Summary: Author: Weisha Zhu --Answers to the concepts in the article "Invite Satoshi Nakamoto to Welcome the New World" 4.6.1 The advantage of the Hong Kong dollar realizing the Bitcoin standard 1.The external environment is getting better 2. Hong Kong is a more neutral region 3. Hong Kong is a small government 4. The Hong Kong ...

Author: Weisha Zhu

--Answers to the concepts in the article "Invite Satoshi Nakamoto to Welcome the New World"

4.6.1 The advantage of the Hong Kong dollar realizing the Bitcoin standard

1.The external environment is getting better

2. Hong Kong is a more neutral region

3. Hong Kong is a small government

4. The Hong Kong government has assets

5. tax advantage

6. Hong Kong Economic Freedom

7. A financial model that lives within our means

8. Hong Kong dollar is a stablecoin

9. Hong Kong dollar pegged to the U.S. dollar

10.The future social model of the asset currency

11.It is a strong competitor to the Bitcoin dollar standard

4.6.2 How to realize the Bitcoin Hong Kong dollar standard

1. Principle of implementation

2. Specific operation

3. The HDAI Stability Fund with a long-term appeal

4. Bitcoin HKD standard needs to balance the interests of big countries

5. There is national competition to achieve the bitcoin standard

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In Chapter 12 of the article "Invite Satoshi Nakamoto to Welcome the New World," I proposed the Bitcoin dollar standard. The most common opinion I heard was that the idea was good and the logic was correct but not feasible. The Fed can't use it because it destroys their vested interests. I have a sentence in the previous article that the Bitcoin dollar standard is the Fed's competition to get this position. In other words, the Fed and others may realize this vision. This article takes the Hong Kong dollar as an example to talk about how the Hong Kong dollar realizes the Bitcoin Hong Kong dollar standard.

4.6.1 The advantage of the Hong Kong dollar realizing the Bitcoin standard

1.The external environment is getting better

The Hong Kong government hopes that "From governing to thriving", make a big move in the blockchain field. The new SAR government is fully promoting the combination of "promising government" and "efficient market", and is doing its best to "grab enterprises" and "grab talents." On October 31, 2022, the "Policy Declaration on the Development of Hong Kong's Virtual Assets" was published. Relevant officials actively participated in blockchain-related meetings, because they know that only by developing and strengthening Hong Kong's status as a financial center can Hong Kong have a future.

At the blockchain conference on January 9, 2023, Chen Maobo, Hong Kong's financial secretary, said: "Hong Kong has been based in the international financial market for decades and enjoys a good reputation. Our regulatory framework and system are in line with international rules and have received international recognition. It is widely recognized that fintech companies in Hong Kong can better use this as a platform to develop international business and explore cross-border cooperation." In addition, the good rule of law environment has cultivated high-quality citizens throughout the years.

Regarding the blockchain, Hong Kong's support and encouragement attitude are completely different from that of the mainland, and the mainland has not opposed it. Therefore, let us believe that the Hong Kong government has the potential to become a "promising government."

2.Hong Kong is a more neutral region

I said in the previous article that the Bitcoin standard should be neutral. Hong Kong circulates Chinese and English, speaks Cantonese, Mandarin and English, and the combined population of Chinese and English covers nearly 3 billion people. Hong Kong has people of all races, and it is an international metropolis. If the Bitcoin standard is realized, it will make it more neutral.

The mainland backs Hong Kong. According to the "2021 RMB Internationalization Report" of the People's Bank of China, in 2020, the total RMB settlement volume of overseas RMB clearing banks was 369.49 trillion yuan, of which Hong Kong accounted for 76%, and trade settlement volume accounted for 42%. It is one of Hong Kong's strengths. The reason why RMB has such a large clearing volume is mainly due to the RTGS system. RTGS is a real-time gross settlement system; Real Time Gross Settlement is a cross-bank electronic settlement system established by international standards, which specializes in handling cross-bank transfers initiated by the payer's account bank.

RTGS has four major systems: Hong Kong Dollar, U.S. Dollar, Euro, and Renminbi. In the financial field, Hong Kong is a trusted financial center for all parties. Generations of hard work have forged Hong Kong's status as a financial center. It is the lifeline of Hong Kong's survival. It cannot be destroyed but should only be strengthened.

3.Hong Kong is a small government

There are 175,000 civil servants and 7.2 million Hong Kong residents, and the proportion of civil servants is 2.4%. The critical reason for the small government is to anchor the dollar and economic freedom, so there is no need for complicated management agencies. Moreover, it is most in line with the law of natural economic growth.

4.The Hong Kong government has assets

The Basic Law of Hong Kong stipulates that the state owns the land in Hong Kong. The government of the Hong Kong Special Administrative Region is responsible for the management, use, development, lease, or grant to individuals, legal persons, or groups for use or development, and all income is at the disposal of the Government of the Hong Kong Special Administrative Region. Having assets is the guarantee to realize the Bitcoin standard. It is also an advantage that the U.S. government does not have. The disadvantage of Hong Kong is that its size is not large and it has reliable assets to provide background support for the Bitcoin Hong Kong dollar standard.

5.tax advantage

Hong Kong's land advantage has been transformed into a low tax rate advantage, and the policy is stable.

6.Hong Kong Economic Freedom

The Fraser Institute in Canada's 2022 Annual Report on the Economic Freedom of the World continues to rank Hong Kong as the world's freest economy. Among the five assessment items, Hong Kong continues to rank first in "freedom of international trade" and "regulation." Hong Kong continues to top the list with a score of 8.59. This position has not changed in the rankings for 27 years. However, this year's economic freedom score has dropped by 0.28 points from the previous one, which is higher than the global average drop of 0.16 points. The Fraser Institute think tank believes that China should be blamed for this, Implement new harsh policies in Hong Kong. Maintaining Hong Kong's degree of freedom is the guarantee for maintaining Hong Kong's status as a financial center. It is also the fundamental guarantee for implementing the Bitcoin Hong Kong dollar standard.

7.A financial model that lives within our means

It is how every family lives, and we must, because we can't print money. Living within our means does not mean that we cannot borrow money. The key is to consider whether we can repay the debt. Failure to pay back the debt is a family disaster. If the financial management of a country is not as good as that of a family, what is the reason? They can print money, inject water into the currency, and cause inflation. The so-called moderate inflation is the act of stealing money. The reason we discussed earlier.

The Hong Kong dollar is a fiat currency in name, but it is actually a stablecoin model. Reliable assets must back the stablecoin, so the Hong Kong dollar is fiat in name but an asset token. Since currency cannot be issued indiscriminately, it must live within its means. The sign of living within one's means always has a fiscal surplus. It is a classic case of the fundamental difference between asset and fiat currencies. Before 1983, Hong Kong implemented many measures, but they were not stable enough. When the linked exchange rate was implemented, Hong Kong's economy underwent risk tests and is rock solid.

Henry Bremridge, the architect of Hong Kong's peg, was an entrepreneur-turned-official. His characteristic is grasping the problem's essence and creating rather than executing. The founder of fiat money was English entrepreneur William Paterson. The fiat currency method he proposed is a method of creating currency with government credit, which alleviates the debt crisis of the English government. To him has different evaluations. Coincidentally, they are both entrepreneurs. Is it accidental or inevitable? In the preface to the article "Inviting Satoshi Nakamoto to Welcome the New World," I said that economists are good at describing problems, and entrepreneurs are good at solving problems. What are officials good at? The first characters of official and administrator are pronounced the same in Chinese. In fact, good officials are good at management. Mr. Joseph Yam Chi-Kwong, the first CEO of Hong Kong's Monetary Authority, is an outstanding representative of management. His characteristics are not in creation but in the implementation and research of system details. Through the efforts of his generation, the linked exchange rate system was consolidated. Their foresight has created a great Hong Kong dollar and Hong Kong's status as a financial center, becoming the basis for a currency model that represents the future asset currency era. When a bitcoin Hong Kong dollar standard model exists, Hong Kong officials can create a system.

8.Hong Kong dollar is a stablecoin

The Hong Kong dollar has the same characteristics as the stablecoin. It is anchored to the U.S. dollar, and The exchange rate between the U.S. dollar and the Hong Kong dollar is fixed in the range of 7.75-7.85. The method is simple and reliable, so the behavior is easy to predict, and the transparent of the whole process generates credibility.

The Hong Kong dollar does not have the function of economic adjustment, and the adjustment of interest follows the U.S. dollar. Therefore, although it is called a fiat currency, it is completely different from the U.S. dollar and the renminbi. Therefore, there are a few hurdles to introducing a bitcoin standard.

The most important thing is that Hong Kong has a group of well-trained officials familiar with the stablecoins principle and the rules and regulations that have been gradually established since 1983, and there are related running procedures. It is the most experienced official team in the world.

The Bitcoin standard only adds an anchor object to the Hong Kong dollar, forming a dual-anchor structure, and the nature of the Hong Kong dollar remains unchanged. Using assets from Hong Kong to add credit to the government, the Bitcoin Hong Kong dollar standard, the first step can make the Hong Kong dollar (HDAI) the leader of the stablecoin in the cryptocurrency market. The existing stablecoin of cryptocurrency is 150 billion U.S. dollars, which is very suitable for the Hong Kong dollar to enter the market.

The Linked Exchange Rate System design in 1983 was 32 years ahead of blockchain stablecoins. However, evaluating the linked exchange rate with the idea of blockchain, it is found that the ideas are surprisingly similar. Furthermore, due to the stablecoin nature of HKD, it is not surprising that the first stablecoin USDT appeared in Hong Kong.

9.Hong Kong dollar pegged to the U.S. dollar

The Hong Kong dollar range has a fixed exchange rate against the U.S. dollar and flows freely. As the anchor currency of Bitcoin, it is equivalent to anchoring the U.S. dollar in disguise. It is the advantage of the Hong Kong dollar. It is the bitcoin dollar standard in disguise.

10.The future social model of the asset currency

What is the social form of Bitcoin standard, and how should its political, economic, and legal relations be arranged? Hong Kong started an unconscious experiment in 1983, and it has been running for 40 years and is running well today. She is the embryonic form of the future human society. Hong Kong can seamlessly connect the Bitcoin standard and the current linked exchange rate and implement a dual-track transition. If the anchor is more stable than the U.S. dollar, the economy will be more stable than the peg U.S. dollar. The essence of legal currency is to anchor the inflation rate. There was no problem in the early stage. We discussed earlier that this anchor fails when finance and industry go hand in hand. The degree of so-called moderate inflation cannot be grasped in advance. It has been 20 years since we entered the 21st century. Finance theories and methods are still at the level of the 1930s. It's better not to manage. Practice in Hong Kong has proved that if the U.S. dollar does not move, there will be no interest rate hikes or cuts in Hong Kong.

11.It is a strong competitor to the Bitcoin dollar standard

Hong Kong is positioned as a financial center. If it becomes a bitcoin-based financial center, it will surpass New York and London and start 120 years of glory. Hong Kong people will realize their coveted status as financial leader. In Chapter 13, Bitcoin has a market capitalization of 10 trillion U.S. dollars in the sixth cycle; that is, the status of the U.S. dollar, and Bitcoin will begin to reverse in 2032. It is a historic opportunity. The key is to have a courageous "promising government" that dares to create history and, after a full demonstration by managers, seize the opportunity to enter the cryptocurrency stablecoin industry quickly. The curve in Chapter 13 becomes the guideline. Otherwise, the curve in Chapter 13 does not hold.

Chapter 13 forecasts are based on the base currency M1, and M1 has statistical data which are not the same. Therefore, the difference in M1 affects the accuracy of the forecast. However, as long as it is the Bitcoin standard, the whole logic makes sense, and the trend remains unchanged.

4.6.2 How to realize the Bitcoin Hong Kong dollar standard

1.Principle of implementation

I introduced how to implement the Bitcoin dollar standard in Chapter 12 of the article, most of which are applicable, and the different points are discussed here.

In "12.2 Program Preparation," put forward three conditions:

1. Satoshi Nakamoto donated no less than 1 million bitcoins to the Federal Reserve.

2. Bitcoin holders set up a Bitcoin Stability Fund with 5% of the total number of Bitcoins, which the Federal Reserve will operate.

3. The Federal Reserve uses the Bitcoin it holds to issue UDAI equivalent to USD. "

Regarding these three items, if Hong Kong is the first to use Hong Kong dollars to realize the Bitcoin standard, Satoshi Nakamoto is likely to support a neutral zone to realize the Bitcoin standard. The Hong Kong government also has the willingness to "grab talents ."In addition to Satoshi Nakamoto, there is also a group of technicians who are also elites as system maintainers. It is also should include in the list of "grabbing talents ."There is no obstacle in the life of people in the English department of the environment in Hong Kong. In "12.3.3 Balanced Demand Mode", there is the following description:

"When the market demand for UDAI is high, the Federal Reserve withdraws USD from the market, buys Bitcoin, and issues UDAI. The details here should be in line with the current operation of the Federal Reserve. See Figure 3 for the currency issuance method."Below is Figure 3。

Fulfillment of Bitcoin standard in Hong Kong dollars involves a source of funds. The Fed is available for sale assets. It has a lot of assets, but Hong Kong does not have them. How to deal with it? When there is not much demand, stablecoins deal with it now. The Hong Kong government has no difficulties. However, the market demand is great. In that case, excessive recycling of Hong Kong dollars will cause an imbalance in circulation, resulting in a high price of Hong Kong dollars and affecting the linked exchange rate.

A new business has been added, and it may be many times larger than the original business; how to do it? The Hong Kong government has no money in hand, and she needs to raise Hong Kong dollars in the market, so the key is to have assets. The Hong Kong government has a large amount of land in its hands. Housing prices in Hong Kong are market prices. If Hong Kong becomes a financial center, many people will flow in, thus providing positive expectations for land values. Hong Kong set up an HDAI (equal to UDAI) stabilization fund to use the land as the credit endorsement of the Hong Kong government. The details of the guarantee will be explained in another document. There are many experts from the Hong Kong government on this point. In Chapter 12, we said that the short-term currency issuance rights of 1 times Bitcoin to the Federal Reserve are specially used for rescue, and the return of rescue funds will not cause super-issuance. This principle also applies to the establishment of HDAI stable funds. This stable fund does not exist in the Bitcoin dollar standard.

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2. Specific operation

The specific operation is: the Hong Kong government issues currency with a land guarantee, buys bitcoins with Hong Kong dollars on schedule, and issues HDAI stabilization funds. The public subscribes to funds issued regularly, and the excess HKD is recovered and written off. Warranty released.

This method is actually a secured credit advance. However, due to the schedule, the period may be very long, and there will be a spread profit between the Bitcoin price and the average price of the last closed fund, which will be attractive.

When this fund buys Bitcoin in the short term, the price of Bitcoin may not always be in a good position so that it may buy high, but the average price may be excellent after a long time. Here we need to refer to the experiment of the stablecoin USDT.

3. The HDAI Stability Fund with a long-term appeal

Due to the existence of the Bitcoin Relief Fund described in Chapter 12, an upward trend in the price of Bitcoin is guaranteed. In addition to the rising profit model of Bitcoin, stability HDAI price is to buy low and sell high, so there is profit. Here there are two profit models. The profits generated by stable fluctuations are regarded as annual dividends, and the rise in holdings is an investment profit. This cycle is no less than the rising cycle of China's real estate. Subscribing such funds will be very popular. Private individuals and central banks of various countries may also buy it, which is definitely better than gold. Gold is no pegged currency; it is just a commodity without financial applications. In this way, the central banks of various countries are still configuring. In addition to the rising characteristics of gold, the HDAI stable fund also has interest income, which is better than gold.

After the fund has a good reputation, government guarantees are actually redundant. But without a guarantee mechanism, that is no anchor-issued currency; call it the air coin in the blockchain, which is wrong from the perspective of the principle of asset currency. Hong Kong's MPF is too poorly operated, so it is better to invest MPF to this fund. And the HDAI stable fund can be made into an ETF, which can be cashed out at any time if it needs to be cashed out. It is the way the Grayscale Bitcoin Fund could only dream of. Grayscale imitates gold; We method is much better than grayscale.

Blockchain represents thoughts on the Future of Finance. All the above concepts are not my creation. I just suggest a specific implementation method of the Bitcoin standard.

4. Bitcoin HKD standard needs to balance the interests of big countries

In this topic, I discussed the U.S. dollar, the renminbi, and the Hong Kong dollar. The Hong Kong dollar is a currency with minor financial problems but lacks in politics. It is very embarrassing to be caught between two strong players. In "12.6 How Bitcoin Offsets U.S. Debt and Satoshi Nakamoto's Status", the method of using profits to offset U.S. debt is introduced. Although it is profitable, because it is not the leader like the United States, it does not have the conditions to enjoy exclusive profits. Part of the profits can be used to fill debts in dollars and renminbi, and euros, JPY, and pounds can also get a share. How to do it is not up to me to decide, and Financial management bureau have to discuss it with the fund's investor. In addition, it is impossible to adopt the idea mentioned above without a big profit in the early stage, and it will not be too late to discuss it after it is done. But such a clause must be conducive to maintaining world peace.

5. There is national competition to achieve the bitcoin standard

Other advanced countries can adopt this method. For example, Singapore, Dubai, and other places have the same enthusiasm as Hong Kong, and a competitive relationship exists. But their conditions are not as good as Hong Kong dollars.

Countries with currency controls cannot adopt the above scenario.

The Bitcoin standard has a time window because this section provides a general method that applies to most countries, the details will be different, and the general framework will be the same. In this way, there will be competition. Many countries may participate in the competition, and more than one country will implement the Bitcoin standard. I believe that the Bitcoin community can only support one country or region as the leader of the Bitcoin standard. The rest can only choose to hook the faucet in the end. There may be opportunities for new leaders to replace old leaders on new tracks. For China, currency control is impossible to abandon in the foreseeable future. It is also an excellent choice to support Hong Kong when there is no possibility of becoming a leader in a new track.

To understand this article, you need to read chapters 10-13 of "Invite Satoshi Nakamoto to welcome the new world" and the previous Q&A articles in this series.

This article was published in Bitpush.

Chinese link:

https://www.bitpush.news/articles/tag/%E8%AF%B7%E5%87%BA%E4%B8%AD%E6%9C%AC%E8%81%AA

English link: https://en.bitpush.news/?s=Weisha+Zhu

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There is no theory in the blockchain, and everyone's understanding is very different. Many innovative and wrong concepts exist, such as the Internet of Value, blockchain computers, etc. We are trying to find Satoshi Nakamoto and popularize the value of Bitcoin. We will explain this series of articles on Sun T.V., and the articles and T.V. explanations are complementary. 10 episodes of the program have been made. The following is the program catalog:

Episode 1 Starting from the Bitcoin White Paper

Episode 2: Does Bitcoin Have Value?

Episode 3 The Reason for Satoshi Nakamoto's Anonymity

Episode 4 The Root of All Evils in Fiat Currency

Episode 5: Past, Present, and Future of Bitcoin

Episode 6 Blockchain Opens Pandora's Box; Satoshi Nakamoto Comes Out

Episode 7 Four conditions for the rapid growth of Bitcoin

Episode Eight Satoshi Nakamoto's Age, Gender, and Nationality

Episode 9 Cypherpunk - the birthplace of Satoshi Nakamoto's thought

Episode 10 None of the dead pioneers is Satoshi Nakamoto; he is still alive

T.V. corresponds to the 6 episodes of our article; that is, the program explains the article's focus. The approximate broadcast time will be around the end of January, and the specific time will be announced separately. Sun T.V.'s link is as follows:

https://www.youtube.com/@isuntv_hk/featur

The whole program is divided into two parts. The first part proves who Satoshi Nakamoto is, and the second is about the Bitcoin standard. The program will continue, followed by discussions and Q&A, hoping to form a Bitcoin-based theoretical system. Users are welcome to leave messages in the T.V. comment area, and viewers will be selected to participate in the conversation.