He Doesn't Understand Technology, but He Hopes Bitcoin Will Make Him a "Leader": His Past 5 Years | 2018 Stories No. 2

Zhou Cheng's life looks like a string of accidents: he happened to buy Bitcoin, he happened to meet a Bitcoin expert. But he tied those accidents together and decided to turn them into "inevitability."

"Recording the actions and everyday lives of ordinary people," Walt Harrington said, "there is far too little of that in our trade. Such stories record how people act, what drives them, what they feel, believe, resent, hope for, fear, achieve and long for as they search for meaning and purpose in their lives. They help people understand where they stand in the world."

He once wrote a story: "The teenage boy in this family had killed himself two years before. I tried to explain to them the kind of story I wanted to write, how deep I wanted to go. The father listened for a long time, and finally said, 'So you want to know what I'm thinking when I pray alone in a quiet room.'"

Put most simply, Harrington said: how do people live, and what do they value?

The lives of each of us make up this world.

"2018 Stories" is a new column from QDaily.

"I'm going to be a billionaire one day."

Zhou Cheng always believed Bitcoin would rise, but he never expected it to rise so fast. When he was interviewed in October 2017, Bitcoin traded at $5,000 a coin, and he predicted it would reach at least $10,000 within a few years. Two months later it was closing in on $20,000. This peer-to-peer digital currency, created by Satoshi Nakamoto, has followers all over the world, and Zhou Cheng is one of them. Unlike most currencies, Bitcoin is not issued by any monetary authority: it is produced through massive computation according to a fixed algorithm, and its supply is capped permanently at 21 million coins.

Even now Zhou Cheng cannot hide his pride when the prediction comes up. "A lot of the so-called experts in the crypto world won't give you a precise number. They just point you in a general direction, because they're afraid of being wrong," he said. "Turns out I called it pretty well."

But Zhou Cheng is no expert at all. He is a long-term holder of several hundred bitcoins, a restaurant owner, the son of a Hebei businessman, a meat-eating Tibetan Buddhist, an amateur of philosophy and history, and a 26-year-old from Qinhuangdao who "in practice only has an elementary school education."

Or, as Yao Kuan puts it — a friend past fifty whom the age gap never troubled — he is "the young master among young masters."

1

A full year has passed since that "golden pronouncement," and Zhou Cheng's memory has flattered his younger self. What he actually said at the time was: "Bitcoin can still go higher. Ten thousand dollars is no problem. But the trend overall will flatten out. The window for speculation is already gone."

That turned out to be exactly the best moment to speculate. The boom and crash that followed were nowhere in Zhou Cheng's plans. On December 16, after two months of frantic climbing, Bitcoin's price hit an all-time high of $19,650. "It's like picking money up off the ground. My assets are appreciating faster than a printing press," Zhou Cheng messaged the reporter on WeChat, thrilled. "Everything this year has been a dream. The happiness came too suddenly."

The dream lasted less than a month. In January 2018 the price swung down, giving back almost everything gained since the previous October. Measured against the December peak, Zhou Cheng's holdings had shrunk by $3.3 million.

At the top, Zhou Cheng sat on all 250 of his coins and sold none. The sudden happiness threw his body out of balance, and night after night he lay awake watching candlestick charts. Part of him thought "the rally is too crazy, a pullback could come soon"; the other part thought "Bitcoin's potential goes beyond this, it will go higher."

Several friends who had bought Bitcoin alongside him were just as excited. Senli, a hairdresser, met Zhou Cheng in 2015; after cutting his hair for a year, Zhou Cheng brought up Bitcoin. It was the first Senli had heard of the strange thing.

That was 2016, when the price still sat around 3,000 to 4,000 yuan. Senli didn't dare buy. He watched from the sidelines for a year, until the price reached about $10,000 in 2017, then put in tens of thousands of yuan at once and caught the greatest bull run yet, alongside Zhou Cheng.

December 2017, and Qinhuangdao was bitterly cold. Overjoyed, Zhou Cheng drove Senli and a few other friends who traded crypto to Beijing for a good time. Music on, heater on, they schemed about eating the most expensive food, having the best time, spending the most money. The car held a discharged soldier, an entrepreneur, a hairdresser, a writer who ran his own social-media account, people from all sorts of trades. Outside the wind cut like a knife; inside the mood blazed. They argued about blockchain, Bitcoin and EOS, one phone watching the candlestick chart, another calculating their net worth.

Before the Chinese government shut down the country's Bitcoin exchanges in September 2017, China was without question the world's center of digital currency trading. Data from bitcoinity.org shows that in 2016, yuan trades made up 98% of global Bitcoin volume. In 2017, according to Goldman Sachs data, initial coin offerings (ICOs) raised $1.25 billion in total for the year, across 92 successful fundraisings carried out through virtual currencies such as Bitcoin and Ether. Sixty-five of those ICOs took place in China — 70% of the total — raising $400 million, or 32% of all the money raised.

In 2017, more than 100,000 investors in China took part in ICOs, and the sums they raised exceeded even the traditional venture capital market. Many of these ICO projects were simply frauds: they published fake white papers to lure investors who understood nothing about blockchain into buying their tokens.

Zhou Cheng never took part in an ICO, and he had not sold a single bitcoin in three years. He is a committed long-term holder.

The Global Bitcoin Development Report, published jointly by Tsinghua University's PBC School of Finance and Huobi, found that 80.77% of Bitcoin users trade for short-term profit, making money on the spread; only 13.81% hold Bitcoin long-term as a hedge.

Zhou Cheng doesn't sell because he believes the price will keep climbing. In 2017 Bitcoin gained an unprecedented 1,700%, which gave him confidence. "Bitcoin went up every day. Everyone was thinking about how they'd spend the money once they got rich," he said. He still misses the warm, hopeful mood in that car on the winter drive to Beijing.

Senli was thinking about buying a car around then. He told Zhou Cheng a Mercedes-Benz looked good; Zhou Cheng laughed and said he'd driven one of those years ago.

The truth is, Zhou Cheng had never been short of money.

2

"This Zhou Cheng, his family really is well off. Before he bought crypto, the life he lived was more young master than any young master's." Yao Kuan is 50 this year: square face, tall, a booming voice, an accent mixing Beijing and northeastern Mandarin. He likes joking with young people, and Zhou Cheng likes listening to him.

In the interview Zhou Cheng hinted obliquely that his "family's situation is decent," but he wouldn't say how big his father's business actually was. From the way he talked, it sounded as if his father had acquired at least two companies. After his parents divorced, Zhou Cheng, as the eldest son, was expected to make something of himself.

"I did let my parents down. I was rebellious in middle school in Qinhuangdao, I didn't get along with the teachers, and in the end I couldn't keep going," Zhou Cheng said. His family sent him to Singapore for middle school; he didn't graduate there either. They sent him to a community college in the United States; he dropped out of that too.

In 2013 a short trip home became permanent residence. Zhou Cheng gave up his studies in America altogether and stayed idle at home, gaming at night and sleeping by day. When he wanted to go out, his mother handed him a fistful of cash. He stuffed it into the car's glove compartment, called whichever friend was free, and killed a whole day.

That year he found a dark web market called "Silk Road." "I wanted to buy some diet pills on there, and the site told me it would be cheaper if I paid in Bitcoin."

That was where Zhou Cheng first heard the word Bitcoin. He left the dark web, typed the term into Taobao, and found people offering to buy Bitcoin on your behalf. He placed an order, received a folder, and, following the instructions, wired the money to the other end on the dark web.

"I was obsessed, spending whole days poking around the dark web." Zhou Cheng found that paying in Bitcoin was a mainstream way of doing business there, and that got him interested — at the time he was shut in at home playing Warcraft all day. He looked up its origins on Baidu, asked his family for tens of thousands of yuan, and bought a few coins.

In early 2013 a single bitcoin still hovered around $100. Less than six months after Zhou Cheng bought in, the price had climbed to $1,000, which struck him as absurd. "I asked a few veteran stock traders I knew: is there any legal investment in this world that can double your principal? They all shook their heads and said it was impossible." The more he thought about it, the stranger it seemed. "I got a bit scared, so I sold everything I had."

That is how Zhou Cheng made a pile of money without quite understanding what had happened. Over the next year he went back to his old life — eating, drinking, gaming, quietly resisting what his family wanted of him. Before long the money was gone.

"When I sold out back then, I figured this Bitcoin thing was probably a Ponzi scheme, and I thought I'd take the one win and stop," Zhou Cheng said. Nearly a year later, with his relationship with his father at its lowest point and his own pockets empty again, the idea of going back to it came to him.

"From then on I read up seriously on blockchain and Bitcoin, and I came to admire the ideals and ideas it stood for." At the end of 2014, Zhou Cheng bought 250 bitcoins at an average price of $350.

After that he bought Litecoin and Ether on and off, putting in several million yuan altogether.

"I tried to explain it to my family, but my mom couldn't grasp what Bitcoin was. To this day she thinks I bought pre-IPO shares," Zhou Cheng said. "But she didn't want to get too involved either. She figured that if I lost it all, I'd write it off as tuition."

In 2014, figures from the National Bureau of Statistics put the average annual wage at 56,300 yuan for employees of urban non-private units and 36,300 yuan for employees of urban private units. For most of the people who, at the end of 2017, regretted not buying Bitcoin earlier, what held them back may not have been timing.

3

Soon after Zhou Cheng bought in December 2014, Bitcoin fell into a dismal 2015. For a whole year the price hovered around $200, and Zhou Cheng wondered whether he had bet wrong again. He started looking at other paths.

"My dad is a strict father." Zhou Cheng always looks a little uneasy when he talks about his family. "My money mostly comes from my mom. My dad and I have almost nothing to talk about."

In 2015, perhaps having played enough, Zhou Cheng wanted to use his father's connections to do something real. "I wanted him to line up some construction work for me. Back then my dream was to be a small-time contractor. But he wouldn't help me, no matter what." His expression turned resentful. "He'd rather help the guy who carries his bag than help me."

Yao Kuan, who has been at Zhou Cheng's side since he was a teenager, thinks the father's attitude stirred up the son's defiance: the obsession with Bitcoin that followed cannot be separated from his eagerness to prove himself to his father. "He had to invest in this Bitcoin thing for two reasons. One, his dad wouldn't help him. Two, he ran into that American."

The American Yao Kuan means is Tim Draper, head of the American investment firm DFJ (Draper Fisher Jurvetson).

On June 27, 2014, Tim Draper bought nearly 30,000 bitcoins at about $600 apiece at the U.S. Marshals Service's first Bitcoin auction, which made his name in crypto circles. In 2016 he came to China, interested in investing in a project at a company run by Zhou Cheng's aunt.

And so, through a connection several degrees removed, Zhou Cheng met Tim Draper. In a bare conference room his question was simple: is Bitcoin worth investing in?

In 2015, when most people had never heard of Bitcoin, the central bank had no reason to regulate it. Zhou Cheng's worry was not whether the government would recognize the asset; it was whether "more refined technologies like Litecoin and Ethereum would erode Bitcoin's position."

Tim Draper is firmly convinced Bitcoin will not be replaced. "Take internet domain names. Whether it's .cn or .org or .html, they're all suffixes, but they will never outsell .com, and no new suffix that comes along will outsell .com either," Tim Draper said. Zhou Cheng later translated the line into something with Chinese characteristics: "It's like housing on Beijing's Third Ring Road, Fourth Ring Road or further out. The build quality is better than on the First or Second Ring Road, but can the prices match?"

With Tim Draper's blessing, Zhou Cheng could not contain his excitement, and from then on he never sold another bitcoin. He called Yao Kuan, wanting to introduce them. Yao Kuan heard the gist of it and said, "Isn't this an American scam?"

"Listening to what that American told him was like listening to Pu Songling tell one of his Strange Tales from a Chinese Studio." Yao Kuan found it hilarious. "Isn't digital currency just a virtual thing? If numbers can be sold for money, what is the world coming to?"

"How can you believe this? Have you gone mad, or are you possessed?"

4

From 2014 to 2016, Bitcoin went through a long winter. The price drifted down and the number of new investors kept shrinking. Zhou Cheng held to Tim Draper's words and waited two full years without selling a coin.

In December 2016, helped by the halving of Bitcoin's block reward, Brexit, the U.S. presidential election and expansion into Asian markets, Bitcoin finally broke through $1,000. In January 2017 it surged to open the year, and by mid-May a single coin had passed $2,000.

Everything seemed to be getting better. Then, in September 2017, the sword came down.

Two big things happened to Zhou Cheng that September. First, the restaurant he had spent two years preparing finally opened. Second, China's central bank issued an announcement banning ICOs, the first public fundraisings of digital currencies. Soon after, the government closed every digital currency exchange in the country, and Bitcoin's yuan price fell from about 32,000 yuan to a low of 16,661 yuan, nearly cut in half.

Before that, because the price had climbed nicely through 2017, his family had gradually worked out what this apparently idle young master was actually doing. Regulation dropped him back into a chorus of doubt.

"A lot of people sent me article links on WeChat saying the digital currency situation in China was finished." Zhou Cheng said he did not believe the digital currency in his hands would become worthless because of one central bank announcement, but it was hard to explain that to his family. Some retail investors around him lost their heads, and those in a hurry to get out dumped their coins cheap in QQ and WeChat groups. The whole crypto world went through what felt like "a nuclear blast."

Feng Guangguo was an old hand who had bought coins alongside Zhou Cheng from the very start. From November 2013 he had accumulated more than ten bitcoins and over a hundred litecoins. When "Black September" came, he cleared out almost his entire stock at once and left the crypto world for good.

"I tried to talk him out of it, too many times. He wouldn't listen." Zhou Cheng thought it a waste. To Feng Guangguo, who is past fifty, Xinwen Lianbo — the state broadcaster's evening news — and the central government still carried far more authority than the friends around him. "Now he's off trading pyramid-scheme coins. I tried to stop him there too, no use," Zhou Cheng said. "It's a shame. A lot of people around me went astray like that, for no good reason."

A few months later the price rebounded sharply. Those who took Zhou Cheng's advice, kept their wallets shut and held rather than sold shared in that brief victory. Feng Guangguo was not in the car on the trip to Beijing.

As the money poured in, Zhou Cheng, who had never taken school seriously, began looking for reasons behind his sudden wealth. "Reading too much doesn't help. Ninety-nine percent of people read dead books." Sometimes he credited his eye for Bitcoin to his own grasp of society and history; other times he sighed that he was simply "lucky," that he had struck it big by chance.

Now Zhou Cheng puts 95% of his spending money into digital currency and keeps 5% for himself. Encouraged by him, Senli deposits the wages he earns each month at the hair salon into a digital wallet the way other people put money in a bank, keeping only a few thousand yuan to live on.

"Win or lose, this is the last gamble of my life. I doubt I'll start another business after this," Zhou Cheng said.

5

Zhou Cheng's restaurant is laid out entirely around the Tibetan Buddhist themes he loves, and it is rather grand. Most of the time, though, customers sit thinly scattered across the first two floors. Through all of 2018 the place roughly broke even, with thin profits.

He gets up in the morning, walks a lap of the restaurant, has the chef make a few dishes, offers a comment or two. In the afternoon he works out. In the evening he eats and talks with friends, either at his own restaurant or at someone else's. Then he goes home alone, checks the price of Bitcoin, gets into bed and endures insomnia until sleep comes.

In January 2018, Bitcoin fell from its peak. Not a small dip: a halving. Against the December 2017 high, nearly 70% of Bitcoin's total market value evaporated. And this time there was no bottoming-out rebound as there had been the year before; the price simply steadied, at around $6,000. The party was over.

By then Zhou Cheng was in too deep. "In 2018 my faith in digital currency has only grown firmer." He explained to his friends in the crypto world that, like stocks, it has peaks and troughs, and that over a longer horizon digital currency still holds endless promise. Once the peak has passed, it is actually a better moment to buy in.

"This state of mind is a lot like gambling, and I feel I have that kind of gambler's luck." Zhou Cheng did not slow down. He kept pouring money in, and he began actively recruiting the people around him — relatives, friends, neighbors, restaurant staff, all sorts. If digital currency were ever busted as a pyramid scheme, he joked, he would count as one of the ringleaders.

In March 2018, blockchain became everybody's subject overnight. WeChat Moments filled with explainers and lecture links; inside and outside the "3 a.m." group, one "academic debate" broke out after another, and interested or not, nobody escaped the bombardment. Next to blockchain, everything else on the internet suddenly looked "classical," and not studying blockchain meant missing the era's last wave of investment opportunity. Chen Weixing, Zhu Xiaohu, Xu Xiaoping, Li Xiaolai — these names raced to speak up in every group, manufacturing collective anxiety. That also saved Zhou Cheng a lot of breath. People who had doubted he was doing anything but fooling around now came to him on their own, wanting in. His circle kept growing.

In July, Bitcoin rallied a little, and his father finally answered his efforts. "I kept it simple. I told my dad there was a chance to make money. He asked how much, and I said tenfold." The old man remains half-convinced to this day, Zhou Cheng said, but he still put up a million yuan and had his son buy on his behalf.

"A million yuan is nothing to him. He bought, sure, but not believing is still not believing. Still, with this one shared subject, at least my dad and I have something to talk about now." The two now trade articles on WeChat from time to time: his father tells him what Li Xiaolai has said this time, and gets back a comment or two from Zhou Cheng — "that guy doesn't know what he's talking about." The silence between father and son is breaking down.

In the best-known leaked recording of Li Xiaolai, who says he holds "a six-figure number of bitcoins," he swore freely to make his point: "Honestly, people with normal logic rarely come into the Bitcoin world. There are too many dumbfcks. And because there are so many dumbfcks, there's consensus, and that consensus creates value too. Those of us who don't consider ourselves dumbf*cks have to accept this fact. That's just how it is."

"In the end, no world rewards winners and punishes losers more than finance," Li Xiaolai said.

6

Zhou Cheng's father has several children. In Zhou Cheng's own words, he knows "it will never be my turn to inherit the family business." His old habits — eating, drinking, having fun — had made the family doubt him, but Bitcoin quickly raised his standing at home. "Relatives who used to think I had no ambition now ask me which coins are worth buying." Zhou Cheng felt something like revenge. "Once digital currency really becomes the future, the returns will be ten or a hundred times their current assets. What's left to fight over in that little inheritance?"

These days he spends more of his energy on his friends in the crypto world. Most are ordinary people from ordinary families, earning around 10,000 yuan a month at jobs with nothing to do with technology. As the number of "believers" grew and his own pile of bitcoins kept expanding, Zhou Cheng's standing in Qinhuangdao's crypto circle rose with it.

His restaurant became a base for digital currency investors. On many thin mornings and afternoons they gathered at the tables on the third floor, judging whatever new dish had just come out of the kitchen while arguing hotly about Bitcoin's future. Most of the time Zhou Cheng talked the most and drew the most agreement.

Zhou Cheng's hopes for the future are boundless. "I've thought about it. If this really works out, I'll stop opening the third floor of my restaurant to the public. I'll hang a big candlestick-chart screen by the stairwell and make it a permanent meeting place for Qinhuangdao's digital currency enthusiasts," he said.

In truth, Zhou Cheng doesn't understand development, doesn't understand mining and, honestly, doesn't understand blockchain very well either. But he is convinced that blockchain is "a platform more advanced than the internet," that it can replace the internet in the future and change society's centralized structure, and that "once blockchain spreads, Bitcoin definitely won't be left behind."

"The first people to play with coins had no idea what blockchain was; the people who talk about blockchain every day hold almost no coins," Zhou Cheng said. "Ordinary people aren't interested in anything that has nothing to do with making money."

But Zhou Cheng feels he has aged suddenly these past two years. He no longer plays Warcraft, and he can't get interested in "the battle-royale games kids play." He doesn't read technology news, entertainment news or financial news. Most of his time goes to Bitcoin and EOS discussion groups, where he can find a sense of belonging and a shared language.

"My family doesn't really understand what I do. They just know I invested in some high-tech thing and made money. Actually I'm not interested in technology. I'm interested in philosophy and history." Zhou Cheng's WeChat Moments are almost all photographs of dishes from his restaurant, "secret histories" of leaders and tycoons from modern and contemporary China, "hyperinflations buried by history," the "rags-to-riches story" of one magnate or another — almost nothing about blockchain or digital currency. When he talks he likes to quote Mao Zedong's deeds and views, calling what he is doing a "struggle," a "revolution." He uses a photograph of Zhang Chunqiao as his WeChat profile picture, and he believes his faith in Bitcoin has something to do with his fondness for ancient coins.

"I feel a little cut off from modern life. I like things from history, and I've invested in the currency of the future. I seem to be living in the past and the future at once," Zhou Cheng said. "Actually the friends around me haven't bought much — many of them own only one or two bitcoins. But at least they can follow what I'm saying, and there's a lot I can pour out to them... I'm grateful to them for that."

Except that he still looks like a man in his twenties, the way he thinks, talks and lives is a long way from that of the young people on the street.

"Not understanding technology doesn't stop me from investing in technology. Mao Zedong never picked up a gun in his life, and it didn't stop him from being a leader," Zhou Cheng said. "Just as I don't understand digital currency, but I can have someone who does, like Tim Draper, make the call for me."

What Zhou Cheng has been busy with lately is a plan to run for administrator of eosDAC. eosDAC is a decentralized EOS community with its own rules and bylaws; its administrators are all eosDAC token holders, together with a board of directors chosen by vote.

"In the future, on this open public chain, new applications and communities can be built from scratch, overturning everything that is now centralized and controlled by big companies and the people in power," Zhou Cheng said. "I won't become a developer. I want to become a leader. I want to accomplish something great."

Note: Zhou Cheng and Yao Kuan are pseudonyms, at the interviewees' request.

Cover image/Visualhunt