Yesterday's article shared my views on macroeconomics and the prediction of economic crises with everyone.

Last week, there was a theft incident at Binance, involving an amount assessed to be the largest in the history of the cryptocurrency ecosystem, with a wide range of assets implicated, and it significantly depressed the prices of quite a number of cryptocurrency assets.

So this incident can entirely be seen as a crisis for the cryptocurrency ecosystem.

However, for me, after this event occurred, I only looked at the analysis of the situation online and did not pay further attention. Because it does not affect any of my decisions or my judgment about the future development of the cryptocurrency ecosystem.

I will also use the viewpoints and methods from yesterday's article to analyze the possible impacts of this crisis.

I will analyze from two perspectives: the impact on the entire cryptocurrency ecosystem, and the impact on Binance.

For the entire cryptocurrency ecosystem, in the short term, the conclusion is very simple and clear; there is definitely an impact, such as affecting morale, affecting market conditions, affecting confidence, and so on; in the long term, the conclusion is also very simple and clear, there is absolutely no impact because the future of the cryptocurrency ecosystem does not depend on Binance, but on decentralized platforms and decentralized ecosystems.

Next, the analysis of the impact on Binance is what I want to share as the main point, which I believe is also the focus for many readers.

First, let us look at the potential impact of this incident on Binance's future development.

Many people online are concerned and worried whether Binance will become the second FTX, ...

How do we judge whether this concern and worry is reasonable?

From the perspective of the business model.

Looking at the business model means looking at its cash flow, liabilities, and leverage.

• Will it be able to generate enough cash flow in the future, and will the assets it currently holds be able to cover this loss?

• Does it have liabilities? If so, will its liabilities be more severely affected by this incident, thus impacting the company’s future operations?

• Does it use leverage in its (daily, investment, etc.) operations? If it does, will this leverage become more severe due to this incident, leading to a "liquidity crunch" for the company?

......

If none of the above issues exist, then the conclusion is very simple: there is a short-term impact, but no long-term impact.

If any of these issues are even slightly unclear, then the conclusion is similarly simple: there is a short-term impact, and the long-term impact also warrants high vigilance.

If the conclusion drawn is that long-term development is a matter of concern, then one must be very cautious.

Now let's consider how investors should deal with the Binance token after this incident.

Here, I will use myself as an example.

(Just to clarify: I do not own BNB and will not buy BNB; this is just an example.)

To decide how to deal with Binance's token, I will consider three aspects: the business model, corporate culture, and price.

The previous discussion covered the business model, so I will not elaborate further here.

Now let’s look at corporate culture.

To assess corporate culture, we look at whether it has historically placed a high value on the interests of its token holders.

• Has it previously used its reserves to cover the losses of token holders?

• Has it experienced similar cases in the past? If so, did it publicly release details of crisis management and implement related preventive measures during those cases?

......

If it has handled these issues well in the past, then the conclusion is also very simple: Binance is a company that values shareholder interests.

If it has handled these issues somewhat unclearly in the past, then the conclusion is similarly simple: there is doubt regarding Binance's commitment to shareholder interests.

If any aspect of the business model or corporate culture raises concerns or doubts, based on my approach, I would not consider continuing to hold BNB, let alone buy BNB.

If, after such scrutiny, the business model and corporate culture show no significant problems, then I would continue to hold it, and might even look at whether the drop caused by this incident presents a good buying opportunity.

This means assessing whether the price after the drop is reasonable, that is, whether the market capitalization after the drop is significantly lower than its intrinsic value (the discounted total of future free cash flows)?

If the market capitalization is far below its value, then this incident has created a great buying opportunity.

If the market capitalization is not significantly lower than its value, then the price drop caused by this incident can be ignored.

The analysis process above involves many factors and perspectives, and it’s likely that some investors did not think this deeply when initially purchasing Binance's token.

By my current standards, these investors should not have bought and held Binance's tokens from the start.

Because when we examine and analyze the investment value of a company/investment target, if any of the three points—corporate culture, business model, or appropriate price—are unclear or incomprehensible, then one should never buy, never invest.

In such cases, buying and continuing to hold, whether in profit or loss, is merely continuing to make mistakes.

If it were me, I would sell immediately, regardless of profit or loss.

As I write this, some readers may say that investing in something requires considering such complex factors and thinking about such difficult questions—how could one possibly understand it?

If you don’t understand, it’s easy: just don’t invest, and simply put your money in the bank to earn interest.

I really like a quote from Duan Yongping (the essence is): Keeping money in the bank to earn interest may not outpace inflation, but it is better than haphazardly investing.

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