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On July 27, local time, at the Bitcoin 2024 Conference held in Nashville, Tennessee, the former US President and Republican presidential candidate for the 2024 US election, Trump promised in his speech to list Bitcoin as a strategic reserve asset. Trump claimed that the US government is one of the largest holders of Bitcoin, "owning nearly 210,000 Bitcoins, accounting for 1% of the total supply", and said that if elected, he would continue to hold all Bitcoin currently owned or acquired in the future, "which will actually serve as the core of the strategic national Bitcoin reserve." In addition, Trump also revealed that he was "the first major party candidate to accept cryptocurrency donations." He claimed that he had raised $25 million, a large part of which was Bitcoin, cryptocurrency and other forms of assets. Trump's attitude towards cryptocurrency has undergone a 180-degree turn. During Trump's previous administration, he had made it clear that he was "not a fan of cryptocurrency" and described the value of Bitcoin and other cryptocurrencies as "based on thin air." In recent years, his attitude towards cryptocurrency has become increasingly "friendly", and he has also launched his own NFT project. This time, he said in a public speech that he would list Bitcoin as a strategic reserve asset for the United States. Previously, there was a view that Trump's current emphasis on cryptocurrency is in preparation for the collapse of the US dollar.

Screenshot of Trump's speech at the Bitcoin Conference

In this regard, Xiong Jie, director of the Global South Research Center at the Institute of International Communication of East China Normal University, believes that this move may be more due to Trump’s current election needs, perhaps to attract support from voters who hold cryptocurrencies.

Bitcoin has no mechanism to regulate the market, and its decentralized design mechanism also determines that it cannot become a currency, let alone support the credit of the US dollar. If the international status of the US dollar declines in the future, a large position in Bitcoin will not play a positive role.

Xiong Jie believes that data assets, as the fifth type of production factor, will become the basis of credit and may be a major breakthrough in the history of economics, and points out that countries in the "global south" such as China may have advantages in this regard. On the contrary, the United States will miss this round of progress due to its institutional disadvantages.

The following is the transcript of the conversation between Guanchazhe.com and Xiongjie:

Observer.com:What do you think of Trump’s high-profile remarks in support of Bitcoin?

Bear Festival:

After the last round of unlimited quantitative easing in the United States and the "money-throwing" during the epidemic, many Americans took the money and bought cryptocurrencies. This may be due to psychological factors, because after all, it is "money blown by the wind", and it is understandable that people with a strong gambling nature would invest it in a high-risk market.

I saw a data that 40% of American adults own cryptocurrencies, and 60% of them hope to increase their holdings to own more. Harris (Vice President of the United States, the Democratic Party's new presumptive nominee after Biden's withdrawal from the election)'s attitude towards cryptocurrencies is still unclear. Intuitively, I think this may be a way for Trump to win votes and directly add a point in the minds of 40% of people.

The second point may be the issue of campaign funds. Previously, there was a view that if Trump is elected, he will make big moves in cryptocurrency in preparation for the collapse of the US dollar in order to continue financial development. But I don’t understand it. For example, let’s imagine that the US dollar interest rate is lowered, and then a lot of funds withdraw from US Treasury bonds, the international status of the US dollar is reduced, and the diversified currency structure is accelerated. But what does this have to do with heavy positions in Bitcoin? So I think it is more out of his (Trump’s) current election needs.

At the Trump Bitcoin Conference, the main venue, which originally had about 8,000 seats, attracted about 10,000 people due to Trump's appearance on the third day. BlockBeats

Observer.com:40% of American adults own cryptocurrency, which is a very interesting phenomenon. Previously, you mentioned that we need to understand the credit basis of cryptocurrency and its relationship with the US dollar. If the credit of a cryptocurrency comes entirely from the US dollar, it is just equivalent to a payment channel for the US dollar, and it is the credit of the US dollar that supports Bitcoin.

On the other hand, if data is a factor, is it a viable option to anchor cryptocurrency to data and computing power? Is it possible for Bitcoin to become the externalization of the data factor and in turn become a credit support for the US dollar?

Bear Festival:How can Bitcoin or other cryptocurrencies achieve this goal? Because it has no mechanism to regulate the market.

Bitcoin was originally designed as a decentralized mechanism. In theory, if someone controls more than 50% of the computing power, it can be manipulated into a centralized mechanism, but in reality it is very difficult to achieve. In addition, the two stablecoins, USDT and USDC, are anchored to the US dollar. In fact, their value will be affected by the fluctuations of the US dollar, and they also cannot play a role in maintaining the voice of the US dollar in another way.

On the other hand, the design mechanism of Bitcoin determines that its total amount is limited and its supply is constantly decreasing. It is actually an "antique". Such a design mechanism determines that it cannot become a currency.

The total number of Bitcoins is 21 million, which are produced in the form of "mining" rewards. The figure shows the rewards after the past four halvings.

Observer.com:In his previous speech, Academician Sun Ninghui compared data elements to the petroleum and petrochemical industry: data is similar to crude oil and needs to be collected and "mined" in a certain way; then, data mining, refining, storage and further development can be compared to various links in the petrochemical industry chain, especially in the AI ​​era, data can be refined into different industrial models to improve the efficiency of the entire industry and social operation efficiency. In such a long industrial chain, each link is indispensable.

As we have seen, the direct application of large models on the C-end is currently difficult to close the loop. On the contrary, on the B-end, in various industry scenarios, the "general and specialized integration" of artificial intelligence models is in full swing.

From this perspective, the West lacks the entire industrial chain. It not only lacks the implementation scenarios of the real economy, but also lacks other related infrastructure. Therefore, the market value of today's leading technology companies is based on the imagination of monopolizing a certain link in the data industry or artificial intelligence, but this is different from the path of combining virtual and physical in China or the global South.

So, when you mentioned how Bitcoin supports the US dollar or the existing Western economic system, the specific link may not exist because it is missing.

Bear Festival:I am increasingly skeptical about whether the ruling elites and capitalists in the United States really have a long-term plan. To turn data into a new oil and petrochemical industry requires a long industrial chain, which means a large amount of infrastructure investment and an extremely long payback period, which may be unacceptable to the West.

For an economy to make a breakthrough in the digital economy, it must go through a process of accumulation and development and do a lot of basic work before it can achieve a breakthrough in the digital economy.

For example, among the "Seven Sisters" of US technology stocks, who is working hard on the basic work? Perhaps Nvidia is doing basic work in comparison, but this is their limit. The US government has been talking about infrastructure construction, but I have not seen any actual action.

Observer.com:How do you think data assets will become the credit basis of legal currency?

Bear Festival:The most intuitive thing is to regard data as the fifth production factor. Data is generated in human production and life activities. In the past, data could not be used or had only a very small scope of use. Now it has a wider scope of use. Data is a new type of production factor. And the new production factor needs to be priced, processed, etc. From the perspective of the credit basis of legal currency, we now have an additional type of production factor.

Whether something is an asset ultimately depends on whether it can be included in the balance sheet. The "Interim Provisions on Accounting Treatment of Enterprise Data Resources" issued by the Ministry of Finance in 2023 provides clear guidance on the accounting treatment of data assets. This is an inevitable result of institutional innovation after technological innovation.

In 2023, the Ministry of Finance formulated and issued the "Interim Provisions on Accounting Treatment of Enterprise Data Resources". The picture shows the relevant person in charge of the Accounting Department of the Ministry of Finance. Ministry of Finance website

Observer.com:If both the West and China want to use data assets as a basis for their respective credit, who will succeed? Who will benefit more?

Bear Festival:I think this is good for the "Global South" and bad for the U.S. Big U.S. Internet companies have never had data assets on their balance sheets because they are unwilling to show them.

If a company has a clear display of how much data it has, how this data is valued, and how much it is worth, it may mean that 20% of the company's market value should be attributed to data assets. Then users will have questions: Whose market value is this 20%? The will of the US state actually represents the will of the bourgeoisie. The entire bourgeoisie is unwilling to clearly measure data assets, because after measurement, Internet users will feel that the value of these (data assets) is created by them, but all taken away by capitalists.

This is actually beneficial to the Global South because they do not have control over the data, which is basically controlled by American Internet companies. This will give them an inspiration that data itself has economic value.

Many countries are now following the European GDPR (General Data Protection Regulation), one of which is that data must be stored within the country. However, simply storing data within the country has no value for the economies of these countries. As for how to realize economic value, there are many lessons to learn. Taking my country as an example, data assets are written in the asset standards of state-owned enterprises. With the expansion of data volume and the continuous innovation of data usage, the appreciation of digital assets is equivalent to the appreciation of state-owned assets, and finally the users who created the data are given back through state-owned enterprises. This path is a path that the global South can imagine.

Data assets, as a new factor of production, may be a major breakthrough in the history of economics. However, I believe that the United States will find it difficult to keep up in this direction due to its institutional shortcomings.

First, there is very little attention and comment abroad on the direction of data as a new production factor, and few people talk about it; second, even if we talk about it, they will discredit us, and their views distorted by ideology will cause them to miss this major economic progress.

Missing this round of progress is caused by their institutional disadvantages. What kind of subsequent impact will it cause? At least one possible direction is how to use data to benefit the whole society. Because they are constrained by the system, they must have private enterprises, and cannot talk about state-owned enterprises or capitalization. The government cannot ask private enterprises to spend money to serve the society.

The limitations of their system make it impossible for people to imagine these things, and in the absence of such imagination, they will also be constrained in their scientific and technological progress.

For example, what Xiongan New Area is doing now is that the data of the entire city is gathered together, and then owned and operated by state-owned enterprises such as Xiongan Group. This will actually give birth to many imaginative new application scenarios. For example, what can be done by combining traffic data and security data?

For example, there is an early warning mechanism for health monitoring of the elderly. If the water meter of an elderly person has not been touched for four hours at home, an early warning will be issued. If it is confirmed that there is indeed a problem, an ambulance will go there immediately, and the traffic lights will be green all the way to allow the ambulance to arrive as soon as possible.

This example actually involves data from several fields. Only after forming a linkage can this task be accomplished. If there is no idea of ​​using this data as an asset to benefit the entire people, this task will be difficult to achieve.

The "Xiongan Night" drone show in June this year China Xiongan official website

The scenarios we can imagine now are actually still very rudimentary. After entrepreneurship was identified as a new production factor in 1890, it had a huge impact on the entire world. After data became a new production factor, will it give rise to a whole new discipline system? We can't imagine it now, but I think it is very likely. This is my understanding of new production factors.

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