How a new coin launched by the Chinese crypto community soared to $600,000 each in just one day
If you think the blockchain industry is like the Wild West, then the blockchain industry in China is a chaotic ‘Westworld’ driven by insanity and greed. What I just experienced is simply one of the loony tales among many taking place there.
I was born and raised in China. I came to the US for my education, then stayed on to become a financial TV journalist after graduating from NYU, and joined Reuters TV in New York in 2010. I first heard about bitcoin in 2011. I took an immediate interest, and, since then, I have been watching its evolution and that of the blockchain industry that the bitcoin spawned. About a year ago I started a documentary series project called “Next: Blockchain” （The first episode is on Amazon Prime now). Along the way, I have traveled to many countries around the world and interviewed over 70 prominent figures in the industry, among them, Jeff Garzik, Matt Roszak, Jihan Wu, Tim Draper, Vitalik Buterin, Joseph Lubin, Roger Ver and Jed McCaleb. Meanwhile, I have become quite involved with blockchain communities, especially in China.
In China, if you want to build a community, first, you must master how to leverage WeChat, a chat app developed by the country’s internet giant Tencent. People use WeChat to manage communities. With WeChat you can create a chat group with up to 500 people. Currently I am invited to multiple WeChat chat groups every day. I have already lost track of how many groups focused on the blockchain that I have in my WeChat account. Not only are the number of such groups growing at a fast clip, they are also become an integral component of the business. There is software that has been developed just to manage the massive WeChat groups. Many startups are offering marketing and PR services among WeChat blockchain communities. It comes to mind that one company claims to reach over 200,000 groups. No doubt WeChat is where things are really happening.
In China, there are two separate and distinct circles within the blockchain industry, lian quan or “chain circle” and bi quan or “token circle”. The first one is more about developing blockchain technology and the other is about issuing, mining and trading tokens. A lot of people will argue that you cannot really separate the 2 topics, but, in China, the line is clearly defined. Guess which circle is more vibrant? It goes without saying, it is the token circle. Not only because this circle has a longer history, stretching back to the early days of bitcoin but also because it is closer to the “money”. Members of the chain circle are, for the most part, highly educated, with a background in finance and tech, while those joining groups within the token circle come from a wider mix of backgrounds and are more “grassroots”.
I happened to join one group called Aisi earlier this year. Aisi is considered one of the oldest chat groups within the token circle. The key person in this circle has taken on the handle Chongge (a loose translation being “Big Bro’ Insect”). Chongge was among the first group of bitcoin believers in China. Chongge was born in the coastal city of Wenzhou and made his first fortune selling computer hardware. In 2013 he discovered bitcoin and started a company called Yibite, which published a free bitcoin magazine, developed a mining machine and operated an exchange.
They would give away bitcoin along with every copy of the magazine, sometimes as much as a whole bitcoin. That is why sometimes people within the community joked that Yibite is the world’s most expensive magazine. If the entity would have survived, its evaluation would likely be hundreds of billion dollars today. However, Yibite couldn’t survive the winter of bitcoin and ceased operations at the end of 2015. Yet, Chongge remains very active in the token circle and has been involved in investing since then.
Aisi WeChat group was founded by Chongge in 2013. Many prominent figures in China’s cryptocurrency world are among its members: Star Xu, Bo Shen, Chandler Guo and Sunny Lu. In Aisi, there is no limit as to the range of topics. You can find jokes, selfie videos, photos of food and travel, and, of course, a plethora of ideas about tokens. Members don’t only consider the chat group as tools of their trade and investment activities but as an integral part of their life. Chongge is the true soul of Aisi. He leads the discussions and sets the rules (and, yes, most chat groups have community rules that are strictly enforced). Aisi is also one of the hardest groups to keep up with as it is so active. On average, 2000 to 4000 new messages will flow through each day. I remember I went through a super busy week and didn’t get a chance to check WeChat for a full five days. In that short time frame, Aisi group had accumulated over 40,000 messages.
On June 1, our documentary team organized a meet up event for our audiences. One of attendees mentioned that Cai Wensheng, a well-known Chinese angel investor and the founder of Meitu, had issued a new token via a WeChat chat group that same day. There were only 500 in total, matching the number limit for a WeChat group. The attendee said that the price of one token had already reached about 4 million yuan, roughly USD 600,000. You could only get into the group if you paid the crazy price tag. He mentioned the chat group’s name: Aisi. I must admit I was shocked when I heard that but I was also immediately suspicious. Is this the same Aisi of which I am a member? First, I quickly jumped online and I did find a lot news talking about the same story that the attendee had related. Then I checked my WeChat account. I was relieved to find out that I was still in the group even I hadn’t paid that crazy price. The whole Aisi group were talking about Aisi token but a bit different from the news i read.
Another thing we must get used to if you want to fit into the blockchain circle in China is the problem of fake news. It is everywhere. Everybody complains but no one is doing anything about it. I knew I needed to get to the bottom of what really happened at Aisi. According to what I could discern from the endless chat history and the member organization chart, Cai is in the group but the key person is still Chongge. Several days prior to the token offering, Aisi members had come up with the idea of issuing a token for the group. Many members expressed their support and a group consensus was considered to have been achieved. Chongge took action on that and decided the final plan. May 31 was selected as the one-day window to submit the member’s imToken ETH address. Only those who submitted the info on that day were eligible to receive one Aisi token at no cost. The idea was one member one token. That is why it was limited to 500 in total. On Jun 1, the Aisi token offering was completed and listed on the exchang (VVBTC）. I tried to get my token. It was not so much because that big price tag was attractive as I was quite doubtful as to whether the Aisi token could be easily liquidated. I was nevertheless quite curious about how the whole affair would play out. However, I missed out on the submission window as I was busy with interviews the entire day. My token is in a foundation now.
According to Chongge, 2.1 tokens had been sold as of Jun 2. The number of members in the Aisi group dropped from 499 to 496 since Chongge hasn’t set the rule of including new Aisi token holder. One Aisi was sold for 1 million yuan, another for 50 bitcoins and 0.1 of one token for 100,000 yuan. According to a screenshot shared by Chongge, the price of one token had reached 3.86 million yuan on Jun 2, meaning that the valuation of all the Aisi tokens is roughly 1.93 million yuan (approx. USD 300 million) without any assets backing it up and no utility except as a proof of membership in this exclusive group.
Yet, the discussion within the Aisi group remains intense. Members have been discussing the rules for introducing new token owners into the group, the logo, the future strategy, how to prevent fake news about Aisi token circulating around , the consensus mechanism and many other related issues. Even though members have kept on emphasizing the importance of consensus yet no voting system or set of consensus rules is in place. Several members have jumped on the bandwagon to initiate new projects based on the Aisi token including charity crowdfunding for a member’s sick dad. In less than one day, copycats had surfaced. Some members have posited that they have started a whole new way of issuing tokens. They have taken to calling it IGO or Initial Group Offering. Things are continuing to progress at a speedy pace, making it hard to keep up. In Chinese, a new expression is already starting to make the rounds: One day in the token circle, one year in the real world.
I don’t know how much longer the Aisi token can maintain its sky-high value but I did admire the way that they tokenized the value of access to the community and the exclusiveness which is hard to measure in the world outside of blockchain. The right incentive can motivate people to be more creative than we can imagine and that is the beauty of Satoshi Nakamoto’s original design for bitcoin. I am not sure to what degree the Aisi members believe in cryptocurrencies and the blockchain. However, that may be a moot point. Incentives are indeed a very strong force binding people together and making things happen regardless of their belief. One member wrapped it up very neatly when he told me: when there so much hot money rushing in, try to make as much money as possible.