Bitcoin Betrays Bitcoin

Nakamoto 2025-9-28 15:15 48820人围观 BTC

▲In the first week of 2017, Bitcoin celebrated its 8th birthday and also experienced a "roller coaster" surge and plunge. (Oriental IC/Picture) The full text has a total of 4292 words and takes about 8 minutes to read. After rising 160% in one year, reach

▲In the first week of 2017, Bitcoin celebrated its 8th birthday and also experienced a roller coaster-like rise and fall. (Oriental IC/Photo)

The full text has a total of 4292 words and takes about 8 minutes to read.

After rising 160% in one year, reaching a record high, and then plummeting 30% in two days, the Chinese once again replicated the 2015 A-share "roller coaster" stock market crash in the Bitcoin industry.
Some people arbitrage and some flee. Bitcoin, whose mission is to end the "Ponzi scheme-like" banknote issuance system, has evolved into an extremely unstable investment product due to the prevalence of speculation, and has become the carrier of some "Ponzi schemes".

This article first appeared on Southern Weekly

WeChat ID: nanfangzhoumo

In the first week of 2017, Bitcoin celebrated its 8th birthday and also experienced a roller coaster-like rise and fall.

In the early morning of January 2, 2017, Beijing time, the price of Bitcoin exceeded US$1,000, and hit an all-time high of US$1,249 (RMB 8,895) on January 5. Then it began a "flash crash" on January 6, plunging 30% all the way to a low of US$805 (RMB 5,555). As of press time on January 11, it was still hovering around $900.

If Bitcoin is viewed as a decentralized currency experiment, the Bitcoin ecosystem is falling into a vortex of accelerating decentralization: short-term arbitrageurs have become the main force in its transactions, and the application scenarios of Bitcoin as a payment method seem to have come to an end, leaving only the attribute of speculation/investment. In the view of the founder, this is alienation and betrayal of the spirit of Bitcoin.

At the same time, altcoins, alternative coins, and traditional financial institutions have begun to invest in blockchain, which is eliminating Bitcoin’s technological center position.

Alienation of Bitcoin In the past six months, RMB transactions accounted for 98% of global Bitcoin transaction volume.

In 2016, the British vote to leave the European Union caused the pound exchange rate to plummet. India announced the abolition of 500-yuan and 1,000-yuan banknotes, and Venezuela announced the abolition of 100-yuan banknotes. The U.S. dollar's interest rate hikes caused other currencies to weaken against the U.S. dollar. Sovereign currencies are “unreliable”. According to the idea of Bitcoin founder Satoshi Nakamoto, this should be the best scenario for Bitcoin as a safe-haven asset.

Eight years ago, out of distrust in the paper money issuance system, this mysterious Japanese-American proposed and created the decentralized virtual currency "Bitcoin" in an attempt to circumvent the inherent instability of the modern financial system of "central bank-paper money". Following this decentralized "Bitcoin spirit", countless technical geniuses and financial elites around the world have contributed to this virtual currency.

However, as luck would have it, no one expected that Bitcoin would evolve into an extremely unstable investment product due to the prevalence of speculation, and become the carrier of some "Ponzi schemes". What was ignored were its monetary attributes such as payment, value scale, and stored value.

“Bitcoin as a safe-haven asset? Prices may fall and rise at one time or another. What risks should we avoid? ”On January 6, 2017, Xu Mingxing, founder and CEO of OKCoin, asked a Southern Weekend reporter that in his opinion, Bitcoin is an investment product, just like art auctions. “There is no application scenario designed from the beginning, why should it be used? ”

This view was also confirmed on another Bitcoin trading platform. According to the "2014-2016 Global Bitcoin Development Research Report" jointly released by Tsinghua PBC School of Finance and Huobi.com in July 2016, 80.77% of Bitcoin users' trading purpose is to make short-term profits and earn profits through price differences. ； Only 13.81% of users regard Bitcoin as a safe-haven asset and hold it for the long term.

Huobi and OKCoin, which were launched in September and October 2013 respectively, caught up with Bitcoin's high point in 2013 and subsequently became the top two Bitcoin trading platforms in the world in terms of transaction volume. According to data from bitcoinity.org, over the past five years, OKCoin’s global market share was approximately 37.67%, and Currency Network’s was 35.44%. Together with Bitcoin China, the two of them contribute about 93% of the transaction volume to the global Bitcoin market.

In 2016, the Chinese once again pushed Bitcoin to a historical high. The price of Bitcoin in China rose by 160% in one year, from 2,700 yuan at the beginning of the year to 7,000 yuan at the end of the year. Whether it is the stock market, bond market or foreign exchange market, this yield pales in comparison. In the past six months, RMB transactions accounted for 98% of global Bitcoin transaction volume.

On January 6, 2017, the Shanghai Headquarters of the People's Bank of China and the Beijing Business Management Department of the People's Bank of China respectively announced on their official websites that the Shanghai Headquarters of the People's Bank of China and the Shanghai Finance Office, together with relevant regulatory authorities, met with the principals in charge of China's three large Bitcoin trading platforms - Bihang, Huobi.com and Bitcoin China - on the same day to learn about the operation of the platform.

Four years ago, Bitcoin also encountered similar regulatory pressure, and its market took a sharp turn. At that time, five ministries and commissions, headed by the People's Bank of China, issued the "Notice on Preventing Bitcoin Risks", stating that Bitcoin is a specific virtual commodity that does not have monetary attributes such as legal compensation and compulsory, does not have the same legal status as currency, and cannot and should not be used as currency for circulation in the market.

This time, although the People's Bank of China only held talks and reiterated its risks, it still put greater pressure on Bitcoin.

In Xu Mingxing's view, regulation was just a reason for Bitcoin's plunge in 2013, mainly because asset prices were too high, leading to bubbles.

Compared with 2013, there are many factors driving this round of Bitcoin’s rise: According to the established algorithm, in July 2016, Bitcoin entered a production cycle in which production was reduced by half, and the supply was reduced.； After the bubble in 2013, the number of Bitcoin users has gradually accumulated and increased. ； As traditional financial institutions and governments recognize and pay attention to blockchain technology, Bitcoin, the source of blockchain technology, has also attracted more people's attention.

Du Jun, co-founder of Huobi.com, previously accepted an interview with a Southern Weekend reporter and believed that Internet financial products such as Yu'e Bao and P2P have introduced many Chinese people's financial management funds into the Internet field. However, after September 2015, a large number of P2P platforms collapsed, leaving these investment and financial management funds in an urgent need to find new outlets. This is an important reason why Bitcoin transactions are unprecedentedly active in China.

This also explains to a certain extent why, in addition to Bitcoin, there are an endless stream of alternative coins around the world that are directly similar to Bitcoin and draw on the technical principles of Bitcoin. For example, three Chinese Bitcoin trading platforms have a product called Litecoin, which was developed by the younger brother of Bitcoin China’s founder and CEO Li Qiyuan. The CoinMarketCap website counts 643 global digital currencies. On January 10, 2017, the total market value of these currencies was approximately US$17 billion, of which Bitcoin was approximately US$14.6 billion, accounting for 86%.

Bitcoin arbitrage The price difference between Chinese and foreign Bitcoins has always been within a constant range. Through the price difference between Chinese and American Bitcoins, we can analyze the phenomenon that no one has transferred large amounts of RMB overseas through Bitcoin.

Beginning in 2017, the China Administration of Foreign Exchange has implemented new regulations and strict management on personal foreign exchange. Whether it is mobile online banking, self-service foreign exchange purchase machines at branches, or foreign exchange purchases at branch counters, you need to fill in a "Personal Foreign Exchange Purchase Application" first, requiring personal foreign exchange funds not to be used for overseas housing purchases, securities investments and other capital projects that have not yet been opened.

In the market, it has become a gimmick that Bitcoin can avoid capital account controls and be exchanged for US dollars. That is, investors can buy Bitcoins in RMB from domestic trading platforms, transfer them to foreign trading platforms, and then sell Bitcoins in US dollars.

Xu Mingxing believes that this is purely "conjecture". "The price difference between Chinese and foreign Bitcoins has always been within a constant range. Through the price difference between Chinese and American Bitcoins, we can analyze the phenomenon that no one has transferred a large amount of RMB overseas through Bitcoin."

Theoretically, as long as it is a globally recognized commodity in circulation, it can be used for currency exchange. For example, you can buy an iPhone in mainland China and sell it in Hong Kong for Hong Kong dollars, or you can buy a diamond in China and sell it in the United States for U.S. dollars, but in fact this is not very practical. Bitcoin is even less operable: it cannot pass the anti-money laundering mechanism of the trading platform. For example, after buying 1 million worth of Bitcoin in RMB in China, the process may take 1-2 months to sell Bitcoin of the same value in the United States. The price fluctuations during this period, coupled with the price difference of Chinese Bitcoin being usually 1%-2% more expensive than overseas, make it only theoretically feasible.

Xu Mingxing believes that monitoring the domestic and foreign price difference curves of Bitcoin is the most scientific explanation that Bitcoin does not cause a net outflow of foreign exchange.

In terms of volume, Bitcoin does not have the scale of the above-mentioned capital outflows. A total of 16 million Bitcoins have been mined so far, and the market value was only about US$16 billion when the price of Bitcoin was at its highest point. “Only if the price of Bitcoin rises another 1,000 times will the central bank be worried. ”An investor who started buying Bitcoin in 2011 told a reporter from Southern Weekend.

Chinese aunts and “novice” users (referring to users who know little about the Internet) were once considered to be the two major groups driving up the price of Bitcoin. But in fact, according to the "2014-2016 Global Bitcoin Development Research Report", which depicts the group portrait of Chinese Bitcoin users for the first time, nearly 90% of Bitcoin users are male, and investors aged 30-39 account for the highest proportion, about 48.74%. ； The largest number of investors come from the IT industry, accounting for 35.45% ； Nearly 80% of investors have high school education or above ； 82.6% of users have experience in other investment products such as stocks, spot leverage, precious metals, etc.

Of course, there are also some fishermen in the turbulent Bitcoin industry.

A website called "Bitcoin Asia Lightning Trading Center" trades Bitcoin investments on behalf of clients in the name of financial management, promising investors fixed dividends and cash withdrawals at any time. After running for 9 months, it suddenly stopped paying dividends and closed the website at noon on January 5, 2017. Members were unable to log in.

Like other "Ponzi schemes", the platform claims to use large-scale high-end cloud computing and machine brick-moving models (purchase Bitcoin from a low-price platform, and then transfer it to a high-price platform to sell in order to obtain the price difference). It shorts or goes long on Bitcoin trading platforms around the world (buy low and sell high), complete transactions within 0.28 milliseconds, and add value with floating trading points without an upper limit to ensure that each investor's dividends increase in value, and can reach a daily rate of return of more than 10%.

In the eyes of professionals, the high yields promised by this platform obviously do not exist, but similar high-frequency trading strategies are very common on Bitcoin trading platforms.

Xu Mingxing told Southern Weekend reporters that it can be monitored in the backend of the currency bank that some users make small profits through repeated high-frequency transactions. They buy when the price is predicted to rise in the short term and sell again after a few seconds. This is also an important reason for the huge transaction volume of China's three major trading platforms. Behind high-frequency trading, the three platforms do not charge transaction fees, and users can buy and sell repeatedly at will.

At first, trading platforms charged handling fees. As a result of platform competition, everyone was free of handling fees. At the end of 2016, in the face of the growth of Bitcoin market and transaction volume, there were also doubts in the market that "trading platforms use programs to increase their own volume and attract new users."

Xu Mingxing defended the idea of "traffic brushing" as a malicious competition among Chinese trading platforms. This volume is not brushed by the platform, but by users. "Many users have recharged 10,000 yuan, which can generate 1 million transaction volume in a day."

Beginning in the second half of 2016, the transaction volume of the Bitcoin trading platform "Bitcoin China" has increased significantly. According to data from bitcoinity.org, in the past 30 days, its transaction volume has exceeded that of BiXing and Huobi, ranking first. As of press time, they have not responded to Southern Weekend reporters’ request for an interview.

Escape from Bitcoin Bitcoin has sowed the technology fire over the past eight years, and its greatest contribution may have been in 2015 in arousing people's interest in the underlying technology of digital cryptocurrencies.

The huge number of trading platforms and mining equipment from China has made many founders of Bitcoin, an experimental virtual currency, very dissatisfied.

In January 2016, Mike Hearn, one of the members of the Bitcoin core development team and a former Google programmer, said that he had sold all the Bitcoins he held. He said that Bitcoin is controlled by China and that the network on which Bitcoin depends is "on the brink of technological collapse."

Half a year later, Stefan Thomas, an active promoter and developer of Bitcoin who produced the video "What is Bitcoin", also expressed similar dissatisfaction: Whenever the price of Bitcoin rises, the number of investors increases and the market value increases, which dominates technical discussions.

In their view, Bitcoin has sown technological fire in the past eight years, and its greatest contribution should be in 2015 arousing people's interest in the underlying technology of digital cryptocurrency, which is the blockchain application technology that is currently in the spotlight. It uses a P2P communication network, relies on mathematical encryption algorithms, and uses a decentralized autonomous approach to collectively maintain an open, tamper-proof ledger, which is extremely disruptive to the financial industry.

Stephen Thomas is currently the CTO of Ripple. If Bitcoin is currently the most successful blockchain application, Ripple is currently the most successful blockchain technology company. They use blockchain technology to solve financial transaction problems for large banks around the world, and partners use its network to transfer money. It has received a total of US$93 million in investment so far, and its investors include Standard Chartered Bank, Accenture Ventures, etc.

On September 15, 2015, Goldman Sachs and JPMorgan Chase launched R3, the world's largest blockchain alliance. Currently, there are more than 70 financial institutions as members, including China's Ping An Group, China Merchants Bank, China Foreign Exchange Trading Center, Minsheng Bank, etc. In October 2016, China’s Ministry of Industry and Information Technology released China’s blockchain white paper, which is regarded as the next trend in the development of financial technology. Tencent, Huawei, Wanda, JD Finance, Ant Financial, etc. announced to join the blockchain alliance.

At the same time, the Bitcoin network is getting larger and larger, and it takes longer and longer to confirm Bitcoin transactions, and it also encounters expansion problems. The Bitcoin core development team, mining pools, and miners have different opinions on solutions and cannot reach a consensus. This has begun to hinder the development of Bitcoin applications. For example, a version update of the Bitcoin Segregated Witness (SegWit) activation code was released as early as October 2016, but currently only about 25% of miners support this change, which is far lower than the 95% required for activation.

“Will the Bitcoin price go to zero? ”On January 10, 2017, a netizen named landen_schmitt asked a question on the Bitcoin section of the social news website Reddit because all his salary was paid in Bitcoin. The best answer he got was: Yes, yes, when the world's internet goes down permanently. Then, learn to make fire again.

At 16:50 pm on January 11, 2017, the People's Bank of China announced that it had formed a joint investigation team to conduct on-site inspections of Huobi, BiBank, and Bitcoin China on the same day to inspect their implementation of foreign exchange management, anti-money laundering and other relevant financial laws and regulations, and trading venue management regulations. About 20 minutes later, the price of Bitcoin and RMB fell by more than 200 yuan.