What is the attitude of domestic internet giants towards cryptocurrency?

This article was published on ZB Global Information.

At the beginning of 2021, the world's richest man, Elon Musk, strongly endorsed Dogecoin and Bitcoin. Under the banner of such leadership, global enterprises turned their attention to the cryptocurrency and blockchain industry. After Tesla invested $1.5 billion in Bitcoin, foreign institutions gradually began investing in Bitcoin and other digital currencies, while leading domestic companies also focused on the Bitcoin market.

Growth of Bitcoin Market Capitalization

Bitcoin's market capitalization exceeded $1 trillion after its price surpassed $53,000. The market capitalization of Bitcoin is calculated differently from traditional corporate valuations. For the stock market, it only requires calculating the total number of issued shares and the current stock price.

Bitcoin is a type of cryptocurrency, and its total supply refers to the number of Bitcoins that have been mined, which is the total circulating amount. Moreover, the production rate of Bitcoin is not constant.

Bitcoin has undergone three halving events to date, starting from an initial production of 50 coins, which halves approximately every four years. The most recent halving occurred in May 2020, reducing the production to 6.25 coins.

According to data from CoinMarketCap, as of the time of writing, the total number of Bitcoins mined has reached 18,644,325. At the current price of $53,750.60, Bitcoin's total market capitalization is approximately $1 trillion. The historical highest price of Bitcoin was $58,334.98, which means the maximum supply market capitalization of Bitcoin is around $1.12 trillion.

Currently, according to the corporate market capitalization rankings at the beginning of 2021, only five companies exceed Bitcoin's market capitalization. They are Apple, Microsoft, Amazon, Google, and Saudi Aramco. Bitcoin's market capitalization surpasses that of Alibaba and Tencent in China, and even exceeds Tesla by more than $30 million.

The high market capitalization of Bitcoin is undoubtedly attributed to significant recent investments from various institutions, especially Grayscale.

Due to the influence of the U.S. SEC regulatory agency, Grayscale allows users to purchase fund shares through cryptocurrency or fiat currency transactions, but does not support redemptions. The purchased fund shares have a fixed lock-up period and can only be traded on the secondary market, with an annual management fee for the fund.

Even under these circumstances, Grayscale currently holds a total of 655,000 Bitcoins, accounting for over 3.5% of the total circulating supply of Bitcoin, with a total holding value of $41.8 billion.

Meitu's Strong Entry into Bitcoin, Becoming a Center of Public Opinion

Among domestic companies, Meitu's $250 million purchase of cryptocurrencies has completely opened the door for domestic enterprises to invest in cryptocurrencies, making Meitu the first publicly listed company to openly express its intention to invest in cryptocurrencies after Tesla.

On March 7, 2021, Meitu released a voluntary announcement stating that the company purchased 15,000 units of Ethereum and 379.1214267 units of Bitcoin in public market transactions on March 5. The value of Ethereum is approximately $22.1 million, while Bitcoin's value is around $17.9 million, totaling an investment of $40 million, equivalent to 250 million RMB.

Meitu's official statement indicated that the purchase of Bitcoin and Ethereum was conducted according to a cryptocurrency investment plan approved by the board of directors, with a cap of no more than $100 million in cryptocurrencies, funded by the company's existing cash reserves. This suggests that Meitu is likely to purchase cryptocurrencies again.

It is worth noting that Meitu's mid-2020 report indicated that the adjusted net profit attributable to the owners of the company for the first half of 2020 was 24.9 million RMB. This shows that Meitu's investment in cryptocurrencies is 1.6 times the net profit from the first half of last year. Why invest such a large amount in cryptocurrencies?

Meitu's founder, Cai Wensheng, stated that the company continues to lay out its blockchain strategy, with this purchase of Ethereum and Bitcoin serving as a long-term value reserve for its blockchain strategy. Meitu is the first Hong Kong-listed company to purchase BTC and is also considered the first publicly listed company globally to use ETH as a currency value reserve.

In the announcement, Meitu's board of directors stated that they believe blockchain technology has the potential to disrupt existing financial and technology industries, similar to how mobile internet disrupted the PC internet and many other offline industries. The blockchain industry is still in its early stages, akin to the mobile internet industry around 2005.

In this context, cryptocurrencies have sufficient appreciation potential, and by allocating part of their cash reserves to cryptocurrencies, they can mitigate the risks associated with holding cash in fund management. More importantly, this demonstrates the group's ambition and determination to embrace technological innovation to prepare for entering the blockchain industry.

Although blockchain has long-term benefits, in general, the prices of cryptocurrencies will still fluctuate in the short term. Therefore, Meitu's board has decided to invest in the two largest cryptocurrencies by market capitalization, Ethereum and Bitcoin, believing that this investment can maximize long-term shareholder value.

Additionally, Meitu's officials stated that the board has observed a growing momentum in building consensus. For example, some traditionally conservative institutions (such as insurance companies) have begun investing in cryptocurrencies; traditional asset management companies have also launched cryptocurrency funds for subscription; and more and more publicly listed companies are purchasing cryptocurrencies as part of their fund management and considering accepting cryptocurrencies as payment for their goods and services.

On the other hand, the accessibility of cryptocurrencies has also been improving, as evidenced by well-known banks offering cryptocurrency trading and custody services. Lastly, some regulatory agencies have begun to license cryptocurrency trading platforms, enhancing investor confidence in trading cryptocurrencies.

Meitu is the first company to publicly invest in cryptocurrencies, while most other domestic companies have an unfriendly attitude towards Bitcoin but hold a very positive view of blockchain technology.

Alibaba's Attitude Towards Bitcoin and Blockchain

Jack Ma, the founder of Alibaba, has repeatedly expressed his views on Bitcoin!

In 2017, Jack Ma mentioned Bitcoin at an event, saying, "I am not very interested in Bitcoin. What I want to know is what Bitcoin can bring to society. But on the other hand, I believe that blockchain technology is very powerful, so at Alibaba, we are trying to ensure that we will promote the world into a cashless society.

But Bitcoin, we view it very cautiously. I don't know much about Bitcoin, and I am always curious about you Bitcoin enthusiasts. I don't think we can live without Bitcoin."

Although Jack Ma publicly stated to be cautious about Bitcoin, it is evident from his words that he acknowledges the potential of blockchain technology. Furthermore, Alibaba Group has demonstrated its support for blockchain through actions.

On November 8, 2017, Alibaba Group and Ant Financial signed a strategic cooperation agreement with Xiong'an, where Alibaba and Ant Financial built a digital Xiong'an blockchain implementation platform.

Through cooperation in blockchain, financial cloud, credit, biometrics, financial intelligence, and risk control security, they aim to build Xiong'an into a "city of collaborative governance and credit, a city of inclusive and green livelihoods, and a city of financial technology innovation."

In May 2018, Jack Ma again discussed Bitcoin and blockchain, stating, "Blockchain is not a bubble, but Bitcoin is a bubble." As one of the founders of an e-commerce giant, Jack Ma's positive view of blockchain technology is aimed at better addressing security issues in internet technology.

On July 13, 2020, Alibaba publicly released its 2020 fiscal year charity "financial report." The data showed that in the past fiscal year, Alibaba's public welfare platform generated over 10 billion donations, raising over 2.2 billion RMB for charitable organizations.

Currently, blockchain has been widely applied in various scenarios of Alibaba's public welfare initiatives, with over 60% of the total donation amount recorded on-chain, forming a new global model of public welfare supported by digital technology.

At present, Alibaba Group is the company with the most blockchain technology globally, which has also enhanced China's voice in the global blockchain arena. It appears that Jack Ma is relatively knowledgeable about Bitcoin, yet he stands on the side of the Bitcoin bubble theory.

Tencent's Attitude Towards Bitcoin and Blockchain

Aside from Alibaba, another representative company in China is Tencent. Although Tencent and Alibaba started from different sectors—e-commerce and social networking, respectively—their rhythms have been remarkably similar over the years, and their attitudes towards Bitcoin and blockchain are also quite similar.

Pony Ma: "Anyone can issue digital currency; where is the security and regulation? Regarding digital currency ICOs, I think there are still many risks. It's not that the technology is immature; if everyone can casually issue digital currency using blockchain technology, it will raise many regulatory issues.

Although digital currency is very popular now, we have not participated in it. We do not consider issuing coins because I think it is a very risky thing."

However, in the blockchain field, Tencent's pace is not inferior to that of Alibaba. Tencent has registered a series of new blockchain patents in many different fields, indicating that the company is on the verge of launching new blockchain-related businesses.

These patents mainly include blockchain-based advertising and advertising monitoring services, fund management, "to C" applications, blockchain hardware devices, and storage solutions built using blockchain networks.

Additionally, Tencent has created a "Tencent Blockchain" website called TrustSQL to establish a foundation of trust in the digital economy era. Tencent Blockchain supports EVM-compatible Solidity smart contracts and allows customizable access policies for permission control; TrustSQL has massive data storage capabilities, supporting records of over 1 billion and unlimited capacity block file storage.

JD's Attitude Towards Blockchain

As Tencent's strategic partner, JD, the second-largest online retailer in China, has been increasing its investment in research and development every quarter, with over 8.6 billion RMB invested in the first quarter of 2020, significantly supporting JD's future intelligent and digital operations.

As early as 2018, JD's chairman Liu Qiangdong decided to vigorously apply blockchain and other technologies on the JD platform. He believes that JD must leverage various "emerging technologies" such as artificial intelligence, big data, and blockchain to reconstruct the entire retail industry, positioning itself as an infrastructure service provider for the retail sector.

Based on the immutable and traceable characteristics of blockchain, JD has been actively promoting blockchain technology in product traceability. On July 26, 2018, JD Global Purchase released 35 quality control and after-sales service improvement measures. This included the establishment of the "JD Blockchain Anti-Counterfeiting Traceability Platform."

In August of the same year, JD launched its blockchain business, Zhizhen Chain. For an e-commerce platform, ensuring high-quality sources is crucial, so this product serves two applications in this regard.

Additionally, JD has launched a BaaS (Blockchain as a Service) platform, along with a blockchain-based invoice app that can digitally track invoices from Pacific Insurance Company.

Currently, JD has partnered with the blockchain privacy platform ARPA to protect the financial data of major clients.

JD's subsidiary JD Digits' data platform will integrate ARPA's blockchain network, which uses a technology called secure multi-party computation (sMPC). JD Digits was established to help other companies modernize using cutting-edge technologies like AI and blockchain.

Under this partnership, ARPA will "massively" utilize sMPC technology to provide a series of privacy protection features for financial companies collaborating with JD Digits.

Baidu's Attitude Towards Blockchain

Baidu, as the largest browser operator in China, has been at the forefront of artificial intelligence and big data internationally. In 2015, Baidu Finance established a blockchain technology team and invested in the American blockchain technology company Circle in 2016. Last year, Baidu's blockchain technology began to be widely implemented, with Baidu Finance becoming a major user.

Baidu's chairman, Li Yanhong, mentioned blockchain technology at the Great Hall of the People, stating, "Blockchain technology is very revolutionary, but it is still in a very early stage. However, it has the potential to be a significant technological innovation that changes the internet.

Much of the traditional internet consists of virtual items, and adding a copy incurs no additional cost. However, with the advent of blockchain, it truly makes virtual items unique, making the internet very different from what it used to be."

Like Tencent, Baidu also has its own blockchain open platform called Baidu XuperChain. According to the official description of XuperChain, it is open-source, self-developed, controllable, and can flexibly and efficiently support various business application scenarios, providing a rapid deployment and operational environment for blockchain.

Currently, the number of users of Baidu XuperChain has exceeded 3,564,310, and the blockchain height has reached 81.77 million, indicating that Baidu is advancing further in blockchain public chain technology than other companies. Thus, it is evident that Baidu currently has no plans to invest in Bitcoin, Ethereum, etc., focusing its research on its public chain technology.

Attitudes of Other Domestic Tycoons

NetEase founder Ding Lei stated, "I have never owned a single Bitcoin; blockchain is suspected of being overhyped!" Ding Lei believes that blockchain itself is a technology that has no issues and can solve many problems, with a rich and broad application scenario, but currently, there is excessive hype around blockchain!

360 founder Zhou Hongyi stated, "The blockchain that has been hacked proves that it also needs security protection!" Zhou Hongyi has publicly expressed to reporters that many exchanges and wallets have emerged, and security incidents have occurred, resulting in the loss of virtual assets, which precisely indicates that blockchain technology needs security protection.

From such remarks, it is clear that Zhou Hongyi has certain concerns about the security issues of blockchain exchanges. Among the leading exchanges, only the ZB exchange has not experienced any security incidents in seven years, while other exchanges continue to be troubled by security issues.

Innovation Works CEO Kai-Fu Lee: "I have withdrawn from all blockchain 3 o'clock groups." At a small media event during the 10th GMIC Great Wall Conference in Beijing, when someone mentioned whether artificial intelligence and blockchain could be combined, Innovation Works founder Kai-Fu Lee grabbed the microphone and said, "I have already withdrawn from all blockchain 3 o'clock groups."

Zhu Xiaohu, managing director of Jinsha River Ventures: "The blockchain bubble will definitely burst this year. I have not invested in any blockchain projects, nor have I invested in mining companies."

Tang Yan, founder of Momo: "What blockchain? Don't look for me with these coins! Our business is currently quite healthy, and we have no motivation to get involved in these."

From the current attitudes of domestic tycoons towards cryptocurrencies and blockchain, it can be seen that from group buying to e-commerce, and then to O2O and new retail, they are all trying to enter the blockchain industry. However, their views on cryptocurrencies like Bitcoin vary; apart from Meitu, no other companies have announced any plans to purchase cryptocurrencies.