1. Li Xiaolai was never Bitcoin’s “Richest Person”…
In the beginning, lots of bitcoin fans placed a lot of emphasis on bitcoin’s anonymity, but I always turned my nose up at this point of view — which of US dollars, French francs, Hong Kong dollars, Macau dollars, and RMB are not anonymous? You can break the law by writing on paper money! So I’ve never been able to bear the sight of those odd and secretive bitcoin holders. In 2011, I even put an ad at the top of my blog: “Long-term Buyer of Bitcoin”…
In 2013, when a CCTV reporter interviewed me, they asked me how many bitcoin I had. I didn’t feel like there was any need to hide, but I also didn’t need to be that clear, so my answer was: "Six figures, and the first figure is 1”… I didn’t imagine that this question and answer would give me a “label”, or a “hat”, but it ended up on my head — “Bitcoin’s Richest Person”.
But actually, Li Xiaolai was never “Bitcoin’s Richest Person”. At the time, I knew two people in China who had more bitcoin than I did. Even in 2018, there are still at least two people that I know who have more bitcoin than Li Xiaolai — it’s just that they are not the same people as in 2013.
Between 2015 and 2017, I lost more than 9,000 bitcoin because of losses at the Yunbi trading platform. At that time, Yunbi’s bank account would often be frozen, they said because of suspicions of “black money” entering the platform. To make the development team feel confident that even if there was a run on deposits there would be absolutely no problem, I had to sell some bitcoin and deposit money in the bank… It was often a wait of several months, and sometimes several accounts would all be frozen… Several months later the assets were unfrozen, and when I used that money to buy bitcoin again I could only buy back 1/3, or 1/5, or 1/6 of the bitcoin… So now it’s even more certain that I’m not the person in China who holds the most bitcoin.
It is quite miraculous, even if they are less than six figures, that these bitcoin came from 4600 RMB in the beginning of 2005. Back then I was still teaching at New Oriental. One day I was notified that “because of excellent teaching quality” Li Xiaolai would be awarded 2300 shares of New Oriental stock options, and in total I needed to pay 4600 RMB. At the time I was somewhat disappointed, because I entered the company too late… Older teachers had been given tens or even hundreds of thousands of shares a couple of years before. But I didn’t have a temper, I just went and paid the money. New Oriental successfully went public on the NYSE in 2006, and so an unsophisticated person like me with no overseas connections unexpectedly ended up with an overseas account…
After New Oriental went public, my colleagues bought new cars and new houses one after the other, but I didn’t do anything. Why? Not because I have willpower, but because it wasn’t worth that much money! After bringing it back and paying taxes, I couldn’t have even bought a Jetta… The IPO price at the time was equivalent to just over 30 RMB, but there was another fact: four shares were combined into one! So after New Oriental went public, I only had 575 shares!
Later I did some trading, and in the end I converted to shares of Apple — only because I had started to use Macs. By early 2011, these stocks were worth approximately 100,000 USD…
By late April of 2011, when I started to buy bitcoin, I was full of ambition, but I only used just over 10,000 USD to buy 2100 bitcoin at an average price of 6 USD — at the time I thought, if this really works out then “if I own 1/10,000 of an economy its still pretty badass!”
See, I once was also a so-called “leek”, buying, buying, buying as soon as I entered the market. And then? One month later, the price of bitcoin fell, starting from a price of 32 USD and cutting in half in just two or three days… At 24 USD I sold 75% after the thought crossed my mind to leave my initial capital in the market and “use the profits to mine” — what a nice dream!
What was the result? When bitcoin “crashed” I felt even better, and thought that I had gotten out just in time… And then? Then my first batch of 2100 bitcoin was wiped out.
I told about this experience later when I was interviewed by Southern Weekly. Anyway, it ended in “a crushing defeat”. What about the 25% I left in the exchange? You’ll know when you hear the name of the exchange: Mt. Gox… In 2011 this exchange was hacked, and my remaining 500 bitcoin were gone!
I felt bad for several days. I felt as if I’d been using a wicker basket to draw water and wasted a lot of effort.
But suddenly I understood that my previous behavior had been completely wrong! Even three or four months before these setbacks, I had been at a coffee shop in Shanghai with my friend Qian Geng, and after discussion we had reached this conclusion: “directly purchasing bitcoin is the best deal” — “in the finance world there is nobody whose strength and intelligence is more badass than capital, so it’s wrong to compete on strength and intelligence!” But how had I completely forgotten this principle? I was upset, but I made a decision to empty my stock account and buy bitcoin with US dollars…
By then it was already August or September, and bitcoin’s price had entered a long downward spiral… I continuously bought over time, sometimes selling a bit when the price went up, and then buying it back when the price went lower. Exchanges weren’t as developed back then as they are now, and there wasn’t much depth on the exchanges, so I mostly relied on contacting miners through online forums. By May and June of 2012, I had no more energy to buy and sell, and I’d also spent all of my cash. I calculated that the total amount I’d invested was around 160,000 USD (fortunately Apple stock rose rapidly and steadily over that period of time) … Along the way I ran into several swindlers and lost 50,000 USD, so in the end the average cost of the 108,000 bitcoin I had was just over one US dollar… But actually, I never bought bitcoin for less than two dollars — which shows that my trading results weren’t bad, because building a position in a bear market is actually relatively easy.
In order to make myself not trade anymore, I edited the host file on my computer, making all of the bitcoin-related web addresses resolve to “0.0.0.0”, and I set a filter in Gmail to make all bitcoin mailing lists go straight to the Archive folder… (Later, Jihan Wu mentioned that in August of 2012 he wrote me an email when Fried Cat was starting up, but I didn’t respond… Actually, I never saw the email, so I missed the chance to become one of Fried Cat’s founding shareholders!)
In January of 2013 I heard from a friend that the price of bitcoin had risen back to ten USD. I though for a bit, and felt that that wasn’t that much money! So I didn’t pay much attention. By February 28th of 2013, bitcoin’s price had returned to its “historic high” of 32 USD, and I read an article that “enlightened” me.
What did the article say? The article was a daily log of a “leek”, and the content was something like this:
Since the price of Bitcoin has returned to its historical high, I've sold every Bitcoin in my pocket!
I found this article funny right away, as the image of “I finally got out” shined through on the page — of course, I actually spit a mouthful of Coca-Cola on my screen! This reminded me through a negative that I shouldn’t become a person like that! So I kept convincing myself to remain unmoved… And the result? The result was that within less than 30 days bitcoin's price shot to 100 USD!
Just like that, I experienced the process of “holding on to an asset as it went 100x” for the first time. Only from that time did I have the chance to begin earnestly thinking about how to start learning investing skills, who to consult, how to train, how put it into practice, and which areas needed to be repeatedly thought about… And the result? From the end of 2013 to the beginning of 2016, almost all of my investment activities failed, whether or not they were within or outside of the bitcoin field! Looking back now, of course I failed! I had no experience, no connections, not even a method for thinking — if I didn’t fail then who would fail!
It was only in 2016 that I started to feel like I was “getting better”. Also, at this time I was no longer “alone”. For example, I “picked up” one of the most important people in my life, Lao Mao, who became widely known later. Why do I say “picked up”? Because Qiu Liang met Lao Mao in Shanghai unexpectedly when doing online customer meetings for Yunbi. Without Lao Mao, I would have completely missed Ethereum! His existence let me understand once again the limits of logic, and that on the edges of logic the same reasoning can reach completely opposite conclusions! I had explained this situation in my book Take Time As a Friend, but it was still quite shocking to deeply experience it again. We later invested in many projects together. In addition to Lao Mao, I have met many good partners on this path that I can cooperate with for my whole life — this is my good fortune.
In 2017, I announced to my internal partners that Li Xiaolai would no longer make money for himself — because it had no meaning, because I don’t spend much money and money that you don’t spend is actually not your money in the end.
And it is hard to increase the amount of bitcoin that I have personally, because later on bitcoin’s price increased another 20x or so… bitcoin is like this, the more you mess around with it the less you have — this is a law. And what will I do with these bitcoin in the future? I mentioned this idea in a lecture at Beijing’s Garage Cafe in 2013:
One of the advantages of holding bitcoin may be that I “don’t need to take the trouble of writing a will”… In the end, when I’m gone, the private keys are essentially destroyed… So this implies that the “circulating supply” is reduced by a portion, which means that the value of all of my bitcoin will be “proportionally divided” among people who hold bitcoin. No matter who they are, and no matter whether they are good or bad people… What is this? This is “great love”.
In the past few years my diabetes has gotten worse and worse, and when it was discovered in 2009 my pancreas was already failing… So my life expectancy is already shorter than normal people. What’s so great about “the richest person”? Especially since it’s a false reputation stuck on my head by others… Lots of people misunderstand me, and think that I care a lot about the things that they think I care about — even though what I care about is definitely something else.