Understanding Fractional Bitcoin | Q&A

1. Is there a safe financial channel for Ethereum?

In the current crypto ecosystem, I think if we talk about safe financial channels, it would either be lending ETH to lending applications (like AAVE, Compound) or participating in Ethereum staking. However, the returns from both are not very high.

I believe that in the current crypto ecosystem, we mainly earn from the price differences of assets. In comparison, this return is not that important.

Therefore, I mainly keep most of my ETH in a cold wallet.

2. About Fractional Bitcoin

If my understanding is not significantly off, I think fractional Bitcoin is somewhat similar to sidechains, and in terms of security, it does not differ much from other Bitcoin second-layer expansions.

It still addresses the old problem: the performance expansion of Bitcoin.

However, I think among the many existing Bitcoin expansion solutions, although each has its own criticized issues, they can already meet the performance expansion needs of current applications.

To make a somewhat inappropriate analogy: developing an Ethereum virtual machine hooked onto the Bitcoin mainnet using the most rudimentary method (in fact, many existing popular solutions do this), this architecture is sufficient to meet the current applications' performance needs for Bitcoin.

But what does that change?

It still does not solve the most significant contradiction in the Bitcoin ecosystem today: the lack of applications.

It's like we don't lack highways but rather the cars running on those highways, yet the current ecosystem is still trying to build more advanced and safer highways.

3. The Collaboration Ability of ZK Coin Projects

If the ZK coin here refers to zkSync, then I think currently this project seems to have a rather average reputation.

Its last airdrop received considerable negative feedback from the community. Moreover, after the airdrop, its TVL almost dropped sharply. This indicates that the project's collaboration ability is quite average.

At present, among the Ethereum second-layer expansion projects, only Arb, OP, and Base are performing the best.

4. If the performance of Ethereum and its second-layer expansions continues to improve and reaches a certain critical point, some existing application scenarios may undergo a qualitative leap.

To some extent, I believe this situation is quite possible. This has happened in the internet field.

When reading the history of past internet development, I once read that around the year 2000 in the United States, there were entrepreneurial teams proposing various online stores and online marketing, but those practices failed at that time.

It wasn't until several years later, when Taobao flourished, that we saw those imagined models from the United States realized by countless small and medium-sized businesses in China's e-commerce sector.

Looking back at the current stagnation of the Ethereum application ecosystem, I think perhaps the best approach is indeed to wait and observe. Maybe some of the seemingly insignificant small applications and inventions today are the seeds of future major disruptions and innovations.

5. On August 19, the Supreme People's Court and the Supreme People's Procuratorate held a joint press conference to release the "Interpretation on Handling Money Laundering…", listing "virtual asset" transactions as one of the methods of money laundering.

In fact, using virtual assets for money laundering has always been illegal, whether in the present, past, or future, and this is no exception in any country around the world.

However, in different countries, the interpretation and enforcement of laws vary significantly, which can lead to some unnecessary troubles.

Specifically regarding our country, I have always said that we must abide by domestic laws when in the country, and if in Hong Kong, we must follow Hong Kong laws.

In my last Twitter exchange, I specifically replied to a reader who asked whether it was necessary to open a bank account in Hong Kong. My intention was to hope that we could handle crypto assets in a legal manner.