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How can crypto businesses bridge the cultural divide? Talking about the information gap between China and the United States on cryptocurrencies

2020-12-21 15:22

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Original title: "Bridging Cultural Gaps in 2021: Crypto in China and the US"

Original source: Coindesk

Original translation: 0x33

Rhythm BlockBeats news, on December 19, Coindesk interviewed Mable Jiang, executive director of Multicoin Capital, and asked her to talk about the cultural differences between Chinese and foreign users as one of the heads of investment institutions. lead to different investment philosophies. Multicoin Capital, as a three-year-old research-driven encryption fund, has a solid logic in laying out infrastructure and exploring potential projects.

The following is the original text translated by Rhythm BlockBeats:

The information and cultural gap between China and the United States is huge. As a Chinese citizen living in Hangzhou who also works for a US-based investment firm, I have had the privilege of experiencing this firsthand.

In encrypted markets, where information is bisected across the Pacific Ocean, actionable information cannot be like packets of data on fiber optics Transfer that fast. Although you may be familiar with various social channels in the West: Telegram, Twitter, Discord, Medium. But on Chinese social software, such as WeChat, Weibo, Bihu and other channels, there is a completely independent encrypted universe that exists and operates. That's just the crux of the matter. Additionally, cultural, time zone and language barriers exacerbate the lack of overlap between the two markets.

How information flows, how relationships and bonds differ between parties, how different social norms create friction, As well as different consumer behaviors, all of these factors combine to form a unique cryptocurrency market structure in the United States and China.

Looking forward, Chinese culture’s high demand for interpersonal trust, mobile user interface preference, WeChat information flow and “ Pragmatism" will continue. However, with more channels for cross-cultural communication, Chinese and US crypto operators should be able to understand the nuances between the two cultures and more effectively market their services in the other market.

Understanding and trust

One of the most important differences I have observed between China and the US is how market participants build and develop trust with each other. Chinese people prefer to trust people they know or interact with directly, while Americans tend to trust brands.

In our investment thesis for dForce, I noted that one of its unassailable moats is its Local business contacts and community channels. dForce founder Yang Mindao is a well-respected influencer in the local community, and due to his prominent position, he was able to build strong relationships with key players in the Chinese crypto ecosystem. Having personal relationships with local Chinese community leaders, crypto operators, and key distribution channels is an unquantifiable but undeniable advantage.

DeFi protocols are not a business. They are permissionless, leaderless organizations, at least in theory. Still, Chinese users expect chat rooms to offer customer service from real people who can explain in real language how these protocols work. That’s why senior employees or founders of platforms like Binance, Huobi, and OKEx often show up in WeChat groups to answer customers’ questions.

These unique requirements of trust impact the way business is done in China. For example, in the U.S. prime brokerage typically refers to three separate lines of business: lending, trading, and custody. Unlike the US, most prime brokerage firms in China emphasize lending and asset management services.

Few of the major crypto institutions in China offer custody as a standalone service because they know The Chinese prefer to manage their own private keys instead of entrusting (trusting) to others. Chinese “whales” (those with large positions) guard all their assets closely, sometimes only on their phones.

On the other hand, in the United States, many cryptocurrency institutions entrust their funds to the Securities and Exchange Commission (Securities and Exchange Commission) , referred to as sec) custodians, and in fact they are required to do so. They don't want to risk custody themselves because, in their view, the "system" is more trustworthy. Again, Chinese users are more convinced of the concept of “Not your key, Not your Coins” (coins without private keys are not yours), because in Chinese culture Contains higher trust requirements. Entrepreneurs need to understand these subtleties in order to compete most effectively on a global scale.

For these reasons (and many others) I usually try to help our non-Chinese portfolio companies Hire people who speak the local language to connect with users and potential business partners on a human level.

Understand user preferences

User behavior and preferences vary widely across markets, and these preferences lead to localized product strategies for dominant players in each region.

In China, smartphones dominate Internet usage. Even some of the most complex derivatives transactions are executed on smartphones. This is in stark contrast to the situation in the U.S. and other Western countries, where traders prefer to log in on their computers.

For a considerable number of Chinese, mobile phones are their first and only computers . Since users prefer (and rely on) mobile interfaces, these mobile apps will naturally compete with each other for user retention. Under such pressure, the most successful apps have grown into super apps, such as WeChat and Alipay, that allow customers to solve all their problems in one place.

While encryption is a borderless phenomenon, user behavior is still largely governed by Web The impact of ingrained user behavior in the 2.0 era. For example, exchanges in Asia are more likely to become super apps that provide services across products. Binance is a good example; in the past two years, the company has aggressively "blitzed" and expanded its business, from basic spot and futures trading, to more complex options trading, to new staking services, mining Pool and fiat OTC applications. Binance tries to provide all crypto financial services.

Coinbase is another typical representative, reflecting the business strategy of the west, launching Custody, Prime, Pro and Retail offers different lines of business and products.

Understanding user preferences and positioning remains a powerful differentiator. This will not change in 2021. Entrepreneurs need to localize strategies in China and the US.

Understanding Information Flow

Platforms such as Twitter, Discord, Telegram, and Medium in the United States welcome permissionless, anonymous online participation and the (relatively) free flow of information across platforms. It’s no secret that in the U.S., the main venue for encrypted messaging is Twitter: Users are free to comment and follow anyone they like publicly.

China is quite different. The main platform is not Weibo (the Chinese version of Twitter) or Bihu (a Medium-like encrypted local discussion forum). Instead, on WeChat. As a heavyweight application, WeChat has a closed information flow. This makes WeChat a microcosm entirely derived from internal information. All communication processes are completed in WeChat, WeChat conversations, WeChat embedded hyperlinks, WeChat circle of friends, etc.

So the hurdle to building a community in China is bigger because everyone has to use WeChat, and forming a Large WeChat groups are not easy.

For example:

The maximum number of people in the WeChat group is 500;

The two-dimensional code has a validity period;

When the group size exceeds 200 people, people cannot join through the two-dimensional code, and the team is responsible for People need to manually pull people in.

But on Twitter, anyone can easily follow or unfollow someone. In a WeChat group, especially those with fewer than 100 members, members face social pressure to “leave the group.” And some influential people in China even monetize their “private domain traffic” by charging fees to join the group, which gives its members a special sense of community (and creates a perceived cost of leaving).

However, the tighter binding of WeChat creates a more level playing field. In the US, a "thought leader" with hundreds of thousands of followers on Twitter doesn't necessarily follow all of his followers, so he or she doesn't see all the feedback. This one-way relationship effectively draws the line between cryptocurrency influencers and professional institutional and retail players.

On WeChat, however, representatives of institutions and retail businesses are often grouped together. This "flat" setup essentially enables two-way communication between professionals and retail investors.

Projects attempting to market in China or the US must understand the difference in these information flows. In China, the media is controlled and influenced by contractual relationships. In the United States, the media "wins by strength." "As encryption becomes more important, more channels of communication will emerge and the structure of information flows will continue to fragment.

Understanding Pragmatism vs. Idealism

BitMEX’s Arthur Hayes once joked that facing China Good marketing to users can make any coin look promising. His joke isn't exactly a joke; it's a reflection of a deeper reality in the crypto capital markets.

Although Vitalik gained huge support in China in the early days of Ethereum, compared to the United States today, Ethereum maximalism is on the decline in China. This is in stark contrast to Crypto Twitter, where Ethereum maximalism enthusiastically promotes Ethereum.

“The products and protocols they are building are becoming more local and more global at the same time

One year ahead

Going into 2021, crypto entrepreneurs must realize that the products and protocols they are building are becoming more local, and more global at the same time. The US and China are clearly the two most critical markets, and winning them means unprecedented success.

Two years ago, the idea of listing in both the US and China was unthinkable. Entrepreneurs today absolutely must develop and execute unique strategies for the US and China, or risk being left behind by the market.

Although there are more and more channels between China and the United States, the cultural moat and user behavior I described above There are no signs of substantial change in the short term. As companies plan to deploy capital next year, they want to hire teams that understand and appreciate the opportunities that cultural differences present, and see the distance between the U.S. and China as a unique advantage to leverage rather than a barrier to global expansion.

Such a cultural bridge is easy to describe, but difficult to build. Winning strategies will be unique and difficult to replicate: no single template can guarantee constant or increased market share.