Romeo Wang: If Hong Kong wants to become the center of Web3.0 in Asia, the first thing it needs to do is embrace Bitcoin, which is the best spokesperson for Web3.0.
Whenever I’m asked about my job, I always have to tentatively explain that I’m in the Web 3.0 business.
“Web3? Web3 what?…”
So I changed the question, “Bitcoin, you’ve heard of it, right?”
“Oh, Bitcoin, I’ve heard of that.”
Finally, our conversation was upgraded from talking at cross purposes to communicating on the same channel.
Web3.0, which sounds like a mysterious future black technology, is actually based on blockchain technology and aims to give users full control over their data and the corresponding digital assets. It is different from the Internet we are familiar with, which is dominated by giants. The difference between the so-called "readable and writable" information Internet and the "ownable" value Internet. This has become a fashionable topic in the past few years. Although Web3.0 sounds like a new concept that has been forced into our minds, it has indeed become popular in niche circles.
In fact, regarding Web3.0, the core point in my book "The Era of Web3.0" published in July 2023 is: Don't worry about what Web3.0 is, just like no one will ask what mobile Internet is now. The key is to understand the scope of Web3.0 and how it is different from other technologies.
As Hong Kong, China announced in April that it had approved the listing of virtual asset ETFs, friends who had not been in touch for a long time began to consult me on social media. To put it simply, in Hong Kong, you can buy Bitcoin just like buying funds!
Finally, the concept of Web3 has been popularized by Bitcoin.
Bitcoin has experienced a series of major events in the past year. Let's try to follow and interpret them from two different perspectives. First, from the perspective of Web3.0, we have to say that the Bitcoin ecosystem has developed into a mainstream narrative. Among them, the launch of the Ordinals protocol allows the issuance of non-fungible tokens (NFTs) on the Bitcoin blockchain, which marks an innovative way to issue assets; the rise of the BRC20 token standard provides a new way to issue assets; the rapid development of Layer 2 technology expansion solutions and Bitcoin staking protocols has brought significant improvements to the scalability and security of the Bitcoin network; Bitcoin's fourth halving event is also an important milestone in its history. If you feel confused after reading these words, then it is self-evident why Web3 cannot be understood by more people.
But if we look at it from another angle, based in Hong Kong, a mature financial center, from the perspective of digital assets and financial investment, the most eye-catching development of Bitcoin in the past year is the Bitcoin spot ETF approved by the United States and Hong Kong. This ETF product is a securitization form of Bitcoin physical assets. It provides a new investment channel for Bitcoin, a new underlying asset, in a market-standardized way that is familiar to the public. Does this make you feel that Bitcoin has suddenly become more intimate and easier to understand?
The birth of Bitcoin can be traced back to the Bitcoin white paper released by Satoshi Nakamoto during the financial crisis in 2008. Over the past 16 years, Bitcoin, a cryptocurrency co-created by anonymous technology geeks, has experienced countless death predictions and scam accusations. Until January 10, 2024, the SEC officially approved the application for a Bitcoin spot ETF, and Bitcoin finally transformed from an "alternative asset" to a "mainstream asset."
Although this is not the world's first Bitcoin spot ETF, as early as February 2021, the Bitcoin spot ETF Purpose Bitcoin ETF issued by Purpose Investments was listed on the Toronto Stock Exchange in Canada. But the significance of this time is obviously very different, because it is the formal acceptance of Bitcoin as an asset class in the capital market where global investors compete in the world's financial center. According to Bloomberg data, the first-day trading volume of the US spot Bitcoin ETF reached US$4.6 billion. Only three months after listing, the net inflow of funds exceeded US$10 billion, becoming the most successful case in the history of US ETF issuance.
The launch of virtual asset spot ETFs in Hong Kong is both reasonable and a little unexpected. On the one hand, the Web 3 Carnival Conference initiated by Hashkey Group, the most influential compliant virtual asset service platform in Hong Kong, in early April needed heavy news to support the scene; on the other hand, Hong Kong has innovatively introduced an in-kind subscription and redemption method, allowing investors to directly use virtual assets such as Bitcoin or Ethereum to trade ETF shares, which undoubtedly provides investors with more flexibility and may also promote the compliance and mainstreaming of cryptocurrencies. It is particularly worth mentioning that Hong Kong is the first in the world to launch an Ethereum spot ETF. This breakthrough is attributed to the central position of the Hong Kong Securities and Futures Commission (SFC) in the regulatory system. The SFC's clear regulatory framework provides strong support for Hong Kong to respond quickly to market innovation. In contrast, the US Securities and Exchange Commission SEC and the Commodity Futures Trading Commission CFTC still have differences on the securities characterization of Ethereum and the division of regulatory responsibilities. This regulatory uncertainty has temporarily hindered the US's progress in this field.
Hong Kong has made significant progress since the Hong Kong Fintech Week announced its embrace of Web 3.0 in October 2022. Although Hong Kong may not have a clear advantage from the perspective of technological innovation, regulators in the financial services sector in Hong Kong have introduced a series of policies to provide a clear regulatory framework for the virtual asset industry. With the rise of compliant virtual asset professionals and professional services, Hong Kong's development trend is undergoing a gratifying change.
In the past two years, the Hong Kong securities market has encountered unprecedented challenges, with liquidity and valuation levels falling sharply and the fundraising function seriously damaged. The market was even once jokingly called "the ruins of a world-famous financial center", which reflects the current difficulties faced by the Hong Kong capital market. Although we cannot be sure that virtual assets can completely revitalize the Hong Kong market, they can at least be considered as a means. More importantly, this represents a proactive attitude.
At a time when Chinese concept stocks and Internet companies are generally weak, the introduction of virtual assets as an emerging asset class is likely to produce a "catfish effect" in the capital market, stimulate market vitality, and attract investors' attention. The capital market is essentially a flow economy that requires capital flow, asset flow, and more importantly, the gathering of popularity and attention.
According to Bitcoin Insider, at the Bitcoin Asia Conference that just ended in Hong Kong, Harvest Global, as one of the issuers of the first virtual asset spot ETF, revealed a plan to open its virtual asset ETF fund to mainland Chinese investors through the Shanghai-Hong Kong Stock Connect. Although this news has not been officially reported by the mainstream media or confirmed in any official form, it has triggered a variety of interpretations and even more radical discussions. This emerging asset class has obviously aroused the enthusiasm and attention of investors, and only with attention can it attract more funds.
As global funds bet heavily on future trends, the market value of the "Big Seven" including Microsoft, Nvidia, and Tesla has exceeded 12 trillion US dollars. At the same time, Bitcoin has become the ninth largest asset in the world in terms of market value, surpassing Tesla and ranking behind gold, Apple, etc. Virtual assets represented by Bitcoin are becoming the new favorite of emerging assets outside the "Big Seven". Believe it or not, Cathie Wood's prediction for Bitcoin in the "Big Ideas" report in 2023 is very optimistic. She predicts that by 2030, the price of Bitcoin may even exceed 1 million US dollars.
Finally, let us end this article with one sentence: If Hong Kong wants to become the center of Web3.0 in Asia, the first thing it needs to do is embrace Bitcoin. Bitcoin is the best spokesperson for Web3.0. One sentence is worth ten thousand sentences!
(The author Romeo Wang is the co-founder of Uweb, a platform focusing on Web3.0 education, training, incubation and investment, headquartered in Hong Kong. The author has previously served as senior vice president of Hong Kong blockchain listed company Xinhuo Technology, former president of Greater China for Euromoeny Institutional Investor, and co-founded Caixin Media Group in 2009.
