What is Long-Termism? The Old Cat and His Never-Sell Philosophy

Article Source: OKX

In the ever-changing world of crypto, some chase trends, some chant slogans, while others choose to become followers of time. Old Cat is such a legendary figure.

As one of the earliest evangelists in the industry, he has traversed through four market cycles, from being an early core member of a trading platform, to a keen venture capitalist, and now once again diving back in to become a product founder. His journey is itself a condensed history of the industry.

In this in-depth conversation in the latest edition of "OKX Friends," we had the privilege of engaging in a discussion lasting an hour and a half with this "veteran OG." With his usual clarity and frankness, he shared his profound insights on market cycles, asset value, life philosophy, and even personal well-being without reservation.

Why does he assert that "Bitcoin's four-year cycle is dead"? And why does he liken Bitcoin to the "English of the digital world"? What decade-long emotional journey lies behind his creation of the new product "Anchor"? Most importantly, what kind of trading endgame thinking is implied by his unconventional statement, "Buying Bitcoin is the true profit realization"?

This is not just an interview, but also a "masterclass" on investment, risk, and life. The purpose of this article is not to recount all the details but to attempt to answer a more difficult question:

After going through four market cycles, why would a person turn "never sell" into a worldview? And what does "long-termism" truly mean to him?

Here is the OKX Friends interview series, with this edition featuring Old Cat @Imlaomao as the guest, interviewed by Mercy @Mercy_okx.

Part One: The Core of Investment — Starting from a Life-or-Death Surgery

Key Quote: "I believe in 'forewarned is forearmed.' The surgery was done to mitigate long-term risks, which aligns with my investment long-termism. My strategy of long-term holding is essentially to filter out potential errors in my short-term actions during volatility, simplifying my entire investment structure."

Mercy: Hello Cat, I understand that you once underwent a major neck surgery and have since shared more insights about life. Is there a connection between this discipline towards your body and life and the 'long-term holding' strategy that you have always emphasized?

Lao Mao: The surgery was just a minor episode in my life experience, although it felt like a huge deal at the time.

My surgery involved opening up the back of my neck to insert five titanium alloy segments, with a risk level comparable to that of a coronary artery bypass.

At that time, I considered many scenarios and even made arrangements for my affairs because life is unpredictable. However, I still decided to go through with the surgery because if I didn't, my future life would be in a very fragile state, with low quality of life and immense mental pressure, which was unacceptable to my inherently optimistic nature.

I chose to endure the immediate risks of the surgery to avoid the long-term, greater risks in the future. This reflects the saying I believe in:

“He who is not farsighted must suffer nearsightedness.” Rather than facing risks in the future, it's better to eliminate them in advance. This aligns perfectly with my investment philosophy.

My approach of "hodling for the long term" is essentially about filtering out the risk of making mistakes due to frequent trading amidst short-term fluctuations. Think about it, with long-term holding, you just need to make one right choice—picking the right asset. Whereas, with day trading, you need to make constant decisions. Which one is simpler? I, of course, choose the simplest option.

Therefore, whether it's the decision to undergo surgery or my investment philosophy, they both stem from the unified core logic within me: simplify and focus on the long term.

Mercy: From trading platforms to venture capital, and now founding your own product. How did you develop this cross-disciplinary, essence-grabbing thinking framework?

Lao Mao: You're giving me too much credit. In fact, everyone's choices are naturally led by their circumstances.

There's a saying that goes, everyone lives the life they most want to because every choice is their own. I have always believed that success requires fundamental core thinking, combined with a bit of luck. I never shy away from acknowledging luck; I've always felt blessed by luck.

How do you verify if someone has relied on luck? It's simple, do a thought experiment: put yourself in the position one step back, with your current state and knowledge, could you still reach where you are today?

If it feels precarious, then most of it is luck.

Of course, luck alone is not enough; hard work is a necessity. During the busiest years at Yunbi (2014-2017), working until three or four in the morning every day was the norm for me. There were times when work would finish at two, and I still felt unsatisfied, so I would write another article for the public account. Therefore, you must do what you need to do, face challenges, and then calmly accept the arrangement of fate.

2. The Death of Cycles, Fiatization of Fiat? - Redefining the Macro Narrative

Key Takeaway: "What is driving Bitcoin's rise is not just the dollar, but the gradual entry of funds from around the world, or more bluntly put, it is the global process of fiat 'fiatization'. As long as its value is not invalidated, the long-term upward trend is very certain."

Mercy: Arthur Hayes believes that Bitcoin's four-year halving cycle is dead, and future cycles will be determined by dollar liquidity. What is your view on this perspective?

Old Cat: I agree with the point of "the end of cycle theory." I have also written articles myself, believing that this cycle will not continue.

The fundamental reason is that the supply-demand relationship has undergone a fundamental change. Why was it a four-year cycle before? Because Bitcoin's supply (output) halved every four years, and under unchanged or increasing demand, the price naturally rose.

However, now, after multiple halvings, the daily new output of Bitcoin is already negligible in the face of the vast global funds.

So, what is currently driving the rise in Bitcoin price, I believe, is not just the dollar, but the gradual entry of various global funds.

More bluntly put, it is the global process of fiat 'fiatization'.

This process will cause people seeking asset preservation to gradually participate. Of course, the process will definitely have fluctuations, smart money will come in first, make money, sell to less smart money, Wall Street will then enter...

But as long as Bitcoin's user base and consensus steadily grow exponentially, as long as its core value is not invalidated, then the long-term upward trend is something I am very confident in.

Mercy: You mentioned the 'collapse of the fiat currency system,' do you think this will happen within ten years? What does it mean for the crypto industry?

Old Cat: Predicting the next ten years is too difficult, I don't think fiat will completely disappear within ten years. But the 'fiat collapse' is not in the future tense, it is in the present tense.

This process has been ongoing since the collapse of the Bretton Woods system in 1971 and has been ongoing.

If you look at the curve of currency issuance in various countries, you will know that the value of fiat currency has always been depreciating. This is fundamentally a form of structural asset transfer, transferring assets from ordinary people who have no asset concept to a few through inflation.

This process is happening in every country, just at different rates of "debasement."

During my time in Australia, the price of a cup of coffee has increased from 3 AUD to 5 or 6 AUD, doubling. Therefore, I firmly hold cryptocurrency because I see it as an opportunity to hedge against fiat devaluation.

As for when fiat will "completely" collapse, we can't control that, we just need to know that it is happening.

Mercy: A newbie question, why can cryptocurrency (such as Bitcoin) fight against inflation and not devalue like fiat?

OldCat: This question is quite complex, I will provide a brief answer here.

Firstly, it is incorrect to say that "cryptocurrency" does not devalue. Apart from Bitcoin, the issuance of thousands of other coins is, in itself, a form of inflation.

However, Bitcoin, due to its Satoshi-designed fixed total supply and deflationary model, along with the strong consensus developed over more than a decade, gives it the ability to resist fiat inflation.

Perhaps this was initially just a utopian idea, but it has now become a reality.

If I were to deposit $10 million in a bank right now, I would be anxious because I know that its actual purchasing power might only be worth $9.5 million next year, $9 million the year after, even though the number hasn't changed.

But if I switch to Bitcoin, its inherent appreciation becomes an effective way to hedge against fiat devaluation. So, it's not that cryptocurrency will not devalue, but Bitcoin, as the asset with the strongest consensus already formed, has a powerful function to resist inflation.

III. Bitcoin: The "English" of the Digital World

Key Takeaway: "Bitcoin is the English of digital currencies. The likelihood of it being replaced will only decrease over time. Therefore, I will not heavily hold other varieties."

Mercy: In comparison to traditional assets like real estate and stocks, how is Bitcoin different in essence, performance, and risk?

OldCat: If you look at the data from the past decade, the answer is clear. Bitcoin's price surge leaves everything else in the dust, surpassing the vast majority of all asset classes we can access. Of course, saying this is unfair to other assets, because I am a HODLER of over a decade.

The biggest risk of Bitcoin is actually its key feature — volatility.

It is this huge volatility that has led numerous people trying to "get rich quick" through leverage to get wiped out, even with leverage as low as two or three times.

Many early holders of four-digit Bitcoin that I know can't access any of it now because of playing with leverage.

There is also a hidden risk that I call the "fear of missing out risk."

Many people put their Bitcoin into a cold wallet, but they can't stand that "missing out" feeling. They always want to use it for collateral to earn some interest or participate in some financial project.

As a result, they end up losing everything, and then they show up in various rights protection groups. You already hold the asset with the highest price increase in the past decade, why would you want to take these unnecessary risks?

So, for ordinary traders, there are truly two main risks: first, you chose a bunch of crypto assets but ultimately did not choose Bitcoin; second, you simply never held any Bitcoin. Everything else is just a passing cloud in the long run.

Mercy: You are known as a "Bitcoin maximalist." How do you define Bitcoin's value?

OldCat: I dare not easily wear that hat because I've also been around the block, once very optimistic about blockchain technology, but reality has "educated" me many times, costing me a lot of tuition fees, and eventually I completely gave up on those "what ifs."

It's hard for me to come up with a new perspective on the value of Bitcoin now because there are more articulate people than me.

But I have an inappropriate metaphor in my heart that I can share: English is currently the world's main lingua franca, right? It's an extremely powerful consensus. It's hard to imagine another language replacing it in the next few decades. Bitcoin is the "English" of the digital currency world.

The likelihood of it being replaced by other species will only decrease over time, not increase. That's why I fundamentally won't hold a large position in other species.

IV. Altcoins and the "Experiment" of DeFi

Key Quote: "What is the value of altcoins? They are all already altcoins. You can wear knockoff shoes for a while, but what can you do with knockoff coins? Except for Bitcoin and stablecoins, if all others disappeared overnight, the world would operate normally without any issues."

Mercy: How do you view the recent market's significant fluctuations and the idea of "altcoins going to zero"?

Old Cat: I think that statement is spot on. Market makers coming to this market are not here for charity; they are here to make money. Once a one-way market appears, they will shut down their bots and run to avoid their own risks, with no moral qualms. A market that relies on market makers to maintain liquidity is inherently unhealthy. This recent crash is fundamentally the market squeezing out the bubble.

The only purpose of meme coins is to allow some capable individuals to make money through their intense volatility, then convert the profits into stablecoins, fiat currency, or bitcoin to grow their wealth. But if you ask about their core value? They are all called "meme" for a reason. I have a wallet from years ago when I participated in various projects. When I opened it recently, I didn't recognize most of the coins in it, and the assets were basically worthless.

Therefore, Occam's razor principle applies here as well: Entities should not be multiplied unnecessarily. Except for Bitcoin and stablecoins, if all other crypto assets were to disappear overnight, the real-world would have no issues.

Mercy: Do you consider DeFi to be financial innovation?

Old Cat: I still consider these to be "experiments" so far. They essentially replicate established plays from the traditional financial world on-chain through code and relationships, such as asset collateralization and interest-bearing loans.

However, the issue lies in the fact that many underlying assets in the DeFi world are artificially created tokens lacking solid value support. This makes its foundation far less robust than traditional finance.

So, we see constant problems in the DeFi space: one moment a project exits scams, another moment a protocol is attacked, and yet another moment there is a liquidation. While everyone is having a blast, smart individuals can make money, much like a grand opening sale at a mall where early birds grab eggs, latecomers get laundry detergent, but most people end up just consuming. Personally, I don't participate and choose to continue observing.

Chapter Five: Anchcertainty -- A product I've been contemplating for ten years, a reassuring trust

Key Quote: "I already have some assets, but there are times when I cannot take care of my family properly, and I dare not think of the consequences. I hope for a tool that is reasonably priced but can truly help me solve this problem in case of emergencies."

Mercy: I'm curious, why did you create 'Anchcertainty'?

Old Cat: I had this idea ten years ago.

At that time, I had just started to have some assets, but my work was very busy, flying more than 50 times a year. Every time the plane took off, I was thinking, in case of a slight possibility, my assets, my family would never find them.

I am someone who has a strong desire for independent asset management and does not want my family to intervene too early. However, on the other hand, if my accident were to cause them to fall into dire straits, I would not be able to accept this consequence at all.

At that time, I was thinking, is there a mechanism that could solve this dilemma? High-end family trusts could, but the threshold is too high, often in the hundreds of millions of dollars, and very expensive.

I needed a tool that was affordable, accessible to ordinary people, and could effectively address this "what-if" scenario. This is the original intention of creating "Anqu."

Mercy: How does "Anqu" solve this problem? Who is its target user?

OldCat: Its core is an "Important Clue Intelligent Delivery" feature. Users can set an interaction cycle with the software (e.g., 30 days). If there is no interaction for a long time, our platform will contact you via SMS, email, or even a phone call to confirm your status.

Once, after all efforts, it is still confirmed that you are in a disconnected state, the system will, after your preset cooling-off period (e.g., 180 days), send a pre-prepared encrypted clue package to your designated recipient.

What's even better is that the password for this clue package can be in the form of a "zero-knowledge proof." For example, you can prompt the recipient that the password is the last four digits of "your mother's passport" plus "your family pet's name." Only you and the recipient know this information, which our platform cannot know. This perfectly balances the independent management of assets and the ultimate protection of family.

Its target users are people like me: with some assets, wishing for independent management but having a strong sense of responsibility towards family, willing to spend $100 a year, for a "hidden insurance" for ordinary investors.

Six, Asset Endgame: A Never-Sell Person

Key Takeaway: "I have always had an obsession: if my external world money is deemed useless, the moment I buy Bitcoin is the true 'profit-taking' — gaining from the real world and buying Bitcoin as the conclusion. I haven't learned how to sell, I really don't know how to sell."

Mercy: MicroStrategy's strategy is "only buy, never sell," which is very similar to you. Have you considered selling Bitcoin to "take profits"?

Old Cat: He is actually many years older than me. The following words may not sound like human language to newcomers, but I must tell the truth: I have never considered the so-called "profit-taking". To me, this concept does not exist.

I have indeed sold some Bitcoin, to buy a house, to cover family living expenses in different places.

But at this moment, I don't even have 1 U of a stablecoin in the crypto world.

I have always had an obsession, that is, when I have fiat currency in the real world and feel like I have nowhere to spend it, the moment I use it to buy Bitcoin is when the true "profit-taking" occurs. It is profiting from the real world, buying Bitcoin as the conclusion of that transaction.

Others say I am greedy, holding onto such cheap chips and not selling. I don't mind. I still think Bitcoin is too cheap right now. I have given up the thrill of volatility, leverage, and buying low and selling high because I genuinely understand that the collapse of the fiat world will continue.

So, I really haven't learned how to sell, and I don't know how to sell. As long as my existing fiat is enough, I won't sell.

Chapter 7: The Next Ten Years: Two Tracks, One Principle

Mercy: Looking ahead 5-10 years, which track would you choose to invest in?

Old Cat: I choose two tracks: AI and Crypto. And my choice is very simple, within AI, I only invest in Tesla, and within Crypto, I only invest in Bitcoin.

These are both assets that I will hold for over ten years. Tesla is the only company that integrates AI with the real world and has a unique industrial production capacity, and its vision is unparalleled. The Tesla I drive was given as Tesla stock (laughs).

Mercy: What advice do you have for young people?

Old Cat: I have only one piece of advice for young people, as I have also gone through this: Please be sure to understand clearly that the crypto industry is actually in a continuous process of falsifiability.

Many things that may seem right now could be proven wrong and end up worthless after some time. There are opportunities in this process, but the risks are greater.

So, never bet everything on one thing, always give yourself a chance to start over.

Over the years, I have been able to come this far because I have always deliberately been conservative and very, very restrained in my desires.

8. About OKX: A Steadfast Long-Termist

Mercy: What is your impression of OKX? How do you view OKX as a company?

Old Cat: I have previously voiced some opinions on Twitter about some minor issues, but later I found that OKX really made significant efforts to address those issues. I think OKX is a company that leans towards prudence and a technical roadmap. You are working on compliance, and you have even obtained licenses in many places. It is a company with a long-term view.