Don't test human nature with Bitcoin; human nature can never withstand the test.
Written by: Xinghai Jianzhang, Luke Wen Studio
In 1986, in Shaoyang, Hunan, a baby boy was born.
Don't get it wrong; this baby boy is not the later Chinese beauty blogger in the top five—Lu Yanzhu—but rather the future richest man in Hunan—Kao Mao (Jiang Xinyu).
Saying he is the richest man in Hunan is no exaggeration.
According to incomplete estimates, Kao Mao has 74,715 Bitcoins in two known wallets. Based on the price nearing $100,000 per coin at the peak in November 2024, Kao Mao's assets amount to 54.9 billion RMB, making him undoubtedly the richest man in Hunan.
However, Kao Mao may not live to see the day he becomes the richest man.
Kao Mao was a top student from a young age. In 2001, at the age of 15, he was admitted to the Youth Class of the University of Science and Technology of China, ranking 11th in the national total score, becoming the pride of all of Shaoyang. To this day, his name still hangs on the honor roll of his alma mater, receiving the admiration of junior students.
In 2009, at the age of 23, Jiang Xinyu published a paper titled "Constructing a Secure Thread Mechanism Using Formal Methods," graduated with a master's degree, and in 2011 went to Yale University for doctoral studies.
No one knew that Kao Mao's journey would bring a huge revolution to the Chinese Bitcoin market.
Speaking of Bitcoin, it can be traced back to a small circle that was born in 1992.
That year, a group of crypto-anarchists was formed. At a gathering, Timothy May, an electronic engineer at Intel, published the "Crypto Anarchist Manifesto," officially proposing the concept of crypto-anarchism.
The first sentence of the manifesto sounds familiar:
"A specter, the specter of crypto-anarchism, haunts the modern world."
The core idea of crypto-anarchism is to use cryptographic software to avoid interference, surveillance, and denunciation when sending and receiving information over computer networks, striving to defend privacy rights and political freedom.
With religious fervor, they decided to create a new digital technology with decentralization as its spiritual core and the SHA256 algorithm as its foundation, to combat state regulation and commercial monopoly in modern society.
They firmly believed that this technology could disrupt human society:
"Computer technology is about to enable individuals and groups to communicate and interact completely anonymously.
… Combined with the emerging information market, crypto-anarchy will create a fluid market for all materials that can be expressed in words and images.
Arise, crypto-anarchists, you have nothing to lose but your barbed wire fences!"
Although this viewpoint seems like the idealistic self-indulgence of a closed circle, in fact, they really changed our lives.
Because the inventor of the World Wide Web, Sir Tim Berners-Lee, BT download author Bram Cohen, Facebook co-founder Sean Parker, and "WikiLeaks" founder Julian Assange, among others, were all members of this group.
Of course, this also includes Bitcoin's creator, Satoshi Nakamoto.
Who is Satoshi Nakamoto? It remains unknown. To this day, computer geniuses, hackers, and intelligence organizations from various countries have been unable to uncover Satoshi Nakamoto's true identity, leading some to suspect that Satoshi is a time traveler from the future.
It must be said that Satoshi Nakamoto's continued anonymity is very much in line with crypto-anarchism.
In 2008, the global financial crisis broke out. On November 1 of the same year, Satoshi Nakamoto published his white paper "Bitcoin: A Peer-to-Peer Electronic Cash System," informing the world: "I am developing a new electronic currency system that operates entirely on a peer-to-peer basis, without the need for a trusted third party."
From then on, an electronic currency—Bitcoin—that could not be manipulated by any political or financial power began to be known.
This also meant that crypto-anarchists could have their own central bank and build their own financial system.
To validate his theory, on January 3, 2009, at 6:15 PM, Satoshi Nakamoto mined the first block of Bitcoin on a small server located in Helsinki, Finland, known as the "Genesis Block," and received the first mining reward—50 Bitcoins.
Thus, Bitcoin was officially born, and Satoshi Nakamoto became the "creator."
Satoshi Nakamoto quickly announced the mining algorithm, and a group of tech geeks began mining on various university servers, rapidly increasing the number of Bitcoins.
But soon the question arose: how to prove that Bitcoin has the function of currency? Or rather, how to prove that Bitcoin can buy things?
On May 18, 2010, a cryptographer named Laszlo Hanyecz from Florida posted online, willing to buy two pizzas for 10,000 Bitcoins, provided it was a face-to-face transaction.
You heard it right, 10,000 Bitcoins, which at the current market value is worth over 7 billion RMB.
But at that time, everyone thought it was a joke and ignored it.
It wasn't until four days later that a British man, thinking "you can't lose anything by ordering two pizzas," ordered two pizzas to be delivered to Hanyecz's home and received the 10,000 Bitcoins, while Laszlo quickly devoured the two pizzas worth 7 billion RMB.
Since then, May 22 has become "Bitcoin Pizza Day" in the crypto community, commemorating the first commercial transaction of Bitcoin.
After the pizza incident, Bitcoin's value began to be recognized by the world, and Bitcoin trading was born, with prices starting to rise.
Soon, this path to wealth caught the attention of the Chinese.
Interestingly, the first group in China to come into contact with Bitcoin was not the tech-savvy geeks from various universities, but rather the non-mainstream crowd with colorful hair in small towns:
Game boosters.
In 2010, the most popular game in China was "World of Warcraft," and behind it was a whole industry chain of boosting, leveling, competitive play, gold farming, equipment farming, and dungeon runs. Countless teenagers could earn dozens of yuan for a night’s work, and if lucky, they could sell good equipment for hundreds or even thousands.
Suddenly, in some boosting QQ groups, advertisements for recruiting miners appeared, claiming that all you needed to do was install a software, and your computer would automatically mine without affecting your gaming. The next day, you could get coins and sell Bitcoin to coin collectors at a price of 2-3 RMB each, with an average of 10 Bitcoins mined in one night, enough for a day's meals.
Thus, Bitcoin spread in a very down-to-earth way among this group of non-mainstream individuals in China, who had no understanding of crypto-anarchism.
These eccentrically dressed non-mainstream individuals could never have imagined the immense value of the string of code they casually sold.
However, these early miners soon faced a business crisis because, by the end of 2010, mining technology had innovated.
According to Satoshi Nakamoto's design, Bitcoin was in a utopian ideal state of "everyone is a central bank," so anyone with a CPU could mine. All you needed was a regular computer and software to start your mining journey.
However, this decentralized situation was soon broken because GPUs entered the game.
We all know that mining heavily relies on computing power. Initially, everyone used CPUs for mining, but as research into mining algorithms deepened, people discovered that mining was just repeating the same work, and CPUs, as general-purpose computing units, were not good at parallel processing, executing at most a dozen tasks at a time, making mining too slow.
In contrast, GPUs have thousands of stream processors, making them inherently suitable for mining, with significantly higher efficiency.
Satoshi Nakamoto initially disagreed with GPU mining; he even advocated for a gentleman's agreement to artificially limit GPU mining to maintain a "fair state" of mining.
However, Satoshi underestimated human nature.
When Bitcoin had value, naturally, people wanted to make money from it.
As Hanyecz open-sourced his optimized algorithm for GPU mining (now you know why he had 10,000 Bitcoins), the total computing power of the Bitcoin network grew exponentially, jumping from MH/s to GH/s levels. Originally, one could mine at most a dozen Bitcoins a day, but with GPUs, the output skyrocketed, making it possible to mine hundreds in a day.
Thus, the non-mainstream crowd in China began flooding into internet cafes with good graphics cards, leaving the internet cafe owners bewildered, indirectly leading to the first large-scale upgrade of graphics cards in Chinese internet cafes, while also solving Huang Jiaozhu's Nvidia crisis.
GPU mining was popular for two years before facing another challenge.
In June 2012, the American Butterfly Labs successfully developed ASIC miners, bringing about a new mining revolution.
ASIC miners use ASIC chips as the core of their computing power. Simply put, they are ASIC chips customized for Bitcoin's SHA256 algorithm, offering higher performance, lower energy consumption, and smaller size.
For comparison, a high-end 4090 graphics card has an optimized mining capability of 129.8 MH/s with a power consumption of about 322W, while the Antminer S9 miner? Its mining capability is 13.5 TH/s! That's several orders of magnitude higher!
Whoever has the mining machine has the power to "mint coins."
At Yale, Kao Mao heard about the developments at Butterfly Labs and keenly sensed an opportunity to make money.
The post-80s generation grew up reading "Reader," which once told a story about the San Francisco Gold Rush era, where due to fierce competition, few prospectors made money, while those who "sold shovels" to them made a fortune.
Kao Mao thought, why can't I be the one selling shovels?
So, almost simultaneously with Butterfly Labs' successful development, Kao Mao, under the ID Friedcat, posted on the Bitcointalk forum, claiming he had the capability to develop mining machines and publicly soliciting funds from the community.
According to Kao Mao's financing plan, he dropped out of Yale and established Bitmain Technologies Co., Ltd. The company's shares were divided into 400,000 shares, each valued at 0.1 Bitcoin.
No one realized that this was the first ICO (Initial Coin Offering) in the history of the global cryptocurrency world.
Kao Mao not only raised funds online but also went on roadshows to promote his mining machines. In the end, Kao Mao successfully raised 16,000 Bitcoins, worth about 1 million RMB at the time. The largest investor was a 26-year-old named Wu Jihan, who invested a total of 15,000 Bitcoins.
With money, things became easier. Kao Mao's mining machine development went very smoothly, and in just two months, he launched his product—the first generation of Kao Mao mining machines.
Kao Mao took the first-generation mining machine to his company's warehouse and set up a mining field for trial use. As soon as it was powered on, it accounted for 51% of the world's Bitcoin computing power!
In other words, at least in early 2013, 51% of the newly produced Bitcoins in the world were from Kao Mao!
At its peak, the "Kao Mao Mining Farm" mined over 40,000 Bitcoins in a single month!
The tremendous success of Kao Mao's mining machines triggered a collective panic in the crypto community. After all, there are only 21 million Bitcoins in total, and if Kao Mao mined them all, what would others mine?
As a result, hacker attacks followed one after another.
To diffuse the hatred, Kao Mao retained only 20% of the network's computing power and sold off the excess mining machines.
At that time, no mining machine could compete with Kao Mao's. Although Butterfly Labs had successfully developed their mining machines, they had not yet gone into mass production, and the Avalon miners developed by Zhang Nangen from Beihang University had not started shipping either. Thus, in the ASIC mining market, Kao Mao was the absolute king.
During that time, people from all over the world flocked to China to buy Kao Mao's mining machines. Some recalled, "Some even threw money over and ran off with the mining machines, fearing they would be snatched away."
In just six months, Kao Mao made over a billion, and at that time, he was only 27 years old.
Kao Mao had a dream; he wanted an island that did not belong to any country, with no army and no police. On this island, the currency would be Bitcoin, a free paradise for crypto-anarchists.
However, before he could earn enough to buy the island, his dream was prematurely shattered.
The mining machines were too profitable, naturally attracting countless competitors.
In June 2013, Butterfly Labs' mining machines finally went into mass production, and in July, Avalon miners also began shipping. Meanwhile, Kao Mao was unable to obtain TSMC's 55nm chips, causing delays in the development of his second-generation mining machines, which led to Kao Mao's mining farm's computing power plummeting to just 4% of the network.
It wasn't until January 2014 that Kao Mao launched his third-generation mining machine, the BE300. He initially thought he could return to the top, but this chip suffered from packaging issues, leading to a series of burn incidents that ultimately ended Kao Mao's mining machine journey.
By the end of 2014, Kao Mao disappeared, and no one had seen him since. The 74,715 Bitcoins in his wallet also vanished without a trace.
The legend of Kao Mao came to an end.
Around August 2017, Kao Mao's two wallet accounts transferred a total of 17,600 Bitcoins within a week. On November 12, 2024, Kao Mao's dormant Bitcoin account awakened after seven years and transferred out 206.34 Bitcoins, worth $18.12 million.
Were these transfers made by Kao Mao? Or were they controlled by someone else? Is Kao Mao still alive? No one knows.
All that is known is that the Bitcoin pioneer, who wore wrinkled T-shirts during roadshows but had a sparkling gaze, would never return.
Kao Mao's company was struggling, and his major investor, Wu Jihan, had to seek other avenues.
At this point, Wu Jihan was no longer the inexperienced rookie but a big shot with millions in assets (from Kao Mao's dividends).
Seeing the potential in Bitcoin, Wu Jihan still hoped to engage in the mining machine business, so he thought of someone—Chang Jian.
Chang Jian is a pen name that most people may not recognize, but he is well-known in the science fiction community.
We all know that Liu Cixin is the foremost figure in Chinese science fiction, having won the highest award in Chinese science fiction, the Galaxy Award, for seven consecutive years from 1999 to 2006.
So who won the Galaxy Award in 2007 and 2008?
Chang Jian.
Coincidentally, Chang Jian is also from Hunan, and his real name is Liu Zhipeng. He has loved the "Chu Ci" (Songs of Chu) since childhood, particularly the chivalry and romance in Qu Yuan's "Nine Chapters," which includes the lines, "With a long sword in hand, I traverse the land, crowned by clouds, adorned with the bright moon and precious jade." Thus, he named himself "Chang Jian."
In reality, Chang Jian is also a passionate idealist. At the age of 16, he began writing science fiction novels, with works like "Kunlun," "Highway 674," "The Wound of Fusang," "The Art of Dragon Slaying," and "If Mark Kay Were Still Alive," which gained him fame.
Some have commented: "His works intertwine modernity and history, with classical pieces echoing the generous songs of Chu, while modern works gradually reveal the beautiful western winds." After winning the Galaxy Award, many regarded him as Liu Cixin's successor.
However, after 2009, Chang Jian never published another science fiction novel.
Many speculated that he had hit a creative bottleneck, but a netizen mysteriously replied in a forum: "Chang Jian is doing something very sci-fi."
Indeed, Chang Jian was doing something very sci-fi—Bitcoin.
As a side note, if we look back at the history of the Chinese crypto community, we will find that there are many science fiction enthusiasts.
For example, Chang Jian, a science fiction writer.
Xuanlian's founder "Crazy Little Strong," a science fiction writer.
Wu Jihan, known as "Magnet," named the chips he developed after the English name of "Sizhu."
How much does Wu Jihan love Liu Cixin? When he hosted the "World Blockchain Conference in Wuzhen" in 2018, he even organized a cross-border roundtable forum titled "The Sci-Fi World in Blockchain" just to meet Liu Cixin.
Zhang Jian, founder of Fcoin, also named his "Singer Capital" after "The Three-Body Problem."
And so on.
Why is there such a high overlap between the science fiction community and the early crypto community?
Perhaps it is because both circles share a high degree of consistency; they are sensitive to technology, emotionally nuanced, and fond of fantasy.
Bitcoin inherently suits their tastes, as it embodies both technology and humanity, reality and ideals.
Chang Jian is such a person. After encountering Bitcoin in 2009, he was quickly captivated by the grand ideals behind it. Chang Jian recalled, "The emergence of Bitcoin perfectly matched my imagination of the cloud era and grand distributed computing projects. I was soon enchanted by it…"
In 2011, Chang Jian found a job within the system, like Liu Cixin, slacking off during work hours, roaming the internet, and specifically introducing Bitcoin to the public.
That year, a female college student asked a question on Zhihu: "I have 6,000 yuan; how should I invest?"
Chang Jian gave an answer that exceeded everyone's understanding: "Buy Bitcoin, securely store your wallet, and then forget about it. Check back in five years."
A few years later, Bitcoin skyrocketed. If that female college student had followed Chang Jian's advice, she would have undoubtedly become a billionaire.
Thus, this response was dug up and revered by countless people, becoming a legendary "Zhihu post."
However, at that time, Chang Jian received not praise but ridicule, as Bitcoin was at its lowest point, and no one believed it could make money.
Chang Jian was indignant and began to publish a series of articles about Bitcoin on his blog, debating with detractors.
One day, he suddenly received a message from someone named QQAgent: "Blogger, I think your website is very valuable. Why not apply for an independent domain name and space? I'll pay for it."
This QQAgent was Wu Jihan.
However, Chang Jian was unwilling to follow Wu Jihan into the mining machine business because, compared to others, he had a deeper understanding of Bitcoin.
Chang Jian believed: "If you only understand Bitcoin from the perspective of investment and arbitrage, you are merely a transient visitor in its life; but if you understand it from philosophical and technical levels and immerse yourself in it, whether in wealth or spirit, you will be far richer than the former."
Chang Jian did not want to lose himself in the volatility of wealth, so in 2011, he collaborated with Wu Jihan to establish Babbitt, thus creating a Bitcoin media outlet for the Chinese crypto community.
If Kao Mao was the one selling shovels during the gold rush, then Chang Jian was the one running a tavern selling information.
However, perhaps due to his overly idealistic nature, Chang Jian's Bitcoin career was not smooth. Both Babbitt and the later BiYuan Chain were once popular but quickly faded away.
Compared to those early entrepreneurs of Chang Jian's generation who had already achieved financial freedom, Chang Jian was clearly not as "successful."
So why do we spend so much ink introducing Chang Jian's story? Not only because he is a preacher of Bitcoin in China but also because his Babbitt almost connected the entire crypto community during those years.
Let's put it this way: in that wild era of Bitcoin, almost all the early entrepreneurial big shots got to know each other through Babbitt.
One day in 2013, a person named "GGGGG" posted a thread, the core content of which was about an offline meetup.
The location was set at the sacred ground for grassroots entrepreneurs in Beijing: Garage Cafe.
That offline meetup was filled with aspiring individuals, but most of them later became big shots, such as Shen Yu, Zhao Dong, Li Xiaolai, and Pumpkin Zhang, who discussed the future of Bitcoin.
From then on, crypto players from all over the country began frequently organizing offline meetups, connecting resources, collaborating, and creating one crypto myth after another.
For example, Wu Jihan met Zhan Ketuang, who had a background in integrated circuits, and together they founded Bitmain.
Pumpkin Zhang met Li Jiaxuan and established Beijing Jianan Yunzhi Innovation Information Technology Co., Ltd., which later became a mining machine giant.
Li Xiaolai met Zhu Fangyi and also started his own mining farm.
Li Lin met Du Jun and began planning to create a platform.
Of course, there was also Kao Mao, a significant portion of mining machines were sold on forums.
These people often gathered in a small courtyard, talking all night, and then left with great ambition.
The night was dark as ink, the lights dim, and the road ahead was unclear, but everyone still felt a surge of enthusiasm.
Under the connections of the early crypto enthusiasts, mining machines and farms began to flourish everywhere, with Silverfish, Little Bee, Rand, TMR, SmarT, 42BTC, etc., marking the arrival of China's Bitcoin golden age.
With more mining, problems also arose.
In discussions, the biggest pain point for these early crypto entrepreneurs was that while they had mining machines and Bitcoins, there was no trading platform controlled by Chinese people.
At that time, the global Bitcoin trading was mainly monopolized by two platforms: Japan's Mt. Gox and Slovenia's BitStamp.
And domestically? There was only one trading platform—Bitcoin China.
The founder of Bitcoin China was Yang Linke, who originally sold sauna equipment. By chance, he invested a few tens of thousands of yuan to create a Bitcoin China trading website.
However, this trading system was very rudimentary; deposits required online banking and transfers to two personal accounts, which belonged to Yang Linke's wife and mother-in-law—
This was not sci-fi at all.
More critically, both domestic and foreign platforms had issues with low security and slow speeds, often charging a 0.3% fee for both sides of the transaction.
As complaints grew in the community, naturally, someone would eye this business opportunity.
Thus, in 2013, two new Bitcoin trading platforms were born: OKCoin by Xu Mingxing and Huobi by Li Lin.
To seize the market, both OKCoin and Huobi adopted a no-fee model, similar to the rapidly growing internet industry in China, where they first attracted users with free services and then charged fees once they captured the market.
With this strategy, Chinese Bitcoin exchanges quickly overwhelmed international exchanges, soon capturing 80% of the world's Bitcoin trading.
They were fortunate to ride the wave of Bitcoin's bull market.
In 2012, the price of a Bitcoin was still $13, but by the end of 2013, it had surpassed $1,000!
What kind of business can achieve such exorbitant profits? Soon, countless people flocked into the crypto space, including even Chinese aunties who knew nothing about cryptocurrencies. The exchanges became as bustling as a vegetable market, with servers crashing at times, and selling a Bitcoin could take several hours.
It turned out that selling shovels and selling information were not as profitable as running a trading market.
Thus, in just one year, Xu Mingxing and Li Lin earned more money than most people could make in a lifetime. In 2020, both made it onto the Hurun Research Institute's "Hurun Global Young Self-Made Billionaires List."
It was truly a windfall of an era; those who caught it soared, while those who missed it lost out.
However, the good times did not last long. The explosive popularity of Bitcoin drew the attention of regulators, who began assessing the risks associated with Bitcoin.
On December 5, 2013, the central bank, along with five ministries, issued a notice titled "Notice on Preventing Bitcoin Risks," denying Bitcoin's monetary attributes and stating that Bitcoin should not be used as currency in market circulation.
The entire market was thrown into chaos, and Bitcoin's price plummeted, causing the money of countless speculators to vanish in an instant.
Two months later, Japan's Bitcoin exchange Mt. Gox announced it had been hacked, resulting in the disappearance of over 750,000 Bitcoins and the company's bankruptcy.
This triggered severe panic worldwide. Who knew if it was a real hacker attack or a "fake hack, real escape"?
Not long after, Butterfly Labs in the U.S. was also shut down by federal court for "suspected commercial fraud."
From then on, Bitcoin entered a long bear market.
Zhao Dong faced a margin call in leveraged trading, losing 150 million.
Yang Linke sold off the vast majority of his Bitcoins.
Kao Mao disappeared.
Li Xiaolai also sold his Bitcoins, intending to open a billiard hall.
In the harsh winter, many players in the domestic crypto space, who had once boasted about their "Bitcoin faith," often forgot that no matter how firm their beliefs were, they could not withstand reality.
However, those who persevered through this long bear market eventually reaped substantial rewards.
For example, Wu Jihan continued to improve his mining machines, maintaining 42.5% of the global computing power during Bitcoin's winter, which later established Bitmain's reputation as a "mining giant."
Similarly, Li Lin's Huobi believed that while the policy denied Bitcoin's monetary attributes, it did not restrict its commodity attributes, and Bitcoin still held investment value. Huobi secured two rounds of angel investment to continue operations.
Then there was Xu Mingxing's OKCoin, which introduced a trading leverage policy, essentially treating Bitcoin as a financial product, allowing for "speculation" through shorting and longing, while OKCoin charged fees for withdrawals in RMB.
Countless dreamers, hoping to get rich, traveled across the country, setting up mining farms in the northern grasslands and deep mountains of Guizhou, utilizing cheap wind and hydroelectric power to start their "coin-making ventures."
More than two years later, they finally received their reward from fate.
The underlying technology of Bitcoin—blockchain technology—began to receive significant attention after 2016. Russian prodigy Vitalik Buterin introduced smart contracts, greatly expanding the application scenarios of blockchain, making it the new darling of the industry, and the crypto space exploded once again.
Those who had persisted during the bear market turned their fortunes around in this bull market.
However, it was awkward that new technologies were always exploited by scammers first.
What did blockchain bring? It did not usher in a spring for "crypto anarchists," but rather the rampant proliferation of "shanzhai coins."
The reason is simple: there are many people in the market who do not understand "crypto anarchism" or blockchain, but they understand human nature.
As long as there is a greedy side to human nature, they can exploit it for profit.
Let’s recall those years—were there not overwhelming advertisements for "blockchain financial projects"? Various celebrities live-streaming to promote blockchain? Even friends and family constantly urging you to join in, claiming blockchain is the new hotspot and you should get on board quickly?
In reality, they just wanted to harvest the "chives."
Those issuing all sorts of "shanzhai coins" often first registered a shell company, then hired an outsourcing team to design a virtual currency, giving it names like Dog Coin, Cat Coin, Pig Coin, Eel Coin, or Shit Coin, and then used paid promoters and big names to hype the project, pulling in investors for ICOs, recharge trading, or even crowdfunding to buy virtual mining machines.
As the promoters continuously inflated the coin's value, with daily increases of 10%, who could resist the temptation? Even if some knew there were huge risks, they always gambled that they wouldn't be the last one holding the bag; as long as someone bought in, they could always make money.
In the end, they often became the chives harvested by the promoters.
Once the promoters had harvested enough, they would directly announce the virtual currency's collapse, leaving a mess behind.
Then the promoters would change their names and do it all over again.
Even worse, shanzhai coins became a money laundering channel for telecom fraud. Victims would simply transfer money, which would instantly turn into shanzhai coins, disappearing in some corner of the earth.
Thus, the entire Chinese market was thrown into chaos. More critically, this method completely evaded regulation, making it impossible to supervise and easily manipulated. You might think you could achieve financial freedom, but in reality, you were enabling someone else's financial freedom while remaining just a green chive.
In that era of rampant shanzhai coin growth, some became overnight millionaires, while many others faced ruin. To put it bluntly, every profit made in the crypto space was stained with blood.
It seemed that inaction was no longer an option; action had to be taken against Bitcoin.
Why?
Because, unlike the U.S. and the U.K., which are built on financial capital, China is built on manufacturing. Markets like virtual currencies, aside from stimulating speculation, have almost no positive impact on the real economy, national tax revenue, or consumer promotion.
On the contrary, this chaotic "shanzhai coin" market is essentially a form of capital plunder by promoters, which not only hinders common prosperity but also amplifies human greed. Once a collapse occurs, it can easily lead to numerous social problems, ultimately costing everyone.
At the same time, China is a country with massive energy consumption, bearing significant carbon reduction pressure. And mining farms? They are the main contributors to carbon emissions, with some "farms" consuming millions of kilowatt-hours of electricity daily. A mining farm in a certain southwestern region consumes as much electricity in a year as three cities do in a year…
Such massive electricity consumption neither supports any real industry nor produces any actual value, nor does it drive employment or tax revenue; it merely creates wealth myths, leading more people to fly into the fire.
Thus, on September 4, 2017, seven ministries jointly issued a notice announcing a complete ban on ICOs, citing risks of illegal fundraising and financial fraud. They also required all projects that had completed ICOs to return funds to investors and to cease all ICO-related activities within a specified timeframe.
This was the event that shook the crypto community, known as the "94 Incident."
Once the announcement was made, many shanzhai coins plummeted to zero, and some shanzhai exchanges even chose to shut down completely.
But the real blow came later. On September 14, 2017, the Chinese government officially issued a notice to shut down cryptocurrency exchanges, requiring all cryptocurrency exchanges in China to completely exit the Chinese market by September 30.
As a result, not only did coins like tc, eth, etc., and bch crash, but Bitcoin also fell by at least 20%.
So, what would happen to the Chinese crypto space?
Escape.
Yang Linke sold "Bitcoin China" to a Hong Kong blockchain investment fund.
Li Lin sold all shares of Huobi Global to Baiyu Capital.
As for Xu Mingxing? He was one of the most successful in transitioning; OKCoin gradually transformed into a company focused on blockchain technology applications and development, and Xu Mingxing even became the director of the Blockchain Committee of the Beijing Youth Internet Association.
However, Xu Mingxing did not expect that in the future, the realm of cryptocurrency exchanges would be dominated by his former subordinate, who had just been released from a U.S. prison at the end of September this year—Zhao Changpeng.
Zhao Changpeng is from Jiangsu, born in 1977. In 1989, his mother took him to queue for 36 hours at the Canadian embassy to finally obtain a visa and immigrate to Canada.
Zhao Changpeng's most immediate impression of Canada was: "I drank fresh milk for the first time!"
After graduating from university, Zhao Changpeng first worked at Bloomberg and later participated in building the cryptocurrency market website Blockchain.info.
By chance, Zhao Changpeng met He Yi.
He Yi, later known as the "sister of the crypto space," was originally a host on a travel channel. In 2014, she joined Xu Mingxing's OKCoin as vice president, fully responsible for OKCoin's brand building.
He Yi initially wanted Zhao Changpeng to advertise for OKCoin cheaply on Blockchain.info, but Zhao Changpeng bluntly refused her.
"Man, you have successfully caught He Yi's attention."
He Yi thought Zhao Changpeng was "very professional" for not letting personal relationships affect his decisions, so she introduced him to Xu Mingxing and invited him to join OKCoin.
That year, Zhao Changpeng was 37 years old.
After joining OKCoin, Zhao Changpeng performed well, contributing many of his ideas on the infrastructure, custody, and security of on-chain transactions. Moreover, due to his overseas living experience, he had a natural advantage in expanding into overseas markets, quickly rising to the position of vice president at OKCoin.
Thus, Xu Mingxing, He Yi, and Zhao Changpeng became the prominent figures in the crypto space in 2014, known as the "Iron Triangle."
However, the Iron Triangle was not as solid as it seemed; Xu Mingxing and Zhao Changpeng soon fell out.
Some say the fallout was due to significant differences in technical and operational approaches between Xu Mingxing and Zhao Changpeng.
Others say it was because Xu Mingxing discovered Zhao Changpeng was having an affair with He Yi, undermining his position.
Xu Mingxing once posted a Weibo message:
"They are a couple, and they are partners with me. How can that last? At that time, the company had clear regulations that internal relationships required one party to resign. She, as a senior executive, broke the company rules, and now to bring this up does not reflect her professional ethics or partnership spirit, right? Regardless, without me, she wouldn't have her current relationship, and she should be grateful to me for that."
This couple clearly referred to Zhao Changpeng and He Yi, and at that time, Zhao Changpeng was still married.
With the situation escalating to this extent, it was evident that they could no longer work together, and Zhao Changpeng and He Yi both left the company.
Then, in 2017, Zhao Changpeng and He Yi came together again to establish Binance.
At that time, Zhao Changpeng could not have imagined that his Binance would become the world's largest trading platform.
Perhaps he should thank the "94 Incident."
The "94 Incident" was a disaster for Bitcoin China, Huobi, and OKCoin, but for Binance, it was an opportunity to overtake the competition.
Why? Because Binance is registered overseas, its servers are also located abroad, and Zhao Changpeng himself is a foreign national, giving him a natural advantage in pursuing an international route. While other virtual currency exchange owners were busy sipping tea, Binance moved its servers to Hong Kong, turning misfortune into fortune and quickly gaining fame.
At that time, 80% of the world's Bitcoin was held by Chinese people, and the "94 Incident" frightened Bitcoin holders across the country, prompting them to rush to transfer their coins out. He Yi, who had experience with OKCoin, was well aware of the LSP situation flooding the domestic market. She created the "Binance 101 Girl Group," featuring beautiful women with long legs, and successfully attracted a large number of male customers through marketing activities like "recharge to receive private gifts from girls." It seemed simple and crude, but it genuinely brought massive trading volume to Binance.
Thus, after the "94 Incident," the traffic from the three major exchanges—Bitcoin China, Huobi, and OKCoin—shifted entirely to Binance, using the Bitcoins held nationwide to elevate this newly established trading platform into a global virtual currency trading giant.
What is a hero made by circumstance? This is a hero made by circumstance!
By 2021, Binance had become the largest virtual currency trading platform in the world. Originally "decentralized," Bitcoin became "centralized" due to Binance's existence.
Binance's daily trading volume could reach $76 billion, and it could earn substantial commissions from this, just like a casino—regardless of whether you win or lose, the casino always makes money.
Moreover, Binance not only provides trading services but also issues its own Binance Coin (BNB), along with transaction fees, listing fees, service fees, and more, raking in profits.
In January 2022, Zhao Changpeng topped the Bloomberg Billionaires List with a net worth of $94.1 billion (approximately 634.8 billion RMB at the time), surpassing big names like Zhang Yiming, Zhong Shanshan, and Zeng Yuqun, becoming the "richest Chinese."
This was the first time in history that a Chinese individual approached a net worth of nearly $100 billion, and he was also one of the most controversial figures in business.
However, having money does not equate to safety; on the contrary, it may represent greater insecurity.
After all, since the birth of crypto-anarchism, there has always been a sword of Damocles hanging overhead—regulation. From the perspective of maintaining financial security and protecting investors, regulatory agencies in various countries have always viewed Zhao Changpeng unfavorably. An American economist once listed the "seven deadly sins" of virtual currencies: concealment, corruption, deception, crime, fraud, price manipulation, and CZ.
This CZ refers to Zhao Changpeng, Changpeng Zhao.
After leaving China, Zhao Changpeng's Binance wandered the world, receiving warnings from financial regulatory agencies in countries such as the UK, Germany, Japan, Malaysia, South Africa, and Singapore. Zhao Changpeng didn't even dare to return home, hiding for a long time in the UAE, but ultimately could not escape the long arm of U.S. jurisdiction.
In June 2023, the U.S. Securities and Exchange Commission (SEC) announced 13 charges against Zhao Changpeng and Binance.
At this point, no one was shouting about the "business environment" anymore. After a series of negotiations, Zhao Changpeng ultimately pleaded guilty to charges of money laundering, unlicensed remittances, and violations of sanctions, and was forced to pay a $4.316 billion fine in a settlement.
However, even after Zhao Changpeng complied, the U.S. still would not let him off the hook.
After he signed the plea agreement in the U.S., his passport was immediately confiscated, and he was subsequently fined an additional $3 billion.
You see, this is the power of a state-level "pump and dump."
Ultimately, through the efforts of his lawyers and the collective letters of plea from 161 friends and family members, including his ex-wife, current wife, life partner, business partners, sister, and mother, the judge sentenced Zhao Changpeng to just four months in prison.
On September 29, 2024, Zhao Changpeng was released from prison.
However, the story was not over.
In October 2024, U.S. prosecutors emphasized that Binance failed to report over 100,000 suspicious transactions related to Hamas, Al-Qaeda, and ISIS. The Binance platform also supported the sale of child sexual abuse materials and was a recipient of a large amount of ransomware proceeds.
In November 2024, Zhao Changpeng was sued again, seeking to recover nearly $1.8 billion that was transferred "based on fraud."
Zhao Changpeng's legend continues, and his legal battles persist. Clearly, as long as Zhao Changpeng's wallet remains, the U.S. will continue to extract its share.
What seems like a challenge to the government in the form of "anarchist cryptocurrency" collapses at the first encounter with government authority.
Looking back at the ten-year history of the crypto space, how should we evaluate Bitcoin?
From a technical perspective, Bitcoin is neither good nor bad, neither good nor evil, neither beautiful nor ugly; it is merely a program, an algorithm, a string of mysterious code hidden on the internet.
From a cultural perspective, Bitcoin is a combination of individualism, liberalism, and technological determinism. It embodies the hopes of technological geniuses and madmen for achieving an anarchic state and a utopian society.
However, no matter how great the ideal, it must withstand the pull of reality.
For liberals, Bitcoin represents a great ideal of human progress.
For those uninterested in technology and only wanting to make money, Bitcoin is merely a tool for wealth creation.
Due to the lack of regulation, Bitcoin is always filled with extreme fluctuations and is never short of wealth myths. Because of survivor bias, people only focus on those who make money.
When someone boasts in their social circle, "I accidentally made 100 million again."
When someone posts a picture showing half of a Maserati logo on the steering wheel, captioned with "Heaven rewards the diligent."
When more people show off a group of young models on their yacht.
Who can restrain their desires?
As humans, we have desires, and Bitcoin just happens to evoke the most greedy side of human nature. You can't resist, and neither can I.
Luo Jinhai, the founder of CoinNeed, once made a vivid analogy:
Bitcoin is the supreme ring that rules all rings; it bewitches the mind, and those who wear the magic ring ultimately become slaves to the Dark Lord Sauron.
In reality, those who put on the Bitcoin ring, unless they have an exceptionally strong will, will mostly become slaves to this magic ring.
Bitcoin, as a technology created by "crypto anarchists," is neutral in itself, but when technology intersects with reality, encountering the complexities of human nature, problems are bound to arise.
Satoshi Nakamoto can collide to find that unique hash value among 440 trillion possibilities, but he cannot calculate the madness of human nature.
When the greed in human nature distorts something that is originally neutral, that thing itself becomes unimportant. Just as there were tulips in the past, now there is Bitcoin. Neither tulips nor Bitcoin are at fault; the only fault lies in human nature.
Therefore, when human nature cannot bear the negative feedback of technology, regulatory intervention becomes very necessary.
After all, Bitcoin cannot satiate hunger, cannot circulate, and has no monetary anchor behind it. Aside from consuming vast amounts of energy to create wealth myths, it brings only disaster.
Why are Chinese people so enthusiastic about the crypto space?
Why do 70% of the world's Bitcoin come from Chinese miners?
Why do Chinese people control 50% of the global Bitcoin market and the vast majority of trading platforms?
By looking at the stories of those crypto tycoons who soared to the heights only to fall from grace in an instant, we may find some answers in our hearts.
Do not test human nature with Bitcoin; human nature can never withstand the test.
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