capital market systems, a market culture that tolerates mistakes and encourages innovation, as well as independent personalities and scientific spirit.

In recent years, the business environment in the country has improved a lot, which is actually a double-edged sword for businesses. It seems that the growth environment has improved, but in reality, if a person is free from worries about food and clothing, it may hinder the development of creativity. If you are forced to go out and find food because you can't fill your stomach, your innovative ability might be stronger.