The History of Public Blockchains: The Decline of Believers and the Rise of Speculators

For a long time, people have confused the cryptocurrency world with blockchain. The former has become a playground for speculators, while the latter bears the stigma of fraud.

In the past, people revered the tech-savvy geek Vitalik Buterin—a staunch believer in blockchain—who was struggling to build blockchain infrastructure, always reminding users not to fall into the "price bubble" trap. Now, they idolize Sun Yuchen, known as the "Jia Yueting of the cryptocurrency world"—a lucky individual who can leverage millions in assets to create billions in bubbles, a practitioner of class leap through virtual digital currency, who has created a new myth of grassroots blockchain with the backing of capital.

Listening to the story of Li Xiaolai making 200 million overnight, the grassroots blockchain has ignited a desire for money. The believers have fallen, while the speculators have risen; this is the new story of China's cryptocurrency world.

01

In Guangdong, where prestigious schools are abundant, Huizhou No. 1 High School is not particularly outstanding. However, as the best high school in Huizhou City, it almost monopolizes the city's top students every year and serves as a pillar for sending top students to Tsinghua and Peking University. Since the 20th century, several "provincial champions" from Guangdong have emerged from this school.

In this school, which places great emphasis on teaching, Sun Yuchen showed little interest in studying itself and instead vehemently resisted the exam-oriented education system, criticizing the social status quo. GQ once reported that, at the bottom of the ranking list, he "only wrote essays in the Chinese exam; answered questions in English with Chinese; filled in the blanks in history exams with the name of the homeroom teacher for antagonists, and his own name: Sun Yuchen for others."

Sun Yuchen considered this a rebellious phase of youth, but these rebellious behaviors had their roots long before.

Unlike other children who rebel against authority, he showed an early yearning for independent success. One day at the age of nine, after reading an article about a Go competition, he wanted to learn Go. After repeated consultations, his parents sent him to Wuhan to learn Go. The independence away from his parents did not lead to success. Realizing he was not cut out for it, he gave up.

In middle school, he became obsessed with online games, feigning illness to skip classes during the day and sneaking into internet cafes at night while his parents were asleep. Upon entering high school, his grades remained at the bottom. The exam-oriented education became his first hurdle to success. "Limited time and energy cannot cover many subjects I am not good at; for someone focused on literature and history, math is truly a painful tragedy," Sun Yuchen said.

While Sun Yuchen immersed himself in the spiritual world constructed by Wang Xiaobo, Li Ao, and his idol Han Han, on the other side of the globe, Vitalik Buterin, who immigrated from Russia to Canada, was engrossed in the world of games.

Like an ordinary gaming addict, 13-year-old Vitalik often spent entire days playing games. His favorite character in World of Warcraft was the Warlock. However, a significant skill of the Warlock, "Life Tap," had its damage portion removed, which hit him hard.

If you think Vitalik was just a gaming addict, you are mistaken. While other kids were still troubled by academic worries, he was already building castles and setting rules in the world of the internet.

The name "V God" is not an exaggeration.

Vitalik received a computer from his father at the age of 4; while other kids played computer games, he became obsessed with Microsoft's Excel software and soon could write automated calculation programs in Excel;

At 7, he created a "Rabbit Encyclopedia" document filled with charts and mathematical formulas, which soon confirmed his talent in mathematics and programming;

By 10, his mental calculation speed was already more than double that of his peers;

At 11, he began to study subjects like mathematics, programming, and economics in a "Genius Class."

While Sun Yuchen anxiously searched for a remedy for the stumbling blocks on his path to success, V God was immersed in the ease brought by his computer talent. During high school, Vitalik enjoyed a web game called Space Invaders. With a computer and a programming book, he self-taught C++ and created a new game, where the gameplay involved shooting through bouncing balls, dubbed "Vitalik's version of Space Invaders." By the time he entered high school, he could no longer find programming challenges that excited him.

Upon graduating high school, V God smoothly entered the University of Waterloo in Canada. This prestigious Canadian university, over 60 years old, is one of the best schools in North America, renowned for its computer science, mathematics, and engineering programs.

The role of talent in life’s path is evident, but the influence of luck and effort should not be underestimated.

The New Concept Writing Competition has produced a number of talented writers, who became the only group to achieve class ascension through words in the "post-news golden age," with the most representative being Han Han, who transformed from a rebellious youth to a genius writer, from a race car driver to a film director.

Sun Yuchen also wanted to change his fate through writing. During his three years in high school, he submitted multiple entries to the New Concept Writing Competition, but they sank without a trace. Eventually, after resubmitting three articles, he got a chance to retake the exam, subsequently winning first prize and qualifying for the independent admission exam at Peking University. This hard-won opportunity for success in his fate was tightly grasped by Sun Yuchen, who frantically caught up on classes and was admitted to Peking University.

Sun Yuchen was born into an ordinary family, with neither money nor power. He himself said, "Even if one has a vision, it is not innate."

When he decided to take the entrance exam for Peking University, a well-connected classmate said his family had connections and would help him, suggesting, "You can get into a second-tier university with a third-tier exam," urging him not to work so hard. In the end, Sun Yuchen "counterattacked" and got into Peking University, while that classmate failed to meet the third-tier cutoff and ended up in a vocational school. This dramatic turn of events was written by Sun Yuchen in his book; he felt that those with connections could also be toyed with by fate, while he had clearly rewritten the trajectory of his destiny.

The difference between achieving success easily and through hard work is the greatest distinction between geniuses and ordinary people.

Sun Yuchen's strong desire to change his fate was born the moment he first saw the Bund at 17. The "intense, shattering" impact made him resolve, "My life is destined to belong to such a place; my life is destined not to be mediocre." He could never have imagined that a year later, Bitcoin, invented by Satoshi Nakamoto, would become the key to his class leap.

Ten years later, wandering around the world with slicked-back hair and wearing shiny branded clothing, Sun Yuchen achieved his life pursuit—money, symbolizing resources and freedom.

02

In contrast, V God's fate took a more uneventful turn.

When V God was in high school, Bitcoin was still unknown. His father introduced Bitcoin to him, but it initially did not pique his interest. This anarchic currency, with individual prices below one cent and no one able to control it, had very few users; a programmer famously bought two pizzas for 20,000 Bitcoins, which became a legend.

However, the changes in the Warlock character's skills in World of Warcraft left him unsettled—this was the fault of the centralized game's authoritarian management model; a centralized product has no rules—he began to think about earning Bitcoin.

V God contacted a planner of a Bitcoin blog and set a price of 5 Bitcoins per article. At the time, with a unit price of $0.8, he could earn $4 per article. With high professional quality and solid writing skills, V God's articles received rave reviews, even boosting the readership of obscure blogs, leading the blog planner to proactively invite V God to be the chief writer for the magazine.

After a small initial success, he became a co-founder of a Bitcoin magazine. To increase revenue, he published only part of each article, requiring readers to pay 2.5 Bitcoins to read the rest. This paid reading model allowed him to earn about $20 to $40 worth of Bitcoin per article.

The game soon reached a dramatic turning point—Bitcoin, which was originally not very valuable, skyrocketed from around $10 to $50 in December 2013, becoming V God's first pot of gold. Rumors in the community suggested that these Bitcoins became V God's original capital for entrepreneurship.

Achieving personal value through content is one of the few commonalities between V God and Sun Yuchen, but their fates diverged from there: V God gained his first pot of gold, while Sun Yuchen's reputation collapsed at its peak.

2009 was one of the periods when Hong Kong people were most resistant to mainlanders, and it was also the year Sun Yuchen went to the Chinese University of Hong Kong as an exchange student. After returning, Sun Yuchen "changed as a person." He began to frequently confront the school on social media, waving the banner of "democracy and freedom," criticizing the school's actions, and becoming an "opinion leader" on the Peking University campus.

In China, outspoken individuals usually do not end well. They either get invited for tea or suffer a collapse of their public persona, facing public backlash. Sun Yuchen belonged to the latter. Sensing the danger of being expelled from school, he graduated from Peking University a year early in 2011 and entered the University of Pennsylvania for graduate studies.

However, life in America was not peaceful either. An article published in the online magazine he founded, "New New Youth," was accused of plagiarism. The similarities between the two articles were too obvious, leading to relentless criticism, but he stubbornly denied it.

Three months before the plagiarism incident, he had just appeared on the cover of Asia Weekly with Jiang Fangzhou as a typical example of "Chinese post-90s elites under the internet," accumulating initial fame. This scandal turned his original supporters into critics, and the carefully cultivated image was tainted by the plagiarism stain. Sun Yuchen immediately switched tracks, moving from literature to business.

Years later, when asked "why he no longer engaged in media," Sun Yuchen replied: "Media no longer represents trends."

Those who can switch tracks at any time usually do not experience much hardship. Simply put, it’s a matter of luck. Sun Yuchen ultimately encountered the favor of capital during the period of original capital accumulation.

Initially planning to stay in the U.S. and become a pioneer of the capitalist system, Sun Yuchen mingled in various business circles. But just like Wall Street's inherent indifference to Asians, financial institutions did not show enthusiasm for a literary youth like Sun Yuchen. After graduation, he did not break into the American business circle.

Fortunately, he bought Tesla stocks and gained over four times the return. Later, he bought Bitcoin and achieved over twenty times the return, elevating his personal assets to the millions.

That was the first price surge following Bitcoin's emergence. Previously, Bitcoin was just a secret in the geek circle; now, with the first wave of people daring to invest, the price multiplied. Most of these individuals had technical or financial backgrounds, and compared to the virtual electronic currency that transcended national sovereignty, Bitcoin's astonishing upward trend was more appealing to them. Sun Yuchen was one of them.

Sun Yuchen claimed that he achieved financial freedom in 2013. Five years later, his ICO project, TRON, reached a peak market value of $3.7 billion. Leveraging millions in capital to create billions in market value, he became a legend in grassroots blockchain.

"Didn’t get into university, heavily in debt, mom is sick, dad is unemployed, the whole family is in dire straits, what should I do?" Many people messaged Sun Yuchen on Weibo, hoping that he could provide a remedy for their similar backgrounds but, in Sun Yuchen's view, "the perspective of describing these problems is wrong," and is "a typical self-indulgence."

He may have forgotten that the people he now looks down upon also once reflected his own image. In early spring 2014, he traversed half of Beijing on the subway with a business plan to meet investors at Guomao. That was the thirty-first person he had arranged to meet; the previous thirty had all rejected him. After he spoke for ten minutes, the thirty-first person asked him, "Why not find a stable job?" He felt mocked by arrogance and left in anger.

If it weren't for his millions, he might find it hard to turn around now.

03

It is hard to deny that the grassroots blockchain is more fascinated by stories of overnight class ascension.

This was not uncommon when blockchain first gained popularity. In December 2017, Bitcoin surged to its highest price of 130,000 yuan, while Ethereum approached the critical point of 10,000 yuan. V God was ranked second among the big shots in the cryptocurrency world, second only to Bitcoin's creator, Satoshi Nakamoto.

In June 2018, the Ethereum Technology and Application Conference was held in Beijing, and V God, who rarely attended conferences in China, made an unprecedented appearance. When he showed up in a gray turtleneck and black casual pants, young female fans and middle-aged male investors boldly expressed their affection, shouting "I love you, I like you" loudly, fearing he wouldn't understand. The scene became chaotic.

At that time, every word and action of V God and Ethereum was headline news.

However, three months after that conference, Ethereum's price plummeted again, and his status was no longer secure. In March 2019, Wang Feng, founder of Mars Finance, posted a status on WeChat, with a screenshot showing the Russian V God fluently typing in Chinese in a group, reporting that the foundation for Ethereum 2.0 was nearly complete, yet there were very few responses.

Price is the primary driving force that people chase; nothing else matters. Even though V God had long publicly warned of the "price bubble," reminding that the height of the price far exceeded the value of the project itself, it was of no use; investors still blamed him. "When will Ethereum reach 10,000 yuan?" someone questioned. He paused for a moment and replied, "I don't know," his expression slightly displeased and helpless.

V God probably felt human nature's loss of control for the first time. All along, he followed his inner choices, gathering in practice areas that aimed to change the world, from Canada to the U.S., Spain, and Italy. At that time, Satoshi Nakamoto's Bitcoin white paper was astonishing geeks in Europe and America. Geeks pursued extreme privacy and freedom; decentralization, freeing each individual from the control of state power, was undoubtedly appealing.

When Bitcoin transformed into Bitcoin 2.0, its inherent flaw of insufficient capacity could not be overcome. V God dropped out of the University of Waterloo and worked in Israel while also developing Bitcoin. To solve the shortcomings, he wanted to develop a universal platform, which became Ethereum, with his role akin to Windows for PCs and Android for smartphones.

However, the old era, defined by "implementation," had passed; the projects that grassroots blockchain now valued were those grand projects claiming to change the world and existing class orders—inevitably, the letter combinations you casually see in life have already become the names of such blockchain tokens.

The essence of these projects is nothing more than speculation to create wealth or harvesting wealth through intelligence. Yet the vast majority of those in grassroots blockchain are still waiting for the bull market to arrive. After all, having experienced the disruptive thrill brought by price, who can easily let go of the possibility of recreating glory? Of course, the cost of storytelling is rising; in the early days, simply copying code, changing an algorithm, and renaming it could bring in money; now, even if one engages in grand projects, they must use jargon that the average person cannot understand.

"After ICO, it brought too heavy a financial color; now, industry development is directly measured by price and market size," according to data analysts, Sun Yuchen is just a coin seller; he brought a new story, and his role happened to be what the industry needed at this stage. Industry insiders told Huxiu, "Last year, mentioning him made everyone think he was a scammer; this year, everyone thinks he is quite reliable because he has money and is doing things."

When did Sun Yuchen's persona become so grand? It all relies on the contrast with his peers.

The grassroots blockchain faced the longest "cold wave" in 2018, with a large number of vertical media and cryptocurrency startups shutting down. The industry replaced itself, and Binance's CMO He Yi told Huxiu, "Some want to create history, while others want to make money." Those within the industry are well aware that most of the companies that failed had leaders who were not qualified to manage, while those that survived did so merely due to sufficient funding.

But Sun Yuchen's story is the most special; he happens to be the one with ample capital and management ability.

He appeared on a friend's radio show, discussing what he was doing and his success, leading many listeners to express that their "worldview was shattered," feeling his success was akin to winning the lottery. But he disagrees—despite the grassroots blockchain's rise being largely speculative, Sun Yuchen is undoubtedly capable.

In Steve Jobs' product theory, the product is 1, and marketing is 0. The latter unfolds based on the former. Sun Yuchen, however, successfully practiced the exception of products revolving around marketing. According to Chain Catcher, the total financing amount for TRON tokens is likely between 300 million to 500 million yuan. Even during the craziest times of ICOs, this is still a significant amount.

The scene of TRON's roadshow with numerous beautiful women on stage, image source: Chain Catcher

Seeing the promotional tactics of TRON's roadshow in the above image, most people would find it exaggerated or vulgar, but Sun Yuchen does not care. As he stated in his autobiographical book, "This is the stark difference between successful and unsuccessful people, the difference between mental maturity and spiritual freedom." However, if it weren't for the "lawless" state of the cryptocurrency blockchain, having sexy women on stage holding signs saying "First there was the Communist Party, then there was TRON," would likely lead to being invited for tea.

Promotion is the core of Sun Yuchen's entrepreneurship. As Li Xiaolai exited the stage, the malicious endorsement era he led had passed, while Sun Yuchen established the unspoken rule of "forced endorsement."

When TRON promoted its luxurious team, it once included OFO's Dai Wei in its list of private investors; Sun Yuchen himself was packaged as "Jack Ma's first post-90s disciple." According to Chain Catcher, if any collaborative article did not use this title, Sun Yuchen felt it was "inaccurate" for his positioning and demanded changes. But now, this "90s disciple" has torn off this label because Alibaba issued him a warning. An insider told Huxiu that Sun Yuchen is very sensitive; if any article contains wording he finds unfavorable, he will contact the author to delete it.

By polishing his image, TRON solidified its position. In just the first quarter of 2018, the price of TRON tokens skyrocketed by as much as 90 times, landing on more than 30 "international mainstream virtual digital currency exchanges," with the number of holders exceeding 500,000, and global trading volume second only to Bitcoin and Ethereum.

04

As the most valuable product of the blockchain 2.0 era, Ethereum had nearly 5 million active users at its peak. However, Ethereum is gradually losing its leading advantage. Even so, which fervent geek would want to be compared to a pyramid scheme master?

V God admits he can be surpassed, but if the potential competitor is Sun Yuchen and TRON, he cannot accept it. "If I were surpassed by Ethereum Classic (ETC), I wouldn't be disheartened; but if I were surpassed by TRON, I would lose hope in humanity."

Since February 2018, cryptocurrencies have been plummeting, and the market is in a downturn, seemingly nearing the bottom. Who would have thought that Ethereum, which saw its market value grow over 100 times the previous year, would shrink by more than 90% a year later, dropping from around 9,500 yuan to about 400 yuan? Price became the focal point of community members, and debates over bottom-fishing or selling continued, leading to doubts about Ethereum's value.

Unlike Sun Yuchen's flexible transitions, V God appears somewhat conservative. The loss of Ethereum's value is fundamentally contrary to V God's original intention. The rule that tokens derive value from projects has been disrupted, and he began to ponder whether it was meaningful to stay with Ethereum. He tweeted several times, warning Ethereum users not to let Ethereum become a "tulip" for speculators to profit from.

But the situation did not improve, so he considered quitting, "Should I drop Ethereum and work for Google?" In a tweet sent out late at night, over 40% of voters agreed he should leave the Ethereum project to work at Google.

Ethereum's current predicament is by no means an isolated case. BlockBeats reported in August 2018 that nearly 1,000 projects in the digital cryptocurrency industry were on the verge of death, with 80% of ICO financing being pure fraud, 10% being zombie projects, and the remaining 10% likely heading towards death.

Before the Spring Festival, a founder of a pyramid scheme project cursed in a WeChat post, "What's wrong with pyramid scheme funds? At least it can provide some tangible benefits to a portion of people, which is better than doing nothing." No one openly criticized or opposed it; the industry has long defaulted to the rule of "whoever picks up the pieces is unlucky," with most people waiting to see the joke while hoping to avoid being cut.

The grassroots blockchain has become accustomed to this game of passing the buck. Sun Yuchen's idea that five "pancake makers" are equivalent to five "Zhuge Liangs" is also recognized by many investors, "At least they can boast a market value of hundreds of billions, which is quite impressive."

Desire is expressed so blatantly, which is rare, but few are as difficult to define as Sun Yuchen.

"Sun Yuchen has a particularly strong performative personality, familiar with the history of our party's rise." A friend close to him told Huxiu that he embodies three keywords: heavy defensiveness, always energetic, and attempting to guide people with passion. This appearance of diving too deep into the role of a successful person makes observers uneasy, "His office building looks like a 'farmer entrepreneur'; just paint the walls white and put in some workstations, and it becomes an office."

Having a topic and traffic is very beneficial for entrepreneurs. Sun Yuchen excels at packaging himself. In many external reports, he uses branded items to showcase strength and measures himself by the number of fans to demonstrate influence.

GQ reported a detail that, before and after his change in identity, Sun Yuchen expressed drastically different views on the domestic entrepreneurial environment. Someone who knows him candidly stated, "Little Sun is a typical chameleon. He has no stable values and tends to lean towards the stronger side."

Sun Yuchen described a scene in a classroom at Lake Hupan University. He asked Jack Ma why he had previously insisted on not doing games but now established Alibaba Games. After a moment of contemplation, Jack Ma replied that his judgment about games had changed; he used to think games were harmful, but Shi Yuzhu changed his perspective, believing that playing games is an important form of entertainment for a person.

This became a classic belief for Sun Yuchen—a person's stance can change at any time with interests.

From the outside, it seems that TRON spends the most money not on advancing project progress but on "gilding" Sun Yuchen. Starting from the end of 2018, Sun Yuchen expanded the scope of "gilding" to social events.

When OFO returned deposits, he tweeted that he was willing to repay 10,000 users for Dai Wei; when Zhao Yu acted heroically and was detained, he said he would support him with 10 million. The former cost 1.99 million, and the latter was 100,000 yuan. In the end, he spent 2.09 million to shape the image of a "conscientious entrepreneur" in the minds of ordinary people, and his Weibo followers increased to 1.1 million. By the end of March 2019, Sun Yuchen's Twitter followers surpassed 1 million, exceeding V God's 840,000 followers.

Just like the recommendation on the cover of Sun Yuchen's book—"From nothing to financial freedom." This kind of extraordinary dislocation is a unique memory of grassroots blockchain. Whether it ultimately elevated V God or made Sun Yuchen famous, both represent the self-filtering process of the industry, and whether it is recognized by the outside world is no longer that important.

This is the story of grassroots blockchain. Two genius figures in their respective fields, firmly grasping the opportunities of life amid the wave of cryptocurrency led by Bitcoin, achieved a significant leap in their destinies through different circumstances and choices.

Does this era favor geniuses or cunning individuals more? It seems to be the latter.

The cover image of this article: On July 6, 2018, V God spoke at a blockchain event held in Zug, Switzerland. © Oriental IC

In addition to interviews with Huxiu, the references for this article include:

[1] Sun Yuchen. This World is Both Cruel and Gentle. Jiuzhou Publishing House. 2017

[2] He Tong. Sun Yuchen on the Wind. GQ.

[3] 0x14, 0x20: The ICO failure rate in the first half of the year was 98.8%, a comprehensive review of the failure data from major exchanges. BlockBeats

[4] Gong Quanyu. The Transformation of TRON: Wielding Billions in RMB. Chain Catcher